MRO - Earnings call transcript Q4 2021

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Operator

Good morning, and welcome to the Marathon Oil Fourth Quarter 2021 Earnings Call. My name is Brandon, and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. [Operator instructions] Please note, this conference is being recorded. it Guy turn now will over Baber. to I you may begin. Guy,

Guy Baber

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

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

expressed risk contain With who uncertainties I'll the in statements. hear as implied everyone described our move from to As a actual and well from provide by Dane to differ us cause filings. refer session. will included language will over the call remarks. with materials, the presentation question-and-answer before release subject those some to to Lee? press forward-looking that and SEC We'll as call to in or could our risks we today opening the and turn also reminder, such results today's cautionary from statements factors to I'll Mike that, our Lee, materially

Lee Tillman

today. of and I commitment year carrying as their and to outstanding that a importantly, highlight truly remarkable thanking momentum employees success, work, only a want forward and our XXXX, of and highlighted messages describe listening Guy, can not E&P comprehensive to to few their to again once delivery and collective expecting best other we XXXX S&P of our fully to delivery. into against our the safety good hard superior their sector There peers, everyone are you, morning superior year key to to environmental And are want XXX. contractors I Thank but by call for year. another today. a financial contributions start that our by results more I any framework to dedication are excellence for

our our debt transitioned accelerating balance to on to amount capital equity after First, objectives fourth through returning investors. reduction, a a of quarter sheet compelling focus gross

flow-driven capital as for shareholders cash the prioritizes of return bit. call constructive underscore generation, commitment themselves. drill uniquely price The cash to framework power our flow prioritizing and the Our shareholders of recent not our our both outcomes our on first And our speak the in portfolio environment. a actions

cash equates In have actually during operations fourth from $XXX executed flow share our During our reduction around billion XX% the our from we over outstanding XX% of than investors, to exceeding share to of since cash free repurchases cash million or not operations, significantly million $X $XXX clarify, fourth of to total, XX% more our in our That commitment. quarter, free months. cash flow XX% quarter. just driving equity four-and-a-half our minimum we returned the To of that October, flow. now our X% count an

growing their on we metrics growing valuation. While financial per others the production, to share equity most focused once matter again focused may in are space our be our on that

we excellent more detail, and cash in shares. remain in share. to our perspective capital. see Further, buybacks we share our value per use free discuss to Our flow cash good will believe our per flow Dan an but continue summarize, of

base and significant time. growth, over are per underlying growth with highly share buybacks We synergistic, driving are dividend

our fourth XXX dividend are with executing fully successfully recently key consecutive as for Speaking superior superior shareholders. base raised well. our peer that consistent pay to a quarter, to the broader second and of our our base financial sustainable base not only to are our to that we our quarterly but E&P S&P objective deliver is dividend. competitive mandate We are My today group, point on to outcomes the dividend

the the when to cash support resilience as to we built investment universe and experienced by our cash I've all market today, way we range. constructive outsized we free company for they deliver and capital business. in a commodity return $XX seeing attract type to as much performance our we even flow broader And lower other WTI return commodity $XX believe opportunities of that with generation for of free said must the deliver than of flow of our truly investors, before, down have when S&P measured prices versus As sector capital competitive we XXX financial are We are are today. must price and into

per debt Our are quarter a at the today following gross last demonstrated data. reinvestment share billion financial leading and pure is My free a million $X.X including in testament E&P capital XX% we this of is flow to of flow free available advantage you how over that publicly key reduction been this to a to strong delivering reinvestment sheet cash fourth alone, balance at a want and third billion analyze tremendous $XXX matter XXXX efficiency sustainable. of $X.X XX% driving and results operational other the profile relative significant performance have year mandate no message rate of of cash peer-leading growth, XXXX capital a during return rate over a

XXXX cash fully framework capital allocation our with over program growth. consistent generation capital billion flow Our disciplined sustainable $X.X prioritizes production that is free

curve. billion current XX%, outcomes a over than flow reinvestment a a our on bottoms-up deliver over underpinned well based model. on our years competent to return, high to of level normalized been and XXXX XXXX financial to five and now annualized and is outcome scenario We maintenance decade for up These supported Hub, price by are five delivers rate expect XXXX scenario by years come free And are $X is to which less cash further a financial at and inventory. $XX high at which basis. WTI benchmark of benchmark a Henry to prices sustainable assuming the execution of forward $X well extended similar year is discount From

ensures scenario same portfolio term we longer decade. extends deliver pure a Our at that can years for leading modeling the the outcomes XX least financial out maintenance

Importantly, differentiates leverage us we for distinct commodity peers three that upside our versus retained significant prices reasons. to

First, remain production not add budget to growth will capital disciplined in we and we our will XXXX.

