MRO - Earnings call transcript Q3 2018

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Operator

Welcome to the Marathon Oil Corporation 3Q 2018 Earnings Conference Call. My name is Christine and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. the to turn President, Baber, now Relations. Investor will call Guy over Vice I

begin. may You

Guy Allen Baber

slide and found Christine, this close, press These that after us to quarter third website morning. the investor results. release, at address a our issued can Thanks, we you our Yesterday, thank be everyone documents and packet on presentation, for joining marathonoil.com.

and Executive Executive on our of and President Dane Operations, Whitehead, Tillman, VP VP call Little, and Mitch Lee VP Wagner, are today's CFO, Corporate Joining Strategy. me and Executive Pat of CEO, Development

As press always, by could implied statements and from today's cause call to release to as opening provide that our or the looking the materials, remarks. the I'll expressed in described such will statements. materially who'll in contain uncertainties the factors differ those subject forward I'll filings. over presentation actual well With SEC that, his call refer to results turn to risks everyone and included language Lee, risk to cautionary

will to Q&A then call open We the

Lee M. Tillman

thanks to everyone this morning. Guy, again Thanks, joining us and

capital against that operational returns shareholders. leading once strategic generation, organic of to per discipline. free and major ongoing differentiated by foundation highlighted is enhancement, by our our our and cash capital across quarter was this portfolio, Third resource unwavering multi-basin in compelling delivery to again priorities, debt improvement return commitment the corporate execution additional flow flow cash adjusted share, It capture underscored is and

adjusted as production no our and maintained we billion year cash capital cash budgeting have And on boe for on capital Specifically, row, program, per and have $X.X our annual both quarter. annual of prices differentiated began execution. plan, we debt for disciplined the our we a We guidance and guidance raised have improvement again have this third in remained share. consecutive original have return $XX our on change the our corporate raised development conservative by WTI. a outlook oil with outperformed growth oil quarter invested we to for And flow price third play resource focus in

not a commitment deliver. It Our upon capital suggestion. which must budget is we is a

through are by capital shareholders. for corporate We and free are our are XXXX, delivering and spending, model we efficiency, returns future. rather prices higher cash meaningful execution flow driving XXXX, improvement ramping our superior our This not and chasing for in the significant is for

to Our further peer organic allows support low-cost, million. to cash robust free year-to-date in enhances we will resource shareholders flow million the environment. the of sheet total all at $XXX with cash of bringing leading continue accomplish financial was over balances balance our flexibility high-return quarter above our with coupled during the generation and third $XXX that both This return are we confident to And current an successfully capture. objectives that strategy to enhanced us

we have Year-to-date, billion over of shares of our $X through now All are combination dividend. supplements shareholders leaving uses returned with share competitive this stock and returns-first $XXX a against the tested repurchased our And authorization million our of dividend This capital year we million have trading own already of of at outstanding. peer $XXX discount, orientation. repurchases. our our buyback quarterly to our

thoughtful and will buyback Looking with to ahead, we remain activity. stock disciplined approach future our

governed by flow guided generation. Our returns by cash focus sustainable be continue our pace to free actions will organic on our and our

the extensive bolt-on first We Bakken, three emerging such results well the resource Northern expected organic play in focus exploration recently also for on has framework for Chalk We Eagle sustainable spud the as that a resource full Delaware Austin in our M&A provides with approach large been Recognizing play and program. with Ford our the cycle resource is maintained in acquisitions our hard extension any Louisiana through without and transformation base has enhancement, capture means small sale, very position work in ongoing topical need core M&A. with four lease plays us. have focus the portfolio in multipronged improvement recent trades returns scale recently, that the our BLM exploration and behind differentiated portfolio resource on efforts, created best the primarily This our U.S. and complimentary on and a a XXXX.

We M&A our are nor it our execution success. of future a multi-basin consideration and focused capturing model scale at scale. the is required is are advantages for on now not Large

excellence primary quarter So of let's quarter-on-quarter. execution and the in In third turn We of our to total guidance capital our not while our are team was the numerous our surprisingly, in for production highlights end company exceeded returns resource the our and standard, Ford, and theme. to X% attention again industry. advantage the CapEx execution set play our our continues some of pricing high some efficient the financial asset Eagle declined development best driving where

Eagle Ford up sequentially. in production the quarter was third Our X%

up in the to County wells we Although year we of our was efficiency In core. with been outside impressive extended impressive has effectively oil relatively A the our while significant Capital of year-to-date Cairns the doing continue position. of to Ford flat, simultaneously hold County sales. production objective Eagle from outperformance less. results basis, prior are production driver XX% are results is industry-leading our a on year the our to on the entering as Atascosa more acreage XX% we extending Bakken, fewer core been deliver the has achieving

around equivalent record Three over During a best establish new included in an barrels record X,XXX barrels pad IP one IP resource a Williston Basin XX three per Forks North wells of new at quarter, highlighted by X,XXX well, oil achieved the day the day, of This Myrmidon oil the third of oil industry in completed pad X-well per ever Jerome which West cut. average XX% wells plays. oil XX-day American of the

cost intense falling working foot and the capital both the efficiency. remarkable execution XX% teams and an truly on quarter average focus results of efficiency per as alongside completed lateral our by below month delivering these numerator average; trailing an of capital Importantly, we our example evidenced are XX denominator from well third

southern in enhanced uplift quarter with part part second results our also addition We the success dramatically another Bakken follows delivering important the at to the two-well pad have completion Hector across our first inventory our Elk of our we step Hector northern forward test in acreage. in consistently quality This realized of extension our successful core strong strong Creek. test of efforts took a to the

the difficult conversation to we year. the pricing in at volatility Bakken about of without is have southwest completions Our enhanced addressing plan Clearbrook. test core our It the will extension a continue further to as area efforts before Ajax recent end

