Marathon Oil’s North Sea production has stalled as the company insists its sale process is “on track”.
In a report on its first-quarter trading, Marathon said that average daily production from is UK assets slumped to 16,000 barrels a day from 26,000 on the same quarter last year.
The firm cited “reliability issues” at the Foinaven field west of Shetland, which is operated by BP. It also said it suffered “natural decline” and a “delayed reinstatement” of gas compression at Brae.
In February, the Health and Safety Executive (HSE) slapped an improvement notice on its aging Brae Bravo platform after a routine inspection discovered a fault with the HVAC (heating, ventilation and air conditioning) system serving the accommodation block.
The platform has been in use since 1987.
Yesterday Marathon said problems at Foinaven are expected to continue to impact on production.
“Additionally, a planned turnaround at Foinaven is expected to begin in the second quarter and extend into the third quarter of 2014,” the company said.
The Houston-based giant, which said it is evaluating bids for its North Sea assets, has 213 onshore staff at its offices at Rubislaw Hill.
It has a further 172 people offshore in UK waters and more than 400 contractors. Details of the sale were in the company’s 2014 business plan
Marathon posted a 73% increase in net income in the quarter on last year, buoyed by strong US growth and shale gas. Production at its shale gas operation in the US – Eagle Ford, Austin Chalk and Bakken – was up 26%.
Chief executive Lee Tillman said: “Importantly, we’ve already advanced the three key priorities of our 2014 agenda – ramping up US resource play drilling activity, marketing our North Sea businesses and delivering shareholder value through opportunistic share repurchases. We remain confident in our plans to grow production from our three US resource plays by 30% in 2014 over 2013.
“Marathon Oil is committed to rigorous portfolio management to simplify and concentrate our portfolio toward higher-growth and higher-margin opportunities. This quarter we closed on the sales of our interests in Angola Blocks 31 and 32, and opened the data room for the marketing of our UK and Norway North Sea businesses with bids due in the second quarter.”
The firm’s total volumes from continuing operations during this year’s first quarter averaged 457,000 barrels of oil per day compared with last year’s 471,000.