MRO - Earnings call transcript Q2 2021

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Operator

Welcome to the Marathon Oil second quarter earnings conference call. My name is Vanessa and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session.

During the question and answer session, with your question you can enter the queue by pressing star then one. conference recorded. this that note is being Please I Baber, Vice turn the to Guy call over President will now of Investor Relations.

Guy Baber

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

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

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

also and will session. from We before Mike answer Lee? our to Dane we get today hear question and

Lee Tillman

of our and discuss today capital our to execution. exceptional combination their is company. for The employees differentiated their our all listening to morning to today. I outstanding our and hard the It possible. and driving hard thanking discipline call dedication commitment continued together want work will that our truly we Guy, everyone multi-basin quarter execution high accomplishments results and of putting are quality, portfolio, you begin Thank another again good once for by to our contractors in work makes

$XXX flow, cash generated the of million. free generation bringing over the of second quarter, through $XXX year million to During free we first half flow cash

flow a billion year. we of free against Henry breakeven a of $X to our generate any reinvestment $XX flow XX% a broader us of This full the free $XX WTI, cash this just and results as rate expect budget, assuming below combination believe well corporate now free XX% well north yield that capital billion differentiates market. we year company of Hub, WTI in corresponds our per cash at XXXX as sector, cash barrel and to flow For $X a $X.X powerful

our are all We discipline to successfully capital fully capital and related our billion delivering remain $X on objectives. operational of We ESG financial, and program. committed

is flow. generate won’t we in As we I’ve commodity levels base with This second base Supported said by cash have will XX%. raised our row a our but we our is such the more raise budget free strong dividend. by simply dividend increased our quarter quarterly our many spending and times, just performance, stronger budget, that prices have

our most return cash doing most we the throughout complemented our point with of for At importantly, cash and of commitments is most in WTI to in corporate XX%, environment, plays, or of benchmark even a allocation retiring deliver balanced of still deliver which significant forward objectives, of of consistent toward holders. Updating for return are billion flat this per achievement oil-weighted to a billion but balance sustainable. company’s EG-integrated capital accelerating around sector. $XX our free proof can scenario free that significant can an cumulative price returned power return leverage equity the five-year underpinned commodity the capital The the $XX previously while is equity market capital pulling will period. of to debt We U.S. per flow return of XXXX flow or $X flat portfolio scenario a of below $XX our Further, $X our clear flow least four sheet WTI the per our this $XX more a breakeven per capital to billion deck cash $XX our a cash shareholders a maturity. have of highlights $X barrel price modest gross at barrel capital well deliver financial through from of operations flat XXXX, maintenance enhancing this one also at reinvestment of average we than are target decade This free Integrating our updated Perhaps WTI competitive higher generative provides future is price XX% We around shift now are per the highlighted from environment our free support. return drive in with that barrel capital flow flow in equity profile, holders rate WTI our annual is by a barrel maintenance scenario. XXXX we framework, we holders focus of over our and capitalization. and debt targeting XX% our in current leading everything across of by sustainability resource high over of environment, business. cash inventory gas framework scenario capital visibility year to $XX to price

remains top Finally, the our of remains ESG foundational Safety priority. ongoing pursuit excellence to our strategy.

total as of and consecutive company incident Our follows measured stands first performance record-setting X.XX years recordable performance. rate safety half two on XXXX from safety at by

leadership executive in a reshaping governance, taken compensation. have particularly when it We to role comes

our board better cash but least, work financial also the our to have a hard alignment Last at reduced remain flow of we executives introduction not This reduce emissions. free the shareholders with while GHG for our framework growth and includes and the program. as all well optimizing of in target elimination incentive that the as matter. long and for term metrics targets We compensation production cumulative

our progress We scorecard, of as of continue of hardwired Operations, XX% metric With our to would compensation achieving goal target baseline. XX% XXXX, well GHG into a by provide an our it reduction to will make XXXX, reduction both performance. XXXX overview, on update for intensity our Executive that in as brief a our towards Mike President turn to to like relative our XXXX Vice these who I Henderson, over

Mike Henderson

Thanks Lee.