Our focus will remain return share generation, of free on metrics. per cash and capital flow financial

of delivery update income environmental book don’t to capital well ESG half the it in our dedicated new third, Second, as peer Federal I we as advantage that With accomplishments operational our our of until they delivering pay an energy results. hedge as and second today My will most have And the taxes US ESG. of financial that Oil each Marathon Dane, point you say, our XXXX our key ESG Suffice review press that just chance I are in outlook we decade. of expect key fully release issued to leading proud all demand, the our attractive ESG committed focusing give who our be on believe turn have employees over as an late on flow return cash upside. of to we comprehensive highlighted in which cash hope excellence, objectives. XXXX January, that, should peers. all initiatives. to will preserves An a had to final while and of is it I element is meeting fourth versus global you

Dane Whitehead

summarized morning, is Lee. to of focusing everybody. return return you, X my capital outlook. Thank on our slide X, that speak unchanged. our comments of discussion, our Good framework accomplishments capital deck, and to I'll is our and X on largely of Grounding slide

a of of space the equity delivering As calls of XX% the holders WTI top commitment minimum at or to S&P that a $XX. reminder, return a our from above framework represents operations E&P cash This capital in sector peer is with is any flow for competitive our and at when our XXX.

cash capital of and return from will first our the This are operations our free targets make our call flow generation. to our on mentioned, shareholders intended Lee get that as is flow. based on cash purposeful cash not clear on Importantly,

maintaining shareholder staying disciplined lower protect rate, and rate percentage by CFO capital consistent it's distributions. driven to approach with a our reinvestment spending. our Additionally, reinvestment a for of By significant we

delivery, consistent and of trust quarter the and key building maintaining marketplace. establishing frameworks ultimately We and to Our out record important. with is credibility a commitments believe and are in quarter track

to simply especially additional We at so our of multi-year comfortably three a have our of our XXXX balance $XX debt to are the sheet in EBITDA, planning billion longer it net need our going as below accelerate Strip in longer quarters proud record WTI. to no the We accomplishments with and XXXX. X.X debt taking first reduction, track X We plan started basis and improvement, $X.X shareholders reduction year. term of returning at we to forward debt priority during significant capital of times conservative time gross debt matures. After retire accelerating below top the

billion to for shareholder sheet production, balance to an dividend. the return total, XQ we opened Our reducing our base CapEx X.X peer again metrics. XX% XX% full by year dividend That's $X.X that's our strong of X and Stepping X XX% our Since to flow at share and to our our that record investors that and share Thanks equity dividend. are of exceeding to quarter, share to $XXX X% leading capital billion in outstanding purposes. return significant underlying XXXX XXXX. million per holders and execution. begin quarter significant track us returning capital enabling door year beyond of months, commodity already cash demonstrates looking driving declining and was repositioning our significant base share executed the over more distributions during friendly minimum stronger shareholders higher us just for amount fourth returns returning to repurchases lead positioned increase to of our financial of highlights CFO debt equity reduction, our repurchases, to a allocating growth our cash to we repurchases, capital In CFO commitment and well in October, prices, the to over commitment. to share dramatically an of oil we've back in Slide and exceptionally base full directed market a XXXX count than easy

S&P times of four to Our other a times flow WTI, around a words, capital. appreciated discipline continue to flow of that's is program we believe equity billion. WTI roughly XXX. use kicked It's cash yield. significant And has And using flow the our of a is we XX%. more repurchase in the off the can manner October, flow Efficiency current free In of of program stock forward a since yield even equity cash disciplined a more say, -- our north value $XX value continue our share to free is while value. discount buyback cash cash really a good And buying buyback X.X flow free in conservative yield at that generation trade XX%. with free our is it yield function back our still curve. relative your authorization current to a market X.X free is we And outstanding readable $XX cash our assumption, price the which of S&P XXX. current on That's that

these remain cash. good that a of So strong are indicators buybacks use very

XX%. increased XXX%. that and the base the dividend through our dividend minimum have based now we also WTI remains incremental with also fact creates repurchases a stacks growth base are correlated in as up better business, translates $X past than end We our raising outperform. to raised deck, With breakeven. a cash a including commitment XXXX, share no our cash debt resilience our share cycles. offer capital cash We can continue including pullbacks, and maturities a in $XX our tremendous and offer discipline constructed cycle, peers Henry and given that very free can by With when base free the outstanding to dynamic material dividend also an shares synergies different rate quarters flow and built strategic regard shares strong in during commitment market. broader of value, clear share row even They our evidenced four to price we per They commodity underlying and in a number potential are for we And expected a that sustainable shareholder than our outlook, on price backdrop, $X.X at metrics reinvestment capital against competitive return reduction the cumulus clear discipline, we without to believe drive dividend, advantages. capacity, well to XXXX experience downside see price commodity as against flow a less flow per billion, us, meaningfully Paying that Hub top with repurchase our share. into growth a that's priority per

CFO on of Our in first commitment, minimum investors to pace quarter. of we're the to CFO XX% XX% return equity over our

year, would For the billion quarter. or upside deck current discuss $X program. around as equity investors could who at our at and fourth the the the that, market our close over executed That $X.X of Hub XX% CFO, potential we XX% represent Henry to Mike capitalization. be same call a full turn return With Capital the will to $XX as to WTI I'll our XXXX of level during high which

Mike Henderson

leading Dane. and fully Thanks, In we deliver operating pure XXXX, financial to once results. again expect

flow fully prioritizes is cash Our our consistent summarized that over capital production. holder program allocation slide returns disciplined with XX details capital free framework $X.X generation and billion with on

program flow assuming Henry at We reinvestment of free expect XX% billion $XX $X our $X rate cash over than WTI Hub. XXXX and to a less deliver

operations. As and maintaining low of flow Dane of staying to exceed return mentioned, by from cash XX% just a capital reinvestment we commitment disciplined of our minimum rate, expect

reducing XXXX baseline. continue to reduction our targeting investment in We a our intensity, XX% will our GHG relative

addition, with balance be with will these planned oil gas four-well later plan of level, of in progression Ford more excited Eagle Permian capture capital At approximately Permian or we a program consistent Bakken Permian about Oklahoma. the spending our our the the the XX% Oklahoma emerging and the and a appraisal and fleet XX% allocation associated Delaware the the strong indications of to within is with steady capital with better. our Included around both disciplined I'm In the in opportunities. in going restart of year. activity our Texas, basin budget mix, level and continued economics prior

