Delivered $1.7
Billion of Shareholder Returns and $500 Million of Gross Debt
Reduction
HOUSTON, Feb. 21,
2024 /PRNewswire/ -- Marathon Oil Corporation
(NYSE: MRO) reported full-year 2023 net income of $1,554 million, or $2.56 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 $1,587
million, or $2.61 per diluted
share. Net operating cash flow was $4,087
million, or $4,187 million
before changes in working capital (adjusted CFO). Free cash flow
was $2,029 million, or $2,182 million before changes in working capital
and including Equatorial Guinea
(E.G.) distributions (adjusted FCF).
Marathon Oil reported fourth quarter 2023 net income of
$397 million, or $0.68 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 $406
million, or $0.69 per diluted
share. Net operating cash flow was $1,080
million, and adjusted CFO was $980
million. Free cash flow was $681
million, and adjusted FCF was $624
million.
Highlights
- Returned 41% of adjusted CFO to shareholders in 2023,
consistent with Return of Capital Framework
- Distributed $1.7 billion to
shareholders, representing >12% distribution yield on current
market capitalization; includes $417
million of shareholder returns during fourth
quarter
- Executed $1.5 billion of
share repurchases, driving 9% reduction to outstanding share count;
includes $352 million of share
repurchases during fourth quarter
- Raised per share base dividend 22% from year-end 2022
level, with no impact to peer-leading post-dividend free cash flow
breakeven
- Reduced gross debt by $500
million in 2023, further strengthening investment grade
balance sheet; includes $300 million
of gross debt reduction during fourth quarter
- Delivered strong full-year 2023 and fourth quarter
financial and operational results
- Full-year 2023 adjusted FCF of $2.2 billion, including $624 million during fourth quarter
- Full-year 2023 oil production of 190,000 net bopd,
consistent with midpoint of annual guidance; includes fourth
quarter oil production of 189,000 net bopd
- Full-year 2023 oil-equivalent production of 405,000 net
boed, consistent with high end of annual guidance; includes fourth
quarter oil-equivalent production of 404,000 net boed
- Achieved another year of comprehensive safety and
environmental excellence
- Reported record annual safety performance, as measured
by TRIR1
- Achieved 2025 GHG Intensity reduction goal of
50%2 two years ahead of schedule
- Improved total Company gas capture rate to
99.5%
- Announced 2024 capital budget that again prioritizes
corporate returns, FCF generation, and meaningful return of capital
to shareholders
- Expect $2.0 billion capital
program to deliver 190,000 net bopd at midpoints of respective
annual guidance ranges
- Expect to return at least 40% of adjusted CFO to
shareholders in 2024 under differentiated CFO-driven framework that
continues to provide investors with first call on cash
flow
"2023 marked another year of impressive delivery against
every dimension of our Framework for Success," said chairman,
president, and CEO Lee Tillman. "We
generated $2.2 billion of adjusted
free cash flow, returned $1.7 billion
of capital back to our shareholders, and reduced gross debt by
$500 million, further improving our
investment grade balance sheet. Within our high-quality E&P
peer group, we delivered among the best free cash flow and
shareholder distribution yields, the most growth in production per
share, the strongest capital efficiency, and the lowest
reinvestment rate. These results are a strong testament to the
quality of our multi-basin portfolio, the discipline in our capital
allocation framework, and the hard work of all our employees. Most
importantly, we delivered these outstanding results while holding
true to our core values: reporting a record year for safety
performance, achieving our 2025 GHG intensity reduction goal two
years ahead of schedule, and further improving our natural gas
capture."
"Looking to 2024 and beyond," continued Mr. Tillman, "I
expect more of the same from our Company: strong free cash flow
generation, underlying growth in per share metrics, compelling
return of capital to shareholders, and ongoing balance sheet
enhancement. We believe the combination of our consistent,
disciplined strategy; our high-quality U.S. multi-basin portfolio;
and our unique E.G. integrated gas business positions us to
sustainably compete not only at the top of our energy peer group,
but with the very best companies in the S&P
500."
2024 Capital Budget and
Guidance
Marathon Oil announced a $1.9 billion to $2.1
billion capital expenditure budget for 2024, fully
consistent with the Company's disciplined capital allocation
framework that prioritizes corporate returns and FCF
generation.
The 2024 program is expected to deliver approximately
$1.9 billion of FCF, assuming
$75/bbl WTI, $2.50/MMBtu Henry Hub, and $10/MMBtu TTF. 2024 cash flow sensitivities to
WTI, Henry Hub, and TTF commodity prices are provided in the
Company's fourth quarter and full-year 2023 investor
presentation.
Marathon Oil's 2024 financial guidance assumes Alternative
Minimum Tax (AMT) cash tax payments for its U.S. domestic
operations at 15% of pre-tax income, partially offset by
approximately $150 million of
expected research and development (R&D) tax credits.
