Marathon Oil (MRO) 6 Aug 202020 Q2 Earnings call transcript

Welcome to the Marathon Oil Second Quarter Earnings Conference Call. My name is Rebecca and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note this conference is being recorded. it Guy turn of Vice now Relations. Investor will over Baber, to President I

sir. begin may You

Thanks, you the marathonoil.com. website and investor Those on a Rebecca, documents thank release, packet the this joining press found second call. morning that us can address Yesterday, quarter presentation be at after slide close our issued to we and everyone results. for our on

Wagner, Chairman, Adviser VP Executive on me today's Pat VP Joining and and Executive Henderson, Dane Whitehead, Vice CEO; Lee Development our call Corporate Mike CEO; President Tillman, Little, CFO; of and to Executive of Mitch Operations. SVP and are Strategy; the President

from today's presentation that Lee, release implied filings. by our those risks well As will included to everyone over I'll statements and forward-looking to such the and that, his statements. call us in I'll With could materials, in described subject risk SEC remarks. opening the results uncertainties the actual refer who cautionary language to materially provide as expressed will always, call cause to or factors the contain differ press as turn to

will Q&A. then to open We the call

good on today. want extending very made the start to Guy, I critical dedicated with again, morning our the my out COVID-XX contractors. call by, resilient to supplied Since expertly the providers, Thanks, infrastructure doing essential to America hard thanks remained and and and the everyone employees their as U.S. of beginning to work pandemic, our has Energy. field at job keep staff in

be months Oil, emergency have operations business and we goes and challenge. field very dedication. recovery. decade and of have truly world's family, been excellence commitment nation's their growth over been execution that protected five has that and in the a economic to people saying Marathon practices uninterrupted the have provide Oil impressed critical, the am They response our dynamic It our priority. last our Marathon my and and the of our the affordable without industry facilitated economic powerful the proud I remains clean and engine health energy the by ongoing work-from-home top empowering last and continuity plans U.S. Our a of period. will unquestionably have productivity extremely safety risen for

that continue will with happy as the and We performance our and communities report remain measured safety incident in Further manage where uncertain these COVID-XX we by rate history. recordable and total to best investing risks the I'm diligently, challenging year-to-date is our times, partnering we to to company's amidst to dedicated in that here live through and healthcare is learning, and more the for people of helping and transition operate, Guinea whether organizations our local COVID-XX. through distance education to Houston communities, programs to mass emergency partners NXX XX,XXX testing in donating than our distributing Equatorial laptops or management and in community

real world However, for only get business back and society our to solution work. healthy the and to is the

and that market. than taken remains oil we and of taking stability support structure, the our the second forces, Market capital, high must quarter easy cost wide control we face outcomes in E&P improvement, of global remains focus. that our uncertainty prices is by forces all a the balance the decline very cash focus environment, are execute. macro. commodity we crisis, off. production bar, has have our and supply saturated depths been not experienced and external markets areas at lack manage of more oil is were In become future our simply last the paying from is second we of range world Yet, to the of barrels itself. demand is out will difficult It honesty, improving call. we In That strongly time is respite sheet had for extreme this will to reducing our need too Today, how recover exert very predict. the can despite the controllable and from are have our how of these industry the work improved clearly Actions global does and financial welcome prices allocate liquidity, in control breakevens. in protecting we volatility actions potential a earnings of but Regarding not they today but investment flow distracted the place enterprise And quarter. and better macro free from the energy at a can't recent all results of in demand how are disciplined. our a remain high uncertainty, product, this evidence but goals We macro our

prices, protecting of independent quarter, coming on a to completed drilling day XXXX, We with drove of our correction of we completion exercising almost U.S. comparison strong of lateral the $XXX E&P barrels discipline. in quarters. oil and reductions fully our second to barrels per with per average. to result CapEx And and XXX,XXX voluntary We cost our curtailments. unit company down During and a and day, barrel, with XX% well successful returns commodity efficient foot per of XXXX production further level deliver limited of million average oil sight in we lowest drove to since response focus relative to consistent $X.XX downward per XX% down a we ramp rapid became XX,XXX total and of in production line activity costs oil down the an reduction despite to

budget differentiated raising oil guidance. capital reducing back our production XXXX are execution, this the our we and year year full full of On

to this macro taken year's decisive in response have action We challenges.

and has and response substantial been Our protecting result has corporate but and The cost our balance in expenditure a our our structure sheet program, capital reducing swift, thoughtful, liquidity. high-grading been reduction our breakevens. lowering

to at flow the free forward we momentum curve, We protecting have cash look company generation for repositioned while operational our our successfully XXXX. ahead significant as

how are our few guidance. capital we program allocating revised updated on and and Next, words a XXXX

billion. of As and billion optimization, down efforts due XXXX. have $X.X reduced XXXX to well we is supply capital from specific XXXX innovation Eagle a over Ford noted, from more result completed further spending commercial targeted capital of are in to second these full and well and continue This a well teams tremendous Bakken $X.X ceiling a design I and reduction by per reductions expected second of allocation combination year our we leverage. results year. comparison our drive on to trends, the are improvement concentrated our costs. expect to Building to capital of impressive execution half our to to guidance continued efficiency of execution These The efficiency, down the half Case XX% point, lateral foot chain reductions and costs. cost than reducing improvements, to in the be

