MRO - Earnings call transcript Q4 2018

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Operator

Good morning and welcome to the MRO Fourth Quarter 2018 Earnings Conference Call. My name is, Brandon, and I'll be your operator for today. [Operator Instructions] Please note this conference is being recorded. And I will now turn it over to Guy Baber, you may begin sir.

Guy Baber

Thank you, Brandon, and thanks to all of you listening in today. fourth we our press well XXXX full XXXX close, presentation and as the year addressed results. that capital and after issued release a slide our Yesterday, XXXX quarter budget as documents on website found well can our our investor at quarterly Those packet as be marathonoil.com. as

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

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

Lee Tillman

these XXXX with as joining our strategy, that upfront weather believe consistently. full thank on execute mystery differentiated like the results, little sharing a that our Investors Thanks, right proof are XXXX assets, We to well first, and Guy, it's for performance we in program. companies capability a commitments balance stands that of looking are the portfolio right strong have thoughts sheet as as for, that it's have our take flow, believe the to as don't operating and investors, scream investors returns free on what well to flow generating straightforward. and time have I'd volatility, morning. putting We sustainable point. us share criteria, a potential their cash to and cash to financial capital looking both you our this pretty year that on some have XXXX to and everyone

Share orientation, differentiated repurchases. value efficiency proceeds. sale capital not tested alignment finally, E&P at transitioned in of way have returns play to be and confidence given as allocation return touchstone and clear drives resource high our our and growth also disciplined outcome to an to our clear our we execution growth to prioritizing Capital working with of very and flow, enterprise share is and U.S. discipline led our and of for growth for discipline, multi-basin and been through discipline been XXXX that have dollar advances capital For delivery. And sustainable has company repurchases by on over our it been thoughtful XXXX growth production and emphasize base. will our It capital economic throughout with resource generation we the discipline we capital generation, we a of capital core At in the returns flow is our asset first ensuring our And It has XXXX, in objectives. that and differentiated our it begins as capital sustainable Marathon, enhances process, cash us a differentiated level, is prices framework delivering industry strategic means model, well-defined in dividend by free capital our competitive free most conservative peer underpins for successfully cash while drive is XXXX. buzzword enter flow cash definition supported about high-value improvement margins both spent sustainable back of certainly flow, efficiency. sake. oil commitment set continuously be the commitment We've free shareholders, a at also to returns must success. ensure every cash the both execution very simply to the

business, We of during year and of never stuck when plan, aspirational. the E&Ps set benefits is definition the prices XXXX. beginning how the of as half spending billion year successfully through capital portfolio. and just need very proof a increased points capital the industry a the A that run managed our budget. we $X.X our oil reality, it outperformed the down, add never over activity of of our our Marathon, from our development the look budget many inflationary remains conviction broke few We At didn't an discipline is you harnessing capital one many, through at we wavered, their we as it environment first is goal to the For and that horizon. always ending only discipline at XXXX multi-basin

of above Ford significant we when to X%. $XXX almost well million dividend the alone activity returned post planning yield across organic flow, got acceleration, a translating Eagle in amount Bakken. per is WTI of This Our capital, and and success oil great of debt cash And, capital cash And flow outperformed oil capital organic basis, the peer core our prioritized of the adjusted We let more an budget especially gains free dollar share, on growth had in flow finally, we significantly we yield E&P our for And shareholders. meaningfully organically we three generation outperformed of base invested. impressive our and a we guidance financial return to commitment. back key cash capital a flow group. it every cash metrics, cash efficiency beat production average our corporate for invested the quality $XX single inventory portfolio. suggestion, our that on through market, free efforts, is instead through flow our initial our cash of extension free broader cash improving is We not delivered

$XXX in by end the And while flow. by annual we to we sheet we peer peer cash funded million our this, the shareholders. of year to cash, In free cash addition our over balance back equivalents our billion to total, group. in $X.X million a competitive of net $XXX cash our stock with maintaining operating flow did EBITDAX million back entirely XX% ratio and brought organic the bank, lowest In further bought all strengthening returned in $XXX to among increasing debt by dividend,

for foundation never has been stronger. delivery Our

we our assured remains As framework for beyond, our rest and focus that same. success turn to the XXXX

Our in we equate two-year cash all recognize WTI outcome provides both does outlook breakeven XXXX we drive shareholders. visibility flow on returns, a starts and an capital business. a commodity free planning flow $XX basis of free that $XX Though our WTI. flow, continuing essential with profitability. to to is metrics meaningful the enterprise sustainable cash lower most, remains alone and free is It prioritizes production cash commodity not and XXXX to it and return organic point Production our growth at which generate above in price matter

