Financial Data and Key Metrics Changes - The second quarter of 2022 saw record financial results, including adjusted net income of $934 million or $1.32 per share and adjusted free cash flow exceeding $1.2 billion with a 24% reinvestment rate [16][12][9] - The company returned $816 million of capital to equity holders during the second quarter, representing 51% of adjusted cash flow from operations (CFO) [18][19] - For the full year 2022, the company expects to generate around $4.5 billion of free cash flow, translating to a free cash flow yield of over 25% [12][21] Business Line Data and Key Metrics Changes - The company is focused on maintaining a disciplined capital program, prioritizing free cash flow generation and operational efficiency [22] - The U.S. production expense guidance was increased by $0.25 per barrel, but this was offset by a reduction in U.S. depreciation, depletion, and amortization (DD&A) guidance [22] - The company expects third-quarter oil production to increase sequentially from 167,000 barrels per day to over 172,000 barrels per day [23] Market Data and Key Metrics Changes - Global demand for oil and gas continues to recover, while supply remains constrained due to years of underinvestment and geopolitical factors, particularly the ongoing situation in Ukraine [5][6] - The U.S. Energy Renaissance is providing some protection against inflationary pressures faced by consumers [6][7] Company Strategy and Development Direction - The company aims to responsibly meet global energy demand while prioritizing safety, environmental, social, and governance performance [8] - The strategy includes a focus on returning capital to shareholders through a framework based on operating cash flow rather than free cash flow, which is designed to provide a competitive edge in an inflationary environment [10][11] - The company is committed to maintaining a high-quality portfolio of U.S. unconventional resources complemented by global LNG exposure [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainability of financial results, supported by a high-quality asset base and disciplined capital allocation [14][25] - The company is preparing for potential macroeconomic uncertainties and is focused on maintaining a robust balance sheet [25][66] - Management highlighted the importance of delivering competitive financial performance to attract investor interest [26] Other Important Information - The company has returned approximately $2.5 billion of capital to shareholders since achieving its leverage objective in October 2021 [11][20] - The base dividend has been raised by 167% since the beginning of the previous year, reflecting a commitment to returning capital to shareholders [20] Q&A Session Summary Question: Thoughts on capital allocation for 2023 - Management indicated that it is too early to provide specifics on capital allocation for 2023 but noted a shift in focus among U.S. basins [30][31] Question: Impact of AMT proposal on cash tax position - Management expressed uncertainty regarding the AMT proposal's impact on cash taxes but noted that current tax attributes would shield from cash taxes until the second half of the decade [38][42] Question: M&A strategy and requirements - Management stated that the criteria for evaluating M&A opportunities remain high, focusing on financial accretion and maintaining capital discipline [52][58]

Financial Data and Key Metrics Changes - In Q1 2022, the company generated $1.3 billion of cash flow from operations and $940 million of free cash flow, with a reinvestment rate of just 27% [10][11] - The company returned $640 million, or 50% of cash flow from operations, back to shareholders [10][11] - Over the trailing two quarters, approximately 60% of cash flow from operations, or over $1.4 billion, was returned to shareholders [9][14] Business Line Data and Key Metrics Changes - The company reported oil production of 168,000 barrels per day in Q1 2022 [10] - The capital spending for the quarter was $348 million, consistent with prior guidance [10][24] - The company raised its equity income guidance from Equatorial Guinea by $200 million, or 67% [11][19] Market Data and Key Metrics Changes - The company rebased its 2022 financial outlook to reflect pricing of $100 WTI and $6 Henry Hub, expecting to generate over $4.5 billion of free cash flow at a reinvestment rate of just 20% [11][19] - The company noted that the inflationary environment is impacting costs, with expectations of inflation rising to 15-20% due to higher commodity prices [20][52] Company Strategy and Development Direction - The company emphasizes a return of capital to shareholders, with a commitment to return a minimum of 40% of cash flow from operations when WTI is above $60 per barrel [14][15] - The strategy focuses on sustainable free cash flow and meaningful returns to shareholders, supported by a high-quality portfolio and a strong balance sheet [8][27] - The company aims to balance cash returns with portfolio renewal, dedicating a portion of capital to organic growth initiatives [37][41] Management Comments on Operating Environment and Future Outlook - Management highlighted the geopolitical tensions and inflationary pressures affecting the energy market, emphasizing the need for a responsible energy transition that includes oil and gas [5][7] - The company believes it is well-positioned to meet growing energy demands while maintaining strong financial returns for shareholders [8][27] - Management expressed confidence in the company's ability to generate significant free cash flow and return capital to shareholders, even in a volatile market [35][50] Other Important Information - The company has increased its buyback authorization to $2.5 billion, indicating confidence in its stock valuation [9][16] - The company expects to continue to outperform its minimum cash flow return commitments, with potential for significant returns in 2022 [16][35] Q&A Session Summary Question: Broader LNG strategy and operational leverage - Management discussed the balanced exposure to commodities and the unique asset in Equatorial Guinea, which is well-positioned to benefit from global LNG market dynamics [30][31] Question: Cash return strategy and portfolio renewal - Management clarified that the cash return strategy is designed to be flexible and responsive to market conditions, with a commitment to return significant capital to shareholders while maintaining a strong balance sheet [32][33] Question: Impact of owning Chevron assets on cash flow - Management indicated that owning additional gas assets would generate incremental value, but emphasized the need for any acquisition to be accretive to the existing high-return organic case [40][41] Question: Capital allocation in the current gas environment - Management noted that the current commodity pricing environment is uplifting the economics of the entire portfolio, allowing for increased capital allocation to gas projects [45][46] Question: Inflationary pressures and planning for 2023 - Management acknowledged the challenges posed by inflation and supply chain constraints, indicating a proactive approach to securing contracts and planning for 2023 [52][53]

