HOUSTON, March 10, 2020 /PRNewswire/ -- In light of
the dramatic fall in commodity prices, Marathon Oil (NYSE: MRO) has
announced an immediate capital spending reduction of at least
$500 million relative to its
previously communicated 2020 capital spending budget of
$2.4 billion. The revised capital
spending budget of $1.9 billion or
less represents an approximate 30% reduction in comparison to
actual 2019 capital spending.
Specifically, the Company will take the following steps to
reduce its 2020 budget:
- Suspend further Resource Play Exploration (REx) drilling and
leasing activity, driving a material reduction to the original
$200 million REx budget for
2020;
- Immediately suspend all operated drilling and completion
activity in Oklahoma, where the
Company is currently running three rigs and one frac crew;
- Meaningfully reduce operated drilling and completion activity
in the Northern Delaware, where
the Company is currently running four rigs and one frac crew;
- Optimize development programs in the Eagle Ford and Bakken,
where the Company is currently running eight rigs and three frac
crews.
"In response to the recent commodity price volatility from
simultaneous supply and demand shocks, we're taking swift and
decisive action to defend our cash flow generation, protect our
balance sheet, and fund our dividend," said Marathon Oil Chairman,
President, and CEO Lee Tillman. "We
believe our foundational work is already in place with a high
quality multi-basin portfolio that affords us the flexibility that
we're exercising today. Our balance sheet reflects a conservative
leverage profile and significant liquidity. And, at every level of
the Company we continue to strive to relentlessly drive down our
cash flow breakeven, while operating safely and responsibly. This
framework has served us well, and it positions us to navigate a
challenging oil price environment ahead."
Marathon Oil maintains a strong financial foundation, ending
2019 with approximately $3.9 billion
of liquidity and no near term debt maturities. Liquidity at year
end 2019 consisted of $858 million of
cash and cash equivalents and an untapped $3
billion credit facility. The unsecured credit facility is
backed by 18 leading global financial institutions, and the
maturity date was recently extended to May
2023. Marathon Oil is rated as investment grade at all three
major rating agencies and has no significant debt maturities until
November of 2022.
The Company will continue to monitor commodity price
developments and retains flexibility to adjust capital spending
plans further in response to a dynamic environment, with minimal
long-term commitments for services and materials. The Company plans
to provide a more comprehensive update to its revised 2020 business
plan as part of its first quarter earnings release in May.
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, 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 the U.S. and Equatorial
Guinea; changes in foreign currency exchange rates, interest
rates, inflation rates, and global and domestic market conditions;
capital available for exploration and development; 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, health pandemics, 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 2019 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 Contacts:
Lee Warren: 713-296-4103
Investor Relations Contacts:
Guy Baber: 713-296-1892
John Reid: 713-296-4380
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SOURCE Marathon Oil Corporation