HOUSTON, Nov. 4, 2020 /PRNewswire/ -- Marathon Oil
Corporation (NYSE:MRO) today reported a third quarter 2020 net loss
of $317 million, or $0.40 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 loss was $219
million, or $0.28 per diluted
share. Net operating cash flow was $345
million, or $352 million
before changes in working capital.
Highlights
- Third quarter free cash flow generation of $180 million through strong execution across all
elements of business
- Third quarter capital expenditures of $176 million on successful and efficient
resumption of drilling and completion activity; 25% reduction to
completed well cost per lateral foot vs. 2019 average
- Third quarter U.S. unit production cost of $4.32 per boe on strong cost control, a 13%
reduction from 2019 average; reduced full year 2020 U.S. unit
production cost guidance by more than 5%
- Third quarter total Company oil production of 172,000 net bopd;
full year 2020 total Company oil guidance unchanged at
midpoint
- Third quarter total Company oil-equivalent production of
370,000 net boed; full year oil-equivalent guidance raised by 5,000
net boed at midpoint
- Ended third quarter with $4.1
billion of liquidity, including $3.0
billion undrawn revolving credit facility and $1.1 billion of cash and cash equivalents;
investment grade credit rating at all three primary rating
agencies, including recent outlook upgrade to stable by
S&P
- Subsequent to end of third quarter, reinstated quarterly base
dividend at 3 cents per share and
reduced gross debt by $100
million
- Committed to transparent capital allocation framework that
provides free cash flow visibility and makes meaningful cash flow
available for investor-friendly purposes across a broad range of
commodity prices
"While we continue to manage through commodity price volatility
and the ongoing COVID-19 pandemic, third quarter represented an
inflection point in what has been a transitional year, highlighted
by $180 million of free cash flow generation on strong
execution across all elements of our business," said Chairman,
President, and CEO Lee Tillman. "We
believe our unwavering focus on how we allocate capital, how we
manage our cost structure, and how we execute is clearly paying
off. Third quarter free cash flow more than funded the
reinstatement of our base dividend and a gross debt reduction of
$100 million, consistent with
our objective to return capital to shareholders and enhance our
balance sheet. We are well positioned to continue doing both in the
current environment."
"We have also committed to a transparent capital allocation
framework that provides visibility to compelling free cash flow
generation and the dedication of meaningful cash flow to
investor-friendly purposes," continued Tillman. "Beyond just a
commitment, we have a unique track record of delivery on this
framework since 2018. We believe we have successfully positioned
our company for industry leading capital efficiency and sustainable
free cash flow generation at lower and more volatile mid-cycle
pricing."
United States
(U.S.)
U.S. production averaged 297,000 net barrels of oil
equivalent per day (boed) for third quarter 2020. Oil production
averaged 159,000 net barrels of oil per day (bopd). U.S. unit
production costs were $4.32 per
boe, a reduction of approximately 13% in comparison to the
2019 average.
Third quarter marked a successful and efficient resumption in
drilling and completion activity for Marathon Oil following the
full pause in activity during second quarter. During third quarter,
the Company brought a total of 18 gross Company-operated wells to
sales and delivered an average completed well cost per lateral foot
reduction of more than 25% in comparison to the 2019 average.
Consistent with prior guidance, second half 2020 gross
Company-operated wells to sales will be weighted to fourth
quarter.
In the Eagle Ford, Marathon Oil's third quarter 2020 production
averaged 91,000 net boed. Oil production averaged 53,000 net bopd
on 9 gross Company-operated wells to sales. In the Bakken,
production averaged 98,000 net boed, including oil production of
69,000 net bopd. The Company brought 8 gross Company-operated wells
to sales during third quarter in the Bakken. Oklahoma production averaged 73,000 net boed
in the third quarter 2020, including oil production of 18,000 net
bopd. Northern Delaware production
averaged 26,000 net boed in the third quarter 2020. Oil production
averaged 14,000 net bopd on 1 gross Company-operated well to
sales.
