Scoop & Stack

Marathon Oil STACK Play Update

With the acquisition from PayRock of 61,000 net acres in the STACK region for $888 million

With the acquisition from PayRock of 61,000 net acres in the STACK region for $888 million now closed, Marathon Oil is starting to gain on its competitors.  The purchased acreage produces about 9,000 boepd in the Anadarko Basin STACK and holds 330 MMboe of PP reserves. As a result, Marathon paid about $98,665/boepd and $2.70/boe of PP reserves. Also, adjusted for proved developed producing (PDP) reserves, the implied acreage value is $11,800/acre, which is much cheaper than the $20,000 per acre Devon Energy paid for the 80,000 net undeveloped acres it acquired from Felix Energy.

By the end of Q3, Marathon Oil’s rig count in the STACK play will be up to four. The emerging oil-rich Meramec shale is Marathon’s most economical play which justifies the ramp up, but there is also a need to retain acreage and to fully delineate the area.  There are other formations of interest for Marathon, as shown in a recent September 7, 2016 investor presentation at the Barclays Energy Power Conference.

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Marathon has raised its Meramec XL type curve in the over pressured STACK by about one-third to 1.525mm boe.  A large part of the Meramec development plan is determining the most productive parts of the play.  Marathon recently drilled two wells along the border of Kingfisher and Blaine Counties, further testing out the effectiveness of the longer laterals (XL’s), which are roughly about 10,000 feet.

The two Meramec XL wells are located in the oil window. In Blaine County, Oklahoma, the Irven John posted a 30-day rate of 1,710 boe/d (70% oil), and the Olive June flowed 1,570 boe/d (75% oil) over 30 days. The wells IP’d at 1,878 boe/d and 1,656 boe/d, both with 80% oil cut, according to state data.

While top wells for Marathon, the pair performed significantly under Continental’s two record-setting Meramec wells in Blaine County that came online this summer. The Madeline 1-9-4XH flowed 3,538 boe/d (71% oil), and the Verona 1-23-14XH IP’d at 3,339 boe/d (70% oil).

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