MRO - Earnings call transcript Q4 2020

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Operator

Welcome to the Marathon Oil Q4 Earnings 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. [Operator Instructions]. conference recorded. this that note is being Please I Baber, Vice turn the to Guy call over President will now of Investor Relations. begin. may you Sir,

Guy Baber

found Thank documents address Yesterday, as XXXX to our morning thanks marathonoil.com. a year slide on issued you, results joining investor release, can quarter Vanessa, this packet capital and and us full that a everyone press our on fourth at the budget. well after for call. be as presentation Those close, our we website the and our

me always, everyone and release will the Mike Mike in Joining and Dane are Tillman, forward-looking contain that our of CFO; on implied uncertainties VP Pat VP or to his actual Dane, included cause could call filings. Strategy; We'll Executive and such Henderson, to factors remarks. language materially described that, statements. our cautionary materials refer CEO; will who and Lee, statements Lee? from subject to over and risk also Senior opening results Lee Corporate today's call, Development as differ session. today Executive by Wagner, VP turn as I'll Chairman, of our presentation from Pat to before well get With we expressed risks to and hear I Whitehead, the the press call SEC and Today's President those the provide question-and-answer in as Operations.

Lee Tillman

and do. our we essential The our to today. by again front and COVID-XX and once infrastructure you, the their center contractors employees to remains Guy, morning start and critical dedication health to safety we as continue Thank I thanking everything want listening as good of providers. through everyone resilience call people and manage pandemic to our to for

people truly week, so without generational multiple Just I'm water again in privilege our outstanding their and execution risen without many the winter storm have did also the challenge have or particularly of the discussing here work. power team, proud a of days Texas, product their of incident. past to is our The again. running this navigated I amidst and and today They perseverance. excellence of

was XXXX how and we on our for results. results we of themselves. that those our focused our elements those year unprecedented within industry, challenging for business achieve While about delivered it just Marathon, But and but results, a control speak not for

as the our First and especially foremost, of challenges measured in total activity of in safety our I'm incident despite will people commodity associated recordable priority. dramatic throughout consecutive performance shifts my record levels the always our to and of second top pandemic the proud volatility. year the year rate be safety by with The price response

also its intensity significant estimated to total the quarter progress and During of fourth XXXX. emissions XXXX, capture improving gas made the XXXX in GHG reduction environmental achieving performance, company XX% approximately to an improving to relative for XX.X%

investment-grade balance Beyond continue operations, commodity generate XXXX primary optimize and all Today, our our playbook. across I'm protect highlight program to flow. pleased sheet maintaining and XXXX success cash reduce to of and safe lower cost in our and sound response in was threefold: capital price our focus comprehensive our elements structure, volatility, free to environmentally

volatility. First, commodity reduced our to and unprecedented program optimized we navigate capital price

the tremendous XX% in XXXX, execution chain down below design, a of our quarter combination during average. optimized XXXX costs down due reduced budget supply expenditures XXXX and approximately below longstanding per billion cost leverage. capital fourth foot our more efficiency, execution for Average optimization original commercial was well a the year-on-year trend completed well recent and XXXX capital guidance lateral continuation year. of $X.X XX% to most from with on dramatically Our We totaled of $X.XX at billion, our the than well XX%

these of cost majority well durable. We to expect prove reductions vast the

Second, multiyear in challenging and The action of of over initial last we response general took our and year. year-on-year decisive our end cost successful record reduction environment. to lowering Early in we and costs, continued production to structure. our XXXX, we aggressive XX% segments the U.S. result trend set the low cost was cost targets exceeding in administrative reduction our Both international and unit XXXX. both costs achieved our a

investment-grade free on Finally, our balance we focus protected maintained flow. our sheet cash and

full our Our million year, to in during our only of million gross track fourth as our base $XX consistent including dividends, fourth free $XXX oil record. This entirely as investors $XXX dividend cash return in with flat we Funded share $XXX with million objective included during capital production quarter multiyear of reinstated XXXX, $XXX cash consistent million sheet. debt per generation for just back collective and our culminated under of well in continue our balance the million returned quarter including improving WTI reduction, and XXXX buybacks barrel. actions with of to free flow by flow, averaging about sequentially $XXX with the around

XXXX optimized We supply/demand our also responded million. November model. business crisis and we the our proactively enhanced reduced successfully XXXX Ultimately, maturity in $XXX or by half to debt and further

to generate a environment more dramatically volatile and addition the the pulling all we necessary financial future. commodity levers ability In through in improved in robust our manage and price to resilience to our lower crisis, the outcomes

for to remains a recovery firm we prices fully we gas with emerging on nascent crisis. We cyclical from the are while supplied demand prices market potential The balances this footing. remain price will takers upside the doubt entered is oil well and this remains no commodity business, just XXXX predictors have surprised the and pandemic understand that that have price therefore, volatile. start that have, to that We year, wide. and And outcomes of not range supply/demand

flow, team, cash returning free As ESG our certainly I our we can't capital remain price. often must these excellence. control of to can't strengthening Regardless external sheet core remind we balance returns the focused the and our and predict macro, investors, corporate oil we forces, priorities: on and our

focused reduce cash free will framework transparent and executing widest generate More flow Additionally, cost us improving to breakeven, across allocation. for cash on further we corporate resilience stay specifically, continue our prices. the will range possible our enabling on structure our to free of we downside optimize our commodity capital flow and

capital rate operating balance framework the disciplined stick We clear cash a to shareholders. our will and for meaningful and flow capital visibility sheet of provide return reinvestment generation our use allocation to purposes, to investor-friendly percentage free of flow enhancement of to prioritizing cash