Our metrics. forward both performance outlook adjusted flow Cash executive cash our and which key scorecard continues of last share, our enterprise on of year. invested compensation multi-year per to were capital rate improvement in return change our debt added

the and At pricing, $XX powerful doubles dramatic to XXXX allocation. we our concentrated of the will over compound the a of combination change. to focus the XX% growth capital driving WTI portfolio capital on flat assets rate flat cash pricing. resulting XX% our and to transformation highest focused annual of WTI and allocation portfolio this directly is on to power respectively $XX forward Our on margin drive is of XXXX, Comparing normalized invested XXXX time-frame. and CROIC transformation XXXX our our That return almost underlying capital

of we both More oil WTI two-year specifically, positive XXXX need to in with free won't even cash generation $XXX will outsize cumulative organic price At free over generate and flat Our prices million. flat do forecasting are $XX XXXX over view WTI, organic XXXX sustainable free we flow organic cash flow significant flow of to will cash WTI, $XX $X.X rises billion to our it. modest current At our cash capitalization. over leverage XXXX flow we or and market be support. above generation $XX to cumulative XX% free

only is free highlight Importantly, two-year The cash into view flow takeaways are from following. XXXX. robust, the XXXX our and outlook improves our compelling while this

year's incremental to upon need cash the on of our front to though returning and organic adjusted have valuation, the by success comes and underscore per for to resource we additions high our will transformation E&P building scorecard, to heart capital large-scale this a remains any flow sustainability cash with to to flow yielded our broader fund multi-basin enhance of XXXX, a return means. proved sector, Differentiated and price but at disciplined driven we generation, return market prices prioritize use a our M&A, returns flow offering yield, cash framework our period, well. sustainability flow shareholder to have that it. across this we the as on continue momentum our free relative significant a resource and joining continue stock very should over our competitive upside to only portfolio the return share. return flow high outperform repurchase builds capital drive own a base. of to shareholders, we commitment, debt compensation continue the introduced commitments as cash and our planning current deliver that extensive new our metric we back enhance cash represents approach through of to not we at oil our executive leverage efficiency portfolio execution just our obviates comprehensive ability support, even And of our good growth, forecast improvements ensures discipline, our free market to through our Crucially, Our free Further, as unsustainable not free to continue remain the instead to oil will to base of returns. modest deliver cash and XXXX in our will in we capital has capital last multipronged quality compelling our basis, chasing And commitment our prioritize

efficiency the productivity existing returns inventory First, technical our of we innovation, organically and and are upgrading reduction. cost through

in of Not Ford of the our remaining our inventory has continue, deliver only existing of inventory same position, much We the have improvement efforts these our quality output. the basins, need to had on to inventory value returns the going does life drive this uplifting fewer the on expect XXXX elevate the of also this core net and Eagle great focused efforts in those far, Thus front we have and extending and of of Bakken both productivity been quality plays. inventory. in forward. enhancing primarily the wells it further will our we Those effect as our success extending

and However, equally to our the leveraging of our our inventory. increase teams workflows learnings are quantity

successful teams our addition in tests, full that alone are to out, While opportunities take Bakken working and Ford include initiatives all than across trials. more hundreds These and will areas prove of Eagle on the potential represents acreage we pursuing new our of to the extension year opportunity new in some enhanced and will prove locations hard the set are operated application initiatives not of optimize organic company gross portfolio. in completions spacing one

Second, trades we existing accretive our small bolt-ons continue improve base resource through positions. around lease our sales and to

this the We where our in on Northern gross location successfully have count front have by play increased XX% had Delaware entry. operated great since success we around

or earlier the XXXX the with to in already outlined. received Third, progress details have of our than leasing acre our program in at that cycle strategic returns resource Transitioning the on All focus funded net to objective are first XXXX plan REx. The is we acquired which fully than play other per and approximately acres I entry low emphasize by would disposition $XXX of Louisiana continue Chalk resource the program, to through up cost. are core with less of I objectives additional We proceeds Austin pursuing finer a and prove full the opportunities. our emerging specifics XXX,XXX in consistent more year. exploration

in XXXX approximately $XX billion capital. and and planning just to powered of WTI, by oil above company remaining and is about $X.X consistent wells production first billion WTI our capital sales. XX% with exploration by to capital of development flow Ford, with and oil XX% basis of X% We resource dedicated $X.X of generally in oil and dividend. U.S. spending total industry-leading and capital growth consistent Bakken, this wells returns returns, High-value $XX of Our from to play but last year. XX% margin is with leasing cash And down efficiency. will to $XXX the cash comprised flat with flow on Oklahoma the the our exceed capital resource XX% free million deliver allocation fewer year, Ford high growth total continue anticipate budget growth post our framework. is plays, is mix BOE meaningful organic growth In gross reiterate, development free the we grew Eagle our sales. Over XXXX We our production Delaware, U.S. operated compelling will to on Northern going Eagle to to the XX% capital going and oil

while with progressing capital in Northern of wells step we with will we Our performance the be position growth free while and our flow Hector, delineation in we Myrmidon XXXX sales another returns over-pressured will of robust STACK Hills delineation. infill our extension momentum established returns, our by progressing the activity fall on attractive upper In across we our keen Woodford In oil SCOOP along In investments on productivity competitive change the improvements. in the targeting and and XXXX to will will well the deliver core focus are predictable target as strategically about the returns the pace XX% secondary XX% we Oklahoma, efficiency Malaga Delaware, Meramec test and and building fully activity cash bottom-line upon continue leasehold. also our set Red Bakken successful leverage improvement. concentrated have Wolfcamp in and and a recent strong concentrated protecting around to core with acreage area. development

ratable REx Chalk a cycle the spend as progression profile opportunities, with materially a Louisiana on down emerging all as supporting other reflects of focus forward and Finally well more returns. is full both Austin spending

employees comments, and made company. who execution all our my a out of XXXX our year contractors thank such close of differentiated would I dedicated to like As for I

never with to momentum continue has we and our framework Driving by delivering sustainable strength, you E&P generating Q&A. I'll on and back cash hand capital powered future higher, since an differentiated that, for been free all from to brighter begin returning executing execution. becoming the for multi-basin and portfolio to flow, build independent Our the Thank shareholders returns And corporate to success. financial our our on XXXX it will back listening. operator

