HOUSTON, Feb. 12, 2020 /PRNewswire/ -- Marathon Oil
Corporation (NYSE: MRO) today announced its 2020 capital
expenditure budget in addition to its fourth quarter and full year
2019 financial results. The 2020 plan is intended to continue
building on the Company's two year track record of execution on its
framework for success: corporate returns improvement, sustainable
free cash flow generation, and the return of capital to
shareholders.
2020 Capital Budget Highlights
- Disciplined total capital budget of $2.4
billion, down 11% from 2019; includes development capital
budget of $2.2 billion, down 9% from
2019, and Resource Play Exploration (REx) capital of $200 million
- Underlying corporate returns improvement to continue outpacing
production growth rates
- Forecasting sustainable organic free cash flow, post-dividend,
at wide range of commodity prices with organic cash flow breakeven
below $50/bbl WTI
-
- Cumulative two-year, post-dividend organic free cash flow of
$600 million at flat $50/bbl WTI
- Cumulative two-year, post-dividend organic free cash flow of
$2.1 billion at flat $60/bbl WTI
- Continue to prioritize return of capital to shareholders with a
competitive dividend and $1.4 billion
of share repurchase authorization outstanding
-
- Returned $1.4 billion of capital
back to shareholders through dividends and share repurchases since
beginning of 2018, representing 23% of operating cash flow; funded
entirely by organic free cash flow generation
- 2020 annual U.S. oil production growth of 6% at the midpoint of
guidance; comparable growth expected in 2021 on comparable
development capital
- Resource Play Exploration (REx) capital spend of $200 million in 2020 primarily supports
exploration and appraisal drilling in the Texas Delaware oil play
and Louisiana Austin Chalk
Full Year and Fourth Quarter 2019 Results
Marathon Oil
reported full year 2019 net income of $480
million, or $0.59 per diluted
share, which includes the impact of certain items not typically
represented in analysts' earnings estimates and that would
otherwise affect comparability of results. Adjusted net income was
$611 million, or $0.75 per diluted share. Net operating cash flow
was $2,749 million, or $2,885 million before changes in working
capital.
Marathon Oil reported fourth quarter 2019 net loss of
$20 million, or $(0.03) per diluted share, which includes the
impact of certain items not typically represented in analysts'
earnings estimates and that would otherwise affect comparability of
results. Adjusted net income was $55
million, or $0.07 per diluted
share. Net operating cash flow was $700
million, or $685 million
before changes in working capital.
2019 Highlights
- Greater than 50% improvement in CROIC from 2017 on a price
normalized basis
- Generated $410 million of organic
free cash flow post-dividend in 2019; generated $110 million of organic free cash flow during
fourth quarter
- Returned $510 million of capital
back to shareholders during 2019, including execution of
$350 million of share repurchases and
$160 million of dividends; return of
capital funded entirely by organic free cash flow generation
- Delivered annual, divestiture-adjusted U.S. oil production
growth of 13% on unchanged $2.4
billion development capital budget; fourth quarter U.S. oil
production averaged 196,000 net bopd, up 9% from prior year
- Achieved approximately 10% annual reduction in average
completed well cost per lateral foot and approximately 15% annual
reduction in U.S. unit production expense during 2019
- Simplified International portfolio to free cash flow generating
integrated business in Equatorial
Guinea; divested U.K. and Kurdistan eliminating over $970 million of asset retirement obligations
- Enhanced resource base with addition of over 1,000 gross
operated locations through success across all elements of returns
focused resource capture framework; highlighted by organic
enhancement in the Eagle Ford and Bakken, REx success in new Texas
Delaware oil play, and accretive Eagle Ford bolt-on that closed in
2019
- Investment grade credit rating at all primary rating agencies
with conservative leverage metrics and low cash flow breakeven oil
price
- Subsequent to quarter end, opportunistically added to hedges
that now cover approximately 40% of 2020 annual U.S. crude oil
production guidance at weighted average floor price of $55.00/bbl and weighted average ceiling price of
$65.25/bbl
"2019 was another year of differentiated execution for Marathon
Oil as we comprehensively delivered on our framework for success
for the second year in a row," said Chairman, President and CEO
Lee Tillman. "We continue to improve
our underlying corporate returns, we've delivered positive organic
free cash flow for eight consecutive quarters, and we've returned
over 20% of our cash flow from operations back to our shareholders
since the beginning of 2018. We improved our capital efficiency in
2019 through meaningful reductions in both completed well cost and
unit production expense, and further optimized and simplified our
portfolio. We also enhanced our resource base through success
across all elements of our comprehensive resource capture
framework, adding over three years of inventory through organic
enhancement, Resource Play Exploration, and bolt-on acquisitions
and trades. Looking ahead to 2020 and beyond, our focus on
differentiated execution will remain unchanged. We'll continue to
be guided by our unwavering commitment to capital discipline and
sustainability. This focus, along with our low organic free cash
flow breakeven of $47/bbl in 2020,
and even lower in 2021, will position Marathon Oil for success
across a wide range of commodity price environments."
United States
(U.S.)
U.S. production averaged 328,000 net barrels of oil
equivalent per day (boed) for fourth quarter 2019, including
196,000 net barrels of oil per day (bopd). Oil production was up 9%
from the year-ago quarter on a divestiture-adjusted basis. U.S.
unit production costs were $5.13 per
barrel of oil equivalent (boe) for fourth quarter with full year
unit production costs under $5.00 per
boe and down approximately 15% compared to the prior year.
