Marathon Oil update Summary
HOUSTON, May 5, 2021 — Marathon Oil Corporation (NYSE:MRO) Marathon Oil First Quarter 2021 Update reported first quarter 2021 net income of $97 million, or $0.12 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. The adjusted net income was $166 million, or $0.21 per diluted share. Net operating cash flow was $622 million, or $637 million before changes in working capital. Source Marathon Oil First Quarter 2021 Update
Highlights
- Strong financial and operational delivery with differentiated execution across all elements of business
- First quarter free cash flow of $443 million
- First quarter capital expenditures of $184 million; committed to capital discipline with no change to $1 billion 2021 capital expenditure budget
- Minimal production impact from Winter Storm Uri due to strong operational performance; first quarter oil production of 172,000 net bopd and first quarter oil-equivalent production of 345,000 net boed with no change to 2021 production guidance
- Acceleration of balance sheet enhancement and return of capital to investors
- Achieved initial gross debt reduction target of $500 million; now targeting at least $500 million of additional gross debt reduction, bringing total debt reduction target to at least $1 billion in 2021
- Raised quarterly base dividend over 30% from 3 cents per share to 4 cents per share
- Continued focus on ESG excellence
- Strong first quarter safety performance as measured by a Total Recordable Incident Rate (TRIR) of 0.231
- Reduced 2020 GHG emissions intensity2 by approximately 25% vs. 2019
- Appointed Holli Ladhani to the Board in March, the second new Director added this year; Board composition reflects continued commitment to refreshment, independence, and diversity
Marathon Oil Message to Shareholders
“First quarter was once again characterized by differentiated execution across all elements of our business, despite challenging operating conditions associated with Winter Storm Uri and the ongoing COVID-19 pandemic,” said Chairman, President, and CEO Lee Tillman. “I am especially proud of the commitment and dedication of our employees, as well as our strong safety performance to start the year. Our differentiated execution culminated in just under $450 million of free cash flow, with year-to-date free cash flow largely funding $500 million of gross debt reduction. Due to the strength and sustainability of our financial and operational performance, we are targeting additional gross debt reduction of at least $500 million this year and have also raised our quarterly base dividend. Our actions are fully consistent with our objective to return more than 30% of our operating cash flow to investors, as we successfully progress both balance sheet enhancement and direct return of capital. We believe that our commitment to ESG excellence and our transparent capital allocation framework that prioritizes free cash flow generation, a low enterprise free cash flow breakeven oil price, balance sheet improvement, and return of capital to investors is a recipe for success relative to both our E&P peer group and the broader S&P 500.” Source Marathon Oil First Quarter 2021 Update
Marathon Oil Well & Facility Permits Download
Marathon Oil OPERATIONS UPDATE
U.S. production averaged 276,000 net barrels of oil equivalent per day (boed) for first quarter 2021. Oil production averaged 160,000 net barrels of oil per day (bopd). U.S. unit production costs were $4.46 per boe for first quarter.
During first quarter, the Company brought a total of 28 gross Company-operated wells to sales. In the Eagle Ford, Marathon Oil’s first quarter production averaged 77,000 net boed. Oil production averaged 51,000 net bopd on 25 gross Company-operated wells to sales. In the Bakken, production averaged 112,000 net boed, including oil production of 77,000 net bopd. The Company brought just 3 gross Company-operated wells to sales in the Bakken. Oklahoma production averaged 53,000 net boed, including oil production of 12,000 net bopd. Northern Delaware production averaged 26,000 net boed, including oil production of 15,000 net bopd.
Marathon Oil FINANCIAL UPDATE
CASH FLOW AND CAPEX: Net cash provided by operations was $622 million during first quarter 2021, or $637 million before changes in working capital. First quarter capital expenditures totaled $184 million. The company’s $1.0 billion capital expenditure budget for 2021 remains unchanged.
BALANCE SHEET AND RETURN OF CAPITAL: Marathon Oil ended first quarter with total liquidity of $4.1 billion, which consisted of an undrawn revolving credit facility of $3.0 billion and $1.1 billion in cash and cash equivalents. The Company continues to maintain an investment grade credit rating at all three primary rating agencies, with Moody’s recently upgrading their rating outlook to stable.
Subsequent to the end of first quarter, the Company achieved its initial 2021 gross debt reduction target by redeeming its $500 million aggregate principal amount of 2.8% Senior Notes Due 2022. The transaction will reduce annual cash interest expense by $14 million and fully retires the Company’s next significant debt maturity. Having achieved its initial 2021 gross debt reduction target, the Company is now targeting at least $500 million of additional gross debt reduction, bringing its total debt reduction target to at least $1 billion in 2021. Subsequent to the end of first quarter the Company also raised its quarterly base dividend from 3 cents per share to 4 cents per share. These actions are fully consistent with Marathon Oil’s objective to return more than 30% of its cash flow from operations to investors, as the Company successfully progresses both balance sheet enhancement and direct return of capital. Source Marathon Oil First Quarter 2021 Update
Oil & Gas News
Marathon Oil Well Permits & Wells Spud
The oil and gas industry is highly regulated by Government agencies. One of the responsibilities is to approve well permits. A well permit is the intent of an oil & gas operator to drill a new well. Well permits include oil wells, gas wells, water wells and more..
Spudding is the process of beginning to drill a well in the oil and gas industry. … After the surface hole is completed, the main drill bit—which performs the task of drilling to the total depth—is inserted and this process can also be referred to as “spudding in.” Source Marathon Oil First Quarter 2021 Update
Marathon Oil Drilling Locations Q1 2021
Eagle Ford in Texas is the most mature tight oil play in the Lower 48 current, oil and natural gas production of 2.5 million barrels of oil equivalent per day. Measuring 400 miles long and 50 miles wide along the Texas Gulf Coast, the Eagle Ford basin is spread over 12,000 square miles in South and central Texas.
Source Marathon Oil First Quarter 2021 Update
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About Marathon Oil Company
Marathon Oil Corporation is an American company engaged in hydrocarbon exploration incorporated in Ohio and headquartered in the Marathon Oil Tower in Houston, Texas. The company is ranked 534th on the Fortune 500 and 1900th on the Forbes Global 2000.
