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Business Update – Marathon Oil Corp

Marathon Oil Corp · Aug 13, 2012 · 61 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Business Update – Marathon Oil Corp – slide 1
    Business Update August 13, 2012 Marathon Oil Corporation
  2. Business Update – Marathon Oil Corp – slide 2
    Marathon Oil Strong, Focused and Disciplined Growth Strong and stable base assets generate significant cash First half 2012 net cash flow from operations 2.3 billion, ex W/C changes Executed major turnarounds ahead of scheduled and…
  3. Business Update – Marathon Oil Corp – slide 3
    2012 - 2016 Expected Capital Allocation 2012 CAPEX 5B 2012 - 2016 Estimated CAPEX Base CAPEX 24-27 B Other Canada Corporate International 32% 3% 42% U.S. 26% Exploration 7% Base 24% Growth CAPEX DJ Basin Other Bakken…
  4. Business Update – Marathon Oil Corp – slide 4
    Strong Base Assets and Growth Portfolio Europe Production* 150 MBOED 100 50 Canada Production* 0 50 2011 1H 2012 MSCOD 25 0 2011 1H 2012 U.S. Production* 150 100 1H 2012 Production Distribution MBOED 50…
  5. Business Update – Marathon Oil Corp – slide 5
    Base Assets Large Stable Base Generates Substantial Free Cash Flow Characterized by safe and reliable operations Stable base production 2012-2016 340 MBOED Libyan production ramping up in 2012 CAPEX 1.3 B per year Constantly…
  6. Business Update – Marathon Oil Corp – slide 6
    Growth Assets Significant Low Risk Production Growth 250 50% CAGR Angola Block 32 80% Liquids 200 CAPEX 3.0B - 4.0B per year Kurdistan 150 MBOED 100 Eagle Ford Gulf of Mexico Bakken Anadarko Woodford 50 DJ Basin 0…
  7. Business Update – Marathon Oil Corp – slide 7
    Lower 48 Onshore Production Forecast Available for Sale 150 P90 125 P10 100 MBOED 75 50 25 0 3Q 2011A 4Q 2011A 1Q 2012A 2Q 2012A 3Q 2012E 4Q 2012E % Oil 51 56 57 59 62 % NGL 4 6 6 7 8 Marathon Oil Corporation…
  8. Business Update – Marathon Oil Corp – slide 8
    Eagle Ford Shale Premier U.S. Resource Play Strong operated position currently 325,000 net acres Paloma acreage added 17,000 net acres 200,000 net acres in core of play Approximately 90% operated with 80% average working interest…
  9. Business Update – Marathon Oil Corp – slide 9
    Eagle Ford Shale Activity & Results Oil 2012 Activity Q1 Q2 YTD Bouldin 2H 800 BOPD, 50 BPD NGL, Condensate Wells Spud 46 61 107 400 MCFD Dry Gas Wells on Production 22 50 72 Drilling Rig Ann Friar Thomas 2H 600 BOPD, 465 BPD…
  10. Business Update – Marathon Oil Corp – slide 10
    Eagle Ford Shale Single Well Economics Condensate High-GOR Oil Low-GOR Oil (3,000-100,000 scf/BBL GOR) (500-3,000 scf/BBL GOR)…
  11. Business Update – Marathon Oil Corp – slide 11
    Eagle Ford Shale Activity Growth Driving Production Spud to Spud Days Nearly 50% quarter on quarter 50 production growth 40 Increased volumes more than 17,000 30 BOED in 2012 20 Anticipate strong 2H-12 growth 10 0 Volumes…
  12. Business Update – Marathon Oil Corp – slide 12
    Eagle Ford Shale 150 Projected Net Production Oil Condensate Gas Dry Gas 100 Liquids MBOED Marathon Paloma 50 5 San Christoval Ranch 5 Shown on Dry Gas + NGL basis 0 Blackjack 2011 2012 2013 2014 2015 2016…
  13. Business Update – Marathon Oil Corp – slide 13
