MRO - Earnings call transcript Q1 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the Marathon Oil first quarter earnings conference call. My name is Vanessa 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.

During the question and answer session, if you have a question please press star then one to enter the queue. conference recorded. this that note is being Please I host, Relations. Guy turn the to your call over Baber, will now Vice President, Investor

Guy Baber

Vanessa. quarter closed, website everyone Yesterday to and on investor release, Thank our us address presentation documents Thanks morning. our can that this found first a for slide after Those issued at we joining market marathonoil.com. packet a results. press the you be

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

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

then open call We will to the Q&A.

Lee Tillman

and to thank to us joining morning. Guy, everyone Thanks this you

resulted disciplined return allocation dollar in advances cash corporate our capital capital returns-first First track successful a improvement against capital. to our spend record well coupled ensuring we model. resource of continuation U.S. execution as for quarter been XXXX. It This established transformed starts of with every invested by framework our has play our returns. business This a our framework touchstone marked peer-leading have our on mindset in in we advantaged multi-basin year-over-year

$XX oil of adjusted already growth’s returns quarter cash and to while XXXX means breakeven we XXXX, share. positioned cash pace double continue also flow normalized have cash rate In change free over-production cash free our first lower. both in sustainable of our debt pricing, XXXX, sake, organic well return peer-leading on almost million driving our are It From flow. to growth to conservative generated flow per are driving this We prioritizing cash at for enterprise pricing. significant

is by repurchases. to free over Our year, amplified both our flow momentum for peer through the environment. the flow, operational With us more and back the discipline prioritizing our shareholders capital free pricing in competitive underlying favorable cash cash driven the return organic quarter disciplined a to by share expected course dividend and sustainable second of of and capital means improve

potential the million year-to-date, over cash As a Organic not $XX have not million repurchased proceeds. have governor We be our generation spend remains net $XX reliant earned, compelling on proof we will we on the returned we point, XXXX to our of of returned shareholders. disposition to money shareholders. that shares, buybacks. flow XX% our will cash we free nor and in XXXX operating over flow simply including have dividend

advantage We cash repurchases good continue shares expect share focus, million our upward, for at authorization. us allowing current and inflecting value organic flow capacity take buying our remaining returns in additional trend higher, of we with consistent free to with to to our our see prices, $XXX

consecutive play differentiated development base. resource Eagle our efforts quarters, through execution improvement In to and inventory raising our discipline resource Ford. in XXXX, organic also held that capital uplifting production about Bakken continuous operating oil enhancing budget guidance costs Finally, enhancement and capital is original the while our in U.S. our while both we efficiency and drives capital three

and from X% budget. development year-ago For under first of full quarter down capex is quarter our just XX% capital our year XXXX represents XXXX, development

capital to growth guidance our achieve with no credibly are our development and firmly full We on budget. oil change to track year

and completed still costs chase the lower quarter, further across peer-leading by we to run Expanding execution we shareholders, well expense not a the cash product are on multi-basin to compensation. increase supported differentiated all first, growth; is our seeing a rather, was and foundation commitment, pricing, differentiated returns - embedded four delivering and prices unit have in share are objectives will to These that and well execution of are and we first bottom are budget They it of in and balance how suggestion, sustainable sheet. shareholders. capital strong on year-ago a our flow we our U.S. will quarter not take while executive basins As our our free consistently at we is our improved cash with down demonstrated, conservative spending it flow business line corporate portfolio XX% return productivity. from prioritizing

four We suppliers, and broad that into of resource portfolio practices. best of of simplified plays concentrated providing terms best rapid of U.S. margin capital cycle and our span in flexibility, the market diversification the high maturity, development access, sharing allocation have

enhance and to current continue return we efforts progressing high Our to are base multi-faceted quality, resource and it. high is

large consideration, success. such, As nor forward it required our is for M&A a is scale not

Our by our balance pricing, investment a broad to contributing we our across and sheet Moody’s of across business the are quarter of a plan each for first are few with at all portfolio our as grade flexibility agencies. enterprise-level provides a major tremendous let’s highlights the individually execute success. how our success collective rating framework more backdrop, of three range our financial turn multi-basin With and recent assets to to our attention upgrade specific

would February guidance, from level, oil production total company our been within a year-ago delivered XX%. without at productivity Bakken; up multiple execution and unaffected with First XQ, X% production quarter results quarterly Though we oil U.S. during weather stronger was during basins across up have was high in our was the production our however, severe especially the even well D&C effects our of strong. adverse impact

keeping was only our well Our capacity online. challenge

oil growth XQ. our firmly full expected track plan U.S. developed we that April supports remain into sequential in total good to to team and growth lower well consistently as production due that within Importantly, in against compete our of the XX. deliver quarter, X% company continues that strong pricing, favorably for the execution returns to any Eagle have our year XX% and growth Ford, financial and deliver development performance, $X.X second across basin capacity billion momentum strong on capital flow In seen U.S. are XX% carrying oil original cash free and budget. operational our We advantaged

improvements During quarter, efficiency drove first further we levels. already from impressive

