Our Global Operations across four core regions — Africa, Middle East, Europe and North America — allow us to discover and develop key opportunities for future growth
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Our spirit of innovation and commitment to delivering superior products that address even the most complex challenges drives Marathon Oil’s legacy of technical excellence.
Superior execution in U.S. resource plays
Growth assets are where Marathon Oil expects to make significant investments to increase oil and gas production and reserves. The Company is focused on U.S. liquid hydrocarbon growth by developing unconventional liquids-rich plays, including the Eagle Ford and Bakken shales, and the Oklahoma Resource Basins. In addition to U.S. shale plays, growth assets include deepwater discoveries and developments offshore Angola, Canadian in-situ assets, certain Gulf of Mexico blocks and the Kurdistan Region of Iraq.
Work in 2012 focused on increasing production in liquids-focused portions of U.S. resource plays, progressing the Birchwood in-situ project in Canada, and producing first oil and developing additional opportunities offshore Angola.
U.S. Unconventional Resource Plays
Marathon Oil has established strong operated positions in high-value U.S. unconventional resource plays. At year-end 2012 its holdings included approximately:
To maximize production and maintain a competitive cost structure, the Company focuses on operational execution to reduce drilling cycle time and optimize well spacing. In 2012, Marathon Oil executed a drilling program focused on liquids-rich areas of the unconventional resource plays, reaching total depth on 274 net (361 gross) operated wells and increasing production by over 49 mboed.
South Texas Eagle Ford Shale
Since 2011, the Company has invested in strategic acquisitions to grow its top-tier presence in the highest value oil and condensate core areas of the Eagle Ford play. Marathon Oil has an average working interest of approximately 80 percent in its operated assets and as of December 31, 2012, the Company had 262 net (379 gross) producing wells in the Eagle Ford Shale. Average net production increased more than four-fold in the Eagle Ford Shale from approximately 15 thousand mboed in December 2011 to more than 65 mboed in December 2012.
The Company anticipates drilling and completing 275 to 320 gross Company-operated wells in the Eagle Ford, targeting production of 85 mboed net in 2013. Development of the high-value, high gas-to-oil ratio, liquids-rich window is the focus. The Company will continue studies to improve drilling and completions speed and efficiency and optimize well spacing to increase drillable locations and recoverable reserves.
North Dakota Bakken Shale
Marathon Oil holds approximately 410,000 net acres in the Bakken Shale oil play in North Dakota and eastern Montana. Throughout 2012, the Company continued selective acreage acquisitions and leasing, further expanding a new prospect area. It also continued to alter completion techniques seeking continuous improvement in well performance. Net sales from the Bakken Shale averaged 29 mboed, composed of 27 mbbld of crude oil, 1 mbbld of natural gas liquids and 8 million cubic feet per day (mmcfd) of natural gas in 2012, a 71 percent increase on a barrel of oil equivalent basis over 2011.
In 2013, Marathon Oil will work to maximize production from the Middle Bakken and Three Forks reservoirs in the Hector/Ajax and Myrmidon areas, continue development of other areas and explore additional formations such as the Lodgepole, Tyler and Red River in the Williston Basin.
Oklahoma Resource Basins
In 2012, Marathon Oil executed its Anadarko Woodford program in the liquids-rich condensate and oil windows. The Company also participated in three development infill projects as well as multiple high liquid-yielding horizontal wells in the Granite Wash, Tonkawa and Cleveland formations. Going forward, Marathon Oil plans to maximize production and reserve development by focusing development activity in the high-performing, liquids-rich Knox portion of the Woodford play.
Gulf of Mexico
Marathon Oil participates in development activities in its Gulf of Mexico growth assets. Appraisal activity was under way in the outside-operated deepwater Gunflint prospect throughout 2012 and will be completed in the first half of 2013. The first appraisal well in the outside-operated Shenandoah discovery began drilling in June 2012 and reached total depth in January 2013.
A successful deepwater oil discovery well was drilled on the Gunflint prospect located on Mississippi Canyon Block 948 in 2008. Marathon Oil owns a 15 percent non-operated working interest in this prospect. One appraisal well was drilled in 2012 confirming expected reservoir properties and establishing the commercial viability of the field. An additional appraisal well began drilling in February 2013 and development planning is ongoing.
The Company owns a 100 percent working interest in the Birchwood in-situ project in Alberta. After drilling approximately 100 appraisal wells in 2011, Marathon Oil filed a regulatory application for a proposed 12 mbbld steam assisted gravity drainage (SAGD) project at Birchwood. Pending regulatory approval, project sanction is expected in 2014, with first oil projected in 2017.
Marathon Oil owns 10 percent working interests in Blocks 31 and 32 offshore Angola. The Angola Block 31 PSVM Development achieved first oil in the fourth quarter of 2012, with net production expected to plateau at 14 net mbbld in the first half of 2014 and remain at that level for approximately three years. The Kaombo Development in the southeastern part of Block 32 is in progress. Front-end engineering and design for the development is under way, with first production from two FPSO vessels possible in 2016. In addition, the Company continues to assess the development potential of other discoveries. Marathon Oil and its partners have drilled more than 30 successful exploration wells in Blocks 31 and 32.
Marathon Oil budgeted $3.4 billion for its exploration and production (E&P) growth assets in 2013, out of a total capital, investment and exploration budget of $5.1 billion. Of this, $1.9 billion is allocated to Eagle Ford, $800 million to the Bakken and $150 million to the Oklahoma Resource Basins.