MRO - Earnings call transcript Q2 2019

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Operator

Welcome to the MRO Q2 Earnings Conference Call. My name is James. I'll be your operator for today's call. [Operator Instructions] Later we will conduct a question-and-answer session. [Operator Instructions] I'd now like to turn the call over to Guy Baber, Guy, you may begin.

Guy Baber

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

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

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

up open We Q&A. to then the will call

Lee Tillman

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

exceptional across transparent operational framework our importantly, discipline Second differentiated more a business. against execution, of outcomes. quarter driving compelling execution is not This aspects financial multi featured our basin for but all just and truly consistent across portfolio bottom-line advantaged capital

peers that only our outcomes but as against Financial market against independent not broader E&P the compete well.

and consistently delivering are comprehensively for framework We against success. our

corporate improvement, We are free pricing. we at significant driving conservative cash returns bottom-line are generating flow sustainable

and And of differentiated portion repurchases. structure considerable our cash dividends through resource cost flow through free capital base a execution. that returning are We are share and improving efficiency, to shareholders we our back

a top the commodity sheet performance is success cycle. powered Our a foundation through strong portfolio execution providing by financial balance operational and the transform tier for continued and

it continuation that level quarter signal all highlights starts for returns a orientation. our quarters, established the is trend to of speak first over and Proofpoint multiple well second with Turning enterprise themselves now a

price portfolio annualized with despite underlying well and capital cash the underscores more XX% decline pricing. on of prior cash operations, WTI our second dimensions, efficient realized invested costs. in a management, secondary concentrated in corporate completed During across return multiple and growth The product returns capital quarter allocation, lower year oil we in improvement cost reductions an meaningful our quarter, weakness success high-margin XX% consistent

to cash flow generation Second commitment pricing. is sustainable our conservative free at

objective but For aspirational flow many, track positive organic front consecutive this of established on now remains with record well post this our dividend. quarters cash free is six

We aren't and we flow free about just talking here future, forecasting cash delivering it now. the it are for are

generated million post we quarter, cash second $XXX of flow. During organic dividend free

we post billion XXXX, free delivered of our cash $X shareholders. organic of now beginning have over the cumulative flow Since dividend for

X% yield competitively, Our E&P peers annualized X% XXXX broader to not organic market. but free the us cash date year only and with since about with flow our is also placing

cash a generating flow capable free is leading breakeven Our price. oil of peer current and with pricing portfolio enterprise resilient below

even also retain to through price we oil higher higher rest free to flow, activity We significant upside And capital realize leverage our will support. modest directly any to higher discipline. commitment cash translate not pricing assured

of half costs free cash is cost declining XXXX our momentum Importantly, improving second and across the by XXXX well base. productivity, strong our reductions underlying asset flow cash into over driven and

XQ date, with $XXX shareholders significant advantage our continue shares dividends of executed own as repurchased our back cash repurchases, our by $X Almost share return Third, took the our over since valued of been over reducing back XX% we our generated shareholders of share of through Year XXXX X%. returned free post to has the repurchases. to we million our to and billion we outstanding share through attractively dividend count stock. beginning in $XXX flow to million capital during have

of our beginning In to $XXX shareholders billion the to flow. and year-to-date cash since of million over returned operating $X.X XX% have our combination with XXXX dividend, we equating

We have that a of only capital track that are we of record capital scorecard. the return shareholders. has underscore a E&Ps returning to our executive commitment well-established one incorporated metric To of our compensation into

we decision repurchase track authorization with this to build our record outstanding And billion. board's share recent our well on increase to to are positioned $X.X

We are a environment. disconnected price flow share in its remains when time generating our cash current significantly free the value. from fundamental At

unique therefore of funded one return of counter-cyclical organic repurchase our believe a flow We shares capital highest by cash is that and own uses the the our disciplined of entirely represents free somewhat opportunity.

in our is that both in and standout and resource was end, powers that our the an culture from quarter and our on our against execution financial, engine operational perspective. base. our improvement delivery execution differentiated second operating truly commitments, efficiency cost Finally, capital to built continuous a our is And

margin US top year-ago and XX% the of was the guidance production end our from High exceeded up oil quarter.

It production of And is consistent this. understand top times range multiple spent with a midpoint exactly development teams I'll it well. year company our our total the one exceeded our Our of suggestion, and a fully our commitment, we the not half it at guidance the said end I've again, our is as of have budget capital say plan.

