Marathon Oil Reports First Quarter 2020 Results

EAGLE FORD: Marathon Oil's Eagle Ford production averaged 114,000 net boed for first quarter 2020. Oil production averaged 72,000 net bopd. Marathon Oil operated four rigs and two frac crews on average during first quarter and brought 38 gross Company-operated wells to sales. The Company has suspended second quarter completion activity and plans to transition to a lower and more stable level of drilling and completion activity over the second half of the year.

BAKKEN: Marathon Oil's Bakken production averaged 110,000 net boed in the first quarter 2020. Oil production averaged 88,000 net bopd. Marathon Oil operated four rigs and 1 frac crew on average during first quarter and brought 25 gross Company-operated wells to sales. As in the Eagle Ford, the Company has suspended second quarter completion activity and plans to transition to a lower and more stable level of drilling and completion activity over the second half of the year.

OKLAHOMA: Marathon Oil's Oklahoma production averaged 74,000 net boed in the first quarter 2020. Oil production averaged 21,000 net bopd. The Company brought 13 gross Company-operated wells to sales during first quarter. Marathon Oil began the year operating three rigs and one frac crew in Oklahoma but suspended all drilling and completion operations before the end of first quarter. The Company currently does not expect to bring any additional wells to sales in Oklahoma this year.

NORTHERN DELAWARE: Marathon Oil's Northern Delaware production averaged 30,000 net boed in the first quarter 2020. Oil production averaged 17,000 net bopd. The Company brought 6 gross Company-operated wells to sales. Marathon Oil has suspended further drilling activity in the Northern Delaware, with only a limited number of wells to sales expected through the balance of the year.

RESOURCE PLAY EXPLORATION: In response to the dramatic fall in commodity prices, the Company has exercised the flexibility inherent in this program and has suspended further activity, beyond wells already in progress in the Texas Delaware oil play. The Company therefore expects to drive an approximate $100 million reduction to REx capital expenditures this year in comparison to initial guidance of $200 million. REx spending is fully contemplated within the Company's total capital spending budget of $1.3 billion or less.

International

Equatorial Guinea production averaged 82,000 net boed for first quarter 2020, including 14,000 net bopd of oil. Unit production costs averaged $2.35 per boe. The previously disclosed major turnaround at the AMPCO methanol facility was completed during first quarter.

Guidance

In light of the substantial change to global commodity prices and the macro environment, the Company has withdrawn previously provided guidance. At the revised capital spending budget of $1.3 billion or less, for full-year 2020, the Company now expects its underlying U.S. crude oil production to decline by approximately 8% on a divestiture-adjusted basis, with a similar percentage decline expected for boe production. Underlying International oil production is expected to decline by approximately 7% on a divestiture-adjusted basis, with a similar percentage decline expected for boe production. Underlying production guidance excludes the potential impact from production curtailments.

On this same underlying basis, full year 2020 U.S. unit production expense is expected to average $4.25/boe to $5.25/boe and full year International unit production expense is expected to average $2.25 to $2.75/boe. These unit production expense guidance ranges are consistent with previously provided guidance.

Marathon Oil currently expects that second quarter U.S. crude oil and boe production will be down sequentially due to curtailments along with natural decline from reduced activity. The Company will continue to assess the need for curtailments on an ongoing basis in response to market conditions.

Corporate

Consistent with a focus to continually reduce its cost structure, Marathon Oil expects to capture annualized cash cost reductions of approximately $350 million relative to its initial 2020 budget. Savings will be realized across numerous expense categories, including production expense, general and administrative expense, shipping and handling expense, and production taxes. Savings are expected to be fully realized on a run-rate basis by the end of this year, with approximately 40% of these savings attributable to the Company's fixed cost structure. For 2020, the Company expects to realize total cash cost savings of approximately $260 million, inclusive of severance and partial year timing impacts.

Cost saving measures include base salary reductions for certain corporate officers, a reduction of Board of Director compensation, and employee and contractor workforce reductions. More specifically, corporate officers, including the Company's President and Chief Executive Officer, the Company's Chief Financial Officer, and other corporate officers will experience temporary base salary reductions of 10% from May 4, 2020 through December 31, 2020. The Company's Board of Directors has also agreed to a temporary reduction of annual cash retainer fees for non-employee directors of 20% for the third and fourth quarter of 2020.

