Marathon Oil to cut spending, workers in 2015

OREANDA-NEWS. February 20, 2015. Marathon Oil will reduce its 2015 spending by another 20pc to \\$3.5bn and lay off 350-400 workers as it continues to adapt to lower crude prices.

The Houston-based independent explorer already cut its 2015 spending plan in December by 20pc from \\$5.5bn down to \\$4.5bn. The company still expects total production growth of 5-7pc this year.

About 70pc of Marathon's 2015 spending will go toward US operations, with \\$1.5bn aimed at the Eagle Ford in Texas, where it plans to drop the rig count to 10 from 18 and drill 245-260 wells. In the Bakken, the company will spend about \\$760mn in 2015, cutting the rig count to five from seven and drilling 100-120 wells. In Oklahoma Marathon will spend about \\$226mn, cutting down to two rigs and drilling 41-50 wells.

Marathon joins the ranks of many other US energy companies in cutting jobs, including Apache, which will cut at least 5pc of its staff. The largest cuts have been at large oil field service providers like Halliburton (up to 6,400 jobs) Weatherford (8,000) and Schlumberger (9,000). Marathon said its job cuts will be focused mainly on US employees, particularly support services workers.

Marathon said its full year 2014 production grew by 35pc, with average output of 181,000 b/d of oil equivalent (boe/d). Eagle Ford production was up by 38pc, Bakken production up by 31pc and Oklahoma-based production up by 29pc.

Sales volumes grew in the fourth quarter to 387,000 boe/d, from 328,000 boe/d a year earlier. US volumes were 262,000 boe/d, up from 206,000 boe/d a year earlier.

Eagle Ford production averaged 131,000 boe/d in the quarter, a 46pc increase from a year ago and 12pc over the prior quarter. The company improved its average time from spud-to-total depth in the Eagle Ford to 12 days.

In the Bakken Marathon averaged 55,000 boe/d in the quarter, a 38pc increase from a year earlier and flat to the previous quarter.

In Oklahoma the company averaged 20,000 boe/d in the quarter, up by 43pc from a year ago and up by 5pc from the prior quarter.

Marathon's Equatorial Guinea production was 106,000 boe/d in the fourth quarter, down from 109,000 boe/d a year ago, yet up from the 100,000 boe/d in the third quarter. UK production was flat at 20,000 boe/d.

The company's crude and condensate realized prices in North America were down by 26pc in the fourth quarter from the third quarter and down by 24pc from the end of 2013 at \\$66.16/bl. Eagle Ford realizations were also down 26pc from the third quarter to \\$68.63/bl. Bakken realizations were down nearly 28pc to \\$61.74 from the third quarter, and Oklahoma realizations were down by 26pc to \\$68.82.

Marathon reported a fourth quarter profit of \\$926mn, up from \\$375mn a year earlier. Not including the benefit of asset sales the company had a loss of \\$93mn in the quarter.

Despite the improved production in North America, that business segment had a \\$143mn loss in the fourth quarter, compared to a \\$125mn profit in 2013. The loss stemmed from lower realized crude prices, and higher expenses, including \\$211mn in dry hole costs.