In addition to strong Bakken core extension test results, Marathon Oil also continued to chip away at its remaining $1 billion share buyback program. (Source: Marathon Oil Corp.)
Marathon Oil Corp. (NYSE: MRO) reported strong Bakken core extension rates that the Houston-based E&P said in a Dec. 11 press release were encouraging plus the company is offering additional share buybacks.
The four-well Gloria pad targeting the Middle Bakken in Marathon’s Ajax area of the Williston Basin in Dunn County, N.D., achieved an estimated average 30-day IP of over 2,400 barrels of oil equivalent per day (boe/d), 84% of which was oil.
Lee Tillman, president and CEO of Marathon Oil, said the strong rates were the result of enhanced area-specific completion designs and “a lot of hard work from our Bakken team.”
“Strong early results in Ajax mark another important step forward in our ongoing efforts to extend the core of our Bakken acreage position, building upon recent successful core extension tests in Elk Creek and Southern Hector,” Tillman said in a statement.
Marathon, which also holds positions in the Permian Basin, Eagle Ford and Stack/Scoop, controls roughly 255,000 net acres in the Bakken play. Production from its Bakken position averaged about 85,000 boe/d (86% oil) during the third quarter.
John Aschenbeck, senior analyst with Seaport Global Securities LLC, said the four-well Middle Bakken pad completion was Marathon’s first test on the acreage in the company’s Ajax area since 2015.
“We believe these results, while still early, are an encouraging sign that the depth and quality of Marathon’s Bakken inventory could be biased higher,” Aschenbeck said in a Dec. 12 research note adding he believes it also shines further light on the continued success of the company’s core extension program in the Williston Basin.
Other recent core extension results by Marathon include a two-well southern Hector test on the Lars pad, which posted an average IP-30 of 1,810 boe/d (roughly 83% oil), and a three-well Elk Creek test on the Bear Den pad with an average IP-30 of 2,530 boe/d (about 72% oil).
Despite Marathon’s strong results from its recent Bakken core extension test, analysts with Tudor, Pickering, Holt & Co. (TPH) said the firm believes the company’s Myrmidon acreage in McKenzie County, N.D., will still likely continue to be its “Bakken workhorse.”
“Impacts from tests likely muted near-term, however, as we don't expect the area to receive meaningful capital for several years,” the TPH analysts said in a Dec. 12 research note.
In addition to the Bakken results, Marathon also continued to chip away at its remaining $1 billion share buyback program.
MORE: Marathon Oil also appeared in Oil and Gas Investor’s July 2018 cover story “Processing Power”
On Dec. 11, the company said it repurchased about $150 million of additional common stock subsequent to $500 million made as of its third-quarter 2018 earnings release. Year-to-date share repurchases now total about $650 million, leaving $850 million of buyback authorization outstanding.
TPH analysts expect Marathon to continue share buybacks in 2019 at strip prices.
“We see about $400 million of free cash flow on our $2.6 billion program with Marathon’s TPH estimated roughly $1.5 billion year-end 2019 cash balance providing dry powder for bolt-ons / resource exploration leasing,” the analysts said.
Emily Patsy can be reached at epatsy@hartenergy.com.
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