International
Equatorial
Guinea production averaged 73,000 net boed for third quarter
2020, including 13,000 net bopd of oil. Unit production costs
averaged $1.76 per boe.
Guidance
Marathon Oil reduced its full year unit
production operating expense guidance for both U.S. and
International segments by over 5% and 8% respectively. The Company
also raised its full year U.S. oil-equivalent production guidance
by 5,000 net boed at the midpoint.
Marathon Oil's full year 2020 capital spending guidance and
midpoint of oil production guidance remain unchanged.
Disciplined Capital Allocation Framework
Marathon Oil
recently provided an update on a transparent capital allocation
framework that prioritizes sustainable free cash flow generation
across a broad range of commodity prices.
In a $40 to $45/bbl WTI oil price environment, the Company
plans to target a total capital spending reinvestment rate of
approximately 70% to 80% of cash flow from operations, with 20% to
30% of cash flow available for investor-friendly purposes -
prioritizing balance sheet enhancement and return of capital to
shareholders.
In an oil price environment above $45/bbl WTI, Marathon Oil plans to target a total
capital reinvestment rate of approximately 70% or less of cash flow
from operations, with 30% or more of cash flow available for
investor-friendly purposes.
Marathon Oil's resilience to lower commodity prices is
underpinned by a free cash flow breakeven below $35/bbl WTI in its 2021 benchmark maintenance
scenario. This maintenance scenario would deliver total Company
2021 oil production in line with the fourth quarter 2020 for
approximately $1 billion in total
capital spending.
In all commodity price environments, the Company will continue
to prioritize free cash flow generation and corporate returns
improvement. While production growth will remain an output of the
Company's capital allocation process, growth will be capped at 5%
in higher price environments, underscoring a commitment to capital
discipline and free cash flow generation.
Corporate
Net cash provided by operations was
$345 million during third quarter
2020, or $352 million before changes
in working capital. Third quarter capital expenditures totaled
$176 million.
Total liquidity as of September 30
was approximately $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 third quarter ending cash balance included the remarketing of
$400 million tax exempt bonds at a weighted interest rate of
2.25%.
Subsequent to the end of third quarter and consistent with prior
announcements, Marathon Oil reinstated a quarterly dividend at
3 cents per share and completed a
cash tender for an aggregate principal amount of $500 million
of its outstanding $1 billion 2.8%
Senior Notes due November 2022.
The tender proactively reduced the Company's next significant
debt maturity and resulted in a gross debt reduction of
$100 million. Both the fourth quarter dividend payment and
gross debt reduction were more than fully funded by third quarter
free cash flow generation of $180
million.
The adjustments to net loss for third quarter 2020 totaled
$98 million, primarily due to
unrealized losses on derivative instruments, the income impact
associated with an equity method investment impairment, pension
settlement, and other non-recurring costs.
A slide deck and Quarterly Investor Packet will be posted to the
Company's website following this release today, November 4. On Thursday,
November 5, 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/.
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,
free cash flow, net cash provided by operations before changes in
working capital and capital reinvestment rate.
Adjusted net income (loss) is defined as net income (loss)
adjusted for gain/loss on dispositions, impairments of proved
property, goodwill, and equity method investments, unrealized
derivative gain/loss on commodity instruments, effects of pension
settlement losses and curtailments and other items that could be
considered "non-operating" or "non-core" in nature. Management
believes adjusted net income (loss) and adjusted net income (loss)
per share are useful to investors as additional tools to
meaningfully represent the Company's operating performance and to
compare Marathon to certain competitors.
Free cash flow, which is free cash flow before dividend, is
defined as net cash provided by operating activities adjusted for
working capital, exploration costs other than well costs, capital
expenditures, and EG LNG return of capital and other. Management
believes this is useful to investors as a measure of the Company's
ability to fund its capital expenditure programs, 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.
Capital spending reinvestment rate is defined as total
capital expenditures divided by operating cash flow before working
capital. Management believes the capital spending 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 (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," "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;
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; 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
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.
