OREANDA-NEWS. Marathon Oil's output in the first quarter fell nearly 15pc as the independent producer sharply cut spending on the back of prolonged oil market weakness.

Total output fell to 388,000 b/d of oil equivalent (boe/d) in the first quarter from 452,000 boe/d a year earlier. Of that, North American output dropped to 239,000 boe/d from 283,000 boe/d a year earlier, while international production fell to 100,000 boe/d from 119,000 boe/d. Capital expenditure (capex) declined to $359mn in the same months from $1.1bn a year earlier.

The company expects North American output to fall further in the second quarter, to an average 220,000-230,000 boe/d "reflecting declines as a result of reduced capital investment," it said. Overseas production is expected to hold around 115,000-125,000 boe/d, as normal operations resume in fields in the UK and Equatorial Guinea following repairs and maintenance.

"We remained focused on lowering costs, reducing our capital program consistent with our plan, and delivering production at the upper end of guidance," chief executive Lee Tillman said in a statement. The cost cuts and non-core assets sales is putting the company "on track to achieve our objective of living within our means in 2016."

Last month, the independent signed agreements to sell non-core assets worth $950mn, which will bring the total asset sales to $1.3bn since August last year, exceeding a target of $750mn-$1bn. In February it lowered its 2016 capex guidance to $1.4bn, 50pc lower than 2015 and 75pc below the 2014 level.

The independent, like its peers Hess and Anadarko, is focusing on lowering costs as the prolonged oil market weakness squeezes cash flows. Unit production costs in North America fell by 22pc from a year earlier to $6.17/bl of oil equivalent (boe) in the first quarter.

Of Marathon's total North American production, output in the Eagle Ford shale in Texas averaged 120,000 boe/d compared with 147,000 boe/d a year-ago, primarily because of decreased drilling and completion activity, which resulted in fewer wells brought to sales. Output in the Bakken in North Dakota held flat at around 57,000 boe/d, while in Oklahoma it rose to 27,000 boe/d from 25,000 boe/d a year earlier.

Marathon earned an average of $28.21/bl on its crude oil and condensate in the US compared with $41.75/bl a year earlier. Overseas it earned $30.95/bl versus $48.87/bl a year earlier.

The independent posted a loss of $407mn in the first quarter compared with a loss of $276mn a year earlier.