Marathon Oil (MRO) 3 Nov 222022 Q3 Earnings call transcript

Company Profile

Participants

Guy Baber	Vice President, Investor Relations
Lee Tillman	Chairman, President and CEO
Dane Whitehead	Executive Vice President and CFO
Pat Wagner	Executive Vice President, Corporate Development and Strategy
Michael Henderson	Executive Vice President, Operations
Neal Dingman	Truist Securities
Scott Hanold	RBC Capital Markets
Jeanine Wai	Barclays
Doug Leggate	Bank of America Merrill Lynch
Paul Cheng	Scotiabank

Call transcript

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Operator

Welcome to Marathon Oil Third Quarter Earnings Call. My name is Sheryl, and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions] As a reminder, the conference is being recorded. the to turn President, Baber, now Relations. Investor will call Guy over Vice I begin. may you Sir,

Guy Baber

Thank you earnings Ford the release our deck, and addressed Yesterday Sheryl. presentation on we standard addressing quarter you, Thank a assets. and the Ensign joining issued everyone issued also our call results. us investor XXXX for packet this release, morning. press after that we third close, of as the slide Natural slide Eagle well Resources’ a those acquisition Alongside materials, separate to press

on All of those our documents website marathonoil.com. can be found at

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

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

also reference have reconciled materials. terms After to completion of rest move question-and-answer defined will prepared in certain today’s who provide been call earnings will of discussion, remarks. will With the Lee in which our turn session. I we the and non-GAAP and that, the the will to We over the remarks, team,

you a yourselves Lee? follow-up. So in of ask one to the interest with question we limit time that

Lee Tillman

their and especially our commitment to and start, as well to today. first hard as want environmental work, everyone I safety to Guy, listening dedication morning as for excellence. to To Thank employees values, you, thank contractors our core and call and always, good their our

we of focused but those I deliver results. entire equally how are our am are company, proud on we results-driven organization. a We

acquisition discuss each that very Resources’ of truly are opportunity of mentioned, company in one quarterly earnings we assets, every materials, objectives. strategic a to standard Guy core excited furthers Eagle As Ford and our our also compelling Ensign our our addition to for Natural

our is the While shortage results, leadership the there is quarter top certainly capital our highlights financial operational near return continued third of of of and list. no from

set In and third will for a will new quarter record third our our fact, quarter more and shareholder return start Mike distribution detail. of and company. success context a and outlook Dane capital our walk operational around in bit provide then results through us financial our there more

our our balance get let’s expansion to have the in will material to cover Ford. to Dane. the Over started. Needless on of remarks spend We a then so Eagle opening today, we of lot ground say

Dane Whitehead

everybody. returned of the the you, marketplace. value in a element We and the shareholders Thank proposition Lee foundational good of our cycle, significant through to capital morning, amount our

at yield As E&P we our $X.X of to a important represents announce yield an commitment of to quarter, translating to not prioritizing XXX% setting quarter cash the third our XX%, distribution but am space, the to generation. very the the cash around we by S&P peer top just our of amounted I market the our space, XX% leadership This that’s at of to billion, top distributions peer capital built of pleased flow, consistently to shareholders’ headwinds characterized further inflationary CFO on flow shareholder uniquely a company operating our annual of a XXX. free for equity over of a And corresponding Total our cash our have shareholders. holders. quarterly distribution is essentially return record in new cash especially to our not highlighted, and shareholder free and believe flow, in by strong call differentiated capital on first calibrated our during framework return is third we

billion While of performance, to The pace below clear decision materially our share, financial conditions, third including of of repurchases. opportunity operating our financial CFO, were we We quarter our saw stock proved to our as step-up bought the $XX and back during strength, due had value capital third in we stock well an of average strong quarter XX% buybacks market levels. and trading price current of our beneficial including around $X.X third of favorable timing least an at price, a return at replenished to the guided quarter. cash executed balance

to cumulative share cash our ongoing commitment driven, flow of on is to and remains so approach commitment become operating pretty our an this ignore. While hard the benefit repurchases differentiated, significant Since to billion return buyback off capital has model per share our metrics. of $X.X reduction significant in in stock, October, our just to growth months, last contributing our share XX% all a program kicking share to repurchased outstanding XX we of underlying count driving our

with use consistent continue and Board belief, authorization stock of again buyback market at billion. $X.X up back outstanding We conditions capital believe has current good to is our this to topped our a buying

at XXXX distributions the of cash Ensign the of the build bit as a to to will portion funding minute expect year will represent enabling in peer beyond. meet leading hear fourth will pace our the XXXX you to the commitments to equity to of the we the quarter, us $XXX yield. a higher fourth share market buybacks increase to ensure year acquisition, which XXXX in annual CFO distribution a allow Looking to million holders. XX% and back level execute cash This repurchases of of at full shareholder Dialing contribute fully quarter, we additional around to us our will return some ahead, the will least end and we a in

