Marathon Oil Reports First Quarter 2015 Results
Corporate Highlights
- Drilling efficiency, additional service cost reductions and
capital reallocation enhancing returns
? High-specification rigs in Eagle Ford delivering pacesetter spud-to-total depth results of under seven days
? Increased year-to-date captured savings from U.S. unconventional drilling and completions service costs to\$250 million , or 17 percent, with more expected
? Reallocating more than\$25 million of capital to Oklahoma Resource Basins - Rigorous cost control focus
? Reduced North America E&P production costs per barrel of oil equivalent (boe) 17% from fourth quarter 2014, and 28% below the year-ago quarter
? First quarter workforce reductions expected to generate annualized net savings of approximately\$100 million - Strong first quarter execution across all segments
? U.S. resource play net production up 11% over previous quarter and 49% over year-ago quarter; total E&P net production (excludingLibya ) up 4% and 20%, respectively, over the same periods
? Brought online first "stack-and-frac" pilot and five Upper Eagle Ford wells
? Participated in five high-density spacing pilots in the SCOOP; three inWoodford and two in Springer
? Bakken enhanced completion pilots concluded and results integrated into development plans; initial results of first downspacing pilot encouraging
? Recorded 98% average operational availability for Company-operated assets - Continued capital discipline and portfolio management
? Further reduction in 2015 capital, investment and exploration budget from\$3.5 billion to\$3.3 billion ; no change to full-year E&P production guidance
? Non-core asset sales targeted to generate at least\$500 million
?\$3.6 billion liquidity at end of first quarter;\$1.1 billion in cash
"
Lee M. Tillman. "Income and cash flows were impacted by lower oil price realizations, which were down nearly 40 percent compared to fourth quarter 2014.
"Our first quarter capital program was on target at
"We're maintaining momentum through this cycle by focusing on
productivity improvements and co-development activities in the
Eagle Ford, leveraging outside-operated opportunities in the
Oklahoma Resource Basins, and enhanced completion design and
downspacing pilots in the Bakken," Tillman continued. "With
increased capital efficiencies, continued improvements in well
productivity and our focus on cost and expense management,
Three Months Ended | ||
(In millions, except per diluted share data) | 2015 | 2014 (a) |
Adjusted income (loss) from continuing operations (b) | ||
Adjustments for special items (net of taxes): | ||
Pension settlement | (11) | (40) |
Unrealized gain on crude oil derivative instruments | 15 | -- |
Reduction in workforce | (27) | -- |
Income (loss) from continuing operations | ||
Per diluted share: | ||
Adjusted income (loss) from continuing operations (b) | ||
Income (loss) from continuing operations | ||
Adjusted net income (loss) (b) | ||
Adjustments for special items (net of taxes): | ||
Net gain on dispositions | -- | 576 |
Pension settlement | (11) | (40) |
Unrealized gain on crude oil derivative instruments | 15 | -- |
Reduction in workforce | (27) | -- |
Net income (loss) | ||
Per diluted share: | ||
Adjusted net income (loss) (b) | ||
Net income (loss) | ||
Exploration expenses | ||
Unproved property impairments | ||
Dry well costs | 58 | 2 |
Geological and geophysical | 3 | 11 |
Other | 20 | 19 |
Total exploration expenses | ||
Cash flows | ||
Net cash provided by continuing operations before changes in working capital (b) | ||
Changes in working capital for continuing operations | (103) | (77) |
Total net cash provided by continuing operations (c) | 309 | 1,069 |
Net cash provided by discontinued operations | -- | 401 |
Net cash provided by operating activities | ||
Additions to property, plant and equipment | (1,102) | (1,043) |
Changes in working capital | (350) | 39 |
Cash additions to property, plant and equipment | (1,452) | (1,004) |
(a) As a result of the sale of the Company's
(b) Non-GAAP financial measure. See "Non-GAAP Measures" below
for further discussion.