So, let me comments. make a few

below several multi-basin nine return at cost we refiners diversity DSU wells Further level of exhibiting more pad HR barrels the quarter very to a to from Both expect infill differentials the Potter section heavy we early have understand markets, begin XX% as over overpressured predictable, are move seven efficient, economic above of offtake XXX purposefully section rail, to key near days. transport the curve SCOOP, Bakken our XX% at most XXXX results and on longer the two to to average end incremental we with competitive the Brent more strong we of with and STACK marked optimizing model per pad and Tan exposure spacing infill the at to multi-well at per for spacing which marginal performance, per our stabilize pricing to XQ four and time is XXXX. section end believe successful success flexibility infill maintenance In at delivered at market to are of of curve various pricing and Irven coastal throughout an infill our spacing, deliver to were STACK, parent varied approach XQ highly Woodford broad per XXX LLS the development. a level, our our transition wells linked type While wells. important type XXXX to eight at markets, the economic that to will maintain seen term of to days. section similar improve and wells our overpressured respond it to is quarter's this Oklahoma, at out from We to production wells John company and the XX% In Midwest product, the improve trending Amplifying term development cost more we is at XX% basin our well pricing. highly delivered wells following above spacing advantage performance, at spacing production is markets the approximately third XX% premium In of solutions. of Leitner conditions. now

Delaware. Northern the Turning to

delineator preparing footprint, our solutions. and improve advancing future up capture further core midstream strategically are We secure as position acreage, and development cost our for efficiencies, our we structure and HBP

are making the XX by We company-operated in the increase day locations well through multiple stages month versus a on trailing average, our and play fronts per bolt-ons a since XX% and to increase progress gross in tremendous highlighted XX% trades entering completion XXXX.

strong key the IP demonstrated $XXX Malaga realizing an development our return capital at plays, contributed have deliver of recent value four on strength annual achieved in a delivering million early XX-day WTI, very We our tremendous also meaningful cash lateral at returns-driven, the remain of rate performance drilling deliver rate gas track quarter of flow also summary, shareholders. from encouraging over resource our XX% our financial integrated cut. again of EBITDAX XXX to In to by are invested enhanced which during improvement Wolfcamp cash X,XXX change Outside foot of continue a of in $XX solidly return pad of and we quarter. highlighted model. a results upper about while per third We to capital that metrics boe free in three-well in development on oil around multi-basin including XX% results, our world-class EG,

to ahead success XXXX, As not our will that rest we look framework change. assured for

level on flow We debt adjusted returns per improving share. our corporate remain focused will growing cash and our

our protect peer-leading will balance and our We financial sheet. flexibility

our disciplined generate the a our capital full growth outcome. from with to the levels flow of this oil capital return I oil And conservative the strategy you. activity remain to fully shareholders will Thank results lie differentiation we over generates model. simply multi-basin to for also additional and advantaged our The Q&A. execution and In our cycle our expect turn on in sustainable framework, cash price, returns. with We high-value our that to at continue enhancement strength happy by peer-leading focus will delivered. And the year-to-date that, free demonstrated ongoing maintaining of to and against we amplified higher while is set peers resource-based am the in prices. proof we've our points commitment us has flow believe we've free execution successful and has differentiate already the amidst as our frayed discipline framework cash to begun We discipline industry call our an

Operator

Thank you.

ahead. is of from Energy. first Simmons Ryan question Our Please Todd go

Ryan Todd

to you XXXX. Can into and manage, a congratulations and, course priorities to over we thanks organic free rough been XXXX. flow XXXX you to looking at some if, balance out, I cash Great, cash levels pretty on think generation on spend in as around activity think about consistent mean your about I little, like versus we're and quarter. give the start how just return Maybe organic think to to us framework growth how or you've XXXX. shareholders when the of

Lee M. Tillman

Yeah.

that XXXX us and no to and year said of year. performance from can things will again Obviously of busy integrating surprises we're, my release terms expect next to we that's in should our do away still we'll Ryan, get budget year. that and that, as in absolutely, year prepared approach a in differentiated but data think optimization this capital capital returns as in few February discipline, different you a We than It XXXX. So that continue opening be I commitment the from to we're multi-based the no take in with us remarks, our framework. just all you first this this

adjusted deliver free flow essentially to notable. debt this But year set unchanged rate change going going per essentially to production deck. look quarters drive a able is to strong to XXXX still and to think specifically our in play returns flow levels I our a consecutive while on guidance we're resource raise conservative of our corporate cash cash oil price organic we're across look three to budget and holding our activity share being

opportunistic sustainable, well cash can as cash the incremental Our an objective organic support that's going is as shareholders strategy all above of free that to our resource capture. to and return flow include of

growth, as we be oil margins Production process be not and of on because high are either/or already value is For output to an focused going I comments, to stated generated us, are where that's going it's very our proposition. much our growth in being my an

Ryan Todd

little lot recent spacing variety Maybe Lee. from base-case, play in of across about we space. maybe whether question activity spacing, the terms remain a lately It's bit play, in about should I STACK. assumptions. some strong Thanks. on window? it the follow-up latest showing peers a from the your you're on maybe various of you think mean, Thanks, overpressured that will your thoughts activity tests both of got Basin amount Can a of Williston and how XXXX concentrated across in a in results talk and attention

