Marathon Oil Reports First Quarter 2022 Results
Continuing to Prioritize Return of Capital with
- Outstanding first quarter financial delivery highlighted by
$940 million of adjusted free cash flow at 27% reinvestment rate - Returned 50% of first quarter cash flow from operations (CFO) to equity investors through
$592 million of share repurchases and$52 million base dividend - First quarter oil-equivalent production of 345,000 net boed; oil production of 168,000 net bopd
- Continue to build on peer-leading return of capital track record, exceeding minimum commitment to return at least 40% of CFO to equity investors
- Returned approximately 60% of CFO to equity investors through share repurchases and dividends over trailing two quarters
- Executed
$1.6 billion of share repurchases sinceOctober 1 st, reducing share count by 11%; includes$900 million of share repurchases year-to-date1 - Board of Directors approved increasing share repurchase authorization to
$2.5 billion as ofMay 4 th - Raised quarterly base dividend by approximately 15%; fifth consecutive quarterly base dividend raise for cumulative increase of 167% since beginning of 2021
- Expect over
$4.5 billion of 2022 adjusted free cash flow at a reinvestment rate of approximately 20% on a$1.3 billion capital budget, assuming$100 /bbl WTI and$6 /MMBtu Henry Hub - Uplift of
$1.5 billion in adjusted free cash flow from original 2022 financial outlook at$80 /bbl WTI and$4 /MMBtu Henry Hub and a reduction in the Company's expected reinvestment rate - Updated 2022 capital budget incorporates 8% inflation adjustment to reflect sustained
$100 /bbl WTI and$6 /MMBtu commodity price environment - Raising 2022 Equatorial Guinea equity income guidance by
$200 million
"Amid tremendous macro volatility,
Since
During first quarter,
Additionally, the Company's Board of Directors approved an increase in total share repurchase authorization to
CASH FLOW AND CAPEX: Net cash provided by operations was
FREE CASH FLOW:
BALANCE SHEET AND LIQUIDITY:
ADJUSTMENTS TO NET INCOME: The adjustments to net income for first quarter reduced adjusted net income by
INTERNATIONAL:
A slide deck and Quarterly Investor Packet will be posted to the Company's website following this release today,
Footnotes:
1 Includes share repurchases settled and share repurchases executed with settlement pending
In analyzing and planning for its business,
Our presentation of adjusted net income (loss) and adjusted net income (loss) per share is a non-GAAP measure. Adjusted net income (loss) is defined as net income (loss) adjusted for gains or losses on dispositions, impairments of proved and certain unproved properties, goodwill and equity method investments, changes in our valuation allowance, unrealized derivative gains or losses on commodity and interest rate derivative instruments, effects of pension settlements and curtailments and other items that could be considered "non-operating" or "non-core" in nature. Management believes this is useful to investors as another tool to meaningfully represent our operating performance and to compare Marathon to certain competitors. Adjusted net income (loss) and adjusted net income (loss) per share should not be considered in isolation or as an alternative to, or more meaningful than, net income (loss) or net income (loss) per share as determined in accordance with