Additionally, broad workforce actions have taken place that reduce the Company's U.S. employee base by 16% and total contractor base by 70%. Such reductions reflect a realignment of Company resources with lower investment levels, while retaining a foundation of essential talent to support an efficient recovery in investment. The Company believes these actions, in addition to other measures, will drive a 17% annualized reduction to corporate general and administrative expense by the end of this year, in comparison to 2019.

Marathon Oil generated first quarter net operating cash flow of $701 million, or $550 million before changes in working capital. The Company made $40 million of dividend payments and executed $85 million of share repurchases during first quarter. In response to dramatic commodity price weakness and the significant uncertainty surrounding the near-term macroeconomic and global oil supply and demand outlook, the Company is temporarily suspending its quarterly dividend payment and its share repurchase program. While returning capital to shareholders remains a key objective for Marathon Oil, the Company is prioritizing financial strength and liquidity preservation in the current uncertain environment. The Company will revisit its return of capital policy in coming quarters, expecting to resume quarterly dividend payments pending improved visibility to normalizing macroeconomic conditions and global oil supply and demand balances.

Total liquidity as of March 31 was approximately $3.8 billion, which consisted of $0.8 billion in cash and cash equivalents and an undrawn revolving credit facility of $3.0 billion. Marathon Oil is investment grade rated at all three primary rating agencies, including recent reviews from Fitch and S&P, and has no significant debt maturities until November of 2022.

The adjustments to net income for first quarter 2020 totaled $(79) million before tax, primarily due to the income impact associated with unrealized gains on derivative instruments, partly offset by the full impairment of remaining goodwill.

Marathon Oil has added to its hedge positions with a primary focus on protecting near-term cash flow. As of May 4, 2020, the Company's second quarter open crude hedge positions include 117,000 bopd of fixed price swaps and two-way collars at a weighted average floor price of $30.33/bbl. Additional protection to second quarter cash flow has been added through fixed price sales agreements. The Company has also added hedges to protect near-term regional basis differentials and NYMEX trade roll exposure.

A slide deck and Quarterly Investor Packet will be posted to the Company's website following this release today, May 6. On Thursday, May 7, at 9:00 a.m. ET, the Company will conduct a question and answer webcast/call, which will include forward-looking information. The live webcast, replay and all related materials will be available at https://www.marathonoil.com/Investors.

Non-GAAP Measures

In analyzing and planning for its business, Marathon Oil supplements its use of GAAP financial measures with non-GAAP financial measures, including adjusted net income, adjusted net income per share and net cash provided by operations before changes in working capital.

Adjusted net income is defined as net income adjusted for gain/loss on dispositions, certain property impairments, unrealized derivative gain/loss on commodity instruments, pension settlement losses and other items that could be considered "non-operating" or "non-core" in nature. Management believes adjusted net income and adjusted net income per share are useful to investors as additional tools to meaningfully represent the Company's operating performance and to compare Marathon to certain competitors.

Management believes net cash provided by operations before changes in working capital is useful to investors to demonstrate the Company's ability to generate cash quarterly or year-to-date by eliminating differences caused by the timing of certain working capital items.

These non-GAAP financial measures reflect an additional way of viewing aspects of the business that, when viewed with GAAP results may provide a more complete understanding of factors and trends affecting the business and are a useful tool to help management and investors make informed decisions about Marathon Oil's financial and operating performance. These measures should not be considered in isolation or as alternatives to their most directly comparable GAAP financial measures. A reconciliation to their most directly comparable GAAP financial measures can be found in our investor package on our website at www.marathonoil.com and in the tables below. Marathon Oil strongly encourages investors to review the Company's consolidated financial statements and publicly filed reports in their entirety and not rely on any single financial measure.