EAGLE FORD: Marathon Oil's Eagle Ford production averaged
105,000 net boed for fourth quarter 2019. Oil production averaged
67,000 net bopd, as oil mix rose to 63% from 57% during the
year-ago quarter. The Company brought 29 gross Company-operated
wells to sales across Karnes,
Atascosa and Gonzales counties with strong initial
production rates. The third and fourth quarters of 2019 represented
the two strongest quarters in the history of the asset on a 30-day
initial production (IP) basis for oil. Completed well cost
during fourth quarter averaged $5.1
million at an average lateral length of 6,400 feet. Fourth
quarter average completed well cost per lateral foot was down 8%
from the 2018 average.
BAKKEN: Marathon Oil's Bakken production averaged 108,000 net
boed in the fourth quarter 2019. Oil production averaged 86,000 net
bopd. The Company brought 16 gross Company-operated wells to sales
across the Myrmidon and Hector areas. The asset established new
quarterly records for both drilling feet per day and completion
stages per day during fourth quarter. The Company continues to
deliver impressive capital efficiency and accretive financial
returns, highlighted by a recent four-well pad in Myrmidon that
achieved an average 30-day IP rate of 3,160 BOED (79% oil) at an
average completed well cost of $4.3
million. The 16 gross Company-operated wells to sales during
fourth quarter had an average completed well cost below
$5 million, down 17% from the 2018
average.
OKLAHOMA: Marathon Oil's
Oklahoma production averaged
82,000 net boed in the fourth quarter 2019. Oil production averaged
24,000 net bopd, with oil mix rising to 29% from 24% during the
year-ago quarter. The Company brought 14 gross Company-operated
wells to sales, including nine wells targeting the Springer
formation in the SCOOP. The nine Springer wells are demonstrating
basin-leading productivity, with an average 30-day IP rate of 2,100
boed (79% oil). With a more concentrated program and strong
production and cost performance, the Oklahoma asset successfully transitioned to
positive free cash flow generation during fourth quarter.
NORTHERN DELAWARE: Marathon
Oil's Northern Delaware production
averaged 28,000 net boed in the fourth quarter 2019. Oil production
averaged 17,000 net bopd. The Company brought 13 gross
Company-operated wells to sales, with a focus on the delineation of
its Red Hills acreage. Since the
transition to Red Hills delineation during fourth quarter, the
Company has brought online nine Upper Wolfcamp wells with an
average 30-day IP rate of 1,500 boed (74% oil) and four Bone Spring
wells with an average 30-day IP rate of 2,270 boed (76% oil). The
Company continues to advance learnings, reduce its cost structure,
and improve margins, exiting the year with approximately 90% of
water and oil on pipe.
Resource Capture
Fourth quarter REx capital
expenditures totaled $168 million.
Expenditures included two bolt-on acquisitions totaling
$106 million that cored up the
Company's 60,000 net acres of contiguous leasehold in the Texas
Delaware prospective for stacked Woodford and Meramec oil targets. The
Company's position in this new play was captured at an entry cost
of less than $2,400 per acre. Full
year 2019 REx capital expenditures totaled $277 million, consistent with prior guidance.
The Company's 2020 REx capital expenditure budget of
$200 million reflects a transition
from acreage capture to exploration and appraisal drilling in two
potential oil plays of scale. In the Texas Delaware, the Company's
third Woodford exploration well is
on flowback, with early rates consistent with expectations. The
Company has now brought online three Woodford exploration wells with average oil
mix of 60%. In the Western Fairway of the Louisiana Austin Chalk,
the Company's first exploration well is on flowback and cleaning up
with recent oil rates at 1,200 bopd (2,650 boed). The Company
recently spud its second Louisiana Austin Chalk exploration
well.
Outside of the REx program, in the fourth quarter Marathon Oil
completed a bolt-on acquisition for approximately 18,000 contiguous
and largely undeveloped net acres adjacent to the Company's
existing northeast Eagle Ford leasehold. The $191 million bolt-on acquisition included
production of approximately 7,000 net boed (approx. 30% oil),
associated midstream infrastructure, and cores up a 70-well, long
lateral development with potential upside. The transaction had an
effective date of Nov. 1, 2019, and
closed on Dec. 31, 2019.
International
Equatorial
Guinea production averaged 85,000 net boed for fourth
quarter 2019, including 15,000 net bopd of oil. Unit production
costs averaged $1.82 per boe.
Cash Flow and Development Capital
Net cash provided by
operations was $700 million during
fourth quarter 2019, or $685 million
before changes in working capital.
Fourth quarter development capital expenditures were
$556 million, bringing full year
development capital to $2.4 billion,
consistent with the original 2019 budget.
Organic free cash flow during fourth quarter totaled
$111 million post-dividend, bringing
full year organic free cash flow generation to $409 million.
Production Guidance
For full year 2020, the Company
forecasts total U.S. oil production growth of 6% at the midpoint of
guidance. Although oil production will not be meaningfully
affected, full year 2020 International gas production will be
impacted by scheduled maintenance activity in Equatorial Guinea during fourth quarter. Full
year total Company oil growth is expected to outpace boe production
growth, consistent with a focus on corporate returns.
First quarter 2020 U.S. oil production guidance is 192,000 to
202,000 net bopd. First quarter 2020 International oil production
guidance is 12,000 to 16,000 net bopd.
Corporate
The Company executed $350 million of share repurchases during 2019,
returning additional capital to shareholders beyond the
$162 million of 2019 dividend
payments. Since the beginning of 2018, Marathon Oil has repurchased
$1.05 billion of its own shares,
representing approximately 7% of its outstanding share count,
funded entirely by post-dividend organic free cash flow.
Total liquidity as of Dec. 31 was
approximately $3.9 billion, which
consisted of $0.9 billion in cash and
cash equivalents and an undrawn revolving credit facility of
$3.0 billion.
