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Marathon Oil Reports Second Quarter 2017 Results

Press Release

Outstanding Operational Results Drive 7% Sequential Oil Growth; Raising 2017 Production Guidance with Greater Capital Efficiency

HOUSTON, Aug. 02, 2017 (GLOBE NEWSWIRE) -- Marathon Oil Corporation (NYSE:MRO) today reported a second quarter 2017 net loss of $139 million, or $0.16 per diluted share, which includes the impact of certain items not typically represented in analysts' earnings estimates and that would otherwise affect comparability of results. The adjusted net loss was $145 million, or $0.17 per diluted share. Net operating cash flow was $422 million, or $471 million before changes in working capital.

Highlights

  • Total Company production from continuing operations increased 6% sequentially to 349,000 net boed, excluding 11,000 net boed from Libya; oil grew 7% excluding Libya
  • U.S. resource play production grew 6% sequentially, averaging 202,000 net boed
  • Oklahoma Resource Basin production grew 11% sequentially with continued focus on leasehold, delineation and infill spacing; 6 new standard lateral wells from the high-density Hansens STACK pilot delivered average 30-day IPs of 915 boed (55% oil)
  • Eagle Ford production up sequentially with fewer wells to sales due to outstanding new well performance; top 10 wells to sales had 30-day IPs averaging 2,340 boed (69% oil)
  • First two Bakken Hector wells with enhanced completion designs achieved 30-day IPs averaging 2,500 boed (85% oil)
  • Successful first MRO-designed completion in Northern Delaware achieved 30-day IP of 1,500 boed (72% oil), pushing delineation farther west in Eddy County
  • Ended the quarter with $2.6 billion of cash on the balance sheet, up from the previous quarter

"With outstanding operational results across all our assets in the second quarter, we delivered on our commitment to resume sequential growth with total Company production, excluding Libya, and the U.S. resource plays increasing 6 percent," said Marathon Oil President and CEO Lee Tillman. "We also made important progress on several key strategic objectives in the resource plays, while exceeding expectations on efficiency, base performance and new well productivity.

"As a result, we're increasing our full-year total Company oil and BOE production growth guidance of 6 percent at the midpoint, adjusted for divestitures, to 7 percent, as well as increasing our 20 to 25 percent exit rate growth in the U.S. resource plays to 23 to 27 percent growth, all within a 10 percent lower capital budget.

"Our operational momentum has us well positioned to continue our sequential growth in the resource plays into 2018, with an objective to live within cash flows."

U.S. E&P
U.S. E&P production available for sale averaged 222,000 net barrels of oil equivalent per day (boed) for second quarter 2017, up 7 percent compared to 208,000 net boed in the prior quarter and up 9 percent from the year-ago quarter, adjusted for dispositions. Second quarter unit production costs were $5.86 per barrel of oil equivalent (boe).

OKLAHOMA RESOURCE BASINS: The Company's unconventional Oklahoma production increased 11 percent to 49,000 net boed during second quarter 2017, compared to 44,000 net boed in the prior quarter and up more than 80 percent from the year-ago quarter. Marathon Oil's second STACK infill spacing pilot, the Hansens pad located in the normally pressured Meramec black oil window east of the Yost pad, tested a tighter well spacing design. The six new standard lateral wells had 30-day initial production (IP) rates averaging 915 boed (55% oil). The Company also continued delineation and leasehold activity with strong results, including a STACK Meramec extended-lateral well, the Chapman, which achieved a 30-day IP averaging 3,185 boed (52% oil) expanding the volatile oil window farther west in Blaine County.

EAGLE FORD: Marathon Oil's production in the Eagle Ford averaged 100,000 net boed in second quarter 2017, up from 99,000 net boed in the prior quarter. The Company brought 41 gross Company-operated wells to sales in the second quarter, compared to 47 wells to sales in the previous quarter. The top 10 wells to sales had 30-day IP rates averaging 2,340 boed (69% oil). During the quarter, a new Company record was set again for the fastest well drilled in the Eagle Ford at a rate of more than 4,200 feet per day.

BAKKEN: In second quarter 2017, Marathon Oil's Bakken production averaged 49,000 net boed, compared to 48,000 net boed in the prior quarter. The Company's first two Hector wells with enhanced completion designs are performing above expectations with 30-day IP rates averaging 2,500 boed (85% oil). Seven Myrmidon wells were brought to sales in July with 24-hour IP rates averaging over 4,000 net boed (78% oil).

NORTHERN DELAWARE: The Company's Northern Delaware production averaged 4,000 net boed in second quarter 2017, reflecting the May 1 closing of BC Operating assets and June 1 closing of Black Mountain assets. During the second quarter, the Company brought online its first well with a Marathon Oil-designed completion. The Cypress 1H well, a Wolfcamp X-Y well in Eddy County, was a western delineation test that achieved a 30-day IP rate averaging 1,500 boed (72% oil) from a 4,600-foot lateral. The Black River well, a Wolfcamp X-Y well with a 9,400-foot lateral, was brought online in early second quarter and has a 90-day IP rate of 1,275 boed (73% oil).

International E&P
International E&P production available for sale (excluding Libya) averaged 127,000 net boed for second quarter 2017, up 4 percent compared to 122,000 net boed in the prior quarter, and up 6 percent over the year-ago quarter. Second quarter 2017 unit production costs (excluding Libya) were $4.03 per boe. Equatorial Guinea production available for sale averaged 107,000 net boed in second quarter 2017 compared to 105,000 net boed in the previous quarter. U.K. production available for sale averaged 18,000 net boed in second quarter 2017, up 20 percent compared to 15,000 net boed in the previous quarter. Marathon Oil had two liftings in Libya, with production available for sale averaging 11,000 net boed in the second quarter.

Guidance
Marathon Oil expects third quarter 2017 U.S. E&P production available for sale to average 230,000 to 240,000 net boed. Third quarter International E&P production available for sale, excluding Libya, is expected to be within a range of 115,000 to 125,000 net boed including scheduled turnarounds in the U.K.

Marathon Oil expects its 2017 capital program to be in a range of $2.1 to $2.2 billion, down from $2.4 billion. The Company raised its full-year 2017 production available for sale forecast from the combined U.S. and International E&P segments, excluding Libya, to a range of 345,000 to 360,000 net boed, an increase to 7 percent at the midpoint on a divestiture-adjusted basis. U.S. resource plays are expected to exit the year with both oil and BOE production 23 to 27 percent higher than fourth quarter 2016, up from the previous estimate of 20 to 25 percent growth.

Corporate
Net cash provided by operating activities from continuing operations was $422 million during second quarter 2017, and net cash provided by continuing operations before...


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