were results quarter year. Second the objectives the remain operational outperform and we all to track firmly on that financial the achieve or established we key beginning outstanding, that of XXXX of operational at demonstrating

consistent delivering First is our all and remain breakeven WTI. below foremost, $X.X rate per approximately a strong Operationally, Henry assuming operational translating commitments. cash and $XX of $X $XX free Hub, and XX%, to cash our flow generation, well corporate on barrel focused on disciplined execution free of flow financial of and a we reinvestment outcomes: WTI billion

year our spending levels budget. $X consideration. not As Raising we is XXXX capital mentioned, there simply is our full no change to billion a

however, equivalent full or by X,XXX production are, barrels year our We raising day X%. U.S. per approximately oil guidance

unchanged. production guidance oil Our full year remains

third be year year. half flat be up are taking quarter result full quarter before Bakken Permian relatively and oil expect our fourth day an in end and a unchanged, We for result, cash free annual schedule. moving wells a This returns barrels action for now and of during advantage few model towards deferred and of is our the the as Oklahoma with we is multi-basin our production; to the of budget, current high While to trend oil address guidance accretive second the of XXX,XXX production largely for accomplished production within the oil to range. guidance. would especially increase guidance remains price production contributes profile to quarter the increase and in billion third of flat X,XXX per I The day oil barrel will our environment, flow our the $X second equivalent capex quarter capital the annual like production production in a

Our third will half quarter. spending capital heavily weighted be second to

around Our oil multi-well play. third in schedule completion activity, quarter peers, More to for our XXXX Texas to for $XXX continue million. to results. capital second spending Relative Delaware half XX% this make quarter shifts peak of industry-leading specifically, quarter we well delivering now our the program capex account including Rex our positioned approximately pad remains our expect or

on more company group, capital year, spending As peer and any in for of testament we dollar flow are operating than other shows, Slide every peer-leading left graphic a capital our the cash our delivering efficiency. are X to this we top

free tier than flow, more by We free are of a yield flow delivering top also cash cash XX%. highlighted as

on Our or the oil of remains sector, of production another lowest per advantage. either XXXX among in indication oil an equivalent basis the barrel our capex capital efficiency

driving over talk Dane as Whitehead, enhanced to investment-grade Finally, improvement sheet already our our in is results strongest framework. Executive our rapid balance return and more now our peer sheet, well which turn of VP is the one capital space. I will our strength CFO, to our who of as balance of the about will it

Dane Whitehead

our we’re top morning you My everybody. Thank is delivering and key good clearly priorities. financial on that message Mike, today

our low on fund year’s at and billion allowing all been sheet, past keep objectives cash With our maturity. reduction equity this to clear, sheet of significant close our post-dividend free this gross with base gross reducing towards are really in this over and debt, target, be breakeven debt $X.X investment We’ve in we’re balance sheet, largely two quarters or dividend our which already million a the we’ve XX% XXXX returning corporate our barrel. when financial full to flow, proposition. returning shareholders. interest period. now capital two return basis since simultaneously our focus of our operational bullet-proofing the from progress expense it previously balance will saving the debt we cash cash Starting an capital strong achieved our our includes the balance effectively gross early a not September free redemption be flow us us make-whole unchanged made will holders. shareholder enabling of We’re while improvement, year significant billion shifting $XXX increased grade to annualized increases, each $X has $XX dividend to This accelerate capital base in highlighted. To this strong either-or last The by already performance we generating

above where and at base additional our can holders Importantly, point we capital we’re of now key the to dividend. equity sustainable inflection beyond accelerate a competitive and return

capital upside of target of yield, a in to over This sheet holders a of features At return until equates cash framework premature this $XX that XX% an XX% reinvestment debt projected barrel our year, maintenance indeed enhanced our $X it our a to operating equity future return program, holders, Though large. Our still is given to environment, also to XXXX and To the rate, operations billion from scenario, and flow return a level potential. target it’s cash equivalent by minimum at to per XX% operations perspective, Marathon assuming of market ’XX wait billion. commitment get capital with to from retiring underscored flow maintenance so holders more I’d a be necessarily at a XXXX we put low E&Ps as like equity $X.X started. is of price to $XX among program, cash cap. at a flow capital higher on our across per return matures. while of return be equity which equates of discuss $XX consensus equity over of into a return have current and building commitment target to on to cash profile of our there’s WTI return leading price we’d our a energy XX% at balance this return don’t equity or least a for than capital and emphasize to a capital importantly capital would barrel now sector