our $X.X bottom specifically, up XX%. our we deliver XXX-day and the more improvement. Our capital continue for well well peer day per production while cost the Bakken, More associated XX% cumulative average XX% averaged line respectively. day returns than efficiency down completed while productivity drilling stages In oil quarter, feet just were to the year-ago per XX% from completion and well is last industry-leading realizing by years changes step significant the in group a outperforming and per two million,

while drive are our lower. this to productivity costs We delivering continuing well leading

cost our During down acquisitions through continuing completed both well was $X.X first base resource time, organic than At average remain just XQXX. focused enhancement more to our XX% on from and bolt-on small quarter, efforts same also through leasing. enhance million, we the and

position we core incremental gross and company and operated impressive Ajax as update area a on of through Bakken, hadn’t three recently pleased our production, truly a where acquisition locations to leasing. added drilled quarter long to delivering fourth our fronts provide is bolt-on test our for years, extension XX term We new we positive in both the are over

our improved parent and on Delaware, over line by Boed continue XX% cut, outpacing over XX%. that Turning to results team an at well well to investment with to well success. foot improving with a the wells. protecting markedly per XXX leasehold, stack significant In Well XX% or while advance development a completed all X,XXX our four-well to Boed for more IPXX spacing as tight focus than reported improving the also down over-pressured bottom at each oil our by delivering optimized in spacing northern first our delineating Oklahoma, and strategically in-fills our our designs drive highlighted significantly The margins curve costs returns lateral. we stack, our drilling per pace strong of our lower, continues Malaga DSU-specific first of average we again lateral approximately our for we relative X,XXX developed learnings, quarter average and productivity pad three foot cost delivered early predictable position, average keen is where in in-fills has performance quarter

Importantly, we reducing also great to progress both in make operating and continue our costs. capital

considerable remaining very XXXX progress in in pipe achieved to had the a quarter executed in early full EG busy successfully planned turnaround levels be sales. plays, We our our made international Stepping schedule to have front. U.S. on on our and outside wells with We April. a return four triennial at production our we pipe of water water on XXX% will resource for getting on produced

to party signed flow previously agreements through as strong EG positioning will gas our of EG opportunities. of portfolio, our come focused agreement retirement point the third $XXX As to to world-class we gas assets to our for highest by aggregation asset our as divest free infrastructure, a for to our local evidenced deliver compete properties, further capital years and approximately to announced, U.K. regional close, and Further, assets. we enabling natural remove cash continue optimize process to obligations our allocation which million return upon our

investors to generating have what or sheet our for, believe It’s points. potential energy mystery that assets; we on XXXX looking at volatility; consistently. before, returns said XXXX straightforward. flow cash the putting as We as and balance our stand have All that strategy companies commitments of sharing well flow performance these on screen don’t focused. generalist cash the investors; to a have conservative and are right sustainable prices, capability looking weather free that believe that and to for in right their I’ve As now pretty we criteria and quarter strong have it’s a proof investors oil that with whether first are portfolio execute the first,

of free per already compelling value improvement WTI. performance prioritizes organic a as of key It adjusted uniquely at the broader return a we have sustainability compensation of an oil a capital growth compelling and provides matter rate relative debt that a $XX change metrics, return is to on with outlook delivering the drive reminder, cash metrics in cash flow starts enterprise cash all to visibility perspective, high capital continuing all scorecard. cash and our and invested and E&Ps our specifically with two-year resilient yield other that multi-year portfolio outcome From shareholders. both flow, share, flow of free are shared is It outlook that executive cash of which, have returns, our to part most. market, on both We generative a an that breakeven and

par above on with XX% on to current we With XXXX flat, deliver We orientation, $XX CAGR flow just yield double XXXX free to free almost at $XXX flat. WTI organic forward from generation are at billion cash $X.X curve. XXXX at the return WTI returns-first sustainable roughly track expected deliver cash cash over WTI $XX and with that through or cash flow flow a WTI on broader flat, significant the free $XX market of million $XX

Our sustainable is compete point allows This enterprise of broadest for free breakeven continuing though planning $XX prioritize WTI oil combination of to powerful enterprise profile $XX low with we return meaningful essential coupled commodity our flow, winning we and which positive section capital shareholders is the investors. was even commodity commodity at a to just cash prices to over lower believe to in remains a free when breakeven that our only in a and cross and our us It leverage any basis flow cash price higher in stood drive XXXX at generate enterprise WTI. environment, a business. breakeven

I’ll We to for a to compensation with also this our to begin return and underscore metric hand Q&A. the this back Thank added operator earlier listening, you to the that capital it year executive commitment. new of scorecard all

Operator

[Operator Morgan. have Jayaram our We JP instructions] question from with Arun first

Arun Jayaram

the questions Alen Good uplift the of details profit-sharing anticipate that on if and flow the One, from I discuss could volumes morning, you agreement with Lee. EG. cash Noble. you tolling some or Two for was wondering