    Eagle Ford Shale 2012 Spacing Pilot Program Ten spacing pilots planned in 2012 Five producing at 40 to 100-acre spacing 350 40-acre Five more in 2012 from 40 to 80-acre spacing spacing test Additional targeted pilot testing in…
  14. Business Update – Marathon Oil Corp – slide 14
    Bakken Shale Delivering Growth and Efficiency 420,000 net acres Average MRO-op WI 81% / OBO WI 11% P50 Net resource 450 MMBOE 420-640 acre average well spacing Current program activity 7 Rigs drilling, expect to reduce to 5 by…
  15. Business Update – Marathon Oil Corp – slide 15
    Bakken Shale Delivering Growth and Efficiency Diomedes Cazador Aisenbrey 21-25H, 96% WI Rig Location 24-hr IP: 1,565 BOED Aisenbrey 21-25TFH, 98% WI MRO-Op Well 24-hr IP: 1,427 BOED OBO Well Myrmidon Menelaus Aeneas Helen…
  16. Business Update – Marathon Oil Corp – slide 16
    Bakken Shale Continual Improvement Reserves & Production Projected Net Production Increased EUR estimates 40 Gas Adopted 30-stage completions as standard Liquids Modified frac fluid volumes 30 Total P50 resource increased from…
  17. Business Update – Marathon Oil Corp – slide 17
    Bakken Shale Three Forks Results & Forward Plans Date 1st BOPD MCFD BOED Well Prod. 24 hr IP 24 hr IP 24 hr IP Bears Ghost USA 31-4TFH Jan-12 1259 1397 1492 Myrmidon Boy Chief USA 11-15TFH Jan-12 730 792 862 Aeneas Weninger Cox…
  18. Business Update – Marathon Oil Corp – slide 18
    Anadarko Woodford Shale Expanding Legacy Position in Liquids 163,000 net acres Average MRO-op WI 55% / OBO WI 16% P50 Resource potential 300 MMBOE 160 acre average well spacing Planned program activity 2 rigs currently drilling…
  19. Business Update – Marathon Oil Corp – slide 19
    Anadarko Woodford Shale Expanding Legacy Position in Liquids Evans, 20% WI 24-hr IP: 1,400 MCFD (shrunk) 200 BOPD, 680 BNGLD Rig Location Cana 6 infill Avg MRO-Op Well 24-hr IP: 4,000 MCFD (shrunk) OBO Well 46 BOPD, 465…
  20. Business Update – Marathon Oil Corp – slide 20
    Angola Block 31, 10% WI MRO acreage PSVM Development Oil discovery Conversion FPSO, 150 MBOED BLOCK 31 PSVM FPSO integration and sail-away complete, 10% WI Marte Development Leda Venus Area vessel arrived in Angola February…
  21. Business Update – Marathon Oil Corp – slide 21
    Canada In-situ Birchwood appraisal MRO-op, 100% WI 14,000 net acres Namur Pierre 60% WI 400 MMBBL Bitumen net P50 resource River Appraisal drilling completed March 2011 100 wells drilled and evaluated Jackpine 2 3-D seismic…
  22. Business Update – Marathon Oil Corp – slide 22
    Exploration Drilling The Gulf of Mexico has a portfolio 2012-2013 Drilling Program of 20 prospects for drilling multiple opportunities Norway 2013 - 2 exploration Kurdistan has a portfolio of seven very large exploration Poland…
  23. Business Update – Marathon Oil Corp – slide 23
    Gulf of Mexico Resuming Operations 20 Prospects with 1 BBOE net unrisked mean resource potential 42% Miocene 52% Paleogene 6% Jurassic Avg. WI - 50% 14 of the 20 prospects MRO operated Petroneus Post-moratorium drilling…
  24. Business Update – Marathon Oil Corp – slide 24
    Iraqi Kurdistan Region Emerging Impact Play 2 Discoveries to Date High impact potential Underexplored surface anticlines Turkey 70 % exploration success rate Discovery sizes of 100 MMBOE to 2 BBOE Syria Iran Early onshore entry…
  25. Business Update – Marathon Oil Corp – slide 25