Our presentation of adjusted free cash flow is a non-GAAP measure. Adjusted free cash flow before dividend ("adjusted free cash flow") is defined as net cash provided by operating activities before changes in working capital, capital expenditures (accrued), and EG return of capital and other. Management believes this is useful to investors as a measure of Marathon's ability to fund its capital expenditure programs, service debt, and fund other distributions to stockholders. Adjusted free cash flow should not be considered in isolation or as an alternative to, or more meaningful than, net cash provided by operating activities as determined in accordance with
Our presentation of net cash provided by operating activities before changes in working capital is defined as net cash provided by operating activities adjusted for working capital and is a non-GAAP measure. Management believes this is useful to investors as an indicator of Marathon's ability to generate cash quarterly or year-to-date by eliminating differences caused by the timing of certain working capital items. Net cash provided by operating activities before changes in working capital should not be considered in isolation or as an alternative to, or more meaningful than, net cash provided by operating activities as determined in accordance with
Our presentation of total capital expenditures (accrued) is a non-GAAP measure. Total capital expenditures (accrued) is defined as cash additions to property, plant and equipment adjusted for the change in capital accrual and additions to other assets. Management believes this is useful to investors as an indicator of Marathon's commitment to capital expenditure discipline by eliminating differences caused by the timing of capital accrual and other items. Total capital expenditures (accrued) should not be considered in isolation or as an alternative to, or more meaningful than, cash additions to property, plant and equipment as determined in accordance with
Our presentation of reinvestment rate is a non-GAAP measure. The reinvestment rate is defined as total capital expenditures (accrued) divided by net cash provided by operating activities before changes in working capital and EG return of capital and other. Management believes the 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
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, future performance (both absolute and relative), expected adjusted free cash flow, reinvestment rates, future debt retirement and the timing thereof, returns to investors (including dividends and share repurchases, and the timing thereof), business strategy, capital expenditure guidance, production guidance, E.G. equity method income guidance and other plans and objectives for future operations, are forward-looking statements. Words such as "anticipate," "believe," "continue," "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
Media Relations Contact:
Investor Relations Contacts:
Consolidated Statements of Income (Unaudited) |
Three Months Ended |
||
|
|
|
|
(In millions, except per share data) |
2022 |
2021 |
2021 |
Revenues and other income: |
|
|
|
Revenues from contracts with customers |
$ 1,761 |
$ 1,732 |
$ 1,177 |
Net gain (loss) on commodity derivatives |
(143) |
15 |
(153) |
Income (loss) from equity method investments |
127 |
74 |
44 |
Net gain (loss) on disposal of assets |
— |
(27) |
— |
Other income |
8 |
6 |
3 |
Total revenues and other income |
1,753 |
1,800 |