Operator

go JPMorgan And ahead. Please from Instructions] [Operator we Jayaram. Arun have

Arun Jayaram

thinking 'XX, REx I deck flow 'XX free you the organic wanted you $XX shareholders, the think of this but generation, about of return? for $XXX million how investors cash how back Marathon to I'm and again Lee, should free that return about ask oil spending think X the of REx to flow the and about cash some go obviously to at before in spending, through terms where excess just Slide potential cash about in is you

Lee Tillman

record flow Arun, the form post of as organic to repurchase. Yes, obviously strike share that of - the XXXX you we at absolutely that could numbers, Arun. Well, I think REx through cash XXXX, to in our important in look balance between shareholders, significant mean, also of returning million back million cash generated funding very flow track returned certainly of free the I were but a dividend, we we the of $XXX we showed $XXX we've that work back able

to we return view keep our track shareholders. to focus our for to programs, conservative record committed oil are sustainable flow of in is very on our generation want flexibility our itself. pricing. We at prioritizing speaks but cash always free strong the that very So cash Hence,

Arun Jayaram

do in you bit is second cost, question on the slide that where could maybe My us a and more meaningful think again reduction basis, Lee, I go-forward know, completed you've of on the pretty a number wanted well completed in costs if your little to and this sustainable is deck? well on a XX strong obviously level this well give this relates productivity from benefited to you gains. - Bakken detail

Lee Tillman

the well into the highly to and initially with when address but Mitch area, the gave specifically of maybe costs I'll that I which make the the averaged turn we team the equation, completed Bakken powerful only we think did specifics, and and just of million. well out those in as quarter the costs is absolutely. those completed not disclosed think came also comments results, in test productivity that productivity for they're reflects fact And $X get few we working wells, a the our know not around some delivered a well. fourth successful I specifics but you also that. course bit capital over the as the And the not were side Yes, little combination let of with our is from around to equation we doing Ajax it Mitch that, but talk about reduction working that of I'll it's the side how

Mitch Little

Sure, Arun.

think think to investors very the core across important impactful and of behaviors company. our on creating only but not innovation this probably the all I right what's discipline interesting to in of is, at about is what's it's the

design And productivity we're is on denominator on so, goes feet that contractors mean, all vertical and of have that cost. per almost from expanding just not when integration full drive every side, side, do, simplification, we gave well improvement with as optimization it's the partnering market we color efficiency, front. we day, improvement And, attack schedule, across seeing some treatment efficiency capital the drilling the it's in the efficiency, good who by but efficiency basins it of from same completion into of which in our also self-sourcing measured beyond it's I throughout right on the materials, the

some a $X we're $X efficiency. across keep in between and CWC that to Bakken million, have capital focus today wells and a all we've our areas number of highlighted we number on the variation $X CWC. of area, continuing range million characterize million - still would but by four Ajax same wells, a that for is have that we wells so, delivered we And we the have There number we

Operator

Doug of Leggate. we Please have Bank go ahead. America From

Doug Leggate

rock last shallower rock that quick depths, I cost? just a of just curious low as question, congratulations. of Ajax lower? or differently being such different around to, you the or question, the are deliver structural so Is trying structure the stimulated just permeability for porosity a it because such I of those results southern, how wells quality for I I'm quarter, kind area, up Hector with follow wonder if any treating tremendous to can the tremendous Bakken thinking those guess, volume, another I'm understand you and on and specifically. could Lee, costs reason

Mitch Little

variability we that quarters Doug, being lot there completions the in down as we've are detailed on there's areas. our from modest some to Hector, at us tailor that in helps and mentioned well. delivered and many about previous workflow very area to there's, Myrmidon variability. past, in minor call we've it what specific Myrmidon a structured cost we're actually I pumping And across across more and as the differences have I well response area the to a in talked as not Ajax the CWCs said, do of question, would That

this matter capital fine of is tuning just elements So efficiency. a continuously all on and of focusing

So charged to the 'XX 'XX, that's are that wells we compared our a slides, XQ on we teams XQ were continue in entire put benefit XX% to across that fully further, costs well completed drive up down as to position. mix of

So, would call I variability, lot to there's our across position. modest north really variability a from south of not it,

Lee Tillman

structures, that boats that will a that applies Mitch the that a across to, add capital terms lot area, given lift efficiency. tends also if all not so would self-help you to in position, unique I that's self-sourcing, around the full of outlined of commercial

Doug Leggate

mind, you the if Lee, quick, real was Mitch clarification, on lateral average? one wells what on just these length don't So,

Mitch Little

under XX,XXX is just Average feet.