Financial Data and Key Metrics Changes - In Q4 2021, the company returned over 70% of cash from operations, equating to more than $800 million to equity investors, significantly exceeding the minimum commitment of 40% [8][19] - The company achieved over $2.2 billion of free cash flow in 2021, with a reinvestment rate of 32%, and over $900 million of free cash flow at a 22% reinvestment rate in Q4 alone [11][12] - The company executed $1 billion in share repurchases since October, resulting in an 8% reduction in outstanding shares [9][19] Business Line Data and Key Metrics Changes - The capital program for 2022 is set at $1.2 billion, focusing on free cash flow generation over production growth [24] - The company plans to allocate approximately 75% of its capital budget to the Eagle Ford and Bakken, with the remainder going to the Permian and Oklahoma [25] Market Data and Key Metrics Changes - The company expects to deliver over $3 billion of free cash flow at a reinvestment rate of less than 30%, assuming $80 WTI and $4 Henry Hub prices [12][24] - The company retains significant leverage to commodity price upside, with a $1 increase in oil price translating to approximately $60 million in incremental free cash flow [28] Company Strategy and Development Direction - The company is committed to a disciplined capital allocation framework that prioritizes sustainable free cash flow generation and return of capital [12][24] - The focus remains on maximizing capital efficiency and free cash flow generation rather than production output [26][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering superior financial outcomes compared to E&P peers and the broader S&P 500, emphasizing the importance of competitive financial performance [10][11] - The company aims to maintain a competitive and sustainable base dividend while also focusing on share repurchases to enhance per share metrics [21][70] Other Important Information - The company achieved a GHG intensity reduction target of at least 30% relative to its 2019 baseline and improved gas capture to 98.8% for the full year [32][33] - The company has a strong commitment to ESG excellence, with new quantitative goals for GHG intensity and methane intensity [33][34] Q&A Session Summary Question: Expected return of free cash flow to shareholders - Management indicated they are on pace to return over 50% of cash flow from operations to investors in Q1, with potential for delivery exceeding 70% as demonstrated in Q4 [40][44] Question: Details on the 2022 program and asset-level color - Management provided insights on the well mix in Bakken and Eagle Ford, with a focus on longer laterals to enhance efficiencies [45][46] Question: Acquisition capital spent during the quarter - The acquisition was a small Eagle Ford bolt-on that allowed for extended laterals in Karnes County, reflecting a disciplined approach to A&D activities [48][50] Question: Allocation of cash flow and preferences between buybacks and dividends - Management emphasized the strong value proposition of share repurchases while maintaining a competitive base dividend, with synergies between the two [52][55] Question: Plans for debt maturities and capital returns - The base case is to pay off small maturities with cash, with no need to accelerate debt reduction [57][59] Question: Future capital allocation shifts towards Oklahoma and Delaware - Management indicated that the capital allocation weighting will remain consistent over the next five years, with no radical shifts expected [60][61] Question: Confidence in drilling programs and inventory depth - Management expressed confidence in the inventory depth across basins, with over a decade of high-quality inventory available [63][64]

Marathon Oil Corporation (NYSE:MRO) Q3 2021 Earnings Conference Call November 4, 2021 9:00 AM ET Company Participants Lee Tillman – Chairman, President, and CEO Guy Baber – Vice President Investor Relations Dane Whitehead – Executive VP and CFO Pat Wagner – Executive VP of Corporate Development strategy Mike Henderson – Executive VP of Operations Conference Call Participants Jeanine Way – Barclays Arun Jayaram – JP Morgan Scott Hanold – RBC Capital Market Doug Leggate – Bank of America Neal Dingmann – tours ...