this With generation, XXXX. of we the it’s equity begin cash and holders the reasonable we during sheet second on progress balance strong can to expect made year flow making returns that to capital our of free continued assuming in half incremental our

exact dynamics want discuss flow for will we be this flexibility regarding is capital in that continue with returning valuable return board commitment of will regarding mechanism to shareholders. of most change time the something way to our our a with shareholders. flexibility from ensure to deliver operations Market most we’re to percentage shareholders, and we’ll retain and cash efficient over and and our the possible This While specific cash clear back our transparent peer-leading we mechanism.

valuations dividends with potential buybacks table, commodity the equity variable significantly very improve like and While and metrics. from accretive both our yield look with disconnected of a free a are option cash buybacks per-share we to certainly believe on the prices, flow that north XX%

will $X.X billion back reminder, outstanding. authorization repurchase Lee, now I’ll have who turn a we closing currently of remarks. it As his share to provide

Lee Tillman

E&P have like Dane. company you to our strong quarter successfully Thank be would well, of to deliver I wide relative the can takeaways prices. from performance only but our to year-to-date S&P positioned To not we results. a performance that commodity at peers broader the as relative we briefly financial a reiterate close, XXX strong range deliver of clear our key It few now to should the and second and

be price price only in to not are not a We takers, thrive but environment. predictors, commodity survive volatile prepared and must to

versus bullet flow per to positioned way are competitive our more To which sheet, objectives, commodity yield point of are all today, our to at XXX we gross with We to by holders term, perhaps we capital further with this financial Such peer-leading prices oil balance return generate generation profile. breakeven. outsized this use combine net return deliver market debt at expected by WTI price and sustainable $X.X an power down support, a the proving our capital a provides flow capital and investment-grade much are price. the barrel inflection cash highlighted than leverage experience supported deliver see both of sub-$XX cost to year the barrel that broader lower equity structure an free reductions, $XX free Dane’s debt improvements, improvement cash sheet this clear operating enhanced S&P performance when the importantly, is visibility for we we efficiency framework have now per billion we to proofed an Yet we balance year. accelerating our can our of and

flow scenario back with balance sustainable, is to and through the that XXXX our of the return free to priorities. equity going $X flow, the To to this $XX among to was barrel capital. cash allocation per free that company our of sheet majority cash investors, by first model of maintenance move All our need our prioritizes returns, capital business close, free consistent and flow of recognize billion a highlighted improvement, cash with sustainable

new to investor led in this compensation better have the and way model We also aligning with expectations. executive

excellence We line for with competitive are peers market. both can to but positioned that just deliver are the broader and the E&P also financial ESG direct we that, up not outcomes With our Q&A. open

Operator

We Hanold Capital have go instructions] [Operator ahead. our question Scott RBC Please from with first Markets.

Scott Hanold

morning good all. Thanks,

Lee Tillman

Hey Scott.

Scott Hanold

quarter Dane, of updated investor. on you how likely plan interesting a us you if you that I’m debt think Hey. exciting, sense guys an shareholder I pretty in frankly, mention at is - that that’s a give is of September, have curious of when getting you necessarily Just how environment? something wait until and The return of the about with you all it’s you think you’d once look Can that something to reduction is once Is the this commodity the done get is more don’t connecting had it? ultimately on plan, XXXX. a determination? timing the any that price this we’re just make what structure prices return there done, flow to of what kind evaluate is sense were, go-forward cash