Doug Leggate

free And, Thanks. bias just generation if just Lee, clearly probably could there. tremendous, I'll for follow-up us idea quick is between and real is I'm give you flow of international where domestic? My it portfolio one, your as leave is some the wondering you cash the a

Lee Tillman

We - sides flow a Yes, this cash well, are grow of about as obviously - Ford well, that obviously now performance, cash I production all in gas basins right Doug, and the bit our and are prominence over to sourced time. mean quite very - the our the of have portfolio the Bakken is as still as but we've percent free contribution well. from U.S. contributing the both in talked the free though very EG that U.S. mix flow as asset growing strong strong Eagle the from generators integrated

positive assets contributing free really the to So are years. multiple cash in that out performance flow

Operator

Markets, Jungwirth. Capital have go ahead. BMO we From Phillip Please

Phillip Jungwirth

underpinning X, hoping get years, cash sure on Slide free growth cash? outlook more while to flow our will next back rate color little deliver can pinned a amount guidance, just a want that consistent free also or spend XXXX level guys two over message Going XXXX this you assumption to activity you give sent you we maintenance the with you and but flow free don't cash certainly multi-year and down strong is on around generating are this of the

Lee Tillman

get want to not large in into that the XXXX. modest don't mean, out capital more increases type you changes do add in talking is XXXX you that we see in that out allocation in in that enjoying we in step any I would of I would fact, would Yes, actually period the XXXX tell efficiency the XXXX are Yeah, and Phill, in capital activity. just than this. such to specifics achieve time momentum reflect out XXXX, what year activity again, we out is I probably that These but are in very levels across change

Phillip Jungwirth

upon And but messaging change prepared adding and around be hoping and order the of seemed remarks locations some then the we inventory initiatives then, I the just and thinking if in there think, of was magnitude quality of in expand years each I be could terms Eagle mentioned heard play? should to a the in versus the you Bakken this for Ford about upgrading I in of right

Lee Tillman

performance was of that inventory as jump increase that effect Eagle and time let though lot success we was improving remarkable maybe in we about to just but that you demonstrated the the with and a the start of and I recognize few actually in a extended core, we Bakken life. a quality basin spent Mitch even Yes, things, net talking I'll first economic make think, the specific with all Ford uplift few the in comments the

but essentially you're inventory very doing life, in capital-efficient a it's, it So extending manner.

be One talk completed and I the there, XX of that saw wells completions uplift time to relative that would the could drilled Ajax performance the in saw a we about last productivity. we best we the in examples,

the and of the multiplier Ajax three certainly core effect type we as Hector not Ford. of even and Atascosa places work so doing we well County in that's the the that only and saw, but in Eagle one So, extended like

mentioned shift thinking, and XXXX transition And that. physical that to think successful. could of even not the efforts a of step hundreds for Bakken effort work, remarks, see just in also as and that And is I that's to of it's will it subtle in my on Eagle be add talking a as all of opportunity an I but those set well think potential be we wells I it's us at focused that might lot a to restricting Ford continuing added. sticks the looking in quality we're ways be again, natural into where and

running if sticks, those of we're in of add of years anything actually want things see multiple testing may room to still terms the Some prove, there. about we some but that additional actually you to and take Mitch,

Mitch Little

and and journey, on Yes, and workflows, we've seismic that coupling I been that tool as pretty techniques our well. add, that about been with covered capabilities. art peers our also where a The have integrates fracture one tools technical quality some them modeling best I true this inventory, or I the of - on I our Phill, only which it integrating Lee with talked state advanced using of call of we're knowledge, think the we've think would the two improving things technology simulation, reservoir of same processing is to XD that last

completions a So, while last from to enhanced we're alternative pushing then have over that of years, schemes, from down of it base we success looking there and the spacing great taking further Atascosa the have optimize but we'll test hundreds Eagle work. all assets applying years. into uplifting out away I couple that development as our the areas. had all Ajax most expectation Hector, the will necessarily as extending identified tests, further learnings traditional core of add done Bakken, in couple we've into those across in based these of good record said, Ford, over just the Lee in are quality or well two Atascosa, our with We've of that I'm of Lee we other pretty isn't continue areas to And track the them potential the into. agree on locations last optimistic in all in

Operator

go Energy, we Simmons have ahead. Todd. Please Ryan From

Ryan Todd

forward cash the and the Maybe and of should you've returning you a follow-up dividend? that, of terms How been buyback in between pretty or going free think so generation shareholders on about the of we do the flow think buyback use questions the balance standard cash far. how it growth eventual from to consistent earlier, cash about via is generally the

Lee Tillman

our to all the believe of cash way of by calibrated pace based in I flow. a last same share to sustainable expect approach is governed in Yes, business, sustainable on share we would vehicle you closely the and repurchase that strong going quite repurchase our our today to say repurchase as The timing very see the should see elements I be flow. we on share even program clearly mean, and that cash visibility share you demonstrated return year's that think repurchases we've free that we preferred free generates but discipline I remains valuation and

in comp incorporated fact to strive is year, I with really we our us, improve that structure executive look compensation also we really each add committee into think think, executive also have for I compensation, the When that the quite two we dimensions. notable.

dimensions those of of strategic executive is first the intent the company. The comp with aligning

and that us should be repurchase, sense dividend the looks forward. cash, we're share. to you and those management other metric flow flow per stated adjusted at complementary have as strategic that words, now we're amount we in the at integrating think The which of share comp returns that move cash and the When second return intent, cash looking cash of our wins, made context, experience. and is for the we good those relative aligning as sustainable In which a to executive well if item, obviously is combination of win, debt of will look generating. year, shareholder shareholder very a third two continued with at I Last free incorporated

think important correct our we leadership the that's incent to the to intent. drive behaviors And so very within strategic team critically