Marathon Oil expects to deliver total Company oil
production of 190,000 net bopd at the midpoint of its 2024 guidance
range. Although winter weather is expected to lower first quarter
production by about 4,000 net bopd, primarily concentrated in the
Bakken, the Company expects no impact to its flat oil production
guidance for the full year. Marathon Oil expects to continue
driving significant growth in oil production per share. The
underlying capital efficiency and bottom line financial outcomes of
the 2024 capital program are again expected to benchmark at the top
of Marathon Oil's high-quality E&P peer group.
More detailed highlights of the 2024 capital program
include the following:
- Expect 5% to 10% fewer net wells to sales in 2024 to
deliver flat year-on-year total oil production as the Company
optimizes well mix to maximize corporate returns and FCF
generation
- 2024 well productivity expected to be comparable to 2023,
with average lateral length increasing by ~5% and capital
efficiency improving
- Capital spending again approximately 60% weighted to
first half of year, driving higher production during second
half of year
- Approximately 70% of total capital allocated to the Eagle
Ford and Bakken
- Higher year-on-year capital spending in the Permian,
accounting for majority of remaining Resource Play capital
spend
- Modest E.G. capital spend limited to long-lead items in
support of up to two potential Alba infill wells in
2025
- Higher year-on-year non-development capital spending,
primarily related to environmental and emissions reduction
efforts
Return of Capital Overview
Marathon
Oil's percentage of CFO Return of Capital Framework provides clear
visibility to shareholder returns, ensuring the shareholder gets
the first call on cash flow generation. In a $60/bbl WTI or higher price environment, the
Company targets returning a minimum of 40% of adjusted CFO to
equity investors.
During 2023, Marathon Oil returned 41% of adjusted CFO, or
$1,724 million, to equity holders in
the form of base dividends and share repurchases, representing a
total shareholder distribution yield of >12% on the Company's
current market capitalization. Marathon Oil executed $1,473 million of share repurchases during 2023,
driving a 9% reduction to outstanding share count and contributing
to significant underlying improvement in per share metrics. Since
Marathon Oil re-initiated its share repurchase program in
October 2021, the Company has reduced
its outstanding share count by more than 27%.
While delivering on its Return of Capital Framework in
2023, Marathon Oil also reduced gross debt by $500 million, including a $300 million prepayment on its Term Loan Facility
during fourth quarter.
For 2024, consistent with its Return of Capital Framework,
Marathon Oil expects to return at least 40% of adjusted CFO to
shareholders, equating to a minimum shareholder return of
$1.6 billion and providing
shareholders visibility to a double-digit distribution yield
(assuming $75/bbl WTI, $2.50/MMBtu Henry Hub, and $10/MMBtu TTF commodity pricing). While
prioritizing its Return of Capital Framework, the Company expects
to continue improving its investment grade balance sheet through
further gross debt reduction.
4Q23 Operations
UNITED STATES (U.S.): U.S. production averaged
352,000 net barrels of oil equivalent per day (boed) for fourth
quarter 2023, including 180,000 net barrels of oil per day (bopd).
U.S. unit production costs averaged $6.51 per boe fourth quarter, with the increase
from the prior quarter primarily due to lower sales volumes on
fewer net wells to sales and a higher level of opportunistic
workover activity. The Company expects average 2024 U.S. unit
production costs to be consistent with the full year 2023
average.
The Company brought a total of 32 gross Company-operated
wells to sales during fourth quarter, including five wells that
came online near the end of December. Additionally, the Company
brought a total of 10 joint venture wells to sales during fourth
quarter.
Marathon Oil's fourth quarter production in the Eagle Ford
averaged 144,000 net boed, including 71,000 net bopd, with four
gross Company-operated wells to sales. In the Bakken, production
averaged 118,000 net boed, including 76,000 net bopd, with 23
gross Company-operated wells to sales. Permian production averaged
39,000 net boed, including 21,000 net bopd, with five gross
company-operated wells to sales and four joint venture wells to
sales. Oklahoma production
averaged 49,000 net boed, including 10,000 net bopd, with six joint
venture wells to sales.
INTERNATIONAL: E.G. production averaged 52,000 net boed
for fourth quarter, including 9,000 net bopd. Sales volumes
averaged 48,000 net boed, including 5,000 net bopd, as the Company
was underlifted during the quarter. Unit production costs averaged
$2.30 per boe. Fourth quarter net
income from equity method investees totaled $45 million, while total cash distributions from
equity method companies amounted to $33
million, including $29 million
of dividends. Fourth quarter represented the final quarter under
the legacy Henry Hub-linked LNG sales contract. Effective
Jan. 1, 2024, pricing is global
LNG-linked. The Company has successfully contracted all 2024 LNG
cargoes at a global LNG price linkage and recently lifted its first
cargo under these new contractual terms.
