Quantcast
Last updated on April 21, 2014 at 5:21 EDT

Marathon Announces Additional 2009 Reserve Replacement and Costs Incurred Details

February 17, 2010

HOUSTON, Feb. 17 /PRNewswire-FirstCall/ – Marathon Oil Corporation (NYSE: MRO) announced that during 2009, the Company added net proved liquid hydrocarbon and natural gas reserves of 674 million barrels of oil equivalent (mmboe), excluding dispositions of 41 mmboe, while producing 149 mmboe, and thereby increasing proved reserves by over 40 percent from 1,195 mmboe at year end 2008 to 1,679 mmboe at year end 2009.

For the three-year period ended Dec. 31, 2009, Marathon added net proved liquid hydrocarbon and natural gas reserves of 872 mmboe, excluding dispositions of 44 mmboe, while producing 411 mmboe, resulting in an average reserve replacement in excess of 200 percent.

“With the change in SEC reporting of synthetic crude oil (SCO) reserves as well as continued investment in the Athabasca Oil Sands Project, Bakken oil play and deep-water developments, we increased our year-end reserves by more than 40 percent,” said Clarence P. Cazalot, Jr., Marathon president and CEO. “With total 2009 costs incurred of $3.5 billion, our finding and development costs remain very competitive; and we will continue to focus spending on our potentially significant exploration wells and North America resource plays.”

The Company’s reserve additions included 603 million barrels of proved SCO reserves related to its Athabasca Oil Sands Project (AOSP) position in Canada. These barrels of bitumen after upgrading are now reported in total proved reserves in combination with traditional oil and natural gas reserves under revised Securities and Exchange Commission (SEC) regulations.

Excluding dispositions and SCO reserves, Marathon realized a liquid hydrocarbon reserve replacement ratio of 96 percent reflecting the Company’s strategic investments in crude oil developments and a decreased focus on natural gas under the current depressed natural gas pricing environment. Excluding SCO reserves discussed above, Marathon’s year-end 2009 liquid hydrocarbon proved reserves declined 14 million barrels. Marathon added 86 million barrels of liquid hydrocarbons, while producing 90 million barrels and selling 10 million barrels of reserves. These additions reflect the Company’s investment in projects off the coast of Norway, in North Dakota’s Bakken Shale play, in Libya and offshore Angola. The Company replaced 91 percent of U.S. liquid hydrocarbon production and 97 percent of international liquid hydrocarbon production, again, excluding SCO reserves.

The Company’s proved natural gas reserves declined by 627 billion cubic feet (bcf). Marathon added 82 bcf through extensions, discoveries and other additions, while recording negative reserve revisions of 172 bcf, which were largely a function of the average annual natural gas price. Also during 2009, the Company produced 351 bcf, and sold 186 bcf of reserves.

Included in the table below are the reserve additions, revisions, sales and production for 2009 by region.


                            Estimated Net Proved Reserves
                       (millions of barrels of oil equivalent)

                               North America               Africa       Europe
                               -------------               ------       ------
                            United                Equatorial
                            States  Canada  Total   Guinea   Other Total Total
                            ------- ------  ----- ---------- ----- ----- -----
    As of Dec. 31, 2008       359       0   359        450   229   679    131
      Revisions of previous
       estimates              -22     603   581         -6     3    -3     17
      Improved recovery         0       0     0          0     0     0      0
      Purchases of reserves
       in place                 0       0     0          0     0     0      0
      Ext., discoveries
       & other additions       34       0    34          0    31    31     13
      Production (a)          -48       0   -48        -41   -17   -58    -41
      Sales of reserves
       in place               -16       0   -16          0     0     0      0
                              ---     ---   ---        ---   ---   ---    ---
    As of Dec. 31, 2009       307     603   910        403   246   649    120
                              ---     ---   ---        ---   ---   ---    ---

                                         Continuing  Discontinued
                                         Operations   Operations  Total
                                         ----------  ------------ -----

    As of Dec. 31, 2008                     1,169         26      1,195
      Revisions of previous estimates         595          1        596
      Improved recovery                         0          0          0
      Purchases of reserves in place            0          0          0
      Ext., discoveries & other additions      78          0         78
      Production (a)                         -147         -2       -149
      Sales of reserves in place              -16        -25        -41
                                              ---        ---        ---
    As of Dec. 31, 2009                     1,679          0      1,679
                                            -----        ---      -----

    (a) The revision of previous estimates for Canada is as of Dec. 31, 2009
    and therefore no production is included in the table for Canada.

Year-end 2009 net proved reserves totaled 1,679 mmboe, of which 37 percent was liquid hydrocarbons, 36 percent was synthetic crude and 27 percent was natural gas. Marathon’s 2009 proved reserve additions were primarily in Canada, because of the revised SEC regulations related to oil sands. The Company also recorded additions in Norway, North Dakota, Libya and Angola. Proved developed reserves represented 71 percent of total proved reserves at year-end 2009, as compared to 76 percent the previous year.

Property acquisition, exploration and development costs incurred for oil and gas producing activities during 2009 were $3.5 billion, or $2.5 billion excluding oil sands. For the three-year period ended Dec. 31, 2009, costs incurred for oil and gas producing activities were $9.9 billion, or $8.9 billion excluding oil sands. (In compliance with the revised SEC regulations, only 2009 property acquisition, exploration and development costs for SCO of $1 billion were included in the three-year period. All prior costs, including those associated with the 2007 acquisition of Western Oil Sands Inc. have been excluded.)

Marathon is an integrated international energy company engaged in exploration and production; oil sands mining; integrated gas; and refining, marketing and transportation operations. Marathon, which is based in Houston, has principal operations in the United States, Angola, Canada, Equatorial Guinea, Indonesia, Libya, Norway, Poland and the United Kingdom. Marathon is the fourth largest United States-based integrated oil company and the nation’s fifth largest refiner.

This release contains forward-looking statements related to proved reserves of liquid hydrocarbons and natural gas, which are based upon certain assumptions, including, among others, presently known physical data concerning size and character of reservoirs, economic recoverability, technology development, future drilling success, production experience, industry economic conditions, levels of cash flow from operations and operating conditions. This release also contains forward-looking statements regarding proved synthetic crude reserves, which are based on presently known physical data, economic recoverability and operating conditions. The foregoing factors (among others) could cause actual results to differ materially from those set forth in the forward-looking statements. In accordance with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, Marathon Oil Corporation has included in its Annual Report on Form 10-K for the year ended December 31, 2008, and subsequent Forms 10-Q and 8-K, cautionary language identifying other important factors, though not necessarily all such factors, that could cause future outcomes to differ materially from those set forth in the forward-looking statements.


      Media Relations Contacts:       Lee Warren           713-296-4103
                                      John Porretto        713-296-4102
      Investor Relations Contacts:    Howard Thill         713-296-4140
                                      Chris Phillips       713-296-3213

SOURCE Marathon Oil Corporation


Source: newswire