Marathon Oil Corp. will continue its enhanced completion design pilots in the Bakken during 2015, limiting drilling to its core Myrmidon area in Mountrail and McKenzie counties.
Eighteen of 42 enhanced completion wells yielded more than a 30 percent increase in cumulative production over the first 60 days, Lee Tillman, Marathon president and CEO said in a February conference call. “This material change in early production is clearly very encouraging, and we anticipate further updates as the production histories mature,” he said. “In the Bakken we’re aggressively piloting enhanced completions to improve value in this basin.”
By concentrating spending in the Bakken on intensive completions, returns have come at or above 100 percent in all areas, he said. The company has adopted the updated completion practices across the Myrmidon area and in its Hector area in Dunn County in the Middle Bakken and Three Forks intervals.
“We anticipate a combination of improved stimulation designs coupled with increasing spacing density to drive toward the highest value, incrementally improving the recovery efficiency across a drilling unit,” Tillman said.
Marathon has benefited from lower costs as well with an average of $6.2 million to $6.6 million in 2014, reflecting a $1 million reduction per well, and with additional cost savings and high initial production expected, the company is aiming for 20 to 30 percent returns at current commodity pricing, according to Tillman.
Variety in testing
Marathon has drilled its first two spacing pilots with six wells per pad in Hector and Myrmidon, and is currently drilling a third such pad.
Each pilot is comprised of six Middle Bakken and six Three Forks first bench wells per drilling-spacing unit, Tillman said in a November 2014 conference call.
From early on in the pilot program, Marathon has tested a variety of enhanced completion techniques on the wells, Tillman said.
By November, the company was specifically testing increased proppant loads ― up to 6 million pounds of proppant per well, Lance Robertson, Marathon vice president of North America production operations said.
“We also tested incremental stages in those wells, surfactants in two or three of those wells, as well as incremental stages adding for small or more finite stage delivery, and then a change in fluid volume, both a decrease and in most cases an increase of fluid volume.”
In the overwhelming majority of those wells, the early response of the 30 day IP was at or above type curve, Robertson said.
U.S. exploration halved
In February the Marathon announced a $3.5 billion capital, investment and exploration budget for the year, down from a $4.3-$4.5 billion budget announced in December, which in turn was a 20 percent drop from 2014.
U.S. exploration spending will be cut by more than half. About 70 percent of the revised budget, or $2.4 billion, will be divided among the three core U.S. plays responsible for the company’s highest returns. Rigs will be reduced from 33 to 18 across the trio of plays by the end of the first quarter, then drop to 14 rigs by the end of the second quarter and maintain that pace for the balance of the year.
Strategic shift
Marathon’s U.S. resource plays now comprise more than half of its E&P production mix.
“That’s a noteworthy increase over the last 12 months,” Tillman said, adding that the resource plays have gone from 43 to 53 percent of the production mix.
“That strategic shift has occurred as we re-shaped our portfolio to concentrate on higher margin, higher return opportunities … and consistently executed across the resource plays, delivering value with that growth.”
“The current low commodity price environment only serves to underscore the importance of subsurface quality and execution at scale,” he said. “We have a deep inventory of resource play opportunities supported by compelling single well economics that are robust across a broad range of prices and that are further advantaged by capturing efficiencies and service cost reductions.”
Even with announced rig reductions, 2015 fourth quarter exit rates for the resource plays will be up relative to 2014 exit rates, he said.
“In the Eagle Ford, we’ll be maintaining execution scale on our highest return wells ― however, at a reduced level. … In the Bakken, we’ll be high-grading to the Myrmidon while continuing to pilot test completion designs and downspacing … and in the Oklahoma Resource Basins, our focus will be to protect our valuable acreage position and be prepared to step up execution as prices recover and cash flows allow,” Tillman said.
In addition to its North American operations, Houston-based Marathon has activity in Europe, the Middle East and Africa.