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
|
|
Sept.
30
|
June
30
|
Sept.
30
|
(In millions,
except per share data)
|
2020
|
2020
|
2019
|
Revenues and other
income:
|
|
|
|
Revenues from
contracts with customers
|
$
|
761
|
|
$
|
490
|
|
$
|
1,249
|
|
Net gain (loss) on
commodity derivatives
|
(1)
|
|
(70)
|
|
47
|
|
Income (loss) from
equity method investments
|
(10)
|
|
(152)
|
|
21
|
|
Net gain (loss) on
disposal of assets
|
1
|
|
(2)
|
|
22
|
|
Other
income
|
3
|
|
6
|
|
6
|
|
Total revenues and
other income
|
754
|
|
272
|
|
1,345
|
|
Costs and
expenses:
|
|
|
|
Production
|
129
|
|
129
|
|
163
|
|
Shipping, handling and
other operating
|
183
|
|
105
|
|
138
|
|
Exploration
|
27
|
|
26
|
|
22
|
|
Depreciation,
depletion and amortization
|
554
|
|
597
|
|
622
|
|
Impairments
|
1
|
|
—
|
|
—
|
|
Taxes other than
income
|
49
|
|
30
|
|
81
|
|
General and
administrative
|
53
|
|
88
|
|
82
|
|
Total costs and
expenses
|
996
|
|
975
|
|
1,108
|
|
Income (loss) from
operations
|
(242)
|
|
(703)
|
|
237
|
|
Net interest and
other
|
(62)
|
|
(69)
|
|
(64)
|
|
Other net periodic
benefit (costs) credits
|
(6)
|
|
7
|
|
2
|
|
Income (loss)
before income taxes
|
(310)
|
|
(765)
|
|
175
|
|
Provision (benefit)
for income taxes
|
7
|
|
(15)
|
|
10
|
|
Net income
(loss)
|
$
|
(317)
|
|
$
|
(750)
|
|
$
|
165
|
|
|
|
|
|
Adjusted Net
Income (Loss)
|
|
|
|
Net income
(loss)
|
$
|
(317)
|
|
$
|
(750)
|
|
$
|
165
|
|
Adjustments for
special items (pre-tax):
|
|
|
|
Net (gain) loss on
disposal of assets
|
(1)
|
|
2
|
|
(22)
|
|
Proved property
impairments
|
1
|
|
—
|
|
—
|
|
Pension
settlement
|
9
|
|
14
|
|
—
|
|
Pension
curtailment
|
—
|
|
(17)
|
|
—
|
|
Unrealized (gain) loss
on derivative instruments
|
36
|
|
96
|
|
(33)
|
|
Reduction in
workforce
|
2
|
|
13
|
|
—
|
|
Impairment of equity
method investment
|
18
|
|
152
|
|
—
|
|
Other
|
34
|
|
13
|
|
1
|
|
Benefit for income
taxes related to special items
|
(1)
|
|
—
|
|
—
|
|
Adjustments for
special items
|
98
|
|
273
|
|
(54)
|
|
Adjusted net
income (loss) (a)
|
$
|
(219)
|
|
$
|
(477)
|
|
$
|
111
|
|
Per diluted
share:
|
|
|
|
Net income
(loss)
|
$
|
(0.40)
|
|
$
|
(0.95)
|
|
$
|
0.21
|
|
Adjusted net income
(loss) (a)
|
$
|
(0.28)
|
|
$
|
(0.60)
|
|
$
|
0.14
|
|
Weighted average
diluted shares
|
790
|
|
790
|
|
803
|
|
|
(a)
Non-GAAP financial measure. See "Non-GAAP Measures" above for
further discussion.
|
Supplemental
Statistics (Unaudited)
|
Three Months
Ended
|
|
Sept.
30
|
June
30
|
Sept.