$XX at investor-friendly purposes. of cash least will or available our will rate our be As less, from barrel operations or for a reminder, assuming we make XX% higher, per WTI and reinvestment XX% flow

upside, commodity the disciplined and raise Finally, won't price surprise we the will we capital to spending. commodity if persist, remain growth. chase our not prices strength will Even if recent

will capital remain higher maintenance budget. even our billion we flow. simply $X pricing, generate With will more free Our budget cash

highlights metrics, incremental of We will targeted program. target this will I allocation who the the XXXX brief gross over to minimum $XXX and leverage of sheet and reduction XXXX. accelerate through a we will our Henderson, evaluate walk capital our now realization our overview our With and framework, million our of capital investors beyond return balance will improvement debt our base us for dividend it capital to of turn Mike

Mike Henderson

Lee. Thanks,

that capital allocation as fairly our the As with matter $X A program maintenance billion consistent Lee highlights, the of capital prioritizing mentioned, most. XXXX framework, operational financial is our few results and Page X billion reinvestment of program on of cash our a just of deliver WTI $X expected is maintenance XX%. to $XX $X deck, summarized earnings flow free at billion our with rate

due free maintenance this about at million ongoing improvements scenario, an cash flow a the to further relative to and $XXX improvement price of reductions. You'll provided deck last capital cash quarter same cost combination of is outlook we note efficiency the

comfortably WTI, the our Our program. of corporate resilience XXXX below cash breakeven free flow underscoring $XX is

targeting of consistent year, our to gross this sheet. are objective million We $XXX balance our with continue reduction improving debt

relative emissions We a improvement, expect our baseline. deliver will intensity relative quarter oil we rate. fourth company And reduction XXXX total production further exit to drive flat XXXX to targeting GHG to XX%

details, capital-efficient and Ford, to approximately our capital the industry's XX% dedicated the be of operational most basins. will Bakken Eagle the Regarding

and about around frackers average will X will for X the X We year. operate rigs to

Additionally, X topics regarding I'd of XXXX other like interest outlook. to address our

challenging Each last basins. respond a was to an events, to teams our it hurricane, demonstrated has weather of winter week ability equally all successfully a impacting significant asset one obviously our be primary from weather. floods extreme perspective, of First, weather or

above fourth oil this winter tested effective all much and of the U.S. the extreme have nature the extreme our the production needed be our expect simultaneously. impacted all into first I our storm market relative safe to slightly who of across the teams quarter. have to the quarter We therefore freeze. Like gone and broad back like down over in past getting beyond company of by been field operators, of teams asset volumes an volumes the to However, recognize would week, many manner. efforts

in have guidance, our production However, and delivering year about these challenges annual fully are we no our on commitment. full concerns reflected

cash much is that. of Second, stronger WTI, highlighted than have while the curve potential our the program forward at clearly, flow current I $XX free

will our discipline and As we mentioned, maintain flow our cash free prices stronger generation. should hold, we prioritize

expect cover continue Assuming just cash in $XX XX%. will turnover WTI, efforts a rate to our billion will $X.X flow our the XXXX optimizing increase below below generation With who strip, still Dane to ongoing free I structure. cost to that, with we over current to reinvestment that's would a price Whitehead, our

Dane Whitehead

improving everyone to morning the environment. lower, that's commodity for and On earnings free of cost deck positioning on volatile track successfully optimization reducing to structure more Slide good our flow generation record, our breakeven, established and call. Mike, cash you, price critical in our potential multiyear shows company a flow Thank X success we've cash a free our been

XX% result During reduce in including decisive innings Directors, to the and was XX%. meaningful dramatic our G&A COVID-XX and the employee our costs base on Board aviation, other other and real was costs. initial comprehensive, to taken the we contractor salary temporary reduction XX% record targets and to a action our broad-based, the was in Board base new U.S. consistently reduction establishing for production action in reduction already administrative actions reductions We're are significant continue materially These pandemic, expenses, year. base. trend. and organizational throughout this outperforming we reduction project estate, levels; activity employee again And in XX%, to our of unit and on XXXX, reduction cost align a general XXXX we contractor among XXXX. to for future and capacity XX% building reduction reduction and early both a momentum Director our took of have better and of international officers; outperformed including: initiatives. lows our expected set executive to various to This for CEO action year-over-year with and end other U.S. our over expense costs both reduction segments The corporate compensation; compensation latest year, a officers both further also alone production projects workforce cost down again and in last a

basis. While quarter turn cover we case. run a reduction, categories by I'll costs Pat expect toward it to an realize Ultimately, we're XXXX Benchmark the a earnings X-Year our to now and across first include recently end and XX% expense savings relative approximately the rate cumulative Pat? projected of and reported production uptick in G&A, workforce our of both XXXX newly associated this production cost cost on to XX% Maintenance with majority G&A year costs reflecting relative disclosed to onetime implemented over reduction to the largely will our driving G&A XXXX. of