(c) Includes adjustments for deferred income taxes of
Sales and Production Volumes
Three Months Ended | ||
(mboed) | 2015 | 2014 |
Net Sales Volumes | ||
North America E&P | 283 | 213 |
International E&P excluding |
116 | 126 |
399 | 339 | |
Oil Sands Mining (b) | 60 | 47 |
Total Continuing Operations excluding
|
459 | 386 |
Discontinued Operations (a) | -- | 77 |
459 | 463 | |
-- | -- | |
Total | 459 | 463 |
(a) Angola and
(b) Includes blendstocks.
The difference between production volumes available for sale and recorded sales for exploration and production (E&P) volumes was primarily due to the timing of international liftings.
Three Months Ended | Guidance (a) | ||
Q2 | |||
(mboed) | 2015 | 2014 | 2015 |
Net Production Available for Sale | |||
North America E&P | 283 | 213 | 270-280 |
International E&P excluding |
119 | 121 | 100-110 |
402 | 334 | 370-390 | |
Oil Sands Mining (d) | 50 | 37 | 28-33 |
Total Continuing Operations excluding
|
452 | 371 | |
Discontinued Operations (c) | -- | 75 | |
452 | 446 | ||
-- | 2 | ||
Total | 452 | 448 |
(a) Guidance excludes the effect of acquisitions or dispositions
not previously announced.
(b)
(c) Angola and
(d) Upgraded bitumen excluding blendstocks.
International E&P production available for sale from
continuing operations (excluding
Oil Sands Mining (OSM) production available for sale for first quarter 2015 was up 35 percent, primarily a result of higher reliability, compared to first quarter 2014 when nine days of planned mine maintenance occurred.
In
The Company further reduced its 2015 capital, investment and
exploration budget to
The Company's second quarter 2015 production guidance, as shown
in the table above, is reflective of planned turnarounds in
Segment Results
Total segment loss from continuing operations was
Three Months Ended | ||
(In millions) | 2015 | 2014 |
Segment Income (Loss) | ||
North America E&P | ||
International E&P (a) | 23 | 221 |
Oil Sands Mining | (19) | 64 |
Segment Income (Loss) (b) |
(a) As a result of the sale of the Company's
(b) See Supplemental Statistics below for a reconciliation of
segment income (loss) to net income (loss).
North America E&P
The North America E&P segment reported a loss of
Capital allocated to the Company's three key U.S. resource plays
for 2015 has been reduced to
- Eagle Ford capital reduced to
\$1.3 billion , reflecting a reduction to seven rigs by the end of the second quarter. For the full year, the Company revised the number of gross operated wells to be drilled to 196-206. - Bakken capital reduced to
\$645 million , reflecting a reduction to one rig by the end of the second quarter. The lower spend will fund the remaining downspacing pilots. The Company revised the number of gross operated wells to be drilled in 2015 to 26-36. - Oklahoma Resource Basins capital increased to
\$253 million as a result of an increase in high-value outside-operated activity. The Company will maintain its program of two operated rigs, and plans to participate in approximately 50 outside-operated well spuds in 2015, nearly double the previously announced program. The number of gross operated wells to be drilled in 2015 remains unchanged.
Further detail regarding the revised 2015 activity plans is provided in the tables at the end of this release.
A summary of
Three Months Ended | ||
Gross Operated | 2015 | 2014 |
Eagle Ford: | ||
Wells drilled to total depth | 88 | 96 |
Wells brought to sales | 91 | 98 |
Bakken: | ||
Wells drilled to total depth | 20 | 23 |
Wells brought to sales | 24 | 17 |
Oklahoma Resource Basins: | ||
Wells drilled to total depth | 8 | 4 |
Wells brought to sales | 5 | 4 |
EAGLE FORD: In first quarter 2015,
Included with the Eagle Ford well counts noted in the table above, the Company brought online nine gross operated
Austin Chalk wells, compared to 11 in the previous quarter. Twenty-four additional
Austin Chalk wells are currently being drilled, completed or awaiting first production. The Company brought online its first four-well "stack-and-frac" pilot with
Austin Chalk, Upper Eagle Ford and two Lower Eagle Ford wells. Early performance from this pilot is encouraging, achieving 30-day IP rates of 1,145-1,622 gross boed. Five Upper Eagle Ford wells were brought online in the first quarter with 30-day initial production (IP) rates of 685-1,248 gross boed.
