Marathon Oil Corp. has earmarked $2.4 billion in development capital for 2019, the majority of which—95%—to be allocated 60-40 to the four US resource plays: Eagle Ford and Bakken, and Oklahoma and Northern Delaware, respectively.
The total is part of the company’s overall $2.6-billion capital budget for this year, down from 2018 levels. Resource play leasing and exploration spending is expected to decline to $200 million, supporting progression of Louisiana Austin Chalk and other emerging opportunities with a focus on full-cycle returns.
For the full year, the company forecasts total oil production growth of 10%, with US oil growth of 12%, both at the midpoint of guidance and on a divestiture-adjusted basis. For this year’s first quarter, Marathon Oil forecasts total oil production of 195,000-215,000 b/d of oil, with US oil production of 175,000-185,000 b/d, accounting for extreme weather conditions experienced early in the quarter.
Earnings, production
Marathon Oil reported full-year 2018 net income of $1.1 billion, including the impact of certain items not typically represented in analysts’ earnings estimates and that would otherwise affect comparability of results. Adjusted net income was $601 million. Net operating cash flow was $3.234 billion, or $3.211 billion before changes in working capital.
The company reported fourth-quarter 2018 net income of $390 million. Adjusted net income was $121 million. Net operating cash flow was $855 million, or $787 million before changes in working capital.
US production averaged 306,000 net boe/d for fourth-quarter 2018, including oil production of 180,000 net boe/d. Oil production was up 4% compared with the prior quarter and up 22% from the year-ago quarter on a divestiture-adjusted basis.
Fourth-quarter production from the US resource plays was 295,000 net boe/d, including oil production of 174,000 net b/d of oil. Fourth quarter US unit production costs were $5.31/boe, a sequential reduction of 14%.
Marathon Oil’s Eagle Ford production averaged 107,000 net boe/d in the fourth quarter, up 2% from the year-ago quarter. Bakken production in the fourth quarter averaged 94,000 net boe/d, up 37% from the year-ago quarter. Oil production was up more than 40% from the year-ago quarter. Marathon Oil’s Oklahoma production averaged 67,000 net boe/d during fourth quarter 2018, up 4% from the year-ago quarter. The company’s Northern Delaware production increased to an average of 26,000 net boe/d in fourth quarter 2018, up 138% from the year-ago quarter.
International production averaged 105,000 net boe/d for fourth quarter 2018, down 13% compared with the year-ago quarter on a divestiture-adjusted basis. The decrease reflects unscheduled downtime at the non-operated Foinaven complex as well as natural decline and planned maintenance activities in E.G.
During 2018, Marathon Oil added proved reserves of 186 million boe for a reserve replacement ratio of 125% excluding dispositions, at a drillbit finding and development cost of $12.41/bbl. Virtually all the additions were in the US. Net proved reserves were about 1.28 billion boe at yearend 2018, down from yearend 2017 primarily due to the disposition of Libya.