Pat Wagner

of X new Capital Slide our Dane. Scenario. Benchmark disclosure around highlights a Maintenance covers X-Year our the Thanks, of

that this is $XX and well-by-well to all-in XXX,XXX our designed of impressive of day efficiency cash flow by First, of is measure. any barrels to XX% free simply a The $X company. I our Benchmark WTI, should outsized want the one X-Year program by for a the it bottoms-up capital and reinvestment Such assumptions. ultimately might oil and is capital forecast a is longer-time capital efficient flow that quarter business nor that a among to $X showcase execution scenario over by Scenario XXXX model. But It a X-year a model sight to underpinned advantage the most not bottoms-up, company evident still through It rate cash is is X-year billion be sustainability of argue provides. with scenario line this potential at deliver is of of billion the Maintenance be of any longer-term E&P lack even intent capital execution that horizon scenario. production over accountability oil free an 'XX is of of execution plan. hold per flat production clear a defensible X-year XXXX. fourth our Rather, supported benchmark this guidance, total

of inventory we we relevant maintenance felt most in below even are this view and the The our is half well of consume our the financial clearly scenario, though compelling. So outcomes maintenance scenario high-quality X-year credible.

free flat years $XX billion WTI, can of barrel of over reinvestment with an cash per average X Assuming XX%. flow approximately $X the we next rate deliver around

below corporate and of the period, billion annually high-quality spend company strength Our barrel all-in hold flat of $XX cash capital between per evidence would we maintenance oil and free X-year capital. breakeven flow of period, billion efficiency production remains throughout XXXX inventory. our fourth $X.X quarter $X total the our over the To WTI

cumulative funding our intensity previously the Importantly, disclosed initiatives, greenhouse approximately period. of $XXX including X-year this estimate all-in fully million for reduction capital spending contemplates

X-Year multi-basin includes Benchmark Scenario that Finally, Maintenance across it's our portfolio. allocation noting our capital worth

heavily do so comprise disciplined introduce to corporate and deliver set. a a XX% into in XXXX from year and XXXX in scenario. opportunity under activity level the assets corporate begin in returns XXXX. we of flow to Oklahoma Oklahoma play expected scenario, leaned Eagle capital to and will XXXX, Permian between each The we from While XXXX and this accretive XX% of beginning Both and measured Bakken back again are high-graded Permian resource this on Ford to in contribute free and cash and the

ESG I'll wrap to will it Lee, excellence back who Now initiatives. by up highlighting turn our

Lee Tillman

encourage is successfully our with belief execute compensation as XX shareholder in value. strategic the behaviors corporate to investors, strategy. are January compensation core We we as long-term to this press performance essential outlining objectives GHG changes our believe the space. we we It's of issued changes long-term And mind, these Corporate executive needed to on our executive and recently our frameworks deliver ESG a our Pat. in appropriate incentivize to is governance when to comprehensive alignment continuously you, to Board comes foundational. leadership enhance reduction all improving government peer Thank intensity have most release both with And and and progressive likely that believe modified well are initiatives. achievement and maximize much it our

must their management corporate with For investor it broader and all our more for compensated. performance, just elements improve and it than market, the are outcomes. will compete sector to of take capital against financial ESG Companies how teams starts strong governance

has of deck, As with equity. highlighted XX% total first compensation the reduce by our has on Slide compensation. was been Compensation we mix XX to step direct our overall took of toward shifted our Directors for our compensation more reduced the Board XX% awards, with My including XX%, current industry also both reductions. alignment environment. through to by long-term participate officers senior compensation will business incentive a total as reduced broader XX% improved been similarly Other to direct reflecting XX% as well reduction

compensation to cash measured efficiency, TRIR; annual our our performance, long-term reflect by and scorecard important environmental emissions value intensity; we X by creation: measured framework the bonus better ESG incentive simplify scorecard and to short-term most financial as as to GHG safety, as measured scorecard. capital free completely our restructured Secondly, flow, production to free factors measured strength, corporate reinvestment metrics and measured balance Note debt and share. capital our eliminated as our flow by cash by cash by growth from financial all been breakeven; that cash discipline adjusted and per have flow and rate; sheet as

long-term we Finally, have LTI also incentive which in meaningfully X vehicles, compensation all notably, we to diversified denominated shares. our are have revised framework. of Most