commitment authorization, driven is dividend cash strong that a our exist our increase demonstrating increasing clear to our the have to funded distributions to impact of about commitment In been of increase year-to-date entirely dividend the from addition return capital approved shareholders synergies dividend, inflation. another The believe base buyback our Board operating accretive has to our the buybacks. base We repurchases. and shareholders. through To significant between was important also framework share flow protecting our capital to summarize, our we

has Our of accretive consistent buybacks leading of driven growth XX%. peer per execution share

built XXXX distribution trailing entire who this outlook. performance of XXX the have our by on accretive highly acquisition. quarters through Mike? with will track our and we the Ensign leadership four extending Mike, the strongest over over return and fully S&P profile to us to, turn the further in capital third We briefly records enhanced call walk the one now will I are committed

Michael Henderson

morning Thanks Dane, everyone. to and good

over cash generation at of operational XX%. just rate yet free by a $X billion quarter, was reinvestment quarter Third another financial strong and highlighted of

oil laterals will Ford oil asset. per year, more We per at what to million. income We income $XXX Our guidance our natural oil strong provided XXX,XXX the equivalent the outperforming our barrels outlook an of expected operational pricing, our gas, laterals representative now and IPXX are XXX,XXX XXXX Woodford remains oil upside last is for with amplified and compelling. laterals, double by guidance program was updated new very Stepping Delaware four-well to raised to another in including is equity guidance wells million EG early wells the latest equivalent over the beginning to eight to the day. deliver the delivered and $XX our year oil three European success performance barrels of operational deploying financial barrels than to differentiated Meramec this average EG that our in -- XXXX. where well significant LNG production LNG for especially play. the in due of We in performance, earnings including activities And brought LNG back equity bit since first both to market. Permian. go-forward and level already Eagle equivalent have a price outcomes, full it global we and guidance financial high pads driven LNG our commodity oil will increase contributed that our step our expires, mile European of end we specifically, we outperformance sales remains our to Permian, design global to we exposure price our under year, change exposure EG’s see has stronger contract sales, for extended our potentially a performance day, call, completion to returned which and Productivity as Texas as this the more developed those legacy per appreciated. are increase XX linked XXXX. we which financial have strong, over well leverage the Henry exposed Hub The by increased and the XXXX, more for in drive in molecules while equity in oil both future Permian quarterly X,XXX the sequentially In by achieving our initial day highest is bright X of

We prior guidance billion, our a our efforts guidance from to an due of momentum capital protect targeted million XXXX into operational inflation execution to also XXXX. to combination and raised increment and spending $X.X $XXX increase

flow We this risk to production other lead free matter against for XX improving metrics still as our we of profile intact. our early that production, set next mitigating protecting expect to and in this capital XXXX, words Despite in barrel additional earnings delivery our and deck. re-investment us year, in continuity. budget expect cash our group capital success spending up execution XXXX, increase operational in depicted In yield, per our our rate slide peer the capital remain

is already deliver maintaining plan growth, ahead continued actively return maintenance share to our XX% sheet. discuss as case it to I targeted free to our over while, strategic we to XXXX, Ensign remains it assets. too rationale our maximum to the the to to we increase cash early investment-grade the we A XX% XXXX be to and Looking explicit in capital mitigate of flow, Lee Under and order the working significant optimizing range. incorporating are while will XXXX, our pre-Ensign now taking program efforts of maintenance the Ensign guidance, to and for integrate the in year-over-year turn the to scenario are expect would capital acquisition. this balance spending

Lee Tillman

these a and to to about review and our acquisition earning slide exacting acquisition associated criteria, talk Eagle deck. me about you dedicated Thank as for Ford have all this especially as press calls. of team each you, the element Mike. the on talk of have release satisfies you excited the I had rationale Hopefully, today rest the to and am chance strategic every you transaction, heard this

basins, our that come years future unique truly a to we return every core profile, high assessed superior asset. striking this the in our immediate free recent in the knowledge adjusted accretion between especially market asset have and and flow in While This has risk each quality experience we a truly believe opportunity cash Ford, is balance opportunity. right given Eagle and while development offers

this transaction to and immediate financial financial of framework, M&A capital conservative through inventory with and of our life return checks all accretion, I personally points. to return accretion sheet maintaining all our logic the enhanced back scale, Going these key each balance commitments. and boxes, shareholder accretion, quality, strength, walk while will industrial

