Q4 2021 Marathon Oil Corp Earnings Call

Good morning, and welcome to the marathon oil of fourth 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 one if you ask a question. Please.

Speaker 1: 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. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.

Speaker 1: Please note this conference is being recorded. I will now turn it over to Guy Baber, and Guy, you may begin.

Please note. This conference is being recorded I will now turn it over to Guy Baber you may begin.

Speaker 2: Thank you, Brandon, and thank you to everyone for joining us this morning on our call.

Thank you Brandon and thank you to everyone for joining us this morning on our call.

Speaker 2: Yesterday, after the close, we issued a press release, a slide presentation, and an investor packet that address our fourth quarter 2021 results and our 2022 outlook. Those documents can be found on our website at marathonoil.com.

Yesterday after the close we issued a press release, a slide presentation and Investor packet that address our fourth quarter 2021 results and our 2022 outlook those documents.

Payments can be found on our website at marathon oil dot 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.

Speaker 2: 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.

Speaker 2: 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.

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.

Speaker 2: 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 filing.

For everyone that the cautionary language included in the press release, and our presentation materials as well as to the risk factors described in our SEC filings.

Speaker 2: 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.

With that I'll turn the call over to Lee, who will provide us with some opening remarks, we will also hear from Dane in for Mike today before we move to our question and answer session Lee.

Speaker 2: Thank you, guys, and good morning to everyone listening to our call today.

Thank you Guy and good morning to everyone listening to our call today.

Speaker 2: 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 want to start by once again thanking our employees and contractors for their dedication and hard work and their commitment to safety and environmental excellence and their collective contributions to a truly remarkable year.

Speaker 2: I can best describe 2021 as a year of comprehensive delivery against our framework for success.

I can best describe 2021 is a year of comprehensive delivery against our framework for success.

Speaker 2: highlighted by financial results that are not only superior to our EMP

Delighted 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.

Speaker 2: but more importantly, superior to any other sector of the S&P 500.

Speaker 2: And we are carrying that momentum forward into 2022, fully expecting another year of outstanding delivery.

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.

Speaker 2: 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 investment.

After accelerating our balance sheet objectives through gross debt reduction fourth quarter transitions will focus on returning a compelling amount of capital to our equity investors.

Speaker 2: 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.

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 are more than $800 million to our equity investors significantly exceeding our minimum 40% commitment.

Speaker 2: 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.

Speaker 2: 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.

To clarify that 70% of our cash flow from operation not our free cash flow that $800 million actually equates to around 90% of our free cash flow during the fourth quarter.

Speaker 2: 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.

In total we have now executed $1 billion of share repurchases since October driving an 8% reduction to our outstanding share count and just four five months.

Speaker 2: 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.

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 or cash flow per share and our free cash flow per share.

Speaker 2: Further, we continue to believe buybacks remain an excellent use of capital.

Further we continue to believe buybacks remain an excellent use of capital.

Speaker 2: Zane 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.

<unk> 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 overtime.

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.

Speaker 2: 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 E&P peer group, but are superior to the broader S&P 500 as well.

Speaker 2: 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 E&P peer group, but are superior to the broader S&P 500 as well.

Speaker 2: 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.

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 Wty ranch.

Speaker 2: We believe we have built that type of resilience into our business.

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 experienced constructive commodity price support as we are seeing today.

Speaker 2: 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.

Speaker 2: Our 2021 results are a strong testament to this mandate.

Our 2021 results are a strong testament to this mandate.

Speaker 2: 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.

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.

Speaker 2: 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 relevant to other EMPs no matter how you want to analyze the publicly available data.

Our peer leading return on capital profile driving significant per share growth.

Tremendous balance sheet following $1 4 billion of.

Gross debt reduction last year and.

And a demonstrated capital efficiency advantage relative to other E&P no matter, how you want to analyze the publicly available data.

My third key message today is that this pure leading financial and operational performance, we have been delivering is sustainable.

Speaker 2: My third key message today is that this peer leading financial and operational performance we have been delivering is sustainable.

Speaker 2: 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.

Our $1 $2 billion 2022 capital program is fully consistent with our disciplined capital allocation framework prioritizes sustainable free cash flow generation and per share accretion over production growth.

Speaker 2: We expect to deliver over $3 billion dollars 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.

We expect to deliver over $3 billion of free cash flow at a reinvestment rate of less than 30%, assuming $80 <unk> and $4 Henry hub prices at a discount to the current forward curve.

Speaker 2: These financial outcomes are sustainable for years to come and are underpinned by over a decade of high return, high confidence in themselves.

These financial outcomes are sustainable for years to come and are underpinned by over a decade of high return high confidence inventory.

And it is 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.

Speaker 2: And it's further supported by our Bottoms Up 5-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.

Speaker 2: 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 differentiates us versus our peers for three distinct <unk> first we will remain disciplined and we will not add production growth capital to our budget in 2022, our focus will remain on free cash flow generation return of capital.

Speaker 2: Importantly, we retain significant upside leverage to commodity prices that differentiates us versus our peers 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 for generation, return of capital, and per share financial method.

And per share financial metrics second we have an attractive hedge book that preserves our cash flow upside.

Speaker 2: 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, an advantaged outlook versus most peers.

And third we don't expect to pay U S. Federal cash income taxes until the second half of the decade and advantaged outlook versus most peers.

My fourth and final key point today, it's at marathon oil, it's fully committed for meeting global energy demand, while delivering comprehensive ESG excellence.

Speaker 2: 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.

<unk> on each element of ESG.

Speaker 2: 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.

I hope all of you've 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.

Speaker 2: 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.

To say I believe our employees should be just as proud of our ESG delivering in 'twenty. One 2021 as they are of our peer leading financial and operational results.

With that I will turn it over to Dave who will give you all an update on our return of capital initiatives. Thank you Lee and good morning, everybody.

Speaker 2: With that, I will turn it over to Dane, who will give you all an update on our Return of Capital initiatives. Thank you, Lee. Good morning, everybody. I'll speak to slide 7 through 9 of our deck, largely focusing my comments on our Return of Capital accomplishments and outlook. Grounding our discussion, our Return of Capital framework is summarized on slide 7, and that is unchanged.

Speak to slide seven through nine of our deck largely focusing my comments on our return of capital accomplishments and outlook.

Our discussion our two and a capital framework summarized on slide seven and that is unchanged as.

Speaker 3: As a reminder, our framework calls for delivering a minimum of 40% of cash flow from operations to our equity holders when WTI is at or above $60.

As a reminder, our framework calls for delivering a minimum of 40%.

Cash flow from operations to our equity holders <unk> at or above $60.

Speaker 3: This represents a return of capital commitment at the top of our E&P peer space and that is competitive with any sector in the S&P 500.

It represents a return of capital commitment at the top of our E&P peer space and that is competitive with any sector in the S&P 500.

Speaker 3: Importantly, as Lee mentioned, our return of capital targets are based on our cash flow from operations and not on our prepayment.

<unk> as we mentioned a return of capital targets are based on our cash flow from operations and not on our free cash flow. This is purposeful intended to make clear that our shareholders get the first call on cash generation. Additionally, as consistent with our reinvestment rate driven approach to capital spending by.

Speaker 3: This is purposeful, intended to make clear that our shareholders will get the first call on cash generation. Additionally, it's consistent with our reinvestment rate-driven approach to capital spending. By staying disciplined and by maintaining a low reinvestment rate, we protect a significant percentage of our CFO for shareholder distribution.

By staying disciplined and by maintaining a low reinvestment rate.

Protect a significant percentage of our CFO for shareholder distributions.

Speaker 3: While frameworks and commitments are important, we believe establishing a consistent track record of delivery, quarter in and quarter out, is ultimately key to building and maintaining trust and credibility with the market.

While frameworks and commitments are important we believe establishing a consistent track record of delivery quarter in quarter out is ultimately key to building and maintaining trust and credibility with the marketplace. We have a multiyear track record of returning significant capital to our shareholders are especially proud of our accomplishments in 2021.

Speaker 3: We have a multi-year track record of returning significant capital to our shareholders and are especially proud of our accomplishments in 2021.

We started 2021 with the top priority is balance sheet improvement.

Speaker 3: We started 2021 with the top priority of balance sheet improvement, accelerating $1.4 billion of gross debt reduction during the first three quarters of the year. After taking our net debt to EBITDA, comfortably below one times at strip and below one and a half times at our conservative longer term planning basis of $50 WTI, we have no other need to accelerate additional debt reduction. So going forward, we plan to simply retire debt as a

Celebrating one $4 billion of gross debt reduction during the first three quarters of the year.

After taking our net debt to EBITDA comfortably below one times at script and below one five times and our conservative longer term planning basis of $50 Meti, we no.

And no longer needs to accelerate additional debt reduction so going forward, we plan to simply retire debt as it matures.

Speaker 3: Our balance sheet repositioning opened the door for us to begin returning a significant amount of capital to equity holders during the fourth quarter, and that's returns beyond our base dividend.

Our balance sheet repositioning open the door for us to begin returning a significant amount of capital the equity holders during the fourth quarter and Thats returns beyond our base dividend.

Thanks to stronger commodity prices higher oil production declining capex and an increase in EG cash distributions.

Speaker 3: Thanks to stronger commodity prices, higher oil production, declining capex, and an increase in EG cash distributions, QuarkQ was an exceptionally strong financial quarter, enabling us to return over 70% of CFO or more than $800 million to our equity investors through our base dividend and share purchases, dramatically exceeding our minimum 40%

<unk> was an exceptionally strong financial quarter, enabling us to return over 70% of CFO for more than $800 million to our equity investors through our base dividend and share repurchases dramatically exceeding our minimum 40% commitment.

Speaker 3: Stepping back and looking at full year 2021, demonstrates our commitment to allocating cashflow to shareholder-friendly purposes. In total, we directed over 70% of our full year 2021 CFO , that's $2.3 billion to debt reduction, shareholder purchases, and our base dividend. That's a peer-leading track record of return of capital execution.

Stepping back and looking at full year 2021 demonstrates our commitment to allocate cash flow to share holder friendly purposes. In total we directed over 70% of our full year 2021, CFO thats $2 $3 billion to debt reduction share repurchases and our base dividend.

That's a pure leading track record of return of capital execution.

Speaker 3: Slide nine highlights that we are well-positioned to lead the market again in returning significant capital to shareholders in 2022.

Slide nine highlights that we are well positioned to lead the market again, and returning significant capital to shareholders in 2022.

Speaker 3: Since October , we've already executed 1 billion of share repurchases, reducing our outstanding share count by 8% in just four and a half months, and driving significant growth to our underlying per share metric.

Since October we've already executed $1 billion of share repurchases, reducing our outstanding share count by 8% in just four five months and driving significant growth to our underlying per share metrics.

Speaker 3: Our current outstanding buyback authorization is $1.7 billion, and we continue to believe that buying back our stock in a disciplined manner is a good use of our capital.

Our current outstanding buyback authorization is $1 7 billion and we continue to believe that buying back our stock in a disciplined manner as a good use of our capital.

The efficiency of the discipline that we're ratable share repurchase program. It was really a function of free cash flow generation relative to market value in other words, your free cash flow yield and while our equity value has appreciated since we kicked off our buyback program in October .

Speaker 3: The efficiency of a disciplined and rateable share repurchase program is really a function of free cash flow generation relative to market value. In other words, your free cash flow yield. And while our equity value has appreciated since we kicked off our buyback program in October , we can continue to trade at a free cash flow yield north of 20 percent, and that's at $80 WTI, which is a discount to the current forward curve.

Continue to trade at a free cash flow yield north of 20% and Thats at $80, <unk>, which is a discount to the current forward curve.

Speaker 3: That's roughly four times the free cash flow yield of the S&P 500. And even using a more conservative, say, $60 WTI price assumption, our free cash flow yield on our current equity value is around 10%. It's still two and a half times that of the S&P 500.

That's roughly four times the free cash flow yield of the S&P 500, and even using a more significant more conservative $60 <unk> price assumption, our free cash flow yield on our current equity value was around 10%. It's still two five times that of the S&P 500.

Speaker 3: So these are strong indicators that 5X remain a very good use of cash. We also believe that disciplined share repurchases offer clear strategic advantage.

So these are strong indicators that buybacks remain a very good use of cash. We also believe the disciplined share repurchases offer clear strategic advantages that can drive strong underlying growth in per share metrics that are correlated with shareholder value.

Speaker 3: They can drive strong underlying growth in per-share metrics that are correlated with shareholder value, including cash flow per share and pre-cash flow per share. They also offer clear synergies with our base dividend, as the reduction in shares outstanding creates capacity, bringing incremental base dividend growth without raising our pre-cash flow rate.

Including cash flow per share and free cash flow per share. They also offer clear synergies with our base dividend as the reduction in shares outstanding creates capacity breaking the incremental base dividend growth without raising our free cash flow breakeven.

Speaker 3: And given the tremendous downside resilience we've built into our business, we can continue to repurchase shares through the cycle, including when we experience commodity price pullbacks. And that's a very different dynamic than during past cycles.

Given the tremendous downside resilience, we have built into our business. We can continue to repurchase shares through the cycle, including when we experienced commodity price pullback and that's a very different dynamic than during past cycles.

Paying a competitive and sustainable base dividend also remains a top priority for us as evidenced by the fact that we have now raised our base dividend four quarters in a row, our accumulative increase of 133%.

Speaker 3: Paying a competitive and sustainable base dividend also remains a top priority for us as evidenced by the fact that we have now raised our base dividend four quarters in a row for a cumulative increase of 133 percent.

Speaker 3: With regard to the 2022 outlook, at an $80 WTI and $4 Henry Hub price deck, our minimum return of capital commitment translates to $1.8 billion, a number that stacks up well against our ENT peers and even better against the broader market.

With regard to the 2022 outlook at an $80 <unk> and $4 Henry hub price deck, our minimum return of capital commitment translates to $1 8 billion.

A number of the stacks up well against our E&P peers, and even better against the broader market.

Speaker 3: With no material debt maturities in 2022, a constructive commodity price backdrop, our commitment to capital discipline, and an expected reinvestment rate of less than 30%, we see potential to meaningfully outperform our minimum 40% of CFO commitment.