30
|
(In
millions)
|
2020
|
2020
|
2019
|
Segment income
(loss)
|
|
|
|
United
States
|
$
|
(135)
|
|
$
|
(365)
|
|
$
|
180
|
|
International
|
8
|
|
(6)
|
|
43
|
|
Not allocated to
segments
|
(190)
|
|
(379)
|
|
(58)
|
|
Net income
(loss)
|
$
|
(317)
|
|
$
|
(750)
|
|
$
|
165
|
|
Cash
flows
|
|
|
|
Net cash provided by
operating activities
|
$
|
345
|
|
$
|
9
|
|
$
|
737
|
|
Changes in working
capital
|
7
|
|
77
|
|
20
|
|
Net cash provided by
operating activities before changes in working capital
(a)
|
$
|
352
|
|
$
|
86
|
|
$
|
757
|
|
|
|
|
|
Free Cash
Flow
|
|
|
|
Net cash provided by
operating activities before changes in working capital
(a)
|
$
|
352
|
|
$
|
86
|
|
$
|
757
|
|
Adjustments for free
cash flow:
|
|
|
|
Exploration costs
other than well costs
|
4
|
|
8
|
|
6
|
|
Capital
expenditures
|
(176)
|
|
(137)
|
|
(646)
|
|
EG LNG return of
capital and other
|
—
|
|
—
|
|
4
|
|
Free Cash Flow
(a)
|
$
|
180
|
|
$
|
(43)
|
|
$
|
121
|
|
|
|
|
|
Cash additions to
property, plant and equipment
|
$
|
(144)
|
|
$
|
(326)
|
|
$
|
(672)
|
|
|
(a)
Non-GAAP financial measure. See "Non-GAAP Measures" above for
further discussion.
|
|
Supplemental
Statistics (Unaudited)
|
Three Months
Ended
|
Year
Ended
|
|
Sept.
30
|
June
30
|
Sept.
30
|
Dec.
31
|
Net
Production
|
2020
|
2020
|
2019
|
2019
|
Equivalent
Production (mboed)
|
|
|
|
|
United
States
|
297
|
|
307
|
|
339
|
|
324
|
|
International
|
73
|
|
83
|
|
87
|
|
92
|
|
Total net
production
|
370
|
|
390
|
|
426
|
|
416
|
|
Less: Divestitures
(a)
|
—
|
|
—
|
|
1
|
|
8
|
|
Total
divestiture-adjusted net production
|
370
|
|
390
|
|
425
|
|
408
|
|
Oil Production
(mbbld)
|
|
|
|
|
United
States
|
159
|
|
182
|
|
201
|
|
191
|
|
International
|
13
|
|
15
|
|
15
|
|
21
|
|
Total net
production
|
172
|
|
197
|
|
216
|
|
212
|
|
Less: Divestitures
(b)
|
—
|
|
—
|
|
—
|
|
6
|
|
Total
divestiture-adjusted net production
|
172
|
|
197
|
|
216
|
|
206
|
|
|
|
(a)
|
Divestitures include
volumes associated with the following: (i) 1 mboed for both the
third quarter 2019 and the year 2019 related to the sale of certain
United States non-core conventional assets which closed in first
quarter 2019 (ii) 6 mboed for the year 2019 related to the sale of
our U.K. business which closed in third quarter 2019 and (iii) 1
mboed for the year 2019 related to the sale of our non-operated
interest in the Atrush block in Kurdistan which closed in second
quarter 2019.
|
(b)
|
Divestitures for the
year ended 2019 include 5 mbbld related to the sale of our U.K.
business which closed in third quarter 2019 and 1 mbbld related to
the sale of our non-operated interest in the Atrush block in
Kurdistan which closed in second quarter 2019.
|
Supplemental
Statistics (Unaudited)
|
Three Months
Ended
|
|
Sept.
30
|
June
30
|
Sept.