XXXX. track We development deliver billion on are original our capital $X.X budget, XXXX our and while operational momentum achieving annual ensuring solidly to objectives key into also on

foot basins. well Importantly, lateral a completed we declining driving are each costs per in our trend of and

cash down cost continue were in E&P in costs our independent declining the unit from as the also XX% production XXXX. US to we We since lowest trend an became year-ago drive a quarter,

and UK, since cost the the is exit also our country in Similarly, we interest divestment international successful an our been lowest became Xth XXXX. and of our following independent has XXth it unit since Kurdistan the

plays never rating sheet both all our a generating business in resource assets to our with integrated US this stronger, simplified Our all of EG grade portfolio quarter. upgrades free has at and three Moody's supported performing and is investment and flow that primary by cash agencies high is from been this S&P of balance

free I are just In highlighted. cash across the Eagle that enterprise-level basin Turning the Lower XX. flow any we Ford, compete success, with and now the financial highlights asset-specific driving returns that to the are delivering

County, activity of Second-quarter the well a of just as that and concentrated a outside ago IPXX. productivity strength value and acreage quarterly by few lower was highlighted as the tier. by record was demonstrating core Karnes of years average measured the expanded our viewed Despite majority

Gonzalo Eagle Ford we declining the over results improve area with We tracking efficiency footprint, Eagle established new quality completed a results our are years a cost the across delivered well from last ahead enhanced ago County Atascosa record as and window successfully prior We tested excellent completions tremendous XXXX Eagle by we delivered across of continues specific two inventory County. IPXX Karnes the XX Ford year, Most pad wells bottom per applied of importantly, Ford uplift us of in to productivity County in the on continue our trend. we the across acreage. foot a line, to while lateral capital oil

on we results that build best well-earned basin. delivering are the as In bottom-line in Bakken, a reputation

Our wells established top Williston a industry-leading and of drilled. X% the production On XX-day for the public oil we only XXX productivity is Basin. accounting account XX top well now XX by wells XX cumulative total conclusively basis, of the validated of for in Despite and data. wells

completed well thought $X possible ago. million our cost number years half relentlessly are with average and cost quarter a not below, down of the completed delivered second or a efficiency XXXX capital of wells just an We average focused year-to-date XX% few from at on well

production extension critical the acreage history as our Additionally, operational highlighting well test, prior strength extended validating broader our is year capability. footprint of as core

and and designs results by supported to Oklahoma of of at quarter optimized foundation spacing strong Turning with predictable established productivity outperformance. a firmly another

cost. efforts our costs Our six notably, an were Most been foot efficiency delivered completion our STACK completed paying has achieved lateral. just team focusing drilling improving wells at and industry-leading average most over are in and recent XX,XXX a capital normalized two $X.X to on fills million, well of pressured These dividends.

our year, Over operated oilier in Springer the second overwhelmingly our while to plain, own formation early plan our of success. delivering be our we are concentrated will areas In to the delineating half success leverage others. Oklahoma the drilling activity our significant learnings Delaware, position of development including the where the from in we Northern improving our all margins, addition the and protecting leasehold

BOED average XXX our deliver saw in we foot. of Specifically, wells an upper Malaga Wolfcamp lateral per IPXX

our margin sequentially profile, water oil during Our is pipe on quarter. XX% cash produced costs evidence and of down XX% were XXX% improving at of rising. our second further and was our As on pipe

in outside EG. four our our US commitment business with portfolio streamlined flow Stepping now continued optimization, of resource to portfolio our plays, integrated generating cash free our to international

today. two most $X from obligation in reduced $XXX Kurdistan exits and XXXX less than our asset we the to the from recent have country UK, retirement billion million With

our and we by And success. our success. In compelling and And quarter focus sectors to quarter. consistent are we which will believe was on frustrated We our by exceptional operational contributing underperformance. bottom-line second context, volatility our what asset strategy with framework market and summary, execution, and delivery every while we control, bottom-line Equity the after in financial truly outcomes quarter for of that within our is

investors. and are competitive and generalist, less is energy that broader challenge results more as must we with as E&P the S&P, Our financial are deliver well that both attractive market to

speak X% already annualized free annualized Marathon flow cash XXXX. Oil flow competing yield this cash point free broader aspirationally is since of this many year-to-date space X% on with While and yield in

equating be our representing cash results over shareholder-friendly to flow. $X.X And XX% time Consistently over about operating by funded to the XX% market. have since rewarded through of market returned and actions superior the organic entirely flow buybacks around beginning of peer free coupled of value in dividend capital with generation. XXXX, competitive disciplined cash we All financial will billion our and of our shareholders

our be first, beyond cash an won't outcome As basin be multi returning not free and There differentiated conservative we surprises, capital our allocation, is XXXX will an any of pricing, ahead our at corporate cash to objective. for to framework and shareholders rigorous returns unchanged. execution. oil in growth success High-value flow conviction sustainable look

for plan going operational our well-positioned both into XXXX efficiency Importantly, has and XXXX. us momentum already capital

Xth this We are organic consecutive our cash our of dividend flow. framework, free quarter post against delivering is

powerful Q&A and Thank combination breakeven I'll begin it you all across commodity hand for session. Our to capital the the of environment. wide are discipline with a our leading that, enterprise a listening winning peer range operator and and to back

Operator

Arun Our from Chase. is of is first muted? there? line Arun your are Jayaram Instructions] JPMorgan you question [Operator Arun,

Lee Tillman

question to the You James. move next can

Operator

Okay.

your Goldman we Brian Singer, Brian from Sachs. problem here. -- Let is question might Is have are there? a muted? you line next Our me

the me RBC. Hanold of next Let Scott check with one.

