Marathon Oil making big Eagle Ford push in 2013

Marathon Oil Corp. plans to make a big push in its liquid-rich Eagle Ford shale play next year with more than a third of its $5.2 billion capital budget for 2013 devoted to the South Texas operation.

CEO Clarence Cazalot said Tuesday the Houston-based exploration and production company is making the Eagle Ford a focal point of its growth strategy. Other key regions for the firm are the Bakken shale in North Dakota and the Oklahoma resource basin.

Morningstar analyst Allen Good said there’s little surprise in Marathon’s plans to continue to put an emphasis on its Eagle Ford operations.

“Eagle Ford has clearly been a positive story for Marathon,” Good said. He added that the overall increase in 2013 capital spending is in line with his firm’s expectations.

Key activity for the company next year will be targeted to liquids, which include oil, condensate and natural gas derivatives such as ethane and propane. Low natural gas prices in the U.S. have hurt firms that rely too heavily on domestic production of natural gas in dry form.

Good said all the majors are cutting rigs and shifting to liquid-rich plays. Good cited Exxon Mobil,  Shell and Occidental Petroleum Corp. as examples.

Marathon’s spending plan, which translates to a roughly 4 percent increase over the company’s projected capital spending for this year, is expected to generate a 6 percent to 8 percent year-over-year increase in total company production, Marathon said.

Some $1.9 billion of the budget is being set aside for Marathon’s Eagle Ford operations. Its 2013 production target there is 85,000 net barrels of oil equivalent per day. Plans call for drilling 215-250 net wells there in 2013.

Marathon also will spend money next year building up other assets across North America, Africa and Europe. It also will be seeking to reduce costs where it can.

The company’s base exploration and production assets include production operations in Norway, the Gulf of Mexico, U.S. conventional oil and gas plays, Equatorial Guinea, the United Kingdom and Libya. Marathon’s spending plan for 2013 includes $870 million for those assets.

For this year, Marathon continues to project total capital spending of roughly $5 billion. That is the figure it has stuck with since August, when it said rig count reductions would be offset by increased spending from outside-operated projects and for infrastructure costs to facilitate the continuing ramp-up of Eagle Ford volumes over the next five years.

The Eagle Ford and Bakken plays have become fields of riches for oil and natural gas producers who are able to keep costs in check and weather price volatility. Marathon, along with Houston-based EOG Resources, have benefited from the right mix of operations.

Last month, both companies posted third-quarter results that impressed Wall Street. Marathon Oil reported an 11 percent jump in profit for the third quarter. The company cited its Eagle Ford shale operations as a factor.