share all accretive, cash will free to is we More paid share a to deal support on increase expected this our stronger attractive drive per free cash approximate key consideration accretive will growth. immediately basis. Marathon share a It’s our accretive First, flow modeling on just times same increase only count a and highly is accretion cash XXXX of financial XXXX standalone level price Accretion double-digit an at higher metrics the generation relative and as XX% metrics. stack. a basis per share to debt additional driving flow to EBITDA asset reducing The is at our XXXX cash the Oil’s X.X yield, and cash flow. with improve significantly XXXX the and a even incremental for XX% are XX% also share further adjusted per operating flow repurchases, to specifically,

translate $XX XXXX to from to is higher cash increase of an delivering our driven with in at to equivalent the generation be remain to of WTI. the our as profile, we cash-flow XX% an our operating return our capacity prices Second, we I just flow But this at beyond accretion Simply of returning XX% this cash return in to and of framework. CFO. will shareholders, shareholders additional will above will our now accretive unique shareholder flow go by straight discussed Therefore, transparent least CFO XX%. committed base distribution a put, consistent cash capital transaction and

dividend nature by taking close Additionally, we plan to full share, base raise quarterly of post-transaction our to per XX% of cash deal. advantage the flow another the $X.XX accretive

our locations with inventory Third, accretive capital, industrial transaction cash and compete this enhancing compelling for life offers flow sustainability. is that to logic immediately our

have We knowledge, demonstrated and fully our and are operating to execution high where we operated track adding XXX,XXX high capital-efficient net experience acres our basin, working of a confidence position, streams, adjacent excellence. interest, leveraging record legacy a

locations, greater Oil We in not to for life clear by are an with undrilled any compete bar inventory immediately years, representing acquiring more that than portfolio, XXX than the locations an capital XX Marathon means. easy

Finally, maintaining balance and with expected we while our sheet are intact. deal below net our are X to firmly strength remain financial investment executing this grade debt-to-EBITDA our

turn was especially of based strategic we program, no and valuation this overview of credits a one to refrac to element and over inventory differentiating rationale, on asset, our nominal critical it and the Pat no upside. rig maintenance of is deal. I that assumed redevelopment quality Importantly will synergy the an discuss believe With depth this which

Pat Wagner

the of since of acquisition differentiating evaluated. compared factor slide to on comments inventory we my a speaking deck, asset it’s have focus quality packages will I Lee. to asset specifically six this Thanks, our recent

As our in combination has the to activities unique, to limited years, Eagle and in assessed asset, the every inventory. asset especially come history asset given Due since Bakken, unique market attractive this effectively basins future has Ford this been the core have quality we there that Lee of preserving development drilling is mentioned, truly XXXX, immediate we recent flow high its believe in accretion opportunities. cash and of

the Additionally working the acre the ownership contracts, undrilled core of done job up Ensign ventures. consolidating Ford, net operatorship position team margin, operated, an XX% of is The result XX% high in return significant excellent XXX,XXX some end high Eagle cleaning midstream a interest, inventory. legacy has and

generation significant and over this of potential windows, XX redevelopment and existing refrac understand recoverable quality every includes DSU bottoms condensate, We truly their early record We from assumptions. are time stimulated track life a resource which technical to value brought effort slide representing Eagle impressed, development wet on XXX undrilled spent legacy this Ensign have cap that wells, came on using side pre-XXXX the highlighting the of excess process conservative gas has XX bottoms this month We asset be wells development have large of and/or dry and phase of all of years, -- analyzing the capital value and each XX Our effort with inventory see teams position total analyzing basis and away acreage, high inventory. encouraging effort efficiency every across behind. on to proven our left of quantity E&P an in the locations, significant on six in with our inventory signing to undrilled results. one Ensign’s cost, gas, spacing efficiency online capital, three best XX considering up in the phase early XXXX the month that own has acreage, the gas to on returns potential right-hand the inventory cumulative deliver It’s relative Ensign the brought condensate productivity operators likely many to in for of windows. undrilled acreage immediately associated some which production most especially Screening test on therefore Eagle successful efficient entire completions, competes in in condensate in Lower capital worth wet return at has Ford very to the especially recently offsetting online basis been group. has The the substantial equivalent U.S., a well peer resource and and capital in X under XXX shown refracs acreage the optionality outperforming successful third -party entire Ford. among A in on and value since economic been refracs deck. the further simple see oil best term the gas longer of therefore Ensign as inventory inventory, upside And on strengthens to XX. our dry Ensign a underlying with the Ensign’s our position. analysis enhances our all of on also highest our external the development And charts validates Peers quality base. data three

valuation upside return of will our Dane for in over to the us, in to count. it this no our inventory represents asset now and refrac of objectives. capital redevelopment as Importantly all assign financing pass our of we I pure upside discuss or

Dane Whitehead

plan sweet. our that to Thanks, our point on and key short maintaining Pat. are transaction, financial conservative will commitments facility We of it pre-payable strength, fund the this additional incurring pay debt. equity to you acquisition to us is give I balance leverage can’t costs. executing holders. have combination without capital investment credit Financing continuing My profile, while be while grade cash this our Who acquisition says, new we optionality return hand, accretive off our deliver sheet of approach and with on quickly the and all. to will debt a