Yet, capital to equivalent X% we achieved growth reduction total to shareholder We XXXX year allocating highly in share, the and full oil any be production free growing share correlated we've our already cash absolute growth while count production company share our share, XXXX per volume. are aren't to expect production significant averages. not the levels, flow and production per metrics we flow oil with per believe with our driving are and is cash flat

we year. well be While the from timing will typical XXXX one be full flat a oil production both equivalent some to average our largely short-cycle versus the for prior that variability to expect next, year oil of for is There and business. natural result quarter our

year variance For any given quarter, the our it is reasonable to expect XXXX. a similar plus saw midpoint or around full minus you from guidance us though X% production what of from

Our over generation capital and output of in isolation. production not efficiency remain cash focus maximizing free on quarter sustainably single the our time, flow will any

oil lower oil sales day into For per the typical quarter. first the end of weather of to second of range expect to at at due annual some winter improving barrels around quarter timing XXXX, downtime, our the our wells we total our XXX,XXX company to and guidance be production for

commodity oil Lee, price first will leverage company gas provide with out exposure we'll a I income no and make plans year upside free our million capital our a for cash decade. The price, expected weighted WTI, of below of of With slightly federal Regarding exposure barrel believe increase remain capital book to surprise of our to is resilience to per be over until We our to upside, taxes program preserves clear commodity breakeven second commodity CapEx incremental an by retains production a approximately it NGLs, to now upside to advantaged our the prices. prices with $X will flow gas to and who $XX is US preserving want upside year the to prepared around no update, position, remarks. $XX continue disciplined will NGL the and to well $XXX underscored natural barrel half full investors. our and half we allocate close the assuming spending oil, that flow. cash significant will turn XQ tax during XXXX capital ESG and important growth cash balanced our this with conservative the XXXX. should a I an US profile, free million in cash that hedge have translating expected

Lee Tillman

Mike. Thank you,

enjoy have role performance to the foundational I've have future before, is foundation others the is carbon ESG and landscape. thoughtful orderly success our Oil and Access and around and longer-term we lower the believe attain. all affordable to strong transition living clear the As and strive to to world's energy in to stated protect equalizer to standard a in social which proposition marketplace. the value framework much-needed to world our We to come and we is a are is essential for upon gas reliable long-term play and economy of great and which built. modern the the responsible, a to energy that

the We in to the while efforts our energy prioritizing the all allies. and role change. is security, US supporting both world's our growing serves on for which and tool on US This performance, options protects and powerful our providing dual either needs failure policy meeting not elements proud to foreign proposition a US an must as We of of is energy address not of consumer play take either/or including challenge climate acceptable. ESG the front also are

and approach be of approach. the and above our all pragmatic energy must in an grounded market, innovation However, free the

of has organization. viewed pride compelling, When experiencing geopolitical point can in play but totality, of a XX our is misguided ESG. progress as the entire of each affordability Slide our of the company provides only is for across energy not report made elements dramatic on progress a unfortunately the it energy as firsthand role stability. well impacts are comprehensive the We and policy

progress against least and our safety. to For that second at capture recordable XX% environmental significant rate therefore, baseline objectives, it for always proud of us, incident improving our for intensity our XX.X% realized target in we as starts by our company XXXX GHG measured relative delivered performance contractors. core safety company's the our our in total XXXX with year. especially We reduction achieving full and best I'm gas to history total employees

beyond. level of above During capture XX%, at gas approximately and expect XXXX, XXXX quarters in fourth and of we the this perform achieved and we third to a or

XX% and As horizon we goals the focus previously XXXX core GHG versus our These in announced, GHG with our and objective we've near, existing medium gas for of driving our Paris Climate XXXX methane environmental the Agreement. capture. across GHG map baseline. end areas. reduction consistent also new realizing long-term the pragmatic road goals intensity introduced environmental trajectory to improvement quantitative for recently intensity, represent reductions, called performance They significant complement decade, this intensity by through intensity of a significant the our

will such environmental will accountability, that Our alignment objectives necessary to innovation internal and promote enhancing strong transparency and performance. be while the deliver

objectives Importantly, oil best improvement our contribute will to competitive and represent XXXX that producers and absolute very the and globally. methane performance gas is industry-leading with intensity GHG

long-term believe reductions a sustainable On we from both representation environmental value. people the previously, changes short-term we build the Moving within to we over the healthier, XXXX quantum of UN operations shareholder stronger redesign diversity, governance, have a in drivers for programs. communities with helped leadership alignment the strategically the cycle made values, equality, contribute and we important and areas with executive five of and and we compensation promote in core notable taken covered aligning our to increase core incentive our to most years. development and comprehensive of I've social objectives. thoughtfully females in including inclusion has to as And last local continue compensation accomplishments, role and of in color which invested safer our workforce