S&P performance Indices comparators. XXX versus should E&P the shareholder return peer as also on reliance mitigate encourage and revised Energy our Our market. adding framework direct peer group, relative against improved the broader overall S&P This XXX will total

mix, flow introduced our commitment price stock Additionally, units to we cycle. sustainable commodity LTI into the free cash performance have cash the throughout underscoring free flow

Keeping to Turning both ESG be always of is safety raise will to and safe, our core performance. contractors, as Slide performance. and view bar key XX and top our our a and continue safety and We workforce component efforts to on a value priority. the environmental employees a

performance. is with highlighted performance. record-setting a COVID-XX consecutive will remain was through We record performance during successfully year of ongoing our Peer-leading the safety managed and of foot greenhouse that minimizing have pandemic our safety climate This strong, our intensity already gas our financial long-term emissions addressing component of TRIR we strategic XXXX, second executive Reducing impact, central delivering of the risk scorecard. environmental compensation goals to change performance.

perspective Some here. is useful

energy mandate too elevate it absolutely role industry to will human not dual in is world's oil challenge goals. to headwinds addressing products progress. of to of other, has power future decades than any many any the Our standard be to acknowledge Though progressing the we and We the and our world's done strategic required commitment innovative to of demand that a our all the part more easy the support And meeting growing will requires be also gas solutions caught get environmental and many a that up transition, economy face, in will to play and change. and come. for energy pragmatic climate we believe we the for part living while progress global

During and reduction a combined gas capital XXXX, our intensity leveraging tremendous our GHG to reset program capture. we activity, step-change in made improvement with the drive targeted in efforts, strides, and

to we approximately XXXX, that GHG reduce quarter. fourth the result, during XX% in we total our intensity company we for the expect gas and achieved XX.X% a XXXX As by also relative capture

ongoing established improvement. our quantitative have significant objectives, highlighting We to commitment

compensation of XX% has into announced annual XXXX intensity the to approximately incorporated relative the reduction have our for target GHG target been XXXX We scorecard. This baseline.

relative XX% to We have intensity expect XXXX. at goal. reduce XXXX, to new disclosed medium-term we By least a by GHG also our

carbon to initiatives to wholeheartedly in replacement enhanced intensity assist combined all progress. and that as and I companies also continue elite of we have of instrumental our funding our incorporated lower future. ensure that portion life reduction material have of believe goals prepared Scenario specific on enjoy, key lower deliver that that in industry briefly believe Specific of additional to world the the oil we These will even our of I deck the mix risk slide to a stated will utility and will provide have of our to in quality a to signify and include continued be let in expect Oil creating today's X-Year energy continue within products to $XXX make gas a emissions. investing position of approximately basis. with our today, and so world comments technologies, while million actions significant we climate in cumulative goal We our I'm to covered and commitment the tankless one up a long-term is gas offset energy to the sequestration our equipment GHG-reducing maintaining We pneumatic activities to come the carbon energy facilities lot already natural achieving Benchmark sustainable sole transition to sites needs emitting emissions Marathon the change. power, addressing messages. confident connecting know actions summarize our have concrete me the and identified and

for were free challenging cash across million of differentiated another XXXX of XXXX it year about $XXX in successful year respects, We many flow. was our execution playbook, was also elements While a all our generating ultimately company. of

We stronger balance and XXXX we capital a free of generation, today company a flow capital framework program year consistent capital. and are than return announced that we As just resilient strength fully cash with a ago. our sheet a a prioritizes allocation more result, were

group, if as E&P cash further and least to million Our XXX flow competitive billion WTI, continue outperformance against free commodity of our $XX price our of only the billion balance improving $XXX of against cash gross flow GHG persist, at not our to intensity. significant well: capital $X upside for debt reduction at sheet reductions emissions S&P $X program is peer broader free but

end costs its XXXX. company to cost multiyear majority XX% taken to expects achieve our XXXX reduction relative general on has We and combined the production additional administrative to and in record. company approximate the realize taken this by action to XXXX. specific have of to the continue More year savings specifically, basis of reduction The already these a an run-rate action track

And WTI, sustainability a compensation we taken through certainly already intensity pursue and least, have Benchmark that flat emissions $X have we design driving but XXXX. billion our and the flow position peer-leading in Maintenance last, We deliver a X-Year efficiency disclosed free GHG and free could are underscores reduction the to broadly. initiatives Scenario cash reductions capital sector of executive delivering. not of we needs leadership flow in cash the more changes At $XX

and differentiators. among E&P In fact, and industry opposed in excellence that free the well model our pandemic, with to capital the direct transition sustainable over Our I to represent was only in our efficiency to our deliver model, We that company to well. not to cash will the recognize begin and, a paramount ESG that, as and broader first growth. session. need disciplined With more the it prioritizes global was with competitive to this before our operating must move are flow market business and turn the as returns Q&A peers, competitive financial operator outcomes but are

Operator

Jeanine with Barclays. our [Operator first Wai have question Instructions] We from

Jeanine Wai

the variable buyback, is subject. Our first just dividends, capital current on question

flow a cash your buyback times variable end is X.X balances to to put getting of set towards times as target, minimum. of amount cash of start that that or the allocating free it your On depends some is investor-friendly you're flow the dividend? free aside know purposes, such some leverage I cash enough for targeting that you'll on X top

on it's the But of been is macro. X.X times that Some enough?