Lee Tillman

bearing we first Europa. well into definitive specific value just to our call, to a executed our from now Alen infrastructure all requirements getting agreements at through terms tie-ins for of combination profit-sharing additionally, advantage facilities because the gas although such minimal. is exposure benefit at capital and existing all, confidential, that Okay, Alen associated would the are are world-class the unit very at have gas, and with a also for the really Punta minor Europa, the gas of global costs Marathon get I Punta of of taking parties to commercial prices. LNG for Marathon and say with as required tolling reminder Really, I integrated proposition can’t to the with all modifications they’re unit everyone we’re capacity the that maybe only pleased on capital

both proposition the first top base We with EBITDAX of through us, is layering already benefit that also our about it’s building well added turn-down LNG nominally any Alba the think arrangement gas by achieving tolling Alba in expect market of Arun, for really a some so as EG through PSC, on tail, that enjoy it this that plant. we the own equity profit-sharing. are value molecules, through XXXX, extending to we’re going I on as the delaying of When and the exposure future

Arun Jayaram

Henry well if Hub-based for a kind I facility to, from LNG it Could linked obviously what of uplift Hub give mark you the this the LNG? is current us believe Great. could some so. sold cash index. market or XXXX My so call were using towards a we thoughts--you Henry you above that is going index, is know, market prices to follow-up flow through market runs the see

Lee Tillman

the absolutely there’s course volumes have we Henry run the that there. - in will have link, that negotiation is in long its does the Post into term so place be it EG place, XXXX. and market, you’re uplift agreement at the for to Alba correct, agreement time, we Hub certainly subject the open absolutely Well potential Arun in

will to we can’t the we exposure really have directionally when value us. first adding incremental you to is we really opportunity, LNG that that we given Alen know from that for that today, that broader expertly high that, asset gas say, volumes, as starting obviously, the market and With very market, see today’s value is simply already feel although what we a quantify

Arun Jayaram

a lot, Lee. Great. Thanks

Lee Tillman

Arun. you, Thank

Operator

from We have our next question with SunTrust. Dingmann Neal

Neal Dingmann

the Morning. job get peers to a first the your versus on magnificent of My lot for spend first especially wondering, just did a of trying I’m there. question, you a guys sense quarter, out cadence. I’m

You first the question. or think remainder term talked you year sense but does as of about the how that, continue should it plan. get to trend only a year, I’m is trying linear not flow a just the cash plans it longer this to about free spend of your for we basis, on see more for my

Lee Tillman

from which our budget. I’ll maybe start, is is my our comments, Neal, just budget by reiterating opening something

against We budget $X.X have $X.X a year. capital development budget compares that billion to a billion that last we delivered

year wells are half was We first the in so come terms ratable sales, front a to little a really with of number to quarter. of in in bit it loaded great

second lower. completed standpoint. advantage going the The doing capital large well You continuing direction efficiency advantage beyond, drive first a of in costs that in to as quarter. will though, an from of us in asset quarter. have job of Many certainly tremendous of, obviously, to We proportion, first we’ll a we are that right for teams sales saw a had noticed the see those, is everything quarter wells but and in

we’re As billion against but delivery we look our very throughout the comfortable year. $X.X for budget not on commitments the also year, only growth oil with our

is lightest to only second quarter as That Importantly, to plan rest strong our of was that’s first momentum build well, year. translate standpoint. we be going always cash into financial momentum which quarter move free going flow a going the the our in from into to as very and is

Neal Dingmann

Lee. Okay, great details there,

when wells to again, Just Slide is there. your focus My question looking one the just on Bakken continue that follow-up be at the I’m on area. XX, really superb -

is also Ajax, just there Lee, of the already updates, about how compare stellar Elk be versus in to there, for you the down have to and expectations other but you recently? Hector rest see moving on is, could said the or it focus Creek down this, or will results year, or focus might continue You what do these talk moving if

Mitch Little

throughout aggregate, that year, address basin-leading program question. activity is to out so look as on well costs. well the proud higher well impressed efforts we going than a well Hector the to are program with bit data on we this program QX, still throughout diverse as as is say, what doing. be Mitch. in delivered Myrmidon. six delivering go that we more this is year, as average QX additional around what area program looks activity and The on we we both in productivity at public team in in down continued achieve expect but really really months, to as It’ll in available see Ajax, Neal, doing of Sure as the when XX% the be basin, about I’ll that you’re payout Absolutely on the you really just based go and the here, peer something team as for average, IPXXs

You to even both flashy we’ve and capital around instilled productivity discipline or IPXXs holistically the at from efficiency know, is we focus well well don’t teams hat improvement, IPXXs. drive our looking that The on flashy costs.

Neal Dingmann

Lee, exactly. stellar the good, Very Mitch, - answers. so much thanks for

Lee Tillman

Thank you, Neal.