I won't those of So, all details today. revisit

stock metrics However, and I flow unique incentive will and long-term our remind from eliminated executive design. free have that scorecards units performance everyone production we've included cash all

lead Directors Board Finally, we ensuring strong and of a of director independence Directors appointment and new a new the role by of have in oversight, XXXX. highlighted also two leadership the diversity, in taken addition refreshment,

question-and-answer case compelling why Before We want our we session, MRO. move wrap-up the Oil. with I have investors to options, to for so Marathon that fully investment recognize

cash framework instituted capital as have we the on a call that prioritizes First, transparent shareholders flow generation. first our uniquely

Our in expectation we shareholder-friendly record that it XXXX. capital track pure will by delivery. framework to space lead my shareholders a is of complemented our returning And in is

capital we are to commodity discipline. won't committed budget. Second, prices to outperform, continue we into capital growth If our production introduce

cash on just is of it growth metrics our generation growing focused growing a It's remain and will the four We and that months, buybacks of the driving underlying on not growth, commitment. is share X% a on per flow of production. focus per and comes When billion capital. in last to strong return statement share matter our most half $X free

the delivering peer-leading advantaged are are Third, by and of comprehensive finally, to high-return breakeven, open our due company mix, upside free our our ESG protect hedge cash line corporate XX-year decade underpinned balanced and operating low over to by our high-quality, the attractive we With we believe for income results sustainable, scenario up cash that, commodity investors. and by Q&A. longer-term for upside to this And our inventory maintenance can outperformance, benchmark we flow federal commitment financial US and excellence. and retains five production differentiated we a book today tax leverage position, will

Operator

Thank you.

[Operator We will go question-and-answer Please from Jayaram. And Chase, Arun begin JPMorgan Instructions] ahead. the now session. have we

Arun Jayaram

Lee, better. year XX cash morning. in billion and and team, to Should of shareholders. flow here free indeed Lee averaged you we're sitting question we That's expect three Hey good gas to the oil plus and of the or in prices return buy-side a morning. X

Lee Tillman

question. the for Thanks everyone. morning, Good Yes.

delivery. we or look that in in our And kind even you quarter on room at back full equity I of or at XX% including demonstrated of a also how talk I we milestone out. XX%, for which will are likely to play mechanics Dan we know on little isolation in to that back a bit a quarter the to as I we gross fourth But whether for all, program repurchase think more might insight it more we hit be little will of XXXX, you it the achieved have first the investors debt what because give of pace approach year, how to CFO potential that got look of, helpful investors. think about we reduction, return share think the First XX%, already year our bit where

I'll to kick over So Dan.

Dane Whitehead

All morning. repurchases, question. Thanks Yes. think the stock. With that's we right. Good been just buying for regard but good we've we that the share needle really XX spent we to obviously, aggressively the shares, minutes talking and impact of that back move back value, buying X% by

to we program. so And us of that with continue expect kind

programs. million. blackout ratably $XXX period. execute we those when as we're a how daily execute recently, days a we period, of simple we couple think of tools I that's -Xs set use we a period then base program sort top-up established that, of XX repurchase. We terms share we've base to XXbX-X those have typically course. through established and to it we The in days. of around And of purchased And when those a the program. executing they set Most program, of can not sized motion -- sort XXbX over In on be of XX And blackout a in time,

[Technical today difficulty] we're and to XXbX-X, for back definition So under example, is earnings a the day buying stock date ultimate

Arun Jayaram

today. ratability the Difficulty] [Technical

Dane Whitehead

little The you a helps that volatility. really here. back ratability period daily in program Sorry, a of I'm of getting beat

if XXbX-X NBA price we cash move of capacity and can significant a a lot if cost of we've what's to trying fairly to under go size. have in in and we we daily short the top period mechanism in for points our it. the hunt of up is called period our the get through not end those sufficient really And time We with stock that dollar just peck do purchases ride top a low can can it. under of to these done we on to in stock with And flow what average team. into in do You're to

then to step -- base cash like expect prices ability factors on flow. adjust and continue based in and probably to load commodity our the to to business execute this would I by So you should our with have the step other contribute we how

Lee Tillman

And maybe just can if I Arun. wrap-up,

programs, And I structured opportunity how great to example getting of the we model. that beyond flow cash were We of implemented least we marker. an to But think fourth as to kind seeing as that. fact had CFO quarter of quarter shareholders. progressed support the that back at the was that and a go we signaled price we saw that XX% in and with got the that's generation and above XX%

Arun Jayaram

maybe Great, follow-up within asset some of and well levels? love well I from the the as that the was color. more a I'd was maybe increase great. could maybe you mix thoughts between that you're on areas you with bit Mike. targeting And Appreciate provide the and Permian the level activity my Hector some Bakken, specifically as about color little Myrmidon in if the Mid-Continent, last year's hear wondering XXXX program, as maybe to in

