Marathon Turns More Eagle Ford Wells to Sales in Q2 2014

August 5, 2014 Kirk Eggleston

In Marathon Oil's second quarter report released on Tuesday, higher density pad drilling and improved execution techniques were credited for a 55% quarter-on-quarter increase in gross operated wells turned to sales. The average time to drill an Eagle Ford well in the second quarter of 2014, spud-to-total depth, was 13 days - the company's goal for the year is 11 days.

Marathon's average net Eagle Ford production was 102,000 boe/d, representing an increase of 26% year-over-year and 6% quarter-on-quarter. Approximately 66% of net production was crude oil/condensate, 16% was natural gas liquids (NGLs) and 18% was natural gas.

Recently, Marathon sold its Norwegian assets for $2.7 billion to re-focus capital investments in the Eagle Ford Shale and other U.S. domestic assets. At the end of the second-quarter, Marathon had approximately $1.1-billion in E&P capital expenditures across its North American asset portfolio.

Marathon Eagle Ford Enhanced Completion Design

According to company officials, enhanced Eagle Ford completion design is delivering strong preliminary results. Wells with 180-day cumulative production are yielding on average 25% improvement relative to modeled type curves.

“We have high confidence in Eagle Ford volumes growth as our well results continue to outperform modeled type curves and deliver strong economics. This quarter we brought 76 gross operated Eagle Ford wells to sales. We expect that momentum to carry forward, generating double-digit production growth quarter-on-quarter in the Eagle Ford for the remainder of 2014.”

— Marathon CEO, Lee Tillman

Marathon Austin Chalk/Upper Eagle Ford Update

Marathon Oil continued its successful delineation of the Austin Chalk/Upper Eagle Ford for co-development with an initial 15,500 net acres now delineated. During the second quarter, the company brought online three Austin Chalk/Upper Eagle Ford wells, including two in the condensate window: the Children Weston 4H and the Franke well, which had a 30-day initial production (IP) rate of approximately 1,650 boe/d (73% liquids). The third well with a 30-day IP rate of 600 boed (90% liquids) was the first in the black oil window. Nine additional Austin Chalk/Upper Eagle Ford wells are currently being drilled, completed or awaiting first production.

Warwick Energy Closes Deal for 7,300 Net Eagle Ford Acres

June 17, 2014 Kirk Eggleston

Oklahoma-based Warwick Energy announced in June of 2014 that the company closed its purchase of R/C Sugarkane LLC, an Eagle Ford upstream oil and gas company, last month.

At closing, Warwick Energy gained R/C Sugarkane's 7,300 net Eagle Ford acres, with current production of ~1,200 net boe/d in Live Oak, Atascosa and Karnes counties. The deal also included R/C Sugarkane's gathering and other related midstream infrastructure in the play. In April of 2014, Warwick announced it agreed to purchase R/C Sugarkane from affiliates of a New York-based private equity firm, Riverstone Holdings LLC, for an undisclosed amount.

According to Warwick officials, the operators of the acquired acreage are ConocoPhillips, Marathon and BHP Billiton. Warwick officials say they are encouraged by downspacing results and optimizations being achieved by these operators.

“The Eagle Ford Shale is a world class, liquids-rich resource play and through this acquisition we have acquired a multi-year drilling inventory that is both substantially de-risked and held by production.”

— Warwick CEO, Katherine Richard

Warwick was founded in 2010, and manages non-operated oil and gas interests across the country, with interests in over 5,000 wells in 13 states. The R/C Sugarkane acquisition will be funded by ArcLight Capital Partners affiliated equity investors.

Marathon Oil Sells Norwegian Business to Focus on U.S. Assets

June 3, 2014 Kirk Eggleston

Houston-based Marathon Oil Corporation announced in June of 2014 that it is selling its Norway business for $2.7 billion to re-focus capital investments in the Eagle Ford Shale and other U.S. domestic assets.

The buyer, Norwegian-based Det Norske Oljeselskap ASA, will take on ~700-million of Marathon's debt from the deal, leaving Marathon with approximately $2.1 billion in proceeds at closing.