    Poland Frontier Unconventional Play Frontier high impact potential 3 basins of Ordovician-Silurian shales 100 600 thick, 6,500 15,000 drill depth Total organic carbon (TOC) range of 2-6% identified from pre-1980 wells with cores 25…
  26. Business Update – Marathon Oil Corp – slide 26
    Gabon Country Re-entry Farm-in to Diaba block Waiting on Government and partner approval, expect to close Q3 2012 MRO 21.25% working interest Total operator 2.2MM gross acres (0.5MM net acres) 31 miles off coastline Water depths…
  27. Business Update – Marathon Oil Corp – slide 27
    East Africa Exploration Kenya and Ethiopia Kenya Muglad Basin MRO signed agreements with Africa Oil to farm-in to 2.0 BBO 2 blocks in Kenya (9 & 12A) Currently awaiting approval from Kenyan government 11MM gross acres (7.5MM gross…
  28. Business Update – Marathon Oil Corp – slide 28
    Driving Growth and Value Strong financial position Fund CAPEX from cash flows Continued focus on high grading portfolio through divestitures 3.5 Billion of transaction value divested 2006 - 2010 Target additional 1.5 - 3.0…
  29. Business Update – Marathon Oil Corp – slide 29
    Strong Dividend Enhances Total Shareholder Return Annualized Indicative Dividend Yield 6/30/12 5 4 3 % 2 1 0 A MRO B C D E F G H I J K Source: Bloomberg for competitors Comparator group contains: APA, APC, CHK, DVN,…
  30. Business Update – Marathon Oil Corp – slide 30
    Marathon Oil Driving Shareholder Value Production growth on track, proving execution abilities Increased rig and frac crew activity Reduced cycle time Continued focus on operational reliability Control costs and capital spending…
  31. Business Update – Marathon Oil Corp – slide 31
    Appendix Marathon Oil Corporation
  32. Business Update – Marathon Oil Corp – slide 32
    Definitions Term Definition BBL Barrel BBOIP Billions of barrels of oil in place BNGLPD Barrels of NGL per day BOED Barrels of oil equivalent per day BOPD Barrels of oil per day EG Equatorial Guinea EG LNG Equatorial Guinea…
  33. Business Update – Marathon Oil Corp – slide 33
    Definitions Term Definition GOR Gas to oil ratio HES Hess Corporation HH Henry Hub natural gas spot price IG Integrated Gas, one of MROs three business segments In-situ Oil sands too deep for mining that require in-place…
  34. Business Update – Marathon Oil Corp – slide 34
    Definitions Term Definition MBLHCD Thousand barrels of liquid hydrocarbons per day MBOED Thousand barrels of oil equivalent per day MBOPD Thousand barrels of oil per day MCFD Thousand cubic feet per day MM Million MMBBL…
  35. Business Update – Marathon Oil Corp – slide 35
    Definitions Term Definition MUR Murphy Oil Corporation NBL Noble Energy NGL Natural gas liquids NPV/I Net present value divided by investment OBO Operated by others Oil Sands Mining or The business segment through which MROs…
  36. Business Update – Marathon Oil Corp – slide 36
    Definitions Term Definition Resources Total Resource represents an optimistic estimate of recoverable hydrocarbon quantities, including both reserves and those volumes expected to be recovered but that cannot yet be classified as…
  37. Business Update – Marathon Oil Corp – slide 37
    Definitions Term Definition WAHA Libyan WAHA concession WTI West Texas Intermediate crude, type of crude oil used as a benchmark in oil pricing WI Working interest Yr. Year YE Year end YTD Year to date Marathon Oil…
  38. Business Update – Marathon Oil Corp – slide 38