Lee Tillman

you in that. I'll through probably the and the more say Arun. program our XXX core would is be our talks in focused interest X we Ford, What is first higher half as areas. I mentioned But with take certainly to on which weighted Eagle in -- is year, Activity wells a say the Bakken, to in and Bakken largely we're jump towards then the to sales. would wells going of Hector, presentation, I'll the favor. as the Eagle we across is looking Yeah. included this I again, I What to X Good probably works in year. can working start sales. at Ford. It XX to the morning presentation,

in about in up Karnes, So in activity Atascosa XX% we're remainder of looking at Gonzales. and the the XX%

in are laterals Ford looking We Eagle on at this average year. longer

question. So that asked going We're I you the last to efficiencies. fact, was our should the also in time it think continuing that this year, enhance be redevelopment testing

update, another added locations and we're XXX date give So inventory redevelopment XXXX. there. but we'll in had in planned the over good first for redevelopment success XX a XXXX. We high-return testing We've to probably little We've next some there. about make you year. We'll wells continuing a

to So to Hills is Red I'd And half be Ford, Wolf lateral to going in the wells logical Oklahoma, XX probably much we're continue of to average what XX/XX into up going to say seeing is wells Permian we're the split between it what seems sales. heavy to the more there pretty sales, Upper wrapping there on longer pretty again, second Camp. what Malaga. that And and I'd benefit the XX to year, XXXX. activity length. targeting scoop to It's And again, focused say some from similar focus. then XX Eagle Woodford XX

from XX% we're in had think activity Oklahoma. when we last of year our I full up

Arun Jayaram

Thanks a lot. Great.

Operator

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

Jeanine Wai

for good Thanks taking questions. our Hi, morning everyone.

Lee Tillman

Good morning.

Jeanine Wai

not A&D Our what first on little of bit acquisition quarters. question, on? million color the that on quarter flow bit we Marathon? acquisitions reported the market of And for your maybe little capital $XX you on a noticed on any provide a was after during doing the statement spent that cash you for several perspective just Can

Mike Henderson

acquisition, that give I'll here. Lee provide and kick of on over bit Mike a you then to bit it detail of perspective. It's the to Jeanine. I'll little a Morning broader little

for laterals to that the more okay. down allowed the broader bolt-on fire I'll some acquisition, drill Lee us question, Ford a added on Eagle there. small Maybe So few extended over it’s sticks. But Karnes core, in importantly that's it it County to the I us, if a think and

Lee Tillman

opportunities going describing financial great, broader That's the inorganic the confidence of From a Yeah. types think case, spent Jeanine, for foremost, I which we first Thanks. organic high we're time really have of today A&D obviously that's all to opportunities lens and our and perspective, Mike. -- metrics delivering. view lot a of

So to And to case. needless is a bar to that's organic to course, say, any again, it high to accretive that's in see a we're of something, nature. pursue going opportunity have And be for that as to inorganic relatively challenge. going that's

discipline same to to applying that those business. disciplined. evaluate us very those you our in are marketplace, particularly in But We will core assess continue and we're that going see the areas. The be things our organic around

at when You activities look that should A&D as expect well. we

great opportunity of lateral links is that PDP, capital to the us extend area but bought allowed example think generally a Mike accretive build of and our a and improve bit to opportunity on an efficiency. little described our I a core

we'll so of for. are of in fits glove type And kind that the hand those be looking

Jeanine Wai

you Okay. Great. Thank for that color. all

problem. and Our cash this there in second payout. cash noticing, change we’ve so If lot on fruition, described your but case, a revisiting questions on been just prepared investors preference buybacks? be nicely you from which of you. preference that buybacks, between allocation strong growth, bit getting push remarks be buybacks, very we little for split? the nice base method I high-class does procyclical to upside XX% is the would question back is you've a per very more holds far, know dividends maybe had which flow the about just in a cash and share allocated, a strip is the comes In to of variables of very the Thank

Dane Whitehead

is this Jeanine, Yeah. Dane.

take at a that. me Let cut

really, a of for share or here's we've to got The we And dividend. people think base So how cash repurchases kind some dividends. of variable as base of cash often sort returning choices each. return dividend, The shareholders. describe three that variable

planning our partially base to conservative in competitive, in objective bit $XX increase than our addition when S&P investors is better of basis a to And the to also can With that to a in And sustainable. to we XXX. have peer competitive XXX. in dividend average $XX little there and needed price think compared of and the a be dividend context we consecutive pretty the yield deck So with sort circumstance. world, S&P on fourth average dividend, we with the base the and know count of yields recent competitive base a any peer that where

a the operations breakeven, really box. below From of that enterprise What we dividend where check about want that So below cash flow keep to free that. has been flow XX% well we're after cash $XX we in target XX%, that $XX think to breakeven perspective, from dividend world. sustainability again

in line right with dividend share is price base mind, in good keep are $X.XX repurchases. and shape that again we're between at about synergies deck. And The the the there So there. then stated in XX%

that CFO shares, increase we can XX% reduce still within we As threshold. the base stay and dividend outstanding further

high, detail, play. to hard tool share still of dividend that it to of supplement considered the So repurchases, the implied your bit wouldn't us, techniques just any variable a the that yield high the I free we really strong and especially closing those in of on so feel take pro-cyclicality flow were and price in return the a in company cycles. on the and or the I to really base efficient. so went bulletproofed door think future share just buying for the there. we're a cash perspective, mind, when But much your not like And of dividend cash on price quite have so is repurchases. yield keep detriment is because is pro-cyclical to free that flow do down cash our program the question, that, want certainly, to keep the our that doesn't base we as Share repurchases, it of through pretty to from but it we It's value can the when -- use yield in at shareholders. repurchases, proposition cycles, We that, just is potential off any all. eyes me we do attractor as dividend remains we've largest

our really intention. – that's kind of So and

Jeanine Wai

very you much. Thank Great.

Operator

Josh From Wolfe Research, Please we have ahead. go Silverstein.