1,071 |
Costs and expenses: |
|
|
|
Production |
152 |
156 |
121 |
Shipping, handling and other operating |
185 |
189 |
152 |
Exploration |
11 |
27 |
21 |
Depreciation, depletion and amortization |
423 |
516 |
496 |
Impairments |
— |
— |
1 |
Taxes other than income |
104 |
109 |
74 |
General and administrative |
73 |
64 |
89 |
Total costs and expenses |
948 |
1,061 |
954 |
Income (loss) from operations |
805 |
739 |
117 |
Net interest and other |
(22) |
(59) |
(13) |
Other net periodic benefit (costs) credits |
4 |
3 |
3 |
Income (loss) before income taxes |
787 |
683 |
107 |
Provision (benefit) for income taxes |
(517) |
34 |
10 |
Net income (loss) |
$ 1,304 |
$ 649 |
$ 97 |
Adjusted Net Income (Loss) |
|
|
|
Net income (loss) |
$ 1,304 |
$ 649 |
$ 97 |
Adjustments for special items (pre-tax): |
|
|
|
Net (gain) loss on disposal of assets |
— |
27 |
— |
Proved property impairments |
— |
— |
1 |
Exploratory dry well costs, unproved property impairments and other |
— |
16 |
— |
Pension settlement |
— |
1 |
— |
Unrealized (gain) loss on derivative instruments |
114 |
(146) |
82 |
Unrealized (gain) loss on interest rate swaps |
26 |
43 |
(41) |
Reduction in workforce |
— |
— |
11 |
Other |
27 |
5 |
16 |
Benefit for income taxes related to special items (a) |
(37) |
(3) |
— |
Valuation allowance |
(685) |
— |
— |
Adjustments for special items |
(555) |
(57) |
69 |
Adjusted net income (loss) (b) |
$ 749 |
$ 592 |
$ 166 |
Per diluted share: |
|
|
|
Net income (loss) |
$ 1.78 |
$ 0.84 |
$ 0.12 |
Adjusted net income (loss) (b) |
$ 1.02 |
$ 0.77 |
$ 0.21 |
Weighted average diluted shares |
732 |
773 |
789 |
(a) |
For the first quarter 2022, we applied the |
(b) |
Non-GAAP financial measure. See "Non-GAAP Measures" above for further discussion. |
Supplemental Data (Unaudited) |
Three Months Ended |
||
|
|
|
|
(Per share) |
2022 |
2021 |
2021 |
Adjusted Net Income (Loss) Per Diluted Share |
|
|
|
Net income (loss) |
$ 1.78 |
$ 0.84 |
$ 0.12 |
Adjustments for special items (pre-tax): |
|
|
|
Net (gain) loss on disposal of assets |
— |
0.03 |
— |
Proved property impairments |
— |
— |
— |
Exploratory dry well costs, unproved property impairments and other |
— |
0.02 |
— |
Pension settlement |
— |
— |
— |
Unrealized (gain) loss on derivative instruments |
0.16 |
(0.19) |
0.10 |
Unrealized (gain) loss on interest rate swaps |
0.04 |
0.06 |
(0.05) |
Reduction in workforce |
— |
— |
0.01 |
Other |
0.03 |
0.01 |
0.03 |
Benefit for income taxes related to special items |
(0.05) |
— |
— |
Valuation allowance |
(0.94) |
— |
— |
Adjustments for special items |
(0.76) |
(0.07) |
0.09 |
Adjusted net income (loss) per share (a) |
$ 1.02 |
$ 0.77 |
$ 0.21 |
(a) |
Non-GAAP financial measure. See "Non-GAAP Measures" above for further discussion. |
Supplemental Data (Unaudited) |
Three Months Ended |
||
|
|
|
|
(In millions) |
2022 |
2021 |
2021 |
Segment income (loss) |
|
|
|
|
$ 661 |
$ 553 |
$ 212 |
International |
115 |
106 |
50 |
Not allocated to segments |
528 |
(10) |
(165) |
Net income (loss) |
$ 1,304 |
$ 649 |
$ 97 |
Cash flows |
|
|
|
Net cash provided by operating activities |
$ 1,067 |
$ 1,146 |
$ 622 |
Changes in working capital |
213 |
(45) |
15 |
Net cash provided by operating activities before changes in working capital (a) |
$ 1,280 |
$ 1,101 |
$ 637 |
|
|
|
|
Adjusted free cash flow |
|
|
|
Net cash provided by operating activities before changes in working capital (a) |
