Marathon's multi-shale focus creates Q3 earnings performance

By Luke Geiver | November 12, 2018

Marathon Oil Corp.’s success as a multi-basin shale oil and gas producer has helped the exploration and production company generate more than $630 million in free cash flow in 2018. For the third quarter, Marathon generated more than half of that year-to-date total by bringing in $320 million. Oil production in Marathon’s two main focus areas—the Bakken and Eagle Ford—were both up above earlier projections for Q3. Asset teams in both shale plays have either found ways to bring better wells online or to expand the core areas of each play.

In the Eagle Ford, Marathon has been able to extend the core area outside of Karnes County and into Atascosa County, Texas. In the Bakken, Marathon was able to bring online major producing wells from the Three Forks formation. In the Delaware Basin, Marathon added bolt-on acreage and worked to create the necessary infrastructure set-up for future development and in the Louisiana Austin Chalk, the company has continued to test out the emerging shale play.

The Jerome well that targets the Three Forks formation, set a new Williston Basin record, according to Marathon, with an initial production rate of 6,380 barrels of oil equivalent per day with a 75 percent oil cut. “This was one of the best wells ever completed in North American resource plays,” said Lee Tillman, CEO and president.

The Bakken and Eagle Ford continue to get the most attention from Marathon. The Bakken is in full field development mode, along with the Eagle Ford. The STACK/SCOOP is in early development and close to full-field development with new well spacing tests positive and nearly complete, according to Mitch Little, executive vice president of operations. The Northern Delaware is still in the appraisal and delineation phase, as the company works the hold acreage by production and line-up midstream takeaway infrastructure.

In Oklahoma, well spacing in the over pressured window of the STACK formation could range from 4-well pads to 7-well pads.

Through three quarters, Marathon believes its stock is still undervalued and has performed roughly $500 million of stock buybacks. The company’s 2018 development capital budget remains unchanged at $2.3 billion.