Oil giant Marathon Oil is slashing its capital spending plans.
In a release on Wednesday night, the company said it plans to spend $US3.5 billion on capital projects in the coming year, 20% less than the company had previously forecast in December.
In December, Marathon Oil said it would spend $US4.3-$US4.5 billion in 2015, or about 20% less than it spent in 2014.
On Wednesday, the company said that 70% of its 2015 budget would be spent on existing oil plays in North America, which Marathon CEO Lee Tillman said are the company’s highest-return investments.
Tillman added, “This budget reflects an emphasis on investment selectivity, balance sheet flexibility and positioning for price recovery.”
On its spending in North America, Marathon laid out its plans like this:
More than $US1.4 billion in capital spending is earmarked for the Eagle Ford, where rig count is expected to drop from 18 in late 2014 to 10 by the end of the second quarter. Included in Eagle Ford spending is approximately $US1.0 billion for drilling and completions.
The Company plans to spend $US760 million in the Bakken in North Dakota. Drilling activity will be reduced to two rigs by the end of the first quarter, down from seven rigs at the end of 2014. Bakken spending includes approximately $US550 million for drilling, completions and recompletions.
Spending of $US226 million is targeted for the Oklahoma Resource Basins, which will also be down to two rigs by the end of the first quarter. This includes spending of approximately $US200 million for drilling and completions.
The Baker Hughes rig count has become a more closely watched figure in recent weeks as companies shut down rigs in response to the decline in oil prices, and Marathon’s plans make clear that this data is likely to decline further.
In a note over the weekend, we highlighted comments from Goldman Sachs that said the rig count decline is still not enough to slow US oil production and balance the market.
Through this decline, production has remained elevated, with the most recent inventory data from API showing a huge increase last week.
Marathon’s announcement also follows a report earlier this month that US oil and gas company SandRidge will cut about 75% of its rig count in Oklahoma and Kansas.
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