Forward-looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, including without limitation statements regarding the Company's future capital budgets and allocations (including development capital budget and resource play leasing and exploration spend), future performance, corporate-level cash returns on invested capital, business strategy, asset quality, drilling plans, production guidance, cash margins, asset sales and acquisitions, leasing and exploration activities, production, oil growth and other plans and objectives for future operations, are forward-looking statements. Words such as "anticipate," "believe," "could," "estimate," "expect," "forecast," "guidance," "intend," "may," "outlook," "plan," "project," "seek," "should," "target," "will," "would," or similar words may be used to identify forward-looking statements; however, the absence of these words does not mean that the statements are not forward-looking. While the Company believes its assumptions concerning future events are reasonable, a number of factors could cause actual results to differ materially from those projected, including, but not limited to: conditions in the oil and gas industry, including supply/demand levels for crude oil and condensate, NGLs and natural gas and the resulting impact on price; changes in expected reserve or production levels; changes in political or economic conditions in the U.S. and Equatorial Guinea, including changes in foreign currency exchange rates, interest rates, inflation rates; actions taken by the members of the Organization of the Petroleum Exporting Countries (OPEC) and Russia affecting the production and pricing of crude oil; and other global and domestic political, economic or diplomatic developments; capital available for exploration and development; our ability to complete our announced acquisitions on the timeline currently anticipated, if at all; risks related to the Company's hedging activities; voluntary or involuntary curtailments, delays or cancellations of certain drilling activities; well production timing; liability resulting from litigation; drilling and operating risks; lack of, or disruption in, access to storage capacity, pipelines or other transportation methods; availability of drilling rigs, materials and labor, including the costs associated therewith; difficulty in obtaining necessary approvals and permits; non-performance by third parties of contractual obligations; unforeseen hazards such as weather conditions, a health pandemic (including COVID-19), acts of war or terrorist acts and the government or military response thereto; cyber-attacks; changes in safety, health, environmental, tax and other regulations, requirements or initiatives, including initiatives addressing the impact of global climate change, air emissions, or water management; other geological, operating and economic considerations; and the risk factors, forward-looking statements and challenges and uncertainties described in the Company's 2019 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other public filings and press releases, available at www.marathonoil.com. Except as required by law, the Company undertakes no obligation to revise or update any forward-looking statements as a result of new information, future events or otherwise.

Media Relations Contact:
Stephanie Gentry: 713-296-3307

Investor Relations Contacts:
Guy Baber: 713-296-1892
John Reid: 713-296-4380

Consolidated Statements of Income (Unaudited)	Three Months Ended
	Mar. 31			Dec. 31			Mar. 31
(In millions, except per share data)	2020			2019			2019
Revenues and other income:
Revenues from contracts with customers	$	1,024		$	1,233		$	1,200
Net gain (loss) on commodity derivatives	202			(44)			(91)
Income (loss) from equity method investments	(12)			24			11
Net gain (loss) on disposal of assets	9			(6)			42
Other income	7			8			35
Total revenues and other income	1,230			1,215			1,197
Costs and expenses:
Production	160			169			187
Shipping, handling and other operating	144			143			154
Exploration	28			42			59
Depreciation, depletion and amortization	644			616			554
Impairments	97			—			6
Taxes other than income	66			79 Werbung Mehr Nachrichten zur Marathon Oil Aktie kostenlos abonnieren E-Mail-Adresse Bitte überprüfe deine die E-Mail-Adresse. Benachrichtigungen von ARIVA.DE (Mit der Bestellung akzeptierst du die Datenschutzhinweise) -1 Vielen Dank, dass du dich für unseren Newsletter angemeldet hast. Du erhältst in Kürze eine E-Mail mit einem Aktivierungslink. Hinweis: ARIVA.DE veröffentlicht in dieser Rubrik Analysen, Kolumnen und Nachrichten aus verschiedenen Quellen. Die ARIVA.DE AG ist nicht verantwortlich für Inhalte, die erkennbar von Dritten in den „News“-Bereich dieser Webseite eingestellt worden sind, und macht sich diese nicht zu Eigen. Diese Inhalte sind insbesondere durch eine entsprechende „von“-Kennzeichnung unterhalb der Artikelüberschrift und/oder durch den Link „Um den vollständigen Artikel zu lesen, klicken Sie bitte hier.“ erkennbar; verantwortlich für diese Inhalte ist allein der genannte Dritte. Andere Nutzer interessierten sich auch für folgende News 18.04.24 - PR Newswire Finsbury Growth & Income Trust Plc - Transaction in Own Shares 18.04.24 - PR Newswire Norges Bank - Form 8.3 - International Paper Company 18.04.24 - PR Newswire JZ Capital Partners Ltd - Proposed Investment in the Secondary Fund for the Purpose of Investing in Follow-on Flex Pack and Proposed Return of Capital and Notice of Extraordinary General Meeting Auf zur INVEST am 26.+ 27.04.2024    Foto: Landesmesse Stuttgart GmbH - Jetzt kostenloses Ticket sichern! weiterlesen» Anzeige wo-site-teaser-box-16688_site-teaser-box_2024-04-17_09%253A00%253A00_2024-04-22_09%253A00%253A59