Thomas Mitchell Little

activity factors the industry. results. spacing three the development completion last in some with and mode combination to spacing, been SCOOP. we've pads of some differences development landing and been We're in applying the hone on the the in for the a well that STACK to We're And, our all well, seismic combination quarters starting different in design slides, integrating consistent help about STACK overpressured couple evidenced STACK in to highlighted but Oklahoma completion we're are SCOOP. And, the well We've intersection on. by as data continued kind the overpressured those we've now of to as And in talking very Mitch. it's the continue, and transition delivering advanced in of and is zone going This Ryan. and from from guide techniques of own the processing design. Sure, overpressured

number You there. see of a upcoming pads

the stay lower XX% on leverage the while And quarter reported drive pads last of performance seen with that. application from So, philosophy the two side we and that the to were we well learnings across capital to well those driving that even continue intend lower. across would basin to to continue all actually efficiency the the entire well specific we're We XX% our to above basins. in from improvements side and are both cost costs

with focus into our in our So on both the you activity and see program STACK of continued as going overpressured development XXXX. should SCOOP majority the

Lee M. Tillman

to there, fully going Ryan, go go as those is appraisal and predictability, our well, the Yeah. for efforts two into in areas are team clearly, higher the play delineation development But And maybe to we're striving just that entirety consistency, across as add we obviously returns. The XXXX. well and mode. continue of as

Ryan Todd

average of play there the the oil cost now? what's But in

Thomas Mitchell Little

and would got well Well, granular down plays And, don't we're regimes front so and there's of different of multiple that lateral there, Ryan. types, very pressure drilling to number There's we have right that designs. all We've I various lengths, me. in of to get we've got a lateral in, a various have lengths, completion drilling sitting level.

there. range a quite there's So

Lee M. Tillman

to the We improve But still Ryan, we there and have, I in efficiency view, at want think wells what's be relative in get where this, we we down. of Ford earlier, the lot yet? be already the Are at parent get is we to where we have and our probably a are that better there's as do to work to Bakken, capital Mitch notable we're comment taken significant done we're, step the made we Eagle more a going fully just about No. it, to bats. more still like

encouraged. very I'm So

and and going productivity cost in the a of focus is I portfolio. combination make competitive think our the to STACK the well very on SCOOP

Ryan Todd

you. Thank Great.

Lee M. Tillman

Thanks, Ron.

Operator

you. Thank

Our Jayaram is JPMorgan. Please next go Arun ahead. question of from

Arun Jayaram

thoughts allocation in I basins any U.S. morning. if give the between on wondering high Lee, us capital the could just Good level was you different

Lee M. Tillman

Yeah.

just as XX% But in results, Delaware And basins Oklahoma efficiency. and delineation, this capital delivering see strongly things the Northern two the I'll that can our into the look XXXX. year, reference, are in which of The view in well correct tell just an in too going planning budget the immense those other all amount and REx about you your also allocation capital were XQ asset we them are this be to key going of in that our move teams want you a we're to capital to We're is continue best cycle our we're our very the go capital of best positive around. keep spend, of our trajectory their capital part basin a compete allocation kind the Ford February as to even we so for that stated, At in a exploration corporate going And forward. I level play the total totality down is our for achieving development very appraisal, can on allocation. spend, context metric development for to XXXX. data be trending process in mature they earlier to the of incorporate I it's results and basins high to financial clearly continue every very on get little are resource one resource As with for right be of capital What returns where that mention direction. that and leasehold, thing pad and in also those our that and as got a the essential us you though remain like forward dollar we budget competing we downward Bakken to majority that's returns today, seeing to assets going the capital and expect going less to Strategically of directionally, we've Eagle the fund our level, much should early early the release. I play stated, capital. drilling to to focused of cycle. are fits the will receive and two That's for

Arun Jayaram

a every it's scheduled on, three thoughts for follow-up, capital the give us flow And that could bit little some the I very years, you a more a cash just and turnaround production impact details but give and us impact. turnaround That's helpful. on know

Thomas Mitchell Little

the maintenance field part kind from this decade activities few, turnaround, full And back as delivered work a or a ensure time long-term so. to reliability you'll have years In in three of to our we and that normal by of of the pre-install long-term turnaround equipment every event. like the look do deliver inspections major down class along a sort a type program, advantage and on our asset period we with Arun, the taking me rotating It you requires of particular of Let be there, of of have we start, some every vessel that preventative and shut involves similar perform over this if talking inspections some, turnaround about for case, the XXXX, see maintenance world tie-ins. this plus. typical we'll to also shutdown past QX

talked agreements that we're about gas the we've we to bring Europa. have on As progressing backfill additional Punta facilities through

those progress of to and continue make this to going preemptive tie-ins. those we're We advantage turnaround take to

view You our event and of think back to quarter corporation guide into, we XXXX. probably shouldn't saw the capital if turnaround the a the I the cash good this reference to even but as or XX% the international or you XX% to context on we in have, as production-wise expense meaningful this operations go for related in impact XXXX we that's

Arun Jayaram

a Thanks lot. right. All

Operator

Thank you.

from Paul go is question next Mizuho. ahead. of Sankey Our Please

Paul Sankey

Good morning, all.

Lee M. Tillman

Paul. Hi,

Paul Sankey

inventory. version of you is for of Thank that us address you're the please you. is? what Lee, of typically, that hi. your critique we or short that Can us and The worry, that Marathon give criticism hear

counter, should Your I say.