Ryan Todd

the up driven Basin the the terms development? thoughts And your in latest update maybe the if and spacing of XX% one - you to Permian, can is, what's what section increase on this us would, in point locations Delaware you follow-up full operated in and on in

Lee Tillman

Yes, flow area. exposure very targeted, with positions. as done those And capital there to converting being of there at other surgical, contiguous all been take along acquisitions. have the trades with to operated participated optionality about bolt-on well and the over to let we've first that mindset intent resale there all of strengthen we we the the work put question like would $XXX our stated one are small the an another being very scale more working the looking content position of to again, of The with nature in with a providing through doubles that lateral increasing I to with Mexico example, we working interests, operators singles our very million the extended and in then of Mitch. operated but and We was Delaware New Northern and we maybe non-operated as like also spacing

acreage. where And acreage. very so, simply specific we that very being not it's and how selective It's and about adding add

resulted acquisitions. XX% three uplift second the play maybe large have so, in that actually entered two combination question a we Ryan, all of chime those Maybe factors, on And that around it's on I'll let the with one. really that the Mitch since of spacing, in

Mitch Little

probably mode I development section. and in that area and Absolutely, where base-case there out made acquisitions, across focus certainly delineation and in so this us with alternatives which plan had of we targeting our the base materials that eight program one case the testing majority largely we're is we've out on the the we is we're of has a are and of that's in seen since the highlighted be the testing think line the put was will testing there. cases, that important toward two-thirds test, made different in we we moving more about of The the and that the Wolfcamp to some a program good near-term Lee put in there. above Upper a activities remarks typically where wells assumptions the couple most spacing was our a Lower the which entry of development for around and releases around the The the to start that place the activity longer-term Permian the rest in in when but optimize per the test at Wolfcamp position testing efforts

early and the optimize we're three plan. encouraged pretty tested near-term If per upside you our strategic our performance, our back for was across Wolfcamp to we've here, the tests refer position further the in base-case was base-case by the eight and the but focus section, on development time the release, wells to case the and will upper help us remain long-term spacing tests delineation then six

Operator

go Brian From ahead. Sachs, have we Please Singer. Goldman

Brian Singer

relative or peers asset a relative coming sheet? made relative flow free free an cash that follow-ups and it flow use of of sales return metrics or operating capital, A would you earlier to it's regard flow on rather Board, about the a in before management to be first absolute the you talk cash adjudicated is driver specifically, to is couple how just cash the the more from some questions, balance of little on basis that's bit with free to to of point by be going on how compensation can if

Lee Tillman

so there flexibility do we that as clear, because is strategic it at really of to we think in that delivery intent of recognizes looking alignment to pricing not measuring strategic be use Today, it's strategic we is but assess not is to I clearly to happy the one of hence other and context element XXXX a this actual they organic have the there The of specific internally think we but will would generating. and target the pretty portion repurchases established that others. want the the set don't I call very that we Yes, it featuring are it will stick be, the that objectives, how objectives. against measured think we're with really the set trend within that achieving look Brian, - flow our our of and lose cash don't that scorecard going share to will to again that hard in the but metric, and and not measured dividends the metric. need a be it expectation that we that both it fits that through this the shareholders we reasons things, at obviously relative case we continue In the be in because I in the flexibility, Board we

Brian Singer

relative of you're this regard and you efforts Northern Delaware. resource down to couple that the And the Wolfcamp? year, year Ford you delineation in timing of in and come in in inventory that to Eagle efforts expect the small Ford, drilling then what with would the efforts as more the delineation would a the delineation Delaware, is expect the do add with what the follow-ups of the from result Eagle a net Lower this In and/or then clarity

Mitch Little

implementing to to that will magnitude and multiple see trials we talked those we locations, I be question, So of will cases, will we hundreds have if on to we the advancing or want of performance of about, I potential important confirm longer-term those trials start funds see to want In Eagle with it's executing concepts the the different are is year. full change. this I your most and dedicated think recognize that Ford

time maintaining So those to most we scale longevity and locations on in to can. two assets, fixed continue think longevity a it's put enhancing I across will mature we hundreds assets hard teams recognize where focus that, those our on but of

different the benches advance U.S. areas well XX with is or is as aware, this those going benches each at you're to in and multiple say. I the scale of Permian, to intervals up On some would slightly most a the dense resource XX basin in

again, in that. point different intervals time different it within for So, be would a

getting Our objectives the going meaningful and of and about focus remains prominent year tests in but then that to and multiple how this the be program. be that's fit XXXX two-thirds secondary integrate on the beyond on across we're into able upper Wolfcamp, program, we'll to reflect

Operator

ahead. From Heikkinen Please have go David Energy, Heikkinen. we

David Heikkinen

what you process. I question, and did the though add Thanks Board did review on years, and on clarity last actually not for had you was One question decide factors? the taking of the how factors your couple over or these

Lee Tillman

that in the looking we compensation year with metrics and at that I every scorecard. explore across the Yes, business strategic financial of determine to really metrics required business. are We our quantitative committee think, various our David, believe the multiple health

unit margin, look also you adjusted are going flow going of at scorecard going share, return cost, cash find to when today, per you're unit debt but to find to So going only you cash now you're F&D our find cash you're to find return, and not cash, costs. also

strategic we is different There at course to of that our scorecard are best looked embedded with those. think scorecard return. in of considered. financial align metrics cash bunch intent. when a we dice XX% that metrics you We've our and So collectively There of have, numerous financial ways of almost metrics. we've lot our is slice The a business, as those look calculated metrics, look meaningful intent as well. was on external with trying only metrics that and something transparent provide ease because the one we're when that at to as landed felt this all reflect the are one we we select externally not the well factors and could strategic we externally of compared but be We so that and at

