Marathon Oil Reduces 2015 Spending by Half

February 19, 2015 Elizabeth Alford

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.

Marathon News: Energy Giants Announce Layoffs

Hess, Marathon, and Whiting Face Fines for Bakken Oil Classifications

February 10, 2014 R.T. Dukes

Hess, Marthon Oil, and Whiting Petroleum all face potential fines from the Pipeline and Hazardous Materials Safety Administration (PHMSA). The fines are being pursued as a result of PHMSA's investigation into the transportation of Bakken oil.

Oil taken from cargo tanks en route to rail facilities in the region was not properly classified. PHMSA took 18 samples from cargo tanks, storage tanks, and pipelines. In all, 11 of the 18 samples were not classified properly.

Hess faces fines of more than $50,000, Marathon Oil faces ~$30,000 in fines, and Whiting faces $12,000 in fines.

Also read:DOT's Arm Issues Bakken Sahle Oil Shipping Safety Alert

“Transportation has an important role to play in helping meet our country’s energy needs, thanks to the increased production of crude oil, but our top priority is ensuring that it is transported safely,” said Transportation Secretary Anthony Foxx. “The fines we are proposing today should send a message to everyone involved in the shipment of crude oil: You must test and classify this material properly if you want to use our transportation system to ship it.”

PHMSA requires the use of nine hazardous materials classifications. Proper classification ensures the material is handled properly and that emergency responders can accurately assess accidents.

As a result of the findings, PHMSA has expanded the scope of the testing to include testing for proper vapor pressure characterizations, corrosivity, hydrogen sulfide, and concentration of dissolved gases.

http://phmsa.dot.gov/

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

February 7, 2014 Kirk Eggleston

Marathon Oil's Bakken production helped drive the company's North American E&P segment income to $529 million in 2013, compared to $382 million in 2012.

The approximately ~38% increase was primarily due to higher liquids volumes from the Eagle Ford, Bakken and Oklahoma resource basins.

Marathon Q4 2013 Production and 2014 Bakken Budget

[ic-l]Marathon Oil averaged approximately 40,000 net boe/d of production in the Bakken during the fourth quarter. That's approximately a ~5% increase from 38,000 net boe/d in the third quarter of 2013.

In 2014, Marathon will spend $1 billion of its $3.6 billion budget in North America in the Bakken. As a result, Bakken production is expected to grow to a little less than 50,000 boe/d.

Marathon Oil's average Bakken production by commodity is as follows:

90% crude oil
4% NGLs
6% Natural Gas

Marathon Hits Q4 2013 Production Target

In the fourth quarter, the company reached total depth on 15 gross wells and brought 22 gross wells to sales, hitting its year-end exit rate estimate of 40,000 boe/d.

“During 2013... our strong year-over-year net production growth in the top U.S. liquids resource plays — 136 percent in the Eagle Ford, 34 percent in the Bakken and 68 percent in the Oklahoma resource basins — demonstrated our ability to drive superior operating results,” said Lee M. Tillman, Marathon Oil’s president and CEO.”

The company improved it's average time to drill a well in the Bakken by 16% compared to a year prior, averaging 15 days spud to total depth. Drilling and completion costs have decreased approximately 10% compared to the fourth quarter 2012.

Marathon Highlights for 2013

~5% increase in production from Q3 (38,000 boe/d) - Q4 (40,000 boe/d)
North American E&P income Up ~38% from 2012 to $529 million thanks to unconventional drilling
16% faster rate to drill a well than Q4 2012 (approx. 15 days)
Drilling and completion costs decreased 10%
Marathon sets capital budget in Bakken at $1 billion in 2014

Marathon Oil Plans To Spend $1 Billion in the Bakken in 2014

December 18, 2013 R.T. Dukes

Marathon Oil Bakken Initial Production Improvement

Marathon Oil plans to spend $1 billion of its $3.6 billion budget in North America in the Bakken in 2014.

As a result, the company's production is expected to grow from a little less than 40,000 boe/d in 2013 to a little less than 50,000 boe/d in 2014.

Marathon will run six rigs in 2014, with one rig dedicated to recompleting Bakken wells that were stimulated with open hole completions.

The company has transitioned from open hole completions to 20-stage completions then to 30-stage completions today. Over the first 1,000 days of a wells life, Marathon's current 30-stage completions are producing 122% more than open hole completions were a short time ago.

“We believe this standard of performance, coupled with continued resource growth, fully supports an accelerated investment in our three high-quality resource plays — the Eagle Ford, Bakken and Oklahoma Woodford.”

— Lee Tillman, CEO,

Marathon Oil's 2014 Expectations and Highlights

Targeted spud to total depth of 15 days
Well costs target of $7.0-7.8 million
Testing 4 Middle Bakken and 4 Three Forks (1st bench) wells per 1,280-acre unit
Planning 6 Three Forks (2nd bench) well tests
Potential to recomplete 100 wells that were stimulated with a open hole completion (increasing reserves 280,000 boe per well)
Inventory of ~2,300 gross wells over 370,000 net acres in the Bakken and Three Forks
Probable resources of 630 million barrels
Expecting production to grow to ~70,000 boe/d by 2017

Read the company's full capital budget press release at marathonoil.com

Marathon Oil's Bakken Production Holds Flat in Q3 - Drilling Faster

November 6, 2013 R.T. Dukes

Marathon Oil's Bakken production held flat at 38,000 boe/d in the third quarter as the company shut in production to complete adjacent wells. Compared to the third quarter of 2012, production is up 27%.

Flat production from one quarter to the next isn't a knock on Marathon, it's going to happen with the expanded use of pad drilling. Unless operators stagger their pad drilling perfectly (near impossible), we'll see lumpy production additions going forward.

“Marathon Oil achieved strong financial results in the third quarter, delivering $1.44 billion in operating cash flows before working capital changes, and adjusted net income of $617 million, 29 percent higher than the second quarter,” said Lee M. Tillman, CEO. “All three business segments performed well, capturing the higher liquid hydrocarbon realizations both domestically and internationally, compared to the second quarter.”

Marathon hit total depth on 21 gross wells and brought 21 gross wells to production during the quarter. The 2013 exit rate for production is estimated at 40,000 boe/d.

The company's average drilling time for each well fell from 15 days in the second quarter to 14 days in the third quarter. That's 20% faster than one year ago.

Marathon also discussed successful results in the Three Forks. The company is targeting the upper portion of the play and expects to explore the lower benches in 2014. Marathon has drilled 58 Three Forks wells to date and the formation accounts for more than 20% of the company's production in the region.

Read the full release at marathonoil.com