With no material debt maturities in 2022 constructive commodity price backdrop, our commitment to capital discipline and the expected reinvestment rate of less than 30%, we see potential to meaningfully outperform our minimum 40% of CFO commitment.

Speaker 3: We're on pace to return over 50% of our CFO to equity investors in the first quarter. For the full year, upside potential at the same $80 WTI and $4 Henry Hub deck could be as high as 70% of our CFO , the level at which we executed during the fourth quarter.

We're on pace to return over 50% of our CFO to equity investors in the first quarter.

For the full year.

Upside potential at the same $80, WCS Ti and $4 Henry hub deck could be as high as 70% of our CFO the level at which we executed during the fourth quarter.

Speaker 3: That would represent a return to equity investors around $3.1 billion, or close to 20% of our current market capitalization.

That would represent a return to equity investors around $3 $1 billion or close to 20% of our current market capitalization.

Speaker 3: With that, I'll turn the call over to Michael to discuss our 2022 cap.

With that I'll turn the call over to Mike, who will discuss our 2022 capital program.

Speaker 4: In 2022, we fully expect to once again deliver peer-leading financial and operating results.

Hi, David.

'twenty two we fully expect to once again deliver peer leading financial and operating results.

Speaker 4: Our one point two billion capital program, with detailed summariz on Slide 13, is Tru. Consistent with our disciplined capital allocation framework that prioritizes corporate returns and free cash flow generation over production r. we expect our 2022 program to deliver over $3 billion of free cash flow at a reinvestment rate of less than 30%, assuming $8 WP I and $4 Henry.

Our $1 2 billion capital program with details summarized on slide 13 is fully consistent with our disciplined capital allocation framework prioritizes corporate returns and free cash flow generation over production growth.

We expect our 2022 program to deliver over $3 billion of free cash flow at a reinvestment rate of less than 30% assuming $80.

$4 Henry hub.

Speaker 4: As Dane just mentioned, by staying disciplined and maintaining a low reinvestment rate, we expect to exceed our minimum return of capital commitment of 40% of cash flow from operations.

As being just mentioned by staying disciplined on maintaining a low reinvestment rate, we expect to exceed our minimum return capital commitment of 40% of cash flow from operations.

Speaker 4: We will continue our investment in reducing our GHG intensity, targeting a 40% reduction relative to our 2019 baseline, in addition to gas capture of 99% or better.

We will continue our investment in reducing our GSE intensity targeting a 40% reduction relative to our 2019 baseline in addition to gas capture 99% or better.

Speaker 4: At the basin level, consistent with prior indications around our capital allocation mix, we will be spending approximately 75% for capital budget in the Eagleford and Bakken, with the balance going to the Permian and Oklahoma.

But the basin level consistent with prior indications around our capital allocation mix, we will be spending approximately 75% our capital budget in the Eagle Ford and Bakken with the balance going to the Permian Oklahoma.

Speaker 4: included within our Permian program is the continued disciplined progression of our emerging Texas-Delaware oil plate with a planned four-well appraisal plan later in the year. I'm excited about the restart of a more steady activity level in both Permian and Oklahoma and the strong economics associated with these opportunities.

Included within our Permian program is the continued disciplined progression are emerging Texas, Delaware oil with oil fleet with a planned four well appraisal costs later in the year I'm excited about the restart of a more steady activity level in both Permian and Oklahoma on strong economics associated with diesel.

Okay.

Speaker 4: We are not allocating any production growth capital in 2022 and expect our total company oil and oil equivalent production to be flat with the 2021 full year average.

We are not allocating any production growth capital in 2022, and expect our total company oil and oil equivalent production to be flat with the 2021 full year averages yet.

Speaker 4: Yet, while we aren't growing absolute production levels, the 8% reduction to our share count we've already achieved is driving significant growth to our production per share, cash flow per share, and free cash flow.

Yet, while we arent growing absolute production levels, the 8% reduction to our share count we've already achieved is driving significant growth.

Production per share cash flow per share and free cash flow per share.

Speaker 4: metrics we believe are highly correlated with shareholder volume.

We believe our highly correlated with shareholder volume.

While we expect our full year 2022 average production for both oil and oil equivalent to be flat versus the prior year.

Speaker 4: While we expect our full year 2022 average production for both oil and oil equivalent to be flat versus the prior year, there will be some natural variability from one quarter to the next, largely a result of well timing that is typical for our short cycle business.

There will be some natural variability from one quarter to the next largely result, well timing that is typical for our short cycle business.

Speaker 4: For any given quarter. It is reasonable to expect a plus or minus 5% variance around the midpoint of our full year production.

For any given quarter. It is reasonable to expect a plus or minus 5% variance around the midpoint of our full year production guidance look similar from what you saw for almost 2021, our focus will remain on maximizing our capital efficiency and free cash flow generation sustainably over time.

Speaker 4: Not dissimilar from what you saw from us in 2021. Our focus will remain on maximizing our capital efficiency and free cash flow generation sustainably over time, not the production output of any single quarter in IT.

Not the production of any single quarter in isolation.

For first quarter of 2022 due to the timing of our wells to sales and some typical winter weather downtime, we expect our total company oil production to be at the lower end of our annual guidance range at around 168000 barrels of oil.

Speaker 4: In the first quarter of 2022, due to the timing of our wells to sales and some typical winter weather downtime, we expect our total company oil production to be at the lower end of our annual guidance range, at around 160,000 barrels of oil per day.

Improving into the second quarter.

Speaker 4: regarding our capital spending profile, our full year capital will be slightly weighted to the first half of the year with approximately $350 million of CapEx expected during 1Q21.

Regarding our capital spending profile, our full year capital will be slightly weighted to the first half of the year with approximately $350 million of Capex expected during <unk> 'twenty one.

I want to make clear that should commodity prices continue to surprise to the upside.

Speaker 4: I want to make clear that should commodity prices continue to surprise to the upside, we will remain disciplined and have no plans to allocate production growth capital.

We will remain disciplined and have no plans to allocate production group capital.

Speaker 4: With our balanced exposure to oil, natural gas and NGLs, our company retains significant leverage commodity price upside.

With a balanced exposure to oil natural gas and Ngls are company retains significant leverage commodity price upside.

Speaker 4: with a $1 barrel increase in oil price, translating to around a $60 million incremental free cash flow.

With a $1 per barrel increase in oil price translating to around $60 million incremental free cash.

We believe preserving this upside is important for our investors.

Speaker 4: We believe preserving this oxide is important for our investors.

Speaker 4: The resilience of our 2022 program is underscored by a free cash flow break-even well below $35 per barrel WTI, assuming conservative gas and NGL prices.

The resilience of our 2022 program, it's underscored by free cash flow breakeven well below $35 per barrel of UTI, assuming conservative gas.

<unk> prices are hedged book that preserves our upside commodity exposure.

Speaker 4: a hedge book that preserves our upside commodity exposure, and an advantaged U.S. cash tax position with no U.S. federal cash income taxes expected until the second half of the decade.

On an advantaged U S cash tax position with no U S. Federal cash income taxes expected until the second half of the decade.

Speaker 4: I will now turn it over to Lee who will provide an ESG update and we'll close out our prepared remarks.

I will now turn it over to Lee who will provide an ESG update on will close out our prepared remarks.

Thank you Mike.

Speaker 2: As I've stated before, strong ESG performance is foundational to our framework for success and our long-term value proposition in the marketplace.

As I've stated before strong ESG performance is foundational to our framework for success and our long term value proposition in the marketplace.

Speaker 2: We believe that we have a clear and much-needed roleto play in the longer-term energy lamp.

We believe that we have a clear and much needed role to play in the longer term energy landscape.

Speaker 2: Oil and gas are essential to a thoughtful and orderly transition to a lower carbon future and to protect the standard of living we have all come to enjoy and to which others around the world strive to attain.

Oil and gas are essential to a thoughtful and orderly transition to a lower carbon future and to protect the standard of living we have all come to enjoy and to which others around the world strive to attain.

Speaker 2: Access to responsible, reliable and affordable energy is the great social legalizer And if the foundation upon which the world's monitoring economy is built.

Access to responsible reliable and affordable energy is the great social equalizer and is the foundation upon which the world's monitoring economies Bill.

Speaker 2: We are proud to play our role in supporting U.S. energy security, which protects the U.S. consumer and serves as a powerful tool of foreign policy, providing options for both the U.S. and our allies.

We're proud to play our role in supporting U S energy security, which protects the U S consumer and serves as a powerful tool of foreign policy, providing options for both the U S and our allies.

We must take on the dual challenge of meeting the world's growing energy needs. While also prioritizing all elements of our ESG performance, including efforts to address climate change.

Speaker 2: We must take on the dual challenge of meeting the world's growing energy needs while also prioritizing all elements of our ESG performance, including efforts to address climate.

Speaker 2: This is not an either or proposition and failure on either front is not acceptable.

This is not an either or proposition and failure on either front just unacceptable. However.

However, our approach must be pragmatic and grounded in the free market innovation and in all of the above the energy approach.

Speaker 2: However, our approach must be pragmatic and grounded in the free market, innovation, and an all-of-the-above energy approach.

Speaker 2: We are unfortunately experiencing firsthand the impacts of misguided energy policy and the dramatic role it can play on energy affordability as well as geopolitical stability.

We are unfortunately experiencing firsthand the impacts of misguided energy policy and the dramatic role it can play an energy affordability as well as geopolitical stability.

Speaker 2: Slide 16 provides a comprehensive progress from Board across each of the elements to be ieved when viewed, and totality to progress. Our company is made is not only compelling but is a point of pride for our entire organization.

Slide 16 provides a comprehensive progress report across each of the elements of the ESG when viewed in totality to progress. Our company has made is not only compelling but as a point of pride for our entire organization.

Speaker 2: For us, it always starts with safety. I'm therefore especially proud that we delivered our second best safety performance in our company's history in 2021, as measured by total recordable incident rate for employees and ncontract.

For us it always starts with safety.

Therefore, especially proud that we delivered our second best safety performance in our company history, and 2021 as measured by total recordable incident rate for employees and contract contractors.

Speaker 2: We realized significant progress against our core environmental objectives, achieving our GHG intensity reduction target of at least 30% relative to our 2019 baseline and improving our total company gas capture to 98.8% for the full year.

We realized significant progress against our core environmental objectives, achieving our GHT intensity reduction target of at least 30% relative to our 2019 baseline and improving our total company gas capture to 98, 8% for the full year.

Speaker 2: During the third and fourth quarters of 2021, we achieved a gas capture of approximately 99%, and we expect to perform at or above this level in 2022 and beyond.

During the third and fourth quarters of 2021, we achieved the gas capture of approximately 99% and we expect to perform at or above this level in 2022 and beyond.

Speaker 2: As we previously announced, we have also recently introduced new quantitative goals for the near, medium, and long-term horizon across our core environmental focus areas.

As we previously announced we have also recently introduced new quantitative goals for the near medium and long term horizon across our core environmental focus areas ghd intensity methane intensity and gas capture.

Speaker 2: Ghg intensity, mefthane intensity and ccap.

These goals complement our existing 2025, ghd intensity reduction objective of 50% versus our 2019 baseline.

Speaker 2: These goals complement our existing 2025 GHG intensity reduction objective of 50%, versus our two thousand and nineteen.

Speaker 2: They represent a pragmatic roadmap to realizing significant improvement in our environmental performance through the end of this decade, driving significant GHG intensity reductions consistent with the trajectory called for by the Paris Climate Agreement.

They represent a pragmatic roadmap to realizing the significant improvement in our environmental performance through the end of this decade, driving significant ghd intensity reductions.

With the trajectory called for by the Paris climate agreement.

Speaker 2: Our environmental objectives will promote transparency and accountability while enhancing the internal alignment and innovation that will be necessary to deliver such strong performance.

Our environmental objectives will promote transparency and accountability, while enhancing the internal alignment and innovation that will be necessary to deliver such strong performance.

Speaker 2: Importantly, our 2030 gh G M methane intensity objectives represent industry leading improvement and will contribute to absolute performance that is competitive with the very best oil and gas producerers GLO.

Importantly, our 2013, DHT and methane intensity objectives represent industry, leading improvement and will contribute to absolute performance that is competitive with the very best oil and gas producers globally.

Speaker 2: Moving from environmental to our social accomplishments, we invested thoughtfully and strategically in our local areas of operations to build healthier, safer, and stronger communities in alignment with core UN sustainable development objectives and we continue to promote equality, diversity, and inclusion as core values, which has helped contribute to a notable increase in the representation of both females and people of color within our workforce over the last five years.

Moving from environmental to our social accomplishments, we invested thoughtfully and strategically in our local areas of operations to build healthier safer and stronger communities and alignment with core UN sustainable development objectives, and we continue to promote equality diversity and inclusion is core values.

Which has helped contribute to a notable increase in the representation of females and people of color within our workforce over the last five years.

Speaker 2: On governance, we believe we have taken a leadership role in aligning executive compensation with the most important drivers of shareholder value.

On governance, we believe we have taken a leadership role in aligning executive compensation with the most important drivers of shareholder value.

I've covered the comprehensive changes we made for the 2021 compensation cycle previously, including quantum reductions and redesigned short term and long term incentive programs. So I won't revisit all of those details today.

Speaker 2: I've covered the comprehensive changes we made for the 2021 compensation cycle previously, including quantum reductions and redesigned short-term and long-term incentive programs. So I won't revisit all of those details today.

Speaker 2: However, I will remind everyone that we've eliminated production metrics from all scorecards and have included unique free cash flow performance stock units in our Executive Long-Term Incentive Design.

However, I will remind everyone that we've eliminated production metrics from all scorecards and have included unique free cash flow performance stock units in our executive long term incentive design.

Speaker 2: Finally, we have also taken a leadership role in ensuring strong board of director oversight, refreshment, independence, and diversity highlighted by the addition of two new directors and the appointment of a new lead director in 2021 .

Finally, we have also taken a leadership role in ensuring strong board of director oversight refreshment independence and diversity highlighted by the addition of two new directors and the appointment of a new lead director in 2021.

Before we move to our question and answer session I want to wrap up with a compelling investment case for marathon oil.