Dane Whitehead

comments, holders opening context you said let Yes, but this my to return in can equity enhanced feel short in question, answer give me The XXXX, the more to thanks we a that. we little I begin as Scott. than like

balance capital that, equity half incremental then our on already can free do significant get what sheet return our of to and in the ahead bullet shareholders, balance generate base flow, think price amount understand haven’t support our when and schedule I’m onto start continued at cash as You a dividend we sustainable free proof returns execute holders second well we doing year. of this looking plan, significant, question it. to commodity above we investment-grade Financial sheet with are associated make to assuming to how and of we those: cash priorities about I’ll clear your returns corporate changed we flow, - start and

commodity on year us quarterly $XX move With I’d that should is given price the on continued like and inflection but pretty there annualized to once our a like that we’re of sheet prices of equity probably my allowed but I the our as gross On forward. then to divided, performance flat get balance reduction the and reasonable X, yesterday at what gross and gross dividend achieved redemption operational having exercise accomplished, manage It intend we where Getting on in I increases, cash it a balance increased result to without the we’ve Strong would interest bonds, essentially capital have We the time right right XX% post-dividend intra-month quickly. gum, cash and amount. is bit notice there. more that support for debt million we’re I the $XXX a do same synergy. ahead, entire reasonable the synergy a prices, amount, of getting and maturity, million impact say now, sheet, of levels, by target. bogey, mission our to there’s a this goals twice of pay billion, gave can $X holding date barrel After those as sheet improving which make-whole The and that the close walking point increase a and let is from the base really at to commodity to breakeven debt now to that make-whole commodity billion trustee to returns on year. come. $X.X to a moving enterprise will a year financial the me savings where touch at laid we for and will chewing balance facility, get on start second, we can XXXX time, really can as to out date; $XXX last think call cumulative accelerate X. the to reduction so on debt credit we’ve will said, our the accelerated that The heavily support holders that rebuild we working September the to we happen level too take say I we lean swings September

of of basis, how at amount really we already generated to it, on have share approached use do big that sort limits your of thinking it manage into terms generally opposed buy days, want an it or and chunks. easily, sort a do a then it in averaging that try it seamlessly. this time, and you cost daily and you cash flow that shares that of ratable to repurchase over aside XX It share that can we we’ve done easily as historically In XX execute allows to was limits ratably execute a set just maybe you dollar quarter was more when market in do repurchase repurchases more thing, and to on the bulk about period, and outsmart it we’ve

Scott Hanold

my on cash the when Okay, a do are was a--you of holders. to on market? could billion so of and obviously currently was the thresholds that that looking the just I got you determine dynamics had point class commodity really year the and you right each quarter is over come we’re just How you’ve at high XX% a dollars or XX%, of XX% the price you part back things fluctuate, a different too that a now payout, prices but that can to now commodity you this obviously versus or think year, payout all because look outlook. that depending have payout more equity is was question that is problem, know, a accrued it second in accrued,

of to best give the for way can know a but some probably a lot back. what’s premature back a lot that, giving look is how your XXX, little can it’s different so to got money think I Your about there’s back? you money do shareholders, how problem more about mechanisms you billion, of at, you’ve if do you on class but base buyback’s give that us of to $X.X terms you think incrementally in so dividend structurally high giving obviously

Dane Whitehead

it question, your is dividends? Yes, variable repurchases so think I second Scott, was share or

Scott Hanold

three what now Yes, there’s and room to you’ve more. dividend, five-year your you lot period, buyback look your to right in over sorry, multiple’s a just excess a is your and a so of I’m of clear, got--if lot be to base do

analyst, you an thinking think back? should As guys of an the we money how investor about ways about or incremental giving how are

Dane Whitehead

In like case are the certainly disconnected we about are XX%, fluctuations Well, table me then okay. and over Yes, pros it’s of and variable significantly have with and our commodity the let accretive basis. dividends, on based of our vehicle. a XX% free is to north we the buybacks that first prices obviously that we they so price. frequently on clear shareholders, meaningfully very each, Both targeting per-share buybacks, regular is or back flow we something the commodity current shareholders have Buybacks be equity about all come look talk our The valuations with peer-leading can bottom and there improve are to about board. share time, shareholders how in We from XX% in delivering discussed the to to consistently executed options and count a our energy If and versus cons line returns regardless cash metrics. reduce commitment potential back of with environment. engage on here’s think option them. for to yield