BAKKEN:
The Bakken enhanced completion design pilot program has concluded with promising early results reflected in a revised standard well completion design going forward. Data from the first 23 wells suggest greater than 30 percent improvement in cumulative production after 90 days when compared to direct offset performance. All 24 of the wells brought to sales in the first quarter incorporated an enhanced completion design, optimizing proppant loading, frac fluid volumes and stage density. Early performance of the first high-density pilot (six wells per horizon) is encouraging with 30-day IP rates of 662-1,209 gross boed, similar to area direct offsets at wider spacing and in line with expectations. The second high-density spacing pilot recently started flowback. Additionally, the Company recently completed drilling its third high-density spacing pilot.
Additionally,
Walker Ridge Block 225 in second quarter 2015.
International E&P
International E&P segment income was
Drilling and evaluation of the offshore
Oil Sands Mining
The OSM segment reported a loss of
Corporate and Special Items
Included in the adjustments to net loss for first quarter 2015
was severance and related expenses of
The Company's open oil derivative positions for the remainder of
2015 consisted of three-way collars of 35,000 barrels a day (bpd)
with a weighted average ceiling of
During the second quarter, the Company increased the capacity
under its revolving credit facility from
Consolidated Statements of Income (Unaudited) | Three Months Ended | ||
(In millions, except per share data) | 2015 | 2014 | 2014 |
Revenues and other income: | |||
Sales and other operating revenues, including related party | |||
Marketing revenues | 204 | 397 | 541 |
Income from equity method investments | 36 | 78 | 137 |
Net gain (loss) on disposal of assets | 1 | (2) | 2 |
Other income | 11 | 23 | 20 |
Total revenues and other income | 1,532 | 2,497 | 2,849 |
Costs and expenses: | |||
Production | 444 | 549 | 542 |
Marketing, including purchases from related parties | 205 | 395 | 542 |
Other operating | 107 | 159 | 103 |
Exploration | 90 | 479 | 73 |
Depreciation, depletion and amortization | 821 | 801 | 643 |
Impairments | -- | 2 | 17 |
Taxes other than income | 67 | 87 | 95 |
General and administrative | 171 | 168 | 187 |
Total costs and expenses | 1,905 | 2,640 | 2,202 |
Income (loss) from operations | (373) | (143) | 647 |
Net interest and other | (47) | (58) | (49) |
Income (loss) from continuing ops before income taxes | (420) | (201) | 598 |
Provision (benefit) for income taxes | (144) | (108) | 200 |
Income (loss) from continuing operations | (276) | (93) | 398 |
Discontinued operations (a) | -- | 1,019 | 751 |
Net income (loss) | |||
Adjusted income (loss) from continuing operations (b) | |||
Adjustments for special items (net of taxes): | |||
Pension settlement | (11) | (4) | (40) |
Unrealized gain on crude oil derivative instruments | 15 | -- | -- |
Reduction in workforce | (27) | -- | -- |
Income (loss) from continuing operations | |||
Per Share Data | |||
Basic: | |||
Income (loss) from continuing operations | |||
Discontinued operations (a) | -- | ||
Net income (loss) | |||
Diluted: | |||
Adjusted income (loss) from continuing operations (b) | |||
Adjusted net income (loss) (b) | -- | ||
Income (loss) from continuing operations | |||
Discontinued operations (a) | -- | ||
Net income (loss) | |||
Weighted Average Shares: | |||
Basic | 675 | 675 | 693 |
Diluted | 675 | 675 | 696 |
(a) As a result of the sale of our
(b) Non-GAAP financial measure. See "Non-GAAP Measures" above for
further discussion.
