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Howard Weil 41st Annual Energy Conference – Marathon Oil Corp

Marathon Oil Corp · Mar 18, 2013 · 67 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. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 1
    Howard Weil 41st Annual Energy Conference March 18, 2013 Clarence P. Cazalot, Jr. Chairman, CEO and President Marathon Oil Corporation
  2. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 2
    MRO Delivering Value and Volumes Execution clearly demonstrated with defined production growth Delivered 8% growth 2011 to 2012 Target 5 to 7% CAGR 2010 through 2017 Target 5 to 7% CAGR 2010 through 2017 2013 production 6 to 8%…
  3. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 3
    Lower 48 Onshore Production Forecast Available for Sale 250 P90 200 P10 P90 +17% P10 150 +25% +12% +7% +20% 100 50 0 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2011A 2011A 2012A 2012A 2012A 2012A 2013E 2013E 2013E 2013E % Oil…
  4. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 4
    MRO Production Profile North American production driving growth 750 7% 5% P90 500 P10 MBOED 250 Range US and Canada EG Angola g Norway/UK Libya 2012 2013 2014 2015 2016 2017 Alaska removed from all years.…
  5. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 5
    Strong Proved Reserve Growth 2,500 Gas Liquids q 2,000 MMBOE) eserves (M 1,500 Proved Re 1 000 1,000 500 0 2010 2011 2012 Marathon Oil Corporation 6
  6. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 6
    U.S. Resource Plays Game Changers Raising resource and production forecasts Eagle Ford 230,000 core net acres Exit 2012 65,500 net BOED Raised 2013 target from 70,000 net BOED to 85,000 net BOED f Bakken 400,000 net acres (325,000…
  7. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 7
    Eagle Ford Shale Top quartile performance 80 Gas NGL Q4 Average 59.5 MBOED Oil 60 Q3 Average 40.3 MBOED OED MBO 40 Q2 Average 20.9 MBOED Q1 Average 14.4 MBOED 20 0 2012 Q1 2012 Q2 2012 Q3 2012 Q4 Gross wells…
  8. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 8
    Eagle Ford Shale Production growth profile 150 P90 P10 100 P90 MBOED P10 50 2011 2012 2013 2014 2015 2016 2017 Marathon Oil Corporation 9
  9. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 9
    Eagle Ford Shale Acreage and resource Original Hilcorp Acquisition Original Hilcorp Acquisition 1,186 Net Wells* Resource Net Wells (MMBOE) LowGOR Oil 1,500 3,500 169 169 HighGOR Oil 3 197 3,197 368 Condensate 1,200…
  10. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 10
    Eagle Ford Shale Acreage, rigs, and pilot plans Oil HighGOR Oil Spacing pilots (40, 60 & 80 acre) Condensate Heel to toe pilot (60 acre) Condensate Condensate Spacing & landing zone pilots (60 acre) Condensate Spacing & stimulation…
  11. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 11
    Eagle Ford Margin Improvement Maximize revenue through Selling all Eagle Ford oil directly (or indirectly) on an LLS basis Increasing use of oil pipelines for flow assurance and lower cost (12/BBL savings) g pp ( / g ) Evaluating…
  12. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 12
    Eagle Ford Shale Margin enhancement through improved well performance Oil Condensate Dry Gas Original Current Area Increase 30Day IP 30Day IP South 1036 BOED 1378 BOED 33% Barnhart (4 wells) (4 wells) South Barnhart…
  13. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 13
    Eagle Ford Shale Improving 30 day IPs in Excelsior 200% 20 75% Performance improvement driven by: Channel hydraulic fracturing Perforation cluster spacing Fluid system Surfactant f Well s Turned to Salles in Quarter 150%…
  14. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 14
    Eagle Ford Shale Building infrastructure and midstream capacity Gas Gathering Oil Gathering Union Central Battery May Station Oil Terminal Barnhart Ranch Sugarloaf Station Gas Sales 2012 Activity Average Spud to…
  15. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 15
    Bakken Shale Delivering growth and efficiency 400,000 Net acres (325,000 net core acres) Currently producing 36 000 t BOED 36,000 net BOED Average WI MRO operated WI 88% p Diomedes OBO WI 10% Cazador 5 Active drilling rigs…
  16. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 16
    Bakken Shale Production Profile Outperforming expectations 80 60 P90 P10 MBOED 40 P90 P10 20 2010 2011 2012 2013 2014 2015 2016 2017 Marathon Oil Corporation 17
  17. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 17
