Marathon Oil (NYSE:MRO) announced on Tuesday that the company will increase its capital, investment, and exploration budget from its current level of $4.8 billion to $5.2 billion next year. According to Fox Business, the oil and gas producer has determined that the majority of the funds will be spent in the “oil-rich unconventional fields in the U.S.”
In particular, more than half of the company’s total spending, approximately $2.85 billion, will be directed towards oil-bearing shale formations, including the Bakken in North Dakota, the Anadarko Woodford in Oklahoma ,and the Eagle Ford in South Texas. Marathon expects that the influx of additional capital will increase production by 6 percent to 8 percent next year.
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A changing trend is characterizing oil production. Hydraulic fracturing, the process by which pressurized fluids are used to extract gas and petroleum from rock layers, has given oil companies access to unexpectedly large reserves. Combined with low tax rates by global standards and increasingly restrictive governments in other oil-rich nations, this development has caused international oil companies to set up fracturing operations in the 48 lower U.S. states. As Fox Business reported, “Marathon’s announcement underscores the growing role the U.S. plays in the oil and gas industry’s portfolio.”
Marathon began extracting oil from shale earlier than many other companies, and the company has already reaped benefits from that decision. The company’s third-quarter earnings, released last month, showed that strong production in the U.S. and abroad contributed to a 9.5 percent revenue increase.