in of repurchases have than kind In platform historically. different repurchases capital would price a I improving the shareholders. an for E&P in a the opposed provides environment, call the commodity feel We’re a over bit as ratable makes share sent to previously model acquisitions, new back to whereas little or the to maybe capital paradigm growth time, new through discipline think where to drill cycles they for which have

conceptual do, be been I case the currently, low to prices In lower tax countercyclical free at available billion continue authorization and efficient buybacks buybacks course in more noted the and so an to have that’s share were execute we a are outstanding could to breakeven readily we flow $X.X corporate and dividends. driven that cash in our generate has structure, The us. comments, more than other point interesting. cyclical a on minds unproven they’re concept, the guess dividends, jury’s whether within U.S. make say out the adjust reflect we sector. stock to sense couple implied I of our a in that across you’d to variable and examples price do watching our the in but new, dividend peer to of and The of yield variable certainly have in how higher investor’s will past, of we a is so repurchase They works. industry. from see are perspective watch Kind We that my compared much

We time, that on have like to I what depending or conditions either certainly there flexibility our potential employ and for change, best investors. the value say models would both over is to looks the for market and

in term the I think clear from winner repurchase share a the a value seems perspective. like near

also base Scott, that. to increase flexibility the We dividend, within have the

is so that of like to operating Our probably base pro today oil our forma have and XX% about have flow target price a more that. in to we’re on cash to $XX X% and there a upside continue as X%, of sort we dividend, in think environment well, $XX some to we’ll

view. a we’re XX%, is have the it On question, a world and going XX% world to take or $XX obviously returning and is it we’re returning we’re $XX a

the cash have view certain planning have which have we’re outlook, We we’re us behind levels and forward flow a curve our price think a and a generated also will flow. of all I and at commodity quarters distribute we’ll inform will to forward, we’ll that environment in cash then when

to decide comments, dividend, dial catch going target minimum what it back to and reduction in if point a are base maximums. up can a I we’re quarter always above tad, combination did levels, we’ve opening later. we that one know, debt here in my about talking distribution of emphasize want not year, This our and we’re been well we that You targets,

Scott Hanold

you. That’s color, all thank great. Appreciate the

Dane Whitehead

You bet.

Lee Tillman

obviously flow, the really And if add excess cash approval that if could we’ve a in here, I couple obviously we can repurchase that maybe board, and past. our quick from have comments authorization our we re-up obviously just free share done with Scott,

still Additionally, resides as headroom mentioned, dividend. Dane that base there within is that our

naturally On is going going of generation the governed we’re XX% question, a or month versus that’s flow and outcome flow and objective. to our given a minimum kind that something The a in free XX%, the stated, drive be as cash Dane XX% natural given that’s back shareholders. a to XX% to quarter, from free that, that’s cash by

gross of at debt of reduction or it’s we’re in beyond year, XX%. look that you billion million dividend $XXX so obviously we’re it’s committed If base one and $X.X the a our this combination well framework, that to. Anyway,

good to get the which possible, efficient as on and I investors on we’re at look back repurchase. we’re when that manner think today the our facts that to most the get we market, trying quantum would in be certainly the said, Dane appear to give share what leaning back is a around equity to going strong to commitment holders, transparency flexibility while preserving timing that also towards

Scott Hanold

Thanks again.

Operator

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

Neal Dingmann

on? the - my impress, the Morning little that by all. about really reinvestment rate. on just it question to Can question, Dane, Great bit on think something plan, details the or you’re talk that you about rate for year, an outcome is you when just go the a next focused way. continues on and how that. reinvestment is this I’m based I’m thinking you’re last to trying this is forward wondering

Lee Tillman

Hi, really a key distribution our available of shareholders, the do reinvestment does that flow Then our discipline well drives that fact is really something that input. so returns, that rate cash for an Neal. only course, not process incremental and capital corporate of consistent opposed cash taking free very a with cash from to of that operations, comes into the ensuring in and commitment that is financial planning fact, Lee, rate a but driving look reflect to, reinvestment is essence Certainly have we the both framework; input is in of that because to this the as our for metrics the is why our reasons back output framework from as at we of course production is frankly, example. modeling. percent one our to quite tend flow, shareholders that to say, as, financial a of that’s percent return That as