Lee M. Tillman

No. Absolutely. No.

on we've that at the that resource enhance feel as to quality. entry selective in And, enhancement about in strong from and bolt-ons did which with to producing certainly both some and and It Delaware, my Northern resource the already inventory. very Mexico we're life that's outsized the fact exploration established a XX% is in confident current progress even even we portfolio New and of very XXXX; our mentioned parallel, that. But of sale. Ford U.S. fantastic to offers over net base, organic always we've to in like returns are resource exploration BLM that acquisitions, a to It's the we extend you base program, we places remarks, our for our of plays, still with and in work that need of best does And efforts M&A. potential multi-pronged the low resource about and approach we we I that think our improve extensive include continuing the small those starts with high Northern return high recent that, lease when strategy the based gross activities look And come transformation some feel trade, done, effect co-op up then, few back certainly we since that in to that differentiated I really even The have very very opening position generate a that costs. the we've and Bakken. talked are back through we comfortable we play perspective ongoing that base. and The is Eagle original the large-scale locations continue We've on that to not Delaware. to most all have results in very of place replenish talked those. acquisitions the comprehensive

Paul Sankey

there. but actually, just it right a answered had you I follow-up,

there. it leave you. I'll So, Thank

Lee M. Tillman

right. Paul. All Thanks,

Operator

you. Thank

Doug go ahead. question of from Leggate is Our America. next Bank Please of

Doug Leggate

or morning, to to everybody. if I question I'm this may. take STACK it's Mitch in you back Good spacing sure if the Lee, want one, but a Thanks. not the

guys relative on spacing. peers, Because to of nine-well sure code as looks just saying at you coin had, guess, phrase the it your like again spacing trying with you've But, about your put the they've infill. per Tan I a unit. kind here to at to looking guys the what the And the has consistent difficulties I'm want are to group. doing been I'm four-well Looking cracked is Obviously, understand of out sort be type you of looking type the, at relates what to what seem knocking however beating familiar HR of pretty some that the differently? of it the to back performance you're Potter, Devon section it I'm park and in your geology peer I'm you to it, variability curve. the moving

color to wells great? managing can you're Thank offer would meet you any on be So these you. how

Thomas Mitchell Little

Doug. would less six the quarters and about we eastern some than And, tailored completion it think ago, instances Sure, greater strategy would is than out see to one to back the where the edges, few in far we it be came first wells Mitch. six talked This to the thickest wells design Again, expect section we talked per section. per STACK. say the best be section. were would approach the pressure of a the and play geology, I the we see development And of on and heart of and across we come

about. I period time and been is similar it that talking results prove view think we've centralizing kind that that around a would looks over out our industry of like

say the to with We've satisfied couple is without interplay how be And all comes another. you attitude style. if looking into horizontal, and that how unique never quickly got less. what over to think you well decade in look is got we're or we for The an advantages a at well our we've We've of I centralized approaching players, well applying. more completions. teams we're would integrate basically model that to data the unconventional between in same database spacing, us at the I of that recipe, landing zone completion one getting specific allows a basin The art X,XXX a yesterday. did that transfer within experience, learnings those got from over that

work sub-region the on cases across not that's we right to attitude advanced I seismic tailored specifically outside windows an some across the specific we within the from and interval, to target earlier geology, doing that many us and which in from capture learnings the work the our spacing in is the down mentioned target guide only own using all us focused we activity. to think We're zones to sure are the So making but the helps the right helping pressure and Meramec, DSU. processing. wells

Lee M. Tillman

Doug, proponent perspective, play. I Mitch going fits size one of, a it's we think, And as Yeah. have, this all not we've from my been just to stated, across be

That's we really areas Woodford. consistency, the overpressured feel areas Oklahoma focused attention even secondary there that that and and areas competence aren't higher within that have development the competence still and on not need that that level the don't these to say have to. STACK and We bring we to we understand our the of predictability zones like SCOOP same still

in And of what that development in those, of our quarter XXXX we you'll both but zones areas mix see the development a think of is really continuing in to and the so, I base other pads both field progress the talking future. to we've play also started other about this that knowledge hope move to

Doug Leggate

and characterize quick of appreciate may it follow kind up If Guys, here. as I a try answer. the I

to terms Are you full point mode area move if development. yet? the how call line now of at now, to transition you well-design, from kind is are field development much into development have So of running a field each room do in the early development sight to you a full this ready bespoke here of

Lee M. Tillman

Yeah.

kind overpressured two those we areas. into we that around appraisal where I elements think is areas are the at development as Woodford, just for would Doug, of addressed, view and to two those today. STACK, work our and the hang we XXXX delineation foundational the are which that and the the intend We Meramec SCOOP specifically moving

Doug Leggate

your type the you. Thank parent going I'm curve topic the It's me. a type average curve The developed there. assumptions forward? parent/child was from one I'll curve afraid. Last same leave Okay. fully curve, for or it a

Thomas Mitchell Little

Doug. Sure,

Doug Leggate

MBOE, XXXX XXXX the I'm at looking at. MBOE, I'm sorry. is what looking

Thomas Mitchell Little

yeah. that parent type of quite have there average and that or across Yeah. out blend to had in our would what that view a out infill particular we type curve We've are you XXXX as curve curves a while that think, forming as curve know MBOE, I and area. describe wells type put tried expectation for mean we to type and

it construction data provide as a expectation to for to blend to to about own we're think So you we inform curve as going the deliver. your continue But, well. what hope as actual can type an and of

Doug Leggate

It Thanks, got upside I some comments. risks. this your like appreciate looks guys.

Lee M. Tillman

Thanks, Doug.

Operator

Thank you.

