Marathon Sets 2009 E&P Budget of $2.5B
Marathon has announced a $5.7 billion capital, investment and exploration budget for 2009, which represents a 24 percent decrease from 2008 capital spending of $7.6 billion. Marathon's 2008 capital spending was 5 percent less than the original $8 billion budget for the year.
"Marathon's 2009 capital program demonstrates a balanced approach that will maintain solid production performance, enhance our strong downstream business, and provide necessary capital investments in profitable mid- and long-term growth projects. Our balanced approach to investing is designed to maintain our solid financial position, deliver a competitive dividend, and enhance shareholder value," said Clarence P. Cazalot, Jr., Marathon president and CEO.
"With more constrained investment levels, as well as the completed and announced non-core asset sales, we now expect the combined production for 2011 from our upstream and oil sands mining segments to be approximately 450,000 barrels of oil equivalent per day (boepd). This is a 7 percent compound average growth rate from our 2007 production level and 4 percent from our 2008 level, both also adjusted for announced asset sales," said Cazalot.
Exploration and Production
Marathon's 2009 worldwide exploration and production budget of $2.5 billion reflects a decrease of 26 percent over 2008 capital spending of $3.3 billion.
During 2009, Marathon expects to spend $1.1 billion on projects that will sustain and grow production in the short term. This includes funds for resource plays in the Bakken Shale and Piceance Basin, domestic oil and gas assets, and international projects such as development drilling in the U.K. Foinaven area and the Volund development in Norway. Approximately $850 million will be spent on projects that provide mid-term production growth, such as Droshky and Ozona in the deepwater Gulf of Mexico, as well as emerging resource plays in the Marcellus and Woodford Shales. Funds in the amount of $480 million will be spent on long-term projects, such as the PSVM development on Angola Block 31 and the anticipated Gudrun development in Norway, as well as worldwide exploration spending in the Gulf of Mexico, Angola, Norway and Indonesia.
Marathon estimates 2009 production available for sale will be between 390,000 and 410,000 boepd, which excludes production from the announced sale of Marathon Oil Ireland Limited (MOIL) expected to close in the first quarter 2009, and excludes the effect of any acquisitions or additional dispositions. This compares to 2008 production available for sale, excluding the MOIL and Heimdal area production, of 372,000 boepd, for an expected production growth range of between 5 and 10 percent.
Oil Sands Mining
Marathon has budgeted $887 million for its Oil Sands Mining segment in 2009 compared to 2008 spending of just under $1 billion. The 2009 budget decrease compared to the 2008 Oil Sands Mining spend reflects a stronger U.S. dollar to Canadian dollar exchange rate and expectations that non-essential projects will be deferred.
The majority of the 2009 Oil Sands Mining budget will fund the Athabasca Oil Sands Project Expansion 1. The expansion, which includes construction of mining and extraction facilities at the Jackpine Mine, expansion of froth treatment facilities at the existing Muskeg River Mine, expansion of the Scotford upgrader, and development of associated infrastructure, is expected to begin operations in the 2010/2011 timeframe.
Net bitumen production from the oil sands mining segment for 2009 is expected to be between 25,000 to 30,000 barrels per day (BPD) before royalties.
The Company holds a 20 percent interest in the Athabasca Oil Sands Project, a world-class project with a long-life, stable production profile that will contribute to Marathon's success well into the future.
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