Corporate Overview
2023 RESERVES:
Year-end 2023 proved reserves totaled 1,320 million barrels of oil
equivalent (mmboe), comparable to year-end 2022 proved reserves,
despite lower SEC commodity pricing. 2023 reserve additions were
primarily attributable to expansion of proved areas and 5-year plan
optimization and effectively replaced produced volumes. Excluding
the impacts of SEC commodity pricing, reserve replacement totaled
over 120%. Oil and liquids accounted for 49% and 73% of the
Company's year-end 2023 proved reserves, respectively.
BALANCE SHEET AND LIQUIDITY: Marathon Oil ended fourth
quarter with total liquidity of $2.3
billion, including $155
million of cash and cash equivalents and $2.1 billion of available borrowings on the
Company's revolving credit facility that matures in 2027. All three
primary credit rating agencies continue to rate Marathon Oil
investment grade.
FOURTH QUARTER ADJUSTMENTS TO NET INCOME: The adjustments
to net income for fourth quarter totaled $9
million.
Safety, Environmental, Social, and Governance
Excellence
SAFETY: Marathon Oil holds safety as
a core value and strives to provide safe, healthy, and secure
workplaces. During 2023, Marathon Oil achieved a record-low annual
Total Recordable Incident Rate (TRIR) of 0.21 for employees and
contractors. Marathon Oil's safety performance remains a key
element of its executive compensation scorecard, underscoring the
Company's commitment to keeping its employees and contractors
safe.
ENVIRONMENTAL: Marathon Oil aims to help meet global oil
and gas demand with strong environmental performance by driving
significant improvement to both the greenhouse gas (GHG) and
methane intensity of its operations, consistent with the trajectory
of the Paris Climate Agreement. Preliminary calculations indicate
Marathon Oil achieved its 2025 GHG intensity reduction goal of
50%2 two years ahead of schedule. The Company's annual
GHG intensity remains a key element of its executive compensation
scorecard. Additionally, Marathon Oil improved its total Company
2023 gas capture to 99.5% and continues to make progress toward its
World Bank Zero Routine Flaring by 2030 commitment.
SOCIAL: Marathon Oil is committed to promoting a diverse
and inclusive workplace, respecting human rights, and making
strategic investments to build healthier, safer, more resilient,
and stronger local communities. Key strategic social investments
during 2023 included: ongoing support of Equatorial Guinea's Bioko Island Malaria
Elimination Project; partnership with the National Fish and
Wildlife Foundation on grassland restoration projects in the
Bakken; awarding grants to teachers across operating areas through
the Unconventional Thinking in Teaching Program; and continued
support of the Barbara Bush Houston Literacy Foundation My Home
Library Program.
GOVERNANCE: Marathon Oil
believes best-in-class governance is foundational to delivering
shareholder value. The Company is especially focused on industry
leadership in aligning executive compensation with the most
critical drivers of shareholder value and on maintaining an
independent and diverse board of directors with strong skills and
experience. During 2023, Marathon Oil continued to enhance its
board of director oversight through its focus on refreshment,
independence, and diversity. The Company elected one new board
member in 2023. Seven of eight directors are independent, average
director tenure remains below the S&P 500 average while
maintaining a diverse mix of short and longer-tenured directors,
three directors are female (including the lead director), and two
directors are ethnically/racially diverse.
A slide deck and Quarterly Investor Packet will be posted
to the Company's website following this release today, February 21. On Thursday,
February 22, 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://ir.marathonoil.com/.
Media Relations
Contact:
Karina
Brooks: 713-296-2191
Investor Relations
Contacts:
Guy
Baber: 713-296-1892
John Reid: 713-296-4380
Footnotes:
|
1
|
Total recordable
incident rate (TRIR) measures combined employee and contractor
workforce incidents per 200,000 work hours
|
2
|
2025 GHG intensity
reduction goal of 50% is relative to 2019 GHG intensity baseline;
MRO's 2023 GHG intensity is a preliminary estimate subject to final
calculation
|
About Marathon Oil
Marathon Oil
Corporation (NYSE: MRO) is an independent oil and gas exploration
and production (E&P) company focused on four of the most
competitive resource plays in the U.S. - Eagle Ford, Texas; Bakken, North Dakota; STACK and
SCOOP in Oklahoma and Permian in
New Mexico and Texas; complemented by a world-class
integrated gas business in Equatorial
Guinea. The Company's Framework for Success is founded on a
strong balance sheet, ESG excellence and the competitive advantages
of a high-quality multi-basin portfolio. For more information,
please visit www.marathonoil.com.
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 (loss), adjusted net income
(loss) per share, net cash provided by operating activities before
changes in working capital (adjusted CFO), free cash flow, adjusted
free cash flow and reinvestment rate.
Our presentation of adjusted net income (loss) and
adjusted net income (loss) per share is a non-GAAP measure.