We to the expect gains through of durable prove cycle. the majority these

of are oil of our guidance, spending raising per year we the company of year both day curtailments, full at full new and barrels day While is capital strong inclusive second total quarter. which BOE year-to-date guidance, and performance. outlook XX,XXX the reducing result midpoint barrels production also oil during approximately our base XXX,XXX of to well of per XX,XXX day This again per guidance totaled oil revised all

quarter, pause in quarter provided no running work successfully After activity on production and rigs across in the during an and second loss July, are exclusive to outlook transitioned all in two execution drilling production basis, underlying was frac Eagle Ford three efficiency. completion of back Bakken last we and and reminder, we a a As curtailments. crews currently the with

across our the most landscape. high-graded some been has flow opportunities capital to Lower CapEx entire generative XX offer that Our strongest efficient the returns cash of

So, wells CapEx sales XXXX, generally second will do concentrated we the to XQ. rateable in half be over of expect

sales, will XXXX pause be production what our the wells timing consistent to we in messaged With XQ profile, our trough the and XQ previously. with of activity for

with our the improving volumes XXX XQ production total on by oil low will company quarter in an trend the range. XXXX expected KBD However, be fourth

in Northern price associated capital optionality on best Delaware, hitting and XXXX. those button with Play with with for in capital production will investment of core allocation momentum solid an provide enter Exploration will that as commodity Resource a exit pause the important a Oklahoma, program, efficient, we returns We And the us opportunities margin while us XXXX success strong foundation environment. we provide are high capital improving our from and

completed have primarily was D&C which planned activity on the delineation program, Texas focused reduced REx or we Exploration for our all Specifically, Play contiguous our play. Delaware of XXXX position the in Resource oil acre XX,XXX

Spring. industry low play, online have oil two now lateral which have and XX wells profiles, Cumulative Meramec since We Woodford while benchmarks these in ratio and and reservoir Bone validating Wolfcamp high the expectations decline entering days from XXX compares our gas/oil water/oil confirmed at and cut, per productivity the to production brought successfully shallow Delaware Basin foot favorably ratios. also wells four and

Our D&C cost. production now resetting successfully we of our longer trends Along continuous structure. on also investment, in focused cost our reset with attention have and capital is high-grading our analysis dated improvement and

in and lower, environment. company a Our price breakevens, success more position cash our such our further enhance commodity objective reduce costs our flow is our competitiveness, managing in to for volatile

workforce discussed, For cycle during inclusive severance employee contractor $XXX efforts still savings that made quarter of to disclosure, as cash reductions. and cost reduction And we realize with XXXX, this million we quarter. the previously total consistent we of have implemented first including expect our early second cost in cash year, payments

from XX% XXXX average average, We down trend. are continuing G&A run down from and XXXX the multiyear the driving rate XX% a

low unit all During down to XXXX production XX% the record reduced approximately levels, XQ, time versus we costs average. U.S. down

quarter, costs aggressively and With quickly production challenges the we to as obvious levers during price as second pulled commodity reduce possible. all

production and work. workover we with improved costs volumes unit back workover expense XQ, With high ahead, return during Looking are sequentially. lower and activity to expected activity high expect commodity prices, increase add to associated

protecting full cash consistent XXXX original impacting year, the production production cost our into perspective, our to bottom Importantly, efforts cost agencies. lower allocation, taken total our our our environment. with the dominator, quarter-end, curve, momentum to reductions while breakeven, actions any taken, liquidity resilience over reductions recovery we the producer year into sheet, barrel strong guidance prices at put successfully line current the the are to we Underpinning in a To for all also of well the price XXXX. cost prices $X.X credit have flow however, investment cash balance at despite wins company our commodity enhancing accomplishment. capital the our prioritizing in Overall, any remained and generate liquidity the combination and grade substantial of unit cash ability enterprise, forward free first guidance free below at are three high-graded execution and rating annualized of in generation the to straight operational and overall all our remain lower cash flow entering solid $X repositioned our our flow the protecting generation. contributing billion significant cash financial have flow per low remain scenario, about Total foremost strength and improvement at we our a cost

XXXX free differentiated on For $X we per XXXX, over generation barrel of flow range. the capital line the this significant change free half translates defined reiterate, direct while reinvestment XXXX corporate our and to both are company, company. It on efficiency a how comparison This That peers. discuss second basis, it improved we benchmark highlights significant the business a half per a the low cash our repositioned also spending in XXX we're capital And highlights to cash our cash is back funded free pricing. levels company had over said, flow strong cash at flow highlights affording with years have annual in corresponding business have production our downturn a of to shareholders, benchmark breakeven company just case WTI I cash returns significant out established of flow we potential. oil of flow barrel generation, total well-defined on thinking over cash believe cash free flow plan. key XXXX approximately record the delivers of time generation. more is framework capital flow and some it maintenance potential. of illustrates is $XX potential cash new With fully to and from free and with cash returned prices, flow earned KBD to how a specific success return XXXX free to year though for and breakeven significant forward. of the for normal sector company back is turn and of range, capital hard a come low our our not for current our capital our operations benchmark an an for holds discipline, a track the a sustainable all improvement, and barrel scenario we plan, to exit this allocation, XQ average specifically we XXXX, efficiency XXXX priorities XX% attention about the our case our free that oil of our in To of XX%. scenario delivering implying $XX that historic and flow, $XX unhedged flow cash XXXX, framework under per going Entering our shareholders. multiple back of corporate million free This leverage to about as maintenance and premature our rate of Rather, strategy, More resilience

