Marathon Oil Reduces 2015 Spending by Half

Marathon Oil
Marathon Oil

Marathon Oil announced further cuts to its 2015 capital spending plan, reducing numbers another 20 percent from their initial December forecast. This represents a total capex that is less than half of last year’s budget. The company will continue to focus spending on its shale resources and will reduce exploration spending by more than half.

Bakken Highlights

Marathon reports that its Bakken production increased 38% from 2013. This number includes 17 gross operated Bakken wells to sales, with 15 piloted enhanced completions. 18 pilot completion wells averaging greater than 30% uplift in cumulative production over the first 60 days. For 2015, Marathon’s operations in the Bakken will receive a $760 million piece of the pie, which represents 22% of the company’s total budget and includes approximately $550 million for drilling, completions and recompletions.

President and CEO Lee Tillman noted that “Nearly 70 percent of our 2015 capital spending will be directed toward our three core U.S. resource plays, which continue to be among our highest-return investment opportunities. This budget reflects an emphasis on investment selectivity, balance sheet flexibility and positioning for price recovery.” He added, “Though our U.S. resource plays generate competitive returns at current pricing, we’re taking action to materially reduce our 2015 capital program relative to 2014 to protect our financial flexibility.

Marathon in the Bakken Formation

The North Dakota Bakken Shale oil play is top investment priority for Marathon Oil, where they have approximately 370,000 acres across North Dakota and Montana.

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Marathon Accelerates Activity in The Bakken and Other US Domestic Plays

Marathon's Bakken and Three Forks Acreage Map
Marathon's Bakken and Three Forks Acreage Map

Marathon is continuing to ramp up its presence in US domestic shale plays, with increased activity expected in the Bakken Shale through the end of 2014. In a company statement in late March 2014, officials revealed that Marathon hit its target of a 28-rig program across the Eagle Ford, Bakken and Oklahoma-Woodford Shale plays at the end of January.

Read more: Marathon Oil's Bakken Production Drives North American E&P Segment Income Up 38%

Marathon Oil’s CEO Lee Tillman said, “We continue to have high confidence in our ability to deliver on our North America long-term production growth targets underpinned by strong resource growth through downspacing and well optimization. In addition, we are progressing the evaluation and appraisal of co-development opportunities with the Eagle Ford’s Austin Chalk and the Bakken’s deeper Three Forks benches.

Marathon Bakken Operations Update

According to Marathon, the company's Bakken acreage accounts for ~800 mmboe in proven and probable reserves and resource potential. As of March 2014, Marathon had a 6-rig drilling program, and anticipates 75 - 85 net wells across the play in 2014. The company also expects to complete 20 - 24 net wells by the end of the year. The Bakken budget for 2014 remains at approximately $1 billion and 29% of the company' 2014 capital budget.

Marathon Targeting Deeper Three Forks Benches in Myrmidon Area

The Three Forks First Bench accounts for ~23% of proven and probable reserves. 45 gross operated wells are planned for the Three Forks in 2014. Six wells are planned in the lower benches of the Three Forks between 2014 - 2015. The initial focus will be on the Myrmidon area.