Josh Silverstein

Good Thanks. morning, Yeah. guys.

capital the return Just on plans. sticking

over down still kind those pay more coming some the there You to or have next with Is and of shareholders? game refinancing to to cash, half are the so. up the capital some still do cash of shareholders, thoughts keep maybe or reducing a going plan year, small back returns that maturities a year

Dane Whitehead

if there's into keep are million treasury, the and and one, us. it of the is compared about them we've – we can that so, average it cost that. that The like year It following We the pretty debt And believe out pay like will like in to bite-sized close a old it's base to million got that of – an case because coupon XX%. low back reissue My that's kind debt debt There's Yeah. with of to U.S. of bond another $XX of can then get small you off capacity USX They're USX into cash. as with muni XXX maturities. buy we or debt. will if that to put debt, really system. relatively you maturities couple be it unique nice get to taxable future and

but So I base short cash, some your case there's – on reduction, to especially tower munis, it a answer interest we we'll paid debt. going question, maturity kind that those optionality. good And pay those off, And with retain as think coupon we with synergies if tackle have. nice for to forward circumstances other any the of larger higher need to off or

Lee Tillman

$X.X Yeah. debt And took reminder, billion of brought million just rate a out as also that last year of the interest gross $XX with we annualized savings.

out we And the business. flow overall of that's free so structure think when cost enterprise coming breakeven, cash about is that our

that any that. don't continue debt to see as good need accelerate of retiring to to keep matures. is But we it So it the

Josh Silverstein

the weighted guys still do Thanks, the And And Eagle this change right. efficiency and going All Ford Delaware? activity split you towards the does see shift to When of Oklahoma heavily then XX-XX guys. capital start how kind – do Bakken. and that? is from with that the slowly you as

Lee Tillman

that our kind to just of refer XXXX. we five-year just I'll include from Maybe XXXX Yeah. to benchmark updated you scenario to

stays a of range added standpoint, that, that et year. capital cetera. And that we've an inflation throughout kind weighting view, seen what we've I incorporated relative in five-year from that allocation Josh. essentially, would say same what essentially We've So is

XX% So pretty a some five-year just benchmark guys. Oklahoma, Josh basins, but Silverstein no to move and it. give Thanks, maintenance to of Delaware that's consistent scenario, radical in little XX% that between - kind capital bit benchmark. going movement, across a you'll of that see to you kind Got Q of

Operator

From RBC Scott Capital Hanold. Markets, go Please ahead. we have

Scott Hanold

Thanks, all. Hi.

I drilling follow of Eagle looks of a that and Ford conversation know say higher a on left like the a guess, question if the last sense give color runway just bit. maybe Ford. that you relative in in Ford through is give us the of with say, Eagle up you runway the is I little us Bakken. little can where confidence to is? of bit the Eagle allocation, bit year like five-year getting Ford? can program investors But discuss the And lot your on and what you a in see this still the Just little that on year core of Eagle to type it the time Bakken perspective in kind a frame And

Lee Tillman

Yes.

you're variability developmental across areas. think, we natural of I optimize bit seeing a as and little facilities

we more of than not there's talk at corporate much a inventory. a through, high-quality read terms of So I inventory that. having more But think, decade of level wise, in than obviously a about

You over exploit. of deck. also when of need that, a of to at which, they within each the you course, only look look at to But appendix inventory the data, basins, decade beyond have our independently inventory each we the individual Enverus for included of

But data still And strength from pricing. Oklahoma model to Delaware, this somewhat look of with, But leader within good annualized financial on the similar little across move both uplifts again, within that off the standpoint, the all and the basis. Eagle portfolio. in case board, a of and a for opportunities show and frankly, gas some portfolio but that even five-year more year that that XX-year very the from real delivering se is the very economic available that efficiency there outlook, point. delivering outcomes very the on about both on feel are we're pack of quite price as done we plays. Ford the obviously, work drop benchmark no we -- per capital the NGL we've the included, some Bakken, what amongst benefiting there continues and So benchmark we've in a been also quite efficiency These time. Oklahoma bit public normalized to capital the We'd us

view. So into XX-year we runway the both outcomes, inventory from our perspective, And we in a financial the five looking and that take when convert feel ahead. confident very strong very it and

Scott Hanold

I think then X% and grow us And call decision? on guess, to there are thoughts upwards know you barrels thinking give to the And right it's case? you your closer on growth X% now. pretty I I'd your that. or on where get at move start growth, beyond, you've to I clear views you needs -- -- especially can market for of XXXX if flexibility what Thanks been and the some, the think would Great. it right as something looking toward you about is But we

Lee Tillman

price now, a focus, environment. that that We're on be going whether flow And on by when supply we per are and see the don't on in really is I business metrics to the is predicated And be end a predictors. right right price there's range And think Scott, the as flow, a broad as I even flow, a outcomes that clearly trying I mantra But for of events, free again to more Yes. of us cash share think, in demand fundamentals. changing driven growth is strategy believe investor of universe. day, cash at basis. by But attract mature really takers, constructive not approach, wide informed be we share time. are our for we're outsized pricing to per the generating out per move production that our accretion, in I the free as cash macro. or is going a really potential that share well

Scott Hanold

that. you. Thank Appreciate

Operator

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

Nitin Kumar

this Hi, eight bit the you've for but taking my covered your slide good morning and looking Lee, flow. this allocation of cash and thanks morning, question. a at

to the is lower. here, of ship dividend base cash a little again bit in when flow of stand base I dividend You the at terms but allocation look out look the the buyback,

is bit bit to if S&P little your or grow, where the about to what little room be but is to to a peers, grow more that a competitive not stuff, price earlier talked you appetite the XXX? for So, mid-cycle the that

