Marathon Oil Corporation

Marathon Oil — Q2 2014 Earnings Presentation

33 slides from Marathon Oil's earnings presentation, Aug 6, 2014

  1. Slide 1: Second Quarter 2014 Earnings Review

    Second Quarter 2014 Earnings Review August 4, 2014

  2. Slide 2: Forward-Looking Statements

    Forward–Looking Statements All statements in this presentation (and oral statements made regarding the subjects of this presentation) other than historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securit

  3. Slide 3: Executing on 2014 Priorities: 2Q 2014 Highlights

    Executing on 2014 Priorities 2Q 2014 Highlights 3 Marathon Oil Corporation  Adjusted net income per diluted share of $0.89, up 33% from the year-ago quarter  Adjusted income from continuing operations per diluted share of $0.62, an increase of 51% from the year-ago quarter  Three high-quality U.S

  4. Slide 4: Total Company Cash Flow 2014 YTD

    Total Company Cash Flow 2014 YTD Marathon Oil Corporation 4 Cash-adjusted debt-to-capital ratio 25% 264 1,169 2,473 (355) (2,230) 2,232 (260) (162) (1,000) 0 500 1,000 1,500 2,000 2,500 3,000 12/31/13 Cash Balance Cont Op Cash Flow b/f WC Cont Op Working Capital Cont Op Cash Capital Expenditures Dis

  5. Slide 5: Adjusted Income From Continuing Operations 2Q-14 vs. 2Q-13

    Adjusted Income From Continuing Operations 2Q-14 vs. 2Q-13 Marathon Oil Corporation 293 (19) 81 (10) 35 40 0 50 100 150 200 250 300 350 400 450 500 2Q 2013 N.A. E&P (After-tax) Int'l E&P (After-tax) OSM (After-tax) Corp & Unallocated G&A (Pre-tax) Other (Pre-tax) Unallocated Income Taxes 2Q 2014 $M

  6. Slide 6: Adjusted Income From Continuing Operations 2Q-14 vs. 1Q-14

    Adjusted Income From Continuing Operations 2Q-14 vs. 1Q-14 Marathon Oil Corporation 438 (32) 60 (61) (9) 21 0 100 200 300 400 500 600 1Q 2014 N.A. E&P (After-tax) Int'l E&P (After-tax) OSM (After-tax) Corp & Unallocated G&A (Pre-tax) Other (Pre-tax) Unallocated Income Taxes 2Q 2014 $M M 4236 6  2Q-

  7. Slide 7: North America E&P Segment Earnings

    North America E&P Segment Earnings 242 131 20 (35) (25) (9) (22) 302 0 50 100 150 200 250 300 350 400 450 1Q 2014 Volume Variance (Pre-tax) Price Variance (Pre-tax) DD&A (Pre-tax) Exploration Expenses (Pre-tax) Other (Pre-tax) Income Taxes 2Q 2014 $M M 2Q-14 vs. 1Q-14 7 Marathon Oil Corporation

  8. Slide 8: N.A. E&P & OSM Crude Oil & Condensate Realizations

    N.A. E&P & OSM Crude Oil & Condensate Realizations Asset 1Q 2014 2Q 2014 Difference Bakken 89.46 93.08 3.62 Eagle Ford 96.10 99.08 2.98 Oklahoma Resource Basins 94.38 101.12 6.74 All other North America 89.25 93.45 4.20 Total North America E&P 92.48 95.95 3.47 Oil Sands Mining 88.50 94.17 5.67 Marke

  9. Slide 9: International E&P Segment Earnings 2Q-14 vs. 1Q-14

    International E&P Segment Earnings 2Q-14 vs. 1Q-14 Marathon Oil Corporation 221 (24) (11) (4) (10) (47) 0 50 100 150 200 250 1Q 2014 Volume Variance (Pre-tax) Price Variance (Pre-tax) DD&A (Pre-tax) Exploration Expenses (Pre-tax) Other (Pre-tax) Income Taxes 2Q 2014 $M M 35 160 9 We sold our Angola

  10. Slide 10: Oil Sands Mining Segment Earnings

    Oil Sands Mining Segment Earnings 64 (17) 23 (15) (2) 2 55 0 10 20 30 40 50 60 70 80 1Q 2014 Volume Variance (Pre-tax) Price Variance (Pre-tax) Operating Costs (Pre-tax) Other (Pre-tax) Income Taxes 2Q 2014 $M M 2Q-14 vs. 1Q-14 10 Marathon Oil Corporation