Adjusted net income (loss) is defined as net income (loss) adjusted
for gains or losses on dispositions, impairments of proved and
certain unproved properties, goodwill and equity method
investments, changes in our valuation allowance, unrealized
derivative gains or losses on commodity and interest rate
derivative instruments, effects of pension settlements and
curtailments and other items that could be considered
"non-operating" or "non-core" in nature. Management believes this
is useful to investors as another tool to meaningfully represent
our operating performance and to compare Marathon to certain
competitors. Adjusted net income (loss) and adjusted net income
(loss) per share should not be considered in isolation or as an
alternative to, or more meaningful than, net income (loss) or net
income (loss) per share as determined in accordance with U.S.
GAAP.
Our presentation of adjusted CFO is defined as net cash
provided by operating activities adjusted for changes in working
capital and is a non-GAAP measure. Management believes this is
useful to investors as an indicator of Marathon's ability to
generate cash quarterly or year-to-date by eliminating differences
caused by the timing of certain working capital items. Adjusted CFO
should not be considered in isolation or as an alternative to, or
more meaningful than, net cash provided by operating activities as
determined in accordance with U.S. GAAP.
Our presentation of free cash flow is a non-GAAP
measure. Free cash flow is defined as net cash provided by
operating activities, capital expenditures and change in capital
accrual. Management believes this is useful to investors as a
measure of Marathon's ability to fund its capital expenditure
programs, service debt, and fund other distributions to
stockholders. Free cash flow should not be considered in isolation
or as an alternative to, or more meaningful than, net cash provided
by operating activities as determined in accordance with U.S.
GAAP.
Our presentation of adjusted free cash flow is a
non-GAAP measure. Adjusted free cash flow before dividend
("adjusted free cash flow") is defined as adjusted CFO, capital
expenditures, and EG return of capital and other. Management
believes this is useful to investors as a measure of Marathon's
ability to fund its capital expenditure programs, service debt, and
fund other distributions to stockholders. Adjusted free cash flow
should not be considered in isolation or as an alternative to, or
more meaningful than, net cash provided by operating activities as
determined in accordance with U.S. GAAP.
Our presentation of reinvestment rate is a non-GAAP
measure. The reinvestment rate in the context of adjusted free cash
flow is defined as capital expenditures divided by adjusted CFO.
The reinvestment rate in the context of free cash flow is defined
as capital expenditures divided by net cash provided by operating
activities. Management believes the reinvestment rate is useful to
investors to demonstrate the Company's commitment to generating
cash for use towards investor-friendly purposes (which includes
balance sheet enhancement, base dividend and other return of
capital).
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 an alternative 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
https://ir.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, future
performance (both absolute and relative); expected free cash flow,
reinvestment rates, returns to investors (including dividends and
share repurchases, and the timing thereof), growth in per share
metrics, balance sheet enhancement, net wells to sales, well
productivity, gross debt reduction, unit production costs,
distribution yields, business strategy, capital expenditure
guidance, production guidance, rig counts, tax assumptions and
other statements regarding management's plans and objectives for
future operations, are forward-looking statements. Words such as
"anticipate," "believe," "continue," "could," "estimate," "expect,"
"forecast," "future," "guidance," "intend," "may," "outlook,"
"plan," "positioned," "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 and global and domestic market conditions;
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; risks related to the Company's hedging activities;
voluntary or involuntary curtailments, delays or cancellations of
certain drilling activities; well production timing; liabilities or
corrective actions resulting from litigation, other proceedings and
investigations or alleged violations of law or permits; 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; the availability, cost, terms and timing of issuance
or execution of, competition for, and challenges to, mineral
licenses and leases and governmental and other permits and
rights-of-way, and our ability to retain mineral licenses and
leases; non-performance by third parties of contractual or legal
obligations, including due to bankruptcy; administrative
impediments or unexpected events that may impact dividends or other
distributions, and the timing thereof, from our equity method
investees; changes in our credit ratings; hazards such as weather
conditions, a health pandemic, acts of war or terrorist acts and
the government or military response thereto; the impacts of supply
chain disruptions that began during the COVID-19 pandemic and the
resulting inflationary environment; security threats, including
cybersecurity threats and disruptions to our business and
operations from breaches of our information technology systems, or
breaches of the information technology systems, facilities and
infrastructure of third parties with which we transact business;
changes in safety, health, environmental, tax and other
regulations, requirements or initiatives, including those
addressing the impact of global climate change, air emissions or
water management; our ability to achieve, reach or otherwise meet
initiatives, plans, or ambitions with respect to ESG matters; our
ability to pay dividends and make share repurchases; our ability to
progress the E.G. Gas Mega Hub; impacts of the Inflation Reduction
Act of 2022 and our assumptions relating thereto; the risk that
assets we acquire do not perform consistent with our expectations,
including with respect to future production or drilling inventory;
other geological, operating and economic considerations; and the
risk factors, forward-looking statements and challenges and
uncertainties described in the Company's 2022 Annual Report on Form
10-K, Quarterly Reports on Form 10-Q and other public filings and
press releases, available at https://ir.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.