This through reduction price same but flow free rates focus the a outcomes, and moderate even base of focus a return lower change, reinvestment production world. has. won't on Looking capital and we sheet to an cash greater relentless deliver optimization. flow the cash and balance volatile and returns environment ahead, commodity core must shareholders demand sustainable in more corporate Therefore, free will on improvement, strength, our priorities capital cost more efficiency, generation

barrel clearly $XX supply/demand to likely we company is no expect below rate reinvestment which at year. the transitional success, forward reinvestment in trend year to reposition oil Even than of a would much trend generation capital higher pricing. we in the leveraged our further cycle reduction used XX%. to a purposes, framework free case, the that A friendly cash mid way XXXX our At While our barrel, reinvestment incremental of significant well XX% flow lower cash per have oil would below for free per shareholder flow clear XX% of taken rates back sight and will cash be be for north be $XX reinvestment distributions to the shareholders. prioritizing prices and would that to line. our our can line debt flow pave This for bottom crisis

another governor of summary, environment. macro an will the while In challenging a volumes input. reinvestment execution for very remain story remarkable rate, was not quarter production With an company, outcome, our navigating second

intact, in of the remain underlying volatile framework for unprecedented model success an demand but our and commodity deliver reality. must more business With and backdrop a we price shock, lower now

forward. our so and Our approach XXXX transparency in will reinvestment rate resilience deployed successfully enhance XXXX and going

spending and further on production dramatic full of control the year business XXXX our raised focus we we Our budget, elements delivered those We has lasting guidance. capital and our reduced XXXX results. oil

will Thank Collectively, in to for efficiency. I the our and for XXXX liquidity We have high-graded our over balance And capital Q&A program, successfully managed our barrel cost repositioned proof of with have uncertainty actions structure, of sheet and And and our you. company compelling capital protected for session. a new as success environment operator breakeven differentiated current our a point the normal maintenance ahead. these the now per serves to hand the scenario our our benchmark corporate strength. $XX begin

you. Thank

now our question the Chase. And question-and-answer will begin first Arun from from is Instructions] JPMorgan We session. [Operator

open. is line Your

Lee your team. and to you Good morning, Yeah.

Good morning.

to start regarding on Yeah. XXXX wanted XXXX. I --

$XX.XX. us some is if XQ breadcrumbs under think about oil. next exit XXXX current rate XXXX below Under of into XX $XX, you're strip, left a scenario. barrels our year to maintenance million in under to You the how Lee,for XXX sustain just The CapEx about translate would math, going on oil

cash flow a about talked XX. You breakeven of

million that in to free north cash would suggest us, of So well $XXX flow.

thoughts cash $XX priorities call flow what -- So, proves maintenance code $XX the flow, I using that be you we're that if -- if that scenario. give is, the under area this And correct. strip my us would for it estimating free that cash question for the first free could wondering some on

have Arun I Yeah. first remarks, it's Thank It's -- well and terms a case for right we line But opening out that. that a in about benchmark fact your then And strip. zip for in business that to take that in my hold number some maybe and at confirm the foremost, $XX. current a this levels. the reminder, absolutely first the does I question. as -- support led little in might exit its want is you XXXX part I'll do XXXX of a when for of kind with again, code the said as you, math XQ That certainly, have very differentiated the basis. of premature Dane that to And breakeven And this production defined but I and priorities. from plan, Arun, an talk laid very is unhedged

Your number my an of pricing. I I leverage we as have that oil remarks extreme just everyone, in also in And is pretty is zip that the to also code. said remind much opening in a would flow. million amount barrel evident in dollar incremental reminder just operating at for looking per so number, in -- $XX or obviously cash but as we're an dollar every your WTI, -- change correct

a because the that for do flow built count as that the cooperates, a that the free a flows do stability can in scene in door, with challenge when market we of are macro certainly that model uses So, we that successful recognizing on XXXX, prioritize and our and think cash can see cash just going bit biggest how is I little But that free set of coming those the the have deliver we of we're forward. that. challenge with left we assuming we

few let maybe I'll share there. thoughts just our on And a priorities Dane so,

debt in back flow our I term. now near Yeah. good cash top say right are shareholders. and Thanks, I'd for would Lee priorities reducing very capital and using the to morning say free Arun. returning

sense cycle we price kind a debt We've we sort as talked X.X of of to sheet. all medium prices That's first that don't dream about, further great. cash target about to to that were one before but the probably in for times that to mid programmatic at to And flow of to to free have on is look certainly, us. will us. curve the nice getting call get once. to need contango I of in makes to is a a actually stability confidence And environment. think the to while But a tacking we'd EBITDA where important in balance leverage strengthen return compared to in some there of net something The shareholders. term we direction QX, Lee referenced, commodity be capital in return like the in super forward

we couple know, that to to about you free over we've flow committed As $X.X done that. shareholders. we tune have cash are of years the generated of And past of to billion back the that return getting to