Okay.

this. restart and of take the that will queue perhaps me Let care Q&A

there? Okay And Arun, are you you more one Singer? Brian JPMorgan Arun are try time. there? Chase? Let me

Arun Jayaram

Yes. me? hear Can you

Operator

can. Go ahead, I Yes, please.

Arun Jayaram

end, about question. my that. Sorry a of our is so about the technical begin But little bit with issues me there gentlemen apologies on let

get historical to that obvious plowed want below be given the market the entry the valuations general market the Board's action in average portfolio transaction just your asset it's back are disparity regarding will indicates public in Lee, perspective into recently valuations which including on flow basin the wide Okay. and Permian, just the your now I buybacks. acreage public in in what well levels seen cash free did relative market? we've thoughts enhancement, your

Lee Tillman

Yes. for good track. technical well, hopefully first all, on apologies and to back the everyone morning we're of difficulties

right, You're exactly Arun.

time. board the repurchases. that the look see a share to returns And of based we'll free it's by valuation fundamentally think flow to into over re-authorization to I deploy driven to It's the continue us price. something intent continue there the current by we at that on share our cash strong the for billion mark that $X.X signals again,

We continue, is direct of sitting peer to very dividend group. which around have within course, competitive our a yield X.X%

core different could the your -- have broader from for fit a I as where and market might from all, have market things be of core those perspective, value been looking to always in recognize currently, valued remain of acreage on you the think terms our very, that focused, unique question in four think, We first in be might very about hand areas transact very position we those though, what opportunities glove. actually that I that. our but are

our to help So us as mindful we're longer continue working build as out that bolt-ons laterals. position, increase for interest, small a contiguous to our of make trades optionality it more well and very more can give

the see to to that So of the reasons that's that we dislocation We opportunistic market. sheet, we balance and want want front can strength can protect in the opportunistic such center I I in fact, to we to one think if our be that continue is quickly we that and continue present itself. think as and of be opportunity, the and act correct this does

Arun Jayaram

just been relatively some been mid-gap Bakken Great, basin. results get of in It performance there you these the your a follow some and drove some but Lee, navigate of what have like in from the thoughts great seems wanted I of successfully impacted on and Bakken has differentiated my industry have it just gas you for processing headwinds, to the up the how year able the gas were standpoint. the volatile rest that the from call players the up. for to the processing headwinds set

Lee Tillman

It comment though issues be the I'll remain and in unique position perhaps may state in gas think painted operators we having business the brush. fully first, frustrating any the can't the us to start a everyone other the for production. has we that North off on I capture basin. be I plans just that same with requirements a Dakota or with is little by saying on don't impact going forward our the of associated oil expect compliant

have pretty it's we in When at almost position strong established credibility very have look against basin operator. Bakken a best our I that not there. to as think any metric, a the in a commitments unique delivering you we argue on hard there

So, continue of to as our the a see Bakken key portfolio. we element

that saw up sequentially this over Bakken nominally you low quarter performance was XX%. think oil I

your So bottlenecks things and ahead the future. it's about business getting could fact on these of in the curve the of planning all in some that

takeaway good And with has a -- so, the again, ability think planning very assessing fully us is I that there to and about to put and diligent our regulations our very team in stead. be compliant our

Arun Jayaram

Great, thanks Lee lot. a

Operator

. Okay

is with Goldman questioner Our Sachs. Brian next Singer

Brian Singer

hear okay? you Can me morning. Good you. Thank

Lee Tillman

and clear. loud Brian Yes.

Brian Singer

All I'm the Ford. going in start Great. Eagle right, to

decline sequentially you First that can there also and in production. And the then seeing online drilling days older beyond first your in XXX has expect you on forward bringing address decline wells XX your we rates go you Ford. to the impacts completing the and that cadence speak that and terminal the from could that assumption day you're Eagle rates to as wells some impact how of that on

Lee Tillman

me color just maybe level. itself. in perhaps about with little on and at that start we talk I'll some a just let in generally high-level bit off Mitch general, Let Ford to the with Brian portfolio a more about commentary tend more cadence then chime and Eagle

We are on development year. halfway our spot budget through the capital

We be of the also there development to we to not wells capital to as going we of interest to fact we're some stress always the sales the perfect from see basins. be links. bit a know that factors wells as bit going to see look a communicated a of course, forward longer little including, to standpoint. But to of little a I spend. Company-operated is that necessarily that were going front-end for we working And we want bit weighted that half into gross in are second lateral year, We're our half proxy sales look the higher second some key into year, a going the