    Bakken Shale Acreage and resource Current View Current View 2P Resource 1,030 Net Wells* (MMBOE) Net Wells 600 2,000 1 668 1,668 Middle Bakken 364 Three Forks 1,500 666 400 1,030 1,000 320Acre Development Case 530…
  18. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 18
    Bakken Shale Drilling best in basin 2012 Drilling Benchmark Data per North Dakota Industrial Commission as of 10/2012 1,200 21.2 21.0 1,000 20.8 ds) MD (Thousand 20.6 800 Avvg ft / day 20.4 600 20.2 Avg TM…
  19. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 19
    Bakken Shale D&C keeps getting better Completions new hydraulic fracturing technology Higher IPs, cumulative production and EURs Optimal fluid volume / Hydraulic fracturing design p y g g Innovative sleeve designs Avg 30 Day…
  20. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 20
    Bakken Shale Optimizing sales mix to drive value January 2011 MRO Sales Mix January 2012 MRO Sales Mix l lif i i l k Value Uplift vs. Historical Markets Truck to Rail 7.00 Pipe Canada 5% 7% 2% 6.00 5.00 Pipe 4.00 Local 36%…
  21. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 21
    Oklahoma Resource Basins Opportunities Continued growth plus new play development Woodford, Cana and Knox Shale 2 rigs Mississippian Currently producing 13 MBOED 163,000 net acres 615 MMBOE net 2P resource Growth Areas Go t eas…
  22. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 22
    Oklahoma Resource Basins Production Profile Value in liquids focused growth with gas upside 60 Rate of growth dependent upon future natural gas / NGL prices P90 40 MBOED P10 20 P90 P10 2010 2011 2012 2013 2014…
  23. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 23
    Oklahoma Resource Basins Growth Acreage and resource Current View Current View 977 Net Wells* 2P Resource Net Wells (MMBOE) 1,000 1,600 1,509 Woodford, Cana and 977 Knox 750 1,200 977 500 800 80Acre Development Case…
  24. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 24
    Resource Plays Summary Planned wells to drill in 2013 including OBO Eagle Ford: 275 to 320 gross (215 to 250 net) Bakken: 190 to 220 gross (65 to 70 net) Bakken: 190 to 220 gross (65 to 70 net) Oklahoma Resource Basins: 42 to 50…
  25. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 25
    Renewed Global Exploration Portfolio Focused on material oil potential Engaged in 6 proven or emerging hydrocarbon basins Diversified portfolio Diversified portfolio Targeting 8 to 10 impact wells per year Option to develop or…
  26. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 26
    Global Exploration Portfolio Norwegian Sea N i S Utgard High CretaceousJurassic Sandstones 620,000 acres 1,400 3,000 MMBOE Gulf of Mexico Kurdistan Fractured Subsalt Miocene MesozoicPermian and Paleogene C b Carbonates…
  27. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 27
    Global Exploration Drilling Schedule 2012 Q4 - 2013 2012 2013 Country Well Nov Dec Q1 Q2 Q3 Q4 Gabon Diaman 1 21.25% WI Norway Darwin 10% WI Norway Sverdrup 30% WI Ethiopia Sabisa 1 20% WI Ethiopia 2nd expl. well 20% WI…
  28. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 28
    Gabon Exploration Impact oil opportunity in proven pre-salt play MRO nonoperated MRO non operated Diaba i b Block (MRO 21.25% WI, l k ( MRO Prospects/Leads Presalt Field/Discovery TOTAL operator) Water Depth 2.2 MM gross acres…
  29. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 29
    Kurdistan Region of Iraq Emerging impact play 2 discoveries to date 0 Miles 30 Atrush Block (MRO 15% WI, TAQA operator) 66,000 gross acres Turkey 1 discovery and 1 appraisal completed Mangesh a ges Gara Tested successfully from…
  30. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 30
    Ethiopia Exploration Impact oil opportunity with running room South Omo Block (MRO 20%, Muglad Basin 1,950 mmbo disc Melut Basin Tullow operator) 1,780 mmbo disc 5.5 MM gross acres g Ethiopia Tertiary rift system objective South…
  31. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 31
    Kenya Exploration Impact oil opportunity with running room Block 9 (MRO 50% WI, Africa Oil Muglad Basin operator) 1,950 mmbo disc Melut Basin 1,780 mmbo disc 7.3 MM gross acres Ethiopia Cretaceous rift system objective South Omo…
  32. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 32
    Gulf of Mexico Exploration and appraisal in 3 plays with world class potential 1 Billion BOE net unrisked mean resource Petroneus potential Over 18 prospects Over 18 prospects Majority MRO operated Gunflint Average 50% WI 2013…
  33. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 33
