Marathon Oil Corporation

Good morning and welcome to the Marathon I.O. 4-Kill and 4-Year 2023 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star one on your telephone keypad. To withdraw your question, please press Star 2. Please note, this event is being recorded. I would now like to turn the conference over to Guy Baber, Vice President, Investor Relations. Please go ahead, sir.

Thank you very much, and thanks as well to everyone for joining us on our call this morning. Yesterday, after the close, we issued a press release, a slide presentation, and an investor packet that addressed our fourth quarter 2023 results and our full year 2024 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, our Executive VP and CFO, Pat Wagner, Executive VP of Corporate Development and Strategy, and Mike Henderson, our 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 presentation materials, as well as to the risk factors described in our SEC files. We'll also reference certain non-GAAP terms in today's discussion, which have been reconciled and defined in our materials. So with that, I'll turn the call over to Lee and the rest of the team who will provide prepared remarks. After the completion of their prepared remarks, we'll move to a question and answer session. And in the interest of time, we ask that you limit yourselves to one question and a follow-up. Lee? Thank you, Guy.

And good morning to everyone joining us on our call today. As I always start these calls, I want to first and foremost thank our employees and contractors for their dedication and hard work in delivering the excellent results we have the privilege of discussing today. And I especially want to thank our employees and contractors for their enduring commitment to our core values. On that front, we have a few notable accomplishments to highlight today. First, we delivered a record safety year in 2023 as measured by total recordable incident rate. for both our employees and our contractors. This builds on a multi-year track record of top quartile TRIR in our industry. Providing a safe, healthy, and secure workplace remains a top priority for us, with our safety performance a key element of our executive and employee compensation scorecards. Second, we continue to make progress in reducing our natural gas flaring, improving our total company gas capture, to 99.5% in 2023, a new high for our company. We'll continue to work hard on our journey of continuous improvement, moving toward our ultimate objective of zero routine learning. And third, we achieved our 2025 GHG intensity reduction goal of 50% relative to 2019 levels, a full two years ahead of schedule. consistent with our objective to help meet the world's growing demand for oil and natural gas while achieving the highest standards of environmental excellence. We are a result-driven company, but how we deliver those results matters, and I couldn't be more proud of our people and what they've accomplished. Yet this type of delivery isn't new for us. It's the continuation of a well-established trend. And before I get into our 2023 results and 2024 outlook, I'd like to reflect on what I believe is our unmatched track record of delivery on our framework for success. We're now more than three years into our more S&P, less E&T journey. My challenge for our company was to raise our game and compete heads up with not just the best companies in our sector, but with the best companies in the S&P 500. and to do so year in, year out, through the commodity cycle on the metrics that matter most, sustainable free cash flow generation, return of capital to shareholders, and capital and operating efficiency. For the last three years, we've consistently held true to our framework for success. We've prioritized corporate returns, sustainable free cash flow, meaningful return of capital, and we've delivered differentiated execution quarter in, quarter out. We've continued to enhance our multi-basin portfolio, which has produced the best capital efficiency in the sector. And we've protected our investment-grade balance sheet while prioritizing all elements of our ESG performance. I believe our commitment to our strategy and the consistency of our execution over the last three years have successfully differentiated Marathon Oil in the marketplace. The proof points are summarized in slide six of our deck. sustainable free cash flow generation. Through discipline, corporate returns focused capital allocation, we've generated $8.4 billion of free cash flow over the trailing three years. That equates to over 60% of our current market cap, almost double that of our EMP peers and six times that of the S&P 500. Next, meaningful return of capital to shareholders. Over the last three years, we've consistently held true to our transparent, cashflow-driven return of capital framework that prioritizes our investors as the first call on cashflow, not the drill bit and not inflation. In total, we've returned $5.6 billion to our shareholders, equivalent to over 40% of our current market cap. Again, that's double that of our EMP peers and well in excess of the S&P 500. Capital and operating efficiency, a testament to the quality of our multi-basin portfolio and the extreme discipline inherent in both our capital allocation and cost structure. Over the trailing three years, we've delivered the lowest reinvestment rate in the EMP sector, below the S&P average. And our well-level capital efficiency, according to independent third-party data, has been the best in the EMP's peer space, 35% superior to the peer average. And 2023 was emblematic of these three proof points. Last year, we delivered $2.2 billion of adjusted free cash flow, $1.7 billion of shareholder distributions equivalent to 41% of our CFO providing a shareholder distribution yield of more than 12%, $1.5 billion of share repurchases that drove a 9% reduction for our outstanding share count, a 22% increase to our base dividend while maintaining our pure low free cash flow breakeven, $500 million of gross debt reduction, and 28% growth in our production per share, driven by our share repurchase program and the seamless integration of the Ensign Eagleford acquisition. That's what comprehensive delivery on our key properties looks And if you like 2023, then you will not be disappointed in our 2024 business plan, which offers more of the same as we continue to build on our multi-year track record. We have confidence in our strategy and in our capital allocation and return of capital framework, and our focus will be on consistently executing our plan amidst all the volatility inherent in our sector. And at the end of the day, I expect our plan to again benchmark with the very best companies in our sector, outperforming the S&P 500. More specifically, this year we expect our $2 billion capital program to deliver approximately $1.9 billion of free cash flow, assuming $75 WTI, 250 Henry Hub, and $10 TTF. We fully recognize that we are a price taker, not a price predictor, and commodity price volatility impacts our financial outcomes. As such, We've provided cash flow sensitivities for each of the key commodities within our slide deck to help you model expectations based on your own commodity forecast. We'll stay true to our CFO return of capital framework, expecting to return at least 40% of our CFO to shareholders, again providing visibility to a double-digit shareholder distribution yield. We expect the underlying capital efficiency of our 2024 capital program to improve as we maintain our well productivity leadership and work all avenues to improve capital efficiency, including further extending lateral links. And perhaps most importantly, we believe our results are sustainable. That's true for our U.S. multi-basin portfolio, and that's true for our integrated gas business and EG. As you all know, our EG business now has no Henry Hub exposure with the expiration of our legacy contract at the end of 2023. That business is now fully realizing global LNG pricing, which will drive improved financial performance this year. We believe this improvement is sustainable due to all the great work our team has done to advance the EG gas mega hub concept. For example, over the next five years, we're expecting our EG business to generate cumulative EBITDA of approximately $2.5 billion, assuming flat $10 TTF commodity prices. With that, I'll turn it over to Dane, who will walk through our commitment to return of capital while also fortifying our investment trade balance sheet.