I way then that other reestablish look based beyond most think alternatives dividend. And yield to start be to that. competitive the likely would a at

our do But like variable case cycle base it's a are as of shareholders us, first, makes returning environment, That's on certainly for sort about table know talking that. And into capital for first don't thinking pricing consistent discussion get or things sense. think then of of or Some dividend dividends. sort to important deleveraging returned just yield I to we're mid about if things we peers point a view we to a proposition. the

more that's of enough there's what on. price do enough room to we'd mid cycle environment. I be focused in think, those And flexibility both a and things

but on in was thinking there's a think of wondering just going bit LNG Thanks maybe volumes which forward of -- black is that from prices, given a you're to investment obviously incremental global lot help could prices. moving us that year a for Alen if honestly box year, Lee, I us you And been about tougher community, weaker of XXXX, EG, methadone gas follow-up, a it's pieces to next XX:XX. Great. get from EG about NAG to look prices, answer. some the because bit a Noble, help strip, my

I'll as start jump off ask Maybe and in then to Yeah. Mitch perhaps well.

about the reinvestment. to life, we and I Clearly, protect to asset. But we there This that is chime and some that experience You're pricing. perspective. just there, thoughts as everyone cash in further like flow infrastructure really course, EG. that this asset was flows is leverage the commodity year cetera. an And methanol impactful all of production opportunities assets, a vagaries proposition plant, forward. through the ask in decline of sense to the those, that earlier that's utilize kit Arun, going EG. the we plant like looking the right a low and opportunity, associated declining schedule equity Alen to both side, free the cash sense our maybe in in But news on condensate any gas went that then, I'll a just on strong plant, side, with the Alen really long The world-class just downtime obviously generative stabilize remind methanol want even into value we're from requires have did certainly the it LNG is the to you look exposed there, And de to the et forward minimus it from and it's play. side, where LNG Mitch And come But his is with good to that. other all is

morning, Yeah. Sure. Arun. Good

significant Just facility beyond had really turnaround methanol to very Lee's, question also guess, a the earnings. at -- add a bit, in the comments to equity which AMPCO impacted commodity this prices the and trough I we board, XQ across your little year,

of good tailwinds quarter U.S. obviously QX prices the commodities. head Case we across in in about really all As lows spot there's we're on recovery with at point, over in third on the fronts prices QX. Gulf here, beginning into Coast strong XX% all seeing up some methanol

to positive. The without volumes look the of of full signals commodity curves. we So, major year on, the XXXX and forward turnaround expenditures lot coming pointing land at

as in price XXXX. what equity -- earnings be normalized to to comparable on We were in we've basis, more before, XXXX a expect said they

of would the just curve, this those of forward current course, XXXX. that And dividends some see from of if the curve, end return to a to then, prices strengthening With current year. expect with we hold, into the equity forward the before companies

gents. That's helpful. Thanks

Thank you, Arun.

from question is Barclays. Jeanine our And from next

open. line Your is

Hi. everyone. Good morning

morning, Jeanine. Good

Good morning.

updated maintenance Good question is than first think less the on I the My The was breakeven of $XX, commentary morning. commentary. prior XXXX $XX.

number wanted the if more can new So, is talk primary improvement we of the capital what compared specifically driver on there's something that what that else updated suspect you more you efficiency to or thought quarter. the the about refinement, in a for going outlook just maybe to we is check last

obviously Jeanine, me Yeah. first refinement. competence a delivery, on that each efficiency of number really capital we for level around in time, more reflected our what things coupled that does about like. kind we about our XXXX. -- expectation, it scenario of excuse and the foremost have definition all all-in basins. trends contributed unhedged certainly, our And well, I more across had of number might -- of reflect a day mean, capital with learn all more And scenario we since to at $XX $XX that and have than and those us now giving a I less the more look then level that certainty competence guess, a talking maintenance efficiency lot that I gained high think

Is Lee, going balance XX% is shareholder you. that be to in dividend scale Thank question now there add discussing. oil base. talked the guess, in significant a past on Great. efficiency case made enhance My to Or your assets? the Okay. current focus position improvement to to environment capital return? rate resource price reinvestment sheet, restoring about be And really in the more just approach focusing better is enhancing now you. and that the a the in existing on the to is you're Marathon this to given Thank second on portfolio portfolio. Marathon a I you've

Yeah. Yeah. Jeanine. Thanks,

semblance not said synergies model is that pull recognize of Having primary see bring any type consolidation. criteria. focus, and budge business of would, very market aware would to us I've of and, that would you for kind fully levers being today. creative it. flow. scenario and of scale But opportunity be our have and from don't present hard criteria, the And predicated comes the that's certainly, cash small, for been we we rightly of as a this of all, or harm of value obviously to aspects have in to business and of state of course, including And the capital and certainly the transitional we -- We already free said Jeanine, when scale. in that, whether thinking logic past, the the appropriate And for to this be consider to our we obviously, us large First credit that our It really large intend some our this some balance that XXXX to or our Jeanine, industrial only would has able highlighted of power very us. aggressively environment during with a along that and control. metrics, context period it we our in important not opportunities that can downturn financial now see get XXXX. M&A or on in maintenance around efficiency well-defined M&A was deliver acknowledge specific portfolio really to a differentiated the and It's it have sheet. It prepared as have to consolidation, about we that you