$ 1,280 |
$ 1,101 |
$ 637 |
Adjustments: |
|
|
|
Capital expenditures (accrued) |
(348) |
(251) |
(184) |
EG return of capital and other |
8 |
48 |
(10) |
Adjusted free cash flow (a) |
$ 940 |
$ 898 |
$ 443 |
Capital expenditures (accrued) |
|
|
|
Cash additions to property, plant and equipment |
$ (332) |
$ (274) |
$ (209) |
Change in capital accrual |
(16) |
23 |
25 |
Additions to other assets |
— |
— |
— |
Total capital expenditures (accrued) (a) |
$ (348) |
$ (251) |
$ (184) |
(a) |
Non-GAAP financial measure. See "Non-GAAP Measures" above for further discussion. |
Supplemental Data (Unaudited) |
2022 Adjusted Free Cash Flow Outlook |
|
(In millions) |
Updated (a) |
Original (b) |
Expected cash flows |
|
|
Net cash provided by operating activities |
$ 5,800 |
$ 4,400 |
Changes in working capital |
200 |
— |
Net cash provided by operating activities before changes in working capital (c) |
$ 6,000 |
$ 4,400 |
|
|
|
Expected adjusted free cash flow |
|
|
Net cash provided by operating activities before changes in working capital (c) |
$ 6,000 |
$ 4,400 |
Adjustments: |
|
|
Capital expenditures (accrued) |
(1,300) |
(1,200) |
EG return of capital and other |
— |
— |
Expected adjusted free cash flow (c) |
$ 4,700 |
$ 3,200 |
(a) |
Based upon a |
(b) |
Based upon an |
(c) |
Non-GAAP financial measure. See "Non-GAAP Measures" above for further discussion. |
Supplemental Data (Unaudited) |
Three Months Ended |
|
2022 Outlook |
|
(In millions, except percentage data) |
|
|
Updated (a) |
Original (b) |
Sources of Cash |
|
|
|
|
Net cash provided by operating activities before changes in working capital (c) |
$ 1,280 |
|
$ 6,000 |
$ 4,400 |
EG return of capital and other |
8 |
|
— |
— |
Sources of Cash |
1,288 |
|
6,000 |
4,400 |
Capital expenditures (accrued) |
$ 348 |
|
$ 1,300 |
$ 1,200 |
Reinvestment rate (c) |
27 % |
|
22 % |
27 % |
(a) |
Based upon a |
(b) |
Based upon an |
(c) |
Non-GAAP financial measure. See "Non-GAAP Measures" above for further discussion. |
Supplemental Statistics (Unaudited) |
Three Months Ended |
||
|
|
|
|
Net Production |
2022 |
2021 |
2021 |
Equivalent Production (mboed) |
|
|
|
United States |
281 |
304 |
276 |
International |
64 |
49 |
69 |
Total net production |
345 |
353 |
345 |
Oil Production (mbbld) |
|
|
|
United States |
158 |
172 |
160 |
International |
10 |
9 |
12 |
Total net production |
168 |
181 |
172 |
Supplemental Statistics (Unaudited) |
Three Months Ended |
||
|
|
|
|
|
2022 |
2021 |
2021 |
|
|
|
|
Crude oil and condensate (mbbld) |
158 |
171 |
159 |
Eagle Ford |
53 |
60 |
50 |
Bakken |
77 |
81 |
77 |
Oklahoma |
12 |
13 |
12 |
Northern Delaware |
11 |
12 |
15 |
Other United States (a) |
5 |
5 |
5 |
Natural gas liquids (mbbld) |
64 |
70 |
53 |
Eagle Ford |
14 |
17 |
12 |
Bakken |
26 |
27 |
19 |
Oklahoma |
17 |
19 |
17 |
Northern Delaware |
4 |
5 |
4 |
Other United States (a) |
3 |
2 |
1 |
Natural gas (mmcfd) |
350 |
379 |
378 |
Eagle Ford |
80 |
94 |
91 |
Bakken |
91 |
95 |
93 |
Oklahoma |
132 |
146 |
145 |
Northern Delaware |
30 |
30 |
35 |
Other United States (a) |
17 |
14 |
14 |
Total United States (mboed) |
280 |
304 |
275 |
International - net sales volumes |
|
|
|
Crude oil and condensate (mbbld) |
8 |
13 |
9 |
Equatorial Guinea |
8 |
13 |
9 |
Natural gas liquids (mbbld) |
7 |
5 |
8 |
Equatorial Guinea |
7 |
5 |
8 |
Natural gas (mmcfd) |
276 |
207 |
295 |
Equatorial Guinea |
276 |
207 |
295 |
Total International (mboed) |