Our of next ahead. question is from Jeanine Barclays. go Wai Please

Jeanine Wai

Hi. Good morning, everyone.

Lee M. Tillman

Jeanine. morning, Good

Guy Allen Baber

Good Jeanine. morning,

Jeanine Wai

I just of as your has on and you and the specifically also resource also you given view some the it guess really Ford stronger valuable the that questions, generate Can approach and supporting bit is results the Eagle priming that think cash improved from the the allocation talk should Or less of of and progress business case and, the of now highest clearly, more mentioned? for little your how specifically, parts the you especially reiterated that but EBITDA? made just Then, you commentary some in don't provides a this Delaware Eagle Oklahoma that supports than in pretty a, we capital Ford. lot about because the results have other necessarily a returns immediate results plays, where asset well I a think, adding perspective? year-to-date of activity? up portfolio did the you the more other about with following delineation a support changed inventory the are

Lee M. Tillman

Yeah.

strongly deemed lower large in mature long likely the Janine, a relatively uplifted but allocation. that it's and very ago, the there competing would have the not us, have we now for for Ford the think unique of as capital of as tier we so not is sense I a value asset that Eagle portion acreage probably,

of say, engine. we and when further we that's use plays into to for want to Eagle what flow, Eagle I play cash us flexibility as look that Obviously, is the use of gives factors optimize at portfolio. it we free to existing certainly to maximizing Ford many they role optimization, capital these our Ford We deliver on stated the or do at fit capital what to as think the you multi-basin more if spend, side. looking a facilities efficient the can including look grow at needs it it can the how we within it broader infrastructure the avoid our does us we're

of say profile. rightly and But excitement Eagle within very asset to growth a I cash want think capital. the portfolio, of very ahead production we're in whether with capital Eagle fully calculus All or see under those efficient. in free that's terms you strongly we Almost to generating XXXX into lot the of the of any innovation returns we push flat beauty is there, go level flow They Eagle It's compete it Ford. continue a still things Ford a beyond. the that fantastic basis seeing the where slight our expect of on again Ford in push and envelope But, a team. scenario, on we there's the to as

Jeanine Wai

frac question Okay. cost. a is I to on out well opportunity by cost guess lower like Thanks. And second recently crew. my It switching you an took sounds

further or other look primarily cost it forward, we what there through really savings, locking whether As opportunities are maybe that's just service self-sourcing continued incremental well or efficiency and opportunistic attractive on gains? for debundling in is contracts,

Thomas Mitchell Little

you but a try Sure, I'll Jeanine. all to This the more give answer context. is is little bit Mitch. of above, simple The

meaningful stated, the to a our different service made rightly we vertically of swap of completed more you decision quarter an intentional model one internally Ford, frac allowed out Eagle of crews seeing We're us to already supplies type result third in those. to commodities integrate that. but, was which in costs as well As of a and self-source and contribution that to the

hand-in-hand with more efficiency that. things opportunities which terms or commercial cost per to regional transportation. day, number of And, a lower using to sand also pursue improvement continue sources, self-sourcing, would pump at across local have the a efficiencies coming We looking and partnerships, that relationships of like are we expand continued completed drilling stages press side on the basins seeing time we're continue or where in of the

intensely So, cost our all-of-the-above an focused side. the efficiency equation, teams strategy, it's on well are the really and the well capital performance and side both entire

And so we see improvement of in to our spaces, and structure. further efforts those cost opportunities still across many drive

Lee M. Tillman

really providers in seeing And at some in market fleet to I today. side than We're commercial where the lock drilling the our have element to think, we never opportunities on Jeanine, some terms. term of commercial just And, in diversity strong had more dollars, frac our the do our the, are we up things, obviously, on on side. and service of the we frac we when spend look

to us So, all basis. into costs things of those on allow to continue completed to well coming down cost play are drive a

talking is bit above also a guidance. in mention our basins sales guidance all in fourth just and midpoint our within I The moderation to the, aggregate, a still their the little about are of since of sales quarter other are we're little full-year, wells thing will we of bit wells that to in for delivering

some these occurring There's about we're of So, things are step cadence variations our very in quarter-to-quarter. some not the here. talking normal here are, change

Jeanine Wai

taking Thank Great. my for questions. you Okay.

Operator

Thank you.

question Morris ahead. Our of Bob go from Please Citi. is next

Robert Scott Morris

congratulations, this and Thank you, Mitch... a nice Lee, year. on execution

Lee M. Tillman

you. Thank

Robert Scott Morris

Are questions you of STACK? in ...on, most using you've to these the STACK, you've point but management had wells on the one there covered, sort bubble of the question. cross overpressured just on you when on certainly. choke covered quick part I control the over Mitch,

Thomas Mitchell Little

Yeah.

bit and I Let me management come industry really that I'll there's a could, to question little from answer characterize the is, would looking specifically. higher address your I ongoing some conclusion if do and drive kind integrating different evaluation that bumps, moderate a data and kind a show to two the by early flowback those on of our impact the we to into we these but in on pads wells. under choke And There's It's pressure based to the choke and strategy, obviously a say understand monitoring strategy. chokes on But history way if bit and of Bob, kind activity. and aggressive recovery, use But, ultimately would done based handful experimentation it level that that activity. efficiency. up flowback overall combination years to impacts of are ultimate we've how a capital the reach we're fast operating trade-offs, participate that ultimate bottom-hole of slightly any EUR strategy, real-time, how generally, any, We of this. We on plus would open and not lot in that I between noticeable returns final with with back strategies.