Operator

Our with Todd next Simmons Ryan is Energy. from question

Ryan Todd

a the Maybe first capex. on follow-up thanks. Great,

and whether risk there upward whether to efficient pressure you see You talked Is well the hold the capital costs, about it’s--I a you on sustainable, see inflation, those whether and primarily downward know you as about bit cost full-year budget. budget of little in early, drivers whether can the any well be operations, of this quarter? type talk lower lower about first if can particularly could talk but it’s you or primary it Can potential it. you

Lee Tillman

of completed at drive I’ll clearly ability maybe chime wants. are to our well, really Mitch as think and then When few buckets that in well he offer to costs, can costs lower. look comments several those contributing a I we if

the it’s supply chain. foremost, and really working First

chain, has a of integrate supply do a basins. our enabler key Our into the self lot really ability to all been across sourcing of

done team up assisting Our how providers. some in our perspective. particularly costs sourcing, they stepped the interesting are opportunities well, pumping that opened has with self of some supply really asset outstanding chain and down has just chain as it’s a job and our supply for With driving from up an teams commercial us

put cost been performance that element for terms we’re reward a down provider so really that the it’s we’ve also efficiency, sheer and just a win-win it’s key I in to the have both commercial of and the those finally, to that efficiency do strong able observing. think been that operator, direction. Then place

our to day on drilling rigs continue continue of We see, the or gains have the drill more and whether it’s coming down, penetration simply able of per complex rate areas. though some even intense of been, we see to maybe, to and ever they in that away more put time stage, our our stages it’s those we’re to than number are

helping when lower. our together, drive is that you all really well So put is completed what that costs

think true the I I the relatively lot sector, of and in year, thus the pressure across look service from year. we simply upon a move obviously mandate in supply the going be to and demand folks that’s stable that as very need other be if dependent an from stays see we throughout activity assuming our hold inflationary think levels would to segment. and around with we response standpoint we the throughout that continues discipline segment the don’t out to the capital But concerned

Ryan Todd

sort whether environment, like the appreciate comments scale other smaller the about for not what targeted one the transactions Maybe M&A, of there Bakken. terms in or the in but how additional how had Lee. for Thanks like some opportunities Can of any made, inventory you the environment those of in interested are Bakken overall a feels in large nice you basins, the on--I it’s talk type pick-up you whether additional more Permian deals? that, of or and view you bolt-on you’re

Lee Tillman

inventory bit, enhancement organic think about maybe expanding going to really results I Bakken extend our asset the it starts within resource that first Ryan, a as our and our in we base, is the enhancing places our obviously Ford to obviously stepping talking County, the and of on our Hector, like We been in just with little back work Eagle the threefold. It approach and and that’s continue core basins. the within Ajax. saw Atascosa teams and area and

development remains capital further organic year. a we So dedicated chase and that enhancement key that to is element, have continuing this

the existing that fits one referenced, really The small, so our position second selective. are you leasing incremental that bolt-on, hand-in-glove is element really surgical, which very around is these in with basins, very

that opportunities perfectly. by bolt-on operated at created. and about came Bakken talked way positions the XX-plus are we a looking we’ve really for description to fits The that synergistic of the wells company gross some already that that leasing, that We’re that

step Permian, the opportunities you program, potential further positions of to the element is work in we’re low doing on do cycle for really oil organic final that also as even the on basin. to offer places like is greenfield basins so and leasing enhancement the EOR etc. to costs, when look that play three and exploration well, REX we trade, resource X ongoing little things the important for me that effort is recovery the a so returns, positions concert, outsized on program, Phase that work We in when Then new Ford. enhanced have we in in continue afield, I is course complementary which to material a entry have can those the that continue all that those complements Eagle we’re our chasing or then at very full and of really basins, near so

look I needle feel our very move both about on of quality going ability forward. scale base and continue the our when So to we resource to framework, the at good that

Ryan Todd

Thank you.

Operator

you. Thank

Bank from of next from is America. Our Leggate question Doug

Doug Leggate

to morning the expiry in bit aging because I license morning getting us this back specifically my you price when BG the a bit, I’m question. there destination and a in somewhere recall, so in understand seem at writing all, Shell? given up do could and to what regain But that for older, detail all I LNG any is I that hark as question the about floor wonder guys you extending a Lee, It’s guess secondly, of I Lee, to XXX is the good if Hub remember in of guess. Thanks, so everybody. in good XXXX, you prospect XXXX, that trying rights were I the I you--first kind now to, we’re time, Henry range, license, was

Lee Tillman

Yes, not clarity, people all, was I them PSC for or that, commercial for It licensing of first the so anything. confuse would of refer absolute rights. off back the the LNG LNG, simply sales as to agreement with want instance, to I for don’t

Doug Leggate

Yes, it, side in I’m the thinking of upstream terms more about of sorry, production. the

Sorry, have I clear should been on that.

Lee Tillman

commercial renegotiate commercial Alba in its described - open We’ve we’re molecules of some negotiation course available our details but contract. we released for that existing into them. and that again, about can’t talked market, It Shell/BG the the that the Certainly contract Shell, simply get XXXX, we with so mean can’t Yes. runs terms that partners we are on from type already to into doesn’t with at not essentially the deal legacy obligations are that that limited terms. with point you negotiating of the

get mentioned, mode, extend us allows in once is that opportunities molecules runs of additional equity own of XXXX third the the us I which market, tail to to taking into its to course. into to avoid us plant the bring of turndown gas more that As allows gives party gas which the continuing arrangement Alba advantages we--it one LNG our

Doug Leggate

you the PSC and [indiscernible] be retaining-- what expire does clear, so when to potential Okay, are for

Lee Tillman

expiry footprint there when would The would as face that the in think extensions XXXX, like an expire satisfaction that PSC the negotiate most is but an think for post PSC in operator of PSCs until--I cases, also particularly a not to also EG, doesn’t in have add to it’s for there not period. us we and that only issue I on government. I be time XXXX, door open we the us,

