Hilcorp acreage acquisition highlights:
•Approximately 141,000 net acres (217,000 gross) primarily in Atascosa, Karnes, Gonzales and DeWitt counties in Texas
• Potential opportunity to acquire approximately 14,000 additional net acres through tag-along rights and other leasing
• Approximately 90 percent operated with 65 percent average working interest
• As of May 1 there were 36 wells producing approximately 7,000 net (17,000 gross) barrels of oil equivalent (boe) per day, of which 80 percent is liquids (three-fourths of which is crude oil and condensate)
• 10 additional wells drilled and awaiting completion
• Six rigs currently operating and two dedicated hydraulic fracturing crews
• Year-end production expected to be approximately 12,000 net boe per day
• Total net risked resource potential of 400 - 500 million boe with upside potential from additional downspacing and other stacked pay potential
• Potential to book up to 100 million boe of proved reserves by the end of 2011
• Production expected to increase to approximately 80,000 net boe per day by 2016
“Marathon has captured a top-five acreage position in the core of the premier resource play in the U.S. since first entering the Eagle Ford in November 2010. This transaction enhances our already strong North America position focused on unconventional, liquids-rich resource plays that provide low-risk, scalable and profitable growth,” said Clarence P. Cazalot Jr., Marathon president and CEO. “This and other projects under development serve as a catalyst for Marathon to increase our projected Upstream production growth to 5 - 7 percent on a compound average annual growth rate (CAGR) during the period 2010 - 2016.
“In addition to establishing our position in the highest value oil and condensate core area of the Eagle Ford shale, these assets will deliver immediate production and reserve additions, an active Company-operated drilling program, significant resource potential, as well as solid economic returns and profitability that are immediately accretive to earnings and operating cash flow, and expected to be self-funding by 2014.
“With our technical expertise and best-in-class drilling, along with our project execution skills, we are poised to maximize profitable reserve and production growth across our liquids-rich resource plays, particularly in the Eagle Ford. Importantly, our financial flexibility enables us to pursue this growth while maintaining a strong balance sheet,” Cazalot said.