Marathon Oil pumping 80,000 Eagle Ford barrels per day

Houston-based Marathon Oil Corp. is making about 80,000 barrels of oil equivalent per day in the Eagle Ford, up 11 percent since the beginning of the year.

About 62 percent of that production was crude oil or condensate, 17 percent was natural gas liquids and 21 percent was natural gas, according to the company’s second-quarter results and a recent call with analysts.

In the second quarter, Marathon drilled 82 new Eagle Ford wells and brought 70 other wells to market. The company is mostly pad drilling, putting multiple wells on each pad, which it said is helping increase speed, efficiency and costs in the region.

The widespread use of pad drilling means that Marathon now holds most of its acreage by production and doesn’t have to run rigs from ranch to ranch in an effort to beat the clock on lease terms.

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Marathon isn’t just working in the Eagle Ford Shale in South Texas.

It also said it has completed four Austin Chalk wells, which have a similar makeup to its Eagle Ford wells in terms of the mix of crude, liquids and natural gas. The average horizontal length of its Austin Chalk wells is 4,075 feet, with initial daily production rates around 980 barrels of oil equivalent and 1.65 million cubic feet of natural gas.

“It’s early days,” Clarence Cazalot, executive chairman, told analysts in a call. “We’ve got four wells. We’ll look to continue to evaluate this and determine just how extensive this prospective Austin Chalk is. But when you think about the fact, these were shorter laterals than what we’ve been drilling in the Eagle Ford and yet achieved pretty strong rates. The performance so far kind of looks like the type curve for the condensate window in the Eagle Ford. So pretty strong performance, very encouraging and I think certainly upside to what we’ve previously thought.”

The Austin Chalk lies immediately above the Eagle Ford. The Eagle Ford is considered the likely “source rock” for oil and gas in the Austin Chalk and other South Texas formations.

The company also completed one Pearsall Shale well with a 24-hour initial production rate of 580 gross barrels of oil equivalent per day. The Pearsall is a deeper formation than the Eagle Ford, and has been an area for recent oil and gas leasing.

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Cazalot said that Marathon is looking at how the geology varies across even the core portion of the Eagle Ford where it operates.

The company is evaluating the spacing of its wells, and it expects to release those results during a Dec. 4 meeting with analysts in San Antonio.

Lee Tillman, president and CEO, said Marathon has a lot of “running room” beyond its primary target in both the Eagle Ford and in the Bakken Shale in North Dakota, and that it is just beginning to understand the potential of the “stacked plays” – the ability to drill in other geologic layers such as the Austin Chalk and Pearsall.

You can read Marathon’s second-quarter call with analysts here on Seeking Alpha, which has free registration.