I sales are we Also, to it. impacting guidance. end upper trending wells be would will of the our toward that overall say So the --

wells a the drilling increasing down specifically, activity the the even of we've in the and is year, in rig sales Bakken. are actually half added Additionally, second to

say guidance that strong full-year as finishing straightforward when Xth moderates there our a and continue year that in very, volumes momentum volumetric XQ the at grow bit, So our our you with activity to though into I and, a I XQ but you guidance think course, addition lot we're into half are become going to just a standpoint designed. go second the very guidance, strongly our Development capital of guidance production yea pretty we and would to of a XQ to that should it quarter the of perspective also from now from factors point look spend.

We capital expect to into of carry efficiency and quite XXXX. a bit momentum operational

make Perhaps, it to has quarter. about I'll the turn comments this maybe over. just Ford, few quite Eagle Mitch, and been extraordinary the just performance pretty which a frankly

Mitch Little

additional points. of couple a maybe just Brian, Yes,

lengths we in certainly interest that Lee to in Ford of the Eagle things All both portfolio and of of extending aware, performance around longer cadence as majority move working general, terms some lateral It's the upgraded into well the half as it the significantly and across of we've Eagle as described we second Ford growing apply Tier the into X play. the exactly had planned well and overwhelming the you're as the the year. would

in more fields very is years long-dated Eight we're upgraded on significant we record an of including Gonzales delivering the in with numbers performance first see we're continue similar IPXXs Karnes, year-by-year programs County outside year year a base year with decline. in the to steep the terms of wells tracking in grow all we these program basis and of as and and as declines shallowing magnitude base production as effect the that from grows development, over but term relatively a longer as that all has grows, it aware the the prior dampening of unconventionals production are prior what

Brian Singer

Great, you're degree the realize is nod you how allocation you. philosophically, to XXXX. that's can want And resource similar my update on not there for versus capital on thank exploration be whether research is prices thinking the inorganic assuming a exploration the perhaps and whether a is quarter talk exploration to bit today opportunities commodity more then about you follow-up but versus opportunistic to a budget about to in something turn. lower there and to Higher this

Lee Tillman

the about I first are three to really investing Eagle that we resource think enhancement when both talked about aspect organic Ford. there lot talk continuing our We we've and and base. that of a improve it terms is about there's the and the and of those always we pursuing enhance talk in Bakken buckets in in

bolt-ons The really around second small element trade. and is

outsized in resource then fact is play for ability third the Offers like that that to it's the to it a And But commitment, well does both us things program constancy at of resource. positions allows we're financial instance. a full at cycle greenfield require doing to exploration in in the for Northern generate our in those of program, element, that of as you returns. get leasing talent cost Some as a terms really said, us. Delaware, in purpose

We and REx year themselves. going couple about to program is ebb as of million nominally talk flow to dollars being activities continue present a hundred the opportunities a and that's

biased may as years spend a Some to be more we years bit the that that But we budget. and leasing, year consistent Louisiana and toward with thinking. saw exactly ratable that around year other that about was dollars XXXX couple it talk I last Austin exploration year the obviously heavier provided position see guidance drilling we established our which may current REx it's early the we and case it's Chalk. more a this But program going million think our of hundred the much still a forward seismic,

Brian Singer

Thank Great. you.

Operator

Okay.

is Our Hanold next RBC. Scott questioner with

Scott Hanold

Thanks, good morning.

Lee Tillman

Morning. Good

Scott Hanold

buybacks term, cash more aggressive the flow be patient about all where on prices, a time, you with in in point point I wait still equity you short for a at Envision like First, I basically had to provides stock to given very your made bit support a -- that you tell great the that's you in more that? a competitive. and bit buyback, buyback you right increased stock authorization, to would supporting mean thought on buybacks would a little I your mean, getting thing Lee, especially see. want or the with commend investing now this your certainly where And think can with I prices free short-term us your portfolio. the

Lee Tillman

our be around generate to we, and this fundamental cash to repurchases by Our is wrapped as going ability share course, our with governed really had principle dialog our organic Board free flow. have well of are

not repurchase also the is taking way we to share on not money that and repurchases to we averaging a that dollar that spend are going execute of advantage share We believe earned. And have overtime appropriate against program.

but flow, expect cash work to put governed should by we're you the program, to that cash that are going it generation. generating we that be going extent flow share to to organic in free us So repurchase our is free

Scott Hanold

cash really have as I certainly, And go to guess agreement. to think like can the looks streamlined give upside follow-up size into on things. that. the opportunity with beyond. of context Can kind appreciate some XXXX I tolling I like bean mean like internationally, my us obviously is It flow new optionality that And EG you Understood, of and that's guys in of you of going Marathon? be what terms you incremental