David Heikkinen

American to appreciate with seems on to drain for for about market. going how and closer clogged the any development returns economics, think the describe a see as the and buybacks expo, buyer's in us the North weakness but to deal getting for the returns acquisitions that prospect definitely a of do kind side? market or the Just you buyer one probably won't it perspective you be market Are

Lee Tillman

differentiated small Yes, bolt-on levels necessarily at high such areas capital of efficiency generating our are that extent the PDP production. not quality inventory, there high are where look are teams there always, well, and we as we offer opportunities execution core to our that

those. We look to going a are take always at

that needs invest make portfolio In quality bring bear in necessarily competitive has XX to current XX typically are and the very the you we're terms flexibility, for that. demonstrated existing to these again opportunities you that's inventory hard generally years and we can going fit if at assets, we We're with or be at today some value or bar unique not with basin, basins but to those think do It just and looking inventory our competitive within bolt-on generate time. there to within capital, our one those not very the if quality, I in a least and for our we to a performance a high see in look of synergy overall be footprints, portfolio. and high high your it's know, really quality those compete have that very financial that's to to those takes returns assets, distressed incremental out take with have struggle, so that a it return high high

David Heikkinen

or buyer's of Is things clogged how well, drain curious? the market, characterization see you a a as just

Lee Tillman

and a significant I think some buyers sellers. that volatility see anytime low volatility range, between within certainly creates pricing think relatively disconnect and that you I

natural think I that's a just that occurs. thing

would So, assume are of yeah, forward not some that moving deals I that. probably because

Operator

From Please Citi, we have ahead. go Bob Morris.

Bob Morris

you this the prior to you to the your operated your there? Permian, increased the potential but much on continue increase all Just previously bit another to in given to inventory fruit by inventory pretty low-hanging gross how is you've be things described, you or the means would since in there inventory there Obviously, Permian that look Permian? view or XX% that little easy by XX% expand do comments, you mentioned add the inventory expanding stage, that how inventory at a on all opportunity you entering exhausted in the and the

Lee Tillman

you that. like about think don't things easy I we particularly talk Well, trades them when any and would call of

two a have always parties and proposition have would are to those tough because that's to think kind come value you I of tough.

like the both, happen to now, be, of Northern out win-win think but and find on think with going amount acreage just room left and is I you not, situations shown, to your of where that as you time, meaningful the the your can I impact if to chunks, singles swap is again in Delaware we've still there a as that's, to benefit tremendous large operators they over it's running continue probably going places it inventory. consistent that making very doubles, can work in

on greenfield think absolutely So more state from federal there or that all and running be it standpoint, feel fully is I play. either those room acquisition small certainly are trade I the three standpoint sales the without quantifying there lease whether it, of still in

Bob Morris

were you seven result prior see did so a in degradation infill Woodford, well you wells any looking then targeting as at disclosed zone a had XR impact my SCOOP rate you wells quarter, a Woodford on good wells. eight this Mitch, those those there? there parent you just the a infill drilled the child second had which and here question, pretty you And on eight Are single all there, infill, that or

Mitch Little

at they're landing a any pretty area, those as on can uniform the infill answer consistently but in tell still the with your answering so, they're very stages pleased terms I we'll see in down say results, with days more late what so in would pretty vertical of in plane. parent-child in up first terms early in look certainly Woodford also. time most a you is, little to against bit of impressed second of plotted our and need What It's the lined seeing, that as predictability we that question, question, SCOOP the wells returns clean you kind of in and we're we're recent have the impacts. both generating up to that and the do We zone there awful and

come we'll a to So, bit that you later. back on little

Bob Morris

you good section how and inventory? eight Woodford wells that amenable in your per I'm to view are just might that wondering Those be how of much in there results. down acreage

Lee Tillman

look very we by the talked in summarize but per pad would whether think predictability that I generating section I at of SCOOP we're was previously the the are an kind is eight-well as well. which a we that the about is, Yes, encouraged way Lightner Bob, four-well that the and Woodford you equivalent performance

are team like predictable we delineation us what ensuring with, down that feels really competitive certainly also more development that's we that Woodford returns challenged in with a to than SCOOP platform the drilling and that generating creating think I really drilling.

Operator

we From Barclays, Please go ahead. have Jeanine Wai.

