News Releases
Highlights
- Second quarter total Company production averaged 384,000 net boed in line with guidance;
U.S. resource play production averaged 189,000 net boed - Strong
Oklahoma well results including two Company-operated STACK Meramec XL wells with 30-day rates averaging 1,710 boed and 1,570 boed, both with higher than 70% oil cuts - Clarks Creek Middle Bakken well achieved average 30-day production of 2,840 boed; highest rate Williston basin well in the past three years
- Reduced North America E&P production costs 5% below previous quarter and 28% below year-ago quarter; adjusting full-year guidance down
$1.00 per boe - Eagle
Ford completed well costs decreased to an average of$4.2 million while advancing higher intensity completions - Full-year capital program expected to be
$1.3 billion inclusive of incremental capital requirements for Oklahoma STACK acquisition activity;$100 million lower than original budget - Over
$1 billion in non-core asset sales in 2016; more than$800 million in proceeds already received - Announced and closed
$888 million Oklahoma STACK acquisition of approximately 61,000 net surface acres - Achieved first gas from Equatorial Guinea Alba B3 compression project in July, on schedule and within budget
"Within six weeks of announcing our acquisition of high-quality assets in the STACK oil window, we've already closed the transaction and will accelerate an additional rig on this acreage in the third quarter while still decreasing our 2016 capital budget. This deal expands our inventory and further positions
North America E&P
North America Exploration and Production (E&P) production available for sale averaged 224,000 net barrels of oil equivalent per day (boed) for second quarter 2016. On a divestiture-adjusted basis, production was down 6 percent from the prior quarter and 13 percent from the year-ago period. Second quarter
The Company closed on the STACK acquisition on
EAGLE
BAKKEN:
During third quarter 2016,
International E&P
International E&P production available for sale (excluding
Oil Sands Mining
Oil Sands Mining (OSM) production available for sale for second quarter 2016 averaged 40,000 net barrels per day (bbld) compared to 49,000 net bbld in the prior quarter and 25,000 net bbld in the year-ago quarter. The decrease compared to first quarter 2016 was due in part to a 4,000 bbld impact from the temporary suspension of operations at the mines related to wildfire response efforts in May. In addition, planned maintenance activities at the expansion upgrader and the Jackpine mine were completed on schedule and on budget. Despite the referenced production impacts, second quarter production was within guidance as mining operations achieved record production levels in June. Operating expense per synthetic barrel (before royalties) was
Guidance
The Company is adjusting its full-year 2016 E&P production guidance range resulting in a new range of 330,000 to 345,000 net boed, which reflects divestitures and acquisitions closed to date. OSM synthetic crude oil production guidance remains unchanged at 40,000 to 50,000 net bbld.
Full-year guidance for
Additionally, the Company expects its full-year 2016 capital program to be
Corporate and Special Items
Net cash provided by operating activities was
During the quarter, the Company announced the sale of
The adjustments to net loss for second quarter 2016 total
The Company's webcast commentary and associated slides related to
# # #
Non-GAAP Measures
Management uses certain non-GAAP financial measures, including adjusted net income (loss) and net cash provided by operations before changes in working capital, to evaluate the Company's financial performance between periods and to compare the Company's performance to certain competitors. Management also uses net cash provided by operations before changes in working capital to demonstrate the Company's ability to internally fund capital expenditures, pay dividends and service debt. These measures should not be considered substitutes for their most directly comparable GAAP financial measures. See the tables below for reconciliations between each non-GAAP financial measure and its most directly comparable GAAP 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 performance, business strategy, reserve estimates, asset quality, production guidance, drilling plans, capital plans, cost and expense estimates, asset acquisitions and sales, future financial position, and other plans and objectives for future operations, are forward-looking statements. Words such as "anticipate," "believe," "could," "estimate," "expect," "forecast," "guidance," "intend," "may," "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 economic conditions in the jurisdictions in which the Company operates, including changes in foreign currency exchange rates, interest rates, inflation rates, and global and domestic market conditions; risks related to the Company's hedging activities; the Company's level of success in integrating acquisitions; capital available for exploration and development; drilling and operating risks; well production timing; availability of materials and labor; difficulty in obtaining necessary approvals and permits; non-performance by third parties of contractual obligations; unforeseen hazards such as weather conditions; political conditions and developments, including political instability, acts of war or terrorism, and the governmental or military response thereto; cyber-attacks; changes in safety, health, environmental, tax and other regulations; other geological, operating and economic considerations; and the risk factors, forward-looking statements and challenges and uncertainties described in the Company's 2015 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other public filings and press releases, available at www.marathonoil.com. The Company undertakes no obligation to revise or update any forward-looking statements as a result of new information, future events or otherwise.
