OREANDA-NEWS. Marathon Oil Corporation (NYSE: MRO) announced today a \$3.5 billion capital, investment and exploration budget for 2015, a further 20 percent 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 percent year-over-year.

"With continued uncertainty in commodity pricing, Marathon Oil has taken decisive action to protect our optionality and position us to be a stronger E&P in the long term. Our commitment to portfolio management means we're well prepared to respond to the current environment, with an opportunity set concentrated on higher-margin assets that compete across a broad range of commodity prices," Marathon Oil President and CEO

Lee Tillman said.

"Nearly 70 percent 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," he noted. "This budget reflects an emphasis on investment selectivity, balance sheet flexibility and positioning for price recovery."

"We're resolutely focused on the fundamentals of capital efficiency, expense management and operating reliability along with service cost reductions to protect and expand our margins. We're also prepared to exercise further flexibility in our spend levels as pricing and the macro environment warrant. Our objective is clear--to deliver long-term shareholder value, regardless of the commodity price cycle, by focusing on those elements of our business which we control."

2015 Capital, Investment and Exploration Spending (In millions) Percent
Of Total
North America:    
   Eagle Ford \$1,449 41%
   Bakken 760 22%
   Oklahoma Resource Basins 226 6%
   Other 325 9%
   Total North America 2,760 78%
International 429 12%
Exploration* 232 7%
   Total E&P 3,421 97%
     
North America E&P 2,885 82%
International E&P 536 15%
   Total E&P 3,421 97%
     
Oil Sands Mining 21 1%
Other:    
   Corporate 39 1%
   Capitalized Interest 40 1%
   Total Other 79 2%
Total Capital, Investment and Exploration Spending \$3,521 100%

*Includes spending on exploration in the deepwater Gulf of Mexico, Gabon, Ethiopia and the Kurdistan Region of Iraq.

North America: Approximately \$2.4 billion of the capital spending budget is allocated to the Company's three key U.S. resource plays. Activity plans are shown in the table below. Wells-to-sales ranges include wells drilled late in 2014 but not brought online until this year.

2015 Activity Plans Net Gross Gross
Operated
Eagle Ford:      
Wells to be drilled 141-152 245-260 215-225
Total wells brought to sales 176-192 285-320 255-275
Bakken:      
Wells to be drilled 42-53 100-120 38-48
Total wells brought to sales 71-83 168-198 68-78
Oklahoma Resource Basins:      
Wells to be drilled 17-20 41-50 16-20
Total wells brought to sales 18-21 43-52 18-22

More than \$1.4 billion in capital spending is earmarked for the Eagle Ford, where 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.

The Company 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: The Company plans to spend \$429 million on its international assets, primarily in Equatorial Guinea, the United Kingdom and the Kurdistan Region of Iraq.

Exploration: Marathon Oil has decreased exploration spending to \$232 million on a targeted exploration program. The 2015 spending program represents a more than 50 percent reduction from 2014 levels. For the Gulf of Mexico, the Company 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 Oil 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 Oil holds a 20 percent 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, the Company 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 barrels per day (bbld) of synthetic crude oil for the OSM segment. Marathon Oil expects its resource plays to achieve production growth of approximately 20 percent in 2015, year over year.

First quarter production guidance reflects continued strong performance expected in the U.S. resource plays and the carry-in effect of 2014 investments, as well as a planned turnaround at the outside-operated methanol facility in Equatorial Guinea.

  Guidance (a) Guidance (a) Actual Actual
  1Q Full-Year 4Q Full-Year
(mboed) 2015 2015 2014 2014
Net Production Available for Sale        
North America E&P 268-279   262  
International E&P excluding Libya (b) 107-116   126  
Combined North America & International E&P, excluding Libya (b) 375-395 370-390 388 358
Oil Sands Mining (c)           40-45 35-45 42 41

(a) This guidance excludes the effect of acquisitions or dispositions not previously announced.
(b) Libya is excluded because of uncertainty around future production and sales levels.
(c) Upgraded bitumen excluding blendstocks.

The Company will hold a conference call, which will be webcast live, on Thursday, Feb.19, at 9 a.m. EST. Accompanying slides will be available on the Company's website approximately one hour prior to the conference call. The replay of the conference call will be available on the website through March 19, 2015. Additional financial information, including earnings releases and other investor-related material, is available online and on Marathon Oil's app for mobile devices.

Marathon Oil Corporation is a global exploration and production company. Based in Houston, Texas, the Company had net proved reserves at the end of 2014 of 2.2 billion barrels of oil equivalent in North America, Europe and Africa.