The adjustments to net income for fourth quarter 2019 totaled
$75 million before tax, primarily due
to the income impact associated with unrealized losses on
derivative instruments. Adjusted net income in the quarter was
negatively impacted primarily by one-off and timing impacts
totaling approximately $37
million.
As of Feb. 10, 2020, the Company's
open crude hedge positions for 2020 include an average of 80,000
bopd at a weighted average floor price of $55.00/bbl and a weighted average ceiling price
of $65.25/bbl, hedged through
three-way collars.
A slide deck and Quarterly Investor Packet will be posted to the
Company's website following this release today, Feb. 12. On Thursday, Feb.
13, at 9:00 a.m. ET, the
Company will conduct a question and answer webcast/call, which will
include forward-looking information. The live webcast, replay and
all related materials will be available at
https://www.marathonoil.com/Investors.
Non-GAAP Measures
In analyzing and planning
for its business, Marathon Oil supplements its use of GAAP
financial measures with non-GAAP financial measures, including
adjusted net income, adjusted net income per share, organic free
cash flow, net cash provided by operations before changes in
working capital and organic finding and development costs.
Adjusted net income is defined as net income adjusted for
gain/loss on dispositions, certain property impairments, unrealized
derivative gain/loss on commodity instruments, pension settlement
losses and other items that could be considered "non-operating" or
"non-core" in nature. Management believes adjusted net income and
adjusted net income per share are useful to investors as additional
tools to meaningfully represent the Company's operating performance
and to compare Marathon to certain competitors.
Organic free cash flow is defined as net cash provided by
operating activities adjusted for working capital, exploration
costs (other than well costs), development capital expenditures,
dividends, and EG LNG return of capital. Management believes this
is useful to investors as a measure of the Company's ability to
fund its capital expenditure programs and dividend payments,
service debt, and other distributions to stockholders. Management
believes net cash provided by operations before changes in working
capital is useful to investors to demonstrate the Company's ability
to generate cash quarterly or year-to-date by eliminating
differences caused by the timing of certain working capital
items.
These non-GAAP financial measures reflect an additional way
of viewing aspects of the business that, when viewed with GAAP
results may provide a more complete understanding of factors and
trends affecting the business and are a useful tool to help
management and investors make informed decisions about Marathon
Oil's financial and operating performance. These measures should
not be considered in isolation or as alternatives to their most
directly comparable GAAP financial measures. A reconciliation to
their most directly comparable GAAP financial measures can be found
in our investor package on our website at www.marathonoil.com and
in the tables below. Marathon Oil strongly encourages
investors to review the Company's consolidated financial statements
and publicly filed reports in their entirety and not rely on any
single financial measure.
Forward-looking Statements
This release
contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. All statements, other than statements of
historical fact, including without limitation statements regarding
the Company's future capital budgets and allocations (including
development capital budget and resource play leasing and
exploration spend), future performance, organic free cash
flow, free cash flow, corporate-level cash returns on invested
capital, business strategy, asset quality, drilling plans,
production guidance, cash margins, asset sales and acquisitions,
leasing and exploration activities, production, oil growth and
other plans and objectives for future operations, are
forward-looking statements. Words such as "anticipate," "believe,"
"could," "estimate," "expect," "forecast," "guidance," "intend,"
"may," "outlook," "plan," "project," "seek," "should," "target,"
"will," "would," or similar words may be used to identify
forward-looking statements; however, the absence of these words
does not mean that the statements are not forward-looking. While
the Company believes its assumptions concerning future events are
reasonable, a number of factors could cause actual results to
differ materially from those projected, including, but not limited
to: conditions in the oil and gas industry, including supply/demand
levels and the resulting impact on price; changes in expected
reserve or production levels; changes in political or economic
conditions in Equatorial Guinea,
including changes in foreign currency exchange rates, interest
rates, inflation rates, and global and domestic market conditions;
capital available for exploration and development; our ability to
complete our announced acquisitions on the timeline currently
anticipated, if at all; risks related to the Company's hedging
activities; well production timing; drilling and operating risks;
availability of drilling rigs, materials and labor, including the
costs associated therewith; difficulty in obtaining necessary
approvals and permits; non-performance by third parties of
contractual obligations; unforeseen hazards such as weather
conditions, acts of war or terrorist acts and the government or
military response thereto; cyber-attacks; changes in safety,
health, environmental, tax and other regulations, requirements or
initiatives, including initiatives addressing the impact of global
climate change, flaring, or water disposal; other geological,
operating and economic considerations; and the risk factors,
forward-looking statements and challenges and uncertainties
described in the Company's 2018 Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q and other public filings and press
releases, available at www.marathonoil.com. Except as required by
law, the Company undertakes no obligation to revise or update any
forward-looking statements as a result of new information, future
events or otherwise.
Media Relations Contact:
Lee
Warren: 713-296-4103
Investor Relations Contacts:
Guy Baber: 713-296-1892
John Reid: 713-296-4380
Consolidated
Statements of Income (Unaudited)
|
Three Months
Ended
|
Year
Ended
|
|
Dec.
31
|
Sept.
30
|
Dec.
31
|
Dec.
31
|
Dec.
