In the long-running competition for success in the oil and gas
industry Marathon Oil is keeping up a steady pace. It has proved
reserves of more than 2.1 billion barrels of oil equivalent,
including 692 million barrels of synthetic oil derived from oil
sands mining. It major focus of production is the US, in the Gulf
of Mexico, Oklahoma, Texas, and North Dakota. Its areas of
production outside of the US include Europe (the UK); Africa
(Equatorial Guinea, Gabon, and Libya); and Canada (the Athabasca
Oil Sands Project, which the company agreed to exit in 2017).
Marathon Oil is engaged in oil and gas exploration production
worldwide, oil sands mining (extracting bitumen from oil sands
deposits in Canada, and producing synthetic crude oil and vacuum
gas oil), and LNG and methanol marketing in Equatorial Guinea.
The company operates through three reportable operating
segments: North America E&P (60% of total revenues), which
explores for, produces, and markets crude oil and condensate, NGLs,
and natural gas in North America; Oil Sands Mining (20%), which
mines, extracts and transports bitumen from oil sands deposits in
Alberta, Canada, and upgrades the bitumen to produce and market
synthetic crude oil and vacuum gas oil; and International E&P
(about 20%), which explores for, produces, and markets crude oil
and condensate, NGLs, and natural gas outside of North America and
produces and markets products manufactured from natural gas, such
as LNG and methanol, in Equatorial Guinea.
Marathon Oil has oil and gas assets in Canada, Equatorial
Guinea, Gabon, Kurdistan (Iraq), Libya, the UK, and the US.
Sales and Marketing
Marathon Oil's marketing activities include the transportation
of oil and gas to market centers, the sale of commodities to third
parties, and the storage of hydrocarbon products.
In 2016 the company's net revenues decreased by 21% to $4.7
billion due to decreases in the North America and International
E&P segments, and despite a growth in the Oil Sands Mining
The E&P decline was primarily due to lower price
realizations and lower net sales volumes from its core US resource
plays, which outpaced the financial impact of lower production
In 2016 Marathon Oil posted a net loss of $2.1 billion (compared
to a net loss of $2.2 billion in 2015), mainly due to lower net
revenues; a non-cash charge related to a valuation allowance on
deferred tax assets of $1.3 billion; and a non-cash charge of $262
million for property impairments.
The company's operating cash inflow decreased from $1.6 billion
in 2015 to $1.1 billion in 2016 due to lower commodity prices. The
average crude oil and natural gas price realizations were down 11%
and 16%, respectively.
Marathon Oil continues to focus on lower cost/higher return
liquid hydrocarbon reserves and production in the US. To accelerate
this push, in 2017 the company agreed to sell its 20% stake in the
Athabasca Oil Sands Project for $2.5 billion, to pay down debt and
reinvest in core projects. That year it also agreed to buy 70,000
net acres in the lower-cost Permian Basin from BC Operating for
To raise cash, in 2016 the company agreed to sell non-core
assets for $950 million, bringing the total to $1.3 billion since
In 2016 the company's primary focus was on the SCOOP and STACK
areas, where it holds 365,000 net acres with rights to the
Woodford, Springer, Meramec, Granite Wash and other Pennsylvanian
and Mississippian plays. It also has operations (145,000 net acres,
six drilling rigs) in the Eagle Ford in Texas, and the Bakken in
North Dakota/Montana (270,000 net acres, six rigs).
In 2015 the company realized significant increases in its three
key unconventional liquids-rich plays: the Eagle Ford, Bakken, and
Oklahoma resource basins. In 2015 about 40% of its spending was
allocated to the Eagle Ford, $760 million for Bakken, $226 million
for Oklahoma Resource Basins. Internationally the spend was $429
million primarily in Equatorial Guinea, the UK, and the Kurdistan
Region of Iraq, and $232 million for the Gulf of Mexico and seismic
surveys in Gabon and Ethiopia.
Mergers and Acquisitions
In 2016 the company acquired Payrock Energy Holdings (a
portfolio company of EnCap Investments) for $888 million. The deal
added to Marathon Oil's position in the STACK play in Oklahoma
where the break-even crude price for commercially viable oil
production is in the low $40s.