Dane Whitehead

quite a in Jeanine. Yes. there, There's bit

net me it. of debt tried about There's capital This our shareholders. and around of clear be the balance really first. talk about Dane. intentions at to to and return so a sheet ahead gross let a a there, Let is take me go and those cut discussion sort We discussion debt other in

But $XXX have a early million our we consider happened debt near-term I of gross year. that would target and in a that's and -- minimum. probably ‘XX reduction. XXXX Lee the Mike goal As noted,

that. that's reduce the We've is also, most our as structural that cash billion $X number, the a And it's helped So X to interest of mildly. $XX cost that's deleveraging. used looking worth costs debt-to-EBITDA reduction you leverage structure And about we're times derisking gross of mid-cycle of $X.X view, we the get to we'll clear a past billion. benefits to cash, referenced, durable our It times range. of say, X.X the and added debt math debt net been over maturities. continue and And to also We've market, term few commonly a in, my that there times reduction. to think carries oil do of in future that's X.X by to kind about reducing net years, done about form

that prices you as on commodity there. look sheet, but also and are shareholders. can accumulating going in cash we go point the probably out focused and we we'll ahead into certainly return cash much -- But with to tandem debt, So get just to gross debt coming other ways had further are to we're getting to by down, look more comes where net And today, take that at we to balance do probably we the year. than on anticipated as quickly

prices important people. to doing of and returning happen strong to paying We down be attention and commodity a that's in pay pretty quite good, when we're environment hold, very these cash there. shareholders. options are debt going both parallel, cash in record generating bit of a where be And an close we to going our things we to to track have know to We

Jeanine Wai

efficiency. general just just gears maintenance and second X-year the My is shifting question, on scenario capital maybe

by how So in kind of terms that I time. evolving general efficiency you guess and over see areas capital of operating

in the Oklahoma. billion XX% You those CapEx CapEx Permian $X.X only and XX% billion areas, the versus mentioned XX% prepared has maintenance $X in plan to it's $X scenario X-year the your And for in slides is XXXX and in the billion total and the CapEx. remarks, to has

and is activity kind X-year been the my capital related and in guess is, in the there on hasn't $XXX of that to question because areas those in is of the lower reflects those ton Oklahoma So I range efficiency areas Permian folding scenario, a recently. that

And your is related? maintain so retiring driving leases? what's of and are the such both facility it kind Or kind purely CapEx, Oklahoma in to other returns factors year and of Permian this more operational as of there all wanting

Lee Tillman

this is Lee. Jeanine,

I inventory. I Guinea. want high-graded a blend only talk out consuming less very point your both in period, described, kind that's returns set across was is this Permian comments. driven. to pointed When I of much it Eagle simple Bakken, defensible. X-year things the sustainability. model opportunity my of still demonstrating opportunity and from than a as just see it's our decline year. in very a it's think focus this X-year is And continue we that of Equatorial worth question to in a And But case, Ford answer offsetting even that's about Oklahoma really is we're to bottoms-up, both while as well-by-well maybe that supported, execution this opening half to And restating high-return out obviously, develop things the all we all and few also the benchmark by the like base about this We

believe answer short plan. both your the can opportunities the those to is So we question basis. accretive returns very capital Oklahoma, and the be high-graded X-year the allocating across Permian on via And it's a in

Operator

our have from Jayaram JPMorgan. next with We question Arun

Arun Jayaram

cash at $XX. Maintenance I $X post-dividend billion $X.X wanted ask more a would free Benchmark flow bit Scenario. On of it little basis, you X-Year a to billion. the around be Lee,

shareholders returning a So beyond some of cash you the to debt reduction do versus targets portfolio mentioned, that renewal? Dane how balance just

Lee Tillman

Yes.

it's environment, in type price of I think any solution this either/or Dane it's -- as mentioned, not really an longer.

I current think I somewhat can both we capital as clearly that, can we to think think our can desired attainment well gross prices, the to as with debt. debt drive net I And the of debt continue accelerate metrics, with contemporaneously shareholders. back our

that's We enhance to in just equation. really to base. opportunities to organic everything that as to going internally the well of enhancement REx that well program from opportunistic And our be might we in on our will continued bolt-on smaller and our continue on market the currently. investment redevelopment that as opportunities of say activities And add the like part will enhancement continue have the as present to include some themselves organic in Eagle Ford as resource

very can particularly feel as environment address look all at we facing. cash, pricing confident those we the uses we're we that current that So of

Arun Jayaram

Got light on And if could maybe don't of Ford? Mike the in shed opportunities I Eagle you. know some some those

Lee Tillman

Yes. Sure.