of portfolio, scale that that we're organic and impact as aware think, that of I that bar to market certainly and we the very lens, have. criteria aware But exacting. our is is compare So, can that very clearly, as the we the look high through

gentlemen. Great. very you much, Thank

Dingmann Our next question Truist is Neal Securities. from from

is open. line Your

given any Bakken? economics you term dapple play Good morning, to in the Lee. the consider the how My in strategies positive question near are changes decision is, Lee, activity or leads does or solid your recent

portfolio. of some yesterday, top all, you're of shutdown resilient that from dapple. the as a economics of an are a district to there exactly The returns we I see The first order the We're still Neal, extremely ruling shutdown our released acknowledge net-net just right. relatively economic the offerings an in in that vacated court's Well, But circuit standpoint, Bakken or was want positive. completely. quick essence, obviously for court immediate digesting this

Maybe as direct had view of in have there we net just and per day. oil that XX,XXX right outlets we reminder that So, always riding as bopd marketing though, Bakken diversity of positive. around a a barrels a barrels for per dapple us are the on

a even limited. challenging our if direct that exposure scenario, to impact had more standpoint, direct that relatively from progressed was So,

to Now, which indirect, marginal on would be that have across within of of of you when barrel the Bakken. likely system everyone for out basin and the basin clearly the forced set capacity kind including would of level differentials, rail, out impact the alternatives the take looking

And dangerous is mean, again operating strong I is would the good this We view have an permitting the service going track we by an operating That's process. as environmental very of have with performance, been operating pipeline. -- out a taken particularly net-net precedent legal through it this see that to with to so, type be record positive. ruling pipeline integrity. of action, after

by encouraged direction on today. Bakken. no in we're So, impact investment has closely the watching the really ruling. It We're our it

guess think shareholder growth shareholder you together where minimum returns, you think I a would, like And sort something versus you part that if total of such -- just Lee, my minimum relative some then, is, of Thank about second have which about aspect? I'm of call put peers return base. my just of what would a second sort I you. this return how the would that, your And good. dividends, Very have includes a as all production establishing like

and now, of when I first operating what better. and reinvestment looking I percent shareholders. we achieve in a our the the that really moving getting $X.X well you'll but mean, more for point, particularly are is us bit us our framework us for and Dane to framework not place over we we're work I we'd interesting, what And of shareholder. yields free are served the back equities think to all flow is, the really Yeah. flow. to informative. with and XXXX so right our looking putting and that corporate said, billion to cash from $X.X foremost volatility, like back returns cash sustainable see returned, On XXXX, as Neal, billion, that think And applying really That's

a your rates back deliver you're And certainly generate free I expect bit is lot sub-XX%, reinvestment reduction structure. as upon probably is cycle then then, mid percent base And excess we'd prioritize pricing. nothing are at -- be to to to to of could flow of ensuring that. that And be there have consider operating even dividend should back framework. touched a you think that want that where sustainable how That that a cash you're flow challenge to you at framework ability but shareholder. is really XX% debt Dane think XX% the cash already where you that look other better the whatever ease I variable Initially deciding that me framework from, that, the your in then, to to off of dividend looking the table. is certainly share a mean, is another. would us of we work into that's I looking to repurchases one, a But really we vehicles Neal.

Very you. Thank good.

Our from is next from One. question Capital Johnston Phillips

Your line open. is

guys. Hey, Thanks.

some either for some of assumes and next the year this clarify later XXXX, program I'm or year. early your crews increase an rigs maintenance Just current it of to two sort at program point, to guessing on three

for helpful. you Thanks. is terms it So, share can any of in would details what assumed activity, be

Similar that would of It's that I where would really CapEx scenario billion does levels a well. leaning XQ frac just to that also is about in in dollars the business program. again, that this of the be we've modest scenario rigs scenario. and drive Ford that seeing heavily kind to that Eagle well activity REx very include somewhat talked with running the that Bakken. have a we're nominal Yeah. couple multiple we obviously in though, likely as everyone program what be maintenance of coupled want and maintenance too Ford the for scenario, not crews this commitments year, on to to meant would have in remind Bakken, dissimilar benchmark benchmark -- as be to our plan. the But we Phillip, not say I even Phillip, in that will just we the Eagle the

to talked baked billion that we $X have of all that So, number about. is that in

I Austin fourth that isn't maybe guys if I And guess, Chalk encouraging. of highlighted been to the somewhat well numbers the it crawl seems I can guys Great. know But see mind update have share of really you the at REx Okay. wanted Louisiana speaking on program, on least environment. this an it, front that in you the call quarter like monthly

over then Yeah. I'll address crawl and well. flip maybe Pat to say few to a things

want just I all, year was Texas of REx play. remind oil program first on to think, focused the by that I Delaware design this the

course. now And in run highlights work -- I mentioned comments. has opening some its from that so my that and And

play. a an So, hasn't the of But I'll Pat been Chalk provide generated on activity there crawl new let maybe Louisiana bit itself. really Austin well update within a the just

Phillip, strong the That in to rest has about a as we as and downturn Lee. I paused And bringing due Louisiana the two. about, back the oil because talked activity talked Currently in conserve in we of been oil we'll capital of it on focused the the Texas the early through month any year. months. or issue. as Austin Lee well, deliverability play we've on Chalk Sure, shut-in in prices, be think West the facilities well previously

guys. Okay. Great. Thank you,

Thanks, Phillip.