    U.S. Resource Position Backbone of Growth Anadarko DJ Basin Eagle Ford* Bakken Woodford* (Niobrara)* Net acres 325,000 420,000 163,000 147,000 Potential gross wells 2,200-4,400 2,000-2,250 1,800-2,000 600-800 81% MRO-OP 55% MRO-OP…
  39. Business Update – Marathon Oil Corp – slide 39
    Net Liquid Hydrocarbon Sales MBOPD Net Liquid Hydrocarbon sales Year Year Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year Qtr 1 Qtr 2 Qtr 3 Qtr 4 (MBD) 2009 2010 2011 2011 2011 2011 2011 2012 2012 2012 2012 United States Bakken 9 12 13 15 15 21 16 24…
  40. Business Update – Marathon Oil Corp – slide 40
    Net Natural Gas Sales MMCFD Year Year Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year Qtr 1 Qtr 2 Qtr 3 Qtr 4 Net Natural Gas Sales (MMCFD) 2009 2010 2011 2011 2011 2011 2011 2012 2012 2012 2012 United States Alaska 87 104 126 87 72 92 94 98 82 Bakken…
  41. Business Update – Marathon Oil Corp – slide 41
    Total Worldwide LHC & Natural Gas Sales MBOED Year Year Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year Qtr 1 Qtr 2 Qtr 3 Qtr 4 Sales (MBOED) 2009 2010 2011 2011 2011 2011 2011 2012 2012 2012 2012 United States Alaska 15 17 21 15 12 16 16 16 14 Bakken…
  42. Business Update – Marathon Oil Corp – slide 42
    Select Balance Sheet / Cash Flow Data (B unless otherwise noted) 2012 1Q 2Q 3Q 4Q As of quarter ended: Cash and cash equivalents 0.5 0.5 Total debt 4.8 5.3 Cash-adjusted total debt 4.3 4.8 Stockholders equity 17.5 17.8…
  43. Business Update – Marathon Oil Corp – slide 43
    Reserve Replacement Estimated Net Proved Reserves E&P OSM TOTAL Natural Synthetic % Proved Liquids Total Total Category Gas Crude Oil Developed (mmbbl) (mmboe) (mmboe) (bcf) (mmbbl) of Total As of Dec 31, 2010 630 2,617 1,066 572…
  44. Business Update – Marathon Oil Corp – slide 44
    High Liquids Content 2011 Liquids as % of Total Production High leverage to liquids Source: Company annual reports Includes OSM results for applicable companies Comparator group contains: APA, APC, CHK, DVN, ECA, EOG, HES, MRO, MUR,…
  45. Business Update – Marathon Oil Corp – slide 45
    Advantaged Liquids Position 2011 International Liquids as % of Total Liquids Production High leverage to liquids Strong leverage to Brent Source: Company annual reports Includes OSM results for applicable companies Comparator group…
  46. Business Update – Marathon Oil Corp – slide 46
    Very Competitive E&P Cost Structure MRO 6 on Total Expenses High leverage to liquids MRO 1 on Total Expenses Competitive cost structure excluding non-cash items Total Expense = Production + S&H + Exploration + DD&A expense +…
  47. Business Update – Marathon Oil Corp – slide 47
    High Income per Barrel Business 2011 Income per BOE High leverage to liquids Competitive cost structure Fourth highest income per BOE Source: Company annual reports Includes OSM results and excludes R&M income and discontinued…
  48. Business Update – Marathon Oil Corp – slide 48
    Continued Focus on Returns 2011 ROCE High leverage to liquids Competitive cost structure Fourth highest income per BOE Liquids focus and high income per BOE drive strong ROCE Source: Company annual reports Includes OSM results…
  49. Business Update – Marathon Oil Corp – slide 49
    Libya Update Summary Production reinstated in November 2011 Liftings resumed January 3rd, MRO net sales averaged 44 MBOED in Q2 Currently producing from all major fields at an average daily rate of 300 MBOPD gross (350 MBOPD…