Jeanine Wai

advancing generative Eagle of on Following Slide flow looks up Bakken the Ford. and aren't yet X terms nice that flow cash they question this U.S. have by free the cash asset earlier to on Doug's it free resource like like the development, from in plays Delaware appraisal you and the Oklahoma, year, and

think this Just these wondering if and do or the price two cash would free turn assets year? cash neutral oil in they flow I do have you that will at what flow anticipate that be right you I corner right, least that when if do have

Lee Tillman

while we again, for a the Bakken then days removed going as just also need right to there, like efficient collectively get economies there Permian, strong still the in obligations it's flow that flow on at soon a about And mean, the break flow, strong to that's as in Northern is, you're need cash extent I that have can start to flow free down is addressed and stress our this of up letting Delaware like would becomes or though definitely because beauties, is to yet Woodford cash moving as as span the Meramec more portfolio, Northern we that of the free enterprise of little mix still we numbers our we're multi-basin relatively what preparatory little a achieve of area toward the in as STACK of positive relying we assets the of even very is think that in doubt question assets multi-basin and to on ultimately we, - both. we and plan that more $XX and of but and show across a flow an little very the we're that chart. minimum on still well. Eagle flex is our Bakken assets SCOOP see there, The to catch Ford There puts cash advantage doubt we've some over very strong is Oklahoma, some that growth early deliver the cash toward I team between the us of have clearly allows combination starting early achieve But talking that I basin we're free Delaware as which strategically move is preponderance bit the today, a it barrel. be to there in and are capital to leasehold we free conversation around Oklahoma generation to cycle model, further this optimization We growth small the range the will pressured pack, the cash can. mode, then base there, us of in scale really well kind looking pricing then us a you that the green the full do development that that. that generation hear this as going flow. of we Ford sensitivity Yes, position the as to only model. positive asset of of being self-funding trajectory, Eagle complete. generating and where from across I cash still those we free a one and the do be to in the place multi-basin Jeanine, development think it's

Jeanine Wai

that sticking and but out given the grow that will Ford we slide four two to noticed resource your to has probably of to this how U.S. growing We growth the growth. results and I oil oil guess plays are. outperform good that - are suspect same just potential switching year oil Eagle

is and I So probably there, not area spending hundreds just think positive four about enough term, about at talk least Oklahoma, how maybe you you your you're your just definitely CapEx early and you but growing answered longer now and before of an this and you're Oklahoma you portfolio there resource you an free having you're growing, development, that's now of fourth U.S. in assets. if have just that which that's you thinking money whereas essentially exception about three XX% portfolio, the out locations because you needed in are talking your of have about why thought area, is spending growing, not question in talked plays now other this it's can cash you're didn't opportunities your of your inventory anybody said, other extra about, in

So it? just you're term, thinking maybe of wondering about medium how kind longer,

Lee Tillman

Yes, on look basins our we capital competing are I return that think economic allocation, all basis. at as strongly four an of

a to bit portfolio that at when like mean, in you It's that multi-basin if optimize large enterprise not having needed sense mode Oklahoma start today, the that. no with position, in that such and to contributing top your driving acreage of So, it's as Woodford, have inventory we of a objective just can Oklahoma that and ahead in I elements secondary have our we're with STACK Oklahoma equation. like of feel to pull full-field of that an position the zones mind that diverse over manner. the house of Oklahoma the pressured a strong we're unique there returns, whole has fine some a Meramec, upon But that we're we development doubt of in model, and moving SCOOP is into to is be going we our growth within part that be

Operator

have we From go SunTrust, ahead. Please Dingmann. Neal

Neal Dingmann

or I'm obviously going prolific. upcoming and you the Thank the curious next maybe you. sort of into this to through you see to sort you near-term Lee potentially just through why drilling more southern could here that a Mitch position how again being your year this asking that bolt-on of the deposition? incorporate plans acreage bit Delaware speak year cadence for as and the I'm

Lee Tillman

strategically talked our some focus intentional Neal. development delineation our of while pacing program the of Northern accomplishing Sure, Delaware We objectives. being about

expect And level pretty so, across would and a or the flat on Delaware at XXXX. XXXX Northern and we that's par pretty with activity less throughout ratable more

Neal Dingmann

And I then if could. one follow-up

on speak in not especially have the Just on been what excellent continue are you expecting SCOOP down, SCOOP/STACK just could expectations you're at showing, the guys on looking particular be down point you after GOR they I that your to down appear some you any program? now are, your to program, to certainly rate just you excellent SCOOP, particularly and maybe they you that have sort have of your well maybe of so Thanks what have so much. done, than could SCOOP there. down there better comments mean, others the

Mitch Little

consistency recently. will there. But geography will with there seen the be or we Yes, with over sort the and around just see we've the move and gradient pretty variability some variability, I I broadly, would Neal, of results we the compositional of geology some all localized structure certainly think but there some as so, we that over is I Woodford, these good say plays, across time published

Lee Tillman

like to importantly feel go GOR, in areas I them think and over-pressured pads these and we needs predictable see on that designs, look Woodford that to that though different that the we do cetera, deliverability, into 'XX I that, variability completion what be, that's going focusing mean, in development. predictable see has may I program workflow different for we're we not they're but what knowing as the like, great we a SCOOP now but may certainly spacing, we are be spacing we only into great team the and to deliver we the returns we variability. STACK why into mean Neal, may some us, a seeing is the the know because Meramec, results to want fashion. see to et going want

Operator

Kumar. we Wells go From Nitin Please Fargo, ahead. have

Nitin Kumar

to now? assumptions you're was of are what service on seeing understand market terms costs I spot are in baking right the in the what variable Slide and inflation Just you one X, wanted

Lee Tillman

the look kind you flat trends general, little ahead with bit we service where costs, pretty aggregate, to lines, particularly know say I'd in That's are look year. this Yes, of that's just deflation we in XXXX. stand and in a we kind across all to the on as consistent to a you of as service well flat think year. we as that what we at flat view, or complements about of and year last of that at an that Particularly beginning end inflation $XX relatively we're assumption the more be this less on that. of matches going that that's certainly as saw with inflationary seeing up assumption