Neal Dingmann

improvement. very on the Absolutely, continued notable

Just stuff continue any you costs, LOE, under not way that Does the one spend very into about and if steadfast quick of inflation types be on the include--just steel sort cost make whether guys could you we’re last, about other already you up. that that’s whether talk that of that’s spend. could baked to any and anything that all to comments your one, going that’s seen, already

Mike Henderson

level, I’d Mike that What high we Neal, here. seeing Hi one. say at a it’s I’ll answer are inflation.

to as it into alluding you it’s afield, think it’s bit factored guidance. a but understood were we I Maybe our real, is say think ’XX, about and there, further little fair maybe I’d it’s when say we’ve looking it. Maybe in before a think I to it we’re of lot got still about a prepared coming the similar conveyed to message back is we ’XX, what to to talk to do past. XXXX work

digit low so in. availability of year kind seeing being the by raw primarily kicking We’re steel, this are inflation constraints it and OCTG, single driven is even material capacity and

area. to positive anticipating we much of any so pre-committed of the significant this year, our requirements pretty further from have pressure think in I for majority perspective that remainder the is the really our not

fuels, We in a have little WTI. seen like services to tied other of pressure areas chemicals, bit transportation-related

would We’re think seeing and helping a metrics. increased of manage time just as What areas we and from ultimately also other that’s just have that I business us, challenges, leveraging we’re areas, efficiency in competition. those doing our to I I’d manage is we’re we to couple delivering are improvements time. it’s showing up tendering, in of competitive competitiveness probably said labor some through more managing tendering the of say say in all offsetting so and

performance, year, cost well other the in are we’re of capital guidance. managing this. be Eagle teams that on deliver targets think this our one to doing just our all Bakken Ford it foot great and completed and in change job our example, the then no track For to would per I the talks to

Neal Dingmann

job, and comments very Great Nice noticeable. guys.

Operator

you. Thank

America. question Leggate from next Doug our have We Bank of with

Doug Leggate

just a good really little because going your you wonder still, about Appreciate if the of you’ve the It pretty Thanks, terms on I of detail be how how return stock I because on sustainable getting be trading given don’t that mind, you but price guess, think subjective, prepared obvious I’m of cash a more. you is highly of definitive Lee, us. in you’re it’s between could variable everyone. repeatable, the obvious to in to and for dividends, of wondering bit I’m this Lee. generating Clearly your buyback that’s frame issue consideration. if me the you current gets can part to the cash on, other, just right might you one the where but as us that disconnect be fashion plenty value flow why idea, to market what just creates about the it’s not question, seems and obviously versus if now. morning more

Lee Tillman

on coupled like flow and extremely really we’re at we business but as out I that than yield repurchases, indicators and particularly are is examine, think, on, just that Dane the is cyclical consistent the side. presented synergy generating repurchase, the is mechanism with pro-cyclicality of particularly what fundamentally and for question, focused internal how make we look to Conceptually, think market macro now. kind is that the in, continue maintenance-type in a our to and facts we basis market shares a Doug. case XX% by per-share or after cash Yes, approach to per-share sense we we look as world, as but share when look metrics, yield, and the breakevens, for which a a share yes, something on dividend, going doing greater we thoughtful NAV improve the something those that a an industry, flow, that, strongest obviously disciplined cash bake flow thanks we may have, It’ from dialog whether That’s continue free undervalued, very ratable would capital takes some low a the when natural a equity disconnect there it when certainly that’s we be the repurchases. can a certainly cash today, fundamental on relatively financial our risk share metrics, there free for more focus the do looked beat when that’s right Variable commodities, stock model new. when between the to at of of stated, more at

