Marathon Oil Announces $2.2 Billion 2020 Development Capital Budget and Reports Fourth Quarter and Full Year 2019 Results
HOUSTON, Feb. 12, 2020 /PRNewswire/ -- Marathon Oil Corporation (NYSE: MRO) today announced its 2020 capital expenditure budget in addition to its fourth quarter and full year 2019 financial results. The 2020 plan is intended to continue building on the Company's two year track record of execution on its framework for success: corporate returns improvement, sustainable free cash flow generation, and the return of capital to shareholders.
2020 Capital Budget Highlights
-- Disciplined total capital budget of $2.4 billion, down 11% from 2019;
includes development capital budget of $2.2 billion, down 9% from 2019,
and Resource Play Exploration (REx) capital of $200 million
-- Underlying corporate returns improvement to continue outpacing
production growth rates
-- Forecasting sustainable organic free cash flow, post-dividend, at wide
range of commodity prices with organic cash flow breakeven below $50/bbl
WTI
-- Cumulative two-year, post-dividend organic free cash flow of $600
million at flat $50/bbl WTI
-- Cumulative two-year, post-dividend organic free cash flow of $2.1
billion at flat $60/bbl WTI
-- Continue to prioritize return of capital to shareholders with a
competitive dividend and $1.4 billion of share repurchase authorization
outstanding
-- Returned $1.4 billion of capital back to shareholders through
dividends and share repurchases since beginning of 2018,
representing 23% of operating cash flow; funded entirely by organic
free cash flow generation
-- 2020 annual U.S. oil production growth of 6% at the midpoint of
guidance; comparable growth expected in 2021 on comparable development
capital
-- Resource Play Exploration (REx) capital spend of $200 million in 2020
primarily supports exploration and appraisal drilling in the Texas
Delaware oil play and Louisiana Austin Chalk
Full Year and Fourth Quarter 2019 Results
Marathon Oil reported full year 2019 net income of $480 million, or $0.59 per diluted share, which includes the impact of certain items not typically represented in analysts' earnings estimates and that would otherwise affect comparability of results. Adjusted net income was $611 million, or $0.75 per diluted share. Net operating cash flow was $2,749 million, or $2,885 million before changes in working capital.
Marathon Oil reported fourth quarter 2019 net loss of $20 million, or $(0.03) per diluted share, which includes the impact of certain items not typically represented in analysts' earnings estimates and that would otherwise affect comparability of results. Adjusted net income was $55 million, or $0.07 per diluted share. Net operating cash flow was $700 million, or $685 million before changes in working capital.
2019 Highlights
-- Greater than 50% improvement in CROIC from 2017 on a price normalized
basis
-- Generated $410 million of organic free cash flow post-dividend in 2019;
generated $110 million of organic free cash flow during fourth quarter
-- Returned $510 million of capital back to shareholders during 2019,
including execution of $350 million of share repurchases and $160
million of dividends; return of capital funded entirely by organic free
cash flow generation
-- Delivered annual, divestiture-adjusted U.S. oil production growth of 13%
on unchanged $2.4 billion development capital budget; fourth quarter
U.S. oil production averaged 196,000 net bopd, up 9% from prior year
-- Achieved approximately 10% annual reduction in average completed well
cost per lateral foot and approximately 15% annual reduction in U.S.
unit production expense during 2019
-- Simplified International portfolio to free cash flow generating
integrated business in Equatorial Guinea; divested U.K. and Kurdistan
eliminating over $970 million of asset retirement obligations
-- Enhanced resource base with addition of over 1,000 gross operated
locations through success across all elements of returns focused
resource capture framework; highlighted by organic enhancement in the
Eagle Ford and Bakken, REx success in new Texas Delaware oil play, and
accretive Eagle Ford bolt-on that closed in 2019
-- Investment grade credit rating at all primary rating agencies with
conservative leverage metrics and low cash flow breakeven oil price
-- Subsequent to quarter end, opportunistically added to hedges that now
cover approximately 40% of 2020 annual U.S. crude oil production
guidance at weighted average floor price of $55.00/bbl and weighted
average ceiling price of $65.25/bbl
"2019 was another year of differentiated execution for Marathon Oil as we comprehensively delivered on our framework for success for the second year in a row," said Chairman, President and CEO Lee Tillman. "We continue to improve our underlying corporate returns, we've delivered positive organic free cash flow for eight consecutive quarters, and we've returned over 20% of our cash flow from operations back to our shareholders since the beginning of 2018. We improved our capital efficiency in 2019 through meaningful reductions in both completed well cost and unit production expense, and further optimized and simplified our portfolio. We also enhanced our resource base through success across all elements of our comprehensive resource capture framework, adding over three years of inventory through organic enhancement, Resource Play Exploration, and bolt-on acquisitions and trades. Looking ahead to 2020 and beyond, our focus on differentiated execution will remain unchanged. We'll continue to be guided by our unwavering commitment to capital discipline and sustainability. This focus, along with our low organic free cash flow breakeven of $47/bbl in 2020, and even lower in 2021, will position Marathon Oil for success across a wide range of commodity price environments."