31
|
(In millions,
except per share data)
|
2019
|
2019
|
2018
|
2019
|
2018
|
Revenues and other
income:
|
|
|
|
|
|
Revenues from
contracts with customers
|
$
|
1,233
|
|
$
|
1,249
|
|
$
|
1,380
|
|
$
|
5,063
|
|
$
|
5,902
|
|
Net gain (loss) on
commodity derivatives
|
(44)
|
|
47
|
|
310
|
|
(72)
|
|
(14)
|
|
Income from equity
method investments
|
24
|
|
21
|
|
64
|
|
87
|
|
225
|
|
Net gain (loss) on
disposal of assets
|
(6)
|
|
22
|
|
(4)
|
|
50
|
|
319
|
|
Other
income
|
8
|
|
6
|
|
15
|
|
62
|
|
150
|
|
Total revenues and
other income
|
1,215
|
|
1,345
|
|
1,765
|
|
5,190
|
|
6,582
|
|
Costs and
expenses:
|
|
|
|
|
|
Production
|
169
|
|
163
|
|
205
|
|
712
|
|
842
|
|
Shipping, handling
and other operating
|
143
|
|
138
|
|
167
|
|
605
|
|
575
|
|
Exploration
|
42
|
|
22
|
|
116
|
|
149
|
|
289
|
|
Depreciation,
depletion and amortization
|
616
|
|
622
|
|
613
|
|
2,397
|
|
2,441
|
|
Impairments
|
—
|
|
—
|
|
25
|
|
24
|
|
75
|
|
Taxes other than
income
|
79
|
|
81
|
|
84
|
|
311
|
|
299
|
|
General and
administrative
|
93
|
|
82
|
|
88
|
|
356
|
|
394
|
|
Total costs and
expenses
|
1,142
|
|
1,108
|
|
1,298
|
|
4,554
|
|
4,915
|
|
Income from
operations
|
73
|
|
237
|
|
467
|
|
636
|
|
1,667
|
|
Net interest and
other
|
(67)
|
|
(64)
|
|
(58)
|
|
(244)
|
|
(226)
|
|
Other net periodic
benefit costs
|
(6)
|
|
2
|
|
(3)
|
|
3
|
|
(14)
|
|
Loss on early
extinguishment of debt
|
(3)
|
|
—
|
|
—
|
|
(3)
|
|
—
|
|
Income (loss)
before income taxes
|
(3)
|
|
175
|
|
406
|
|
392
|
|
1,427
|
|
Provision (benefit)
for income taxes
|
17
|
|
10
|
|
16
|
|
(88)
|
|
331
|
|
Net income
(loss)
|
$
|
(20)
|
|
$
|
165
|
|
$
|
390
|
|
$
|
480
|
|
$
|
1,096
|
|
|
|
|
|
|
|
Adjusted Net
Income (Loss)
|
|
|
|
|
|
Net income
(loss)
|
$
|
(20)
|
|
$
|
165
|
|
$
|
390
|
|
480
|
|
1,096
|
|
Adjustments for
special items (pre-tax):
|
|
|
|
|
|
Net (gain) loss on
disposal of assets
|
6
|
|
(22)
|
|
4
|
|
(50)
|
|
(319)
|
|
Proved property
impairments
|
—
|
|
—
|
|
25
|
|
24
|
|
75
|
|
Exploratory dry well
costs, unproved property impairments and
other
|
—
|
|
—
|
|
40
|
|
—
|
|
40
|
|
Pension
settlement
|
10
|
|
—
|
|
5
|
|
12
|
|
21
|
|
Unrealized (gain)
loss on derivative instruments
|
55
|
|
(33)
|
|
(336)
|
|
124
|
|
(267)
|
|
Reduction of U.K. ARO
estimated costs
|
—
|
|
—
|
|
—
|
|
—
|
|
(121)
|
|
Other
|
4
|
|
1
|
|
6
|
|
28
|
|
6
|
|
Provision (benefit)
for income taxes related to special items
|
—
|
|
—
|
|
(13)
|
|
(7)
|
|
70
|
|
Adjustments for
special items
|
75
|
|
(54)
|
|
(269)
|
|
131
|
|
(495)
|
|
Adjusted net
income (a)
|
$
|
55
|
|
$
|
111
|
|
$
|
121
|
|
$
|
611
|
|
$
|
601
|
|
Per diluted
share:
|
|
|
|
|
|
Net income
(loss)
|
$
|
(0.03)
|
|
$
|
0.21
|
|
$
|
0.47
|
|
$
|
0.59
|
|
$
|
1.29
|
|
Adjusted net income
(a)
|
$
|
0.07
|
|
$
|
0.14
|
|
$
|
0.15
|
|
$
|
0.75
|
|
$
|
0.71
|
|
Weighted average
diluted shares
|
800
|
|
803
|
|
829
|
|
810
|
|
847
|
|
(a)
|
Non-GAAP financial
measure. See "Non-GAAP Measures" above for further
discussion.
|
Supplemental
Statistics (Unaudited)
|
Three Months
Ended
|
Year
Ended
|
|
Dec.
31
|
Sept.
30
|
Dec.
31
|
Dec.
31
|
Dec.
31
|
(In
millions)
|
2019
|
2019
|
2018
|
2019
|
2018
|
Segment
income
|
|
|
|
|
|
United
States
|
$
|
148
|
|
$
|
180
|
|
$
|
159
|
|
$
|
675
|
|
$
|
608
|
|
International
|
33
|
|
43
|
|
83
|
|
233
|
|
473
|
|
Not allocated to
segments
|
(201)
|
|
(58)
|
|
148
|
|
(428)
|
|
15
|
|
Net income
(loss)
|
$
|
(20)
|
|
$
|
165
|
|
$
|
390
|
|
$
|
480
|
|
$
|
1,096
|
|
Exploration
expenses
|
|
|
|
|
|
United
States
|
$
|
42
|
|
$
|
22
|
|
$
|
76
|
|
$
|
149
|
|
$
|
246
|
|
International
|
—
|
|
—
|
|
—
|
|
—
|
|
3
|
|
Not allocated to
segments
|
—
|
|
—
|
|
40
|
|
—
|
|
40
|
|
Total
|
$
|
42
|
|
$
|
22
|
|
$
|
116
|
|
$
|
149
|
|
$
|
289
|
|
Cash
flows
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
|
700
|
|
$
|
737
|
|
$
|
855
|
|
$
|
2,749
|
|
$
|
3,234
|
|
Minus: changes in
working capital
|
15
|
|
(20)
|
|
68
|
|
(136)
|
|
23
|
|
Net cash provided by
operations before changes in working capital (a)
|
$
|
685
|
|
$
|
757
|
|
$
|
787
|
|
$
|
2,885
|
|
$
|
3,211
|
|
Cash additions to
property, plant and equipment
|
$
|
(616)
|
|
$
|
(672)
|
|
$
|
(684)
|
|
$
|
(2,550)
|
|
$
|
(2,753)
|
|
(a)
|
Non-GAAP financial
measure. See "Non-GAAP Measures" above for further
discussion.