Speaker 2: Before we move to our question and answer session, I want to wrap up with the compelling investment case for Marathon Oil. We fully recognize that investors have options, so why MRO? First, we have instituted a transparent capital framework that uniquely prioritizes our shareholders as the first call on cash flow generation.

We fully recognize that investors have options. So one.

<unk> MRO.

First we have instituted a transparent capital framework that uniquely prioritizes our shareholders as the first call on cash flow generation our.

Speaker 2: Our shareholder-friendly framework is complemented by a track record of delivery, and it is my expectation that we will lead our peer space in returning capital to shareholders in 2022.

Our shareholder friendly framework is complemented by a track record of delivery and it is my expectation that we will lead our peer space and returning capital to shareholders in 2022.

Speaker 2: Second, we are committed to capital discipline. If commodity prices continue to outperform, we won't introduce production growth capital into our budget. We will remain focused on free cash flow generation and return of capital.

Second we are committed to capital discipline, if commodity prices continue to outperform we won't introduce production growth capital into our budget. We will remain focused on free cash flow generation and return of capital.

Speaker 2: When it comes to growth, our focus is not on growing production, it's on growing the per share metrics that matter most. And a billion dollars of buybacks in just the last four and a half months, driving eight percent underlying per share growth, is a strong statement of our commitment.

When it comes to growth our focus is not on growing production. It's on growing the per share metrics that matter, most and $1 billion of buybacks and just the last four five months driving 8% underlying per share growth is a strong statement of our commitment.

Third due to our balanced production mix low corporate free cash flow breakeven attractive hedge book, an advantage to U S. Federal cash income tax position, our company retained differentiated upside leverage to commodity outperformance and we will protect us upside for our investors.

Speaker 2: Third, due to our balanced production mix, low corporate free cash flow break-even, attractive hedge book, and advantaged U.S. federal cash income tax position, our company retains differentiated upside leverage to commodity outperformance, and we will protect this upside for our investors.

And finally.

Speaker 2: And finally, we believe the peer-leading financial and operating results we are delivering today are sustainable, underpinned by over a decade of high-quality, high-return inventory, by our five- and 10-year benchmark maintenance scenarios, and by our commitment to comprehensive, longer-term ESG excellence. With that, we can open up the line for Q&A.

We believe the peer leading financial and operating results. We are delivering today are sustainable underpinned by over a decade of high quality high return inventory by our five and 10 year benchmark maintenance scenarios and by our commitment to comprehensive longer term ESG excellence.

With that we can open up the line for Q&A.

Thank you and we will now begin the question and answer.

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Speaker 1: And from JPMorgan Chase, we have Arun Jayaram, please go ahead.

It from J P. Morgan Chase, we have a really Jr. Please go ahead.

Speaker 5: Hey, Lee and team, good morning. Lee, if we're sitting here in a year and oil and gas prices indeed averaged 80 and 4 or better, should we expect you to return 3 plus billion of free cash flow to shareholders? That's the buy side question of the morning.

Hey, Lee and team good morning.

Lee if we're sitting here in a year in oil and gas prices, Indeed averaged 80 and four or better.

Should we expect you to return three plus billion of free cash flow to shareholders.

The buy side question the morning.

Speaker 2: Yeah, good morning, Arun. Thanks for the question. You know, first of all, I think we are already on a pace in first quarter, Arun, to return 50% or more of our CFO back to investors.

Yes, good morning, Arun Thanks for the question.

First of all I think we are already on a pace.

First quarter room to return, 50% or more of our CFO back to investors.

Speaker 2: And as we demonstrated in 2021, whether you look at fourth quarter in isolation, where we got hit that 70% kind of milestone back to equity investors, or even look at the full year, including our gross debt reduction, which also achieved 70%, we know that we have that potential for delivery.

And as we demonstrated in 2021, whether you look at fourth quarter in isolation, where we got hit that 70% kind of.

Come back to equity investors or even look at the full year, including our gross debt reduction, which also which reached 70%.

No that we have that potential for delivery, but I think what it might be helpful for Dave to talk a little bit about the mechanics of how we approach the share repurchase program because I think it will give you a little bit more insight and how the year will likely play out so I'll kick over today.

Speaker 2: But I think what it might be helpful for Dane to talk a little bit about the mechanics of how we.

Speaker 2: the share repurchase program because I think it will give you a little bit more insight and how the year will likely play out. So, I'll kick over to Dan.

Good morning, Arun. Thanks for the question, yes with regard to share repurchase obviously, we just spent 30 minutes talking about the fact that we've been aggressively buying back shares when we think thats good value really move the needle.

Speaker 3: Morning, Arun. Thanks for the question. Yeah, with regard to share repurchase, obviously, we just spent 30 minutes talking about the fact that we've been aggressively buying back shares, and we think that's good value, but we really moved the needle by buying back 8% of the stock. And so we expect us to continue with that kind of program. In terms of how we execute on that, we use a couple of tools when executing the share repurchase.

Buying back 8% of the stock and so.

Spect us to continue with that kind of program in terms of how we execute on that we hope we use a couple of tools.

When executing the share repurchases and I think of it sort of as a base program and that sort of a top up program that the <unk>.

Speaker 3: And I think of it sort of as a base program, and that's sort of a top-up program. The base program, we establish simple 10B51 programs. Most recently, we've sized those around $250 million, and we've set those in motion to be purchased ratably over a set period of time, typically 30 to 45 days.

Ace program, we established simple <unk>.

Programs, most recently with size of those around $250 million and we set those in motion to be purchased Ratably over a period a set period of time typically 30% to 45 days.

Speaker 3: We established those 10B51s when we're not in a blackout period.

We established those tend to be <unk>, when we're not in a blackout period of course, and then they can execute daily through blackout periods. So for example, we're buying back stock today under <unk> on an earnings basis, the ultimate definitions.

Speaker 3: course and then they can execute daily through blackout period. So, for example, we're buying back stock today under a 10D51 and earnings beta is the ultimate definition.

Good morning, gentlemen.

Speaker 3: So, great ability to add.

So.

The variability of that variability.

Sorry, I'm getting a little feedback here.

Speaker 3: Sorry, I'm getting a little feedback here. The readability of that daily program really helps when you're in a period of volatility. You know, you're not trying to hunt and peck for low points in the stock price. You just ride through and dollar cost average into it.

The readability of that Daily program really helps when you are in a period of volatility.

Trying to hunt and Peck for low points in the stock price you just right through in dollar cost average into it.

Speaker 3: And, you know, if we get to the end of a period and our cash flow is sufficient to top up on top of what we've done with these 10b-5-1s, we can go in with daily purchases under what's called a 10b-18, and we can do those in fairly significant size. We can really...

And.

If we get to the end of a period and our cash flow was sufficient to top up on top of what we've done with these can be <unk> ones. We can go in with daily purchases under what's called NBA team and we can do those in fairly significant size.

We can really.

Speaker 3: move a lot of stock in a short period of time under that mechanism, if we have the capacity to do it. So I would expect, you know, probably a scrap price to continue to execute like this with a base load, and then we have the ability to adjust based on how commodity prices and other factors in our business contribute.

Move a lot of stock in a short period of time under that mechanism. If we have the capacity to do it so I would expect.

You should probably expect us to.

Continue to execute like this with a base load and then we have the ability to adjust based on our commodity prices and other factors in our business contribute to our cash flow.

Speaker 2: And maybe if I could just wrap up, I think fourth quarter was a great example of that model. You know, we had signaled that kind of at least a 50% of CFO getting back to shareholders, but as the quarter progressed and as we implemented these structured programs, we saw an opportunity with price support and the cash flow generation that we were seeing to go above and beyond that, and that's, in fact, how we got to that 70% marker.

And maybe if I can just wrap up our brands I think fourth quarter was a great example of that model, we had signaled that kind of at least 50%.

CFO getting back to shareholders, but as the quarter progressed and as we implemented the structure programs, we saw an opportunity with price support and the cash flow generation that we were seeing to go above and beyond that in that back out we got to that 70% Mark.

Great great.

Speaker 5: Great, great. Appreciate that color. And my follow up was with Mike. I was wondering if you could provide maybe a little bit more.

Appreciate that color and my follow up who is with Mike I was wondering if you could provide maybe a little bit more.

Speaker 5: asset level color on the 2022 program, specifically maybe in the Bakken. I'd love to hear about maybe the well mix between Hector and Myrmidon and maybe some thoughts.

Asset level color on the 2022 program.

Specifically, maybe in the Bakken I'd love to hear about may be the well mix between Hector and myrmidon and.

Maybe some thoughts within the Permian as well as in the mid continent. Some of the areas that you're targeting as you increase activity from last year's levels.

Speaker 5: within the Permian, as well as in the Mid-Continent, some of the areas that you're targeting as you increase activity from last year's levels.

Yes, good morning, Ryan can certainly take you through that.

Speaker 4: Yeah, good morning. We can certainly take you through that and I'll start with the back and they'll probably jump on to Eagleford, but in the back end, we're as as we.

I'll start with the Bakken they'll probably jump on to Eagle Ford and the Bakken.

We.

Speaker 4: included in the presentation. Looking at 30-60 wells to sales, what I would say is probably more weighted towards the first half of the year. It is a higher working interest program this year, which obviously works in our favour. What I would say is largely focused

Included in.

Presentation looking at 50 to 60 wells to sales what I would say is probably more weighted towards the first half of the year.

It is a higher working interest program this year, which hopes that works in our favor, but what I would say is largely focused in Hector.

Speaker 4: in Hector. Eagleford, again, as we mentioned in the presentation, 120 wells to sales.

Eagle Ford again, as we mentioned in the presentation 100, 120 wells to sales.

Speaker 4: Activity is going to be across our core areas, so we're looking at about 45% of the activity in Cairns, 35% in Anastosia, and the remainder up in Gonzales.

Activity is going to be across our core areas. So we're looking at about 45% of the activity in karnes, 35%.

Got it.

The remainder.

Often consolidates, we are looking at longer laterals on our bridge in Eagle Ford This year, so that should enhance our <unk>.

Speaker 4: We are looking at longer laterals on average in Eagleford this year, so that should enhance our

Speaker 4: efficiencies. We're also going to be continuing the redevelopment testing that I think it was this time last year you asked the question.

<unk> six <unk>.

We're also going to be continuing the redevelopment testing that.

It was this time last year you asked the question so.

Speaker 4: probably make a date for this by next year. We'll give you another update but we're continuing the redevelopment testing there with the 15 wells plan.

We'll probably make a date or the spend next year.

Another update but we're continuing to redevelopment basically 15 wells planned in 2022, but some good success in 2021, we bought at little over 100 high return redevelopment locations to inventory and there still seems pretty logical to continue that act.

Speaker 4: in 2022, had some good success in 2021.

Speaker 4: We've added a little over 100 high-return redevelopment locations to inventory there, so it seems pretty logical to continue that activity into 2022.

And since <unk> 2022.

Speaker 4: Permian, again, 20 to 25 wells to sales.

Permian get 20% to 25 wells to sales.

<unk>.

Speaker 4: That's probably going to be more focused on the second half of the year, targeting the Upper Wolf Camp and what I'd say is split pretty much 50-50 between Red Hills and Malaga. And then wrapping up, Oklahoma, again 20-25, Wellesley Seals, what I'd say there is heavy

It's probably going to be more focused on the second half of the year targeting the upper Wolfcamp and what I'd say is split pretty much 50, 50 between Red Hills Mall.

And then ramping up Oklahoma again, 20% 25 wells to sales what I'd CVR is heavy.

Speaker 4: Woodford focused and you know similar to maybe what we're seeing in Eaglesburg, we're going to benefit there from some some longer average lateral lens. I think we're 30% up from when we had our last full year of activity in Oklahoma. Great, thanks a lot.

Woodford focus.

Similar to what we're seeing in the Eagle Ford, we're going to benefit there from some some longer average lateral lengths I think were 30% up from when we had our last full year activity in Oklahoma.

Great. Thanks, a lot.

From Barclays, We have Jeanine Wai. Please go ahead.

Hi, good morning, everyone. Thanks for taking our questions.

Anthony.

Speaker 6: First question, we noticed that you reported 47 million of acquisitions during the quarter on the cash flow statement after not doing any for several quarters.

The first question, we noticed that you reported $47 million of acquisitions during the quarter on the cash flow statement after not doing any for several quarters can you just provide a little bit of color on what that acquisition capital is spent on and maybe a little bit on your perspective on the A&D market for marathon.

Speaker 6: provide a little bit of color on what that acquisition capital was spent on and maybe a little bit on your perspective on the A&E market for Marathon.

Good morning, Jeanine, it's Mike here.

Speaker 4: Morning, Janine. It's Mike here. I'll give you a little bit of detail on the acquisition and then I'll kick it over to Lee to provide a little bit of that broader perspective.

Give you a little bit of detail on the acquisition and then I'll kick it over to Lee to provide a little bit of that broader perspective.

Speaker 4: So the acquisition, it was a small Eagle for Bolton and the core.

The acquisition it was a small eagle Eagle Ford bolt on in the core.

Speaker 4: It added a few stakes, but I think more importantly for us, it allowed us to drill some extended laterals.

It added a few states, but I think more importantly for us it allowed us to drill some extended laterals guidance Karnes County, there maybe on the broader question is helpful.

Speaker 4: down in Carnes County there. Maybe on the broader question, I'll fire that over to Lee, if that's okay? Yeah, no, that's great, Mike. Thanks.

Part of that over to leave US Okay, Yes, now thats great Mike. Thanks.

Speaker 2: You know, from a broader perspective, Janine, I think first and foremost, we're going to view all opportunities and organic opportunities with the lens of really our high confidence organic case, which we obviously spent a lot of time describing.

From a broader A&D perspective, Janine I think first and foremost we're going to view all opportunities inorganic opportunities through the lens of really our high confidence organic case, which we obviously have spent a lot of time, describing today and the types of financial metrics that that's that's delivering so needless to say.

Speaker 2: today and the types of financial metrics that that's delivering. So, needless to say, it sets a relatively high bar for any opportunity that's inorganic in nature. And of course, to pursue something, we're going to have to see it as accretive to that organic case. And again, that's going to be a challenge.

It sets a relatively high bar for any opportunity that inorganic in nature and of course to pursue something we're going to have to see it as accretive to that organic case and again, that's going to be a challenge we will continue to assess and evaluate those things.