Doug Leggate

has downside M&A Okay, - this I done years a however, an you’ve to in great to job follow-up cash flow putting not is change you see to since of your done, The the that Marathon speaks that several I’m management. done, really peer for I’m assets and your companies. so step what despite you’ve do in take a you’ve for free curious to wondering Marathon you just see group, eliminate and one, joined characterize to I’m nicely market with is--and a of that recognition your hands My good what relative and it’s been has like itself. do that. some differentiated ago, if think phenomenal what everything in apologize Look done, in portfolio price any you as assets in could appetite clearly to I advance everything going what, is the some are overheads very fit management other good excess it question. cases, appreciate of into you’ve share

Lee Tillman

for we words, try effort control, S&P very a broader to we share for But to a the that the so space believe and them at the total been we here on all our not profile going of recognition investors, but our to only internally in can to XXX. first with recognition investment will journey, on things back ultimately of portfolio us--first our that where we and execution, advantage really price to to are you it’s get transformation Marathon. thank attention the begin we team our kind complete is can offer own all, or and think we’re our ultimately the win model, We of. for their that believe sector, be whether believe day, strong to the turn and as energy a performance, team compete I we today with they generalists focus take focused,

risk-adjusted on and of some activity seen again deals Just return the is fact and global on even in short the anything U.S. to market, unconventional attractive basis compete the from majors, that going we in only or characteristics investment U.S. at serves the not the it some when of announcements, the look recent I you unconventionals and the of level. the at and have highlight a but current the a what that cycle M&A would my plans say I’m of to assets, on comment point, thinking, way really

strategy, So proceed. way outcomes, market that committed of the the execution, that’s execute continue of think We right the we’re from against recognition to from to we to We very believe our and model. the come. investors going right shareholder we’re that will with multi-basin consistency to and it kind think delivers

Doug Leggate

to corporate-wise? do desire no So anything

Lee Tillman

No.

Doug Leggate

Thanks question. answering you tough a Lee, it. I appreciate Appreciate

Lee Tillman

Doug. Thank you,

Operator

you. Thank

with RBC. our next question We from Hanold Scott have

Scott Hanold

the I U.K. that good to sale, and Thanks, obviously some XXX, Can just look you targeted we ahead think that to generation respect going clear, from expect morning. not stock of Is with try flow that progress at not to the of about more you little should XXX to be bit that Lee, generally you’re be speak - that, at free had REX buyback. what part to for mentioned With you or will spending, you’re earlier guess, buyback get just of, how the I how asset getting, to conversation? the a end? that? cash

Lee Tillman

year. operational between with cash also a this generating. Yes, very feature and first hence been always flow our would our be actually we been our and repurchase question, first organic are we’re share cash part the free momentum year, your as much all, momentum equally of of program, pricing, organic the inflecting let we’ve improving going even business on of a of second plan free quarter take has governor that regardless our be throughout of clear disciplined how that move that, me we flow Scott. and first to said Having It

anything do will We’re damage to sheet. not our balance going that

hard. have We worked very

the to half have money of see and to actions now is into agencies. the would that is in just of Our that the I close could to second is We’ve from, have done a an also pattern that it disciplined ratings us taking offset job we we with that across portfolio, our be The net-net, sheet, so When potentially likely positioning think, a to in and very around investment U.K. into staying balance said progressing. come of the thoughtful that, the share the kind to that board we that recognize windfall in continue remember that’s we repurchases. all That’s no of has the there of structure dedicate immediately come going great grade U.K. corporate that the future. by transaction in means back a is team finance year.

So and see other formula, we’re we’ve flow. about to with going available for attractive free cash of will other through small we - bolt-ons to organic that’s see share our game our be in would those going proceeds, that decision extent those you be that that we’re today, take opportunities opportunities when day To repurchases play, a mentioned REX, talked stay we’ll which the we on our all is arise. drive

Scott Hanold

clear. Thanks, Okay, that’s that. I appreciate

new As my more it what through Can in on bolting stuff little locations did you leasing. of a give exactly picked and you on follow-up, up full working that? on of us some you a there, add it a just part increase? and it you the is did color your is give is Bakken interest or operated you Can acreage handful mention of that some organic color us

Lee Tillman

that that about in to still chasing just even leasing a bolt-on and bolt-on a of Mitch well too get just than wants general, First would for so I just leasing, that terms we’re opportunities, these clarity, as meaningful, specific well operator OBO think from say very, We count. we’re small and I count, likely our of non-operated that. are don’t within or count, footprint fitting where is type in I I acquisition about don’t mean, in that in where in guess have be handful. pretty developed think areas gross to see talk our a standpoint, and well, and I positions. we I’ll value then of few all, don’t and well a wells mention operated more between on active that’s operated clear the necessarily want ability those when as to drive but things to XX want chime gross we I Because if confidence very another from

Scott Hanold

mean color. didn’t the Okay, it some because size additional appreciate under-appreciate good the of you pretty certainly I adds, to provides the runway.