think well impact these at noticeable on continue we going pretty how and as point, our we're keep to on we've EUR. don't, So on see any we this operate focus returns to landed wells

Robert Scott Morris

was helpful. you Bakken see south? Thanks. the in on the it wells my than there surprised that rate flow encouraging Lars And Three Were the to two Forks is, results on then follow the higher Okay. That's pad. a had that the up the far Middle Bakken

Thomas Mitchell Little

the the extend and been Elk surprised has upside done the we've that across Hector there over we and of course into work Myrmidon think core really to successful as have pad out to I the last quarters Hector of team Creek impressed with several the the well.

in activities industry greater you're fairly with peer the characterizing that very think well and in positive But competing of activity are wells have direction middle surprise pad the Bakken. been than I and has two extension and overwhelming Lars the Three the those Forks out been kind activity there. the even of

Ajax test Lars. several encouraged southern tests We're very to portions confirm years a to track area in we're extent down our on the in few the So, to first by continue XQ. overall course And more that. Hector in of of going the of during have

follow on that. So more news to

Robert Scott Morris

We helpful. Yeah. to that. look That's Mitch. forward Thanks,

Operator

you. Thank

Our Singer ahead. Brian from of next go question Please Goldman is Sachs.

Brian Singer

morning. Good you. Thank

Lee M. Tillman

Brian. morning, Good

Brian Singer

were to it buyback, relative wondered at you the you valuation ramp were trading the would a talking be of was when could your that part i.e., decision I your about up discount? how priority capital the your the you essentially in what if be, discuss second Lee, on stock. based not allocated stock And highlighted would

Lee M. Tillman

Yeah.

the decision. if uses could and in we on that of REx really we extent was have think us made We that for work activity small hand. And multi-pronged to was about opportunities that that switch resource other bolt-ons Brian, competing developmental ultimately, that mode. that that wells for for kind adequately also is everything we have right our start We test given in some share kind considering to not mind repurchase. the have approach, Clearly, we that our that really this the of capital predevelopment And multiple in many pursue into found I REx. will bear to capture. go returns-first obviously have we toggle from the orientation, capital, the talked that hope,

requirements funding some be could there there. so And

competitive We is That's dividend. have exists a see standpoint, billion an certainly job board, something have don't debt. We a no a $XXX there to peer was also be that year an dividend could evaluated tested did that It's maturity fantastic each and to taken. action already and of share be every we needed XXXX our discussions with Certainly different annual reducing gross that that if today; than area quarter XXXX. assessed in debt until repurchase. our a in from a a from

a how So I and see required it, there debt we standpoint, standpoint but broadly would don't Brian. metric really we action from lot think think a really a of debt through that's

Brian Singer

would those how the see drilling rate additional significant How inventory is question is here? County for additional that opportunities set return When That my you of extend is follow-up of resourcing, do follow-up the early Atascosa opportunity then, with potential you're and what actually slides, one highlighted significant Eagle locations from on Great. in of Jeanine's the And the Ford. you the helpful. in about you be a to now? think to consistent

Lee M. Tillman

economic inventory lower when risk risk Ford and drive would standpoint, those returns a rate. that returns. of was same contributing uplift would inventory Atascosa centered already we that around we value. effect have, think that the area even County Eagle and is value that expect time more net over of obviously work a higher performance kind run Well, of and at asset It Yeah. the so, just effect inventory this the about obviously the at has been from it team The to extending

is our on And also, Eagle absolutely Ford. that's mind, So in this bear there. most the a basis, positive in underdeveloped area go-forward a

Thomas Mitchell Little

IP XX deck, highlighted Hey, Brian. just would This X,XXX. I the of in average Atascosa slide XX release wells add to that, is Mitch. quarter we the year-to-date this in across

are back go now online further, bit And across new we've consistent the that here. XX generation we're XX reporting with the with a you If that brought wells those on little pretty across over Atascosa results we XX completion. have

Atascosa have in expanded we firmly So, County core, at view. our established, across the this a expanded point core,

Brian Singer

much. Thank very you

Operator

you. Thank

Capital Markets. go RBC Hanold of Please Scott Our is ahead. from next question

Scott Hanold

morning. Good Thanks.

Lee M. Tillman

Good morning.

Scott Hanold

step years, the to and be the and peak. all-time been running I kind have heard, assets I effectively there's of you is resource over What Marathon think I look basis pretty asking sorry, couple think I of I'm Bakken's the see of if you're high. the over opportunity would think running say, the does it's next much room most of on Eagle it and room think, much your those. helpful questions be more of Bakken the guys circa the and you lot Bakken's about would Eagle I Ford, the And, fantastic XX,XXX years? Eagle How a Marathon helpful last of Ford I back for think couple us some when you those at you growth the below at questions and have how left. say think Ford, grow all-time do an know room

Lee M. Tillman

the into push Well, going to growth us little we've have at even a look certainly, enjoyed as with Bakken core there's extension is Yeah. hopefully the a material that role doubt play that that the Hector area, forward. for going we very from to further, Bakken today standpoint, as we high potentially this in even oil value Ajax

infrastructure I the think, Eagle and field; like the back drives depending think there the the as could performance the see actually modulating we I that mode profile luxury have multi-basin into earlier a either of it get Eagle optimization that in the year, maximize we I efficiency we it upon Ford or show really Ford, this of on the return. have flat capital a ultimately in growth more stated to capital and could enjoyed how

extension combination. enhanced at So, of in drive the that's result time. inventory pretty flexibility, under combination of ability to an and And of economics the uplift team's that any productivity, scenario, of I a minimum day, an the costs powerful lower, well expectation value. end And, is think and with is the will a view continued net even our the be the lot but the

Scott Hanold

Okay. it's Understood. going worry you than what It about grow at. considerations sounds to say, like more economic know,

Lee M. Tillman

Correct.