Speaker 2: We will continue to assess and evaluate those things in the marketplace, particularly those that are around our core areas, but we're going to be very disciplined. The same discipline that you see us applying in our organic business, you should expect that when we look at A&D activities as well. I think the opportunity that Mike described is a great example of an accretive opportunity that brought a little bit of PDP, but generally allowed us.

The marketplace, particularly those that are.

Around our core areas, but we're going to be very disciplined in the same discipline that you see us applying.

In our organic business you should expect that when we look at AMD activities as well I think the opportunity that Mike described is a great example of an accretive opportunity the ball a little bit of PDP, but generally allowed us to build on our core area and extend our lateral lengths and improve our capital.

Speaker 2: to build on a core area and extend our lateral links and improve our capital efficiency. And so those are the type of kind of hand-in-glove fits that we'll be looking at.

Efficiency and so those are the type of kind of hand in glove fits that we'll be looking for.

Okay, great. Thank you for all that color.

Speaker 6: Great. Thank you for all that color. Our second question is maybe just revisiting the method of the cash payout. If the strip holds and the 70% of cash flow comes to fruition, there's a lot of cash to be allocated, which is a very nice high-class problem. In this upside case, does your preference between buybacks, variables, and base dividends change on that allocation split? I know so far you've had a very strong preference for buybacks.

Second question is maybe just revisiting the method of the cash payout if the strip holds and the 70% of cash flow comes to fruition. There is a lot of cash to be allocated which is a very nice high class problem and this upside case does your preference between buybacks variables and base dividends teens on that allocation split.

I noticed so far you've had a very strong preference for buybacks, which is Alan would you decide very nicely and the prepared remarks about per share growth but.

Speaker 6: which you described very nicely in the prepared remarks about for share growth. But we've just been noticing we've been getting a little bit more pushback and questions from investors on pro-cyclical buyback.

Dustin noticing we'd be getting a little bit more pushback and questions from investors on pro cyclical buyback. Thank you.

Speaker 3: Yeah. Hey, Jeanine, this is Dan. Let me take a cut at that. So really, we've got three choices for returning cash to shareholders, the base dividend, shareholder purchases, or some sort of a variable cash return that people often describe as variable dividends. And kind of here's how we think of each. The base dividend, so...

Yes, Jeanine this is being let me take a cut at that so really we've got three choices for returning cash to shareholders. The base dividend share repurchases or some sort of a variable cash return people often described as variable dividends.

Here's how we think.

The base dividend so.

Speaker 3: You know, our objective there with the base dividend is to have a competitive yield when compared to peer average and the S&P 500. And also, in addition to competitive, we need it to be sustainable. And we think of that in the context of a pretty conservative.

Our objective there with the base dividend is to have a competitive yield when compared to peer average and the.

S&P 500, and it also.

In a competitive we need it to be sustainable and we think of that in the context of a pretty conservative.

Planning basis price deck sort of in a $45 to $50 world.

Speaker 3: planning basis price deck sort of in a $45 to $50 world where we know investors can count on that base dividend in virtually any circumstance.

We know investors can count on that base dividend in virtually any circumstance.

Speaker 3: With our recent fourth consecutive increase, the base dividend yields competitive peer average and a little bit better than the S&P 500. So check that box. From a sustainability perspective, we really think about 10% of cash flow from operations is being...

With our recent fourth consecutive increase the base dividend yields competitive peer app with your average and a little bit better near S&P 500.

Check that box from a sustainability perspective, we really think.

At 10% of cash flow from operations has been where.

Speaker 3: where we want to target that dividend, again, in that $45 to $50 world. We want to keep the enterprise break-even, free cash flow break-even after dividend below $40. We're well below that, so we're in good shape there. The $0.07, again, is about right in line with the 10% at that stated price deck.

Where we want to target that dividend again in that $45 to $50 world.

What keeps the enterprise breakeven free cash flow breakeven after dividend below 40, we're well below that so we're in good shape there.

Seven again its about right in line with the 10% at that stated price deck.

Speaker 3: And then keep in mind there are synergies between the base dividend and shareholder purchases.

And then keep in mind, there are synergies between the base dividend and share repurchases.

Speaker 3: as we reduce outstanding shares, we can increase the base dividend further and still stay within that 10% CFO threshold. So we really like that in our play.

As we reduce outstanding shares we can increase the base dividend further.

Still stay within that 10% CFO thresholds, so we really like that interplay.

Share repurchases, we just went through that in quite a bit of detail, but we still think the value proposition is so strong there. It's just hard to take your eyes off of that.

Speaker 3: Shareware purchases, we just went through that in quite a bit of detail, but we still did. The value proposition is so strong there, it's just hard to take your eyes off that as the largest attractor of return of cash to shareholders.

As is the largest.

Attractor of return of cash to shareholders.

Speaker 3: We certainly, from a variable dividend perspective, have considered that and it remains a potential tool for us to use in the future to supplement the base dividend and share our purchases.

We certainly from a variable dividend perspective have considered that and it remains a potential tool for us used in the future to supplement the base dividend and share repurchases I wouldn't want to do it to the detriment of either the base dividend or share repurchases, especially when the implied free cash flow yield is so high on notes repurchased.

Speaker 3: I wouldn't want to do it to the detriment of either the base pivot end or shareholder purchases.

Speaker 3: Especially when the implied free cash flow yield is so high on those repurchases and the program is so efficient.

As in the program so efficient.

Speaker 3: But, you know, we're not closing the door on any techniques. I do think on your pro-cyclicality question, just keep in mind when the precastal yield is that high, it doesn't feel pro-cyclical.

But.

We're not closing the door on any any techniques that I do think on your pro cyclicality question just keep in mind when the free cash flow yield is that high.

Fuel pro cyclical me at all and because we've really bullet proofed.

Speaker 3: at all. And because we've really bulletproofed our company for down price cycles, we can keep buying pretty much any price cycle. So, and that's really kind of our intention. Great. Thank you very much.

Our company was down.

This cycles, we can keep buying to pretty much any price cycles, so and thats really kind of our attention.

Great. Thank you very much.

From Wolfe Research, we have Josh Silverstein. Please go ahead.

Speaker 7: Good morning, guys. Just sticking on the capital return plans, you still do have some small maturities coming up over the next year and a half or so. Is the game plan still to pay those down with cash, reducing some of the capital returns to shareholders, or are there refinancing thoughts that maybe keep more cash going back to shareholders?

Yeah. Thanks, good morning, guys.

Just sticking on the capital return plans you still do have some small maturities coming up over the next kind of year on year and a half or so is the game plan is still to pay those down with cash reducing some of the capital returns to shareholders or are there refinancing thoughts that maybe keep more cash going back to shareholders.

Yes, My base case is pay them off with cash.

Speaker 3: Yeah, my my base case is pay them off with cash. They're really kind of small bite sized maturities. There's

They are really kind of small bite sized maturities.

Speaker 3: We've got like $38 million of old USX debt, if you can believe that, with an average coupon of just about close to 10%, it would be nice to get that out of the system.

We've got like $38 million of U S. O U S. Ex Pat if you can believe that with an average coupon of about close to 10% will be nice to get that out of the system.

Speaker 3: The following year or so, there's another $200 million of USX debt like that, and then we get into a couple of maturities that are the muni bond debt that's pretty unique to us. We like that one because we can buy it back and put it in the treasury, if you will, and keep it as capacity to reissue in the future, and it's a relatively low-cost debt compared to tax debt.

The following year or so there is another $200 million use fix that like that and then we get into a couple of maturities that are the muni bond debt, that's pretty unique to us we like that one because we can we can buy it back and put it into treasury, if you will and keep it as capacity to reissue.

The future is relatively low cost gap compared to taxable.

Speaker 3: So, you know, short answer to your question, base case, pay it off with cash. I think there's some good synergies with interest production, especially on that higher coupon debt.

So short.

Short answer to your question base case paid off with cash I think there's some good synergies with interest production, especially on that higher coupon debt.

But yes.

As we pay off those munis will kind of retain the optionality, if we need those going forward to tackle a larger maturity tower or any other circumstance. It's nice to have us just as a reminder, the $1 $4 billion of gross debt that we took out last year also brought with it $50 million of <unk>.

Speaker 3: As we pay off those munis, we'll kind of retain the optionality, and if we need those going forward to tackle a larger maturity tower or for any other circumstance, it's nice to have.

Speaker 2: Yeah, just as a reminder, you know, the $1.4 billion of gross debt that we took out, you know, last year also brought with it $50 million of annualized interest rate savings. And so, when we think about our overall enterprise, free cash flow break-even, you know, that's cost structure that's coming out of the business. So, it is good to continue to keep retiring that debt as it matures, but we don't see the need to accelerate.

<unk> interest rate savings and so when we think about our overall enterprise free cash flow breakeven.

<unk> cost structure that is coming out of the business. So it is good to continue to keep retiring that debt as it matures, but we don't see the need to accelerate each of them.

Alright, Thanks, guys and then.

Speaker 7: Thanks guys. And then, you know, the activity is still heavily weighted with this 75-25 split from the Eagle, Ford, and Bakken. When do you see the shift kind of slowly going towards Oklahoma and Delaware? And how does the capital efficiency change as you guys start to do that?

The activity is still heavily weighted with this 70 525 split from the Eagle Ford Bakken.

When do you see that the shifts kind of slowly going towards Oklahoma in Delaware and how does the capital efficiency change as you guys start to do that.

Yes, maybe I'll just refer you to our kind of five year benchmarks scenario that we just updated to include.

Speaker 2: Yeah, maybe I'll just refer you to, you know, our kind of five year benchmark scenario that we just updated to include.

Speaker 2: from 2022 to 2026, so essentially, we've added a year. We've incorporated kind of what we've seen from an inflation standpoint, et cetera. And what I would say is that that relative capital allocation weighting stays essentially in that same range throughout that five-year view, Josh. So no radical movements. You'll see some capital move in between basins.

2022 to 2026, so essentially we've added a year, we've incorporated kind of what we've seen from an inflation standpoint et cetera, and what I would say is that that relative capital allocation weighting stays essentially in that same range throughout that five year view chalk of no radical move.

But youll see some capital move them between basins, but kind of that 20% to 30%.

Speaker 2: But kind of that 20% to 30% going to Delaware and Oklahoma, that's pretty consistent across that five-year benchmark maintenance scenario, just to kind of give you a little bit of a benchmark.

Going to Delaware, and Oklahoma, that's pretty consistent across that five year benchmark maintenance scenario just to just to kind of give you a little bit of a benchmark.

Got it thanks guys.

From RBC capital markets, we have Scott handled please go ahead.

Speaker 1: RBC Capital Markets. We have Scott Henald. Please go ahead.

Thanks, Thanks Al.

Speaker 7: Thanks. Thanks, all. Just to maybe follow up on that question a little bit, and it looks like the Eagleford is getting a little bit higher allocation, say, this year, and I guess, you know, the last year relative to, say, the Bakken, but can you give us a sense of, like, where you see the runway in the Eagleford is? I know a lot of conversations with investors kind of discusses, you know, what type of core runway still is left in the Bakken and the Eagleford, and if you can just give us a little bit of color on your perspective on the confidence in that drilling program through that five-year time frame in the Eagleford.

Just to maybe follow up on that question, a little bit and it looks like the Eagle Ford is getting a little bit higher allocation say this year.

Yes.

Last year relative to say the Bakken, but can you give us a sense of like where you see the runway in the Eagle Ford as I know a lot of conversation with investors kind of discusses what type of core runway still left in the Bakken and the Eagle Ford and if you can just give us a little bit of color on your perspective on the confidence in that drilling program through that.

The five year timeframe in the Eagle Ford.

Speaker 2: Yeah. You know, I think, you know, you're seeing a little bit of natural variability as we, you know, optimize across facilities and developmental areas. So there's not much more of a read-through, I think, than that. But in terms of inventory-wide, we obviously talk at a corporate level about having more than a decade of high-quality inventory. You need only look at the Enveris data, which, of course, we included within the appendix of the deck.

Yes, I think youre seeing a little bit of natural variability as we optimize across facilities and developmental area. So there's not much more of a read through I think that but in terms of any.

Inventory lie.

We obviously talk at a corporate level about having more than a decade of high quality inventory you need only look at the <unk> data, which of course, we included within the appendix of the deck.

Speaker 2: But beyond that, when you look at each of our individual basins, they each independently also have over a decade of inventory for inventory to exploit. So we feel very good about the outlook of the five-year benchmark case. And even the portfolio model work that we've done on the 10-year benchmark continues to show us delivering annualized financial outcomes that look very similar to what we're delivering this year on a price-normalized basis. And from a capital efficiency standpoint, we've been the leader of the pack there for quite some time. We've included, again, a little bit more public available data on that point, but there is no real drop-off, per se, in that capital efficiency.

But beyond that when you look at each of our individual basis. They each independently also have over a decade of inventory for inventory to exploit and so we feel very good about the outlook.

Give you a benchmark case and even our portfolio model work can be done on the 10 year benchmark continues to show us delivering annualized financial outcomes that look very similar to what we are delivering this year on a price normalized basis and from a capital efficiency standpoint, we've been the leader.

The pack there for quite some time.

We've included again, a little bit more public available data on that point.

But there is no real drop off per se in that capital efficiency as we move amongst the players. These are still very economic opportunities across the board both within both Eagle Ford and Bakken, but also within Oklahoma and Delaware with obviously, Oklahoma benefiting somewhat.

Speaker 2: As we move amongst the plays, these are still very economic opportunities across the board, both within both Eagleford and Bakken, but also within Oklahoma and Delaware, with obviously Oklahoma benefiting somewhat from some of the strength in NGL and gas pricing, but quite frankly that uplifts all of the portfolios.

From some of the strength in NGL and gas pricing, but quite frankly that uplifts all of the portfolio so from our perspective.

Speaker 2: So from our perspective, a very strong runway looking ahead. And when we take that inventory and convert it into financial outcomes, we feel very confident in both the five and the 10-year.

Very strong runway looking ahead, and when we take that inventory and converted in the financial outcomes, we feel very confident in both the five and the 10 year view.

Great. Thanks for that and then.

