Marathon Oil has reported second quarter 2023 net income of $287 million or $0.47 per diluted share, which includes the impact of certain items not typically represented in analysts' earnings estimates and that would otherwise affect comparability of results. Adjusted net income was $295 million or $0.48 per diluted share. Net operating cash flow was $1,076 million or $1,121 million before changes in working capital (adjusted CFO). Free cash flow was $442 million or $531 million before changes in working capital and including Equatorial Guinea (E.G.) distributions and other financing (adjusted FCF).

Continued delivery on commitment to return at least 40% of adjusted CFO to shareholders

• Returned $434 million to shareholders during second quarter, an approximate 10% increase from first quarter 2023 shareholder distributions; second quarter return of capital included $372 million of share repurchases and $62 million base dividend
• Achieved first half 2023 shareholder distributions of $831 million, including over $700 million of share repurchases; represents 40% of adjusted CFO
• Executed $4.2 billion of total share repurchases over trailing 7 quarters, driving a 24% reduction in outstanding share count and significant growth in all per-share metrics

Achieved strong second quarter financial and operational results with no changes to full-year production or capital spending guidance ranges

• Generated second quarter FCF of $442 million and adjusted FCF of $531 million
• Delivered sequential increase in total second quarter production to 399,000 net barrels of oil equivalent per day (boed) and 189,000 net barrels of oil per day (bopd)
• Company's full year 2023 total Company oil equivalent production is trending above the midpoint of the annual guidance range

"Second quarter adds to our track record of consistent execution against our well-established Framework for Success" said Chairman, President, and CEO Lee Tillman. "We built on our return of capital leadership, increasing shareholder distributions to over $430 million during second quarter, including over $370 million of share repurchases. Second quarter financial and operational results were again very strong, highlighted by notable increases to our cash flow, free cash flow, and production relative to the first quarter. We remain on track to deliver against our full year capital spending and production guidance with oil equivalent production trending above the midpoint. In summary, we remain well positioned to continue offering our investors top tier and sustainable free cash flow generation, an advantaged return of capital profile, and differentiated per-share growth with an investment grade balance sheet - all at an attractive valuation. I remain confident that our 2023 business plan is both resilient and compelling across a broad range of commodity prices and that it benchmarks at the very top of both the E&P sector and the S&P 500 on the metrics that matter most."

Return of Capital

Marathon Oil's percentage of CFO framework provides clear visibility to significant return of capital to equity investors, ensuring the shareholder gets the first call on cash flow generation and protecting shareholder distributions from capital inflation. In a $60/bbl WTI or higher price environment, the Company targets returning a minimum of 40% of CFO to equity investors. The Company remains on track to meet or exceed this minimum objective in 2023.

During second quarter, Marathon Oil returned $434 million to shareholders, including $372 million of share repurchases and the $62 million base dividend. Through the first two quarters of 2023, Marathon Oil has returned $831 million to shareholders, representing 40% of adjusted CFO. Shareholder distributions through the first two quarters of 2023 include over $700 million of share repurchases and $125 million in base dividends.

Since significantly increasing return of capital to equity investors in fourth quarter 2021 under its current Return of Capital Framework, Marathon Oil has returned $4.6 billion to shareholders, including $4.2 billion of share repurchases that have reduced outstanding share count by 24%, contributing to significant growth in all per-share metrics.

2Q23 Operations

UNITED STATES (U.S.): U.S. production averaged 356,000 net boed for second quarter 2023, an increase from 341,000 net boed during first quarter. Oil production averaged 181,000 net bopd for second quarter, an increase from 176,000 net bopd during first quarter. The Company brought a total of 80 gross Company-operated wells to sales during second quarter. U.S. unit production costs averaged $5.88 per boe during second quarter.

Marathon Oil's second quarter Eagle Ford production averaged 156,000 net boed, including 81,000 net bopd, with 49 gross Company-operated wells to sales. Bakken production averaged 109,000 net boed, including 68,000 net bopd, with 23 gross Company-operated wells to sales. Oklahoma production averaged 50,000 net boed, including 9,000 net bopd. Permian production averaged 40,000 net boed, including 21,000 net bopd, with eight gross Company-operated wells to sales.

INTERNATIONAL: E.G. production averaged 43,000 net boed for second quarter 2023, including 8,000 net bopd. Unit production costs averaged $5.72 per boe, and net income from equity method investees totaled $22 million during second quarter. Second quarter production, unit costs, and equity income were all negatively impacted by a triennial turnaround completed during the month of April. Second quarter cash distributions from equity method companies totaled $249 million, including $215 million of dividends and $34 million of distributions classified as return of capital.

2023 Guidance

Marathon Oil's originally provided 2023 production guidance ranges remain unchanged with the Company's full year 2023 total Company oil equivalent production trending above the midpoint of guidance. Third quarter total Company oil and oil equivalent production are both expected to be at or above the high end of the annual guidance ranges. No change to the Company's 2023 capital spending guidance range of $1.9 to $2.0 billion with first half capital spending (accrued) accounting for just over 60% of the full year budget at the midpoint of guidance, consistent with the Company's business plan.

KeyFacts Energy: Marathon Oil US country profile