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Marathon Oil’s North America E&P Segment in 2Q15

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Marathon Oil’s operating income breakup

Marathon Oil’s (MRO) North America E&P (exploration and production) segment recorded $45 million in operating loss in 2Q15—compared to $302 million in operating income in 2Q14. The Oil Sands Mining segment recorded an even steeper fall. It fell to a $77 million operating loss—compared to a $55 million operating income last year. The International E&P segment recorded positive operating income in 2Q15. However, the operating earnings fell by 74% over 2Q14.

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Marathon Oil’s North America E&P segment’s performance

The primary reason Marathon Oil’s revenue and profits fell was its average realized price fall in 2Q15 compared to 2Q14, particularly in its North America E&P segment. Marathon Oil’s 2Q15 North America E&P segment’s crude oil and natural gas realized prices fell 45% from 2Q14. NGLs’ (natural gas liquids) realized price fell 58%. The fall was partially offset by higher production in the segment.

As noted in the above chart, the North America E&P segment’s crude oil, natural gas, and NGL production volume rose in 2Q15 over 2Q14. Marathon Oil’s 2Q15 North America production portfolio features the following:

  • The Eagle Ford Shale, Marathon Oil’s largest shale production, witnessed a 32% production rise. Marathon Oil produced 135,000 barrels of oil equivalent per day in 2Q15. The shale also saw drilling efficiency gains by Marathon Oil. It was led by a faster drilling rate. As a result, the spud-to-total depth time to drill a well fell to 11 days.
  • In the Bakken, 2Q15 production rose 22% over 2Q14 due to efficiency gains and enhanced completion designs resulting in wells outperforming historical type curves. Marathon Oil produced 61,000 barrels of oil equivalent per day in 2Q15.
  • In the Oklahoma Resource Basins, Marathon Oil produced 24,000 barrels of oil equivalent per day in 2Q15. This is a 33% rise over 2Q14. It brought a total of three wells online in the latest quarter in this shale.

In 2Q15, the falling crude oil price led to a sharp fall in many of the upstream companies’ net income in the US including Whiting Petroleum (WLL), EQT (EQT), and Concho Resources (CXO). Marathon Oil accounts for 1.20% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and 0.85% of the iShares US Energy (IYE).

Next, we’ll discuss Marathon Oil’s international performance.

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