United States (U.S.)
U.S. production averaged 328,000 net barrels of oil equivalent per day (boed) for fourth quarter 2019, including 196,000 net barrels of oil per day (bopd). Oil production was up 9% from the year-ago quarter on a divestiture-adjusted basis. U.S. unit production costs were $5.13 per barrel of oil equivalent (boe) for fourth quarter with full year unit production costs under $5.00 per boe and down approximately 15% compared to the prior year.
EAGLE FORD: Marathon Oil's Eagle Ford production averaged 105,000 net boed for fourth quarter 2019. Oil production averaged 67,000 net bopd, as oil mix rose to 63% from 57% during the year-ago quarter. The Company brought 29 gross Company-operated wells to sales across Karnes, Atascosa and Gonzales counties with strong initial production rates. The third and fourth quarters of 2019 represented the two strongest quarters in the history of the asset on a 30-day initial production (IP) basis for oil. Completed well cost during fourth quarter averaged $5.1 million at an average lateral length of 6,400 feet. Fourth quarter average completed well cost per lateral foot was down 8% from the 2018 average.
BAKKEN: Marathon Oil's Bakken production averaged 108,000 net boed in the fourth quarter 2019. Oil production averaged 86,000 net bopd. The Company brought 16 gross Company-operated wells to sales across the Myrmidon and Hector areas. The asset established new quarterly records for both drilling feet per day and completion stages per day during fourth quarter. The Company continues to deliver impressive capital efficiency and accretive financial returns, highlighted by a recent four-well pad in Myrmidon that achieved an average 30-day IP rate of 3,160 BOED (79% oil) at an average completed well cost of $4.3 million. The 16 gross Company-operated wells to sales during fourth quarter had an average completed well cost below $5 million, down 17% from the 2018 average.
OKLAHOMA: Marathon Oil's Oklahoma production averaged 82,000 net boed in the fourth quarter 2019. Oil production averaged 24,000 net bopd, with oil mix rising to 29% from 24% during the year-ago quarter. The Company brought 14 gross Company-operated wells to sales, including nine wells targeting the Springer formation in the SCOOP. The nine Springer wells are demonstrating basin-leading productivity, with an average 30-day IP rate of 2,100 boed (79% oil). With a more concentrated program and strong production and cost performance, the Oklahoma asset successfully transitioned to positive free cash flow generation during fourth quarter.
NORTHERN DELAWARE: Marathon Oil's Northern Delaware production averaged 28,000 net boed in the fourth quarter 2019. Oil production averaged 17,000 net bopd. The Company brought 13 gross Company-operated wells to sales, with a focus on the delineation of its Red Hills acreage. Since the transition to Red Hills delineation during fourth quarter, the Company has brought online nine Upper Wolfcamp wells with an average 30-day IP rate of 1,500 boed (74% oil) and four Bone Spring wells with an average 30-day IP rate of 2,270 boed (76% oil). The Company continues to advance learnings, reduce its cost structure, and improve margins, exiting the year with approximately 90% of water and oil on pipe.
Resource Capture
Fourth quarter REx capital expenditures totaled $168 million. Expenditures included two bolt-on acquisitions totaling $106 million that cored up the Company's 60,000 net acres of contiguous leasehold in the Texas Delaware prospective for stacked Woodford and Meramec oil targets. The Company's position in this new play was captured at an entry cost of less than $2,400 per acre. Full year 2019 REx capital expenditures totaled $277 million, consistent with prior guidance.