30
|
|
2020
|
2020
|
2019
|
United States -
net sales volumes
|
|
|
|
Crude oil and
condensate (mbbld)
|
159
|
|
183
|
|
201
|
|
Eagle Ford
|
53
|
|
66
|
|
63
|
|
Bakken
|
69
|
|
81
|
|
92
|
|
Oklahoma
|
18
|
|
16
|
|
23
|
|
Northern
Delaware
|
15
|
|
16
|
|
18
|
|
Other United States
(a)
|
4
|
|
4
|
|
5
|
|
Natural gas liquids
(mbbld)
|
68
|
|
56
|
|
61
|
|
Eagle Ford
|
20
|
|
20
|
|
22
|
|
Bakken
|
16
|
|
12
|
|
9
|
|
Oklahoma
|
25
|
|
16
|
|
23
|
|
Northern
Delaware
|
5
|
|
7
|
|
6
|
|
Other United States
(a)
|
2
|
|
1
|
|
1
|
|
Natural gas
(mmcfd)
|
421
|
|
413
|
|
462
|
|
Eagle Ford
|
111
|
|
133
|
|
134
|
|
Bakken
|
76
|
|
60
|
|
46
|
|
Oklahoma
|
179
|
|
167
|
|
229
|
|
Northern
Delaware
|
40
|
|
44
|
|
36
|
|
Other United States
(a)
|
15
|
|
9
|
|
17
|
|
Total United States
(mboed)
|
297
|
|
308
|
|
339
|
|
International -
net sales volumes
|
|
|
|
Crude oil and
condensate (mbbld)
|
11
|
|
16
|
|
16
|
|
Equatorial
Guinea
|
11
|
|
16
|
|
16
|
|
Natural gas liquids
(mbbld)
|
8
|
|
9
|
|
10
|
|
Equatorial
Guinea
|
8
|
|
9
|
|
10
|
|
Natural gas
(mmcfd)
|
310
|
|
354
|
|
373
|
|
Equatorial
Guinea
|
310
|
|
354
|
|
373
|
|
Total International
(mboed)
|
71
|
|
84
|
|
88
|
|
Total Company -
net sales volumes (mboed)
|
368
|
|
392
|
|
427
|
|
Net sales volumes
of equity method investees
|
|
|
|
LNG (mtd)
|
3,960
|
|
4,635
|
|
4,590
|
|
Methanol
(mtd)
|
1,065
|
|
738
|
|
1,036
|
|
Condensate and LPG
(boed)
|
9,340
|
|
10,896
|
|
11,586
|
|
|
(a)
Includes sales volumes from the sale of certain non-core proved
properties in our United States segment.
|
Supplemental
Statistics (Unaudited)
|
Three Months
Ended
|
|
Sept.
30
|
June
30
|
Sept.
30
|
|
2020
|
2020
|
2019
|
United States -
average price realizations (a)
|
|
|
|
Crude oil and
condensate ($ per bbl) (b)
|
$
|
37.78
|
|
$
|
21.65
|
|
$
|
55.09
|
|
Eagle Ford
|
38.79
|
|
23.53
|
|
57.99
|
|
Bakken
|
36.28
|
|
20.03
|
|
53.48
|
|
Oklahoma
|
38.49
|
|
22.09
|
|
55.09
|
|
Northern
Delaware
|
40.18
|
|
22.36
|
|
54.16
|
|
Other United States
(c)
|
38.51
|
|
18.31
|
|
51.74
|
|
Natural gas liquids
($ per bbl)
|
$
|
11.80
|
|
$
|
7.09
|
|
$
|
11.37
|
|
Eagle Ford
|
12.07
|
|
8.70
|
|
11.40
|
|
Bakken
|
10.26
|
|
2.56
|
|
7.16
|
|
Oklahoma
|
12.15
|
|
8.67
|
|
13.20
|
|
Northern
Delaware
|
13.65
|
|
6.24
|
|
10.02
|
|
Other United States
(c)
|
12.17
|
|
9.68
|
|
15.21
|
|
Natural gas ($ per
mcf)
|
$
|
1.78
|
|
$
|
1.44
|
|
$
|
1.92
|
|
Eagle Ford
|
1.79
|
|
1.69
|
|
2.29
|
|
Bakken
|
1.26
|
|
0.93
|
|
1.83
|
|