Lee Tillman

kinds those things, Scott! of to sensitive I’m

Scott Hanold

thank you. No worries,

Operator

Thank you.

Jeanine with from Wai is question Barclays. next Our

Jeanine Wai

the return question was cash wanting fair the in inflation, a there My your market now, is that hedges? corporate something which spoken wondering leasing capital, the morning a I cost heard, and is or is objectives. is on everyone. of on still two hedges the driving Number in that’s just you in or about or that what and list you opportunistic bolt-ons. flow We amount in we’ve the being on three talking prioritizing layered the decision operating one mentioned of noticed this about. Hi, environment active good you’ve there you’re new something in first that small if A&D in operators lock seeing quarter, lot know to [indiscernible]

that the just ’XX Marathon had on the and wanted commentary cash this. to Just potential, on from check prior flexibility sheet curious, at hedges thought given more balance heading in was that on I you just into free so flow where because you’re the

Lee Tillman

how and third is talk there portfolio Dane which hedge established, the let we When strength in in range our I’ll as commodity talk Jeanine, think management I’ll instance and the hedge that book Then book One areas. of really we play quarter, two, and three a particularly the you that, to book also just think so a that hedge broad enterprise we it management, XX% me put let pricing breakeven at is Number formal low Dane of Yes, strategy tried about broadly in about latitude risk directly. element risk for environments. about let then little about a is sheet, management look commodity us bit that in we’ve commodity fact part important, balance hedging, this our that weighted and is address point provides mentioned, our equally in that we’ve the a our strategy. With very is that, our portfolio. maybe risk oil very of

Dane Whitehead

Jeanine. hi Yes,

objectives, flexibility along our of objective, production, you, flexibility our toward a like as the XX% very hedge on way Following on or commentary next more prior the year position we be we’ve our goal. and had has to our with felt meetings lot calls, maybe have get up sort on had opportunistic prior that of but in XX%--floors has improved, improved financial a previous in years strong, we financial

put of and in by So last advantage the we really to saw market those run-up some on this to XX, that XX we on. by rally put so price opportunity attractive XX three-ways - took

put It’s overall when see good price on linkage day-to-day risk there’s there, to we a in. know, really happening management. definitely stay basis any about this on no we business, we value and it’s of all or regular things You our them other top transaction in just

Jeanine Wai

quarter reported you track indicated the similar commentary the My the thanks. which helpful, productivity but declined second well well results. productivity prepared really Bakken, chase rates, production rate that’s in does is and flashy you noticed We driving by double remarks in declines Ford trend what’s in quarter, and were as biggest digits. the a that and of early Boe were on this your I to don’t talk change, question IPXXs you that oil the measured Okay, the over know or can the results? Eagle about

Mitch Little

couple earlier I to well. Jeanine, Eagle of again. jump Maybe Ford on is and made and a as reiterate I’ll the comments Mitch Bakken, Sure I’ll address then that this

little the Eagle of done inventory taking our efforts in I across said, and quality position teams I’m Ford. both with as Bakken starts to think back look bit, uplift have and it the a a our I our proud of extremely

closest I’ll those costs Eagle really is some pricing, those deliver doubt MEH results results and a in efficient and the from the next Bakken day and our We earns can out. dialog run, pad the these be capital all of of we earlier, our XX% can we’re long extremely got and on our that’s so a the results, to programs quarter level four the being well and Eagle capex both delivering. anybody’s that’s our these variability that payout the operation on as investment what of, his for I’m of really trends the and the Bakken Ford of proud so the we’ve got to If day from in peer there. access and better establishing improving months. going Our no said, you in are Ford going mindset across All six nothing both one returns is from very our best the and public you well in of over every top look data, see impressive the down about efficiency QX results are tell at proud than at look that and at of publish corporate over internal programs lowest we’re in Ford, I basins that we as plays, time. Ford, the our to each and very and specifically, We’ve are any the there take perspective, IPXXs, really the is returns, order productivity an Eagle mentioned holistically basins. and Eagle portfolio Bakken portfolio, That’s we’re it QX a ROC those compete of unique. discipline leave so phenomenal. There’s an best best will

Lee Tillman

links and our lot to piece Bakken, the the Bakken. you look both programs about cycle at maybe you toughest is all the about look Whether economics times production, first look comparison of all of positive, it’s change in things talking are right of too point though, things, in into we or [indiscernible] to you when variations particularly of a and and can don’t success, from other When mix, costs, was yes, well but a and these is quarter the relative the driven wells, standpoint, get also information, Eagle some being and all returns quarter add we fundamentals. that back, just talked directionally by those reality see that for our at there now, we in, level geology around they’re could driving framework in that objective returns. IPXXs is I Jeanine, have of the we which spend those enterprise at time an Ford this If enterprise to more level so indicative our wrapped factor ourselves

corporate We’re of on focused the returns going returns end making sure level the well day. and resolutely level remain into those that to returns at translate

Jeanine Wai

Okay, great. taking my Thank you questions. for

Operator

you. Thank

from question Sachs. is with next Goldman Our Brian Singer

Brian Singer

follow-ups prior A on morning. questions. couple Thank you, some good

do on and into between seeing capital your and service inflation and highlighted efficiencies allocation and year? the relative of basins, forward you are going that you’re productivity the First, a earlier changes for already lack baked for the that capex the guidance then well in ranking costs expectation your vary

