Marathon Oil Corporation President and CEO Lee M. Tillman, speaking at the Barclays CEO Energy-Power Conference in New York today, provided investors with key updates on the Company's progress and operations, with specific focus on the strategic imperatives of resource capture, profitable volumes growth and shareholder value.
In his presentation, Tillman highlighted the following:
- More than 20% growth in U.S. unconventional 2P resource to 3 billion boe across Oklahoma Resource Basins, Bakken and Eagle Ford; up 520 million boe vs. year-end 2013
- Future drilling inventory increased to 4,650 net wells
- Resource adds concentrated in Oklahoma, where unconventional 2P resource is up approximately 40% to 1.11 billion boe vs. year-end 2013
- Initial acceleration of three incremental rigs to be added by year-end 2014; further acceleration expected in 2015
- Expect resource play production growth at a double-digit CAGR for 2015-2017; total Company production growth projected as high single-digit CAGR for the same period
"We've been aggressively conducting pilots and delineation drilling across our three U.S. resource plays to test downspacing, enhanced completions and co-development. The successful results have grown our net 2P unconventional resource to 3 billion barrels of oil equivalent (boe), up 520 million boe compared to year-end 2013. Associated with the resource growth, Marathon Oil's well inventory for future drilling opportunities has increased to more than 4,600 net well locations across the Eagle Ford, Bakken and the Oklahoma resource basins," Tillman said.
"More resource equals more inventory, which supports more drilling activity in our highest return opportunities," he emphasized. "Organic investment is our first priority, as we optimize our portfolio and redeploy operating cash flow and proceeds from strategic transactions. In line with this objective, we plan to add an initial three incremental rigs - two rigs in Oklahoma and one in the Bakken - before year end. This increased drilling activity will give us a 'fast start' on 2015 growth as we continue to position for further acceleration."
Tillman said the Company expects to release further detail about its 2015 activities in December in conjunction with Marathon Oil's 2015 capital, investment and exploration budget. "Importantly, we see the Oklahoma Resource Basins as the third major growth engine in our portfolio, with more than 1 billion boe of 2P resource and more than 1,200 net well locations in future drilling inventory," he said. "Our anticipated forward program, supported by the initial two incremental 'fast start' rigs, is focused on driving development in the SCOOP while continuing delineation in the STACK and exploring new horizons such as the Springer formation.
"In North Dakota, we're shifting up a gear to ensure we capture full value from the integration of results from our high-density drilling and well completion pilots. More than half of our completions in the Bakken in the second half of 2014 will be testing some aspect of enhanced well completion designs. The additional rig in late 2014 will provide capacity to drive high density development into 2015.
"Last but not least, we're executing with confidence in the Eagle Ford. We're on plan with our delineation of Austin Chalk co-development, and expect to pilot our first 'stack and frac' of the Upper Eagle Ford in the fourth quarter of 2014. Our completion optimization work continues to generate high incremental returns with tighter stage spacing delivering incremental rates of return of approximately 100 percent.
"Overall, we're pleased with our progress in the U.S. resource plays and are committed to driving both operating and capital efficiency while growing resource, volumes and cash flows. By adhering to our business strategy, exercising capital discipline and focusing on execution, Marathon Oil will deliver industry-leading results and competitive production growth throughout the year and in the future," Tillman said.