Consolidated Statements of Income (Unaudited) | Three Months Ended | ||||||||
June 30 | Mar. 31 | June 30 | |||||||
(In millions, except per share data) | 2016 | 2016 | 2015 | ||||||
Revenues and other income: | |||||||||
Sales and other operating revenues, including related party | $ | 870 | $ | 714 | $ | 1,307 | |||
Marketing revenues | 89 | 58 | 183 | ||||||
Income from equity method investments | 37 | 14 | 26 | ||||||
Net gain (loss) on disposal of assets | 294 | (60 | ) | — | |||||
Other income | 12 | 4 | 15 | ||||||
Total revenues and other income | 1,302 | 730 | 1,531 | ||||||
Costs and expenses: | |||||||||
Production | 350 | 328 | 450 | ||||||
Marketing, including purchases from related parties | 88 | 58 | 182 | ||||||
Other operating | 95 | 109 | 81 | ||||||
Exploration | 189 | 24 | 111 | ||||||
Depreciation, depletion and amortization | 561 | 609 | 751 | ||||||
Impairments | — | 1 | 44 | ||||||
Taxes other than income | 39 | 48 | 78 | ||||||
General and administrative | 132 | 151 | 168 | ||||||
Total costs and expenses | 1,454 | 1,328 | 1,865 | ||||||
Income (loss) from operations | (152 | ) | (598 | ) | (334 | ) | |||
Net interest and other | (86 | ) | (85 | ) | (58 | ) | |||
Income (loss) before income taxes | (238 | ) | (683 | ) | (392 | ) | |||
Benefit for income taxes | (68 | ) | (276 | ) | (6 | ) | |||
Net income (loss) | $ | (170 | ) | $ | (407 | ) | $ | (386 | ) |
Adjustments for special items (pre-tax): | |||||||||
Net (gain) loss on dispositions | (296 | ) | 63 | — | |||||
Proved property impairments | — | — | 44 | ||||||
Unproved property impairments | 141 | — | — | ||||||
Pension settlement | 31 | 48 | 64 | ||||||
Unrealized (gain) loss on commodity derivative instruments | 91 | 23 | 44 | ||||||
Reduction in workforce | 1 | 7 | (2 | ) | |||||
Other | (9 | ) | — | — | |||||
Provision (benefit) for income taxes related to special items | 15 | (51 | ) | (54 | ) | ||||
— | — | 135 | |||||||
Adjusted net income (loss) (a) | $ | (196 | ) | $ | (317 | ) | $ | (155 | ) |
Per diluted share: | |||||||||
Net Income (loss) | $ | (0.20 | ) | $ | (0.56 | ) | $ | (0.57 | ) |
Adjusted net income (loss) (a) | $ | (0.23 | ) | $ | (0.43 | ) | $ | (0.23 | ) |
Weighted average diluted shares | 848 | 730 | 677 |
(a) Non-GAAP financial measure. See "Non-GAAP Measures" above for further discussion.
Supplemental Statistics (Unaudited) | Three Months Ended | ||||||||
June 30 | Mar. 31 | June 30 | |||||||
(in millions) | 2016 | 2016 | 2015 | ||||||
Segment income (loss) | |||||||||
North America E&P | $ | (70 | ) | $ | (195 | ) | $ | (45 | ) |
International E&P | 55 | 4 | 41 | ||||||
Oil Sands Mining | (38 | ) | (48 | ) | (77 | ) | |||
Segment income (loss) | (53 | ) | (239 | ) | (81 | ) | |||
Not allocated to segments | (117 | ) | (168 | ) | (305 | ) | |||
Net income (loss) | $ | (170 | ) | $ | (407 | ) | $ | (386 | ) |
Exploration expenses | |||||||||
North America E&P | $ | 37 | $ | 18 | $ | 91 | |||
International E&P | 4 | 6 | 20 | ||||||
Oil Sands Mining | 7 | — | — | ||||||
Segment exploration expenses | 48 | 24 | 111 | ||||||
Not allocated to segments | 141 | — | — | ||||||
Total | $ | 189 | $ | 24 | $ | 111 | |||
Cash flows | |||||||||
Net cash provided by operating activities | $ | 178 | $ | 74 | $ | 408 | |||
Minus: changes in working capital | (112 | ) | 19 | (112 | ) | ||||
Net cash provided by operations before changes in working capital (a) | $ | 290 | $ | 55 | $ | 520 | |||
Cash additions to property, plant and equipment | $ | (299 | ) | $ | (454 | ) | $ | (868 | ) |
(a) Non-GAAP financial measure. See "Non-GAAP Measures" above for further discussion.
