Marathon Oil Reports 3Q:24 Results

(Marathon, 6.Nov.2024) — Marathon Oil Corporation reported third-quarter 2024 (3Q:24) net income of $287mn or $0.51 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 $360mn or $0.64 per diluted share. Net operating cash flow was $1,209mn or $1,042mn before changes in working capital (adjusted CFO).

HIGHLIGHTS

3Q:24 free cash flow of $659mn and adjusted FCF of $589mn before changes in working capital and including Equatorial Guinea (E.G.) distributions and other financing
Sequential increase in 3Q:24 production to 207,000 net bopd and 421,000 net boed; third quarter oil production outperformed guidance of approximately 200,000 net bopd on strong new well productivity and continued drilling and completion efficiency gains
Raised full-year 2024 production guidance to 192,000 net bopd and 393,000 net boed from prior guidance midpoints of 190,000 net bopd and 390,000 net boed, respectively; no change to original capital spending guidance range
Total return of capital to shareholders during 3Q:24 of $61mn through the base dividend
3Q:24 sequential gross debt reduction of $545mn with $57mn increase to cash and cash equivalents

3Q24 Financial Overview

CASH FLOW: Net cash provided by operations was $1,209mn during third quarter or $1,042mn before changes in working capital. Third quarter capital expenditures totaled $458 million.

RETURN OF CAPITAL: Third quarter return of capital consisted of the $61mn base dividend. Marathon Oil discontinued its share repurchase program upon announcement of its pending merger with ConocoPhillips, and under the Merger Agreement, Marathon Oil may not increase the quarterly dividend in excess of the current $0.11 per share.

BALANCE SHEET: Marathon Oil reported a sequential gross debt reduction of $545mn during third quarter. Cash and cash equivalents increased by $57mn from the second quarter to a quarter-end total of $134mn.

ADJUSTMENTS TO NET INCOME: The adjustments to net income for third quarter totaled $73mn. This includes a $75mn deferred tax valuation allowance recorded for foreign tax credits which expire in 2025 that are likely to remain unused.

3Q24 Operational Overview

UNITED STATES (U.S.): U.S. production averaged 379,000 net boed during third quarter 2024. 3Q:24 oil production averaged 198,000 net bopd, a significant increase from the 2Q:24 average of 183,000 net bopd, due to strong new well performance, ongoing drilling and completion efficiency gains, and the timing of the company’s capital program. Excluding joint venture wells, the ompany brought a total of 72 gross company-operated wells to sales during third quarter. 3Q:24 U.S. unit production cost averaged $5.97 per boe.

Asset	Production (bopd)	Production (boed)	Wells to Sales (Gross)
Eagle Ford	87,000	166,000	34
Bakken	72,000	116,000	27
Permian	31,000	56,000	9
Oklahoma	7,000	40,000	2

INTERNATIONAL: E.G. production averaged 42,000 net boed during 3Q:24, while total sales volumes averaged 37,000 net boed. The difference between production and sales was the result of a 31,000 net mcfd (5,000 net boed) Alba LNG underlift. Marathon Oil’s Alba LNG sales achieved a realized price of $10.76 per mcf during 3Q:24, as the Company continued realizing the uplift in value from the shift to global LNG pricing. 3Q:24 E.G. unit production cost averaged $4.16 per boe.

Total International segment income was $95mn during third quarter, including $39mn of income from equity method investees. The company received total cash distributions of $29mn from equity method companies during 3Q:24, including dividends of $21mn and return of capital of $8mn.

2024 Guidance Overview

Due to strong new well productivity and continued drilling and completion efficiency gains, Marathon Oil raised full-year 2024 total oil production guidance to 192,000 net bopd and oil equivalent guidance to 393,000 net boed, while leaving the original full-year 2024 capital spending guidance range unchanged. Updated production guidance compares to prior oil and oil equivalent guidance midpoints of 190,000 net bopd and 390,000 net boed, respectively. The company expects 4Q:24 oil production to moderate to approximately 190,000 net bopd, consistent with the phasing of its capital program and the associated sequential reduction in wells to sales, similar to the prior two years. This reduction in capital spending is expected to contribute to a sequential increase in free cash flow generation during fourth quarter on a price-normalized basis.