Houston explorer Marathon Oil Corp. is reducing its rig count in the Eagle Ford Shale because of drilling efficiencies and dropped rigs in the Anadarko Woodford and Bakken plays in response to a “continued decline in natural gas liquids (NGL) and natural gas prices,” the company said Wednesday.

Marathon reported net income of $393 million (56 cents/share) in 2Q2012, compared with $996 million ($1.39) in the year-ago period. In 2Q2011 Marathon had $698 million in profits related to the refining business, which was spun off last year. Excluding one-time items the company earned 59 cents/share in the latest quarter, which matched Wall Street’s forecasts.

Sales of oil and natural gas rose 20.8% year/year. Quarterly oil realizations averaged $97.81/bbl, down 6.8% from a year ago, while natural gas sold on average for $2.70/Mcf, which was down 15.9%.

“The positive financial impact of our solid operational performance was more than offset by lower commodity prices compared to the first quarter, with the largest impact in inland U.S. crude and NGL markets,” said CEO Clarence Cazalot. “This lower price environment, coupled with costs that have not declined at a comparable rate, dictate a more disciplined level of domestic spending and activity.

“As a result, we are reducing for the remainder of 2012, and perhaps into 2013, the rig count in the North Dakota Bakken and Oklahoma Anadarko Woodford plays. We will also be able to fully execute our Texas Eagle Ford growth plans with fewer rigs as a result of increasing drilling efficiencies.”

Even with the rig count reductions, Marathon confirmed its 5% upstream production growth in 2012 over 2011. The company is projecting 2013 upstream output will be “6-8% higher than 2012,” excluding operations in Alaska and Libya.

In the Eagle Ford, Marathon has 20 rigs and four dedicated hydraulic fracturing crews. However, the company “realized significant efficiencies in drilling over the past few months, with July spud to spud rig time averaging 23 days.” Because of the efficiency gains,” the rig count in the South Texas play is to be cut by two to 18 for the rest of 2012.

Plans to drill 230-240 wells this year in the Eagle Ford remain on track. Marathon expected to close Wednesday on its $750 million acquisition of Eagle Ford operator Paloma Partners II LLC (see Shale Daily, May 11). Eleven incremental wells related to the Paloma acquisition also remain on the drilling schedule this year.

However, drilling plans in the Anadarko Woodford and Bakken shales have been sharply reduced, with the rig count in the Anadarko Woodford play cut to two from six, and the Bakken rig count cut to five from eight.

In the Anadarko Woodford Marathon “expects to be able to maintain its projected 2012 year-end production level of approximately 10,000 boe/d and to retain its core acreage in the play with this two rig program over the next 12-18 months.”

With a five-rig program in the Bakken, the company expects to maintain its projected 2012 exit rate of 30,000 boe/d over the next 12-18 months, as well as “retain its core acreage in the play.”

Net production in the company’s core Eagle Ford operations jumped almost 50% in 2Q2012 from the first three months of this year to 21,000 boe/d from 14,000 boe/d “of which 75% was crude oil/condensate and 11% was NGL.” At the end of July the company was producing more than 31,000 boe/d net from total Eagle Ford operations; 61 wells were drilled and 50 were brought online in the latest period. Twenty (gross) operated wells were awaiting completion at the end of July.

Eagle Ford output is expected to average 30,000 boe/d net this year, excluding output related to the Paloma acquisition. To complement drilling and completion activity, Marathon installed close to 210 miles of gathering lines in the first half of 2012, commissioned four central gathering and treating facilities and began construction on five additional facilities. Marathon said it is now able to transport about 70% of its product by pipeline.

Bakken production, which averaged 90% crude oil and 5% NGLs, averaged 26,700 boe/d in 2Q2012, versus 25,500 boe/d net in 1Q2012. The company drilled 26 gross wells and brought 24 wells to sales. Marathon Oil continued to achieve strong results from the Myrmidon area with average 24-hour initial production (IP) rates in excess of 2,000 boe/d.

Marathon also produced 5,700 boe/d on average in the Anadarko Woodford during the latest period, compared with 4,600 boe/d net in 1Q2012. Performance is being driven by results in the Knox area, with 24-hour initial production rates ranging from 800 boe/d to 1,700 boe/d, the company said. During the quarter, eight new wells were brought to sales, followed by four additional wells in July. At the end of July net production reached 8,500 boe/d.

Upstream production available for sale in 2Q2012 averaged 362,000 boe/, excluding Libya, which was at the upper end of company guidance of 350,000-365,000 boe/d.