  11. Slide 11: U.S. Resource Plays Drive Toward >30% Growth: Eagle Ford

    U.S. Resource Plays Drive Toward >30% Growth  Eagle Ford outperforming modeled type curves and on track for double digit growth quarter-over-quarter through year end  Production averaged 102,000 net BOED; increased 26% over 2Q 2013 and 6% over prior quarter  Enhanced completion design delivering

  12. Slide 12: U.S. Resource Plays Drive Toward >30% Growth: Bakken and Oklahoma

    U.S. Resource Plays Drive Toward >30% Growth  Bakken driving to higher density pilots and shifting to more aggressive completion designs  Production averaged 50,000 net BOED; increased 28% over 2Q 2013 and 16% over prior quarter  Reached TD on 19 gross operated wells and turned 19 gross wells to

  13. Slide 13: Unconventional Resource Plays Accelerated Resource Development

    Unconventional Resource Plays Accelerated Resource Development to Grow Profitable Volumes 13 Marathon Oil Corporation 0 50 100 150 200 1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014 2014E A va ila b le f o r Sa le N et M B O ED Oklahoma Resource Basins Bakken Eagle F

  14. Slide 14: Net Production Available for Sale

    Lower 48 Onshore Forecast 0 50 100 150 200 250 1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014E A va ila b le f o r Sa le N et M B O ED Net Production Available for Sale 14 Marathon Oil Corporation % Crude Oil & Cond 57 59 58 60 60 60 61 62 63 65 6 7 10 10 12

  15. Slide 15: E&P Net Production Volumes

    0 100 200 300 400 500 1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014 MBOE D Available for Sale Sales Libya - Available for Sale Libya - Sales E&P Net Production Volumes Including Libya and excluding Alaska & Disc Ops North America & International E&P Segments  Net production availa

  16. Slide 16: Total Company LHC Sales Volumes 2Q-14 Actual vs. 3Q-14 Estimate

    U.K. 2% E.G. 10% U.S. 69% Canada 19% U.K. 5% E.G. 11% U.S. 67% Canada 17% Total Company LHC Sales Volumes Excluding Libya & Norway 2Q-14 Actual vs. 3Q-14 Estimate Marathon Oil Corporation 16 3Q 2014 Estimated Sales Volumes 275 – 295 Net MBOD 2Q 2014 Actual Sales Volumes 266 Net MBOD Minimal Libya sa

  17. Slide 17: 2014 Drilling Schedule

    Location Well 2014 Q1 Q2 Q3 Q4 Kurdistan Mangesh-1 Kurdistan East Swara Tika-1 Kurdistan Jisik-11 Kurdistan Mirawa-21,2 Kenya Sala-1 Kenya Sala-22 Ethiopia Shimela-1 Ethiopia Gardim-1 Gulf of Mexico Shenandoah2 Gulf of Mexico Key Largo1 Gulf of Mexico Perseus E.G. Sodalita West1 E.G. Rodo1 45% WI 20

  18. Slide 18: Executing on 2014 Priorities

    Executing on 2014 Priorities  Accelerated activity in Eagle Ford, Bakken and Oklahoma Resource Basins  Eagle Ford - well results continue to outperform modeled type curves; double digit production growth quarter-over-quarter for remainder of 2014  Bakken - more than 50% of 2H wells testing enhanc

  19. Slide 19: We Will be Recognized as the Premier Independent E&P Company

    We Will be Recognized as the Premier Independent E&P Company by: 19 Marathon Oil Corporation Living our values Investing in our people Continuous improvement in operating and capital efficiency Driving profitable and sustainable growth Rigorous portfolio management Quality and material resource capt

  20. Slide 20: Appendix

    Appendix > a Marathon Oil Corporation

  21. Slide 21: Volumes, Exploration Expenses & Effective Tax Rate 2014

    Volumes, Exploration Expenses & Effective Tax Rate 2014 (excluding Libya & Discontinued Operations) 21 Marathon Oil Corporation 1Q 2Q 3Q 4Q Year North America E&P Net Sales Volumes: - Liquid Hydrocarbons (MBD) 163 178 - Natural Gas (MMCFD) 300 294 - North America E&P Total (MBOED) 213 227 Internatio