    Committed to Financial Discipline Fund CAPEX from cash flows 2013 CAPEX 5.2 billion Focus on increasing margins Focus on increasing margins Continued focus on high grading portfolio through divestitures 3.5 Billion of transaction…
  34. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 34
    High Income per Barrel Business 2012 Income per BOE 18 16 14 12 10 /boe 8 6 4 2 0 A B C MRO D E F G H I J K Source: Company annual reports Includes OSM results and excludes R&M income and discontinued operations…
  35. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 35
    Strong Dividend Enhances Total Shareholder Return Annualized indicative dividend yield at 12/31/12 5 4 3 % % 2 1 0 A B C MRO D E F G H I J K Source: Bloomberg for competitors Comparator group contains: APA, APC, CHK,…
  36. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 36
    MRO Delivering Value and Volumes Execution clearly demonstrated with defined production growth Delivered 8% growth 2011 to 2012 Target 5 to 7% CAGR 2010 through 2017 Target 5 to 7% CAGR 2010 through 2017 2013 production 68% higher…
  37. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 37
    Appendix Marathon Oil Corporation
  38. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 38
    Definitions Term Definition 2P Volumes represent most likely deterministic estimates of proved plus probable reserves as defined by the SEC plus volumes with the same technical certainty as 2P p proved and probable reserves that…
  39. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 39
    Definitions Term Definition BOPD Barrels of oil per day CAGR Compounded average growth rate CAPEX Capital expenditures CHK Chesapeake Energy Corporation DVN Devon Energy Corporation ECA Encana Corporation E&P Exploration…
  40. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 40
    Definitions Term Definition EUR Estimated ultimate recoverable FEED Front end engineering design g g g FPSO Floating production, storage and offloading vessel GOR Gas to oil ratio HES Hess Corporation Insitu Oil sands too…
  41. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 41
    Definitions Term Definition MBOED Thousand barrels of oil equivalent per day MBOPD Thousand barrels of oil per day MCF Thousand cubic feet MCFD Th Thousand cubic feet per day d bi f t d MM Million MMBBL Million barrels…
  42. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 42
    Definitions Term Definition MROOP Marathon Oil Corporation operated MUR Murphy Oil Corporation NBL Noble Energy NDPA North Dakota Pipeline Authority NGL Natural gas liquids OBO Operated by others db h The business…
  43. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 43
    Definitions Term Definition Proved Reserves Proved oil, natural gas and bitumen reserves determined under SEC requirements PSA Production Sharing Agreement Production Sharing Agreement PSVM Plutao, Saturno, Venus, Marte…
  44. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 44
    Definitions Term Definition TLM Talisman Energy Inc. OC TOC Total organic content o a o ga c co e Calculated as follows: (Change in share price between the beginning and ending Total Shareholder months in the calculation, based…
  45. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 45
    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 B kk Bakken 9 12 13 15 15 21 16…
  46. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 46
    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 Al k Alaska 87 104 126 87 72 92 94 98 82…
  47. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 47
    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 Alaska 14 17 21 15 12 16 16 16 14…
  48. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 48
    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 0.7 0.7 Total debt 4.8 5.3 6.5 6.9 Cashadjusted total debt 4.3 4.8 5.9 6.0 Stockholders…
  49. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 49
    Competitive E&P Cost Structure MRO 4 on Total Expenses MRO 7 on Total Expenses excluding including OSM noncash items and including OSM MRO 2 on Total Expenses l MRO 3 on Total Expenses excluding l l d excluding OSM noncash…
  50. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 50
    MRO Production Profile Value in liquids focused growth with gas upside 750 EF, Bakken, Anadarko Woodford Libya Unrest 7% All Other 5% 500 P90 P10 MBOED 250 2010 2011 2012 2013 2014 2015 2016 2017 Alaska removed…
  51. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 51
    Strong Base Assets and Growth Portfolio Europe Production* 150 MBOED 100 50 0 Canada Production* 2011 2012 50 MSCOD 25 0 2011 2012 U.S. Production* 200 MBOED 100 2012 Production Distribution 0 2011 2012…
