South Texans evidently aren’t the only ones obsessing about the Eagle Ford.
Janet Clark, executive vice president and chief financial officer of the Houston-based Marathon Oil Corp., spoke last week at the UBS Global Oil and Gas Conference in Austin and told the audience, “So let’s talk about the Eagle Ford, because everybody seems to like to talk about the Eagle Ford and so do we.”
The company at the end of last year was making 65,000 barrels of oil equivalent per day in the field. By the end of this year, i’s target is 85,000 barrels.
Marathon has about 200,000 core net acres in Eagle Ford (which is its acreage after any working interest partners or mineral owners – who usually get a 12 to 25 percent cut in the oil and gas – are paid).
Clark said the company continues to learn more about its resources — and potential for resources in formations that lie above them – in the Eagle Ford and Bakken.
But the company has a strong position in both fields and Clark said, “in any event, the way we see the plays today, we’ve got about a 10-plus year inventory of drilling opportunities ahead of us.”
So far the company has spent about $4.5 billion acquiring Eagle Ford acreage.
But like other companies, it isn’t keeping everything. “We’re also divesting of acreage or letting acreage expire to the extent that it doesn’t meet our return requirements,” Clark said.
The company thinks it can drop its well spacing on part of its acreage — which could give it as much as 1.2 billion to 1.3 billion barrels of reserves in South Texas.
Clark said that having the right infrastructure is key in keeping down costs.
So Marathon invested $350 million in Eagle Ford infrastructure last year and is spending another $190 million this year. It is building pipelines instead of moving crude oil by truck.
“So very importantly, we are taking barrels off the road, putting into pipe; it’s safer, better for the environment, it’s better for the community, and it’s actually lower cost. So it makes sense all around,” Clark said.
But will Marathon be in South Texas (or the Bakken, or anywhere else) forever? The company says that’s what it likes about U.S. onshore work – it can move around.
“(It’s) one of the things that’s so great about the new portfolio as compared to the old Marathon, which is characterized by large projects, mega projects, typically international, that are large and lumpy and once you start them, you’re committed to them,” Clark said. “With the lower 48 land drilling, we have much greater flexibility to move our capital around to either add rigs or delete rigs, move rigs from one area to another area, that gives us much more flexibility in terms of optimizing the value.”
But for now Marathon is running 16 drilling rigs in the Eagle Ford and is putting its money in South Texas
Clark said it expects to spend “less than $2 billion in the Eagle Ford” this year, $800 million in the Bakken and $150 million in Oklahoma’s Anadarko Basin.