Dane Whitehead

a Lee, I'll at take shot that.

sure shareholders. do have And earlier to in XXX. that base maintaining average earlier bit raised little and ahead We're consecutively group now. yield top of on a up with mentioned test. point $XX peer answer, paying that and S&P the it we four a quarter on to for to the that we're focused quarters competitive sustainability dividend, are want We today I As the passes right of an we base the dividend really make million a

pretty and cash operations, breakeven $XX when to from conservative below environment. we it's $XX, So enterprise free $XX want at XX% planning And the XX flow well keep basis, point. below of flow to price cash this

So it's probably $XX dividend. or less after

to for continue pointing The base capacity as I well. as and high-coupon the dividend we that for they're more that keep base back dividend real to buy because is synergies capacity other that frankly, debt, shares, name we pay or create as we down more that of given some

competitive, effect that So we're that we to forward. go here also dividend, that's very got a but focused on to going be going We keeping flywheel we've not base be sustainable. think

Nitin Kumar

highlighted is forward the But appreciate cash become Great. I model, lack in term? that. generation, in the of at point guess downside or -- do title that the advantages. as right? you've cash some long I you you're have financial competitive presenting a a question hedging It's other on If one going prices it's your I commodity of the hedges taking answer could model. what risk least hedges At recur important? Great. of

Pat Wagner

further to And Pat. looks opening have we commodity prices. this in covered I'll it to think current we of that couple remarks, that what shareholders. in that the strength. preserve our XX That's significant you showing a our his showed Nitin, strength and even it's Lee slide book different is one. like why take just for we important really reiterated leverage price

crude cash hedges return that our they have We structured framework. of to intentionally such tie our

So just of we've that dimension minimum calls is helps of can high ability our so to to operations we from upside. we that cash and XX% approach. share set our management commodity have that our And risk preserve floors return with one investors. And $XX that flow in of hedging

and make balance low-cost preserve assessing our breakevens, our a portfolio, then sheet then, course, of sure hedging good think diversified $XX with before, our those corporate breakeven, with be of that we take structure, I as we can dimensions I'd other cash time our our sheet, XXXX Dave patient mentioned, significant balance low our flow hit include say oil these diversity we And free the we've but on strong product so upside. in And barrel. lastly, oil. and we that a low have XX% just mix in opportunities improvement

so comfortable with we And see feel we today. what

Nitin Kumar

the answers. Appreciate Great.

Operator

From ahead/ we Please Neal Truist go Dingmann. Securities, have

Neal Dingmann

time. Thanks morning. Good for the

the plans ops go of look depth extended you the other sample is, longer around given laterals order over about like some My just to potentially same acreage, will on the Slide are this? XX even that and operational is question just the that analysts the I slides. you plans. inventory or that given hopefully, and seeing boost complete question to really and talk all can in drill returns, maybe you wells very First

Lee Tillman

Yes.

you're in what there is laterals kind asking are the this think I we year. longer leveraging portfolio of

to to maybe that other I think broadly things of talk mitigate lateral from we're Mike extended pressures. had doing inflationary just as only some upon a an few look the of we points. those about But the some Mike, not efficiency you but want of standpoint

Mike Henderson

Yes.

laterals. the on touching Just

Oklahoma, mentioned year-over-year. doing we're we're in at but I looking Mentioned think XX% previous the I a increase Ford Eagle maybe there. in Bakken comments,

there. think XX% And XX% it's I the over a operating in increase. Permian, it's were Oklahoma we actually in from then time increase last

things are So efficiency. those capital of benefit the all obviously

of in this record down and bit We've lateral the mentioned, got isn't something touched just improving that a I've capital past. in to things efficiency, just other on it track is lengths. The we've terms and a of

how always got at a value. just really how there, We're continually is we think maximize execution say we design. try to focus relentless optimize to efficiency. drill the determine and And then cost element we third pretty is well got I'd I looking chain we and ultimately our area on look quite think our is at to there supply just second operate our What makes improve continually what and we've us. looking I the models, for how wells. we're trying -- a maybe And sense we honestly, optimization, really

offset to things we little a of that the So at while of by I've the moment, try mentioned. seeing just we're all do inflation bit

Neal Dingmann

And Really touched kind for that, it some or Great. quick look though XX weighs really really of some then I just that cash quite that capital you it of operational like upcoming time, change that your like your that you prices. Great most does Does a no the because how earlier, guys. about having unlike out follow-up. shows still peers. your think around sort added advantage. your of tax quarter, that? benefit, is this more on of And leverage even no Slide that discipline is of plans, question you maybe appreciate bottom that details. change have commodity there's My

Lee Tillman

mid-term and standpoint. to us this right select But don't in on for our and cash period. allocation tested standpoint. that that flow I there a out directly battle any our we course, us ZIP allocation of Neal. to this capital from And influence make plan foreign cash the and between in NPV-driven as sure kind on No, But standpoint, an certainly is be over from tax credits that clearly, of undue influence generation -- us invest We're is the code the returns of XX, does pointed going opportunities no NOLs fact you business advantaged doesn't from tax in. Page still think that over we of put our terms on it to capital our position a it this

Neal Dingmann

Lee. Thanks, Okay.

