Marathon Oil to spend $2.2 billion on shale resources in 2017

By Patrick C. Miller | February 22, 2017

Marathon Oil’s $2.2 billion capital program for 2017 is aimed at accelerating activity and production growth in the North Dakota and Oklahoma shale plays.

"We enter 2017 with greater focus and concentration on our excellent opportunities in the U.S. resource plays, and are well positioned to generate high return production growth for our shareholders," said Lee Tillman, Marathon president and CEO. "This year's $2.2 billion capital program underscores our strategic shift as we allocate over 90 percent to the U.S. resource plays.”

Marathon said it will return to sequential growth in its U.S. resource plays during the second quarter of 2017 and expects a 15 to 20 percent increase in oil resource growth from the fourth quarter of 2016 to the fourth quarter of 2017.

“We're ramping up activity in Oklahoma as we progress our STACK and SCOOP acreage toward full-field development, and in the Bakken where our enhanced completions recently achieved record results in the basin,” Tillman said. “Additionally, our Eagle Ford asset will contribute significant free cash flow while continuing to drive operational efficiencies."

Based on a flat WTI rate of $55 per barrel of oil equivalent (boe) from 2017 to 2021, Marathon expects a compound annual growth rate of 10 to 12 percent—except for Libya. The company plans to allocate $2 billion to its U.S. resource plays, which will be split about one-third to each of the three basins with Oklahoma's strategic objectives occupying the first call on capital.

For the Oklahoma resource basins, Marathon will focus on STACK leasehold retention, STACK delineation and infill pilots in preparation for 2018 full field development. The company plans to increase its Oklahoma rig count to average about 10 rigs, while bringing 90 to 100 gross-operated wells to sales. This includes four to five STACK infill pilots and two SCOOP infill pilots to sales, as well as testing additional secondary horizons.

In the Eagle Ford, Marathon expects to maintain a six-rig drilling program and bring 155 to 170 gross operated wells to sales. With about two-thirds of the program focused in the high-margin oil window, Marathon expects its Eagle Ford asset to generate significant free cash flow in 2017. The company plans to continue optimizing completion techniques with increased proppant and fluid loading, and average lateral lengths.

In the Bakken, Marathon plans to focus on its highest return in the west and east Myrmidon areas where it completed several basin-leading wells in 2016. The company will progress multiple enhanced completion trials as well as continuing its focus on optimizing base production, while bringing 70 to 75 gross operated wells to sales. Marathon expects to average approximately six drilling rigs in the Bakken in 2017.