Oklahoma
|
2.03
|
|
1.59
|
|
1.75
|
|
Northern
Delaware
|
1.53
|
|
0.88
|
|
0.84
|
|
Other United States
(c)
|
1.90
|
|
1.25
|
|
3.69
|
|
International -
average price realizations
|
|
|
|
Crude oil and
condensate ($ per bbl)
|
$
|
30.28
|
|
$
|
13.79
|
|
$
|
46.04
|
|
Equatorial
Guinea
|
30.28
|
|
13.79
|
|
46.04
|
|
Natural gas liquids
($ per bbl)
|
$
|
1.00
|
|
$
|
1.00
|
|
$
|
1.00
|
|
Equatorial Guinea
(d)
|
1.00
|
|
1.00
|
|
1.00
|
|
Natural gas ($ per
mcf)
|
$
|
0.24
|
|
$
|
0.24
|
|
$
|
0.24
|
|
Equatorial Guinea
(d)
|
0.24
|
|
0.24
|
|
0.24
|
|
Benchmark
|
|
|
|
WTI crude oil (per
bbl)
|
$
|
40.92
|
|
$
|
28.00
|
|
$
|
56.44
|
|
Brent (Europe) crude
oil (per bbl) (e)
|
$
|
42.96
|
|
$
|
29.34
|
|
$
|
61.93
|
|
Mont Belvieu NGLs (per
bbl) (f)
|
$
|
15.87
|
|
$
|
12.25
|
|
$
|
15.16
|
|
Henry Hub natural gas
(per mmbtu) (g)
|
$
|
1.98
|
|
$
|
1.72
|
|
$
|
2.23
|
|
|
|
(a)
|
Excludes gains or
losses on commodity derivative instruments.
|
(b)
|
Inclusion of realized
gains (losses) on crude oil derivative instruments would have
increased average price realizations by $2.24, $1.59, and $0.72,
for the third quarter 2020, the second quarter 2020, and the third
quarter 2019.
|
(c)
|
Includes sales
volumes from the sale of certain non-core proved properties in our
United States segment.
|
(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.
|
Full Year
2020
Production Guidance
|
Oil Production
(mbbld)
|
|
Equivalent
Production (mboed)
|
Full Year
2020
|
Q3
2020
|
Q2
2020
|
Full
Year
2019
|
|
Full Year
2020
|
Q3
2020
|
Q2
2020
|
Full
Year
2019
|
|
Low
|
High
|
Divestiture-Adjusted
|
|
Low
|
High
|
Divestiture-Adjusted
|
Net
production
|
|
|
|
|
|
|
|
|
|
|
|
United
States
|
175
|
177
|
159
|
182
|
191
|
|
300
|
310
|
297
|
307
|
323
|
International
|
13
|
15
|
13
|
15
|
15
|
|
75
|
80
|
73
|
83
|
85
|
Total net
production
|
188
|
192
|
172
|
197
|
206
|
|
375
|
390
|
370
|
390
|
408
|
The following table sets forth outstanding derivative contracts
as of November 3, 2020, and the
weighted average prices for those contracts:
|
|
2020
|
|
|
2021
|
|
2021
|
Crude
Oil
|
|
Fourth
Quarter
|
|
|
First
Half
|
|
Second
Half
|
NYMEX WTI
Three-Way Collars
|
|
|
|
|
|
|
|
Volume
(Bbls/day)
|
|
80,000
|
|
|
|
—
|
|
|
—
|
|
Weighted average price
per Bbl:
|
|
|
|
|
|
|
|
Ceiling
|
|
$
|
64.40
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Floor
|
|
$
|
55.00
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Sold put
|
|
$
|
48.00
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