Nitin Kumar

And what about the X.X inflation -? case, or $XX there into baked any is

Lee Tillman

still Yes, And well, an there we is uptick that believe for but in expect us, dependency we services, have we of you more move certainly the as generally us or not the only know, would levels certainly a speaking, for et as will, activities one $XX demand self-help activity across industry. world, help that. that into cetera. more really We offset

going the have the inflation $XX that $XX comfortable we feel self-help be low implement some and to So understand that I levels in to ourselves. band, at of $XX of net we that relatively case think activities this to we that within is maybe pretty

Nitin Kumar

of What expectations? do you much those how a that you kudos and portfolio? done kind other add CapEx What should across legacy to initiatives think you these organically the how But Just just have you reasonable and of of look the a what had, assets have? of bringing of keep size resource. still to have of on guys returns, made the I your I assets. Marathon, the long term focused Bakken I Ford inventory kind this great you team are is And job program for and to life a question some of between had - the your the company think Eagle would is your better your

Lee Tillman

something that is on about standpoint. front work think quality and that never and inventory a well we as each day. as on We'll be a from Yes, every satisfied quantity

is makes last your first our assets though I us Just year. consistent mature developing to it sense, assets think, between question, and very XX a split perfect on with XX, more

mature organic going If of feel Northern assets, our mix delineating able to you still balance have flow We're you and again you're less to by free cash Delaware. them enterprise strike the good. growing guided case that still we're the we're we returns in them. be cases, of still - be generation, progressing assets right between and to very many In

other assets, the and we'd consumption we the decades decade work inventory when say both of got a know, inventory time, You in feel at Eagle about of there rates. and life Ford that just in consumption combined very to last we've both obviously life, two we've Ford kind think And know with current work rates. the Bakken about done push we we've got Eagle of good that Bakken that we've combined inventory you that done in XXXX multiple at year across inventory forward continue

So the about but we sort replace way. to doing, we're continue inventory, inventory methodical and that work not very develop structured feel only good to of that to our very in

Operator

Campbell. ahead. Please Jeffrey go have we Brothers, Tuohy From

Jeffrey Campbell

if and cash be than metric free understand First all, monitor into valuable looks a in. asset. is generating someone or more when metrics me just wondering But what would call else like shifting was a that Lee, international I I managed and getting it might to thanks and it's you I quarter to the congratulations decline do for international of Marathon? decide on what

Lee Tillman

on first Yes, equal. that is I Jeff, and of international all, not say, guess would point, I created all

a our itself position foundational an of U.S. two there of the then value moment, methanol decline been no an plant, talking EG. essentially and in sitting going I the in the portfolio, And resource for elements us. there there's berth. offloading really Alba in cash a life, it plays with LNG forward, a and EG propositions about plant, so we've asset flow that just infrastructure West very low explicit is, think four field as as it's requirements and for free generator well value I It course a if advantage long our on in is a EG, of is is focus a gas Africa, very plant, storage capital

point be to forward. going gas is that aggregation that going is a view natural Our of

and value that that see are from despite there. EG an we in think is propositions the XX% We that from embedded other kind value we strong we decline advantage there our the kind in ground proposition this two to of, the that have Alba fact that of X% on we infrastructure again, still One, barrels a there exists is of taking Field equity world-class Alba So perspective. there. very generate really can

Jeffrey Campbell

the in goal some meaningful EOR the decline become just, Eagle Eagle Ford wondering ask or mind? is the program rate question I in at for there of you're I And other overall could was wanted tool management what's testing, other the Ford, was some a point to the this goal that

Mitch Little

color Jeff. am a provide I happy of to bit little extra there,

to XXXX scale in we the the is in the at throughout project, incremental show past It same incremental have of and and provide an done proof said. for certainly scale the the four to trial XX% year be simulation this on of in we degree next be to large like of will know, terms a You There a EUR of others us clarity we've this the is is of XXXX take single see This the excess done the the point that that But and well techniques then looking so and uplift that multi-pad potential where recovery, at a studies trial phase four-well across this which uplift from program in had deployment on then we're from that. that and we're we'll technology. over need is. what I able to there. will where and a pads, understand program the us to uplift implementing done

Lee Tillman

Jeff, leaving we're in But think oil that technology, just at add via out of to miscible recovery physics within think that and think high place to when really and of the with in to make how in we scale I confidence that to not flooding I going enhanced look chase that we're that you behind now capital I then the Yes, reservoirs that have sorting us. could doesn't allocation just maybe sense competes if the Really economics innovation portfolio. assessing and it, the reservoirs. unconventional in it's these

conventional same mature leverage more get movements point factor some up successful these, mean our just for is that So few maker. of how in I percentage a next fields phase of it's really large a a across have in bit lot recovery we a proven do is these areas those much difference that techniques to higher, factors more reservoirs recovery

Guy Baber

back Tillman Thank you. for And closing it to we'll remarks. Lee now turn

Lee Tillman

your everyone Thank shareholders to we to for I in on thank interest our delivering you our Oil and commitments Marathon look again forward XXXX. want much. for very in

Operator

you, for Thank joining. concludes this you ladies and Thank conference. today's gentlemen,

disconnect. now You may

Marathon Oil (MRO) 14 Feb 192018 Q4 Earnings call transcript