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)
|
2023
|
2023
|
2022
|
2023
|
2022
|
Revenues and other income:
|
|
|
|
|
|
Revenues from
contracts with customers
|
$
1,585
|
$
1,771
|
$
1,603
|
$
6,407
|
$
7,540
|
Net gain (loss) on
commodity derivatives
|
23
|
1
|
15
|
42
|
(114)
|
Income from equity
method investments
|
45
|
38
|
144
|
185
|
613
|
Net gain (loss) on
disposal of assets
|
11
|
1
|
(39)
|
17
|
(38)
|
Other
income
|
27
|
2
|
10
|
46
|
35
|
Total revenues and
other income
|
1,691
|
1,813
|
1,733
|
6,697
|
8,036
|
Costs and expenses:
|
|
|
|
|
|
Production
|
221
|
192
|
181
|
828
|
690
|
Shipping, handling and
other operating
|
202
|
164
|
158
|
689
|
733
|
Exploration
|
13
|
20
|
18
|
59
|
110
|
Depreciation,
depletion and amortization
|
549
|
583
|
434
|
2,211
|
1,753
|
Impairments
|
2
|
—
|
3
|
2
|
7
|
Taxes other than
income
|
112
|
113
|
103
|
363
|
484
|
General and
administrative
|
72
|
72
|
88
|
297
|
308
|
Total costs and
expenses
|
1,171
|
1,144
|
985
|
4,449
|
4,085
|
Income from operations
|
520
|
669
|
748
|
2,248
|
3,951
|
Net interest and
other
|
(84)
|
(94)
|
(60)
|
(352)
|
(188)
|
Other net periodic
benefit credits
|
4
|
5
|
2
|
15
|
16
|
Income before income taxes
|
440
|
580
|
690
|
1,911
|
3,779
|
Provision for income
taxes
|
43
|
127
|
165
|
357
|
167
|
Net income
|
$
397
|
$
453
|
$
525
|
$
1,554
|
$
3,612
|
Adjusted Net Income
|
|
|
|
|
|
Net income
|
$
397
|
$
453
|
$
525
|
$
1,554
|
$
3,612
|
Adjustments for special
items (pre-tax):
|
|
|
|
|
|
Net (gain) loss on
disposal of assets
|
(11)
|
(1)
|
39
|
(17)
|
38
|
Proved property
impairments
|
2
|
—
|
3
|
2
|
7
|
Exploratory dry well
costs, unproved property impairments and other
|
4
|
11
|
12
|
30
|
74
|
Pension
settlement
|
—
|
—
|
2
|
1
|
2
|
Unrealized (gain) loss
on derivative instruments
|
(21)
|
6
|
(22)
|
(13)
|
(18)
|
Unrealized loss on
interest rate swaps
|
—
|
—
|
—
|
—
|
27
|
Acquisition
transaction costs
|
—
|
1
|
18
|
2
|
18
|
Other
|
37
|
—
|
(2)
|
37
|
46
|
Benefit for income
taxes related to special items (a)
|
(2)
|
(4)
|
(12)
|
(9)
|
(43)
|
Valuation
allowance
|
—
|
—
|
—
|
—
|
(685)
|
Adjustments for special items
|
9
|
13
|
38
|
33
|
(534)
|
Adjusted net income
(b)
|
$
406
|
$
466
|
$
563
|
$
1,587
|
$
3,078
|
Per diluted share:
|
|
|
|
|
|
Net income
|
$
0.68
|
$
0.75
|
$
0.82
|
$
2.56
|
$
5.26
|
Adjusted net income
(b)
|
$
0.69
|
$
0.77
|
$
0.88
|
$
2.61
|
$
4.48
|
Weighted average
diluted shares
|
584
|
604
|
637
|
608
|
687
|
|
|
(a)
|
In both 2023 and 2022,
we applied the estimated U.S. and state statutory rate of 22% to
our special items.
|
(b)
|
Non-GAAP financial
measure. See "Non-GAAP Measures" above for further
discussion.