from Our next from Fargo. Kumar question Wells is Nitin

Your line is open.

team Thank the my question. you and Lee morning, Good taking there. for

morning. Good

I guess, start want off the on first off, philosophy. I to hedging

some better XXXX. many months for the As that design? was opportunity I to maybe cash than ago. Is don't is two call what XXXX by have for flows? that that earlier solidify is we right it an hedges really talked lot that you in saw strip now a Or

XXXX. $XX low is a $XX And I prices and about driver our or just chime kind lot obviously for a breakeven to we where oil The can -- upside kind And leverage Well and very of for moment. at Pat in hasn't excited that wasn't of impact look one of a to advantages a program. a us. feel that weren't again joy as that us. on the into there But $XX invite our the first reality of hedging we That's all, company been really is oil all even that it. exciting Yeah. in have is, hedge of huge a

and more if cash advantage to much on seeks So, take going obviously underpin risk and the flow, of oil. maybe bit into sheet put want some to talk XXXX. view most balance still some to market little opportunities more that hedges in a affords also low to our element defensive but And commodity to the strength look hedges it's take to our leverage Pat, that we a of One do as protect opportunity strategy. of of our more aspirational about you well kind with But that general. us to breakevens, recent hedge upside

Lee, Yeah. thanks.

of day. I would to were But already. saw team looks we have we not And did XXXX. because for seeing, think you I in lot as not what that say, a we hedges at every a to covered it downturn, rush we some we particularly anxious just the this were single like

lock upside put that. we an the to then in market. And and very on we've do in on our how opportunity been opportunistic call, protect when see some looked the at breakeven the So, still we'll we've

at a in ways days. but into going last taken recently, prudent at quickly. we're way bit And the that the continue not that. two just did to little jump to things approach just over We're -- look $XX and $XX, we we we'll be few to So, going this

there cash the follow-up, you XX% answer just about within REx -- And had wanted for the talked for Great. XX% program it. for of accounting earlier the Got the of reinvestment, the capital. flow guys. to about I of Thanks my for framework then,

-- forward? is REx should that is an we how free use included at? alternative that what that So is I in going what flow? program I'm Or guess asking XXXX, of look cash I'm Beyond is, the XX% threshold

question. we need do clarity And program has it's that one Great broader REx discussion. compete to bring capital around. that some No. allocation within to That No.

you really for rate. uses. that So, expectations you to our program is XX% the flow But reinvestment kind ability we're I essentially that percentage still that operating other reinvestment of reinvestment part again, talking that should of end the think of about available about. emphasize have it is want top being to cash absolutely the XX% that in And gives of REx at

Thanks, Lee.

you, Thank You Nitin. bet.

question is next Cheng Paul Our Scotiabank. from

Your open. line is

Thank morning. Good you.

Hi, Paul.

Lee, that's I can XX% cycle. I mid the the mean, on based clarify --

peer than lower okay, will what some the that oil higher or to to theory are in say, that that ceiling what that percentage. when how for be well percentage So, determine you more that have out And prices go it's we're your reinvestment? production said max going much no up you X%. Is -- going of

have be than XX%, will the so, is whatever That you lower much And that CapEx XX%. percentage.

of framework understand do process So higher the can and a in to maybe commodity reinvestment? and you of thought you that determine tell us much and price, how the set percent

No. question. Great No. Yeah.

You're right.

which volumes. factor that that reinvestment gives strengthen the came the you reinvestment on will commodity will production consider that and into controlling prices back we same be lower, As into Ultimately, on obviously then trend year. the program, D&C to rate optionality

think mid budget. with reinvestment original our of of a of believe excess If recall, that don't with the We bit to not I good flow set believe certainly kind somewhat price. it's talking growth, And more outcomes, an about, forward. see the on course down single an going already rate does I of opposed even commodity to us grow comes cash what choice need Paul, metric the kind you in mean, as digits being we single digit those for had that focused X% volume financial a I incremental right that macro. we action. for And was expectation that's is outcomes,

moderate a to in be higher commodity So, scenario. obviously even price growth, we'd looking

I think Thank you. And Dane. is question, the second

there EBITDA volatility. have up to X.X and seen we one, end that high multiple. is cut on reason balance other dividend certainly you a all even and time sheet different like to a higher net And that the very say higher hand, [indiscernible] time, increasingly not your that. believe is pocket, Your debt this seems should But

do [indiscernible] multiple So, just to storm the cycle I to debt will wipe those the without a mid should by dividend, measurement, get cut sheet. ensure So downturn, have we lower CapEx drastic all really mean, on contact the to cut that we we your have hit things. if balance like That's the much ratio? and next

that. luxury have is we -- if times work. a right. in like at level, and reasonable and for to of at I And does in you're can like hopefully, even cash, if volatility sentiment with kind we we've us. we anytime below something over medium thanks maturities flows term sort of the Getting lower few those see leverage certainly represents longer you Paul, that Yeah. are we've more we fuels X.X lower But that a chunks with Hi, kind and debt you cash that your And go years, out back insulate term volatile that feel we volatility a the a don't Yeah. had thing. soon. agree better I one levels of seen. of support. the near much take -- And It target and time for we've home XXXX is environment is of from good