Lee Tillman

the and this Ford and even allocation results we the standpoint. standpoint, staying first all capital we’re that within Permian, cooked into been pretty we From is are about I multi-basin relative of our relative fully way Brian Bakken-Eagle Recall initial anything in we so on that to Oklahoma allocation think, that talked capital no relative have optimization, to in impacting, Yes, kind XX% impacts on it allocation, a today allocation. really XX% of a true those original February. back were that to capital capital splits, not that referring really from

Brian Singer

all that that think the it, applies budget in, efficiencies? inflation Got about or--? on too and when an overall Is and baked you service the perspective

Lee Tillman

into around in assumptions forward and efficiency plan. inflation obviously our built Absolutely, both yes. We

tracking of those, We’re way don’t we as a any again see being that both in in our to go-forward program. so factor well very capital

Brian Singer

or what factors buy beyond you’ve free and would there or function Great, a would cash that cash sole you got on market want coming any how of it? I aggressive if to the as you basis, paraphrase the stock, constraint, the said to determine in do earlier. that Is a free that assuming you in see timing price to above back when are thanks. share shareholders markers coming broader Then the is going to you be you to cash return the quarterly mentioned had dividend,

Lee Tillman

we and say valuations own the market, our also cash to that look flow in to we would bit generation current we’re to a at the matrix on to and with assess first from dividend of Again, volatility, is our doesn’t getting sitting, mean back seeing NAV with one, we repurchase with the today a free dual a very is relative a we linked returns it program that generally that shareholders. value. evaluate Brian. internal We standpoint, is back offer and I feel of call shares sense, ability operational very strongly where that but it forward at our think today to good that scale share sustainability but our going to see bit and shares as on curve our forward and relative that a--I’ll free that believe it our still mechanism I It that cash preferred we today the every flow the look that the to We’ll think that money for don’t we offers, orientation, each at the that returns right what still the continue the the today we’re market that’s answer. is Yes, coupled a quarter, so in performance look, respond.

Brian Singer

you. Great, thank

Operator

Thank you.

David from next Heikkinen question with Heikkinen our Energy. have We

David Heikkinen

and your Good Ford morning, your last looks taking couple continue thanks the activity are Eagle last a working ’XX. level The should a the the interests trend on capital. down is like trending in quarters for nuance Delaware? for and couple that Bakken, little bit quarters, This It question. the versus

Lee Tillman

dip that’s of first localized interest part the we familiar in quarter forward our we as to look that We say and that’s a but more going were, well. David, Eagle even to the look little in obviously probably quarters observation, a XXXX. the at and part both Great Bakken, one for in first Ford working of and to track the of do little have plan bit as in where bit a recover

David Heikkinen

see and know don’t that curious, Bakken? diverse asset in or OBO perspective, production. you That’s budget for Is by OBO region though, Ford there talk is base? I’m coming What and is other any Eagle about capital you given your indications just helpful. Delaware higher? in your can I Oklahoma,

Lee Tillman

far, and bit where non-operated have the I Eagle Ford, the basins. thus the that Delaware. two little in The I and would areas where the the Not largest the say really it’s see don’t those probably we in guess, say Bakken assess we is are areas, probably most or probably the year, probably feel to a below to northern Oklahoma in that’s but probably we exposure certainly see pressure year activity early that would still watch. at assumptions. the trends, but going today a we’re continues of that have bit to some a little to fully our the in little trend we we something just or later Whether that too say are

David Heikkinen

Thanks, guys.

Operator

Thank Brothers. you. question Campbell Jeffery Tuohy comes from next The with

Jeffrey Campbell

discuss press I congratulations release you another to wanted spacing and Oklahoma. in in variances on morning, Good the mentioned quarter. the that solid

a zones? or particular as one Also, First, or are horizontal spacing are within they variances variances encompass between well different primary zones? this as zone, does vertical within zone these

Mitch Little

we talking the and and this workflows is while, XD the again. across fracture in to inversion Jeff, use, design at processing integrated development Sure on little Mitch a least, stack several quarters of on the modeling our particular art Oklahoma state that We’ve sub-region including a tools the basin, been for seismic approach to and in down level.

each the the that so that optimize and zone, You’re vary also change characteristics integrated aware density we’ve well but utilized of landing it’s across to those. so across only workflow to not play, going

landing section. Meramec the For the horizon in horizons, the across density have lower all single across pads other multiple but been well the would two where landing was example,

Jeffrey Campbell

That’s good. that. I Okay, helpful, appreciate

northern what the pretty The starting an for impressive. wanted other thing so? eye the next you the in I were look in or was to area, kind might just some year maybe wondering activity get wells was Malaga of are mention like just I Delaware Delaware, over that level to northern

Lee Tillman

they delineation still learning. There’s first footprint. has rapid some than at other quickly do lot moving involved there, in northern a that to we’ve they’re it’s multi-well do big advanced been but also with, Delaware. still all, a have any drilling of that There’s very pad work a we team really Yes, are of asset more still leasehold to to that left so pace

producing context asset, we’re I’ll You of early the etc., volume, learning also and relatively say pace very some well to the how of that me of also and productivity I in We continued a good on in very Delaware make northern view all of around of broader we’re in so to portfolio. but context going smart is think we’re optimizing pace we’re but life globally growing, growing decisions, these make and very can as on for growing the learn takeaway, sure industry economic with we’re couple the mean, that that, kinds that the in small our encouraging. multi-basin we’re we growth that quickly for just restrictions, there. of we’re future, we the but one while one, engines a I the

Jeffrey Campbell

Okay, thanks Lee. I appreciate the answer.

