Marathon Oil Corporation

Good morning and welcome to the Marathon Oil 4th Quarter 2021 Earnings Call. My name is Brandon and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session during which you may dial star 1 if you have a question. Please note this conference is being recorded. I will now turn it over to Guy Baber. Guy, you may begin.

Thank you, Brandon, and thank you to everyone for joining us this morning on our call. Yesterday, after the close, we issued a press release, a slide presentation, and an investor packet that addressed our fourth quarter 2021 results and our 2022 outlook. Those documents can be found on our website at MarathonOil.com. Joining me on today's call are Lee Tillman, our Chairman, President, and CEO, Dane Whitehead, Executive VP and CFO, Pat Wagner, Executive VP of Corporate Development and Strategy, and Mike Henderson, Executive VP of Operations. As a reminder, today's call will contain forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. I'll refer everyone to the cautionary language included in the press release and our presentation materials, as well as to the risk factors described in our SEC filings. With that, I'll turn the call over to Lee, who will provide us with some opening remarks. We'll also hear from Dane and from Mike today before we move to our question and answer session. Lee?

Thank you, Guy, and good morning to everyone listening to our call today. I want to start by once again thanking our employees and contractors for their dedication and hard work, their commitment to safety and environmental excellence, and their collective contributions to a truly remarkable year. I can best describe 2021 as a year of comprehensive delivery against our framework for success, highlighted by financial results that are not only superior to our E&P peers, but more importantly, superior to any other sector of the S&P 500. And we are carrying that momentum forward into 2022, fully expecting another year of outstanding delivery. There are a few key messages I want to highlight today. First, after accelerating our balance sheet objectives through gross debt reduction, fourth quarter transitioned to a focus on returning a compelling amount of capital to our equity investors. Our cash flow driven return of capital framework uniquely prioritizes our shareholders as the first call on cash flow generation, not the drill bit. And our recent actions underscore both our commitment to prioritizing our shareholders and the power of our portfolio in a constructive price environment. The outcomes speak for themselves. During fourth quarter, we returned over 70% of our cash from operations or more than $800 million to our equity investors, significantly exceeding our minimum 40% commitment. To clarify, that's 70% of our cash flow from operations, not our free cash flow. That $800 million actually equates to around 90% of our free cash flow during fourth quarter. In total, we have now executed $1 billion of share repurchases since October, driving an 8% reduction to our outstanding share count in just four and a half months. While others in our space may once again be focused on growing their production, we are focused on growing the per share financial metrics that matter most to our equity valuation, our cash flow per share and our free cash flow per share. Further, we continue to believe buybacks remain an excellent use of capital. Dane will discuss our perspective in more detail, but to summarize, we see good value in our shares. We are driving significant underlying per share growth, and buybacks are highly synergistic with base dividend growth over time. Speaking of our base dividend, we recently raised our quarterly base dividend for the fourth consecutive quarter, fully consistent with our objective to pay a competitive and sustainable base dividend to our shareholders. My second key point today is that we are successfully executing on our mandate to deliver financial outcomes that are not only superior to our EMP peer group, but are superior to the broader S&P 500 as well. As I've said before, For our company and for our sector to attract a broader universe of investors, we must deliver competitive financial performance with other investment opportunities in the market, as measured by free cash flow generation and return of capital, even when commodity prices are much lower than they are today, all the way down to $40 to $50 WTI range. We believe we have built that type of resilience into our business. And we must deliver truly outsized free cash flow and return of capital versus the S&P 500 when we experience constructive commodity price support, as we are seeing today. Our 2021 results are a strong testament to this mandate. over $2.2 billion of free cash flow at a reinvestment rate of 32% in 2021, including over $900 million of free cash flow at a 22% reinvestment rate during the fourth quarter alone. a peer-leading return of capital profile driving significant per share growth, a tremendous balance sheet following $1.4 billion of gross debt reduction last year, and a demonstrated capital efficiency advantage relative to other EMPs, no matter how you want to analyze the publicly available data. My third key message today is that this peer-leading financial and operational performance we have been delivering is sustainable. Our $1.2 billion 2022 capital program is fully consistent with our disciplined capital allocation framework that prioritizes sustainable free cash flow generation and per share accretion over production growth. We expect 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 at a discount to the current forward curve. These financial outcomes are sustainable for years to come and are underpinned by over a decade of high return, high confidence inventory. And it's further supported by our bottoms-up five-year benchmark maintenance scenario, which has now been extended out to 2026 and which delivers annualized financial outcomes similar to 2021 and 2022 on a price-normalized basis. While our five-year benchmark scenario is based on a well-by-well execution-level model, our longer-term portfolio modeling extends the maintenance scenario out 10 years and shows that we can deliver the same peer-leading financial outcomes for at least a decade. Importantly, we retain significant upside leverage to commodity prices that differentiate for three distinct reasons. First, we will remain disciplined and will not add production growth capital to our budget in 2022. Our focus will remain on free cash flow generation, return of capital, and per share financial metrics. Second, we have an attractive hedge book that preserves our cash flow upside. And third, we don't expect to pay U.S. federal cash income taxes until the second half of the decade. My fourth and final key point today is that Marathon Oil is fully committed to meeting global energy demand while delivering comprehensive ESG excellence, focusing on each element of ESG. I hope all of you have had a chance to review the dedicated ESG press release that we issued in late January, which highlighted our key accomplishments in 2021, as well as our new environmental objectives. Suffice to say, I believe our employees should be just as proud of our ESG delivery in 2021 as they are of our peer-leading financial and operational results. With that, I will turn it over to Dane, who will give you all an update on our return of capital initiatives.