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Researched by Industrial Info Resources (Sugar Land, Texas)--Finding rosy lenses unfashionable, executives at oil and gas giant Marathon Oil Company (NYSE:MRO) (Houston, Texas) acknowledged that oil prices likely will remain low for a "longer period of time" in a presentation accompanying third-quarter 2015 results. The company's capital-spending plan for 2016 is now expected to be 29% lower than the plan for 2015, although operational improvements have helped to boost output in the profitable U.S. resource plays, including the Eagle Ford Shale. Industrial Info is tracking $9.89 billion in active projects involving Marathon Oil.
Among the projects tracked is the $30 million expansion of the Salt Dome crude-oil storage terminal in Cut Off, Louisiana. LOOP LLC, a subsidiary of Marathon Oil, plans to increase storage capacity at the 7 million-plus-barrel-per-day terminal by constructing three tanks, each with a capacity of 300,000 barrels. The expansion, which is the fourth in a series of phases, is expected to kick off before the end of the year and to be completed in first-quarter 2017.
Net losses were reported to be $749 million during the quarter, compared with net income of $431 million in third-quarter 2014; total revenues stood at $1.32 billion, a 55.47% decrease. Production available for sale from the North American Exploration & Production (E&P) segment increased 5% to 263,000 net barrels of oil equivalent per day; executives say they expect to see companywide production growth rates reach 7%, and U.S. resource play growth rates reach 20%, by the end of the year.
U.S. resource plays provided the strongest production growth for Marathon during the third quarter, with the Eagle Ford assets reporting a 9% increase to 128,000 net barrels of oil equivalent per day. The company also continued to improve its efficiency in Eagle Ford drilling and completions, with a significant drop in the time to drill a well to its total depth. Marathon also reported unconventional production growth in the Oklahoma Resource Basins and the Bakken Shale, and record production in the Oil Sands Mining segment, largely due to stronger operations and a total lack of maintenance.
Marathon also reported $611 million in after-tax, non-cash asset-impairment charges during the quarter, an indication that some of its properties have lost significant value. The charges were related to lower forecasted commodity prices and Marathon's decision to move away from conventional exploration.
In August, the North American E&P segment finalized the disposition of natural gas assets in eastern Texas, northern Louisiana, and Wilburton, Oklahoma, for $100 million. Marathon also reduced E&P production expenses and general and administrative costs by $136 million, or 28%, when compared with the same period last year.
"In the case of Eagle Ford, for this quarter the team was focused on development drilling in core Karnes County, while also testing the limits of delineated acreage," said Lee M. Tillman, the president, chief executive officer and director of Marathon Oil, in a conference call. "We had another quarter of solid reductions and completed well costs, faster feet per day drilled, and more frac stages completed per month. We also previously announced additions to Eagle Ford 2P resource of 165 million oil-equivalent barrels, driven by the upper Eagle Ford and Austin Chalk."
Capital expenditures for full-year 2015 are estimated to reach $3.1 billion, while those for 2016 are expected to drop 29% to $2.2 billion, which executives said would keep annual average production levels in U.S. resource plays mostly even with that of 2015.
"This represents a significant reduction from our $3.1 billion program in 2015," Tillman said. "But at least three quarters of our 2016 program is expected to be directed toward the U.S. resource plays, which offer our highest risk-adjusted returns. We expect our 2016 budget to be approved by the board of directors later this year."
E&P production for full-year 2015 is expected to total between 380,000 and 390,000 barrels of oil equivalent per day, a 7% increase from full-year 2014.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
Among the projects tracked is the $30 million expansion of the Salt Dome crude-oil storage terminal in Cut Off, Louisiana. LOOP LLC, a subsidiary of Marathon Oil, plans to increase storage capacity at the 7 million-plus-barrel-per-day terminal by constructing three tanks, each with a capacity of 300,000 barrels. The expansion, which is the fourth in a series of phases, is expected to kick off before the end of the year and to be completed in first-quarter 2017.
Net losses were reported to be $749 million during the quarter, compared with net income of $431 million in third-quarter 2014; total revenues stood at $1.32 billion, a 55.47% decrease. Production available for sale from the North American Exploration & Production (E&P) segment increased 5% to 263,000 net barrels of oil equivalent per day; executives say they expect to see companywide production growth rates reach 7%, and U.S. resource play growth rates reach 20%, by the end of the year.
U.S. resource plays provided the strongest production growth for Marathon during the third quarter, with the Eagle Ford assets reporting a 9% increase to 128,000 net barrels of oil equivalent per day. The company also continued to improve its efficiency in Eagle Ford drilling and completions, with a significant drop in the time to drill a well to its total depth. Marathon also reported unconventional production growth in the Oklahoma Resource Basins and the Bakken Shale, and record production in the Oil Sands Mining segment, largely due to stronger operations and a total lack of maintenance.
Marathon also reported $611 million in after-tax, non-cash asset-impairment charges during the quarter, an indication that some of its properties have lost significant value. The charges were related to lower forecasted commodity prices and Marathon's decision to move away from conventional exploration.
In August, the North American E&P segment finalized the disposition of natural gas assets in eastern Texas, northern Louisiana, and Wilburton, Oklahoma, for $100 million. Marathon also reduced E&P production expenses and general and administrative costs by $136 million, or 28%, when compared with the same period last year.
"In the case of Eagle Ford, for this quarter the team was focused on development drilling in core Karnes County, while also testing the limits of delineated acreage," said Lee M. Tillman, the president, chief executive officer and director of Marathon Oil, in a conference call. "We had another quarter of solid reductions and completed well costs, faster feet per day drilled, and more frac stages completed per month. We also previously announced additions to Eagle Ford 2P resource of 165 million oil-equivalent barrels, driven by the upper Eagle Ford and Austin Chalk."
Capital expenditures for full-year 2015 are estimated to reach $3.1 billion, while those for 2016 are expected to drop 29% to $2.2 billion, which executives said would keep annual average production levels in U.S. resource plays mostly even with that of 2015.
"This represents a significant reduction from our $3.1 billion program in 2015," Tillman said. "But at least three quarters of our 2016 program is expected to be directed toward the U.S. resource plays, which offer our highest risk-adjusted returns. We expect our 2016 budget to be approved by the board of directors later this year."
E&P production for full-year 2015 is expected to total between 380,000 and 390,000 barrels of oil equivalent per day, a 7% increase from full-year 2014.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