According to Marathon CEO Lee M. Tillman, the company is focused on simplifying and concentrating its business, with a primary focus on its U.S. resource plays, including the Eagle Ford. This divestiture is one of several deals Marathon has made in the past few years. Since 2011, the company has divested $6.2 billion in assets.

“Marathon Oil has a deep inventory across three high-quality U.S. resource plays with expanding opportunities to further accelerate activity. Such organic growth will be our first priority for additional capital allocation.”

— Lee M. Tillman

Currently, Marathon has 211,000 net Eagle Ford acres. During the first-quarter of 2014, the company averaged 96,000 net boe/d, which was an increase of 7% over the previous quarter.

Marathon Increases Its Eagle Ford Resource Estimate to 1 Billion Barrels

December 11, 2013 R.T. Dukes

Marathon Eagle Ford and Austin Chalk Development Plan

Marathon Oil has increased its total resource estimate for the Eagle Ford from 469 million barrels initially to ~1 billion boe today.

The company will run 18 rigs throughout 2014 in the the Eagle Ford.

In addition, Marathon will pursue developing both the Austin Chalk and Eagle Ford in the area.

Development will look more like what we see operators doing in North Dakota where they target the Bakken and Three Forks from single pads.

In areas prospective for both plays, two wells targeting the Austin Chalk and three wells targeting the Lower Eagle Ford will be drilled from a single pad. Further testing in the first half of 2014 will determine how widely this method of development can be applied.

“When you look at the three priorities for our 2014 business plan - accelerating our rig activity in three of the highest-value domestic resource plays, ......we believe they definitively reinforce our stated strategy of creating long-term shareholder value and a commitment to rigorous portfolio management integrated with robust capital allocation.”

— CEO Lee Tillman.

Capital Budget Focused on Liquids Growth in North America

Marathon Oil will spend $5.9 billion in 2014, with approximately 60% ($3.6 billion) directed at developing liquids-rich assets in North America.

A total of $2.3 billion will be spent in the Eagle Ford to drill 385-405 gross (250-260 net) wells. Almost 90% of the company's activity is operated. $225 million, which is included in the $2.3 billion, will be spent on pipelines and centralized production tanks (batteries).

[ic-l]Marathon will spend just over $1 billion in the Bakken and more than than $200 million in the Oklahoma Woodford. Combined with the Eagle Ford, the plays account for almost all of Marathon's North American resource play investment in 2014.

Production from the company's three core resource plays will surpass 175,000 boe/d in 2014, with the Eagle Ford contributing approximately 120,000 boe/d

Read the full press release at marathonoil.com

Marathon Oil Expects to Exit 2013 Producing 100,000 boe/d from the Eagle Ford

November 5, 2013 R.T. Dukes

Marathon Oil Eagle Ford Acreage Map & Improving Well Performance

Marathon Oil's Eagle Ford production averaged more than 90,000 boe/d at the end of October and is on pace to eclipse more than 100,000 boe/d by year-end 2013. Another important note is that more than 70% of oil production is now being transported by pipelines.

The company's production in the third quarter was roughly double that of the same period in 2012 at more than 81,000 boe/d. Production growth since the second quarter wasn't quite as impressive (up 1,200 boe/d or 3%), but the numbers were tempered by drilling to hold acreage in areas where the company has a lower working interest. A little less than 2/3rds of Marathon's production is considered oil and condensate, with the remainder split between NGLs and natural gas.

Marathon's average spud-to-total depth time averaged 12 days in the third quarter. That's 20% better than the more than 15 days the company spent in the third quarter of 2012. The company has also decreased its drilling and completion costs by more than 20% in the past year. One reason costs are down is 97% of wells in Q3 were drilled from pads. The average number of wells drilled per pad is up as well to 3.3 from 3.1 in the second quarter.

Marathon hit total depth on 70 gross wells and brought 71 gross wells to production during the third quarter. 85% of wells this year have been drilled on 60-acre spacing or less.

Read the full earnings press release at marathonoil.com