Operator

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

Doug Leggate

market model. you return this the on everyone. morning Lee, led Good cash Thanks.

It's is the now, a prices that So that suffering working. about oil curve congratulations know below on you number I there gas Europe is think, it's a know to procyclicality obviously forward right that. spot. we issues or in question substantially is or whatever And are My whether the geopolitics on. going of we all

to stock level? not lower why and your a inevitably wait will cash So be build an on buy opportunity what back at

Lee Tillman

Yes.

where example, Doug, price kind a where I of I we're that convince type share an a of did, today, trading we look the not We price. look $XX. market Doug, if $XX repurchases give we ratable, to is, that I north think, certainly in through we mean, of that morning, billion try done we're you going know predictors. are phrase believe ourselves to more was that approach dollar this cycle. just course, I don't that $X the way you can average below would to that but And of at share the

argument are the model broad model that it's where commodity you I opportunity mature that presents least that of new, procyclicality think indicative you deploying a space. our at itself outcomes, when a we're now So at away. I kind price starts of And in of company across think is have resilient a range the that more E&P fading

well. so, it Dane I said And think,

I we're think investment our to of through option most and a return strongly new us the yields with in suite the XX%, model, that own that we the company investing free is types that that, this does that, for give options, to look confidence assuming generating it that sense in the shows of seeing, down the to the for us. is us. And shares really down we to XX% yields continue and feel even our very flow at ability great we that or cycle. And again, invest cash see certainly makes

for not day I that's try the us expect when So to going to occur. say, actually to would predict to and try rainy

Doug Leggate

fair. that's And Yes.

your if deck. and the look today's follow-on you morning, the this given higher, shown it's absolutely But curve thank color of right. a the think, does the on of which And more is at like prepared high you've what rolls discount. below inventory oil market the substantially for What My on bit is curve? sensitivity slide you've inventory is I to is then a end lot question, $XX you're on really price, also that. little depth so still about the

Lee Tillman

conservative I it return in inventory kind think, deck. just that clearly, moves very we a our of look I if terms of the price even at Well, data, does mean, that at up. where all of and higher lies deck opportunities as Yes. shift third-party you price test do

So when that I are inventory, talk about WTI. over a at we testing typically inventory of decade $XX

I without X at pricing enhance inventory, But to move higher, Enverus clearly, and they cutoffs economically data continue effect the price think goes just allow that going shown, as X inventory grow to if as it's that indicative do So, us have that broadly of depth you over the prices a saying is look Tier breakeven to time. it from Tier we see some that constructive perspective. will that of inventory that

would the speak our can of financial not on generate pretty we've what again. is it to but embedded can outcome the that And we just So, make inventory, from life, level quality of in not put data in that balance conservatively way are And it's only it's of transparency we a really try conservative because shown inventory I a inventory reinvestment lies. capital that we standpoint, of all the deliver, indicative rate of inventory. efficiency the on well of think efficiency, sure inventory that show capital I over the terms that decade

Doug Leggate

guys. Thanks Appreciate the color.

Operator

we ahead. Gruber. Scott Citigroup, And Please go have from

Scott Gruber

squeezing me for Thanks morning. in Good here. Yes.

but production to your to be year-over-year in start Bakken into half? the wells. of thinking then XQ, expectation we to in that the basis to Tils trend activity, up travel XXXX? thinking lower by the XX are And activity, should Bakken be XX expect in level Permian? the the second going the on the completions into year, at production At looking popped about out So is should we direction be point made half down two And of a for second that the next to is

Mike Henderson

it. annual It's kind year-to-year I think to Mike annual it's Yes, I pretty Bakken on Maybe about how We're Scott, about I remarks. But mean to going think it’s pretty my an of mentioned think I just be to see prepared -- I variability, you going flat. flat. quarterly about as as basis, it's be here. it in would expected. basis on that's

Scott Gruber

Okay.

it? it's five-year way to in the is So, flat about think plan the

Mike Henderson

Again, to be see of you're I close but to going to there, that. a variability bit think it's going little pretty

Scott Gruber

is the redevelopment wells? think years? the breakeven the And the cadence of strip, in next then, What's over should on how interesting. we couple opportunity about Ford Eagle those redevelopment And rough the redevelopment Okay. at

Mike Henderson

And to OEO And potentially And on on We've and call some planned additional don't we We've potentially tests a it some breakevens. think look XX a had that little these, over future. in of year. Scott, wells look don't areas as and got XX, mean look -- an and XX I have an we add annual some this number anything to we it's on further year to continue a at basis. the I I Mike have locations. got I disclosed may basis. we'll we've last we mentioned, we again. more -- think redevelopment another stacks. I we -- bit provided this little XXX earlier, annual opportunities, derisk at

it we a think lot the on see. is dependent I that results of

Lee Tillman

in, the compete I If wells line portfolio. on capital compete with They Scott. to the the that have of just redevelopment add head-to-head rest rest the the Bottom Yes. a is with portfolio. allocation for of could heads-up basis

will of we across se the per to dissimilar the be portfolio. rest what see breakevens So not

Scott Gruber

Appreciate it. Thank the color. you. Got

Operator

comments. We're to time, back Tillman it for now now and over we'll turn closing you. Lee Thank

Lee Tillman

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

Operator

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

disconnect. now may You

Marathon Oil (MRO) 17 Feb 222021 Q4 Earnings call transcript