Marathon Oil is writing down $340 million in unproven acreage in Bee, DeWitt, Lavaca, and Wilson counties.
The acreage isn't necessarily bad, but it either doesn't compete with the rest of Marathon's acreage or lease expirations are simply coming quicker than the company can deploy rigs (capital).
After making several acquisitions over the past few years, it really comes as no surprise.
Not everything was being written down. Marathon's production grew 22% over the fourth quarter of 2012 to reach an average of 72,000 boe/d (64% oil).
“Our strong operational performance was a result of high levels of reliability in our base business along with continued growth in our Eagle Ford and Bakken shale plays.”
arathon hit total depth on 76 gross wells and brought 68 gross wells to production in the quarter. Spud to spud drilling time improved to an average of 18 days on the quarter. That's down from 28 days one year ago. Pad drilling should drive drilling times down further.
“The company is also testing the potential of the Austin Chalk and Pearsall Shale formations. ”
Approximately 65% of the company's production is moving by pipeline and that number is expected to grow to 75% by the end of May. Gathering pipelines and central gathering & treating facilities were installed to put Marathon well on its way to having its midstream infrastructure in place.
Downspacing tests have been positive and the company expects to develop its acreage on a maximum of 80-acre spacing. Expect more definitive results from 40-60 acre spacing tests in the second half of the year.
Read the full press release at marathonoil.com