Houston-based Marathon Oil Corp. (MRO) on Thursday raised its U.S. and global oil and gas guidance, with domestic onshore operations delivering strong returns sequentially across the board, CEO Lee Tillman said during an earnings conference call to discuss results.
Total production, excluding Libya, reached 419,000 boe/d in 2Q2018 with the U.S. providing more than two-thirds of the total at 285,000 boe/d net, up 6% sequentially. Supply came from four major basins: Eagle Ford and Bakken shales, Oklahoma’s reservoirs and the Permian Basin’s Delaware sub-basin.
"Through better well performance and greater drilling and completion efficiencies, we've raised our guidance for annual improvement in corporate cash returns and cash flow for the total company and for the U.S. resource plays," Tillman said.
Operations chief Mitchell Little noted that the exploration and production company is running trials on various drilling and completion design changes, which include altering pumping strategies for proppant loading and diversion technology.
"When you look at performance in aggregate being up more than 100% since 2016, I feel good about the capability and the commitment of the team there to continue to drive further improvements," Little said.
Eagle Ford production increased to 106,000 boe/d net in the second quarter, up 2% sequentially. Thirty-nine wells were turned to sales with average 30-day initial production (IP) rate of 1,880 boe/d, 66% weighted to oil.
In the Bakken, production averaged 82,000 boe/d, up 11% sequentially, with oil production up 14%; 21 wells were turned to sales witn an average 30-day IP rate of 2,700 boe/d (77% oil). Winona and Mamie wells in West Myrmidon set Three Forks records in the Bakken with 30-day IP oil rates, and three new Elk Creek wells averaged a 30-day IP rate of 2,530 boe/d (72% oil)
Oklahoma production averaged 80,000 boe/d net, up 7% sequentially. The four-well Lightner Woodford infill pad in the South Central Oklahoma Oil Province, i.e. SCOOP, delivered an average 30-day IP rate of 2,620 boe/d, on equivalent eight-well/section spacing.
Production from the northern area of the Delaware averaged 17,000 boe/d; six new wells from the Cypress infill pilot averaged 1,235 boe/d IP 30 (52% oil). The three-well Fiddle Fee pad averaged 1,745 boe/d IP 30 (66% oil). MRO also executed an agreement for water gathering and disposal in Eddy County, NM.
“Our Eagle Ford and Bakken asset teams continue to set the standard for performance in their respective basins, while our Oklahoma and Northern Delaware assets progress important multi-well infill tests," said Tillman. "Additionally, we continue to benefit from about half of our oil production for the quarter being linked to Louisiana Light Sweet Crude or Brent, and the flexibility afforded by our differentiated position in the four best U.S. unconventional plays.”
In the second half of this year, MRO plans to drill its first exploration well in the emerging Louisiana Austin Chalk play, which runs from the Texas coast. Year-to-date, MRO has leased about 240,000 net acres in the play.
MRO raised its global production guidance for 2018 to 400,000-415,000 boe/d from 390,000-410,000 boe/d, with U.S. production expected to average 290,000-300,000 boe/d.
Tillman said further developments in 2Q2018 pointed to keeping the focus more on U.S. resource plays rather than overseas. For example, MRO is on track to exit Kurdistan by the end of the year, the eighth nation it has pulled up stakes in since 2013.
Under MRO’s multi-basin, returns-driven business model, the producer has "the flexibility to take advantage of opportunities without being forced to accelerate in the headwinds,” Tillman said.
For 2Q2018, Marathon reported net income of $96 million (11 cents/share), compared with a loss of $153 million (minus 18 cents) a year ago.