The Company's 2020 REx capital expenditure budget of $200 million reflects a transition from acreage capture to exploration and appraisal drilling in two potential oil plays of scale. In the Texas Delaware, the Company's third Woodford exploration well is on flowback, with early rates consistent with expectations. The Company has now brought online three Woodford exploration wells with average oil mix of 60%. In the Western Fairway of the Louisiana Austin Chalk, the Company's first exploration well is on flowback and cleaning up with recent oil rates at 1,200 bopd (2,650 boed). The Company recently spud its second Louisiana Austin Chalk exploration well.
Outside of the REx program, in the fourth quarter Marathon Oil completed a bolt-on acquisition for approximately 18,000 contiguous and largely undeveloped net acres adjacent to the Company's existing northeast Eagle Ford leasehold. The $191 million bolt-on acquisition included production of approximately 7,000 net boed (approx. 30% oil), associated midstream infrastructure, and cores up a 70-well, long lateral development with potential upside. The transaction had an effective date of Nov. 1, 2019, and closed on Dec. 31, 2019.
International
Equatorial Guinea production averaged 85,000 net boed for fourth quarter 2019, including 15,000 net bopd of oil. Unit production costs averaged $1.82 per boe.
Cash Flow and Development Capital
Net cash provided by operations was $700 million during fourth quarter 2019, or $685 million before changes in working capital.
Fourth quarter development capital expenditures were $556 million, bringing full year development capital to $2.4 billion, consistent with the original 2019 budget.
Organic free cash flow during fourth quarter totaled $111 million post-dividend, bringing full year organic free cash flow generation to $409 million.
Production Guidance
For full year 2020, the Company forecasts total U.S. oil production growth of 6% at the midpoint of guidance. Although oil production will not be meaningfully affected, full year 2020 International gas production will be impacted by scheduled maintenance activity in Equatorial Guinea during fourth quarter. Full year total Company oil growth is expected to outpace boe production growth, consistent with a focus on corporate returns.
First quarter 2020 U.S. oil production guidance is 192,000 to 202,000 net bopd. First quarter 2020 International oil production guidance is 12,000 to 16,000 net bopd.
Corporate
The Company executed $350 million of share repurchases during 2019, returning additional capital to shareholders beyond the $162 million of 2019 dividend payments. Since the beginning of 2018, Marathon Oil has repurchased $1.05 billion of its own shares, representing approximately 7% of its outstanding share count, funded entirely by post-dividend organic free cash flow.
Total liquidity as of Dec. 31 was approximately $3.9 billion, which consisted of $0.9 billion in cash and cash equivalents and an undrawn revolving credit facility of $3.0 billion.
The adjustments to net income for fourth quarter 2019 totaled $75 million before tax, primarily due to the income impact associated with unrealized losses on derivative instruments. Adjusted net income in the quarter was negatively impacted primarily by one-off and timing impacts totaling approximately $37 million.
As of Feb. 10, 2020, the Company's open crude hedge positions for 2020 include an average of 80,000 bopd at a weighted average floor price of $55.00/bbl and a weighted average ceiling price of $65.25/bbl, hedged through three-way collars.
A slide deck and Quarterly Investor Packet will be posted to the Company's website following this release today, Feb. 12. On Thursday, Feb. 13, 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, organic free cash flow, net cash provided by operations before changes in working capital and organic finding and development costs.
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.