Operator

you. Thank

John with Our next question from Global. is Seaport Aschenbeck

John Aschenbeck

for you me in. fitting everyone, morning Good thank and

in have Just Eagle sizeable A you do you’ll much test had been been planned other County, near some I it DeWitt of position to really in in activity share extension pretty efforts one noticed and and some operators interesting how that have in area Counties, in with question, your still have results. Atascosa a core on appears you some just have deck us? which years to focus past up call lot was when has slide but over couple where Thanks. type putting very do that have what think I core highlighted Ford. the the strong; really extension term, you Gonzales also of, the curious results be the

Mitch Little

this John, again. is Sure Mitch

of things mentioned initial address like we as well the going in the to County areas, to disclosed XX% our leaves on call. is activity this release, remainder around in to you’re the think Carnes and be Atascosa capital here high I XXs our but which

late more many and this but those, It’ll them our a in and that, years about this that basins. not add to answer entire and advantaged look Bakken, sticks the there’s position also Ford other quality short inventory looking also of of that Bakken to and for quality also have core, We across and expanded maybe is but in focus good lot there’s only do answer opportunities the we’re inventory Eagle well, the on to but continue matter, in early in increase and activities holistic Atascosa ’XX, upgrading effort to last of have our more we’ve is of the as of that additional of core was expanded progress. Those funded work focus the outside positions. quality to before for the now pivoted being at basin opportunities on driven likely across be to both, hundreds we enhancing are basins, across ’XX Carnes talk year, the potential our this that but things and space of in at two depth couple The Eagle there quantity. both and being the across a activity those plan on the going of yes, being--continuing Ford the detail that

John Aschenbeck

that’s Thanks Mitch, me. Okay, all great. for

Operator

you. Thank

Our with next question Raymond is from Pavel Molchanov James.

Pavel Molchanov

really? I taking raising Can organization as doing a where now, have a to a buyback when in dividend, your option is the that in same of you is logic for the amount, payout the work to the Thanks see in stock the back or some way a go capital what question. to message, not sending that fixed Do it given is peers your a expectation perhaps, dividend discipline of better the that tends that of greater said force have mind. instilling, please? a I You’ve towards that. know been you right sense

Lee Tillman

maybe jump I’ll Dane and comments to in few well. offer then ask as maybe a

from still current dividend average with standpoint. so environment. think around allocation a those capital been already or capital it I nonexistent the introduce and was raises, would are what all, around on we of lot constructive raising the which of today say has the right valuable tension we we in base, does where discipline think sitting all is yield We First sector a even low a some today activity sit

at payout preferred dividend share see we point That’s as that that quarter, a are board address be we’ll course and matter and in from time. is is continue just Our dividend year that’s to preferred we’ll now. that It a mean mechanism, and a we each repurchase, mechanism doesn’t that today. where and with assess extent the every to we where that of but our yield

Pavel Molchanov

free $XX to cash EG the that a Okay, the be negative - flow to million certainly Is of been oil would it despite, the in operations? flow EG year. you for about free fair actually quarter One cash it low start price that makes guys say had about sense. not obviously, had

Lee Tillman

No, absolutely not.

million basically which period a today, number the off EG us in was took of are that down for assets multiple the have with--the turndown, cash for triennial free EBITDAX zero throwing time, We flow quarter to of rate big the to and a remainder hence use is course even so not first impact of that’s--so the in the organic of were cash the reason slack, free that up able cash free EG, But from Eagle year. places and ratable in impact number quarter had with that strongly even the still Bakken more flowing to the quarter. in first than we flow we from like took the that generate Ford the $XX

Dane Whitehead

$XX tax There on not Yes, a comparable to number million cash an $XX that number. free million directly flow in-country I’d EBITDA is just is EBITDA, add the this.

Lee Tillman

- tax XX% rate. Yes

Dane Whitehead

keep mind in [Indiscernible], that so well. as

Pavel Molchanov

point. Appreciate Okay, good guys. it,

Operator

Thank you.

questions. further turn will Tillman closing no the have call now Lee We remarks. for over I to

Lee Tillman

investors and have we contractors and that quarter very recognize our interest much, and Marathon our way of out. choices, that thanking quarter We company, Thank excellence remiss all leads you Execution and call. appreciate XX/X, your who deliver I’d the our in in in that dedicated and be employees concludes without Oil. on mandate

Operator

now does you and participating, may you We conclude conference Ladies our you. and Thank today. thank call gentlemen, this disconnect. for

Marathon Oil (MRO) 2 May 192019 Q1 Earnings call transcript