X our even incremental against the forward barrel code WTI deck, more debt with ratio debt-to-EBITDA to to testing remained of net end $XX times remain we leverage WTI, the in zip X.X XXXX. by and we $XX expect per barrel Importantly, per at below of curve leverage the conservative times price our the

have We with constructed constructive our about leverage ratings feedback profile. coupled the given from improvement the impact agencies, scale the our the -- and to sustainability, deal limited received to

deal giving flexibility to simultaneously tangible assets to in equity contributing We capital efforts, us optimization and balance full our sheet return financial in pay also to our remains income while acquired our of aspect order our exposure this to holders. believe short for down attractive expensing Bottomline tax this are acquisition that like an debt positive another XXXX, do solid, the rock AMT. could eligible deal of in our enhancing this differ transaction that

capital Ensign and all supportive, if potentially XX% In of market cash to consistent of return to for Lee the remains return wrap-up. framework commitment CFO XXXX our the holders conditions are a financial stated, our our objective of driven already accretion least more by have equity higher Back base to and beyond with flow remains deal. we at as Additionally, steadfast. of

Lee Tillman

I to you, plan peer Thank further continue flow remain Ford leading objectives cash XXXX and optimizing and too remarks is early spending Eagle which of we that to market the will remains Dane. our it asset. return the Consistent working are strategic any of as an guidance, delivering our capital by with can detailed capital our generation integration unchanged shareholders, new Yet, strengthened to offer earlier all and free acquisition. up say of accretive still

the program Ensign efficiently assets integrates that XXXX Ford expeditiously be share Our case continues to that maintenance for growing focus and and per is metrics. the Eagle on to

successfully For investor I market, increased flow for have E&P. more competitive the years, that with sector financial corporate for by now returns, view of reiterated less as and of performance. sponsorship, deliver free cash and return we our generation investment our are my that we alternatives delivering kind must measured attract in just to company Today S&P, performance other capital,

out, our challenge are and to is that prove year in Our in quarter out. results sustainable now year and quarter

the We are for challenge. up

capital and protecting shareholders delivery, by of investment compelling free leading share underscored per setting price distribution. capital case to sustainable discipline, flow we return this is market simple, commodity track upside, have record a Our of cash shareholder quarter’s growth. record And

acquisition, proud U.S. reiterate how I Eagle close gas and have that peers. with company. our has in Our the our brings of unique want am the LNG global only is today, strengthened among differentiated market complementary I multi-basin our to our how exposure Ford EG positioned to and business call To integrated growing we portfolio a been balanced

just and core we supporting financial top adhering S&P continued to of are development much billions the the gas open up have of is global at while our responsible the important, lifting enjoy. are out all needed line We critical Q&A. that so very doing protecting we we XXX, delivering of and living furthering economic oil values, the progress, standard that, as and energy of come to With to for poverty absolutely the outcomes can

Operator

Our comes from Instructions] Truist from question Securities. first Dingman Thank Neal you. [Operator

is Your line open. now

Neal Dingman

question Good My morning, deal. on quite guys. Congrats good. looks deal. Ensign on the It the is

in wondering, of great about, a Lee new PDP undrilled this how activity. you one, I and two, Eagle almost obviously, next You just Ensign number but comes am about of of some you just drilling thinking be lot how a broad in-between gave am Ford, with but XXX,XXX sort some mentioned this the Ford color Eagle strokes, nice around guys, really are inventory. also think secondly, good bit value year do sort your wondering, with now of in in focused the you then, on I

Lee Tillman

Yeah.

the on PDP development we value I opportunities. in between that put and think we say component of undrilled I the think almost when would XX-XX Neal, future in would general, in valuation, kind just about

hit I capital. think Inventory flow that that was accretion, was spot immediate accretion, between unique significant immediately aspects and that inventory sweet of one the deal the with this competes really it with of cash life for

and So stood this us unique. to that really quite deal out made

an Ensign I the terms a the thinking remains are essence XXXX. we how of top case maintenance for that of be that We as that in a these In are of it, believe going layer enterprise. for top to locations enterprise capital portfolio midst in from But through our and process mean, obviously, valuation program today. perspective, capital to part we and XXXX. bulk so compete through detailed be just about going maintenance view the for We us program beat on are on would for this we maintenance that’s of layering model that allocation still going the detailed would we budget today’s in Ensign of the and

Neal Dingman

stepping sort you thoughts Great, wondering had, that really you Delaware. this play then you year for expectations Great obviously, there. now of follow-up, that on had Mike, with Mike, second the Delaware, to or am just maybe maybe up earlier recently just the now have activity any the And have all then details. a prior if deferred one I on activity