Organic free cash flow is defined as net cash provided by operating activities adjusted for working capital, exploration costs (other than well costs), development capital expenditures, dividends, and EG LNG return of capital. Management believes this is useful to investors as a measure of the Company's ability to fund its capital expenditure programs and dividend payments, service debt, and other distributions to stockholders. 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, organic free cash flow, free cash flow, 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 and the resulting impact on price; changes in expected reserve or production levels; changes in political or economic conditions in Equatorial Guinea, including changes in foreign currency exchange rates, interest rates, inflation rates, and global and domestic market conditions; 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; well production timing; drilling and operating risks; 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, 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, flaring, or water disposal; other geological, operating and economic considerations; and the risk factors, forward-looking statements and challenges and uncertainties described in the Company's 2018 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:
Lee Warren: 713-296-4103
Investor Relations Contacts:
Guy Baber: 713-296-1892
John Reid: 713-296-4380
Consolidated Statements of Income (Unaudited)
Three Months Ended
Year Ended
Dec. 31 Sept. 30 Dec. 31 Dec. 31 Dec. 31
(In millions, except per share data) 2019 2019 2018 2019 2018
---
Revenues and other income:
Revenues from contracts with customers $
1,233 $
1,249 $
1,380 $
5,063 $
5,902
Net gain (loss) on commodity derivatives (44) 47 310 (72) (14)
Income from equity method investments 24 21 64 87 225
Net gain (loss) on disposal of assets (6) 22 (4) 50 319
Other income 8 6 15 62 150
Total revenues and other income 1,215 1,345 1,765 5,190 6,582
Costs and expenses:
Production 169 163 205 712 842
Shipping, handling and other operating 143 138 167 605 575
Exploration 42 22 116 149 289
Depreciation, depletion and amortization 616 622 613 2,397 2,441
Impairments 25 24 75
Taxes other than income 79 81 84 311 299
General and administrative 93 82 88 356 394
Total costs and expenses 1,142 1,108 1,298 4,554 4,915
Income from operations 73 237 467 636 1,667
Net interest and other (67) (64) (58) (244) (226)
Other net periodic benefit costs (6) 2 (3) 3 (14)
Loss on early extinguishment of debt (3) (3)
Income (loss) before income taxes (3) 175 406 392 1,427
Provision (benefit) for income taxes 17 10 16 (88) 331
Net income (loss) $
(20) $
165 $
390 $
480 $
1,096
Adjusted Net Income (Loss)
Net income (loss) $
(20) $
165 $
390 480 1,096
Adjustments for special items (pre-tax):
Net (gain) loss on disposal of assets 6 (22) 4 (50) (319)
Proved property impairments 25 24 75
Exploratory dry well costs, unproved property impairments and 40 40
other
Pension settlement 10 5 12 21
Unrealized (gain) loss on derivative instruments 55 (33) (336) 124 (267)
Reduction of U.K. ARO estimated costs (121)
Other 4 1 6 28 6
Provision (benefit) for income taxes related to special items (13) (7) 70
Adjustments for special items 75 (54) (269) 131 (495)
Adjusted net income (a) $
55 $
111 $
121 $
611 $
601
---
Per diluted share:
Net income (loss) $
(0.03) $
0.21 $
0.47 $
0.59 $
1.29
Adjusted net income (a) $
0.07 $
0.14 $
0.15 $
0.75 $
0.71
Weighted average diluted shares 800 803 829 810 847
---
(a) Non-GAAP financial measure.
See "Non-GAAP Measures"
above for further
discussion.
Supplemental Statistics (Unaudited)
Three Months Ended Year Ended
Dec. 31 Sept. 30 Dec. 31 Dec. 31 Dec. 31
(In millions) 2019 2019 2018 2019 2018
---
Segment income
United States $
148 $
180 $
159 $
675 $
608
International 33 43 83 233 473
Not allocated to segments (201) (58) 148 (428) 15
Net income (loss) $
(20) $
165 $
390 $
480 $
1,096
Exploration expenses
United States $
42 $
22 $
76 $
149 $
246
International 3
Not allocated to segments 40 40
Total $
42 $
22 $
116 $
149 $
289
Cash flows
Net cash provided by operating activities $
700 $
737 $
855 $
2,749 $
3,234
Minus: changes in working capital 15 (20) 68 (136) 23
Net cash provided by operations before changes in working capital (a) $
685 $
757 $
787 $
2,885 $
3,211
---
Cash additions to property, plant and equipment $
(616) $
(672) $
(684) $
(2,550) $
(2,753)
---
(a) Non-GAAP financial measure.
See "Non-GAAP Measures"
above for further
discussion.
Supplemental Three Months
Statistics Ended
(Unaudited) Year Ended
(In
millions) Dec. 31, 2019 Dec. 31, 2019
---
Organic
Free
Cash
Flow
Net
cash
provided
by
operating
activities $
700 $
2,749
Adjustments:
Changes
in
working
capital (15) 136
Exploration
costs
other
than
well
costs 13 35
Development
capital
expenditures (556) (2,407)
Dividends (40) (162)
EG
LNG
return
of
capital
and
other 9 58
Organic
free
cash
flow
(a) $
111 $
409
---
(a) Non-GAAP financial measure.