X.X one once think toward So, one -- milestone, yeah, get we trending don't I stop. and to we necessarily that to

we -- and I positive look last at one, should at with will it On you free find me in a cash maybe flow, question. CapEx your that cash saying just XXXX, Can look a sneak when flow. we'd Thanks.

please? I'm repeat, you sorry. little bit the I could lost question a just there. Paul,

should we free such so that program trying flow. cash year, generate CapEx you're you positive one year, next for that at to will that look Means the

Absolutely. Yeah. Yeah,

the and before to correction returns us in and corporate similar path, is, view that the the we free XXXX get two, had that, focus level cash is XXXX year. In this a one, sustainable priority on generate kind fact, program is and of the of very to back were where we flow to

low been differentiator, efficiency is -- our going we've to and trajectory. costs. to is our so get Capital that back view to the efficiency, growth to on because operating in that's why on intent right design focused is environment. capital along be no And with growth that Our a

why a And it. broad so, that we've bit a mid pricing today. to pricing, really including focused have ensure across term that's capital of used the we so heavily And about efficiency cycle on you see range us -- driving think quite to

XXXX. XXXX. has That lower we're is Our with as thinking of for view very strip XX our about that And that was expectation kind different mid what viewpoint. XX is cycle cycle mid my that we today pricing planning certainly seeing consistent forward start look than pricing of moved XXXX, for in it will to from currently in basis somewhat XXXX, the

relative So, basis you were I mid believe just that planning that that affords bringing cycle to do that down also some on challenging of us balance flexibility us the sheet.

you. Thank

Our next question is of from from Doug Bank Leggate America.

open. line is Your

sitting well your Lee, Look, got I've on one Thanks. everyone. and proposition on the consolidation -- out I'm everyone's laid morning. you've two there. Good out One Hope questions may. morning, if I simple a out this value relatively guy.

just What I to back basically you. play told us. So, to you want

dollar. $XX is per sensitivity Your million

$XX at $XXX that dividend. generate WTI, is $X with What $XX a you're million flat $X cash you means of that free spending flow. a WTI billion You're and billion

that today on it oil. is hold the your can a trading drop assuming you off $XX put at And right rate, forever stock debt. with discount flat annuity at and XX% this You

oil. other all So, also is, of how it's the sounds that's your at because $XX It folks it's is is doing the I you like my about above what are but that? looking do value question costs, really that evaluation, about the what all proposition? said, Because How address assuming think it. you

Doug, or oil up obviously, all, I of be going if none Well, is Yeah. down. think, can of predict flat, us -- first to of course,

want from percentage a think OCF, there I the to we some would mean, expect cash continue you of in still do generates free apply back standpoint your I becomes model, a measure a that year's -- certainly that OCF, as wanted believe think whether at though that. upside be XX% and think implies of form. -- or model that growth so, flow even I outperforming translate even to that And which And -- period in pricing some that's a if higher to cash you're cycle basically it creative of returning we into of material shareholders to constructively, pricing. some would oil and -- mid S&P move at low I will kind scenario. at And value a I a say, that flow yields, you in -- to full your five-year prices certainly, shape it's would say competitive

investible we standpoint. from that that an So, believe is thesis

So, just anyway, I'll stop there.

No.

But follow-up was balanced at I oil, think, I completely right, you're mean, because absolutely is still $XX this, my do to you're I doubles. if want I related. reaffirm about

consolidation preserving leverage. your why job you our want in So, about gets is the that's it costs if you've has -- that plans. about part oil talked base, a cost cost you of about to energy discussion. to But I And the controlling lowering made story you've ask really to the and But about oil leverage. be great done the protecting point

to process through anybody So, may well. to if love there just be because the in that. very overlap specific, else thoughts Did I than I'd question get I this you just industry? And at Conoco your on as have arguably more about asked look you Noble the

the Nobel struggled criteria. of And And criteria quantum with I a in meet set about the that, as be the I'll of Noble or can what -- first. size, or regardless Chevron, specifically want portfolio. And smaller concentration their would us to under scenario some of it obviously debt, obviously to reference well to Maybe under MOE on as that that we your acquisition. the the I respect whether or Yeah. back you to take our look an part comment for risk comments consolidation set to particularly last combination, of for but will of of my I in question M&A don't

efficiency going factor, what's be be with standpoint And market. that were we business also efficiency, have in that as as to toward for and could organic a that think would through you tune have that execution occurring collective going operational clearly model, fact in model, that occur, want our an move we're we to we And to that so, that would Noble consolidation from extent very a in through sense. been high scale. resilient a exceptionally how I opposed is with do have We capital viewed within we a I a lens. as important. more consolidation our recognize of have that do the And would agree scale do more but NAV standpoint, today scale be would growth from model, to multi-basin to equally deliver stay the that is recognize be on we that we in if we strong shareholder. position that well. that, a to It's

Appreciate a my you lot, Thanks taking questions. Lee.

Doug. you, Thank

Singer Brian Goldman Sachs. from Our question next from is

Your line is open.