Mike Henderson

morning. good Yes, yes. Arun,

several as We're potential review. as one we and think hundred thinking Eagle the about undertaking Ford Lower We're the there. I locations new mentioned flow unit. Upper a Ford in for we've deck, section-by-section the got Eagle

are of with the and We sections vintage completions to targeting going recoveries. be older some lower

undertaken the or very further The were X a planned of We have this already over have year. X for encouraging. We tests results years. do tests past number

of a anticipate the I'd later So year. bit an update in on

Arun Jayaram

LN that longer-term EG? follow-up free Lee, you just of flow, looks just talk provided XXXX. towards Okay. cash cash in Chevron, free first financials achieved It and that in EG. And implications on my the the deck your you Noble about about flow like your project, is in the not talk the gas Can outlook

Lee Tillman

third-party did Arun, start Yes, yes, successfully the Yes. right, you're up LN we project.

more what our as really it $X to Scenario, kind you and free when equity from that. a just plus the about That when for but cash Benchmark of XXXX, very tried income to look impact X/X, income kind of couple mindset. on transparency EG at of a February. at flow a a that with of kind $XX, on and flow middle free flow. also bit So million of particularly PSC Maintenance up We a kind like, you basis, free well that view relative so Henry of equity roughly on you of combined in just looks little it hundred both started the of and more look X-year over cash accounts will, the annual Hub pleased we're provide that cash And if of disclosure

we're getting to the as sharing obviously a terms out LN transparency. on clearly broken of But molecules. because that trying specifically, the as well agreement the are haven't just Clearly, provide those benefit there, tolling bit more both profit private. just So of we of little

Operator

from question We with Truist Dingmann next have our Securities. Neal

Neal Dingmann

the Gonzales the the about you've more to and a which Ford, looking certainly when and look Ford, could think at and and -- you and have about It of Eagle But at on talk XXX wells, all Ajax there. wondering, kind Slide looking you location? maybe total conservative how plan just you just on also, Atascosa wondering where got how I locations think areas total me just the of I'm kind room at helps. I'm only Hector seems Obviously, you're X, about you not go XX and you still running XXX, the -- for each XX, I talk Lee, forward? Bakken team, have core Eagle slide the a Bakken in you of

just color or core any those in add So areas? wondering you total could either

Lee Tillman

decade is or the we Neal, that conservative way world. consistent think and that's a of inventory. kind mid-cycle think have the I view very a at high-return Eagle of capital-efficient, more Bakken the with broadly, price more of And deck, relatively of Yes. I would a Ford the about

So say, gas. $XX, $X.XX

conservative will So view. of is that's out well. you're mean the portfolio Permian correct, confident X prices. we're those that's in benchmark inventory year. pretty conservative That what clearly plus high-graded a work collectively, have this inventory And of and across exploiting opportunity start I in relatively we some we high-return of to set that basins very the XXXX XX-year-plus leaning very in on that feel we inventory WTI that at be as a complementary an Oklahoma kind

Neal Dingmann

one follow-on. quick just then And

any into year? or expectations or Texas, this next oil you the If year play for thoughts Delaware either talk

Pat Wagner

that Pat. one. take Neal, is I'll this

aggregate, improved our Meramec that XXX-day viability Bone exceeds we and Spring year the that performance. position. met Our the that and delivered play. Woodford to across is average program wells you industry and progressing may remind that Wolfcamp I across on has this productivity the the play continue wells In expectations over of plus. And brought the last year objective X have the

characteristics. than And of Our hope lower oil exactly shallow decline, ratios, the to we that are the been we've Delaware. what and much high objective to which productivity, which the the rest oil has prove see, productivity out was seen reservoir cut, strong

the targeting that see plan goes, both year. test, kind 'XX we how on pad to year, a bring as this Meramec far and a works Woodford As out us we'll spacing do X-well to through and for of the

Operator

Scott is question Markets. next from Our Capital RBC Hanold with

Scott Hanold

give But be little obviously, know scenario. this higher But the disciplined a your into and looks color bit remain you limit you like capital And the X% talk would when growth. that? got of case, that like structure price your to, scenario Ford know say, moving then about And think it baseline? me a could Could that oil we how you've in Bakken on -- into on upside I maintenance what outlook had a about prior progress could I you would you're versus to where Eagle allocation the year. you going discussed relative

