HOUSTON, Feb 19 (Reuters) - Marathon Oil Corp said on Thursday it has so far captured $225 million in savings, citing streamlined shale drilling and completion processes and lower prices from oilfield service providers.
While many oil and gas companies forecast cost savings, Marathon said it is already seeing savings as it squeezes well costs in fields in south Texas and elsewhere and renegotiates service contracts in response to the steep drop in crude oil prices that have upended the sector.
"With margins compressed by lower commodity prices it's incumbent upon us to be aggressive in pushing those service costs and tangible costs down," Lance Robertson, vice president for North American Operations told investors on a conference call.
Marathon said its has reduced its per well cost by $1.3 million to an average of $6.3 million through efficiency and service costs reductions.
The Houston company is also working to pare general and administrative expenses by eliminating 350 to 400 positions in response to the collapse in crude oil prices, said Chief Executive Officer Lee Tillman.
Oil companies have made drastic budget cuts in response to a collapse in the price of crude oil. Since June, oil prices have fallen by about half, whipsawed by growing supplies and waning demand.
After the close of regular trading on Wednesday, Marathon said it would cut its 2015 capital budget by another 20 percent to $3.5 billion, and reported that fourth-quarter profit rose, on a gain related to the sale of oil and gas properties in Angola and Norway.
Even with a lower budget, Marathon expects total oil and gas production to rise 5 percent to 7 percent as it improves the way wells are completed and drills in the most productive areas.
Shares of Marathon fell 1.4 percent, or 42 cents to $28.60 in late morning New York Stock Exchange trading.
(Reporting by Anna Driver; Editing by Chizu Nomiyama)
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