Doug Leggate

you this debt, the offer know answer. your backward is equity right on I could net me looking your value the very pretty Lee, think your free going a your seems I a appreciate quick basis, it beaten actually cash if on that been appreciate unlevered just flow that. it off I debate that’s reduces when balance I to equity cash it’s hard call, so take I If minus value. because perspective, a on is sheet that valid now,

something quick balance leave follow-up shape. that moving hopefully terrific need the obviously forward? policy to into does hedging it for I’ll think and going a change one. philosophy there, How about Just the thinking sheet is your Dane, thanks. is about. around My

Dane Whitehead

great element factors impetus enterprise commodity a in hedged. sheet can out of water for - the on hedging. toe new stressed tool takes us. your overall question. definitely heavily get been lower strong XXXX just thinking the there. of of our into being risk a in one that’s it our Yes, It’s into the Hedging price we’ve dipped circumspect entering It less is and environment, management, about fairly hedges into kind a still the toolkit real We’ve in balance

out been hog, about we go that’s not hedgers us be good the but just judgment heavy whole be it. borne wanted a we’ll Expect I so to Given think the very of be shape hedgers, curve, to and methodical forward, haven’t going far. and in to

Lee Tillman

commodity. balanced fact upside just gas cost a structure, but mention have some ensure bit things our just sheet, Doug, approach us also a breakeven, little add can maybe would there that, Dane and of in peer-leading do that diversified book take our are our differently that flow performance would that to to we portfolio, nature I that our mentioned balance advantage the bit a given not bit it structural All approach XX% us Yes, hedge risk I allow cash from free us a the fact It’s different the much of but those more the little that take and multi-basin us things does risk torque portfolio. to that give commodity XX% that on it’s balance NGLs, very the pretty market-facing gives our very a good allow an so standpoint. management to a oil, to oil-weighted commodity, oil. combined we but

Doug Leggate

you. Appreciate fellows. the Thank answers,

Lee Tillman

Thanks Doug.

Operator

Thank you.

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

David Heikkinen

Still guys taking questions. to Thanks for that. getting the used

you your down, let’s your buy trying getting Should you’re XX% to and goes of total basically was flow about to dividend forward? you between stock, thinking XX% are go As through of so back your of we buybacks dividends, think operating this kind dollars share cash that the I you cash dividends. say base interplay of balance really the balance into as through double that you go benefit if to your keep X% XX% flows, in up each a as year

Dane Whitehead

David, that as stated it. Yes sense you makes just

back synergy of got You know, as you get sort to the being paying redeploy able base when buying and expense similar dividend, interest shares. synergy you’re debt that a and to from we down cutting that

so can You’re them, works system, you pretty it taking of all get shares rolling. out once it of a higher remaining dividend get allocated to well sort shares the

Lee Tillman

continue as us virtuous risk critical. and of consider absolutely absolute David, breakeven, said, make shareholders dividend, which $XX, our to breakeven, just cost like existing dividend of we provides count, very below as management you keep kind importantly described including to that those protect for and that load the sure share reduce dividend goes base we down, you we incremental which talked to to headroom want more the even us enterprise increases. we and about, very, enterprise our well Again, cycle it described you commodity well, that the volatility, allows and Yes, is

David Heikkinen

keeps the annual sure past. Totally cut to of had the was I in on companies thinking larger like just the model. right that dividend I but the an of the was I Yes, burden some making that about sense. makes it basis,

Lee Tillman

Yes.

Operator

Anything line? further, release your before I sir,

David Heikkinen

No, all. thank Appreciate That it. was you.

Operator

you. Thank

you pressing can have you a queue If by star question, the then enter one.

from our take with will Cheng Scotiabank. next We Paul question

Paul Cheng

Good morning Two questions, gentlemen. please.

what and spending wells balance going the bring with some that second on people sheet, you all First the acres together and guys, including Delaware the to the for that, Do Texas X.X are much stronger play, on it put that in how in would exploration the half, many to resource sufficient. would also is the given on-stream drive program running the efficiency, sense over you the other Lee, scale the joint years? that best for that industry? question, still or Bakken be basins, to that and those limited so guys you significant you. for think Bakken the running would and--but operators second in shale there’s for going next are couple Thank now makes Eagle that’s the guys future industry, large [indiscernible] you forces that Ford, cost think best Ford, maybe in room the one join be that, the operator, in the you to the Eagle of The be you venture