Lee Tillman

price consider look improvement be base to But offsetting that sure within XXXX. a reduction. at Clearly, the still in Scott, really It here means at the and Yes. the we a limiter dividend not go obviously going I potential, look I'll really and demand, disciplined. business X-year or the plan again, with let's even that We'll fundamentals a our would have makes absolutely terms since a is confuse sustainability what back have going believe we same discussion we're market our first. on fundamentals of heavily and capital an depending drawdowns our think to a today within accelerate was very can shareholders. I we for you a framework support sit to upside sense. to us And in keyword should demonstration Then into we've us outlook. is really the portfolio. balance of back get I expect said you at to market S&P to And the the I to see we look a financial lean and like case growth believe occurring, debt we'll in as I market, If expectation. to the sheet the whether look point, upon think sit, more supply approach got that benchmark opportunities consistent though say, what standpoint growth XXX. not we're We're context. There even to outcome is going to making then where or that competitive incremental we about that investment a disciplined from a now, And alternative well-supplied with still win are seeing day. that's and certainly, nascent recovery going demand is in

continue outsized I order offset sector. and risk to, in exists cash will, believe, free to to have in that We our drive, flow the implicit you if volatility

Scott Hanold

quarters, thought interest on there? us of And the couple also, out you your is deals, an there of Lee, And been are where decent-sized like there's Williston all where least corporate with if at scale two. or were at is seemed a in opportunities give I the like And there Basin. And update at? could looked ask couple process of least a level other of you transactions still given over last in Can valuations something that? that that the quarter it higher this, larger you was sort

Lee Tillman

Yes.

occurred, that addressing think just and consolidation have overall, I certainly maybe asset improves. healthy deals the think some I of is level maybe

that the specific across size boats basins, structure in think any result that behavior, think Many specifically. very really I free whether the to certainly aware and the comment deals. we're be well-defined We're any I which large, and assets criteria. competitive that going them the synergies our medium well to be X that harm I marketplace. the something and and need do more deals operators, budge bespoke, financial can very raises sheet, accretive then presence of also, to no in It's our is accretive or off efficient key for logic to industry. to and of adds the criteria returns, But these in it to consolidation, ultimately not should of which our been the of in hands our to cash to all something it's industry, our going industrial going to flow. longer-term of we're going certainly, very small, available deals ultimately, transactions it's to clear to gets apply the of are on or disciplined a have most sustainability. It the balance has all don't have intend given

So all the in market. at those we look opportunities

disciplined regardless lens to access we very those. at a But We all those to are look have apply going size. all the to opportunities of

Operator

Johnston Phillips Capital One. from is with question next Our

Phillips Johnston

on maintenance follow-up another X-year Maybe the scenario.

how XX-month to get decline next expect assumed would rate to PDP decline over what for entering change wanted that is this to X-year And your Just year? the be oil you a sense rate natural period?

Lee Tillman

Yes.

fully sustainable within I longer-term year's cash just in I I all XXXX, want think, high-quality, not I clear business plan shale you just all, that assets. but decline when outcomes say U.S. contemplated X-year delivering rates be particularly with strong very flow, capital-efficient that think and this would those. decline exclusive benchmark first of for case, also our only base I -- is to really have free financial mutually aren't mean

expect we shift there. declines base see as have do we year represents typically say, So portfolio X it's you're that and that wells will production more We less year I moderate of, in X that a mix that bringing in on-stream. that those decline would of and just where say those

So there is X-year that moderation that as decline to will to be baked the not over our case fully again, but well. 'XX in time. a benchmark But only all of plan,

Phillips Johnston

Yes.

quarter. count of year growth from low But full mild then guiding year, ratable for and the the there little [TIL] rest line Ford than to of wells about also on expect of of due year quarter, lower And year little both quarter to areas. some a slightly contributing XXX lumpiness sense. the the first production I Makes average? there? QX? Okay. in I in sort side, you CapEx the And the fourth wells you bit bit in quarterly about quarter assume Eagle XX for lower sort versus of to guys to the Or that XXX first and the that's first expect turned first less in of the 'XX, down cadence that X noticed of terms would be be the are to the quarter full would which CapEx oil the plan of rest than is XX% in volumes those in just your achieve is then a you in Bakken to

Lee Tillman

Yes.

the probably are did year. the as the -- there. we going -- winter Bakken to really just that little of it's we're in potentially quite pause There's a quarter. be first bit impacts out little in a Generally down ratable timing. speaking, across You we There question a the of point in bit a weather recognize

a where we to activity. concentrate that's So not completion our want necessarily time

CapEx -- well that that to going to is be from generally standpoint, it a But as so wells effect. ratable. you're sales a And as seeing

that Mike driver as mentioned in weather. a expect the side, to from conditions range that's volumes. of do strong wealth that from with carry sales play. We across we low still But and volume the a performance, the in be in some guidance to even of quarter had On of the we expect our our see opening annual winter standpoint, kind end to not winter weather persisted remarks, first impact

Mike already kind that stated, quarter, fully impact our full guidance already XXX in range. that yes, of first winter in And range. year is notionally, into notionally, So baked as

Operator

next our Scott Gruber Citigroup. with have question We from

Scott Gruber

between here, on and [TILs] Ajax this prices a and your best in activity Hector you're layer split of mix Bakken XX when What's back and about inventory. some to your year, thing about XX low. largely second start half the 'XX. the to trend greater right wells and are of Obviously, color do Thinking year? the and program when in your on Marathon last Hector of Ajax in oil to I Thinking the believe focused some