Supplemental Statistics (Unaudited) | Three Months Ended | ||
(in millions) | 2015 | 2014 | 2014 |
Segment Income (Loss) | |||
North America E&P | |||
International E&P | 23 | 81 | 221 |
Oil Sands Mining | (19) | 23 | 64 |
Segment income (loss) | (157) | (39) | 527 |
Items not allocated to segments, net of income taxes: | |||
Corporate and unallocated | (96) | (50) | (89) |
Pension settlement | (11) | (4) | (40) |
Unrealized gain on crude oil derivative instruments | 15 | -- | -- |
Reduction in workforce | (27) | -- | -- |
Income (loss) from continuing operations | (276) | (93) | 398 |
Discontinued operations (a) | -- | 1,019 | 751 |
Net Income (loss) | |||
Capital Expenditures (b) | |||
North America E&P | |||
International E&P | 146 | 148 | 105 |
Oil Sands Mining | 21 | 40 | 68 |
Discontinued Operations (a) | -- | 14 | 110 |
Corporate | 2 | 22 | 3 |
Total | |||
Exploration Expenses | |||
North America E&P | |||
International E&P | 55 | 65 | 16 |
Total | |||
Provision (Benefit) for Income Taxes | |||
Current income taxes | |||
Deferred income taxes | (179) | (249) | 89 |
Total |
(a) As a result of the sale of our
(b) Capital expenditures include accruals.
Supplemental Statistics (Unaudited) | Three Months Ended | |||||
2015 | 2014 | 2014 | ||||
North America E&P - Net Sales Volumes | ||||||
Liquid Hydrocarbons (mbbld) | 223 | 207 | 163 | |||
Bakken | 54 | 52 | 40 | |||
Eagle Ford | 119 | 107 | 78 | |||
Oklahoma Resource Basins | 12 | 9 | 6 | |||
|
38 | 39 | 39 | |||
Crude Oil and Condensate (mbbld) | 184 | 173 | 138 | |||
Bakken | 51 | 49 | 38 | |||
Eagle Ford | 92 | 85 | 62 | |||
Oklahoma Resource Basins | 5 | 3 | 2 | |||
|
36 | 36 | 36 | |||
Natural Gas Liquids (mbbld) | 39 | 34 | 25 | |||
Bakken | 3 | 3 | 2 | |||
Eagle Ford | 27 | 23 | 16 | |||
7 | 5 | 4 | ||||
|
2 | 3 | 3 | |||
Natural Gas (mmcfd) | 359 | 331 | 300 | |||
Bakken | 20 | 21 | 16 | |||
Eagle Ford | 169 | 144 | 107 | |||
Oklahoma Resource Basins | 78 | 64 | 54 | |||
|
92 | 102 | 123 | |||
Total North America E&P (mboed) | 283 | 262 | 213 | |||
International E&P - Net Sales Volumes | ||||||
Liquid Hydrocarbons (mbbld) | 41 | 65 | 48 | |||
|
28 | 32 | 35 | |||
|
13 | 11 | 13 | |||
|
-- | 22 | -- | |||
Crude Oil and Condensate (mbbld) | 31 | 55 | 36 | |||
|
18 | 22 | 24 | |||
|
13 | 11 | 12 | |||
Libya | -- | 22 | -- | |||
Natural Gas Liquids (mbbld) | 10 | 10 | 12 | |||
|
10 | 10 | 11 | |||
|
-- | -- | 1 | |||
Natural Gas (mmcfd) | 451 | 491 | 468 | |||
|
418 | 455 | 435 | |||
|
33 | 34 | 30 | |||
|
-- | 2 | 3 | |||
Total International E&P (mboed) | 116 | 147 | 126 | |||
Oil Sands Mining - Net Sales Volumes | ||||||
Synthetic Crude Oil (mbbld) (d) | 60 | 55 | 47 | |||
Total Continuing Operations - Net Sales Volumes (mboed) | 459 | 464 | 386 | |||
Discontinued Operations - Net Sales Volumes (mboed)(a) | -- | 10 | 77 | |||
459 | 474 | 463 | ||||
Net Sales Volumes of Equity Method Investees (mtd) | ||||||
LNG | 6,275 | 6,675 | 6,579 | |||
Methanol | 884 | 1,131 | 1,153 |
(a) As a result of the sale of our
(b) Includes natural gas acquired for injection and subsequent
resale of 10 mmcfd, 9 mmcfd, and 7 mmcfd in the first quarter of
2015, and the fourth and first quarters of 2014,
respectively.