Lee Tillman

today on broader profit so of on There decline combination is doing meaning to Yes, I financial probably going very full asset, it that have views And that to is performance the on arrangement, there transparency that even what Atlanta we're is that, of with you continue drive field delivery continue is Alba should within asset low financial to the give the molecules. exactly long sharing. directional addition the give we the which it's tolling impact on the itself but even can clear portfolio. the specifics non-equity assets opportunity some what EBITDAX, though of a can't and that will a expect to out of EG off give an the back life, is certainly

etc. we that regional that with valuable LNG the EG have of Island, it that of And area, And plant extremely for plant, bring the that have stated We fully believe gas Aland sitting aggregation before. continue leveraging additional infrastructure will we which that simply as in which step, gas kind is profitability methanol a in and a fact Bioko of loading the to local storage on natural promise plant first both a to is we've will fulfill [Phonetic] we arrangement asset. that a believe course, point

Scott Hanold

hearing that. Okay, on Look that. to I appreciate forward more

Operator

Bank of of Leggate questioner America. next Our is Doug

Doug Leggate

you morning, me. Lee? everyone. Good Thanks. hear Can

Lee Tillman

Good Absolutely. Doug. morning, Yes.

Doug Leggate

to you, in of a see forward to couple looking weeks. seeing Good

Lee Tillman

Got you.

Doug Leggate

growth, on inherent the growing organization. of dividend sustainable been perhaps capacity emphasize the over cash aspirations, caveat flow continuing comment been to of There compete little growth. But a you're had able guess, you against your obviously I buyback is that. growth XXX the visibility the dividend which to dividend Lee, S&P there for I you've made one and about guess,

you balance just I'd about to like the two. know how the between think

competitive terms about free flow in that? do How but that other S&P XXX the cash growth the certainly dividend is of Just you is piece think relative of metric because metric.

Lee Tillman

think be are out flow and first an cash the we that's I let's generation doing point you honest that that step rightly not is free Well, industry Doug sustainable been of on achieving basis. is a quarter can't to a regular you I conversation free our actually mean, Xth returning of that shareholders generating you're cash flow. because this unless about have cash

very sit deliver where perspective we cash our we from shares, relative to and because repurchase volatility say, So the mechanism first of step where consistently much the is Today, talking the having in best our flow a to you're a in model -- delivers portfolio your to free then the yield cash a back that a share once favor our, sustainably competitive, get you the business I'll yield, that that shareholders. NAV you simply internal model about value market to and are on calculations. own

is thoughtful we So decision will for continue the make balance and between that every we with believe how look quarter and repurchase answer something and is a dividend to share assess our right we'll that shareholders. mix at it about to mix. truly continue had to that first returns that on that and each split, That

in think time. we group, clearly yield it's your on the within at is Today peer competitive about the moving cost X.X% sitting truly again, forward part structure dividend, we're that of

form to into end I our mindful, at to day, the to shareholders free will emphasize cash over metric but that essentially my how dividend, to as I flow And the shareholders have about the in of the cash on you return well. patient very that's believe or be is return that also another, continue scorecard most of one of back XX% important you to really and metric. our So a ramp ability

Doug Leggate

good a that. very quick point. just Maybe follow-up to a That's

we was it lower, be the it assuming significantly So the point? that and reasonably was at where to thought be we would pivot it back be dividend not go would expect let's competitive aspirational your obviously valued see all yield to would because price dividend share your

Lee Tillman

just factor clearly forward the side I of it's that at on valid think returns you get shareholders. lends the have -- we it's share best today market the that's that based very overwhelming the in so forward as we and sustainability dividend? going us to and, absolutely take think yes, it's I be value flip a to are stage, volatility mix. mechanism It's I saw what table on the And to curve, in that But the the the in then to mean, the as see think do part that of step back and our inherent itself now to the for right it -- equation. of we just repurchase on I consideration

Doug Leggate

B. me But that's part one if last one one part from thinking, A I'm

expires in couple So, the contracts hopefully should there. evolve you that and it take you inherited which quick to gain a one it relates to leave how British like -- for from of years. the Thanks. Gas off we flow last real control expect of I'll you is agreement, -- a fairly What if cash EG onerous in off EG once the take destination as

Lee Tillman

and contract time. -- agreement place in was certainly a time --at at that we'll a different put that Yeah,

through I So what to enhance can out get to the EG as that absolutely market hindsight don't want think the I exposure the going will that go that to asset. is of we and say its go continue forward have but agreement and and we'll course, profitability back full it runs we opportunity

Doug Leggate

Thanks stuff. so Great much.

Lee Tillman

Thank Yeah. you.