|
Supplemental
Statistics (Unaudited)
|
Three Months
Ended
|
Year
Ended
|
(In
millions)
|
Dec. 31,
2019
|
Dec. 31,
2019
|
Organic Free Cash
Flow
|
|
|
Net cash provided by
operating activities
|
$
|
700
|
|
$
|
2,749
|
|
Adjustments:
|
|
|
Changes in working
capital
|
(15)
|
|
136
|
|
Exploration costs
other than well costs
|
13
|
|
35
|
|
Development capital
expenditures
|
(556)
|
|
(2,407)
|
|
Dividends
|
(40)
|
|
(162)
|
|
EG LNG return of
capital and other
|
9
|
|
58
|
|
Organic free cash
flow (a)
|
$
|
111
|
|
$
|
409
|
|
(a)
|
Non-GAAP financial
measure. See "Non-GAAP Measures" above for further
discussion.
|
Supplemental
Statistics (Unaudited)
|
Three Months
Ended
|
Year
Ended
|
|
Dec.
31
|
Sept.
30
|
Dec.
31
|
Dec.
31
|
Dec.
31
|
(mboed)
|
2019
|
2019
|
2018
|
2019
|
2018
|
Net
production
|
|
|
|
|
|
United
States
|
328
|
|
339
|
|
306
|
|
324
|
|
298
|
|
International
(a)
|
85
|
|
87
|
|
105
|
|
92
|
|
114
|
|
Total net
production
|
413
|
|
426
|
|
411
|
|
416
|
|
412
|
|
(a)
|
The Company closed on
the sale of its Libya subsidiary in the first quarter of 2018 and
as such, international net production volumes for the year ended
December 31, 2018 excludes 7 mboed related to Libya.
|
Supplemental
Statistics (Unaudited)
|
Three Months
Ended
|
Year
Ended
|
|
Dec.
31
|
Sept.
30
|
Dec.
31
|
Dec.
31
|
Dec.
31
|
(mboed)
|
2019
|
2019
|
2018
|
2019
|
2018
|
Net
production
|
|
|
|
|
|
United
States
|
328
|
|
339
|
|
306
|
|
324
|
|
298
|
|
Less: Divestitures
(a)
|
—
|
|
1
|
|
2
|
|
1
|
|
6
|
|
Total
divestiture-adjusted United States
|
328
|
|
338
|
|
304
|
|
323
|
|
292
|
|
|
|
|
|
|
|
International
|
85
|
|
87
|
|
105
|
|
92
|
|
114
|
|
Less: Divestitures
(b)
|
—
|
|
—
|
|
12
|
|
7
|
|
16
|
|
Total
divestiture-adjusted International
|
85
|
|
87
|
|
93
|
|
85
|
|
98
|
|
|
|
|
|
|
|
Total net
production divestiture-adjusted (a)(b)
|
413
|
|
425
|
|
397
|
|
408
|
|
390
|
|
(a)
|
The Company closed on
the sale of certain United States non-core conventional assets in
third quarter 2018, first quarter 2019, and third quarter 2019. The
production volumes relating to these dispositions have been removed
from all corresponding prior periods to derive the
divestiture-adjusted United States net production.
|
(b)
|
Divestitures include
volumes associated with the following: (1) the sale of our U.K.
business, which closed in third quarter 2019, (2) the sale of our
non-operated interest in the Atrush block in Kurdistan, which
closed in second quarter 2019, (3) the sale of our non-operated
interest in the Sarsang block in Kurdistan, which closed in third
quarter 2018, and (4) the sale of Libya, which closed in the first
quarter of 2018. These production volumes have been removed from
historical periods above in arriving at total divestiture-adjusted
International net production.
|
Supplemental
Statistics (Unaudited)
|
Three Months
Ended
|
Year
Ended
|
|
Dec.
31
|
Sept.
30
|
Dec.
31
|
Dec.
31
|
Dec.