  52. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 52
    Base Assets Large stable base generates substantial free cash flow Characterized by safe and reliable operations Stable base production 2012 to 2017 350 MBOED CAPEX averages 1.3 B per year Constantly seek to reduce costs and…
  53. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 53
    Canada Athabasca Oil Sands Project (AOSP) 20% WI Integrated mine and upgrader 1.6 Billion BBLS bitumen net 2P resource 255 MBD gross design capacity Namur Pierre 60% WI 51 MBD net preroyalty River Additional Additional 16 MBD…
  54. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 54
    Canada In-situ Birchwood appraisal MRO operator, 100% WI 14 14,000 net acres 000 net acres Namur Pierre 60% WI 400 MMBBL Bitumen net 2P resource River Appraisal drilling completed March 2011 100 100 wells drilled and…
  55. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 55
    Equatorial Guinea Alba field & LPG, EGLNG and Methanol - Long lived asset 2012 net sales 36 MBLHCD & 429 MMCFD Alba field Alb fi ld 63% WI and operator 489 MMBOE 2P net resource 347 MMBOE net proved reserves at 12/31/12 Alba…
  56. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 56
    Norway Alvheim FPSO - Outperforming expectations Alvheim & Volund 65% WI and operator Vilje 47% WI, operator as of 10/1/2012 Full field development cost of 13.50/BOE 168 MMBOE 2P net resource at 12/31/12 85% Liquids 132 MMBOE…
  57. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 57
    Libya Update summary Production reinstated in November 2011 Liftings resumed January 3rd, MRO net sales averaged 45 MBOED in 2012 45 MBOED in 2012 Currently producing from all major fields at an average daily rate of 320 MBOPD…
  58. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 58
    Angola Blocks 31 and 32 Block 31 PSVM, 10% WI 4 production and 1 injection well online 2 active rigs building well inventory g g y Plateau of 14 MBOPD reached 2014 to 2017 Converted FPSO with 150 MBOED capacity Planned total of…
  59. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 59
    Gunflint Discovery Gulf of Mexico: Mississippi Canyon Discovery well drilled in 2008 Encountered over 600 ft of net pay in 7 horizons First appraisal well reached TD in Gunflint Noble (op) 26.05% 2012 MRO 15.25% 070 3 Others…
  60. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 60
    Shenandoah Prospect Gulf of Mexico: Walker Ridge Discovery well drilled in 2009 Encountered over 300 ft of net p y pay in 4 sands Excellent reservoir properties and good oil quality First appraisal well reached TD st app a sa…
  61. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 61
    Norway Exploration Utgard High trend Potential new high impact play area Utgard High is adjacent to, and an analog of, the Nordland VI Area: Not proven and prolific Halten and Donna Terraces open for leasing Sweden 4.0 BBO gross…
  62. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 62
    Poland Exploration Frontier unconventional play Early entry: large, low cost acreage position 2.3 MM acres gross across 3 basins g KWIPrabuty1 Play potential is 600 miles in length BRONM Lubawskie1 11 Exploration concessions,…
  63. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 63
    Eagle Ford Shale Single well economics excl. acreage acquisition costs Condensate High GOR Oil Low GOR Oil Gross IP 30 day (BOED)* 1,801 553 394 Gross EUR (MBOE)* 1,126 694 463 % Liquids 70% 82% 93% Liquid Revenue % q 88% 94% 99%…
  64. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 64
    Bakken Shale Single well economics excl. acreage acquisition costs Hector Myrmidon Gross IP 30 day (BOED)* 534 825 Gross EUR (MBOE)* 575 671 % Liquids 98% 91% Gross Cost MM 86 8.6 87 8.7 (includes facility costs) Acre Spacing…
  65. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 65
    Anadarko Woodford Shale Single well economics excl. acreage acquisition costs E. KNOX: Condensate CANA: Condensate Gross IP 30 day (BOED)* 1,092 730 Gross EUR (MBOE)* 1,274 908 % Liquids 56% 45% Liquid Revenue % q 72% 62% Gross…
  66. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 66
    Eagle Ford Shale Wells performing as expected Condensate HighGOR Oil g 500000 250000 All Wells (65) 2012 Wells (140) 400000 200000 OE Cumulative BOE E Cumulative BO 300000 150000 200000 100000 100000 50000 0…
  67. Howard Weil 41st Annual Energy Conference – Marathon Oil Corp – slide 67
    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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