Operator

SunTrust. of Neal Dingmann is next And

Neal Dingmann

at about remainder next talk My can bit what targets just could wondering, increased just of year Permian. are about to has obviously a you zone. multi-well, your But only spacing? morning, multi-zone in so in you plans questions guess people far. how not first spacing terms terms just answer you this Good been scrutiny there speak, Could pertaining Great of just guys. per you your of development looking think there talk about and I multi-zones I'm year and and on

Mitch Little

both think our productivity. this we've which haven't our spend delineate development on quarters. pacing area into lot continued kind over to a and our past not our going strong strategically capital for Wolfcamp of consistent the Permian, in like of messaging we've Malaga had set XXXX move the upper is been of position in But with on Neal, where time focus around Probably the reported Mitch. areas program We've I Sure. investments is is. few we in that to fair bit focus XXXX. pretty a

Red We also slides delineation Hills year, over the stronger was of half of the bit revealed the move we second as into a there into in component the area.

our of with structure improving pipe pipe water programs trials the position. completion on our focusing In or oil and of various backdrop from on water on cost of we're to of drilling getting all efficiencies and that margins down, capturing driving course, up that, across XX%

it's right track, that set expected plan budget this we the executing the to when early early, year. we're we on in So

so as it's localized Bone do the concentration program, Wolfcamp of in maturing some term, that benches Malaga, the Wolfcamp to going be and position element in but and Spring zones. continue delineation in full-field then development and development. the towards more has We been upper part And between have in we areas of across other delineation trials move the into multiple upper more some like near mix Wolfcamp to more the that as

Neal Dingmann

a does players. question at has you when out just basins. I'm then Mid-Con is out could And return just others good. maybe would at play when wondering, you -- versus of And you your like of there Mid-Con or it have a wondering, stack you do very of of just purely some by you how look I sort bit broader is development up one look talk Lee, about my guess others? some driven. that's of just few great consider some I'm the guess that reallocation I your a you reallocation the how one purely obviously and that really Very sort been plan,

Lee Tillman

of Oklahoma. a Yeah. Well, Having backing said and going for offer advantage maybe of and we about original talked we recall about was returns activity original and our the the to be more as the returns. those and that XX% that, oilier to and is absolutely, competitive the in Oklahoma allocation to up Delaware earlier concentrate our going just of which parts bit how the is XX% because the program Ford year to about all to SCOOP development really both little in Eagle us capital STACK the a designed Bakken reminder of Northern our budget just allocate

In efficiency the we kind for on and development targeted addition, really costs The done of our made these we for basically well the print are just that to enhance allowed completed where we've getting capital last us also this cost $X.X to bear wells to pads STACK in point. million. two completed on continue case that down Meramec well demonstrated

the we as going Oklahoma including play, look kind so is take be half the of And in to the overwhelmingly of the of again activity that areas concentrated year, our Springer. even at the and second oilier

windows headwinds to anticipated in driven and of head our And is by some of again, aspects capital, which need that for lot of is all other flexibility multi-basin do, the just this our and the secondary this When say, but see to head the I to in fact, I those in our significant pretty a the is of part our compete advantage orientation we if certain move the believe opportunities with have do issue, view have point don't so. returns a products obviously phase portfolio. to we of Oklahoma

Neal Dingmann

Thanks, Mitch. Great Lee. Thanks, details.

Operator

Okay.

Heikkinen David question Energy next Advisors. Heikkinen Our of

David Heikkinen

for lot of commendable of uncertainty and quarters thinking a do Thanks eliminating about investors. record the and last time building think a six that's I track is

earlier some the think about questions As I listen and intent. trying to the to of really

eliminate portfolio comfort versus I existing acquisition? think they're have around the your of trying you uncertainty to

it you talk like I yourself acquisition? time And stock could flexibility, on just you're understand, looking talk which at your portfolio, people simply, price existing like locked dividend about much seems in but your can you of about the and leaving be process your spend very thought how can site Marathon existing

Lee Tillman

is four think best think, a plays, required resource a believe nor first large David, it with us is really very US for success. not portfolio for forward and extensive of scale transformation is in the all, I I differentiated M&A what our position consideration really we

that multi-basin lot think we've advantages I about competitive of gives talked before. So model a us that

us. and is work on the for of really the work UK Kurdistan exit front not the hard us, the from hard in us So the with portfolio behind particularly

of the addressed, accretive or our the we in, that the already enhancing within really to it well our operate. forward basins fit right the believe it's like what kind again we be even look elevating year. core at But resource that in we approach I've at basins as sales bolt-ons we comes going enhance And even Mexico is adding base one already looking currently New as and which incremental as our we continue in grow could to is, last also which into trades, economics participated sticks have, and lease smaller that looking the

risk well. which the guarantees it, approach the that success we exploration. really finally, lease there think third our to are there out program that element that it's standpoint get And generate is expose are some money money then we things as of but we've and on from there got right we will albeit a no have There in truly REx and