31
|
|
2019
|
2019
|
2018
|
2019
|
2018
|
United States -
net sales volumes
|
|
|
|
|
|
Crude oil and
condensate (mbbld)
|
196
|
|
201
|
|
180
|
|
190
|
|
171
|
|
Eagle Ford
|
67
|
|
63
|
|
62
|
|
63
|
|
63
|
|
Bakken
|
86
|
|
92
|
|
82
|
|
86
|
|
71
|
|
Oklahoma
|
24
|
|
23
|
|
16
|
|
21
|
|
18
|
|
Northern
Delaware
|
16
|
|
18
|
|
14
|
|
16
|
|
12
|
|
Other United States
(a)
|
3
|
|
5
|
|
6
|
|
4
|
|
7
|
|
Natural gas
liquids (mbbld)
|
58
|
|
61
|
|
55
|
|
60
|
|
55
|
|
Eagle Ford
|
18
|
|
22
|
|
24
|
|
22
|
|
23
|
|
Bakken
|
12
|
|
9
|
|
6
|
|
9
|
|
7
|
|
Oklahoma
|
22
|
|
23
|
|
19
|
|
22
|
|
20
|
|
Northern
Delaware
|
5
|
|
6
|
|
5
|
|
6
|
|
4
|
|
Other United States
(a)
|
1
|
|
1
|
|
1
|
|
1
|
|
1
|
|
Natural gas
(mmcfd)
|
444
|
|
462
|
|
422
|
|
438
|
|
429
|
|
Eagle Ford
|
121
|
|
134
|
|
127
|
|
130
|
|
129
|
|
Bakken
|
59
|
|
46
|
|
35
|
|
46
|
|
35
|
|
Oklahoma
|
216
|
|
229
|
|
192
|
|
210
|
|
213
|
|
Northern
Delaware
|
41
|
|
36
|
|
42
|
|
36
|
|
26
|
|
Other United States
(a)
|
7
|
|
17
|
|
26
|
|
16
|
|
26
|
|
Total United
States (mboed)
|
328
|
|
339
|
|
305
|
|
323
|
|
298
|
|
International -
net sales volumes
|
|
|
|
|
|
Crude oil and
condensate (mbbld)
|
13
|
|
16
|
|
29
|
|
20
|
|
39
|
|
Equatorial
Guinea
|
13
|
|
16
|
|
16
|
|
15
|
|
17
|
|
United Kingdom
(b)
|
—
|
|
—
|
|
10
|
|
4
|
|
11
|
|
Libya (c)
|
—
|
|
—
|
|
—
|
|
—
|
|
7
|
|
Other International
(d)
|
—
|
|
—
|
|
3
|
|
1
|
|
4
|
|
Natural gas
liquids (mbbld)
|
9
|
|
10
|
|
10
|
|
9
|
|
11
|
|
Equatorial
Guinea
|
9
|
|
10
|
|
10
|
|
9
|
|
11
|
|
Natural gas
(mmcfd)
|
363
|
|
373
|
|
411
|
|
371
|
|
435
|
|
Equatorial
Guinea
|
363
|
|
373
|
|
400
|
|
365
|
|
416
|
|
United Kingdom
(b)(e)
|
—
|
|
—
|
|
11
|
|
6
|
|
14
|
|
Libya (c)
|
—
|
|
—
|
|
—
|
|
—
|
|
5
|
|
Total
International (mboed)
|
83
|
|
88
|
|
108
|
|
91
|
|
122
|
|
Total Company -
net sales volumes (mboed)
|
411
|
|
427
|
|
413
|
|
414
|
|
420
|
|
Net sales volumes
of equity method investees
|
|
|
|
|
|
LNG (mtd)
|
5,180
|
|
4,590
|
|
5,384
|
|
4,933
|
|
5,805
|
|
Methanol
(mtd)
|
1,153
|
|
1,036
|
|
1,119
|
|
1,082
|
|
1,241
|
|
Condensate and LPG
(boed)
|
11,832
|
|
11,586
|
|
15,071
|
|
11,104
|
|
13,034
|
|
(a)
|
Includes sales
volumes from the sale of certain non-core proved properties in our
United States segment.
|
(b)
|
The Company closed on
the sale of its U.K. business on July 1, 2019.
|
(c)
|
The Company closed on
the sale of its Libya subsidiary in the first quarter of
2018.
|
(d)
|
Other International
includes volumes for the Atrush block in Kurdistan, which was sold
in the second quarter of 2019.
|
(e)
|
Includes natural gas
acquired for injection and subsequent resale.
|
Supplemental
Statistics (Unaudited)
|
Three Months
Ended
|
Year
Ended
|
|
Dec.
31
|
Sept.
30
|
Dec.
31
|
Dec.
31
|
Dec.
31
|
|
2019
|
2019
|
2018
|
2019
|
2018
|
United States -
average price realizations (a)
|
|
|
|
|
|
Crude oil and
condensate ($ per bbl) (b)
|
$
|
54.83
|
|
$
|
55.09
|
|
$
|
56.01
|
|
$
|
55.80
|
|
$
|
63.11
|
|
Eagle Ford
|
57.63
|
|
57.99
|
|
63.27
|
|
59.06
|
|
67.19
|
|
Bakken
|
51.98
|
|
53.48
|
|
51.11
|
|
53.65
|
|
60.39
|
|
Oklahoma
|
55.49
|
|
55.09
|
|
58.42
|
|
55.78
|
|
64.63
|
|
Northern
Delaware
|
57.08
|
|
54.16
|
|
48.04
|
|
54.04
|
|
55.23
|
|
Other United States
(c)
|
56.26
|
|
51.74
|
|
60.41
|
|
57.47
|
|
63.11
|
|
Natural gas
liquids ($ per bbl)
|
$
|
15.47
|
|
$
|
11.37
|
|
$
|
24.71
|
|
$
|
14.22
|
|
$
|
24.54
|
|
Eagle Ford
|
15.72
|
|
11.40
|
|
21.46
|
|
14.27
|
|
24.08
|
|
Bakken
|
13.12
|
|
7.16
|
|
19.01
|
|
13.48
|
|
24.98
|
|
Oklahoma
|
17.30
|
|
13.20
|
|
29.55
|
|
14.66
|
|
24.38
|
|
Northern
Delaware
|
12.35
|
|
10.02
|
|
28.99
|
|
13.15
|
|
26.30
|
|
Other United States
(c)
|
13.98
|
|
15.21
|
|
26.68
|
|
16.43
|
|
28.63
|
|
Natural gas ($ per