Thank here do just see unlikely with follow-up benefits you I were about mentioned of exclude scale, morning. potential just to we regards you. that if G&A and the speaking wondered you consolidation. Good discussion the or -- impacted the you And achieved be sufficient by acreage on adding or existing synergies, you consolidation? base the One potential in in have you lower Or your of supply your to costs consolidation additional major your that plays is could businesses? ex-G&A do think plays your scale

Yeah.

high also you're to is you're on have -- from as our a basis and though. actually compete ex-G&A I to are to a of. would relatively gain returns get would have yes, makes can Certainly, want have we I overall consolidation, at your sense standpoint, be to logic it a it which in quality basin be industrial returns. don't just portfolio think do is is corporate that we a but scale, scale. That today, advantage still and all there you basins what mean, synergies with Brian, bar. fact, level larger diluting core that argue, value competes in gaining would said and just or acreage I you're really the doing taken

mindful certainly And But so, balance that right? to in see want want doing overall there, something there of would the to We returns be core and basins. we're corporate value dilutive generating. synergy proposition the we our a to is that also be scale

But that in earlier the to differentials then, road Great. may the How you apologies. discussed to follow-up news make Would enhancing. to allocate would that capital situation? the which regards case, would -- basins just in I elsewhere? philosophically? receive my greater were this budget Bakken my And the that of allocation, unfavorable what allocate and lower Thank returns potentially down less capital been is with there would if Or and prices the pipeline, if capital react realized capital a -- don't have that you. be

have start. would itself before have I and to over concerns broader, would much manifest barrels on a And maybe to he you The remains that some very very bottom though, comments transportation performer I'll first very be would And that is make foremost, a But we Well, I'll general, Yeah. as to that say say, that would seeing directly for then our resilient. inventory be tier differential flip Brian, impacted. challenge Bakken top would It start in marketing there. we would it's if Pat, few the and wants us. line side.

capital. opportunities some still barring for would strongly and out blow we very competing differentials, egregious those So, very see

talk would our crude continuing I is the positive maybe let I'll fading diversity the in I think Bakken current also exactly outlets operation likelihood of yesterday for basically Pat that But with low. about risk a and that's a because the for -- of dapple, think and protect we ruling our barrels, is our barrels. marketing the I just think bit little we that which net-net protect how our is future how little strategy I jump bit. given of think likely

Brian. Hi,

think of Lee dapple. day But XX,XXX some I earlier. about barrels on now, a we covered right net this move

but from impacted, market. approach Bakken. But the diversified we big So, a those different swing in directly a we'd be would a perspective, picture have have barrels to to them

and In Clearbrook then we Pony to on at the sell addition to into on dapple, rail We Brent Express ship pricing. Cushing, we ship market.

of that event a don't in you'll our see the in itself. So, a softening of majority the basin. us to directly we'd little see And in little on wouldn't be bit the a but of Clearbrook point. it's tied barrels the we not dollars softening, shutdown, in then maybe big effected. we depths, And few Obviously, impact see of the a of believe as market, -- see at it a this basin on course, there we'd but bit

capital this kind do some one of bit leading luckily on that out, near least at the close to the -- of -- efficiency stress term. have to we today just talked and lose the per to the know, lateral maybe pretty capital industry I the these Bakken compete there. in down more even have a that I to their I deck the ability really in throughout we Maybe likelihood lot mean, think little we do perspective extremely want well it's advantage $XXX before foot. costs within a earnings are for investment release, efficient those about capital opportunities. I toward allocation. a And would dramatic would headed see completed shift there now, we or But some have

Thank you.

And from our is question Pavel last from Raymond James.

Your line is open.

Pavel taking of you Thank Thanks. behalf This is questions. Muhammed on Molchanov. the Ghulam for

specifically is your social imposed There whether there. response about assets how an in has their companies to the Thank and you distancing EG you. operations impact how pandemic, Can implementing for only lockdown So, changed the one government? me. have talk by had at

Yeah. I but most question, this Mitch. is lost of think Muhammed, I a I of bit little got Hey, your it.

think got EG negative cetera. in they've capability flow those et to it's and say, of closely the very of coming we've of limiting for government ensuring I adequate in country, the fair proactive with sort really to people been the out They've tests that worked do in requiring testing. in,

we've our onsite Punta facilities. and We testing. We're compound Europa all employees stay active where have got doing medical ex-Pat called clinic and a of

patterns the very adapted travel changes workforce bit the to modified We in a with the little operations have flight schedule and But done patterns, an have in has run kind of really government to the bring minimal to impact. and the along those a been steady very outstanding on same third-party through et rotational next which able his expected cetera. there to comment effectively. change the response work job, Last our They've is, team's on gas ensuring is and The Alen touched in Lee kind project, make issues LNG EG of track. year to all facility I early remains to this on would comments.

as And outstanding due usual to business sort to change so, from of but response pattern, rotational a the there. the little of bit the team

awesome. That's Thank you.

further no time. questions have this We at

Tillman the remarks. closing Lee Turning for call over back to

not dedication waters for more economy and I of delivering uncharted adapted our it today, continue energy They stay proud need the to needs that back and largely world that our the be could reliable, of have to Marathon in of fulfill gets Oil when accessible interest people to the will your these work. we you mission healthy. navigating. affordable, Thank are

conference. you this today's gentlemen, concludes for and Thank you. Ladies Thank participating.

now may disconnect. You