So line strategy I think comprehensive that to our in M&A. we've bottom not resource to place continue base. scale and improve large really the a very And require does replenish is got

David Heikkinen

free net, the following flow. number shows is you pretty But about million sales. cash versus right with five up quickly lease trades cash And or that REx, line year, and couple dollars and accretive portfolio the your flow enhancing use slide organic free of cash just you A&D your of on CapEx on the as free indirect total bolt flow to the think that, hundred could a

repeatability that track and flexibility you how record? the do building for of outlook So on about think

Lee Tillman

ourselves low that it find commodity in, as as I drive obviously our of on down first breakeven that think highly upon environment think, is the can I focus continuing enterprise our really price we dependent to and all, we of needs very free even price breakeven lower. us commodity to range that broad flow a having of to outcomes. mindset across gives of operate all that headroom to It drive generate to cash continuing those continue to meet that

that And could back which but that be years, not some we as Resource see striking be years some funding these then of to the accretive we balance really and just bolt-on best Capture only and opportunities. opportunities selecting rec some fit between could shareholders can and returns it's redeploy also

on our business. going to we're So the have meaningful most impact

Operator

Our Pickering Holt. Tudor from next & Jamaal question Tudor of

Jamaal Tudor

everyone. morning, Good

Lee Tillman

Good morning.

Jamaal Tudor

are As color as working I something interest like I charts, second of the kind QX low some in expect working any we the longer bit QX half listening QX for magnitude interest, working something could commentary and on on similar higher trajectory increase, or we higher? look the you at is back the of of the but give looks interest, relatively Should year. of could kind and of snap on it Mentioning a see little laterals it kind QX. to there of

Lee Tillman

to specifics Yeah, into the basin basins, in our is basins again materially does high about, well, going I would difference. interest a think way get want working directionally, see basin I have higher in would Jamal, sales that. trending link certainly also higher we have you that in so interest some wells well. driver, the fact and that can of that We by end to efficient, very to with of we where up allocation beyond that we are capital And and don't relatively certainly do element of that lateral as make that a an and the on remind toward are we certainly will I also But been follow you be those is working our

Jamaal Tudor

look get half much a fair the second enough. you're which going right moving Springer in and well. to on oilier is is overall, as looks dip of region expecting some I Oklahoma of there average in of second pieces a any half as get Gonzales, like And which year. it be the of some the bit of attention, the I little we sense just are pieces the Eagle moving at then All that could oilier year, of oil the Ford be cut the moving kind should to than just in wanted

Lee Tillman

metric high-value to financial product. Certainly, That's that closely outcomes. very what's really we the that delivering of our it's key because a watch our is

try basins, well-mix year, that said, in particularly allow I that have keep we're say, So to oil the to cut. bit where second more certainly those would continue improving the not to like is a directionally of Oklahoma, half you if to drive to flat over little in going going us a we

and higher regardless as is Bakken relatively like oil of cut. the places well opportunity as In the fixed there pointed out, we to some Ford, cut County to continue mix. as the a Atascosa you is continue up-dip move to as more however, Eagle Gonzales the extent, toward that to do oil obviously well And

Jamaal Tudor

you. thank right, All

Operator

question Barclays. Next of Wai is Jeanine

Jeanine Wai

everyone. morning good Hi,

Lee Tillman

morning. Good

Jeanine Wai

my support have so cash consistent my free you and loading morning, only the level growth. to regarding spoke one, dividend that question about Good needing question, I is on flow that

well. plan if more Eagle US, efficiencies in year we include and the in doing original the growth So dollar to both but actually you oil Ford and less we go back Eagle this with mode given as XXXX Bakken with more the harvest Ford suspect oil a the growing objectives the is

you -- Oklahoma story. pretty in Eagle flow what to run we more and already be can program perhaps with like type Delaware Bakken loaded if in pretty to Ford flow But level enhance talk the cash you about cash appropriate which free a free be and when the a and it's strong for considered could

guess is how level thinking on Bakken our the maybe view you to closest scenario. So running type in But the just longer-term loaded know check of wanted of just, get the is we about into this you're assets. to

Lee Tillman

well, certainly. Yeah,

all assets. as of First our we as manage assets a individual Jeanine, portfolio, not

higher have flexibility. implicit the cash them All assets to between that of of flow growth and capability free generation each our have cycle

in rate of change corporate-level driving with we our our allocation So start a returns. capital of view process a

is drive to then quite is deck objective a an cash of the an free that really not outcome, conservative out sustainable price frankly flow that pops on and next growth The oil objective.