|
Supplemental Data (Unaudited)
|
Three Months Ended
|
Year Ended
|
|
Dec. 31
|
Sept. 30
|
Dec. 31
|
Dec. 31
|
Dec. 31
|
(Per share)
|
2023
|
2023
|
2022
|
2023
|
2022
|
Adjusted Net Income Per Diluted
Share
|
|
|
|
|
|
Net income
|
$
0.68
|
$
0.75
|
$
0.82
|
$
2.56
|
$
5.26
|
Adjustments for special
items (pre-tax):
|
|
|
|
|
|
Net (gain) loss on
disposal of assets
|
(0.02)
|
—
|
0.06
|
(0.03)
|
0.06
|
Proved property
impairments
|
—
|
—
|
—
|
—
|
0.01
|
Exploratory dry well
costs, unproved property impairments and other
|
0.01
|
0.01
|
0.02
|
0.05
|
0.11
|
Unrealized (gain) loss
on derivative instruments
|
(0.03)
|
0.01
|
(0.03)
|
(0.02)
|
(0.03)
|
Unrealized loss on
interest rate swaps
|
—
|
—
|
—
|
—
|
0.04
|
Acquisition
transaction costs
|
—
|
—
|
0.03
|
—
|
0.03
|
Other
|
0.05
|
—
|
—
|
0.05
|
0.06
|
Benefit for income
taxes related to special items
|
—
|
—
|
(0.02)
|
—
|
(0.06)
|
Valuation
allowance
|
—
|
—
|
—
|
—
|
(1.00)
|
Adjustments for special items
|
0.01
|
0.02
|
0.06
|
0.05
|
(0.78)
|
Adjusted net income per share
(a)
|
$
0.69
|
$
0.77
|
$
0.88
|
$
2.61
|
$
4.48
|
|
|
(a)
|
Non-GAAP financial
measure. See "Non-GAAP Measures" above for further
discussion.
|
Supplemental Data (Unaudited)
|
Three Months Ended
|
Year Ended
|
|
Dec. 31
|
Sept. 30
|
Dec. 31
|
Dec. 31
|
Dec. 31
|
(In millions)
|
2023
|
2023
|
2022
|
2023
|
2022
|
Segment income
|
|
|
|
|
|
United
States
|
$
468
|
$
505
|
$
510
|
$ 1,763
|
$ 2,740
|
International
|
51
|
62
|
129
|
232
|
585
|
Not allocated to
segments
|
(122)
|
(114)
|
(114)
|
(441)
|
287
|
Net income
|
$
397
|
$
453
|
$
525
|
$ 1,554
|
$ 3,612
|
|
|
|
|
|
|
Net operating cash flow before changes in working
capital (Adjusted CFO)(a)
|
|
|
|
|
|
Net cash provided by
operating activities
|
$ 1,080
|
$ 1,066
|
$ 1,127
|
$ 4,087
|
$ 5,428
|
Changes in working
capital
|
(100)
|
78
|
(23)
|
100
|
(18)
|
Adjusted CFO(a)
|
$
980
|
$ 1,144
|
$ 1,104
|
$ 4,187
|
$ 5,410
|
|
|
|
|
|
|
Free cash flow
|
|
|
|
|
|
Net cash provided by
operating activities
|
$ 1,080
|
$ 1,066
|
$ 1,127
|
$ 4,087
|
$ 5,428
|
Capital
expenditures
|
(360)
|
(449)
|
(344)
|
(2,033)
|
(1,480)
|
Change in capital
accrual
|
(39)
|
(44)
|
11
|
(25)
|
30
|
Free cash flow
|
$
681
|
$
573
|
$
794
|
$ 2,029
|
$ 3,978
|
|
|
|
|
|
|
Adjusted free cash
flow(a)
|
|
|
|
|
|
Adjusted
CFO(a)
|
$
980
|
$ 1,144
|
$ 1,104
|
$ 4,187
|
$ 5,410
|
Adjustments:
|
|
|
|
|
|
Capital
expenditures
|
(360)
|
(449)
|
(344)
|
(2,033)
|
(1,480)
|
EG return of capital
and other financing(b)
|
4
|
23
|
3
|
28
|
17
|
Adjusted free cash flow
(a)
|
$
624
|
$
718
|
$
763
|
$ 2,182
|
$ 3,947
|
Reinvestment rate
(a)
|
37 %
|
38 %
|
31 %
|
48 %
|
27 %
|
|
|
(a)
|
Non-GAAP financial
measure. See "Non-GAAP Measures" above for further
discussion.
|
(b)
|
Excludes approximately
$2 million of debt issuance costs for the second quarter of
2023.
|
Supplemental Data (Unaudited)
|
2024 Free Cash Flow
Outlook (a)
|
(In millions)
|
Expected free cash
flow(b)
|
|
Expected net cash
provided by operating activities
|
$
3,900
|
Less: Capital
expenditures (at mid-point of annual guidance)
|
(2,000)
|
Expected free cash
flow(b)
|
$
1,900
|
|
|
(a)
|
Based upon an $75/bbl
WTI, $2.50/MMbtu Henry Hub and $10/MMbtu TTF price
assumption.