See "Non-GAAP Measures"
above for further
discussion.
Supplemental
Statistics
(Unaudited) Three Months Ended Year Ended
Dec. 31 Sept. 30 Dec. 31 Dec. 31 Dec. 31
(mboed) 2019 2019 2018 2019 2018
---
Net production
United States 328 339 306 324 298
International (a) 85 87 105 92 114
Total net production 413 426 411 416 412
---
(a) The Company closed on the sale
of its Libya subsidiary in the
first quarter of 2018 and as
such, international net
production volumes for the
year ended December 31, 2018
excludes 7 mboed related to
Libya.
Supplemental
Statistics
(Unaudited) Three Months Ended Year Ended
Dec. 31 Sept. 30 Dec. 31 Dec. 31 Dec. 31
(mboed) 2019 2019 2018 2019 2018
---
Net production
United States 328 339 306 324 298
Less: Divestitures (a) 1 2 1 6
Total divestiture-
adjusted United
States 328 338 304 323 292
International 85 87 105 92 114
Less: Divestitures (b) 12 7 16
Total divestiture-
adjusted
International 85 87 93 85 98
Total net production
divestiture-adjusted
(a)(b) 413 425 397 408 390
---
(a) The Company closed on the sale of
certain United States non-core
conventional assets in third
quarter 2018, first quarter 2019,
and third quarter 2019. The
production volumes relating to
these dispositions have been
removed from all corresponding
prior periods to derive the
divestiture-adjusted United
States net production.
(b) Divestitures include volumes
associated with the following: (1)
the sale of our U.K. business,
which closed in third quarter
2019, (2) the sale of our non-
operated interest in the Atrush
block in Kurdistan, which closed
in second quarter 2019, (3) the
sale of our non-operated interest
in the Sarsang block in Kurdistan,
which closed in third quarter
2018, and (4) the sale of Libya,
which closed in the first quarter
of 2018. These production volumes
have been removed from historical
periods above in arriving at total
divestiture-adjusted
International net production.
Supplemental Statistics (Unaudited) Three Months Ended Year Ended
Dec. 31 Sept. 30 Dec. 31 Dec. 31 Dec. 31
2019 2019 2018 2019 2018
United States - net sales volumes
Crude oil and condensate (mbbld) 196 201 180 190 171
Eagle Ford 67 63 62 63 63
Bakken 86 92 82 86 71
Oklahoma 24 23 16 21 18
Northern Delaware 16 18 14 16 12
Other United States (a) 3 5 6 4 7
Natural gas liquids (mbbld) 58 61 55 60 55
Eagle Ford 18 22 24 22 23
Bakken 12 9 6 9 7
Oklahoma 22 23 19 22 20
Northern Delaware 5 6 5 6 4
Other United States (a) 1 1 1 1 1
Natural gas (mmcfd) 444 462 422 438 429
Eagle Ford 121 134 127 130 129
Bakken 59 46 35 46 35
Oklahoma 216 229 192 210 213
Northern Delaware 41 36 42 36 26
Other United States (a) 7 17 26 16 26
Total United States (mboed) 328 339 305 323 298
International - net sales volumes
Crude oil and condensate (mbbld) 13 16 29 20 39
Equatorial Guinea 13 16 16 15 17
United Kingdom (b) 10 4 11
Libya (c) 7
Other International (d) 3 1 4
Natural gas liquids (mbbld) 9 10 10 9 11
Equatorial Guinea 9 10 10 9 11
Natural gas (mmcfd) 363 373 411 371 435
Equatorial Guinea 363 373 400 365 416
United Kingdom (b)(e) 11 6 14
Libya (c) 5
Total International (mboed) 83 88 108 91 122
Total Company - net sales volumes (mboed) 411 427 413 414 420
---
Net sales volumes of equity method investees
LNG (mtd) 5,180 4,590 5,384 4,933 5,805
Methanol (mtd) 1,153 1,036 1,119 1,082 1,241
Condensate and LPG (boed) 11,832 11,586 15,071 11,104 13,034
---
(a) Includes sales volumes from the
sale of certain non-core
proved properties in our
United States segment.
(b) The Company closed on the sale
of its U.K. business on July
1, 2019.
(c) The Company closed on the sale
of its Libya subsidiary in the
first quarter of 2018.