mcf)
|
$
|
2.10
|
|
$
|
1.92
|
|
$
|
3.27
|
|
$
|
2.18
|
|
$
|
2.65
|
|
Eagle Ford
|
2.40
|
|
2.29
|
|
3.69
|
|
2.54
|
|
3.09
|
|
Bakken
|
2.31
|
|
1.83
|
|
3.46
|
|
2.34
|
|
2.95
|
|
Oklahoma
|
1.95
|
|
1.75
|
|
3.22
|
|
2.04
|
|
2.38
|
|
Northern
Delaware
|
1.72
|
|
0.84
|
|
1.80
|
|
1.17
|
|
2.08
|
|
Other United States
(c)
|
1.89
|
|
3.69
|
|
3.65
|
|
2.81
|
|
2.73
|
|
International -
average price realizations
|
|
|
|
|
|
Crude oil and
condensate ($ per bbl)
|
$
|
48.26
|
|
$
|
46.04
|
|
$
|
58.25
|
|
$
|
53.09
|
|
$
|
64.25
|
|
Equatorial
Guinea
|
48.26
|
|
46.04
|
|
46.35
|
|
48.99
|
|
55.28
|
|
United Kingdom
(d)
|
—
|
|
—
|
|
78.49
|
|
67.99
|
|
74.34
|
|
Libya (e)
|
—
|
|
—
|
|
—
|
|
—
|
|
73.75
|
|
Other International
(f)
|
—
|
|
—
|
|
52.52
|
|
51.24
|
|
58.89
|
|
Natural gas
liquids ($ per bbl)
|
$
|
1.00
|
|
$
|
1.00
|
|
$
|
2.25
|
|
$
|
1.40
|
|
$
|
2.27
|
|
Equatorial Guinea
(g)
|
1.00
|
|
1.00
|
|
1.00
|
|
1.00
|
|
1.00
|
|
United Kingdom
(d)
|
—
|
|
—
|
|
33.44
|
|
37.88
|
|
41.66
|
|
Natural gas ($ per
mcf)
|
$
|
0.24
|
|
$
|
0.24
|
|
$
|
0.49
|
|
$
|
0.33
|
|
$
|
0.54
|
|
Equatorial Guinea
(g)
|
0.24
|
|
0.24
|
|
0.24
|
|
0.24
|
|
0.24
|
|
United Kingdom
(d)
|
—
|
|
—
|
|
9.13
|
|
5.67
|
|
8.03
|
|
Libya (e)
|
—
|
|
—
|
|
—
|
|
—
|
|
4.57
|
|
Benchmark
|
|
|
|
|
|
WTI crude oil (per
bbl)
|
$
|
56.87
|
|
$
|
56.44
|
|
$
|
59.34
|
|
$
|
57.04
|
|
$
|
64.90
|
|
Brent (Europe) crude
oil (per bbl) (h)
|
$
|
63.41
|
|
$
|
61.93
|
|
$
|
67.71
|
|
$
|
64.36
|
|
$
|
71.06
|
|
Mont Belvieu NGLs
(per bbl) (i)
|
$
|
17.15
|
|
$
|
15.16
|
|
$
|
25.09
|
|
$
|
17.81
|
|
$
|
26.75
|
|
Henry Hub natural gas
(per mmbtu) (j)
|
$
|
2.50
|
|
$
|
2.23
|
|
$
|
3.64
|
|
$
|
2.63
|
|
$
|
3.09
|
|
(a)
|
Excludes gains or
losses on commodity derivative instruments.
|
(b)
|
Inclusion of realized
gains (losses) on crude oil derivative instruments would have
affected average price realizations by $0.58, $0.72, $(1.50),
$0.67, and $(4.60), for the fourth and third quarter 2019, the
fourth quarter 2018, and the years 2019 and 2018,
respectively.
|
(c)
|
Includes sales
volumes from the sale of certain non-core proved properties in our
United States segment.
|
(d)
|
The Company closed on
the sale of its U.K. business on July 1, 2019.
|
(e)
|
The Company closed on
the sale of its Libya subsidiary in the first quarter of
2018.
|
(f)
|
Other International
includes volumes for the Atrush block in Kurdistan, which was sold
in the second quarter of 2019.
|
(g)
|
Represents fixed
prices under long-term contracts with Alba Plant LLC, Atlantic
Methanol Production Company LLC and/or Equatorial Guinea LNG
Holdings Limited, which are equity method investees. The Alba Plant
LLC processes the NGLs and then sells secondary condensate,
propane, and butane at market prices. Marathon Oil includes its
share of income from each of these equity method investees in the
International segment.
|
(h)
|
Average of monthly
prices obtained from Energy Information Administration
website.
|
(i)
|
Bloomberg Finance
LLP: Y-grade Mix NGL of 55% ethane, 25% propane, 5% butane, 8%
isobutane and 7% natural gasoline.
|
(j)
|
Settlement date
average per mmbtu.
|
Q1 2020
Production
Guidance
|
Oil Production
(mbbld)
|
|
Equivalent
Production (mboed)
|
Q1
2020
|
Q4
2019
|
Q1
2019
|
|
Q1
2020
|
Q4
2019
|
Q1
2019
|
|
Low
|
High
|
Divestiture
-Adjusted
|
Divestiture
-Adjusted
|
|
Low
|
High
|
Divestiture
-Adjusted
|
Divestiture
-Adjusted
|
Net
production
|
|
|
|
|
|
|
|
|
|
United
States
|
192
|
|
202
|
|
196
|
|
176
|
|
|
325
|
|
335
|
|
328
|
|
294
|
|
International
|
12
|
|
16
|
|
15
|
|
14
|
|
|
75
|
|
85
|
|
85
|
|
78
|
|
Total net
production
|
204
|
|
218
|
|
211
|
|
190
|
|
|
400
|
|
420
|
|
413
|
|
372
|
|
|
|
|
|
Estimated Net
Proved Reserves (mmboe)
|
U.S.