|
(b)
|
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
|
Net Production
|
2023
|
2023
|
2022
|
2023
|
2022
|
Equivalent Production (mboed)
|
|
|
|
|
|
United
States
|
352
|
369
|
278
|
355
|
284
|
International
|
52
|
52
|
55
|
50
|
59
|
Total net
production
|
404
|
421
|
333
|
405
|
343
|
Oil Production (mbbld)
|
|
|
|
|
|
United
States
|
180
|
189
|
156
|
182
|
159
|
International
|
9
|
9
|
10
|
8
|
10
|
Total net
production
|
189
|
198
|
166
|
190
|
169
|
Supplemental Statistics
(Unaudited)
|
Three Months Ended
|
Year Ended
|
|
Dec. 31
|
Sept. 30
|
Dec. 31
|
Dec. 31
|
Dec. 31
|
|
2023
|
2023
|
2022
|
2023
|
2022
|
United States - net sales
volumes
|
|
|
|
|
|
Crude oil and condensate
(mbbld)
|
179
|
189
|
156
|
181
|
159
|
Eagle Ford
|
71
|
80
|
62
|
77
|
57
|
Bakken
|
75
|
77
|
59
|
71
|
71
|
Oklahoma
|
10
|
9
|
10
|
10
|
12
|
Permian
|
21
|
22
|
20
|
21
|
14
|
Other United
States(a)
|
2
|
1
|
5
|
2
|
5
|
Natural gas liquids (mbbld)
|
86
|
90
|
59
|
87
|
64
|
Eagle Ford
|
37
|
40
|
14
|
37
|
15
|
Bakken
|
26
|
27
|
22
|
24
|
25
|
Oklahoma
|
15
|
13
|
15
|
16
|
17
|
Permian
|
8
|
10
|
6
|
10
|
5
|
Other United
States(a)
|
—
|
—
|
2
|
—
|
2
|
Natural gas (mmcfd)
|
520
|
539
|
371
|
521
|
363
|
Eagle Ford
|
217
|
229
|
93
|
222
|
86
|
Bakken
|
101
|
103
|
80
|
94
|
87
|
Oklahoma
|
147
|
143
|
143
|
146
|
140
|
Permian
|
53
|
61
|
40
|
57
|
34
|
Other United
States(a)
|
2
|
3
|
15
|
2
|
16
|
Total United States (mboed)
|
352
|
369
|
277
|
355
|
284
|
International - net sales
volumes
|
|
|
|
|
|
Crude oil and condensate
(mbbld)
|
5
|
11
|
11
|
9
|
10
|
Equatorial
Guinea
|
5
|
11
|
11
|
9
|
10
|
Natural gas liquids (mbbld)
|
6
|
6
|
6
|
5
|
7
|
Equatorial
Guinea
|
6
|
6
|
6
|
5
|
7
|
Natural gas (mmcfd)
|
219
|
217
|
235
|
214
|
252
|
Equatorial
Guinea
|
219
|
217
|
235
|
214
|
252
|
Total International (mboed)
|
48
|
53
|
56
|
50
|
59
|
Total Company - net sales volumes
(mboed)
|
400
|
422
|
333
|
405
|
343
|
Net sales volumes of equity method
investees
|
|
|
|
|
|
LNG (mtd)
|
1,669
|
1,670
|
1,653
|
1,790
|
2,565
|
Methanol
(mtd)
|
1,377
|
1,208
|
1,328
|
1,252
|
1,058
|
Condensate and LPG
(boed)
|
5,705
|
8,264
|
7,540
|
7,344
|
7,969
|
|
|
(a)
|
Includes sales volumes
from certain non-core proved properties in our United States
segment.