(c) Includes Gulf of
(d) Includes blendstocks.
Supplemental Statistics (Unaudited) | Three Months Ended | ||
2015 | 2014 | 2014 | |
North America E&P - Average Price Realizations (a) | |||
Liquid Hydrocarbons (\$ per bbl) | |||
Bakken | 37.78 | 60.09 | 87.60 |
Eagle Ford | 36.30 | 58.88 | 84.16 |
Oklahoma Resource Basins | 28.25 | 39.48 | 58.75 |
Other |
40.23 | 64.05 | 87.40 |
Crude Oil and Condensate (\$ per bbl) (c) | |||
Bakken | 39.92 | 61.74 | 89.46 |
Eagle Ford | 42.72 | 68.63 | 96.10 |
Oklahoma Resource Basins | 45.57 | 68.82 | 94.38 |
Other |
41.39 | 66.12 | 89.25 |
Natural Gas Liquids (\$ per bbl) | |||
Bakken | N.M. | 33.79 | 57.62 |
Eagle Ford | 13.73 | 22.59 | 37.50 |
17.04 | 21.65 | 44.58 | |
Other |
26.38 | 38.64 | 61.83 |
Natural Gas (\$ per mcf) | |||
Bakken | 2.93 | 4.75 | 8.41 |
Eagle Ford | 2.88 | 4.03 | 4.89 |
Oklahoma Resource Basins | 2.61 | 4.08 | 5.50 |
Other |
3.59 | 3.44 | 5.10 |
International E&P - Average Price Realizations | |||
Liquid Hydrocarbons (\$ per bbl) | |||
|
27.85 | 42.40 | 62.37 |
|
55.81 | 58.81 | 109.53 |
|
-- | 89.18 | -- |
Crude Oil and Condensate (\$ per bbl) | |||
|
42.55 | 61.68 | 90.44 |
|
57.19 | 58.89 | 110.99 |
|
-- | 89.18 | -- |
Natural Gas Liquids (\$ per bbl) | |||
|
1.00 | 1.00 | 1.00 |
|
33.64 | 43.80 | 73.10 |
Natural Gas (\$ per mcf) | |||
|
0.24 | 0.24 | 0.24 |
|
7.68 | 7.06 | 10.02 |
|
-- | 0.09 | 6.65 |
Oil Sands Mining - Average Price Realizations | |||
Synthetic Crude Oil (\$ per bbl) | |||
Discontinued Operations - Average Price Realizations (\$ per boe)(a) | |||
Angola | -- | -- | |
Norway | -- |
(a) Excludes gains or losses on derivative instruments.
(b) Includes Gulf of
(c) Inclusion of realized gains on crude oil derivative instruments
would have increased average price realizations by
(d) Represents fixed prices under long-term contracts with
N.M. Not meaningful.
2015 Activity Plans | Net | Gross | Gross Operated |
Eagle Ford: | |||
Wells to be drilled | 132-143 | 226-241 | 196-206 |
Total wells brought to sales | 160-176 | 257-292 | 227-247 |
Bakken: | |||
Wells to be drilled | 31-42 | 88-108 | 26-36 |
Total wells brought to sales | 58-70 | 153-173 | 53-63 |
Oklahoma Resource Basins: | |||
Wells to be drilled | 19-22 | 62-71 | 16-20 |
Total wells brought to sales | 23-26 | 100-110 | 18-22 |
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