Michael Henderson

run so a I at will Neal, take that. Yeah.

sales, have X are to fourth those that and of X.X so bringing in year they seen that we online this we obviously, quarter. was XX another year And coming think we miles, wells year the or most in next Florida results wells milers. have excited, I the on I as look-forward pretty this to five been the impressive, XXXX.

two only probably in going to are We milers. on bring

So look were you think X-mile in from the wells we when and to performance team, well very XX deck. third the The laterals. XXXX strong quarter mentioned and eight it at execution I sales, the

that’s go-forward more program. over of wells day. representative touched again, think per mentioned we X,XXX And oil as I those equivalent averaged of barrels

Over the that first online. be was Those cut. oil XX% day. space, And XX the that some completions IP three of at brought Delaware probably, per were that and most on days, Basins the barrels we wells largely to oil [inaudible] this exciting then, best were we latest design XX, up of brought look XXX year,

got to think of probably and I So similar out split for I the XX-XX of teased running. year. next ground be team year. it it about And going the tried going that are capital the with of year next to all And capital well teased hit on well XX% we next terms for think to back, up share in Permian, but you I it

So about we brands excited pretty future spend in Delaware the what us. for more are

Lee Tillman

extended to lateral too delivered. extended that, exactly the acquisition original a the continues through more and when position, position. that’s continue drilling to has more that we ability kind access that really which always build cetera, tackling Neal, team would we to just do the contiguous time would I laterals our the of team would give over across made to et blocking theory, what good give us And our us add some trades, and to to was And do

Neal Dingman

on details Great again deal, the and sort guys positive. of looks congrats

Lee Tillman

Thank you, Neal.

Operator

you. Thank

from comes Scott question from Markets. next Hanold Capital Our RBC

line Your is open. now

Scott Hanold

acquisition economics acquisition especially Yeah. It’s does touch a Ensign about strong how give good the could But you hydrocarbon little case. in made think a you Obviously, little the Thanks. have you holistically, guys very Hey. on mix. little a base on, can balanced If bit. bit that we window. a more color got condensate us pretty

had of I much think higher very focus. very traditionally oil cut Marathon -- a kind

on on total about about mix? next asset And think, of a you about little corporation? because as bit Does activity layer talked this do historically the change when process. bit of how kind you talk a a barrels little within you more this that that you of think have year, a gas thought oil So has again it maintenance I

Lee Tillman

Yeah. questions, No. All Scott. great

little a of if bit start mix me Let on, Ensign. will, product you the

economics our First portfolio. driven and we and inventory foremost, is competitive are the Ensign and within by returns extremely

into In which cash return delivering essence free translate terms flow economic sustainable model. our of cash in of returns, and

So its best that will -- locations us. with those for underpin

So wouldn’t economic competitiveness we to locations. are mix, focused on I the are we product say of agnostic and but much these returns the more

referring is will think Ensign, one-third, maybe positive focused see level contribute forward, even of Ensign we loss maintenance into -- and mean us to about mix, on back, that, portfolio, we around talked Ensign play. we you are more maintenance still XX% a about in we if the at And you returns. one-third reality the it’s the is one-third, will be mix will, the bit and there bringing little level, the gas bit XX% we at arbitrary So it’s a oil that Ensign And a now. to and at to oil that are even production, I Ensign I continuing enterprise into have but more At in maintenance When coming when Eagle step hold higher itself we about to basin we of think we the what that with but we oil again are in drop the are mean level. oil, going XX% Eagle certainly, still is XX% to still of the gassy, getting oil production. a on. nominally when balance Ford, nominally level flattening plus we now little are but asset we still, maintenance is enterprise just Ford, NGLs at down still even bit we with between a oil. the may

Scott Hanold

accomplish. near context. take you level mean, that least your able more I existing leverage? your for you impressive, you thoughts about prices -- obviously, this in does bit on, have guess Appreciate Should And is bit quarter also now I acquisition, buybacks shareholder Will your guess, hedging hedging a better still And -- if commodity this to was obviously, little until, can past will returns, temper about to little year. commitment, and recent pivot guys you debt that on pretty pace bit this on the your different maybe the visibility and a from term now, into this you since a hit next thinking taken think to the at acquisition. we I have were on we little but obviously

Dane Whitehead

the is I will take Scott. shares we Thank acknowledging XX% the the are first that. commitment repurchases Hey, high share really you well, Historically when certainly in I capacity demonstrates doors to believe like cut us. that and our have we for off return at that the the for fact I think that that CFO, of the This to watermark Dane. repurchases a was quarter do it. driving high

repurchase accretive, at a to -- in strategy. are CFO. signal be kind The billion, the share which did to continue a of very aggressive we re-mooted also We repurchase share that authorization post going $X.X the itself so that the is should XX% quarter, our strong the Board acquisition Ensign with

