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How Did Marathon Oil’s North America E&P Segment Perform?

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Marathon Oil’s operating income 

Marathon Oil’s (MRO) North America E&P segment recorded a $61 million operating loss in fiscal 3Q15 compared to $291 million in operating income in fiscal 3Q14. The Oil Sands Mining segment fell to a $11 million operating loss compared to a $93 million operating income last year. Only the International E&P segment recorded positive operating income in fiscal 3Q15. However, its fiscal 3Q15 operating earnings fell by 73% compared to fiscal 3Q14.

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North America E&P segment’s performance

The main reason Marathon Oil’s revenue and profits fell was its average realized price fall in fiscal 3Q15 compared to fiscal 3Q14—particularly in its North America E&P segment. Marathon Oil’s crude oil and natural gas realized prices fell 54% and 35% in fiscal 3Q15 compared to fiscal 3Q14. The NGL (natural gas liquid) realized price fell 65%. The fall was partially offset by higher production.

As noted in the above table, the natural gas and NGL production volume in Marathon Oil’s North America E&P segment rose in fiscal 3Q15 over fiscal 3Q14. The crude oil production didn’t change.

Marathon Oil’s performance at the US shales

Marathon Oil’s North America production portfolio featured the following in fiscal 3Q15:

  • In the Eagle Ford Shale, Marathon Oil witnessed a 9% production rise to 128 MMboe (thousand barrels of oil equivalent) per day in fiscal 3Q15 compared to fiscal 3Q14. The shale also saw drilling efficiency gains by Marathon Oil—led by a faster drilling rate. As a result, the spud-to-total depth time that it takes to drill a well fell to ten days here from 11 days in the previous quarter. In comparison, Pioneer Natural Resources’ (PXD), Marathon Oil’s upstream peer, fiscal 3Q15 production from the Eagle Ford Shale averaged 43 MMboe per day. Marathon Oil accounts for 1.1% of the Energy Select Sector SPDR ETF (XLE).
  • In the Bakken, the production in fiscal 3Q15 rose 9% over fiscal 3Q14. It was led by a strong performance from the Doll pad wells in West Myrmidon. Here, Marathon Oil produced 61 MMboe per day in fiscal 3Q15. It didn’t change from fiscal 2Q15.
  • In the Oklahoma Resource Basins, Marathon Oil produced 23 MMboe per day in fiscal 3Q15. This is a 21% rise over fiscal 3Q14. It brought a total of seven wells online in the latest quarter.

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

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