61 |
53 |
66 |
|
341 |
357 |
341 |
Net sales volumes of equity method investees |
|
|
|
LNG (mtd) |
3,489 |
2,213 |
3,766 |
Methanol (mtd) |
982 |
776 |
1,092 |
Condensate and LPG (boed) |
6,914 |
6,123 |
10,730 |
(a) |
Includes sales volumes from the sale of certain non-core proved properties in our |
Supplemental Statistics (Unaudited) |
Three Months Ended |
||
|
|
|
|
|
2022 |
2021 |
2021 |
|
|
|
|
Crude oil and condensate ($ per bbl) (b) |
$ 94.43 |
$ 77.03 |
$ 55.38 |
Eagle Ford |
96.38 |
77.68 |
57.52 |
Bakken |
93.80 |
76.49 |
53.65 |
Oklahoma |
94.08 |
77.39 |
55.63 |
Northern Delaware |
92.47 |
77.70 |
57.06 |
Other United States (c) |
88.79 |
75.26 |
54.83 |
Natural gas liquids ($ per bbl) |
$ 37.32 |
$ 34.99 |
$ 23.94 |
Eagle Ford |
35.50 |
34.26 |
24.43 |
Bakken |
38.21 |
34.79 |
23.22 |
Oklahoma |
38.02 |
36.42 |
25.08 |
Northern Delaware |
35.29 |
33.79 |
22.60 |
Other United States (c) |
36.98 |
33.85 |
20.89 |
Natural gas ($ per mcf) |
$ 4.79 |
$ 5.24 |
$ 6.31 |
Eagle Ford |
4.51 |
5.25 |
5.78 |
Bakken |
5.28 |
5.58 |
2.96 |
Oklahoma |
4.71 |
5.08 |
8.36 |
Northern Delaware |
4.54 |
4.68 |
7.85 |
Other United States (c) |
4.49 |
5.65 |
6.81 |
International - average price realizations |
|
|
|
Crude oil and condensate ($ per bbl) |
$ 59.63 |
$ 71.29 |
$ 44.13 |
Equatorial Guinea |
59.63 |
71.29 |
44.13 |
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) |
$ 95.01 |
$ 77.10 |
$ 58.14 |
Brent ( |
$ 100.30 |
$ 79.59 |
$ 60.82 |
Mont Belvieu NGLs (per bbl) (f) |
$ 38.24 |
$ 35.39 |
$ 23.98 |
Henry Hub natural gas (per mmbtu) (g) |
$ 4.95 |
$ 5.83 |
$ 2.69 |
(a) |
Excludes gains or losses on commodity derivative instruments. |
(b) |
Inclusion of realized gains (losses) on crude oil derivative instruments would have decreased average price realizations by |
(c) |
Includes sales volumes from the sale of certain non-core proved properties in our |
(d) |
Represents fixed prices under long-term contracts with |
(e) |
Average of monthly prices obtained from |
(f) |
|
(g) |
Settlement date average per mmbtu. |
The following table sets forth outstanding derivative contracts as of
|
|
2022 |
2023 |
||||
|
|
Second Quarter |
|
Third Quarter |
|
Fourth Quarter |
First Quarter |
Crude Oil |
|
|
|
|
|
|
|
NYMEX WTI Three-Way Collars |
|
|
|
|
|
|
|
Volume (Bbls/day) |
|
50,000 |
|
30,000 |
|
30,000 |
— |
Weighted average price per Bbl: |
|
|
|
|
|
|
|
Ceiling |
|
$ 98.79 |
|
$ 97.52 |
|
$ 97.52 |
$ — |
Floor |
|
$ 58.00 |
|
$ 56.67 |
|
$ 56.67 |
$ — |
Sold put |
|
$ 48.00 |
|
$ 46.67 |
|
$ 46.67 |
$ — |
NYMEX Roll Basis Swaps |
|
|
|
|
|
|
|
Volume (Bbls/day) |
|
60,000 |
|
60,000 |
|
60,000 |
— |
Weighted average price per Bbl |
|
$ 0.67 |
|
$ 0.67 |
|
$ 0.67 |
$ — |
Natural Gas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume (MMBtu/day) |
|
100,000 |
|
100,000 |
|
100,000 |
— |
Weighted average price per MMBtu |
|
|
|
|
|
|
|
Ceiling |
|
$ 7.13 |
|
$ 7.13 |
|
$ 7.13 |
$ — |
Floor |
|
$ 3.88 |
|
$ 3.88 |
|
$ 3.88 |
$ — |
Sold Put |
|
$ 2.88 |
|
$ 2.88 |
|
$ 2.88 |
$ — |
HH Two-Way Collars |
|
|
|
|
|
|
|
Volume (MMBtu/day) |
|
— |
|
— |
|
50,000 |
50,000 |
Weighted average price per MMBtu: |
|
|
|
|
|
|
|
Ceiling |
|
$ — |
|
$ — |
|
$ 19.28 |
$ 19.28 |
Floor |
|
$ — |
|
$ — |
|
$ 5.00 |
$ 5.00 |
View original content to download multimedia:https://www.prnewswire.com/news-releases/marathon-oil-reports-first-quarter-2022-results-301539978.html
SOURCE