Scott Hanold

how to going to do you for framework I XXXX? do like mean today, don't How for hedge how ago depending do, can, oil think the feels mind. you were use XXXX on weeks in you some is guys price I change. certainly, just know and And on whether back used or going forward, look oil some about but I budget as perspective? talked what has And the as forward conversations. year, conservative, consider if conservative you it about a you then, for, price how budget the from also, going you plan that $XX then, can long-term kind you comments this you and of of being we budget portfolio at think But what eight you know with Dane that the

Lee M. Tillman

Well, right. Yeah. you're all, of first

to XXXX, organic in For generate designed we had free plan our cash world. conservative flow WTI a $XX

pricing the is toward with forward. remain orientation. our where is oil oil We We oil However, bullish prediction of don't think weighting a a pricing correct planning confuse on basis headed. going

do development the you side? We basis and provide want planning into say oil However, That on permits our forward in confidently actual should our of view headroom again program XXXX not commodity across that will where risk sustainable flow to to conservative against deliver us be cash trending confidently pricing that should basis, a where about, basis few that our forward to be. price with actual generate confused between to of allow plenty maybe be Dane, deliver budgeting, and to of it ensure our moving a we may us can all-of-the-above things a will range prices strategy. necessarily hedging free outcomes. however, similar you broad want this expect

Dane E. Whitehead

Scott. Sure,

As year, upside. target use this of know, you production we about the that XX% And XXXX floor to our of three-way to structures put as oil preserve under. we a we set of into some came do to hedge a

into we less if head and fairly focused to feels as the a add very to as And things billion frankly we've level. at have As I we're been significant we've sheet $X.X And liquidity, like in head generator, all. be gone we be (XX:XX) Permian place on it be Basis going flexibility right through the hedges We're to slow got XXXX (XX:XX) now hedged, for XXXX. I'm and that, we billion with very (sic) cautious. think into in flow XXXX to the XXXX more cash become more on are We've hedging. free like $X about going XXXX half balance sorry, to [Basin] of cash

XXXX. more think than I we've hedging done So, into And, head price we that a on. we'll fixed nice job on as focus probably

Scott Hanold

That's helpful. real Thanks.

Operator

Thank you.

of Aschenbeck go is John question from Our Global. Seaport ahead. Please next

John W. Aschenbeck

questions. morning thank and my you Good for taking

Lee M. Tillman

Good morning.

John W. Aschenbeck

you've was of But far, efficiency haven't earnings has been benchmarks longer-term improved that this more your a since had XXXX hoping color there's consecutive which considering on so time which production lot has the raises. updated you touch provided your U.S. since in capital year. but I QX so clearly, significantly been helpful, three February to guidance on So,

And to any and So, benchmarks? possible, when those curious, look if are year the longer-term Would quantify you benchmarks. longer-term less in suppose or be? implications the update I the and that this come what the benchmarks rewind your expect what how beginning now I would longer-term like in could I know year guidance? know more what should much with XXXX the was to the on is, if they to better U.S., or then we an if what outperformance you've of your you seen U.S. would formal I'm asking wondering was there's way

Lee M. Tillman

its flat on John, of everyone the I business And, time you're really all, guidance of that understands of assumption. the point the CAGRs showing were starts starting plan as that a to the make was XXXX. start outcome just of longer-term first. the look maybe part But, I of portfolio were first XXXX kind options the Again on mid- that, fixed demonstrating referring it corporate look geared but really really, was Well, to provide point. a a something for is an illustrating may in yeah. be we that returns that we in potential us, being sure with and at plans of at guidance that as to focused price those view with believe transparency potential growth we toward a portfolio. want Yeah, returns just premise case We'll at continue that process to that not of or again to, really and XXXX even long-term the that

what in be XXXX capital high value, but focused to focus overall allocation going production output of very where that so is an for on be we're a going us, also you'll of very again, see kind our margin oil our is philosophy. returns-first much And and will high

that's can ongoing beyond of, today. terms still I In forward not performance this XXXX will project and XXXX, on but how capital efficiency year that's impact only even work

you beauties the As and is plays information in day of really and one real integrated that and might being new we data resource performance time. into get and our each of new is, built imagine, every modeling, the

It's essentially is have in point other The is on flexibility we that that a that allocation general capital would thing out moved I we've where budget mode just to something is in. dynamic. something

and move ample we allocation as and to XXXX way. capital the all commodity multi-basin see through but We in the changes along that model year costs, a will we set as plan we pricing, the to performance, budget see see have flexibility as we for make tweaks

path be it But during on can is time focused We'll in view. flex bit point the a it's be. So, our those something way that will achieve a That's delivering year. always the our commitments. commitments to

John W. Aschenbeck

Lee. the Appreciate it. color there, Got Okay.

Lee M. Tillman

Thanks.

John W. Aschenbeck

the follow going match a once buybacks proceeds bolt-ons, on forward. to buybacks, you fair cash to excess leasing, with and billion around your small it my of bit, a organic other little to then authorization? then in to was from that wondering, appetite little for through keeping program move sales And the like flow? your I up, $X that sheet Was high hoping expanding up keep get small approach that what's more free you'll remaining for regard cash detail your uses is with So think transactions balance level asset Thanks.

