Marathon Oil (NYSE:MRO) raised the company's estimate of future production growth from the Bakken formation, as the company finds this domestic play even more productive than expected. The company is also benefiting from the rapid development of its Eagle Ford Shale properties.

Bakken Production Growth
Marathon Oil has approximately 413,000 net acres under lease in the Bakken, and is currently operating eight rigs in this play in North Dakota. The company exited 2011 producing 24,000 net barrels of oil equivalent (BOE) per day from this formation.

Marathon Oil now estimates that net production in 2012 from the Bakken will average 27,500 BOE per day in 2012, and reach 38,000 BOE per day in 2016. The previous estimate for 2016 production was 33,000 BOE per day.

Marathon Oil is using a 30 stage hydraulic fracturing operation for wells in the Bakken and is averaging a 24 hour initial production rate in 2012 of 1,352 BOE per day. The company reported two wells with initial production rates above 2,000 BOE per day.

Marathon Oil is also testing the Three Forks formation, which is present on much of the same acreage. The company has reported 13 successful test wells into the Three Forks play.

SEE: Check out The Strategic Oil Reserves Explained

Other Bakken Players
Continental Resources (NYSE:CLR) is one of the largest operators in the Bakken and just announced the purchase of additional acreage here for $340 million. The company added 37,900 net acres spread across Montana and North Dakota.

MDU Resources (NYSE:MDU) also has acreage exposed to the Bakken in North Dakota and Montana, and plans to spend $160 million in 2012 to develop its properties.

Total Company Production
The higher production growth from the Bakken will help Marathon Oil achieve its long term production goals. The company estimates that overall company production will grow at a 5% to 7% compound annual growth rate from 2010 to 2016.

SEE: What Determines Oil Prices?

Eagle Ford Shale
Marathon Oil has approximately 305,000 net acres under lease in south Texas that is prospective for the Eagle Ford Shale and is currently operating 17 rigs in this play. The company estimates that it will spend approximately $1.5 billion annually to develop its properties here.

Marathon Oil is using a well design in the Eagle Ford Shale that incorporates 15 stage hydraulic fracturing and is seeing initial production rates above 1,000 BOE per day. The company estimates that net production from the Eagle Ford Shale will average 30,000 BOE per day in 2012.

Murphy Oil (NYSE:MUR) is also active in the Eagle Ford Shale and has more than 230,000 net acres under lease. The company has drilled 74 horizontal wells to date on its properties and is currently producing approximately 9,000 BOE per day.

SEE: Peak Oil: What To Do When The Wells Run Dry

The Bottom Line
Marathon Oil's decision to separate the company's downstream operations into a standalone public company has freed the company to pursue a more aggressive development program in the Bakken and Eagle Ford Shale plays. The result is better than expected long term production growth for the company.

SEE: A Guide to Investing in Oil Marlkets

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At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.