Three Months Ended | Guidance(a) | |||||||
June 30 | Mar. 31 | June 30 | Q3 | Full Year | ||||
(mboed) | 2016 | 2016 | 2015 | 2016 | 2016 | |||
Net production available for sale | ||||||||
North America E&P (b) | 224 | 239 | 274 | 200-210 | ||||
International E&P excluding |
120 | 100 | 108 | 125-135 | ||||
344 | 339 | 382 | 325-345 | 330-345 | ||||
Oil Sands Mining (d) | 40 | 49 | 25 | 45-50 | 40-50 | |||
384 | 388 | 407 | ||||||
— | — | — | ||||||
Total Company | 384 | 388 | 407 |
(a) Guidance includes the effect of acquisitions and divestitures closed to date.
(b)The sale of the Company's
(c)
(d) Upgraded bitumen excluding blendstocks.
Three Months Ended | ||||||
June 30 | Mar. 31 | June 30 | ||||
(mboed) | 2016 | 2016 | 2015 | |||
Net production available for sale | ||||||
North America E&P | 224 | 239 | 274 | |||
Less: Divestitures (a) | (13 | ) | (15 | ) | (31 | ) |
Divestiture-adjusted North America E&P | 211 | 224 | 243 |
(a) Divestitures include the sale of
Supplemental Statistics (Unaudited) | Three Months Ended | ||||||||
June 30 | Mar. 31 | June 30 | |||||||
2016 | 2016 | 2015 | |||||||
North America E&P - net sales volumes | |||||||||
Liquid hydrocarbons (mbbld) | 173 | 186 | 213 | ||||||
Bakken | 49 | 53 | 57 | ||||||
Eagle Ford | 84 | 95 | 108 | ||||||
|
14 | 12 | 11 | ||||||
|
26 | 26 | 37 | ||||||
Crude oil and condensate (mbbld) | 135 | 147 | 176 | ||||||
Bakken | 44 | 47 | 54 | ||||||
Eagle Ford | 61 | 70 | 82 | ||||||
|
6 | 5 | 5 | ||||||
|
24 | 25 | 35 | ||||||
Natural gas liquids (mbbld) | 38 | 39 | 37 | ||||||
Bakken | 5 | 6 | 3 | ||||||
Eagle Ford | 23 | 25 | 26 | ||||||
|
8 | 7 | 6 | ||||||
|
2 | 1 | 2 | ||||||
Natural gas (mmcfd) | 310 | 315 | 361 | ||||||
Bakken | 24 | 25 | 22 | ||||||
Eagle Ford | 150 | 154 | 164 | ||||||
|
82 | 89 | 81 | ||||||
|
54 | 47 | 94 | ||||||
Total North America E&P (mboed) | 224 | 239 | 274 | ||||||
International E&P - net sales volumes | |||||||||
Liquid hydrocarbons (mbbld) | 44 | 32 | 42 | ||||||
|
30 | 25 | 28 | ||||||
|
14 | 7 | 14 | ||||||
Crude oil and condensate (mbbld) | 33 | 23 | 33 | ||||||
|
19 | 16 | 19 | ||||||
|
14 | 7 | 14 | ||||||
Natural gas liquids (mbbld) | 11 | 9 | 9 | ||||||
|
11 | 9 | 9 | ||||||
Natural gas (mmcfd) | 457 | 382 | 396 | ||||||
|
430 | 351 | 365 | ||||||
|
27 | 31 | 31 | ||||||
Total International E&P (mboed) | 120 | 96 | 108 | ||||||
Oil Sands Mining - net sales volumes | |||||||||
Synthetic crude oil (mbbld) (c) | 49 | 59 | 29 | ||||||
393 | 394 | 411 | |||||||
Net sales volumes of equity method investees | |||||||||
LNG (mtd) | 5,797 | 4,322 | 4,991 | ||||||
Methanol (mtd) | 1,303 | 1,280 | 673 | ||||||
Condensate and LPG (boed) | 11,306 | 10,208 | 8,586 |
(a) Includes Gulf of
(b) Includes natural gas acquired for injection and subsequent resale of 5 mmcfd, 5 mmcfd, and 7 mmcfd in the second and first quarter of 2016, and second quarter of 2015, respectively.
(c) Includes blendstocks.
