Marathon Oil swings to loss. Chops capital spending
Marathon Oil, an oil and natural gas exploration and production company, has posted a quarterly loss and decided to cut spending due to low oil price environment.
The company reported a fourth quarter 2015 net loss of $793 million, compared to a profit of $926 million in the year-ago quarter.
Marathon’s fourth quarter capital program decreased to $564 million and total net production during the quarter averaged 432,000 net boed.
“In the fourth quarter, our capital spend and production costs both came in better than expectations,” said Marathon Oil President and CEO Lee Tillman.
Tillman added: “We reached a major milestone in Equatorial Guinea with the successful installation of the jacket and topsides for the Alba field compression project, on schedule to start up by mid-year 2016.”
To remind, the Alba B3 topside and jacket were installed at the Alba field, offshore Equatorial Guinea, in January 2016.
In the UK, Marathon’s production available for sale averaged 18,000 net boed in fourth quarter 2015, compared to 20,000 net boed in the year-ago quarter.
In late December, the Brae Alpha production platform, in the UK North Sea, experienced a process pipe failure which lead to a production shutdown. According to Marathon, repairs are underway with resumption of full production expected in the second quarter. The Brae Alpha Platform is located in block 16/07a, approximately 155 miles (248km) north-east of Aberdeen.
Marathon Oil reduced E&P production expenses and total company adjusted general and administrative expenses by $146 million for fourth quarter 2015 compared to the same quarter in 2014.
Capital program halved
Marathon Oil announced a 2016 capital program of $1.4 billion, a reduction of over 50% year-over-year, and more than 75% below 2014.
With the material step-back in year-over-year investment, 2016 total company production is expected to decline 6 to 8 percent on a divestiture-adjusted basis, Marathon said.
The company plans to spend approximately $170 million on its international assets, primarily to complete long-cycle projects in Equatorial Guinea and the Kurdistan Region of Iraq. The Alba field compression project in Equatorial Guinea remains on budget and on schedule to start up by mid-year, and will extend plateau production by two years as well as the asset’s life by up to eight years.
Marathon Oil has reduced conventional exploration spending to $30 million, down from more than $250 million in 2015 and from more than $500 million in 2014. Activity in 2016 is limited to existing commitments in the Gulf of Mexico and Gabon, with no exploration wells planned.
For full year, the company forecasts production available for sale from the combined North America and International E&P segments, excluding Libya, to average 335,000 to 355,000 net boed.
On a divestiture-adjusted basis, E&P and total company production is expected to be 6-8 percent lower than 2015, due to a significantly lower 2016 capital program.
Offshore Energy Today Staff