Speaker 7: Great. Thanks for that. And then, you know, as, and I think you've been pretty clear on, you know, your views on growth, especially where we're at right now, but I know there is, you know, some, I guess I'd call flexibility to grow upwards of 5% if the market, you know, needs barrels or, or you think it's the right decision. And, and, you know, as you start thinking about 2023 and beyond, you know, can you give us your thoughts on, you know, the, you know, looking, you know, what would get you to move toward, you know, something closer to 5% growth, you know, okay.

You've been pretty clear on your views on growth, especially where we're at right now, but I know there is.

Some I guess I would call a flexibility to grow upwards of 5% if the market needs of barrels or you think it's the right decision and as you start thinking about 2023 and beyond can you give us your thoughts on that.

Looking what would get you to move toward.

Something closer to 5% growth.

Case.

Speaker 2: Yeah, I believe right now our focus guide is really, again, on per share accretion, whether that be pre-cash flow, cash flow, or even production on a per share basis.

Yes, I believe right now our focus Scott is really again on per share accretion whether that the free cash flow cash flow or even production on a per share basis.

Speaker 2: You know, we're going to be informed by the macro, but at the end of the day, we're price takers, not price predictors. And there's a wide range of potential outcomes that are going to be driven, clearly, by...

We're going to be informed by the macro but at the end of the day, we're price takers that price predictors and Theres a wide range.

Potential outcomes that are going to be driven clearly by <unk>.

Speaker 2: you know, events as well as supply and demand fundamentals, but our strategy is predicated on really generating outsized free cash flow when we are in a constructive pricing environment. And I don't really see that mantra changing as we move out in time. And I think that the growth and per share metrics for...

Events, as well as supply and demand fundamentals, but our strategy is predicated on really generating outsized free cash flow.

When we are in a constructive pricing environment and I don't really see that mantra changing as we move out in time and I think the.

The growth in per share metrics for US is the right approach I think for a mature business that is trying to attract more of a broad investor universe.

Speaker 2: is the right approach, I think, for a mature business that is trying to attract more of a broad investor universe. I appreciate that. Thank you.

I appreciate that thank you.

Wells Fargo, we hit the team Kumar. Please go ahead.

Speaker 8: Hi, good morning, and thanks for taking my questions. Lee, you've covered this a bit this morning, but looking at your slide eight and the allocation of cash flow.

Hi, good morning, and thanks for taking my questions you've covered this a bit this morning, but looking at your slide eight and the allocation of cash flow.

Speaker 8: You stand out in terms of the buyback, but when I look at the base dividend against your peers, the allocation of cash flow to the base dividend is a little bit lower. So, you talked a little bit earlier about mid-cycle prices and stuff, but where is the room for that to grow, or what is the appetite to grow that, to be a little bit more competitive with your peers, if not the S&P 500?

You stand out in terms of the buyback, but when I look at the base dividend.

It appears the allocation of cash flow to the base dividend is a little bit lower so.

Can you talk a little bit earlier about mid cycle prices stuff, but what is there is there room for that to grow what is the appetite to grow that.

Be a little bit more competitive with your peers, if not the S&P 500.

Okay.

Got it.

Okay.

Speaker 3: As I mentioned earlier, in an earlier answer, we really are focused on maintaining a competitive yield with that base dividend, and we're right on top of the average for the peer group today and a little bit ahead of the S&P 500. And, you know, we have raised that base dividend four quarters consecutively to the point now we're paying $50 million a quarter.

Answered earlier in an earlier answer.

Our focus on maintaining a competitive yield with that base dividend and we're right on top of the average for the peer group today and a little bit ahead of the S&P 500, and we have raised that base dividend fourth quarters consecutively. Two point now, we're paying $50 million a quarter.

Two shareholders.

Speaker 3: to shareholders, we do want to make sure that it passes the sustainability test. So with 10% of cash flow from operations in a pretty conservative $45 to $50 planning basis price environment, and we want to keep the enterprise free cash flow break even below 40, and it's well below 40 at this point.

We do want to make sure that it passes the sustainability test so 10% of cash flow from operations with a pretty conservative 45 to $50.

Sure.

Planning basis price environment.

We want to keep the enterprise free cash flow breakeven below $40 well below $40 disappointed.

Speaker 3: probably 35 or less after give and end.

Probably 45 robust after dividend.

Speaker 3: You know, the other synergies that I keep pointing to because they're real is as we continue to buy back shares, we create more

The other synergies that I keep pointing to cook. The real is as we continue to buy back shares we create more capacity.

Speaker 3: for that dividend, for that base dividend, and frankly, as we pay down some of that high coupon debt, there's more capacity for the base dividend as well. So we're very focused on keeping that competitive, but we also want to keep it sustainable. We think we've got a flywheel effect going here that's going to feed that base dividend.

Or that dividend.

Or that base dividend and frankly, as we as we pay down some of that high coupon debt more capacity.

The basically the name as well so we're very focused fund.

That competitive, but we all products.

Available, we think we've got a flywheel effect going here thats going to feed that base dividend.

Sure.

Speaker 8: Great, great. I appreciate that. I guess the other question I have is, you know, you've highlighted the lack of hedges as one of your competitive advantages, but you're presenting a financial model, right? It's a cash generation, cash recurrent model. At what point do hedges, or at least taking some of that downside risk in commodity prices, become important?

Great Great I appreciate that.

I guess the other question I have is you have highlighted the lack of hedges as one of your competitive advantages.

But at.

Presenting a financial model related to cash generation cash recurring model.

<unk>.

At what point do hedges are a key is taking some of that.

Downside risk and commodity prices become important.

Speaker 8: if you could answer the thought around hedging going forward in the long term.

If you could answer that.

Todd on hedging going forward in the long term.

I did see that Gee this is Pat I'll.

Speaker 9: I'll take that one. You know, Lee covered it in his opening remarks, and you just reiterated that we have significant leverage even to further commodity price strength, and we think it's really important to preserve that strength for our shareholders. That's why we showed the slide on 14, showing what our current book looks like at a couple different prices.

I'll take that one yeah Lee covered it in his opening remarks can you just reiterated that we have significant leverage to further commodity price strength that we think it's really important to preserve the strength of our shareholders. That's why we showed the slide 14.

Showing what our current book looks like in a couple of different prices.

Speaker 9: We have intentionally structured our crude hedges such that they tie to our return of cash framework, so we've set our floors at $60.

We have intentionally structured our crude hedges such that they tie to our return of cash framework. So we've set our floors at $60.

Speaker 9: and we have high calls so that we can share that upside and that helps preserve our ability to return that minimum 40% of cash flow.

We have high calls so that we can share that upside is that best helps preserve our ability to return thats bit of a 40% of cash flow from operations for investors.

Speaker 9: from operations to investors. And hedging is just one dimension of our commodity risk management approach. I think we've hit on these before, but other dimensions include our strong balance sheet, our low cost structure, our low corporate pre-cash flow rate, even as Dane mentioned, below $35 a barrel. And then of course our diversified portfolio.

Hedging is just one dimension of our commodity risk management approach.

I think we've hit on these before but other debentures include our strong balance sheet.

Cost structure, our low corporate free cash flow breakeven as Dave mentioned $35, a barrel and then of course, our diversified portfolio.

Speaker 9: With our significant balance sheet improvement in 21, and those break-evens, we can be patient and take it.

With our significant balance sheet improvement at <unk> blood and those.

Breakeven.

We can be patient.

<unk>.

Speaker 9: our time in assessing hedging opportunities so that we make sure we preserve the upside. And then lastly, I'd just say that we have a good product diversity mix with 50% oil. And so we feel comfortable with what we see today. Great. Appreciate the answers.

Our time and assessing hedging opportunities so that we make sure we preserve the upside and then lastly, I'll just say that we have a good product diversity mix.

50% of oil.

Feel comfortable with where we sit today.

Great I appreciate the answers.

Yes.

From <unk> Securities we have deal, but please go ahead.

Speaker 1: Thanks for the time. The first question is just on the ops plans. I really like that slide 21 that you go over inventory depth and hopefully some of the other analysts are seeing the same slides. My question around that is, you know, given the sample acreage, we all look to drill and complete even longer laterals and very extended wells in order to potentially boost returns. Or can you just maybe talk about the operational plans given that?

Good morning, Thanks for the time.

First question is just on the odds plans I really like that slide 21 that we've got inventory depth and hopefully some of the other analysts have seen the same slides my question around that is.

Given the sample acreage, we all look to drill and complete an even longer laterals.

Very extended wells in order to boost.

Can you just maybe talk about the operational plans given it.

Speaker 2: Yeah, I think what you're asking there is, are we kind of leveraging longer laterals in the portfolio this year? I think Mike hit upon a few of those points, but Mike, maybe you wanted to talk broadly, not only about extended laterals, but some of the other things that we're doing from an efficiency standpoint, you know, as we look to mitigate some of the inflationary pressure.

Yes, I think I think what you're asking there is are we kind of leveraging longer laterals in the portfolio. This year I think I think Mike hit upon a few of those points, but Mike maybe you want to talk broadly not only about extended lateral that some of the other things that we're doing from an efficiency standpoint, as we look to mitigate some of the inflationary pressures.

Speaker 4: Just touching on the laterals, we're looking at a 10% increase in Eagleford year-over-year. You mentioned Oklahoma, we're going back in there. I think it's a 30% increase in Oklahoma from the last time we were operating there. And then in Permian, it's actually over 50% increase.

Yes, just touching on the laterals.

I think maybe mentioned in previous comments, but we're looking at a 10% increase in the Eagle Ford year over year.

<unk> mentioned, Oklahoma Bakken there I think it's a 30% increase in Oklahoma from the last time, we were we were operating there and then in Permian, it's actually over 50% increase.

Speaker 4: So all of those things are obviously going to benefit capital efficiency. The other thing that I've mentioned, and this is something that we've touched on in the past,

So all of those things are obviously going to benefit capital efficiency.

The other thing that the other things I've mentioned.

Peter touched on us.

<unk>.

Speaker 4: You know, we've got a bit of a track record in terms of just improving capital efficiency, and it isn't just down to a lateral lens. I think we continually look at our well design and we're always looking to optimize there and we try to maximize value.

We've got a bit of a track record in terms of just improving capital efficiency and it isn't just <unk> lateral lengths I think we continually look at our well design.

We're always looking optimized data and do we try to maximize volume.

Speaker 4: The second area is execution efficiency, what I'd say is we've got a...

The secondary is execution efficiency, what I'd say.

Pretty relentless focus there just how do we drove in how we improve and quite honestly.

Speaker 4: pretty relentless focus there just on how we drill and how we improve and quite honestly how we operate our wells. And then the third element is maybe supply chain optimisation.

Operator Wells and then we started to element as maybe supply chain optimization I think we've got it.

Speaker 4: We're continually looking at a cost model, really trying to determine what ultimately makes.

Continually looking at looking at our cost models really trying to determine.

What what ultimately makes sense for us so.

Speaker 4: stands for us. So while we're seeing a little bit of inflation at the moment, we do try to offset by all of the things that I've just mentioned.

We're seeing a little bit of inflation at the moment, we do try to offset by by all the things that I've just mentioned.

Great Great added details I appreciate that guys and then just a quick follow up.

Speaker 1: Great, great added details. I appreciate that, guys. And then just a quick follow-up, I really like that slide 14 that shows your leveraged commodity prices. My question is,

Really like that slide 14 that show you leveraged commodity prices.

Speaker 1: around that, really just kind of looking at that bottom corner, does your advantage, and you touched on this earlier, having no upcoming cash taxes for quite some time.

Around that.

I looked at that bottom corner does their advantage.

When you touched on this earlier has no upcoming.

For quite some time. Unlike most of your peers does that maybe change how you think about some of your operational plans or is it still a capital discipline sort of weighs out.

Speaker 1: unlike most of your peers, does that maybe change how you think about some of your operational plans? Or is it still what capital discipline sort of lays out in that, that, you know, even though you have that benefit, there's really no change because

Even though you have that benefit there's really no change to that.

No I don't think Theres any certainly no undue influence of that fact on our business plan and our capital allocation from that standpoint, Neil but clearly as you pointed out on page 14.

Speaker 2: No, I don't think there's any, certainly no undue influence of that fact on our business plan and our capital allocation from that standpoint, Neil. But clearly, as you pointed out on page 14.

Speaker 2: It does put us in an advantage position in terms of the cash flow generation.

Does put us in an advantaged position in terms of the cash flow generation.

Speaker 2: over, you know, kind of over this midterm period.

Over kind of all of this mid term period and of course, we battle tested this to make sure that between our Nols in our foreign tax credits that.

Speaker 2: And of course, we battle tested this to, you know, make sure that

Speaker 2: between our NOLs and our foreign tax credits that this is the right zip code for us from a cash tax standpoint. But it doesn't influence us directly from a capital allocation standpoint. We're still gonna be returns and NPV driven on the opportunities we select to invest in. Well said, thank you.

This is the right ZIP code for us from a cash tax standpoint.

It doesn't influence us directly from a capital allocation standpoint, we're still going to be returns and NPV driven on the opportunities we select to invest in.

Well thanks, Dave.

From Bank of America, we have Doug Leggate. Please go ahead.

Thanks, Good morning, everyone.

Speaker 4: Thanks, good morning everyone. Lee, you led the market on this cash return model, so congratulations to you on that. It's obviously working. My question is about the post-cyclicality. I think we all know that oil prices are suffering a number of issues right now, whether it's geopolitics or gas in Europe or whatever is going on, and we know that there's a forward curve substantially below the spot.

You led the market on this cash return model. So congratulations to you or not so obviously working.

My question is about the cyclicality I think we.

We all know the oil prices are suffering a number of issues right now, whether it's <unk> politics or gas in Europe , or whatever is going on and we know that there is a forward curve.

<unk> below the spot so why not build cash on with one what will inevitably be an opportunity to buy back your stock at a lower level.

Speaker 4: So why not build cash and wait on what will inevitably be an opportunity to buy back your stock at a lower level?

Yes, I think Doug the way I would kind of frame that is we're not going to try to convince ourselves that were priced predictors.

Speaker 2: Yeah, I think, Doug, the way I would kind of phrase that is, you know, we're not going to try to convince ourselves that we're price predictable.

