It was another great quarter for Marathon Oil (MRO -1.56%), as investments in American operations resulted in strong liquids production growth. Three shale plays in particular, the Eagle Ford, Bakken, and SCOOP, were primarily responsible for pushing Marathon Oil's earnings higher after it updated investors on May 6. With output from those three shale plays growing by 26% year over year, the North American exploration and production segment posted $242 million in net income this quarter compared to a loss of $59 million in the same quarter a year ago.  

In order to offset production declines abroad, Marathon Oil is selling non-core assets and shifting its focus toward shale plays. Without shale, Marathon Oil's earnings and production growth would be nonexistent.

In the Eagle Ford, Marathon Oil averaged 96,000 barrels of oil equivalent per day in net production over the first quarter of 2014, an increase of 33% versus last year and 7% sequentially. To make things even better, Marathon Oil only brought 49 gross wells online last quarter due to winter delays even as it fully drilled 83 gross wells. This left 22 gross wells to be completed as of March, which will provide a strong production boost this quarter.

Marathon Oil's Eagle Ford operations production mix is 65% crude oil/condensate, 17% natural gas liquids (NGLs), and 18% natural gas. With 82% of production being high-margin liquids, Marathon Oil can produce large streams of free cash flow that can be reinvested straight back into the business.

To prolong the growth story, Marathon Oil is testing out the Austin Chalk formation just above the Eagle Ford. By bringing the Children Weston 4H appraisal well online, Marathon Oil was able to showcase the potential of the Austin Chalk, as the well had a stellar production curve. The 30-day initial production rate was 1,600 boe/d, which was comprised of 76% liquids. If Marathon Oil's other Austin Chalk wells that are due to be completed later this year turn up similar results, Marathon Oil will have found another promising stacked play.

In the emerging Oklahoma Resource Basin, otherwise known as SCOOP (South Central Oklahoma Oil Province), Marathon Oil has made great strides in developing its 100,000 net acre foothold in the area. Last quarter, Marathon Oil grew output by 15% year over year to 15,000 boe/d as liquids output shot up 28%. 

Going forward, Marathon Oil plans on testing out the Southern Mississippi trend and the Granite Wash to get a better estimate of what the stacked SCOOP play can yield. The SCOOP is made up of numerous trends stacked on top of each other, making well optimization a must so that each new well brought online taps into the most prolific parts of the play. 

Continental Resources (CLR) is another big player in the area that has managed to acquire 400,000 net acres in the SCOOP and STACK regions. Due to data accumulated from 300 wells in the SCOOP and the STACK (another shale play just north of the SCOOP), Continental Resources sees a 400 foot oil-shale interval just waiting to be pumped out. As mid-sized oil producers continue developing the SCOOP and STACK, expect reserve estimates to be revised upward as more data about the trends becomes available.

Williston Basin
Up north in the Bakken shale, Marathon Oil continues to see strong production numbers. Even with the abnormally harsh winter, Marathon Oil was able to boost output by 16% year over year to 43,000 boe/d, 90% of which was crude oil.

While Continental Resources continues to lead the pack with its 1.2 million net acre leasehold in the well known Bakken shale, Marathon Oil will be able to piggyback off of Continental Resources' success. One example is how Marathon Oil is testing out downspacing in the Williston Basin, trying to complete eight wells on a 1,280-acre unit. Continental Resources has already had great success with downspacing, which was proven by its ability to bring 14 wells online in a 1,320-acre unit. 

Foolish conclusion
Marathon Oil posted a solid quarter, and this statement sums up what to expect for the year:

With strong execution, we remain confident in our plans to grow production from our three U.S. resource plays by 30[%] in 2014 over 2013. The combination of downspacing with improved completion productivity has consistently improved our well results. Across the resource plays we continue to aggressively pursue co-development opportunities for the Austin Chalk in the Eagle Ford, Three Forks in the Bakken, and vertically stacked horizons in Oklahoma.

Not only do investors have these three plays to watch, but Marathon Oil is divesting its North Sea assets. When Marathon Oil sold its Angola assets, it used the additional cash to buy back shares. With $1.5 billion of its share-repurchase plan left, expect Marathon Oil to keep buying back stock after the monetization is completed.

Booming American output from shale plays coupled with share buybacks make Marathon Oil's short-term outlook very bullish, supplemented by an even stronger long-term growth story. In the long term, Marathon Oil can bank on offshore Gulf of Mexico projects coming online over the next few years.