  22. Slide 22: 2014 Estimates: Volumes & Tax Rates by Jurisdiction

    2014 Estimates (excluding Libya & Disc Ops) Volumes & Tax Rates by Jurisdiction 22 Marathon Oil Corporation Available for Sale 3QE Available for Sale Year Estimate Estimated LHC Sales Volumes 3QE Approximate Annual Production % Statutory Tax Rate North America E&P Total (MBOED) 235 – 248 - Liquid Hy

  23. Slide 23: 2014 Estimates: Exploration Expenses & Production Operating Costs per BOE

    2014 Estimates Exploration Expenses & Annual Production Operating Costs per BOE 23 Marathon Oil Corporation 3QE Year Estimate Exploration Expenses (Pre-tax): North America E&P ($ millions) 50 – 125 International E&P ($ millions) 25 – 100 Effective Consolidated Tax Rate (excluding Libya, Disc Ops) 30

  24. Slide 24: Net Income to Adjusted Net Income

    Marathon Oil Corporation 24 Net Income to Adjusted Net Income 1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014 Net Income 383 426 569 375 1,149 540 Adjustments for special items (net of taxes): Unrealized (gain)/loss on derivative instruments 32 (32) 39 (6) 0 0 (Gain)/loss on disposit

  25. Slide 25: Income from Continuing Operations to Adjusted Income

    Marathon Oil Corporation 25 Adjusted income from continuing operations, a non-GAAP financial measure, facilitates comparisons to earnings forecasts prepared by stock analysts and other third parties. Such forecasts generally exclude the effects of items that are considered non-recurring, are difficu

  26. Slide 26: North America E&P Cost per BOE Trend

    North America E&P Cost per BOE Trend Continuing to control costs 26 0 10 20 30 40 50 60 70 80 1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014 $ /B O E Production operating DD&A Taxes other than income Other Exploration Marathon Oil Corporation 1Q 2013 Exploration expense includes an

  27. Slide 27: International E&P Cost per BOE Trend Includes Libya

    International E&P Cost per BOE Trend Includes Libya 27 0 5 10 15 20 25 30 1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014 $ /B O E Production operating DD&A Taxes other than income Other Exploration Marathon Oil Corporation We sold our Angola assets in the first quarter of 2014 and e

  28. Slide 28: International E&P Cost per BOE Trend Excludes Libya

    International E&P Cost per BOE Trend Excludes Libya 28 0 5 10 15 20 25 30 1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014 $ /B O E Production operating DD&A Taxes other than income Other Exploration Marathon Oil Corporation We sold our Angola assets in the first quarter of 2014 and e

  29. Slide 29: Net Methanol and LNG Sales Volumes

    Number of LNG Cargoes 15 13 17 14 14 15 1,410 973 1,364 1,250 1,153 980 6,787 5,820 7,302 6,282 6,579 6,624 0 2,000 4,000 6,000 8,000 1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014 MT D Methanol LNG International E&P 29 Marathon Oil Corporation Net Methanol and LNG Sales Volumes Met

  30. Slide 30: Net Income ($MM)

    Net Income ($MM) Marathon Oil Corporation 2013 2014 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q North America E&P Segment Income (59) 221 242 125 242 302 International E&P Segment Income 273 170 192 123 221 160 Oil Sands Mining Segment Income 38 20 106 42 64 55 Total Segment Income 252 411 540 290 527 517 Not allocated

  31. Slide 31: Select Balance Sheet / Cash Flow Data

    Select Balance Sheet / Cash Flow Data ($B) Marathon Oil Corporation 2013 2014 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q As of quarter ended: Cash and cash equivalents 0.8 0.2 0.4 0.3 2.0 1.2 Total debt 6.5 6.5 6.7 6.6 6.5 6.4 Cash-adjusted total debt 5.8 6.3 6.3 6.3 4.5 5.2 Stockholders’ equity 18.6 19.0 19.0 19.3 19

  32. Slide 32: Net Cash Provided by Continuing Operations

    Marathon Oil Corporation 32 Net Cash Provided by Continuing Operations 1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014 Net cash provided by continuous operations 1,078 1,922 3,300 4,388 1,069 2,118 Changes in: Current receivables 87 69 (53) 297 (69) (266) Inventories (17) (19) (11) (

  33. Slide 33: Capital, Investment & Exploration Spending Reconciliation

    Capital, Investment & Exploration Spending Reconciliation $MM Marathon Oil Corporation 2014 Budget 2014 YTD Capital expenditures, including acquisitions 5,669 2,576 M&S Inventory 0 16 Investments in equity method investees & others 0 0 Exploration costs other than well costs 213 68 Capital, Investme

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