Speaker 2: We believe that a more rateable dollar average type approach where we can look through the cycle. I mean, just to give you an example, Doug, if you look at that billion dollars of share repurchases that we did, that was done below a $17 share price.

We believe that a more ratable dollar average type of approach, where we can look through the cycle. I mean, just to give you. An example, Doug if you look at that $1 billion of share repurchases that we did that was done below $17 share price and of course today on where we are trading in the market. This morning.

Speaker 2: And of course, today, I don't know where we are trading in the market this morning, but certainly north of 20.

Certainly north of 20.

Speaker 2: So I think that, you know, the opportunity that presents itself is when you have a model where you are resilient across a broad range of commodity price outputs.

So I think that.

The opportunity that presents itself is when you when you have a model where you are resilient across a broad range of commodity price outcomes that kind of pro cyclicality argument starts fading away and I think it's indicative of a new more mature model in order to.

Speaker 2: that kind of pro-cyclicality argument starts fading away. And I think it's indicative of a new, more mature model that we're deploying now, at least at our company, in the EMP space. And so I think, you know, Dane said it well. I think with this new model, it does give us that ability to really invest in our shares through the cycle.

Deploying now at least at our company.

<unk> space and so I think <unk> said it said it well I think with this new model it does give us that ability to.

To really invest in our shares through the cycle and again, assuming we continue to see the types of yields that we're seeing free cash flow yield downturn, even down to 60 were 10% we feel very strongly that that is.

Speaker 2: And again, assuming we continue to see the types of yields that we're seeing, free cash flow yields, down to, you know, even down to 60 or 10 percent, we feel very strongly that that is a great option for us, and we look at the suite of investment options, certainly investing in our own company, and the confidence that that shows and the return that it's generating makes the most sense for us.

<unk> option for us and we look at the suite of investment options, certainly investing in our own company and the confidence that that shows and the return that is generating makes the most sense for us. So I would not expect us to try to say for the rainy day and try to predict when that's actually going to occur.

Speaker 2: I would not expect us to try to say for the rainy day and try to predict when that's actually going to occur.

No. That's fair I think it's really more about what the market is prepared to discount.

Speaker 4: No, that's fair. I think it's really more about what the market is prepared to discount and if the curve rolls higher, then you're absolutely right. My follow-on is on the inventory question and you've given a lot of color this morning, so thank you for that. But you've also shown a little bit of sensitivity on the oil price, which is substantially below, you know, the high end is still $50 on your slide deck. What does the inventory depth look like at today's curve?

Overall is higher than you are absolutely right.

My follow on is on the inventory question and you've given a lot of color. This morning. So thank you for that but you are also showing a little bit of sensitivity on the oil price, which is substantially below the high end is still 50 Bucks.

On your slide deck, what does the inventory depth like at today's curve.

Yes, well I think if you do look even in just the third party.

Speaker 2: Yeah, well, I think if you do look even at just the third party data, clearly it does shift in terms of kind of where that higher return inventory lies as that price deck moves up. And when we test all of our opportunities at a very conservative price deck. So when I talk about.

David and clearly it does shift in terms of kind of where that higher return inventory lies at that price that moves up and when we test all of our opportunities at a very conservative price deck. So when I talk about.

Speaker 2: over a decade of inventory, we typically are testing that inventory at a $50 WTI. So it goes without saying that some of that Tier 3 and Tier 4 inventory, if we continue to see constructive pricing, will allow us to economically grow that inventory just from a price perspective.

Over a decade of inventory, we typically are testing that inventory at a $50 <unk>.

The Ti so it goes without saying that some of that tier three and tier four inventory. If we continue to see constructive pricing will allow us to economically grow that inventory just from a price perspective, but I do think the interim data is broadly indicative.

Speaker 2: But I do think the inverse data is broadly indicative of that effect as you look at the break-even cutoffs that they have shown. Clearly as prices move higher, it's going to enhance that inventory depth over time.

That effect as you look at the breakeven cut offs that they have shown clearly as prices move higher.

It's going to enhance that inventory depth over time.

Speaker 2: So we try to speak pretty conservatively is the way I would put it, Doug, and really not only conservative in terms of our inventory life.

So we tried to be pretty conservatively.

Way I would put it Doug and really not only conservative in terms of our inventory lie but make sure that we show transparency on what that inventory can generate from a financial outcome standpoint.

Speaker 2: but make sure that we show transparency on what that inventory can generate from a financial outcome standpoint. Because it's not just inventory, it's the quality of inventory. And I think the balance of data that we've shown on capital efficiency, the level of reinvestment rate that we can deliver are all indicative of the capital efficiency embedded in that well over a decade of inventory life. Appreciate the color. Thanks, guys.

It's not just inventory if the quality of inventory and I think the balance of data that we've shown on capital efficiency.

The level of reinvestment ranked we can deliver are all indicative of the capital efficiency embedded in that well over a decade of inventory life.

I appreciate the color thanks, guys.

From Citigroup, we have Scott group. Please go ahead.

Speaker 10: Yes, good morning. Thanks for squeezing me in here. So looking at the Bakken activity...

Yes. Good morning, Thanks for squeezing me in here.

So looking at the Bakken activity.

Speaker 10: you know, your production popped in 4Q, but the 22 tills are gonna be down 10 to 20 wells. At that level of activity, should we expect Bakken production to start to trend lower on a year-over-year basis in the second half? And, you know, is the expectation that'll be made up for the second half by the completions in the Permian? And then thinking, you know, out into next year, is that the direction of travel we should be thinking about into 2040?

Production Pumpkin <unk>.

With the 22 pills or youre going to be down 10 to 20 wells.

Levels of activity should we expect Bakken production to start to trend lower on a year over year basis in the second half.

The expectation that will be made up for the second half by the completions in the Permian.

And then thinking out into next year is that the direction of travel we should be thinking about into.

Into 'twenty three.

Yes, it's Mike here, maybe maybe.

Speaker 4: Yes, Scott, it's Mike here. Maybe how I think about back-end, you know, on an annual kind of year-to-year basis, it's going to be pretty flat, is how I think about it. We're going to see quarterly variability, as I mentioned in my prepared remarks. I mean, that's just to be expected. But, yeah, as I say, I think about it on an annual basis, it's pretty flat.

Both Bakken and annual.

Kind of year to year basis, its going to be pretty flat.

So I would think about it we're going to see quarterly variability as I mentioned in my prepared remarks.

But that's just to be expected, but as you say.

Think about it on an annual basis.

Slide.

Okay. So it's flattened the five year plan is the way to think about it.

Again, you're going to see a little bit of variability there but.

Speaker 4: Again, you're going to see a little bit of variability there, but I think it's going to be pretty close to that.

I think it's.

Going to be pretty close to that.

Okay, Okay, and then the redevelopment.

Speaker 10: And then the redevelopment opportunity in the Eagleford is interesting. What's the rough break even on those redevelopment wells and at Strip, how should we think about the redevelopment cadence over the next couple years?

Opportunity in the Eagle Ford is interesting.

The rough breakeven on those redevelopment wells and at.

Strip, how should we think about the redevelopment cadence over the next couple of years.

Speaker 4: I don't, Scott, it's Mike again. I don't think we've disclosed anything on break-evens. I mean, you know, we had 14, 15 redevelopment tests last year, and as I mentioned a little bit earlier, we've added

Scott, It's Mike again, I don't think we've disclosed anything on breakeven.

We haven't spent 14 15 redevelopment tests last year and as I mentioned, a little bit earlier, we bought it.

Speaker 4: a little over 100 specks. We've got another 15 wells planned this year to potentially de-risk and some additional areas and potentially look to add some.

A little over 100 specs, we've got another 15 wells planned on this year to potentially de risk and.

Some additional areas and potentially look to add some are their locations.

Speaker 4: further locations. And, you know, I think we look at this on an annual basis.

I think when you look at this on an annual basis.

Speaker 4: We've got a number of these, we call it OYO.

Got a number of these we call dual fuel.

Speaker 4: opportunities and we'll continue to look at that on an annual basis and we may have some more in the future. I think a lot of it is dependent on the results.

Opportunities in.

We'll continue to look at on a manual basis, and we may have some more in the future I think a lot of it is dependent on the results that we see but if.

Speaker 2: Yeah, but if I can just add in, Scott, the bottom line is that the redevelopment wells compete head-to-head with the rest of the portfolio. They have to compete on a heads-up basis for capital allocation with the rest of the portfolio. So break-evens, per se, will be not dissimilar to what we see across the rest of the portfolio.

If I can just add ensky bottom line is that the redevelopment wells compete head to head with the rest of the portfolio. They have to compete on a heads up basis for capital allocation with the rest of the portfolio so far.

<unk> per se will be not dissimilar to what we see across the rest of the portfolio.

Sure.

Got it appreciate the color. Thank you.

Thank you.

Speaker 9: you in our overtime and we'll now turn it back to Lee Tilghman for closing comments.

We'll now turn it back to Lee Tillman for closing comments.

Speaker 2: Thank you for your interest in Marathon Oil, and I'd like to close by again thanking all of our dedicated employees and contractors for their commitment to safely and responsibly deliver the energy the world needs each and every day. That ends our call.

Thank you for your interest in marathon oil and I'd like to close by again thanking all of our dedicated employees and contractors for their commitment to safely and responsibly deliver the energy the world needs each and every day that ends our call.

Thank you ladies and gentlemen. This concludes today's conference. Thank you for joining you may.

Speaker 9: Ladies and gentlemen, this concludes today's conference. Thank you for joining. You may now disconnect.

Now disconnect.

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Good morning, and welcome to the marathon oil of fourth quarter 2021 earnings call. My name is Brandon and ill 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 paid all star one if you have a question.

Speaker 9: 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.

Speaker 9: Please note this conference is being recorded. I will now turn it over to Guy Baber, and Guy, you may begin.

Please note. This conference is being recorded I will now turn it over to Guy Baber.

It would be good.

Speaker 2: Thank you, Brandon, and thank you to everyone for joining us this morning on our call.

Thank you Brandon and thank you to everyone for joining us this morning on our call.

Speaker 2: Yesterday, after the close, we issued a press release, a slide presentation, and an investor packet that address our fourth quarter 2021 results and our 2022 outlook. Those documents can be found on our website at marathonoil.com.

Yesterday after the close we issued a press release, a slide presentation and Investor packet that address our fourth quarter 2021 results and our 2022 outlook.

These documents can be found on our website at marathon oil dot com.

Speaker 2: 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.

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.

Speaker 2: 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.

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.

Speaker 2: 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 bylaws.

Speaker 2: 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.

With that I'll turn the call over to Lee, who will provide us with some opening remarks, we'll also hear from Dane in for Mike today before we move to our question and answer session Lee.

Speaker 2: Thank you guys and good morning to everyone listening to our call today.

Thank you Guy and good morning to everyone listening to our call today.

Speaker 2: 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 want to start by once again thanking our employees and contractors for their dedication and hard work.

Amendment to safety and environmental excellence and their collective contributions to a truly a remarkable year.

Speaker 2: I can best describe 2021 as a year of comprehensive delivery against our framework for success.

I can best describe 2021 is a year of comprehensive delivery against our framework for success.

Speaker 2: highlighted by financial results that are not only superior to our PPP.

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.

Speaker 2: but more importantly, superior to any other sector of the S&P 500.

Speaker 2: And we are carrying that momentum forward into 2022, fully expecting another year of outstanding delivery.

And we are carrying that momentum forward into 2022 fully expecting another year of outstanding delivered.

There are a few key messages I want to highlight today.

Speaker 2: 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 investment.

First after accelerating our balance sheet objectives through gross debt reduction fourth quarter transitions will focus on returning a compelling amount of capital to our equity investors.

Speaker 2: 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.

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 are more than $800 million to our equity investors significantly exceeding our minimum 40% commitment.

Speaker 2: The outcomes speak for themselves. During fourth quarter, we've returned over 70% of our cash from operations, or more than $800 million to our equity investors, significantly exceeding our minimum 40% commitment.

Speaker 2: 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.

Clarify that 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 the fourth quarter.

Speaker 2: 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.

In total we have now executed $1 billion of share repurchases in October driving an 8% reduction to our outstanding share count and just four five months.

Speaker 2: 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.

While others in our space may once again be focused on growing their production.

Our focus on growing the per share financial metrics that matter, most to our equity valuation or cash flow per share and our free cash flow per share.

Speaker 2: Further, we continue to believe buybacks remain an excellent use of capital.

Further we continue to believe buybacks remain an excellent use of capital.

Speaker 2: Zane 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.

We 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 overtime.

Speaking of our base dividend, we recently raised our quarterly base dividend for the fourth consecutive quarter fully consistent with our objective to paying a competitive and sustainable base dividend to our shareholders.

Speaker 2: 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.

Speaker 2: 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 E&P peer group, but are superior to the broader S&P 500 as well.

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 E&P peer group, but are superior to the broader S&P 500 as well.

Speaker 2: 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 rate.

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 <unk> range.

Speaker 2: We believe we have built that type of resilience into our business.

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 experienced constructive commodity price support as we are seeing today.

Speaker 2: And we must deliver truly outsized free cash flow in return of capital versus the S&P 500 when we experience constructive commodity price support, as we...

Speaker 2: Our 2021 results are a strong testament to this mandate.

Our 2021 results are a strong testament to this mandate.

Speaker 2: 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.

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.

Speaker 2: 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 relevant to other EMPs, no matter how you want to analyze the publicly available data.

Apparel, leading return of capital profile driving significant per share growth.

Tremendous balance sheet following $1 4 billion of gross debt reduction last year.

And a demonstrated capital efficiency advantage relative to other E&P no matter, how you want to analyze the publicly available data.

My third key message today is that this pure leading financial and operational performance, we have been delivering is sustainable.

Speaker 2: My third key message today is that this peer leading financial and operational performance we have been delivering is sustainable.

Speaker 2: 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.

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.

Speaker 2: We expect to deliver over $3 billion of free cash flow at a reinvestment rate of less than 30 percent, assuming $80 WTI and $4 Henry Hub prices at a discount to the current forward curve.

We expect to deliver over $3 billion of free cash flow at a reinvestment rate of less than 30%, assuming $80 <unk> and $4 Henry hub prices at a discount to the current forward curve.