  50. Business Update – Marathon Oil Corp – slide 50
    Driving Growth and Value Liquids Rich Shale Resource Plays Focused on North America liquids growth Developed low risk liquids rich shale play position Established top-tier position in core of Eagle Ford play Improved reserve…
  51. Business Update – Marathon Oil Corp – slide 51
    Eagle Ford Shale Building Facilities & Midstream Capacity Gas Gathering Oil Gathering Central Battery May Station Union Battery Under Oil Terminal Construction Barnhart Ranch Sugarloaf Station Gas Sales Marathon…
  52. Business Update – Marathon Oil Corp – slide 52
    Bakken Shale Continuous Improvement - Drilling Rigs setting new performance benchmarks Bakken Drilling Efficiencies H&P 257 9/11 Spud to Total Depth (TD) in 70 210 Spud-Spud / Spud-TD, Days Average North Dakota Rig Count…
  53. Business Update – Marathon Oil Corp – slide 53
    Bakken Shale Export Capacity Williston Basin Oil Production & Export Capacity Current take away capacity tight 2.50 2.25 Today However. capacity increase 2.00 progresses 1.75 Rail Capacity, MMBOPD 1.50 High Production…
  54. Business Update – Marathon Oil Corp – slide 54
    DJ Basin (Niobrara) Emerging Growth Play 147,000 net acres Successfully de-risked play through 70/30 joint venture Average MRO-op WI 70% / OBO WI 15% Planned Activities No active rigs drilling 17 MRO-op wells in 2012 20 Wells…
  55. Business Update – Marathon Oil Corp – slide 55
    DJ Basin (Niobrara) Emerging Growth Play Black Hollow 16-1H, 70% WI Flowing back Marathon Oil Corporation 56
  56. Business Update – Marathon Oil Corp – slide 56
    Canada Athabasca Oil Sands Project (AOSP) 20% Working Interest Integrated mine & upgrader 1.6 Billion BBLS Bitumen net P50 resource 255 MBD gross production capacity Namur Pierre 60% WI 51 MBD net pre-royalty River Additional 21…
  57. Business Update – Marathon Oil Corp – slide 57
    Equatorial Guinea Alba Field & LPG, EGLNG, & Methanol - Long Lived Asset 2011 Net Sales 38 MBLHCD & 443 MMCFD Alba Field 63% WI & Operator 529 MMBOE P50 net resource 379 MMBOE net proved reserves at 12/31/11 Alba LPG Plant 52%…
  58. Business Update – Marathon Oil Corp – slide 58
    Norway Alvheim FPSO - Outperforming Expectations Alvheim & Volund 65% WI & Operator Vilje 47% WI Full field development cost of 13.5/BOE 173 MMBOE P50 net resource at 12/31/11 84 % Liquids 99 MMBOE produced through 12/31/11…
  59. Business Update – Marathon Oil Corp – slide 59
    Harir Mountain, Mirawa, and Jesik Prospects Harir Block, Kurdistan Elevation Line 14 Jesik Mirawa Harir km asl 1 0 Cenozoic -1 Cretaceous -2 Jurassic -3 Triassic 3km 45% WI (56.25% Paying Interest) & operator Harir Block…
  60. Business Update – Marathon Oil Corp – slide 60
    Gulf of Mexico Innsbruck Prospect Mississippi Canyon Miocene NW MC948 MC993 SE Gunflint Innsbruck MC948 3 2 Salt Oligocene M. Mio Oligocene 45% WI and operator 6 miles WD 6,290, PTD 29,000 Three-way closure with…
  61. Business Update – Marathon Oil Corp – slide 61
    Estimated 2012 Production & Tax Rates by Jurisdiction Jurisdiction Approximate Production % Statutory Tax Rate U.S. 42 36%* Norway 21 78%** EG 30 25%** Angola 1 50% U.K. 6 62%** Total E&P 100 (exc Libya) Libya 93%**…

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