Supplemental Statistics (Unaudited) | Three Months Ended | ||||||||||||||||||||
June 30 | Mar. 31 | June 30 | |||||||||||||||||||
2016 | 2016 | 2015 | |||||||||||||||||||
North America E&P - average price realizations (a) | |||||||||||||||||||||
Liquid hydrocarbons ($ per bbl) | $ | 35.07 | $ | 24.00 | $ | 45.96 | |||||||||||||||
Bakken | 38.38 | 26.00 | 49.29 | ||||||||||||||||||
Eagle Ford | 34.31 | 23.02 | 44.05 | ||||||||||||||||||
|
25.57 | 19.41 | 30.29 | ||||||||||||||||||
|
36.27 | 25.51 | 50.89 | ||||||||||||||||||
Crude oil and condensate ($ per bbl) (c) | $ | 40.77 | $ | 28.21 | $ | 52.63 | |||||||||||||||
Bakken | 42.00 | 28.78 | 51.36 | ||||||||||||||||||
Eagle Ford | 41.21 | 28.65 | 53.47 | ||||||||||||||||||
|
41.55 | 29.74 | 51.00 | ||||||||||||||||||
|
37.27 | 25.66 | 52.83 | ||||||||||||||||||
Natural gas liquids ($ per bbl) | $ | 14.84 | $ | 8.12 | $ | 14.77 | |||||||||||||||
Bakken | 7.73 | 3.47 | 11.63 | ||||||||||||||||||
Eagle Ford | 15.68 | 7.05 | 14.08 | ||||||||||||||||||
|
14.88 | 11.86 | 14.45 | ||||||||||||||||||
|
23.64 | 23.47 | 25.65 | ||||||||||||||||||
Natural gas ($ per mcf) | $ | 1.96 | $ | 2.02 | $ | 2.76 | |||||||||||||||
Bakken | 1.77 | 2.09 | 2.62 | ||||||||||||||||||
Eagle Ford | 2.02 | 1.98 | 2.71 | ||||||||||||||||||
|
1.92 | 2.03 | 2.64 | ||||||||||||||||||
|
1.95 | 2.10 | 2.98 | ||||||||||||||||||
International E&P - average price realizations | |||||||||||||||||||||
Liquid hydrocarbons ($ per bbl) | $ | 32.11 | $ | 22.66 | $ | 44.70 | |||||||||||||||
|
27.28 | 20.43 | 35.74 | ||||||||||||||||||
|
42.32 | 30.20 | 61.93 | ||||||||||||||||||
Crude oil and condensate ($ per bbl) | $ | 42.21 | $ | 30.95 | $ | 56.70 | |||||||||||||||
|
41.46 | 30.93 | 52.27 | ||||||||||||||||||
|
43.25 | 30.72 | 62.97 | ||||||||||||||||||
Natural gas liquids ($ per bbl) | $ | 2.65 | $ | 2.20 | $ | 3.10 | |||||||||||||||
|
1.00 | 1.00 | 1.00 | ||||||||||||||||||
|
25.99 | 23.56 | 36.49 | ||||||||||||||||||
Natural gas ($ per mcf) | $ | 0.53 | $ | 0.60 | $ | 0.78 | |||||||||||||||
|
0.24 | 0.24 | 0.24 | ||||||||||||||||||
|
5.06 | 4.61 | 6.98 | ||||||||||||||||||
Oil Sands Mining - average price realizations | |||||||||||||||||||||
Synthetic crude oil ($ per bbl) | $ | 40.88 | $ | 26.41 | $ | 52.46 | |||||||||||||||
Benchmark | |||||||||||||||||||||
WTI crude oil (per bbl) | $ | 45.64 | $ | 33.63 | $ | 57.95 | |||||||||||||||
Brent ( |
$ | 45.52 | $ | 33.70 | $ | 61.69 | |||||||||||||||
|
$ | 1.95 | $ | 2.09 | $ | 2.64 | |||||||||||||||
WCS crude oil (per bbl)(g) | $ | 32.29 | $ | 19.21 | $ | 46.35 |
(a) Excludes gains or losses on derivative instruments.
(b) Includes Gulf of
(c) Inclusion of realized gains on crude oil derivative instruments would have increased average price realizations by
(d) Represents fixed prices under long-term contracts with
(e) Average of monthly prices obtained from
(f) Settlement date average per mmbtu.
(g) Monthly pricing based upon average WTI adjusted for differentials unique to western
Media Relations Contacts:Lee Warren : 713-296-4103Lisa Singhania : 713-296-4101 Investor Relations Contacts:Zach Dailey : 713-296-4140