Marathon Oil will allocate US$2 billion – the bulk of its capex – for the development of its oil-producing assets at home, in the STACK play, Eagle Ford, and the Bakken, the company said in a press release. International operations will be allocated less than 10 percent of the total budget for the year, which is set at US$2.2 billion.
Chief executive Lee Tillman said the focus on production at home is motivated by the opportunities for higher returns in the assets it operates. Special attention will be paid to asset development in the STACK and SCOOP plays in Oklahoma, as well as the Bakken, while acreage in the Eagle Ford will be the main contributor to free cash flow and the place where Marathon will focus on further improving operational efficiencies.
The 2017 capital budget is twice the size of what Marathon spent in 2016, though the initial 2016 capex was planned at US$1.4 billion. Exxon, Chevron, and Hess Corporation were also among the energy majors that plan to spend more this year than last.
The company reported a net loss of US$2.14 billion for 2016, on the back of charges associated with “certain items not typically represented in analysts' earnings estimates.” The result beat analyst expectations.
Related: Oil Flat As OPEC Cuts Offset By Shale
Asset sales totaling US$1.3 billion were agreed or announced during the year, allowing Marathon to streamline its operations, following the global industry trend of becoming leaner and meaner after the price crash.
The company, like its peers, benefited from the improvement in oil prices following OPEC’s agreement with 11 non-OPEC producers to cut their combined production by about 1.8 million bpd. Although the effect from the cut has been limited, thanks in part to the rising shale oil output, it has been good news for U.S. oil and gas.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.