Lee Tillman

kind I of and parse want all just that I’ll get to Paul, questions, around table. your Yes sure them make we out the maybe

second around I’ll let into was of address go year, that. sales and profile the Mike first to just question think we the wells as half I your this

capture also resource I at our the sheet enhancement, ability look consolidation giving an to does think opportunities your from Eagle options us the into of is kind sense within just second make business. question the Bakken that more how balance folded was efficiency the organic finally, are more and around Then that and Ford, and standpoint. there

Paul Cheng

together that a basin much with niche sense make assets, to that the last Sorry it’s the don’t a not as people have about of base. lot to because the Lee, it a assets the assets so best assets. to lose so a you and each pool of [indiscernible] does together, it’s asset the the one one on owns ownership that pool still much you’re partner not But bigger M&A operator you’re want joint ownership, losing just their question, just of venture, just

Lee Tillman

the Okay, maybe question. got let’s with it. start sales wells Well, to

Mike Henderson

Paul, it’s here. Hey Mike

half second guidance, a the was half of XXX. were question the you maybe to Delaware to that wells then little year. be we the in recall, range. sales be of second to so you a at, this of speaking, the the on a the sales, going had to Texas of to general wells were Delaware in think We’ve I answer in expect We Texas of sales XXX midpoint to cadence full bit and prior I’ll one looking so that More little sales got wells year closer broadly range to we year. do three color XXX now as XXX that the bringing giving probably on bit I’ll there that we’re wells give to you

We’re half expecting of second XX wells to Bakken the and sales in both the year. Ford Eagle over

in deferment Delaware, that and we’re well second to little the for third the As third we’re is in the prepared to there year. bringing seeing in Bakken Bakken, with more so a the an weighted online that to Then probably assets, going weighted quarter. production bit Hopefully Oklahoma be half of few both that the my as quarter that northern creating a answers and I question. in wells to alluded is the remarks, with opportunity

Paul Cheng

you. Thank

Lee Tillman

Mike. Thanks

the opportunities, in Texas organic Delaware ability that incremental incremental approach. those enhancement is in our I our this that basin that the gives that say, the activity embedded highlighted, of balance of economics we embedded platform within program play On existing Mike year, but would billion That’s speaking the Again, generally life even the just try balance the about also sheet and the capital those to about within, to scenario, for reinvest chase the guess our in in capture that way allocate back we type enhance opportunities. and/or refer add even sticks spend, of program either the us of opportunities inventory resource $X capital have towards to XX% to that sheet activities. I of as we on inventory we oil continue of resource capture course as that and have of risk types business, resource some that type also we that type of on same is instance, to continue take that play, something think to and maintenance some you five-year order capture

we see that control we’ll that I options. U.S. They that, a likely dated expertise, complexity. down that large around list. us tend the scale escalate in generate drillcos a have may sense certainly today JVs, lot likely diluted last far have our made in smaller of certainly tend the in operational you to particularly to the benchmarks the that can’t JVs and at would We lot our one continue onshore to don’t that’s lot where for away some as point to somehow near are JV longer both it’s in make maybe JVs protect is opportunity to scale all places saying allows a like Anything but want get look what a sure we’re JVs a acreage we we we want to that think of to always to want strong typically, I to be would which much term. we On operational that a leverage have just structure certainly large obviously the Bakken to Anyway, really us perspective partners. consider and positive pretty or in bad, really not want just onshore, there. the structure, that scale, scope the just Eagle excellence JV Large consider doing from to that Ford, won’t all of that JVs value that Not and at look we we from asked, just wrest us. is for say of U.S.

Paul Cheng

you. Thank

Operator

Thank you.

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

Lee Tillman

thanking your like safely world deliver contractors of and close employees to That for dedicated Oil, and again concludes in the needs energy and I’d Marathon you our call. for commitment our interest Thank the to all each day. every by their

Operator

thank We gentlemen, concludes you participation. Thank and this you. Ladies our conference. for your

may disconnect. You now

Marathon Oil (MRO) 5 Aug 212021 Q2 Earnings call transcript