Think the a return equals So is as pre-Ensign return XX% available to greater. cash to return. shareholders of quantum it about XX% post-Ensign

minimum shareholders. threshold. be can going significant allocate XX% the of increase to our a it’s cash meeting are to return certainly minimum. that That’s quantum We So to our we shareholder

to ability shareholders. of to think -- a flexibility debt the have timeframe, good to are our shape to that I and in point to that priority in is we balance we and to strong we will that a at lots is we do repay around obviously priority be appropriate The returns that the exceed to is our are to up sheet service going The our an pay given consistently this to and not going that in the pretty ability is leverage but pace framework pre-payable be shown forward. have really debt debt back post-close opportunistically so debt going going are we that to facility would using can look and we lot taking going -- be going why we be flexibility that our credit of that. on that’s new pretty We have

So we on stay to going that. are focused

other one that? there. question want take asked did in have might Pat, You hedging to you

Pat Wagner

say that changed. would part is our of commodity that. basically the just in hasn’t Yeah. one general managing Sure. philosophy just I Hedging

Dane so, flow $XX. And incremental our balance is to some to talked free really balance low sheet, focus it still contributed I strong, be debt. it’s about important but think cash breakeven the And sheet on at going

of So shape good we any in prices. are in range commodity

to just need that and because we very see That will in into the So we provide opportunities past, have us go did some this the see hedge be protection. a market as if acquisition. would a you downside we said, been don’t we little opportunistic,

unless feel don’t but take to is We will those do us the compelled something that we that shows market compelling.

Lee Tillman

Yeah.

mutually not to leverage those shareholders, exclusive. think our and because sits of it I where that return it’s that, our and debt are capital very important future retirement achieving profile

modeled transaction, XX% stated, And will the things. of We are in virtue new those, have Dane XX%, words How time. that CFO by XX% be over if In bit the is of doing going the will. uplift now is doing those kind other XX% you we XX%. of we to as those but minimum be it commodity Ensign we on the a are dependent is with gauge the both price, way of obviously both

ability are return we to that back to and So seeing accretion our shareholders. give

Scott Hanold

Thanks. that. appreciate I

Operator

Thank you.

Barclays. question from Our next comes Wai Jeanine from

open. now is line Your

Jeanine Wai

our Thanks taking questions. Good Hi. everyone. Hey. just… morning, for Maybe

Lee Tillman

Good morning, Jeanine.

Jeanine Wai

there, Hey. be in $XXX morning. following QX, balances. to Maybe on so up of just are help cash expected which will comments million rebuild buybacks the your couple Good a

a impacts the cash of how the provide and between envisioned levels of you revolver can view split XXXX? the cash new terms the deal sense deal funding your for rough and XXXX, changed whether on for has In debt the

Dane Whitehead

Yeah.

borrowings the think that. XX% and capital from I to the should of be terms revolver debt, pre-payable -- or balance I split debt get and markets would So the which debt to a about versus be go to new cash loans cash of mix roughly think funding

advantageous assessing most I We the… am are there. still sorry, the was approach what

Jeanine Wai

Okay.

Lee Tillman

Cash count.

Dane Whitehead

-- cash Yeah. the Cash oh, count.

about that. Sorry

year. dial towards we end obviously, the the are of share to going back repurchases So,

acquisition. a or forecast $X.X We the portion end that at we so will the year of of use for the the

million we cash a we with. are at And but have like, capital generating, higher next the debt to number through good enable year, head I we and balance that we of interim sort month quantum $XXX to to that to this As us service within think manage will working still is cash be able million of to $XXX a work historically distributions, the make point. shareholder

Jeanine Wai

income you in all Thank EG, striking new to to Great. upside you Maybe in detail. in here portfolio another Okay. relating in is contractors, there certainly prepared EG to remarks. the starting your pivoting the XXXX asset that mentioned for

you. that, it footprint, or meant that In that’s maybe wondering longer plant the on term? anywhere of be And a horizon Thank on medium could if to originally I LNG the other think just in your so upside, twinned. was terms have radar

Lee Tillman

a Yeah. yeah, us for is Jeanine, value proposition EG. tremendous there in

really We have talked and two about areas. it

is is equity course there. that infrastructure offloading, And the this as gas well storage Europa, One the as the we plant Punta Alba then have plant our there plant. the world-class of production LNG methanol Gas there condensate and field, in

LNG and gas, objective through exposure been steps that we to molecules through brought facility, to LNG global in is proceeds, advantage to have Our to that if those our of virtue the infrastructure, train. third-party some now in continue of travelling in land number will, Partners the take pricing. Alen to of plant. the hence basically, of existing pipeline development, both, the gas was invested And Essentially to built our bring also but able percentage they you first one was third-party that right the which by load one the

to will opportunities flow vision current at the so, we dissimilar base that continue able and will be that are And trend. drive to to Alen, our LNG is be where there to continue not more molecules least

Africa EG as Nigeria, as including are of cross-border opportunities, molecules but prone one both gas gas of of to Cameroon, accretive as most terms well in an We West in in gas for also areas the their home indigenous sitting as well. look they

the correct grow the designed ensuring decade. train we You the was help current our expansion but facility today through is are beyond one can for the and us next gas really base have the priority flow, number that that in

Jeanine Wai

Great. Thank you.