|
Supplemental Statistics
(Unaudited)
|
Three Months Ended
|
Year Ended
|
|
Dec. 31
|
Sept. 30
|
Dec. 31
|
Dec. 31
|
Dec. 31
|
|
2023
|
2023
|
2022
|
2023
|
2022
|
United States - average price
realizations(a)
|
|
|
|
|
|
Crude oil and condensate ($ per
bbl)(b)
|
$
77.28
|
$
80.90
|
$
84.29
|
$
76.42
|
$
95.58
|
Eagle Ford
|
76.71
|
79.70
|
84.26
|
75.41
|
95.73
|
Bakken
|
77.19
|
81.97
|
84.93
|
77.32
|
96.40
|
Oklahoma
|
78.36
|
80.48
|
82.36
|
76.25
|
95.26
|
Permian
|
79.05
|
81.86
|
84.21
|
77.35
|
92.25
|
Other United
States
|
76.45
|
78.54
|
81.74
|
73.47
|
91.74
|
Natural gas liquids ($ per bbl)
|
$
20.92
|
$
21.37
|
$
26.02
|
$
21.20
|
$
34.55
|
Eagle Ford
|
20.12
|
21.60
|
26.47
|
20.89
|
34.12
|
Bakken
|
19.29
|
19.24
|
23.17
|
19.52
|
33.80
|
Oklahoma
|
25.78
|
24.52
|
30.14
|
24.22
|
37.09
|
Permian
|
20.97
|
21.97
|
25.82
|
21.72
|
31.75
|
Other United
States
|
21.34
|
18.94
|
24.55
|
20.81
|
33.30
|
Natural gas ($ per
mcf)(c)
|
$
2.32
|
$
2.28
|
$
4.93
|
$
2.36
|
$
6.11
|
Eagle Ford
|
2.34
|
2.33
|
4.99
|
2.34
|
5.94
|
Bakken
|
2.44
|
2.10
|
5.55
|
2.66
|
6.23
|
Oklahoma
|
2.49
|
2.35
|
4.95
|
2.41
|
6.27
|
Permian
|
1.55
|
2.18
|
3.83
|
1.81
|
5.65
|
Other United
States
|
2.82
|
3.03
|
3.96
|
2.88
|
5.89
|
International - average price
realizations
|
|
|
|
|
|
Crude oil and condensate ($ per
bbl)
|
$
47.43
|
$
64.30
|
$
59.27
|
$
57.50
|
$
68.67
|
Equatorial
Guinea
|
47.43
|
64.30
|
59.27
|
57.50
|
68.67
|
Natural gas liquids ($ per bbl)
|
$
1.00
|
$
1.00
|
$
1.00
|
$
1.00
|
$
1.00
|
Equatorial
Guinea(d)
|
1.00
|
1.00
|
1.00
|
1.00
|
1.00
|
Natural gas ($ per mcf)
|
$
0.24
|
$
0.24
|
$
0.24
|
$
0.24
|
$
0.24
|
Equatorial
Guinea(d)
|
0.24
|
0.24
|
0.24
|
0.24
|
0.24
|
Benchmark
|
|
|
|
|
|
WTI crude oil (per
bbl)
|
$
78.53
|
$
82.22
|
$
82.64
|
$
77.60
|
$
94.33
|
Brent (Europe) crude
oil (per bbl)(e)
|
$
83.72
|
$
86.66
|
$
88.56
|
$
82.47
|
$ 100.78
|
Mont Belvieu NGLs (per
bbl)(f)
|
$
22.33
|
$
23.13
|
$
27.18
|
$
22.82
|
$
35.78
|
Henry Hub natural gas
(per mmbtu)(g)
|
$
2.88
|
$
2.55
|
$
6.26
|
$
2.74
|
$
6.64
|
TTF natural gas (per
mmbtu)
|
$
13.61
|
$
10.80
|
$
37.18
|
$
13.10
|
$
40.85
|
|
|
(a)
|
Excludes gains or
losses on commodity derivative instruments.
|
(b)
|
Inclusion of realized
gains (losses) on crude oil derivative instruments would have had
no effect on average price realizations for the fourth quarter
2023, third quarter 2023 and the year ended December 31, 2023,
while decreasing average price realizations by $0.40 for the fourth
quarter of 2022 and by $1.90 for the year ended December 31, 2022,
respectively.
|
(c)
|
Inclusion of realized
gains (losses) on natural gas derivative instruments would have
increased average price realizations by $0.06 per mcf for the
fourth quarter 2023, $0.13 per mcf for the third quarter 2023 and
$0.15 for the year ended December 31, 2023, while decreasing
average price realization by $0.04 per mcf and $0.16 per mcf for
the fourth quarter 2022 and the year ended December 31, 2022,
respectively.
|
(d)
|
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.
|
(e)
|
Average of monthly
prices obtained from Energy Information Administration
website.
|
(f)
|
Bloomberg Finance LLP:
Y-grade Mix NGL of 55% ethane, 25% propane, 5% butane, 8% isobutane
and 7% natural gasoline.
|
(g)
|
Settlement date average
per mmbtu.
|
The following table sets forth outstanding derivative
contracts as of February 19, 2024 and the weighted average
prices for those contracts:
|
|
2024
|
|
|
First Quarter
|
|
Second
Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
Crude Oil
|
|
|
|
|
|
|
|
|
NYMEX WTI Three-Way Collars
|
|
|
|
|
|
|
|
|
Volume
(Bbls/day)
|
|
40,000
|
|
40,000
|
|
20,000
|
|
20,000
|
Weighted average price
per Bbl:
|
|
|
|
|
|
|
|
|
Ceiling
|
|
$
101.01
|
|
$
101.01
|
|
$
101.95
|
|
$
101.95
|
Floor
|
|
$
66.25
|
|
$
66.25
|
|
$
65.00
|
|
$
65.00
|
Sold put
|
|
$
51.25
|
|
$
51.25
|
|
$
50.00
|
|
$
50.00
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/marathon-oil-announces-2024-capital-budget-and-reports-fourth-quarter-and-full-year-2023-results-302067918.html
SOURCE Marathon Oil Corporation