NYMEX WTI
Two-Way Collars
|
|
|
|
|
|
|
|
Volume
(Bbls/day)
|
|
20,000
|
|
|
|
10,000
|
|
|
10,000
|
|
Weighted average price
per Bbl:
|
|
|
|
|
|
|
|
Ceiling
|
|
$
|
46.83
|
|
|
|
$
|
52.37
|
|
|
$
|
52.37
|
|
Floor
|
|
$
|
37.00
|
|
|
|
$
|
35.00
|
|
|
$
|
35.00
|
|
Basis Swaps -
NYMEX WTI / Argus WTI Midland (a)
|
|
|
|
|
|
|
|
Volume
(Bbls/day)
|
|
15,000
|
|
|
|
—
|
|
|
—
|
|
Weighted average price
per Bbl
|
|
$
|
(0.94)
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Basis Swaps -
NYMEX WTI / ICE Brent (b)
|
|
|
|
|
|
|
|
Volume
(Bbls/day)
|
|
5,000
|
|
|
|
1,630
|
|
|
—
|
|
Weighted average price
per Bbl
|
|
$
|
(7.24)
|
|
|
|
$
|
(7.24)
|
|
|
$
|
—
|
|
Basis Swaps -
NYMEX WTI / UHC (c)
|
|
|
|
|
|
|
|
Volume
(Bbls/day)
|
|
—
|
|
|
|
14,000
|
|
|
—
|
|
Weighted average price
per Bbl
|
|
$
|
—
|
|
|
|
$
|
(1.80)
|
|
|
$
|
—
|
|
NYMEX Roll
Basis Swaps
|
|
|
|
|
|
|
|
Volume
(Bbls/day)
|
|
30,000
|
|
|
|
—
|
|
|
—
|
|
Weighted average price
per Bbl
|
|
$
|
(0.81)
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Natural
Gas
|
|
|
|
|
|
|
|
Henry Hub
("HH") Two-Way Collars
|
|
|
|
|
|
|
|
Volume
(MMBtu/day)
|
|
250,000
|
|
|
|
225,000
|
|
|
200,000
|
|
Weighted average price
per MMBtu:
|
|
|
|
|
|
|
|
Ceiling
|
|
$
|
2.82
|
|
|
|
$
|
3.10
|
|
|
$
|
3.05
|
|
Floor
|
|
$
|
2.25
|
|
|
|
$
|
2.51
|
|
|
$
|
2.50
|
|
HH Fixed Price
Swaps
|
|
|
|
|
|
|
|
Volume
(MMBtu/day)
|
|
—
|
|
|
|
50,000
|
|
|
50,000
|
|
Weighted average price
per Bbl
|
|
$
|
—
|
|
|
|
$
|
2.88
|
|
|
$
|
2.88
|
|
Basis Swaps -
WAHA / HH (d)
|
|
|
|
|
|
|
|
Volume
(MMBtu/day)
|
|
10,000
|
|
|
|
—
|
|
|
—
|
|
Weighted average price
per MMBtu
|
|
$
|
(0.37)
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
NGL
|
|
|
|
|
|
|
|
Fixed Price
Ethane Swaps (e)
|
|
|
|
|
|
|
|
Volume
(Bbls/day)
|
|
10,000
|
|
|
|
—
|
|
|
—
|
|
Weighted average price
per Bbl
|
|
$
|
8.78
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
(a)
|
The basis
differential price is indexed against Argus WTI Midland and NYMEX
WTI.
|
(b)
|
The basis
differential price is indexed against Intercontinental Exchange
("ICE") Brent and NYMEX WTI.
|
(c)
|
The basis
differential price is indexed against U.S. Sweet Clearbrook ("UHC")
and NYMEX WTI.
|
(d)
|
The basis
differential price is indexed against Waha and NYMEX Henry
Hub.
|
(e)
|
The fixed price
ethane swap is priced at OPIS Mont Belvieu Purity
Ethane.
|
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SOURCE Marathon Oil Corporation