No bad stock

Marathon Oil Corporation
CEO : Mr. Lee M. Tillman

Quarterly earnings growth(YoY,%)

Period	Revenue	Operating Income	EPS	Release Date
2022 Q4	21.2% YoY	1.2%	-11.8%	2023-02-16

Lee Tillman says,

Financial Performance and Operational Efficiency Advantage

• MRO delivered $4 billion of adjusted free cash flow generation in 2022.
• The company has the strongest free cash flow yield in its peer group and one of the top five free cash flow yields in the entire S&P 500.
• Their reinvestment rate is 10 percentage points below the S&P 500 average, and they have one of the lowest capital intensities, indicating a well-established capital and operating efficiency advantage relative to a high performing peer group.

Return of Capital Framework

• MRO is returning significant capital back to their shareholders through their cash flow driven return of capital framework.
• The company has returned 55% of their adjusted free cash flow from operations or $3 billion to shareholders in 2022.
• MRO has a 17% shareholder distribution yield, the highest distribution yield on their E&P peer space and one of the top 10 distribution deals in the entire S&P 500.
• Their base dividend remains competitive and sustainable, and they have consistent share repurchases.
• MRO has reduced their share count by 15% in 2022 and 20% since the start of the most recent share repurchase program in October 2021, leading the peer group.
• The company raised their base dividend three times during 2022, bringing their track record to seven increases in the last eight quarters.

Ensign Acquisition

• MRO successfully closed on the Ensign acquisition before year end, materially strengthening their portfolio and enhancing their Eagle Ford scale.
• The acquisition is accretive to key financial metrics, return of capital framework, high-quality inventory life, and offers compelling industrial logic in the core of a basin they know well.
• Integration efforts are progressing well, and initial 2023 results have outperformed their expectations.

2023 Outlook

• MRO’s 2023 budget prioritizes significant free cash flow generation and return of capital to shareholders.
• The reference commodity prices of $80 WTI $3 Henry Hub and $20 TTF expect to generate $2.6 billion of adjusted free cash flow.
• The company expects to return a minimum of $1.8 billion to their shareholders, providing clear visibility to a double-digit shareholder distribution yield.
• A $0.50 per MMBtu change in Henry Hub only impacts their annual cash flow by just over $100 million.
• MRO is even better positioned for 2024 as their unique integrated gas business in Equatorial Guinea will benefit from an increase in global LNG price exposure.
• The company expects a significant uplift to 2024 EBITDA of $500 million to potentially more than $1 billion relative to 2023 due to the current and significant arbitrage between Henry Hub and global LNG prices.

Michael Henderson says,

2023 Capital Pool Overview

• Expected to deliver strong free cash flow and significant return capital to shareholders across a wide band of commodity prices
• Expected $1.9 billion to $2 billion capital budget to deliver $2.6 billion adjusted free cash flow with just over 40% reinvestment paid
• Expect to return at least $1.8 billion of capital to shareholders
• Approximately nine rigs and 3 to 4 frac crews to operate on average for the year
• 60% of total capital spend expected in the first half of the year, with activity and wells to sales weighted to the first two quarters of the year

Oil Production

• Expected maintenance level oil production of approximately 190,000 barrels of oil per day, flat relative to 2022 after incorporating Ensign volumes
• Expect to see an improving production trend for oil into the second and third quarters
• The lower end of annual guidance range is a good starting point for the first quarter total oil production, approximately 185,000 barrels of oil per day

Oil Equivalent Production

• Midpoint of guidance is 395,000 oil equivalent barrels per day, inclusive of a planned second quarter turnaround in EG
• Run a 4-rig program in the Eagle Ford
• Run 3 rigs in average in the Bakken, focusing activity in high-quality hectare area of the play
• Expect to continue improving capital efficiency in the Permian by increasing on average lateral lines to 10,000 feet this year, spudding between 25 and 30 wells this year inclusive of at least one multi-well pad in our Texas Delaware, Meramac Woodford fleet

Integrated Gas Business in Equatorial Guinea

• Lee will provide an update on the Integrated Gas business in Equatorial Guinea

Q & A sessions,

Expected decline in equity income and EBITDA in 2023

• Lower commodity prices, including natural gas, and planned turnaround in Q2 to impact results

Robust outlook for 2024

• Anticipated increase in global LNG price exposure to drive significant financial uplift
• Alba source LNG to be sold into global LNG market from January 1, 2024
• Potential $500 million EBITDA uplift expected at pricing consistent with forward curve or $20 per MMBtu TTF
• Potential EBITDA uplift in excess of $1 billion expected in upside case of $40 per MMBtu TTF in 2024

Inventory Life and Ensign acquisition

• Clustered with 4-5 companies in 12-15 year inventory life ZIP code
• Ensign acquisition accretive to overall enterprise and specifically Eagle Ford metrics
• Continued focus on opportunities that have net positive effect on inventory life

Monetization of unique EG gas assets

• World-class infrastructure well positioned to monetize indigenous EG gas and discovered undeveloped cross-border opportunities
• Commercial framework at EG LNG to be replicated for third-party opportunities with potential for commercial success and upside participation

Balanced portfolio and capital allocation

• 50% oil, 50% gas and NGL portfolio provides natural hedge and broad exposure across commodity deck
• No major shifts in capital allocation expected as result of gas volume
• Very leveraged to oil and driven by profitability, while still being constructive on gas