Mike Henderson

'XX, XX% anything to expect in -- Hey, and -- Mike Hector. Scott, progress I Hector is in in notionally and And the would play No year. looking more between XX% in Ajax we about years. 'XX Hector plans Ajax a split out then beyond sorry, We're part here. for Myrmidon XX% as significant it's obviously, this the

Scott Gruber

trends the rigor of assumptions think And question the I wells, and How capital especially productivity given which, study rates. it's then really X-year work about next and well, trend intersection about of around rate as years? X the incorporate did study as fast think through service over and trends, you over these thinking drill the well the behind around a the efficiency D&C the the around the operational how X each items Really guys when well you the you. complete the Got about, efficiency service and did about you operational efficiency, you in I study. have How productivity, years?

Mike Henderson

probably get a lot Hey, Scott, in again. here help it's me It's and through as I here to this. Mike there, might out you need

specifically, it little into of cost think well from are cost did a we Pat that albeit about X putting those year, I a maybe we -- some costs, think savings we As mentioned, over perspective. we assuming are savings level bit risk perspective look at of bottoms-up and

already Eagle we take have for what the Ford pacesetter in example, you the case. ground, Bakken, less for wells we in we're assuming than those X-year maintenance that and so completed wells the wells, If our drilled and

some inflation are on perspective, From that that comparable So I from modest plan, list? the and period improvement, on Is And say XXXX. I productivity we anything assuming that, delivered over asked think perspective, to we in is which reasonable. you productivity well XXXX are is we think pretty would then assuming what is the the we're inflation an a well X-year that what have I there may but seeing missed side, already. X-year on capital nothing some I haven't in

Scott Gruber

how efficiency No, inflation? we've kind service Is something thought about guys improvement it rate it's the operational that sounds time it? the about of broadly like and can thought offset just you that over

Mike Henderson

a I fair way about that's think to it. think

Scott Gruber

Yes, question, on the so I'm complex you a it. through Okay. Appreciate talk Great. just how curious guys color. it's

Operator

is Cheng Our Scotiabank. Paul next question with from

Paul Cheng

related is questions. Actually, of couple A the to one first cost.

in One service. have area the some of seen inflation some in your Permian have mentioned, they cost competitors small

the in Just that operation? first spiking inflation cost That's sort up your of of have guys question. part any you curious seen

operation it. -- mentioned I that I your if in at we're winter the know normal returned to impact you and at that don't you fully what Secondly, the when is looking point? whether Have missed are first this quarter

Mike Henderson

your it's answer here second Mike first. question again. Hey, Paul, I'll

it I on touched impact. obviously it. winter We the is anticipated think impacting Lee just QX

still looking had think that for -- somewhere But at full we've the around number obviously, in quarter. year, at guidance I you on... looking getting then up for we're back that a that is XXX included the question the XXX, then range the And the deck.

Paul Cheng

have barrels storm? Do gave any you the know first for down, production XX,XXX Is from you a winter in it Mike, number actually, per you there I you? the barrel you actual Is day guidance share per number can what XX,XXX the a impact day, can for share? say, is the quarter. that

Lee Tillman

anticipate back in downtime, no, of Paul, getting of recovery Hey, we'd anticipate of period still mode some online. also And production well. an just that would say, wells having I online terms of plus element back having clearly we in kind as would the bring wells but as we're we

kind most And so it's of -- we're out. going to have to until wait we those can net of things

of So to we're best you view right now. provide kind trying our that of

how have actuals because haven't shut-in. see they we So of post recovered fully specific exactly we don't all to will wells perform our

Mike Henderson

here. your take Paul, And a first at run question I'll

I'd uptick not You capital has costs. drive look returned a that that expect if And from What inflation. macro about were drives level would perspective, activity say we there, it's a to capital substantial in at asking we inflation. current activity a it to

feels as there's in long manageable. inflation there, So space, so discipline what E&P say I'd very the

secured and Specifically middle of our the this we frac Marathon, of to fleet do through XX% our have year. crews rig

space], We pressure out that's project to casing we material on demand shipping the in raw and due that space. flatten But are inflationary really which year. seeing non-E&P the and some [mill in

discipline So But we're within industry, I'd the mild we inflation characterize there's that as it think manageable. is if some inflation. probably seeing

Operator

That the I to time over questions turn call we remarks. have will you. Tillman, Lee thank the all for today. is closing CEO, And now for

Lee Tillman

for Oil. you concludes times. contractors like dedicated by, perseverance thank And close and most again, Marathon these employees I'd thanking to their all your and our in commitment That Well, in interest for of our call. challenging their

Operator

participating. concludes you this Thank gentlemen, and conference. Ladies for you. thank our And

You disconnect. may now

Marathon Oil (MRO) 23 Feb 212020 Q4 Earnings call transcript