going a it's X too so within for would emphasize that would specifics But the be it's we early that us flex metrics our on around delivering say basins bit basins. actually give just financial I and that to how And to I those XXXX. of make can all just really capital allocate around

we where relatively the is year great generally managed this Ford of for year Eagle speaking like example flat. a Eagle Some Ford instance

in free was flow. generating cash but high for was it mode. Bakken In generation managed it being cash to So a growth also case free was the very of significant instance, flow

based particular each role have enterprise we so level. And at what our to the will drive need on of a financial outcomes basins an

rule is basin I'd say to plateau So in get on or effect say, we're there no a given I terminal level. production to when trying -- would some

Jeanine Wai

like prevents and of companies guys some I the volatility is the growth in a guess at was terms dividend model. in and that to commentary oil of the investor listening point prices having Yeah. like oil companies my feedback you Okay. least bigger gas, that

kind cash you oil control And but cash and control can free if oil so that. dampening prices the of is do you volatility flow your enhance prices, can you the free

So we that. just how are kind of thinking about you're wondering,

Lee Tillman

overall of would is on Jeanine low prices, commodity I our that and our operate flow. in I breakeven XX%. across breakeven. of tried to breakeven still Oil really our Oil think US sub driving I year is cash well while sub what have by our can enterprise by mean still XX% as XX on that such We're generating what enterprise spectrum sustainable focus enterprise we growing that the terms say MRO broadest as free we're XX we and with this that practical,

first So I it's but and think obviously, process the objectives financial it's, it an optimization with foremost. starts

Jeanine Wai

Okay, helpful. great. very Thank that's you

Operator

next question Molchanov from with our Raymond James. Pavel And

Pavel Molchanov

question. much year flow the million, coming EG? if if XXX million highlighting cash, Thanks flow XXX that doing from can metrics. In guys this disaggregate I'm you curious that cash how and up in where cash the is taking you free for end from of maybe free is of free coming particular,

Lee Tillman

in a asset we of think to Bakken, -- all I cash continue being a of about probably Northern are the this EG production of to is strong bit still cycle. there. base cash flow the gain generation, when generators development still would the that then, flow appraisal little still And The you flow strongly base free is free negative across Delaware and those still cash-taker build point, to and It course, at and phase as our look early because on Eagle of neutral. are the is way contributing Ford level Oklahoma scale cash delineation

Pavel Molchanov

Is contributor? largest E.G Okay, helpful. that's the

Lee Tillman

is it No, not.

Pavel Molchanov

terms barrel In

Lee Tillman

not it's No,

Pavel Molchanov

is not. It

Okay.

gasp Your highlighted maybe the up you current grade like rating or balance investment the are with would into of you agencies all of level grade sheet of you further of happy on the kind to territory? just from get single-A ratings, investment

Lee Tillman

Well, I'll an let maybe Dane make in. opening comment jump then

very rating. S&P we're enjoy. Moody's pleased that our upgrade we Obviously, now split upgrade, first to triple has can we, we the investment rated get that brings benefits that an were of the it First B strengthened to we triple all, E&P got subsequent upgraded. Then, grade B-minus company which from to to

But sure for EBITDAX debt to maybe like health determine our help drive anything we of sheet do the us to we balance Dane key do to us metrics I'll flexibility we that net necessarily at else right make like. would look ratings, we also jump don't looking throw But in and order he we're really that in and that to the and let we have. to overall maximize that things tried the things drive business the

Dane Whitehead

rated all work agencies really grade on that hard I'd investment thanks the Yes, everything we're three we've fact really at very happy that accomplishing with today. Lee. we're say that about talked

it's cash of financial productivity, all corporate on returns, driving strength. increasing terms well free costs, Focusing level generating in down flow, its more --

the to see the business with key some agencies, to They on rating the just you the another the I we're so we're credit push than and notch we support model to going from the to support agencies. that's we've focused to exactly really like going upgrade And executing quality think can keep executing. on get and if in ratings rather model that metric accelerated described

Lee Tillman

also maybe, would I we took sheet of XXXX. balance back in action that a add lot

interest there. to curve as breakeven. cost, bit as strength a of well sheet all debt we're that of quite contributes our a enterprise really of ahead gross little etc. think to our bit We I our the the of balance took out reduced

knew environment. important going I got in we the out sheet be so forward balance financial question that the well to And we because think commodity in kind of front flexibility of was

Pavel Molchanov

Appreciate helpful. that's Okay, it guys.

Operator

back closing We remarks. question-and-answer call turn to the Tillman Lee concludes now This our session. for

Lee Tillman

appreciate Thank leads of you. quarter and way we to We personally Oil. our and Marathon interest contractors the dedicated recognize day choices Thank want you your call. who all deliver company have excellence Execution that in quarter investors that each employees and I every our concludes thank our that and and out. on mandate and in in

Operator

your Thank This participation. for you ladies concludes today's Thank and gentlemen. you conference.

may now You disconnect.

Marathon Oil (MRO) 8 Aug 192019 Q2 Earnings call transcript