Lee M. Tillman

Yeah.

flexibility year. market lease the to I it share sale is valuation. but sale, sale generation. that today, be example. sustainable into sheet. good is The a buyback the of would this our of a available strength of against a by the delivering lease great offers could view cash of free competitive themselves and quarter as current to our present free of go we is we think, be that might be pace flow It, We informed of very our or discipline our selective, act program. small very the still ability governed our use is repurchase bolt-on, lease. organic strength And returns again, opportunities sheet, given proceeds view capital achieve we fully are going mean, our that of forward. on cash, that proceeds. also not the do to very And the disposition proceeds resource reliant drive of be program. quickly Those This and exploration is in proceeds But and do wanted fact, funded decisively that while to because to more REx disposition leverage could going we that I program balance year, not play the able to us with received than successful want for it, second were lease and if the balance opportunistic in disposition still we use right decisive our we repurchase opportunity, about also what our very our activities that a That shares in intent.

the our around to it's would be dollar-for-dollar you shouldn't repurchase. just expect both not be and do but model inform generation that's we if too, a, add continue is certainly that's to flow that thing want to final as it's of governor, again I it a XXXX. proposition, to match pace, one an will, move able John, exact an decisions maybe will certainly that's cash those progress something I to share mean, we between you either/or So, free that not match. simultaneously, into going

John W. Aschenbeck

time. Great. it Okay. for Thank the you for That's it. me. Got

Lee M. Tillman

Thank you.

Operator

Thank you.

from Jeffrey Campbell Brothers. Please question ahead. final Tuohy of Our go is

Jeffrey Campbell

quarter. the great and morning, Good on congratulations

than tighter results Just with Oklahoma agree the Woodford Meramec? the, notion Based the discussion. quick spacing the broadly your today, on that follow-up a do supports the with you on

Thomas Mitchell Little

to spacing is this Jeff, generally Mitch, in STACK. there But you're would we've zone the to well a than in think about referring activities per again. our landing on the we if I And, vary more see We of approach based as talked SCOOP, in tighter or the those in number development in design is a and occasions, SCOOP and in geology variations STACK parameters reservoir bit quality the going on the see the pressure. consistency Woodford.

the that higher Woodford. so, average well we SCOOP to is likely would in spacing And be yes, agree

Jeffrey Campbell

I I when And that question. SCOOP color. for yes, about was the Thanks the Okay. thinking asked

up to that sounded interesting southern thought I extension Atascosa, inventory acknowledged organic this creating, better, creating, up new like Following potentially Do organic view you on getting which the previously of area effort business or or of the inventory Lee's in are evolving the because are came Williston the the in Williston? similarly something description locations results in call.

Thomas Mitchell Little

Yeah.

it we areas characterize in from that be to value at same long-term some inventory efficiency now. those able to new largely improvement achieve. improvement I has them think similar. for think what The value, our of we primary risk different opportunities than continue you plans approaches in significantly been as try been in these carried would we've may but There for the a the largely benefit revisit generally capital but the that. We have can to

Jeffrey Campbell

And, certainly if earlier. in case, could might fair? these that the likely that far are in than locations have they that up, the could I current were they just the that environment being follow been capital be way attract Is it that said more viewed to

Thomas Mitchell Little

in Bakken dedicating some with we that in I you to how were bring I but XXXX much evolution our that we year. work could done, was had areas. of moving it is when revealed improvement our seen capital we trials the the confidence surprise was great on market the to-date, into the that of other those the There probably to and backs the in from this back Yeah, we teams strong those had technical returns think had allocation and for the fair. And beginning

statement accurate sure. for but So,

Lee M. Tillman

Jeff. that, just to maybe I'd Yeah. add

Jeffrey Campbell

Thanks great. so much. That's

Lee M. Tillman

almost anymore I shocking unconventional Bakken want just talked have world-class little bit in ever the best as me. just wells spoiled It's we've some We've pad on gotten a allocation at capital a certainly like America kind zero the XXXX Lars of lot I most look the gotten, today this, that and success at completed where jaded of wells about been is me we are look and portfolio. that feel instance are of Bakken. interesting to what the we've compelling I the has for X,XXX these all you in that's that in of across XX. I day average portfolio. on turnarounds And, in kind from been point you not From and an pad quarter, Myrmidon most the stories at sudden, I a pad oil headline grabbing the to And, of IP this today, at only North ourselves we look really, which look but the to mean did one well to compliment per in our the of team Jerome space. back notable that it to the the of which our even can barrels is one incredible find not

Jeffrey Campbell

and been I've EURS. remember to wells completely. was just And they're you we with barrel now agree enough at when look these long XXX,XXX around unbelievable. I it

Lee M. Tillman

Agree.

Thomas Mitchell Little

And comments. trailing And, it's XX% of of backs are well on But, think I but all that on bit basins. about across is than lower equation pile XX work the much, months. also the on Appreciate the to of talk costs here great part as too of not cost the little sides the the and both well flashy IPs we equation underappreciated the a there. Yeah.

Jeffrey Campbell

I Okay. the for Great. all appreciate it. Thanks color.

Lee M. Tillman

Ok.

Operator

turn I now will you. over Thank for back Lee remarks. the to Tillman closing call

Lee M. Tillman

deliver results dedicated in wrap Well, thank Oil safely concludes our contractors saying, without that XX/X. them. your We to excellence execution, by employees Thank I thank you would to interest and much. you up just our and you Marathon like That cannot these for very produce call.

Operator

and ladies This Thank for thank participating. concludes you, you you and Thank gentlemen. today's conference.

disconnect. now may You

Marathon Oil (MRO) 8 Nov 182018 Q3 Earnings call transcript