Speaker 2: These financial outcomes are sustainable for years to come and are underpinned by over a decade of high return, high confidence in themselves.

<unk> financial outcomes are sustainable for years to come and are underpinned by over a decade of high return high confidence inventory.

And it is 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.

Speaker 2: And it's further supported by our Bottoms-Up 5-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 outcome for at least a decade.

Speaker 2: 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 differentiates us versus our peers are three distinct <unk> first we will remain disciplined and we will not add production growth capital to our budget in 2022, our focus will remain on free cash flow generation return of capital.

Speaker 2: Importantly, we retain significant upside leverage to commodity prices that differentiates us versus our peers 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 pre-cash regeneration, return of capital, and per share financial method.

<unk> 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 and advantaged outlook versus most peers.

Speaker 2: 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, an advantaged outlook versus most peers.

My fourth and final key point today, it's a marathon oil it is fully committed for meeting global energy demand, while delivering comprehensive ESG excellence focusing on each element of ESG.

Speaker 2: 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.

Speaker 2: 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.

I hope all of you've 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.

Speaker 2: 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.

Nice to say I believe our employees should be just as proud of our ESG delivering in 'twenty. One 2021 as they are of our peer leading financial and operational results.

Speaker 2: With that, I will turn it over to Dane, who will give you all an update on our Return of Capital initiatives. Thank you, Lee. Good morning, everybody. I'll speak to Slide 7 through 9 of our deck, largely focusing my comments on our Return of Capital accomplishments and output. Grounding our discussion, our Return of Capital framework is summarized on Slide 7, and that is unchanged.

With that I will turn it over to Dave who will give you all an update on our return of capital initiatives. Thank you Lee and good morning, everybody.

I'll speak to slide seven through nine of our deck largely focusing my comments on our return of capital accomplishments.

Look grounding our discussion on our capital framework summarized on slide seven and that is unchanged as.

Speaker 3: As a reminder, our framework calls for delivering a minimum of 40% of cash flow from operations to our equity holders when WTI is at or above $60.

As a reminder, our framework calls for delivering a minimum of 40%.

Cash flow from operations to our equity holders <unk> at or above $60.

Speaker 3: This represents a return of capital commitment at the top of our E&P peer space and that is competitive with any sector in the S&P 500.

<unk> represents a return of capital commitments at the top of our E&P peer space and that is competitive with any sector in the S&P 500.

Speaker 3: Importantly, as Lee mentioned, our return of capital targets are based on our cash flow from operations and not on our pre-cash flow.

Accordingly, as we mentioned a return of capital targets are based on our cash flow from operations and not all of our free cash flow. This is purposeful intended to make clear that our shareholders get the first call on cash generation. Additionally, as consistent with our reinvestment rate driven approach to capital spending by.

Speaker 3: This is purposeful, intended to make clear that our shareholders will get the first call on cash generation. Additionally, it's consistent with our reinvestment rate-driven approach to capital spending. By staying disciplined and by maintaining a low reinvestment rate, we protect a significant percentage of our CFO for shareholder distribution.

By staying disciplined and by maintaining a low reinvestment rate.

Protect a significant percentage of our CFO for shareholder distributions.

Speaker 3: While frameworks and commitments are important, we believe establishing a consistent track record of delivery, quarter in and quarter out, is ultimately key to building and maintaining trust and credibility with the market.

While frameworks and commitments are important we believe establishing a consistent track record of delivery quarter in quarter out is ultimately key to building and maintaining trust and credibility with the marketplace. We have a multiyear track record of returning significant capital to our shareholders are especially proud of our accomplishments in 2021.

Speaker 3: We have a multi-year track record of returning significant capital to our shareholders and are especially proud of our accomplishments in 2021.

We started 2021 with the top priority of balance sheet improvement accelerating $1 $4 billion of gross debt reduction during the first three quarters of the year.

Speaker 3: We started 2021 with the top priority of balance sheet improvement, accelerating $1.4 billion of gross debt reduction during the first three quarters of the year. After taking our net debt EBITDA comfortably below one times at STRIP and below one and a half times at our conservative longer-term planning basis of $50 WTI, we have no other need to accelerate additional debt reduction. So going forward, we plan to simply retire debt as a

After taking our net debt to EBITDA comfortably below one times at scrip and below one five times and our conservative longer term planning basis at $50 going to DTI.

All of our needs to accelerate additional debt reduction so going forward, we plan to simply retire debt as it matures.

Speaker 3: Our balance sheet repositioning opened the door for us to begin returning a significant amount of capital to equity holders during the fourth quarter, and that's returns beyond our base dividend.

Our balance sheet repositioning open the door for us to begin returning a significant amount of capital the equity holders during the fourth quarter and Thats returns beyond our base dividend.

Speaker 3: Thanks to stronger commodity prices, higher oil production, declining capex, and an increase in EG cash distributions, 4Q was an exceptionally strong financial quarter, enabling us to return over 70% of CFO or more than $800 million to our equity investors through our base dividend and share purchases, dramatically exceeding our minimum 40% cap.

Thanks to stronger commodity prices higher oil production declining capex and an increase in EEG cash distributions <unk> was an exceptionally strong financial quarter, enabling us to return over 70% of CFO for more than $800 million to our equity investors.

Dividend and share repurchases dramatically exceeding our minimum 40% commitment.

Speaker 3: Stepping back and looking at full year 2021, demonstrates our commitment to allocating cashflow to shareholder-friendly purposes. In total, we directed over 70% of our full year 2021 CFO , that's $2.3 billion to debt reduction, shareholder purchases, and our base dividend. That's a peer-leading track record of return of capital execution.

Getting back and looking at full year 2021 demonstrates our commitment to allocate cash flow to share holder friendly purposes. In total we directed over 70% of our full year 2021, CFO , that's $2 3 billion.

<unk> to debt reduction share repurchases and our base dividend.

Peer leading track record our return of capital execution.

Speaker 3: Slide nine highlights that we are well-positioned to lead the market again in returning significant capital to shareholders in 2022.

Slide nine highlights that we are well positioned to lead the market again, and returning significant capital to shareholders in 2022.

Speaker 3: Since October , we've already executed $1 billion of share repurchases, reducing our outstanding share count by 8% in just four and a half months, and driving significant growth to our underlying per share metric.

Since October we've already executed $1 billion of share repurchases, reducing our outstanding share count by 8% in just four five months and driving significant growth to our underlying per share metrics.

Speaker 3: Our current outstanding buyback authorization is $1.7 billion, and we continue to believe that buying back our stock in a disciplined manner is a good use of our capital.

Our current outstanding buyback authorization is $1 7 billion and we continue to believe that buying back our stock in a disciplined manner as a good use of our capital.

Speaker 3: The efficiency of a disciplined and rateable share repurchase program is really a function of free cash flow generation relative to market value. In other words, your free cash flow yield. And while our equity value has appreciated since we kicked off our buyback program in October , we can continue to trade at a free cash flow yield north of 20 percent, and that's at $80 WTI, which is a discount to the current forward curve.

The efficiency of a discipline that we're ratable share repurchase program. It was really a function of free cash flow generation relative to market value in other words, your free cash flow yield and while our equity value has appreciated since we kicked off our buyback program in October we continue to trade at a free cash flow yield north of 20 <unk>.

And thats at $80, <unk>, which is a discount to the current forward curve.

Speaker 3: That's roughly four times the free cash flow yield of the S&P 500. And even using a more conservative, say, $60 WPI price assumption, our free cash flow yield on our current equity value is around 10%. It's still two and a half times that of the S&P 500.

That's roughly four times the free cash flow yield of the S&P 500, and even using a more significant more conservative $60 <unk> price assumption.

Free cash flow yield on our current equity value was around 10%. It's still two five times that of the S&P 500.

Speaker 3: So these are strong indicators that buybacks remain a very good use of cash. We also believe that disciplined shareholder purchases offer clear strategic advantage.

So these are strong indicators that buybacks remain a very good use of cash. We also believe the disappoints share repurchases offer clear strategic advantages. They can drive strong underlying growth in per share metrics that are correlated with shareholder value.

Speaker 3: They can drive strong underlying growth in per share metrics that are correlated with shareholder value, including cash flow per share and pre-cash flow per share. They also offer clear synergies with our base dividend, as the reduction in shares outstanding creates capacity for incremental base dividend growth without raising our pre-cash flow rate.

Including cash flow per share and free cash flow per share. We also offer clear synergies with our base dividend as the reduction in shares outstanding increase capacity, Brent incremental base dividend growth without raising our free cash flow breakeven.

Speaker 3: And given the tremendous downside resilience we've built into our business, we can continue to repurchase shares through the cycle, including when we experience commodity price pullbacks. And that's a very different dynamic than during past cycles.

And given the tremendous downside resilience, we have built into our business. We can continue to repurchase shares through the cycle, including when we experienced commodity price pullbacks and thats, a very different dynamic than during past cycles.

Paying a competitive and sustainable base dividend also remains a top priority for us as evidenced by the fact that we have now raised our base dividend four quarters in a row, our accumulative increase of 133%.

Speaker 3: Paying a competitive and sustainable base dividend also remains a top priority for us as evidenced by the fact that we have now raised our base dividend four quarters in a row for a cumulative increase of 133 percent.

Speaker 3: With regard to the 2022 outlook, at an $80 WTI and $4 Henry Hub price deck, our minimum return of capital commitment translates to $1.8 billion, a number that stacks up well against our ENT peers and even better against the broader market.

With regard to the 2022 outlook at an $80 <unk> and $4 Henry hub price deck.

Our minimum return of capital commitment translates to $1 8 billion.

A number of the stacks up well against our E&P peers, and even better against the broader market.

Speaker 3: With no material debt maturities in 2022, a constructive commodity price backdrop, our commitment to capital discipline, and an expected reinvestment rate of less than 30%, we see potential to meaningfully outperform our minimum 40% of CFO commitments.

With no material debt maturities in 2022 constructive commodity price backdrop, our commitment to capital discipline and they expect that reinvestment rate of less than 30%, we see potential to meaningfully outperform our minimum 40% of CFO commitment.

Speaker 3: We're on pace to return over 50% of our CFO to equity investors in the first quarter. For the whole year, upside potential at the same $80 WTI and $4 Henry Hub deck could be as high as 70% of our CFO , the level at which we executed during the fourth quarter.

We're on pace to return over 50% of our CFO to equity investors in the first quarter.

All year.

Upside potential at the same $80, WCS Ti and $4 Henry hub deck could be as high as 70% of our CFO the level at which we executed during the fourth quarter.

Speaker 3: That would represent a return to equity investors of around $3.1 billion, or close to 20% of our current market capitalization.

And that would represent a return to equity investors of around $3 1 billion or close to 20% of our current market capitalization.

Speaker 3: With that, I'll turn the call over to Mike. We'll discuss our 2022 cap.

With that I'll turn the call over to Mike will discuss our 2022 capital program.

Speaker 4: In 2022, we fully expect to once again deliver peer-leading financial and operating results.

98, and 2022, we fully expect to once again deliver peer leading financial and operating results.

Speaker 4: Our $1.2 billion capital program, with details summarized on slide 13, is fully consistent with our disciplined capital allocation framework that prioritizes corporate returns and free cash flow generation over production growth. We expect our 2022 program to deliver over $3 billion of free cash flow at a reinvestment rate of less than 30%, assuming $80 WTI and $4 Henry Hopkins.

Our $1 2 billion capital program with details summarized on slide 13 is fully consistent with our disciplined capital allocation framework.

<unk> corporate returns and free cash flow generation over production growth.

We expect our 2022 program to deliver over $3 billion of free cash flow at a reinvestment rate of less than 30%, assuming $80 double epi and $4 Henry hub.

Speaker 4: As Dane just mentioned, by staying disciplined and maintaining a low reinvestment rate, we expect to exceed our minimum return of capital commitment of 40% of cash flow from operations.

As being just nations by staying disciplined on maintaining a low reinvestment rate, we expect to exceed our minimum return of capital commitment of 40% of cash flow from operations.

Speaker 4: We will continue our investment in reducing our GHG intensity, targeting a 40% reduction relative to our 2019 baseline, in addition to gas capture of 99% or better.

We will continue our investment in reducing our GSE intensity targeting a 40% reduction relative to our 2019 baseline in addition to gas capture 99% or better.

Speaker 4: At basin level, consistent with prior indications around our capital allocation mix, we will be spending approximately 75% of our capital budget in the Eagleford and Bakken, with the balance going to the Permian and Oklahoma.

Basin level consistent with prior indications around our capital allocation mix, we will be spending approximately 75% our capital budget in the Eagle Ford and Bakken with the balance going to the Permian Oklahoma.

Speaker 4: Included within our Permian program is the continued disciplined progression of our emerging Texas-Delaware oil plate with a planned four-well appraisal path later in the year. I'm excited about the restart of a more steady activity level in both Permian and Oklahoma and the strong economics associated with these opportunities.

Included within our Permian program is the continued disciplined progression are emerging Texas, Delaware oil with oil fleet with a planned four well appraisal later in the year I'm excited about the restart of a more steady activity level in both Permian and Oklahoma on strong economics associated with diesel.

Jamie.

Speaker 4: We are not allocating any production growth capital in 2022 and expect our total company oil and oil equivalent production to be flat with the 2021 full year average.

We are not allocating any production growth capital in 2022, and expect our total company oil and oil equivalent production to be flat with the 2021 full year averages.

Speaker 4: Yet, while we aren't growing absolute production levels, the 8% reduction to our share count we've already achieved is driving significant growth to our production per share, cash flow per share, and free cash flow.

Yet, while we arent growing absolute production levels, the 8% reduction to our share count we've already achieved is driving significant growth.

Production per share cash flow per share and free cash flow per share.

Speaker 4: metrics we believe are highly correlated with shareholder volume.

We believe our highly correlated with shareholder volume.

While we expect our full year 2022 average production for both oil and oil equivalent to be flat versus the prior year.

Speaker 4: While we expect our full year 2022 average production for both oil and oil equivalent to be flat versus the prior year, there will be some natural variability from one quarter to the next, largely a result of well timing that is typical for our short cycle business.

There will be some natural variability from one quarter to the next largely result, well timing that is typical for our short cycle business.

Speaker 4: For any given quarter, it is reasonable to expect a plus or minus 5% variance around the midpoint of our full year production value.

