Marathon Oil's second quarter production levels in the Eagle Ford grew 50% from the first quarter of the year. 50% quarter over quarter. In the second quarter, Eagle Ford production averaged 21,000 boe/d, with 75% attributable to crude/condensate and 11% attributable to NGLs. By the end of July, production had stretched to more than 31,000 boe/d. Marathon is on pace for 50% quarterly growth again.

2012 will be marked as the year in which the company hit its stride in development of the play. Through the first half of the year, the company has started drilling on 107 wells and brought 72 to production. The company has completed more than 210 miles of gathering lines and five central battery plants, with five more in progress. As of the second quarter, the midstream build out had allowed the company to move 60% of its crude production through pipelines.

Marathon Testing Down Spacing at 40-acres

Marathon is also testing optimal well spacing. The company has ten spacing pilots planned and active. Five of the pilots are producing at 40 to 100-acre spacing and five more are planned at 40 to 80-acre spacing. A few things happen when wells can be drilled at tighter spacing intervals:

• Recovery rates rise
• More wells can be drilled from a single pad, lowering total surface disturbance
• Well costs fall with the efficiencies of more centralized operations

Expect to hear more at the end of the year from Marathon and others in regards to acreage spacing. Also listen for results from other tests involving lateral placement, stimulation design, and toe placement of the well.

Marathon Drilling Times Drop to 23 Days

By our count, the company averaged 18 rigs running in the second quarter and reported drilling 61 gross wells, with 50 brought to production. The company plans to lower its rig count for the remainder of the year, but will still meet its well targets. Marathon can lower the rig count and drill the 230-240 wells planned because the company has lowered its spud to spud drilling time to 23 days from more than 40 days less than a year ago. At the end of July, the company was running 22 rigs, but plans only call for only 18 rigs to run through the remainder of the year.

The company also closed the $750 million acquisition of Paloma Partner's Eagle Ford Assets on August 1st.