Operator

from comes Lynch. Thank you. [Operator from Bank Instructions] America Doug next Leggate Merrill of Our question

is line open. Your now

Doug Leggate

but I comment get is position. Thanks, can I this I everyone. of Thanks -- some looks or not Dane, on getting me wonder about the could tax. if slide description There am on exactly interesting for cash the your on. like deck acquisition an ask going the cost question you help to cash it right, a footnote tax acquisition

with that how So wonder you and think could about you? the does we should How I just if evolved tax? Ensign how AMT through, walk help us has cash

Dane Whitehead

for tax us. question you Thank for Doug. Sure, Yeah. cash

Doug Leggate

Yeah.

Dane Whitehead

But to for years very were system. great, not Reduction a couple under traditional the Inflation cash to of so we the Act, prior tax going taxpayers be

IRA tax there’s XX%. With the alternative structure, an minimum it’s

that is And we three could threshold. for we certain the average on through so subject pretax if XXXX. of $X be years, income hit a to The threshold billion XXXX

period. measurement end that through the in of that measurement still We -- our forecasting. living are we So do

to average $X for coin a close We is flip. threshold kind of are that pretty three-year that billion

a new eligible intangible a but move Ensign things for a the able mover that’s can possibility of at credits think to be we could our playing it which calculation, the of We price, Ensign, about would very that acquisition go one, the what calculation. the number year. get move whether is course, in -- a of legislation and color part and the intangible this the third that on kind and significant precedent, a is XXXX be with at we -- which deal that’s And assuming that if point, to close on of consistent favorable we to, also plan just to the threshold That’s of drilling a interpretation with the this in for capital would of needle of this does deductibility got and threshold foreign are the for we directly but be purposes be this be so on treasury There’s little then tangible predict happen. that program. not that of portion that call close will acquired have tax transaction And to significant one is tangible will relates we to which deduct assets, threshold more calculation. it for question of give field. expensing favorable runs that one the change, we as sight else big couple of fairly the costs if a there to hard that’s assets, if whole us There needle asset legislative that relates you look so -- line you to

of deal margin really you without in in those would So help right are could AMT for sort of today, Doug, moving direction be the kind paying nice. quantifying which the Ensign XXXX -- all they taxes defer until certainly all this on us

Doug Leggate

from helpful. to your this really at get was I what tax Yes. kind of guess you shield can that’s much how is I trying That’s transaction.

at things marketing been gas thank of the on try today, want of today, I my and hit Thanks. those where on over all about LNG so should parts, let’s would there. equal versus XXXX, there’s mix things the the your LNG. rolls and XXXX. when address the moving try could the comment leave say, no it So but from we equity it things? lot Shell on you land given -- to many How contract if of the of shift we think change I How a will all agreement a go there’s I guess, X, is to flat, in January then legacy end pricing, for that. this you there’s about I commodity. and guess the delta, follow-up, exposure gas transaction, so Obviously, were

Lee Tillman

kind end remaining percentage listen open what all molecules, through there. molecules just of which all, complex there a course, all current flow the Alen equity receive That yeah, chart, the the They plant, will runs plant. of more how contract. which in XXXX, not to as is are post its LNG -- third-party today, of the the from first companies marketplace. of put to sold gas production. are into those Shell post at through for the Alba production of change the of But that we refer just gets things that the Alba molecules flow we through through clarity it selling course not we XXXX. today backend the for on are it because contract, Yeah. just term on Doug, Tail, that, then back, of Alen the That proceeds and the runs current negotiation Relative equity

going basis financial decline we post would to those as are more of finalize Alba really see and more make shift year a to Henry LNG TTS from on Based and move obviously negotiations contracts would Hub-linked So of today’s contract new that starting a Henry would fact Henry course would post a equity the on molecules a on market material linked will from in We despite a be conditions that arbitrage global to between XXXX. be we the Hub, like something of we uplift of see uplift, expect XXXX. that those global a we essentially to expect contract to next Hub LNG-linked the flowing more those to there, Field. a on

Doug Leggate

quantify Lee, would that fair? you that Presumably be at time.