(d) Other International includes
volumes for the Atrush block
in Kurdistan, which was sold
in the second quarter of 2019.
(e) Includes natural gas acquired
for injection and subsequent
resale.
Supplemental Statistics (Unaudited)
Three Months Ended Year Ended
Dec. 31 Sept. 30 Dec. 31 Dec. 31 Dec. 31
2019 2019 2018 2019 2018
United States - average price realizations (a)
Crude oil and condensate ($ per bbl) (b) $
54.83 $
55.09 $
56.01 $
55.80 $
63.11
Eagle Ford 57.63 57.99 63.27 59.06 67.19
Bakken 51.98 53.48 51.11 53.65 60.39
Oklahoma 55.49 55.09 58.42 55.78 64.63
Northern Delaware 57.08 54.16 48.04 54.04 55.23
Other United States (c) 56.26 51.74 60.41 57.47 63.11
Natural gas liquids ($ per bbl) $
15.47 $
11.37 $
24.71 $
14.22 $
24.54
Eagle Ford 15.72 11.40 21.46 14.27 24.08
Bakken 13.12 7.16 19.01 13.48 24.98
Oklahoma 17.30 13.20 29.55 14.66 24.38
Northern Delaware 12.35 10.02 28.99 13.15 26.30
Other United States (c) 13.98 15.21 26.68 16.43 28.63
Natural gas ($ per mcf) $
2.10 $
1.92 $
3.27 $
2.18 $
2.65
Eagle Ford 2.40 2.29 3.69 2.54 3.09
Bakken 2.31 1.83 3.46 2.34 2.95
Oklahoma 1.95 1.75 3.22 2.04 2.38
Northern Delaware 1.72 0.84 1.80 1.17 2.08
Other United States (c) 1.89 3.69 3.65 2.81 2.73
International - average price realizations
Crude oil and condensate ($ per bbl) $
48.26 $
46.04 $
58.25 $
53.09 $
64.25
Equatorial Guinea 48.26 46.04 46.35 48.99 55.28
United Kingdom (d) 78.49 67.99 74.34
Libya (e) 73.75
Other International (f) 52.52 51.24 58.89
Natural gas liquids ($ per bbl) $
1.00 $
1.00 $
2.25 $
1.40 $
2.27
Equatorial Guinea (g) 1.00 1.00 1.00 1.00 1.00
United Kingdom (d) 33.44 37.88 41.66
Natural gas ($ per mcf) $
0.24 $
0.24 $
0.49 $
0.33 $
0.54
Equatorial Guinea (g) 0.24 0.24 0.24 0.24 0.24
United Kingdom (d) 9.13 5.67 8.03
Libya (e) 4.57
Benchmark
WTI crude oil (per bbl) $
56.87 $
56.44 $
59.34 $
57.04 $
64.90
Brent (Europe) crude oil (per bbl) (h) $
63.41 $
61.93 $
67.71 $
64.36 $
71.06
Mont Belvieu NGLs (per bbl) (i) $
17.15 $
15.16 $
25.09 $
17.81 $
26.75
Henry Hub natural gas (per mmbtu) (j) $
2.50 $
2.23 $
3.64 $
2.63 $
3.09
---
(a) Excludes gains or losses on
commodity derivative instruments.
(b) Inclusion of realized gains
(losses) on crude oil derivative
instruments would have affected
average price realizations by
$0.58, $0.72, $(1.50), $0.67, and
$(4.60), for the fourth and third
quarter 2019, the fourth quarter
2018, and the years 2019 and 2018,
respectively.
(c) Includes sales volumes from the
sale of certain non-core proved
properties in our United States
segment.
(d) The Company closed on the sale of
its U.K. business on July 1, 2019.
(e) The Company closed on the sale of
its Libya subsidiary in the first
quarter of 2018.
(f) Other International includes
volumes for the Atrush block in
Kurdistan, which was sold in the
second quarter of 2019.
(g) Represents fixed prices under long-
term contracts with Alba Plant
LLC, Atlantic Methanol Production
Company LLC and/or Equatorial
Guinea LNG Holdings Limited, which
are equity method investees. The
Alba Plant LLC processes the NGLs
and then sells secondary
condensate, propane, and butane at
market prices. Marathon Oil
includes its share of income from
each of these equity method
investees in the International
segment.