|
Int'l
|
Total
|
As of December 31,
2018
|
1,078
|
|
203
|
|
1,281
|
|
Additions
|
91
|
|
—
|
|
91
|
|
Revisions
|
(23)
|
|
24
|
|
1
|
|
Acquisitions
|
18
|
|
—
|
|
18
|
|
Dispositions
|
(11)
|
|
(24)
|
|
(35)
|
|
Production
|
(117)
|
|
(34)
|
|
(151)
|
|
As of December 31,
2019
|
1,036
|
|
169
|
|
1,205
|
|
|
|
|
|
Organic Changes in
Reserves (excluding dispositions) (mmboe)
|
|
|
110
|
|
Production (excluding
dispositions) (mmboe)
|
|
|
149
|
|
Reserve Replacement
Ratio (excluding dispositions)
|
|
|
74
|
%
|
|
|
|
|
Organic Changes in
Reserves (excluding dispositions and acquisitions)
(mmboe)
|
|
|
92
|
|
Production (excluding
dispositions) (mmboe)
|
|
|
149
|
|
Organic Reserve
Replacement Ratio (excluding dispositions and
acquisitions)
|
|
|
62
|
%
|
|
|
|
|
Finding Costs (In
millions, except as indicated)
|
|
|
2019
|
Property Acquisition
Costs - Proved
|
|
|
$
|
93
|
|
Property Acquisition
Costs - Unproved
|
|
|
282
|
|
Exploration
|
|
|
862
|
|
Development
|
|
|
1,699
|
|
Total Company -
Costs Incurred
|
|
|
$
|
2,936
|
|
|
|
|
|
Cost
Incurred
|
|
|
$
|
2,936
|
|
Organic Changes in
Reserves (excluding dispositions) (mmboe)
|
|
|
110
|
|
Finding and
Development Costs per BOE
|
|
|
$
|
26.69
|
|
|
|
|
|
Costs
Incurred
|
|
|
$
|
2,936
|
|
Property Acquisition
Costs (Proved and Unproved)
|
|
|
(375)
|
|
Capitalized Asset
Retirement Costs
|
|
|
(80)
|
|
Organic Finding
and Development Costs (a)
|
|
|
$
|
2,481
|
|
Organic Changes in
Reserves (excluding dispositions and acquisitions)
(mmboe)
|
|
|
92
|
|
Organic Finding
and Development Costs per BOE (a)
|
|
|
$
|
26.97
|
|
(a)
|
Non-GAAP financial
measure. See "Non-GAAP Measures" above for further
discussion.
|
The following table sets forth outstanding derivative contracts
as of February 10, 2020, and the
weighted average prices for those contracts:
|
|
2020
|
|
|
2021
|
|
Crude
Oil
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
|
Full
Year
|
|
NYMEX WTI
Three-Way Collars (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume
(Bbls/day)
|
|
80,000
|
|
|
80,000
|
|
|
80,000
|
|
|
80,000
|
|
|
|
—
|
|
|
Weighted average
price per Bbl:
|
|
|
|
|
|
|
|
|
|
|
|
|
Ceiling
|
|
$
|
66.12
|
|
|
$
|
66.12
|
|
|
$
|
64.40
|
|
|
$
|
64.40
|
|
|
|
$
|
—
|
|
|
Floor
|
|
$
|
55.00
|
|
|
$
|
55.00
|
|
|
$
|
55.00
|
|
|
$
|
55.00
|
|
|
|
$
|
—
|
|
|
Sold put
|
|
$
|
47.75
|
|
|
$
|
47.75
|
|
|
$
|
48.00
|
|
|
$
|
48.00
|
|
|
|
$
|
—
|
|
|
Basis Swaps -
Argus WTI Midland (b)
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume
(Bbls/day)
|
|
15,000
|
|
|
15,000
|
|
|
15,000
|
|
|
15,000
|
|
|
|
—
|
|
|
Weighted average
price per Bbl
|
|
$
|
(0.94)
|
|
|
$
|
(0.94)
|
|
|
$
|
(0.94)
|
|
|
$
|
(0.94)
|
|
|
|
$
|
—
|
|
|
Basis Swaps -
NYMEX WTI / ICE Brent (c)
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume
(Bbls/day)
|
|
5,000
|
|
|
5,000
|
|
|
5,000
|
|
|
5,000
|
|
|
|
808
|
|
|
Weighted average
price per Bbl
|
|
$
|
(7.24)
|
|
|
$
|
(7.24)
|
|
|
$
|
(7.24)
|
|
|
$
|
(7.24)
|
|
|
|
$
|
(7.24)
|
|
|
Natural
Gas
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Way
Collars
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume
(MMBtu/day)
|
|
100,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
Weighted average
price per MMBtu:
|
|
|
|
|
|
|
|
|
|
|
|
|
Ceiling
|
|
$
|
3.32
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
Floor
|
|
$
|
2.75
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
Sold put
|
|
$
|
2.25
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
(a)
|
Included in the table
above, are 20,000 bbls/day of three-way collars for 2020 with a
ceiling price of $66.37, a floor price of $55.00, and a sold put
price of $48.00 which were entered into between January 1, 2020 and
February 10, 2020.
|
(b)
|
The basis
differential price is indexed against Argus WTI Midland.
|
(c)
|
The basis
differential price is indexed against Intercontinental Exchange
("ICE") Brent and NYMEX WTI.
|
View original content to download
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SOURCE Marathon Oil Corporation