Marathon Oil Reports Second Quarter 2018 Results

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By Margaret Nongo-Okojokwu,

Marathon Oil has reported second quarter 2018 net income of $96 million, or $0.11 per diluted share, which includes the impact of certain items not typically represented in analysts’ earnings estimates and that would otherwise affect comparability of results. Adjusted net income was $126 million, or $0.15 per diluted share. Net operating cash flow was $767 million, or $849 million before changes in working capital.
Highlights
Total production averaged 419,000 net boed; U.S. production averaged 298,000 net boed, both up 5% (ex-Libya) compared to the prior quarter U.S. resource plays averaged 285,000 net boed, up 6% compared to the prior quarter with all four basins growing sequentially Eagle Ford production increased to 106,000 net boed, up 2% sequentially; 39 wells to sales had an average 30-day initial production (IP) rate of 1,880 boed (66% oil)
Bakken production averaged 82,000 net boed, up 11% sequentially, with oil production up 14%; 21 wells to sales averaged a 30-day IP rate of 2,700 boed (77% oil); Winona and Mamie wells in West Myrmidon set new basin Three Forks records on 30-day IP oil rate; three new Elk Creek wells averaged a 30-day IP rate of 2,530 boed (72% oil) Oklahoma production averaged 80,000 net boed, up 7% sequentially; four-well Lightner SCOOP Woodford infill pad delivered an average 30-day IP rate of 2,620 boed (48% oil) on equivalent eight-well per section spacing Northern Delaware production averaged 17,000 net boed; six new wells from the Cypress infill pilot averaged 1,235 boed IP 30 (52% oil) and the three-well Fiddle Fee pad averaged 1,745 boed IP 30 (66% oil); executed agreement for water gathering and disposal in Eddy County
In July, closed on the sale of three non-core, non-operated conventional assets in the U.S., including two in the Gulf of Mexico, further concentrating and simplifying the portfolio Raised both 2018 total Company oil and boe production guidance and 2018 resource play oil and boe production guidance, with no change to 2018 development capital budget
‘Another quarter of outstanding operational execution across our multi-basin U.S. portfolio has driven better than expected production in the resource plays, and has enabled us to raise our annual resource play production guidance for the second consecutive quarter with no increase to our development capital budget. Our Eagle Ford and Bakken asset teams continue to set the standard for performance in their respective basins, while our Oklahoma and Northern Delaware assets progress important multi-well infill tests,’ said Marathon Oil president and CEO Lee Tillman. ‘Additionally, we continue to benefit from about half of our oil production for the quarter being linked to LLS or Brent, and the flexibility afforded by our differentiated position in the four best U.S. unconventional plays.
In the second half of the year, we plan to drill our first exploration well in the emerging Louisiana Austin Chalk play as we continue our pursuit of low entry cost opportunities to enhance full-cycle returns. Our focus remains on execution and capital discipline, and we generated more than $250 million in organic free cash flow in the second quarter. We remain on track to deliver a strong rate of change in our key financial performance metrics highlighted by an expected annual increase of more than 70 percent in corporate cash return on invested capital (CROIC) at current strip prices.’

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