Marathon Oil cuts spending by another 20%

HOUSTON -- Marathon Oil has announced a $3.5 billion capital, investment and exploration budget for 2015, a further 20% decrease since the Company's December capital budget update. 

By reducing exploration spending by more than half and continuing to focus on the Company's three high-quality U.S. resource plays, Marathon Oil's budget will support profitable investments that are expected to generate a total Company production growth rate, excluding Libya, of 5% to 7% year-over-year.

"Nearly 70% of our 2015 capital spending will be directed toward our three core U.S. resource plays, which continue to be among our highest-return investment opportunities," Marathon Oil President and CEO Lee Tillman said. "This budget reflects an emphasis on investment selectivity, balance sheet flexibility and positioning for price recovery."

North America. Approximately $2.4 billion of the capital spending budget is allocated to the Company's three key U.S. resource plays.

More than $1.4 billion in capital spending is earmarked for the Eagle Ford, where the rig count is expected to drop from 18 in late 2014 to 10 by the end of the second quarter. Included in Eagle Ford spending is approximately $1.0 billion for drilling and completions.

Marathon plans to spend $760 million in the Bakken in North Dakota. Drilling activity will be reduced to two rigs by the end of the first quarter, down from seven rigs at the end of 2014. Bakken spending includes approximately $550 million for drilling, completions and recompletions.

Spending of $226 million is targeted for the Oklahoma Resource basins, which will also be down to two rigs by the end of the first quarter. This includes spending of approximately $200 million for drilling and completions.

International. Marathon plans to spend $429 million on its international assets, primarily in Equatorial Guinea, the UK and the Kurdistan Region of Iraq.

Exploration. Marathon has decreased exploration spending to $232 million on a targeted exploration program. The 2015 spending program represents a more than 50% reduction from 2014 levels.

For the Gulf of Mexico, Marathon expects to drill one company-operated well and participate in a non-operated appraisal well at Shenandoah. Seismic surveys are planned in Gabon and Ethiopia.

Oil sands mining. Marathon expects to incur $95 million of costs for sustaining capital projects in its oil sands mining (OSM) segment. A substantial portion will be offset by a carbon sequestration credit, resulting in reportable capital expenditures of $21 million. Marathon holds a 20% outside-operated interest in the Athabasca Oil Sands Project.

Corporate and other. The corporate budget is expected to total approximately $79 million, of which $40 million represents capitalized interest on assets under construction.

Production guidance. For the full year, Marathon forecasts 370,000 to 390,000 net boed for production available for sale from the combined North America E&P and International E&P segments, excluding Libya, and 35,000 to 45,000 net bpd of synthetic crude oil for the OSM segment. Marathon expects its resource plays to achieve production growth of approximately 20% in 2015, year over year.