(h) Average of monthly prices obtained
from Energy Information
Administration website.
(i) Bloomberg Finance LLP: Y-grade Mix
NGL of 55% ethane, 25% propane, 5%
butane, 8% isobutane and 7%
natural gasoline.
(j) Settlement date average per mmbtu.
Q1 2020 Production Oil Production (mbbld) Equivalent Production (mboed)
Guidance
---
Q1 2020 Q4 2019 Q1 2019 Q1 2020 Q4 2019 Q1 2019
---
Low High Divestiture Divestiture Low High Divestiture Divestiture
-Adjusted -Adjusted -Adjusted -Adjusted
Net production
United States 192 202 196 176 325 335 328 294
International 12 16 15 14 75 85 85 78
Total net production 204 218 211 190 400 420 413 372
---
Estimated Net Proved Reserves (mmboe) U.S. Int'l Total
---
As of December 31, 2018 1,078 203 1,281
Additions 91 91
Revisions (23) 24 1
Acquisitions 18 18
Dispositions (11) (24) (35)
Production (117) (34) (151)
As of December 31, 2019 1,036 169 1,205
Organic Changes in Reserves (excluding dispositions) (mmboe) 110
Production (excluding dispositions) (mmboe) 149
---
Reserve Replacement Ratio (excluding dispositions) 74
%
Organic Changes in Reserves (excluding dispositions and acquisitions) (mmboe) 92
Production (excluding dispositions) (mmboe) 149
---
Organic Reserve Replacement Ratio (excluding dispositions and acquisitions) 62
%
Finding Costs (In millions, except as indicated) 2019
---
Property Acquisition Costs - Proved $
93
Property Acquisition Costs - Unproved 282
Exploration 862
Development 1,699
---
Total Company - Costs Incurred $
2,936
Cost Incurred $
2,936
Organic Changes in Reserves (excluding dispositions) (mmboe) 110
---
Finding and Development Costs per BOE $
26.69
Costs Incurred $
2,936
Property Acquisition Costs (Proved and Unproved) (375)
Capitalized Asset Retirement Costs (80)
---
Organic Finding and Development Costs (a) $
2,481
Organic Changes in Reserves (excluding dispositions and acquisitions) (mmboe) 92
---
Organic Finding and Development Costs per BOE (a) $
26.97
---
(a) Non-GAAP financial measure.
See "Non-GAAP Measures"
above for further
discussion.
The following table sets forth outstanding derivative contracts as of February 10, 2020, and the weighted average prices for those contracts:
2020 2021
Crude Oil First Second Third Fourth Full Year
Quarter Quarter Quarter Quarter
---
NYMEX WTI Three-Way Collars (a)
Volume (Bbls/day) 80,000 80,000 80,000 80,000
Weighted average price per Bbl:
Ceiling $
66.12 $
66.12 $
64.40 $
64.40
$
Floor $
55.00 $
55.00 $
55.00 $
55.00
$
Sold put $
47.75 $
47.75 $
48.00 $
48.00
$
Basis Swaps - Argus WTI Midland (b)
Volume (Bbls/day) 15,000 15,000 15,000 15,000
Weighted average price per Bbl $
(0.94) $
(0.94) $
(0.94) $
(0.94)
$
Basis Swaps - NYMEX WTI / ICE Brent (c)
Volume (Bbls/day) 5,000 5,000 5,000 5,000 808
Weighted average price per Bbl $
(7.24) $
(7.24) $
(7.24) $
(7.24) $
(7.24)
Natural Gas
---
Three-Way Collars
Volume (MMBtu/day) 100,000
Weighted average price per MMBtu:
Ceiling $
3.32
$
$
$
$
Floor $
2.75
$
$
$
$
Sold put $
2.25
$
$
$
$
---
(a) Included in the table above, are
20,000 bbls/day of three-way
collars for 2020 with a ceiling
price of $66.37, a floor price of
$55.00, and a sold put price of
$48.00 which were entered into
between January 1, 2020 and February
10, 2020.
(b) The basis differential price is
indexed against Argus WTI Midland.
(c) The basis differential price is
indexed against Intercontinental
Exchange ("ICE") Brent and NYMEX
WTI.
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SOURCE Marathon Oil Corporation