Lee Tillman

Yeah. No.

guidance, think like equity et-cetera. I income done, and we have lot EG we to just tried on have a think, providing give more I visibility transparency by

absolutely that As do new be on there’s so will terms commercial what are EG with clarity to to we get to intend financials. market, we understand going and the what like, those that share the

Doug Leggate

That’s terrific. Thanks fellas. Appreciate it.

Lee Tillman

Thank Doug. you,

Dane Whitehead

you. Thank

Operator

you. Thank

from next question comes Scotiabank. Cheng from Our Paul

Your line now open. is

Paul Cheng

Good morning. guys. Hey,

Lee Tillman

Hey, Paul.

Dane Whitehead

Good morning.

Paul Cheng

I Two I apologize first. to question. One is, have think,

get price how between split world, ideal to have paying or you if pay XXX and gas the down? as you. wet you debt if that perfect or we the pace a billion? external want in to looking that quickly In terms net are debt or how back, down billion, you is of on of that that optimum that the you that feel you at the take environment, $X new $X as do inventory, do good window, is question hope, dry So you the you commodity In want on condensate so Ensign it a second the question. that’s the gas? first an Thank quickly that The we then

Dane Whitehead

and sort our and feel for this us to used both the debt. of If case, the expeditious debt pay That or think in very more a help a like things we debt on deal period. much AMT, with tailwind over XX a on prices comfortable the going to our forward want month be we a will increase flexibility model distributions we of out pace or in incremental reduction, that of get we -- shareholder to aggregate just that, it’s say I to base commodity curve, perfect give if us fashion to the world more sort this book.

flexibility a bit there’s borrowings. when That’s due technically I with of quite aren’t So they revolver until the revolver guess, been XXXX. to. bulk has extended

get the in payments personal debt So else as interest bias of out guess, -- and something possible like distributions. without to I as bias the But my a the cash lot my there. system flexibility stressing we is of have quickly the

Pat Wagner

very that the Pat. I take would will those the have as be gas would and today our compete locations going the favorably first window, specific, the into Lee wet majority that on Without of say I described, mentioned question that, i.e., few it, just condensate inventories. and too in is the in This years. inventory those and we I and ones much vast we attack

Lee Tillman

exists pointed again I I count the so have wells. upside that come conservative own want recorded very that, had if just potential the And putting refracking that X,XXX could no out and approach and taken we that that wells amplify really Ensign think Yeah. out that a technical the that redevelopment add I maybe in on taking view are it we that on our teaser also Jeanine probably inventory. was and inventory and And to to credit XXX or existing emphasize

us protect believe that for we feel over to for in XXX It was to the as undrilled strong So potential we the valuation the very we locations XXX that conservative. future. a basis continues well probably -- upside be confident that in

Paul Cheng

deal preliminary certainly it, Ensign I for but call I preliminary ask OpEx -- from is have And potential, any and operation? guys that cost synergy you on, whether the this can benefits know you are what

Lee Tillman

of relative a fall is we going maybe so Mike the included with about the legacy our let Right Eagle kind will I think a frankly, how our couple in. into Eagle of rest now, those with little Mike ways drive believe to cash and team Yeah. bringing none expectation enterprise. may the to But of and asset cost the are excellent Ford, we more jump say this of unit that equation. our you find quite that Ensign of we to even we to and is contiguous and value things Ford in to looks come. kind that the talk position, valuation that will And want bit savings acquisition

Michael Henderson

at I short that on one, we mean, that Ford and Paul. Eagle fairly bringing are The toward more in it’s it’s it’s Yeah. more the answer actually company then moment. OpEx, the

quite positive that that’s is potential ago. the and proper. baked a while to Again, of upside into us potential can as us which again that there that Ensign be with size positive should so that as our these baked out that and our we to scale continue asset just think brought there well the great of think recent is they we wells I I scale upside chain a little to side some given bit that supply job to is that done of the one So And there, increased some and going of we terms doubles do it just productivity our then on anyway the we the in. that mentioned any there’s potential the increases synergies. for online. the and tight think, both scale and net of and have still obviously is so can team. that, expertise have other a implications, that fact It’s positive. not positive well thing and a optimize with a positive, cost, I market out is They just Maybe the a in Dane and things. basin bring get AMT Well, regards help with a footprint, the just shout

Paul Cheng

will more thank on I talking in am future. be Hope follow-up. we you will sure the I about So that. that

Lee Tillman

Thank you.

Operator

Thank you.

have questions closing Tillman We time. to I’d comments. the turn no back call further at Lee this for to like

Lee Tillman

thanking Thank dedicated ever. Oil your and safely contractors by you in you responsibly the close employees and and now of again very to energy than needs for deliver I’d for much. world to all interest their Marathon our more commitment Thank the like

Operator

and conference. Thank this concludes you. today’s Ladies you gentlemen, for participating. Thank

disconnect. now may You

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