Marathon Oil has interests in roughly 145,000 net acres in the Kurdistan Region of Iraq, including a 15% working interest in Atrush, a 25% working interest in Sarsang, and a 45% operated working interest in the Harir block. But these properties are all exploratory prospects, with the majority of Marathon's activity consisting of testing and appraisal, and are not currently contributing to its production.
Only the nonoperated Atrush block, where the company plans to drill three wells that will yield first oil in early 2015, is expected to contribute to near-term production. Gross production from Atrush Phase 1 is estimated at roughly 30,000 barrels of oil per day, of which 4,500 barrels per day would be net to Marathon -- a mere drop in the bucket compared to company-wide production that averaged 457,000 barrels of oil equivalent per day (boe/d) in the first quarter of 2014.
Kurdistan unaffected so far
Further, the risk of a disruption in the Kurdistan Region, a semiautonomous region in northern Iraq, is relatively low. Despite extremists belonging to the Islamic State in Iraq and the Levant, or ISIL, having seized additional cities north of Baghdad, production from Iraq's main producing regions -- southern Iraq and Kurdistan -- has so far been unaffected.
Kurdistan is also quite well fortified with an estimated 190,000 troops protecting the region's interests, according to a recent note by Morgan Stanley analysts. The Kurds have also taken control of Kirkuk, their historic capital and an oil-rich region, which further limits the risk of oil production disruptions.
In fact, recent news reports suggest that Kurdistan is actually planning to boost its oil exports in coming months. Exports from the region are currently at around 120,000 barrels per day and could increase by 100,000 barrels per day by year-end, if a revenue-sharing agreement with Iraq is instituted, experts say.