For any given quarter. It is reasonable to expect a plus or minus 5% variance around the midpoint of our full year production guidance look similar from what you saw for almost 2021, our focus will remain on maximizing our capital efficiency and free cash flow generation sustainably over time.

Speaker 4: Not dissimilar from what you saw from us in 2021. Our focus will remain on maximising our capital efficiency and free cash flow generation sustainably over time, not the production output of any single quarter in IT.

Not the production output.

Any single quarter in isolation.

For first quarter of 2022 due to the timing of our wells to sales and some typical winter weather downtime, we expect our total company oil production to be up reward end of our annual guidance range at around 160000 barrels of oil.

Speaker 4: first quarter of 2022, due to the timing of our wells to sales and some typical winter weather downtime, we expect our total company oil production to be at the lower end of our annual guidance range, at around 168,000 barrels of oil per day.

Before improving into the second quarter.

Speaker 4: regarding our capital spending profile, our full year capital will be slightly weighted to the first half of the year with approximately $350 million of CapEx expected during 1Q21.

Regarding our capital spending profile, our full year capital will be slightly weighted to the first half of the year with approximately $350 million of Capex expected during <unk> 'twenty one.

Speaker 4: I want to make clear that should commodity prices continue to surprise to the upside, we will remain disciplined and have no plans to allocate production growth capital.

I want to make clear that should commodity prices continue to surprise to the upside we will remain disciplined and have no plans to allocate production growth capital.

Speaker 4: With our balanced exposure to oil, natural gas, and NGLs, our company retains significant leverage to commodity price upside.

With a balanced exposure to oil natural gas and Ngls are company retains significant leverage commodity price upside.

Speaker 4: with a $1 barrel increase in oil price, translating to around a $60 million incremental free cash

With a $1 per barrel increase in oil price translating to around $60 million incremental free cash.

Speaker 4: We believe preserving this oxide is important for our investors.

We believe preserving this upside is important for our investors.

Speaker 4: The resilience of our 2022 programme is underscored by a free cash flow breakeven well below $35 per barrel WTI, assuming conservative gas and NGL prices.

The resilience of our 2022 program is underscored by a free cash flow breakeven well below $35 per barrel WBI, assuming conservative gas.

<unk> prices hedge book that preserves our upside commodity exposure.

Speaker 4: a hedge book that preserves our upside commodity exposure, and an advantaged U.S. cash tax position with no U.S. federal cash income taxes expected until the second half of the year.

On an advantaged U S cash tax position with no U S. Federal cash income taxes expected until the second half of the decade.

Speaker 4: I will now turn it over to Lee, who will provide an ESG update, and we'll close out our prepared remarks.

I will now turn it over to Lee, who will provide an ESG update.

Close out our prepared remarks.

Thank you Mike.

Speaker 2: As I've stated before, strong ESG performance is foundational to our framework for success and our long-term value proposition in the marketplace.

As I've stated before strong ESG performance is foundational to our framework for success and our long term value proposition in the marketplace.

Speaker 2: We believe that we have a clear and much needed role to play in the longer term energy landscape.

We believe that we have a clear and much needed role to play in the longer term energy landscape.

Speaker 2: Oil and gas are essential to a thoughtful and orderly transition to a lower carbon future and to protect the standard of living we have all come to enjoy and to which others around the world strive to attain.

Oil and gas are essential to a thoughtful and orderly transition to a lower carbon future and to protect the standard of living we have all come to enjoy and so which others around the world strive to attain.

Speaker 2: Access to responsible, reliable, and affordable energy is the great social equalizer and is the foundation upon which the world's modern economy is built.

Access to responsible reliable and affordable energy is the great social equalizer and is the foundation upon which the world's monitoring economy is built.

Speaker 2: We are proud to play our role in supporting U.S. energy security, which protects the U.S. consumer and serves as a powerful tool of foreign policy, providing options for both the U.S. and our allies.

We are proud to play our role in supporting U S energy security, which protects the U S consumer and serves as a powerful tool of foreign policy, providing options for both the U S and our allies.

We must take on the dual challenge of meeting the world's growing energy needs. While also prioritizing all elements of our ESG performance, including efforts to address climate change.

Speaker 2: We must take on the dual challenge of meeting the world's growing energy needs while also prioritizing all elements of our ESG performance, including efforts to address climate change.

Speaker 2: This is not an either or proposition and failure on either front is not acceptable.

This is not an either or proposition and failure on either front is not acceptable. However.

Speaker 2: However, our approach must be pragmatic and grounded in the free market, innovation, and an all-of-the-above energy approach.

However, our approach must be pragmatic and grounded in the free market innovation and in all of the above energy approach.

Speaker 2: We are unfortunately experiencing firsthand the impact of misguided energy policy and the dramatic role it can play on energy affordability as well as geopolitical stability.

We are unfortunately experiencing firsthand the impact of misguided energy policy and the dramatic role it can play an energy affordability as well as geopolitical stability.

Speaker 2: Slide 16 provides a comprehensive progress report across each of the elements of ESG. When viewed in totality, the progress our company has made is not only compelling, but is a point of pride for our entire organization.

Slide 16 provides a comprehensive progress report across each of the elements of the ESG when viewed in totality to progress. Our company has made is not only compelling but as a point of pride for our entire organization.

Speaker 2: For us, it always starts with safety. I'm therefore especially proud that we delivered our second best safety performance in our company's history in 2021 as measured by total recordable incident rate for employees and contractors.

For us it always starts with safety I'm, therefore, especially proud that we delivered our second best safety performance in our company history, and 2021 as measured by total recordable incident rate or employees and contract contractors.

Speaker 2: We realized significant progress against our core environmental objectives, achieving our GHG intensity reduction target of at least 30% relative to our 2019 baseline and improving our total company gas capture to 98.8% for the full year.

We realized significant progress against our core environmental objectives, achieving our GHT intensity reduction target of at least 30% relative to our 2019 baseline and improving our total company gas capture to 98, 8% for the full year.

Speaker 2: During the third and fourth quarters of 2021, we achieved a gas capture of approximately 99%, and we expect to perform at or above this level in 2022 and beyond.

During the third and fourth quarters of 2021, we achieved a gas capture of approximately 99% and we expect to perform at or above this level in 2022 and beyond.

Speaker 2: As we previously announced, we've also recently introduced new quantitative goals for the near, medium, and long-term horizon across our core environmental focus areas.

As we previously announced we have also recently introduced new quantitative goals for the near medium and long term horizon across our core environmental focus areas ghd intensity methane intensity and gas capture.

Speaker 2: GHG intensity, methane intensity, and gas capture.

These tools complement our existing 2025, ghd intensity reduction objective of 50% versus our 2019 baseline.

Speaker 2: These goals complement our existing 2025 GHG intensity reduction objective of 50% versus our 2019 baseline.

Speaker 2: They represent a pragmatic roadmap to realizing significant improvement in our environmental performance through the end of this decade, driving significant intensity reductions consistent with the trajectory called for by the Paris Climate Agreement.

It represent a pragmatic roadmap to realizing a significant improvement in our environmental performance through the end of this decade, driving significant ghd intensity reduction.

System with the trajectory called for by the Paris climate agreement.

Speaker 2: Our environmental objectives will promote transparency and accountability while enhancing the internal alignment and innovation that will be necessary to deliver such strong performance.

Our environmental objectives will promote the transparency and accountability, while enhancing the internal alignment and innovation that will be necessary to deliver such strong performance.

Speaker 2: Importantly, our 2030 GHG and methane intensity objectives represent industry-leading improvement and will contribute to absolute performance that is competitive with the very best oil and gas producers globally.

Importantly, our 2030, GH GM methane intensity objectives represent industry, leading improvement and will contribute to absolute performance that is competitive with the very best oil and gas producers globally.

Speaker 2: Moving from environmental to our social accomplishments, we invested thoughtfully and strategically in our local areas of operations to build healthier, safer, and stronger communities in alignment with core UN sustainable development objectives and we continue to promote equality, diversity, and inclusion as core values, which has helped contribute to a notable increase in the representation of both females and people of color within our workforce over the last five years.

Moving from environmental to our social accomplishments, we invested thoughtfully and strategically in our local areas of operations to build healthier safer and stronger community and alignment with core UN sustainable development objectives, and we continue to promote equality diversity and inclusion is core values.

Which has helped contribute to a notable increase in the representation of females and people of color within our workforce over the last five years.

Speaker 2: On governance, we believe we have taken a leadership role in aligning executive compensation with the most important drivers of shareholder value.

On governance, we believe we have taken a leadership role in aligning executive compensation with the most important drivers of shareholder value.

Speaker 2: I've covered the comprehensive changes we made for the 2021 compensation cycle previously, including quantum reductions and redesigned short-term and long-term incentive programs. So I won't revisit all of those details today.

I've covered the comprehensive changes we may for the 2021 compensation cycle previously, including quantum reductions and redesigned short term and long term incentive programs. So I won't revisit all of those details today.

Speaker 2: However, I will remind everyone that we've eliminated production metrics from all scorecards and have included unique free cash flow performance stock units in our Executive Long-Term Incentive Design.

However, I will remind everyone that we've eliminated production metrics from all scorecards and have included unique free cash flow performance stock units in our executive long term incentive design.

Speaker 2: Finally, we have also taken a leadership role in ensuring strong board of director oversight, refreshment, independence, and diversity highlighted by the addition of two new directors and the appointment of a new lead director in 2021.

Finally, we have also taken a leadership role in ensuring strong board of director oversight refreshment independence and diversity highlighted by the addition of two new directors and the appointment of a new lead director in 2021.

Before we move to our question and answer session I want to wrap up with a compelling investment case for marathon oil we fully recognize that investors have options. So why MRO.

Speaker 2: Before we move to our question and answer session, I want to wrap up with a compelling investment case for Marathon Oil. We fully recognize that investors have options, so why MRO? First, we have instituted a transparent capital framework that uniquely prioritizes our shareholders as the first call on cash flow generation.

First we have instituted a transparent capital framework that uniquely prioritizes our shareholders as the first call on cash flow generation our.

Speaker 2: Our shareholder-friendly framework is complemented by a track record of delivery, and it is my expectation that we will lead our peer space in returning capital to shareholders in 2022.

Our shareholder friendly framework and complemented by a track record of delivery and it is my expectation that we will lead our peer space and returning capital to shareholders in 2022.

Speaker 2: Second, we are committed to capital discipline. If commodity prices continue to outperform, we won't introduce production growth capital into our budget. We will remain focused on free cash flow generation and return of capital.

Second we are committed to capital discipline.

Modest prices continue to outperform we won't introduce production growth capital into our budget.

We will remain focused on free cash flow generation and return of capital.

Speaker 2: When it comes to growth, our focus is not on growing production, it's on growing the per share metrics that matter most. And a billion dollars of buybacks in just the last four and a half months, driving eight percent underlying per share growth, is a strong statement of our commitment.

When it comes to growth our focus is not on growing production.

Growing the per share metrics that matter, most and $1 billion of buybacks and just the last four five months driving 8% underlying per share growth is a strong statement of our commitment.

Third due to our balanced production mix low corporate free cash flow breakeven attractive hedge book, an advantaged U S. Federal cash income tax position, our company retained differentiate it upside leverage to commodity outperformance and we will protect us upside for our investors and.

Speaker 2: Third, due to our balanced production mix, low corporate free cash flow break-even, attractive hedge book, and advantaged U.S. federal cash income tax position, our company retains differentiated upside leverage to commodity outperformance, and we will protect this upside for our investors.

Speaker 2: And finally, we believe the peer-leading financial and operating results we are delivering today are sustainable, underpinned by over a decade of high-quality, high-return inventory, by our five- and ten-year benchmark maintenance scenarios, and by our commitment to comprehensive, longer-term ESG excellence. With that, we can open up the line for Q&A.

And finally, we believe the peer leading financial and operating results. We are delivering today are sustainable underpinned by over a decade of high quality high return inventory by our five and 10 year benchmark maintenance scenarios and by our commitment to comprehensive longer term ESG excellence.

With that we can open up the line for Q&A.

Thank you and we will now begin the question and answer session.

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Speaker 9: from JP Morgan Chase, we have Arun Jayaram. Please go ahead.

And from J P. Morgan Chase, we have a really Jr. Please go ahead.

Speaker 5: Hey Lee and team, good morning. Lee, if we're sitting here in a year and oil and gas prices indeed averaged 80 and 4 or better, should we expect you to return three plus billion of free cash flow to shareholders? That's the buy side question of the morning.

Hey, Lee and team good morning.

If we're sitting here in a year in oil and gas prices, indeed averaged $80 four or better.

Should we expect you to return three plus billion of free cash flow to shareholders.

The buy side question the morning.

Speaker 2: Yeah, good morning, Arun. Thanks for the question. You know, first of all, I think we are already on a pace in first quarter, Arun, to return 50% or more of our CFO back to investors.

Yes, good morning, Arun Thanks for the question.

First of all I think we are already on a pace and first quarter range to return, 50% or more of our CFO back to investors.

Speaker 2: And as we demonstrated in 2021, whether you look at fourth quarter in isolation, where we got hit that 70% kind of milestone back to equity investors, or even look at the full year, including our gross debt reduction, which also would be 70%, we know that we have that potential for delivery.

And as we demonstrated in 2021, whether you look at fourth quarter in isolation, where we got hit that 70%.

Milestone back to equity investors or even look at the full year, including our gross debt reduction, which also which reached 70%.

We know that we have that potential for delivery, but I think what it.

Speaker 2: But I think what it might be helpful for Dane to talk a little bit about the mechanics of how we.

Might be helpful for Dane talk a little bit about the mechanics of how we approach the share repurchase program because I think it will give you a little bit more insight and how the year will likely play out so I'll kick over today alright.

Speaker 2: the share repurchase program because I think it will give you a little bit more insight and how the year will likely play out. So, I'll kick over to Dan.

Speaker 3: Morning, Arun. Thanks for the question. Yeah, with regard to share repurchase, obviously, we just spent 30 minutes talking about the fact that we've been aggressively buying back shares, and we think that's good value. We've really moved the needle by buying back 8% of the stock. And so we expect us to continue with that kind of program. In terms of how we execute on that, we use a couple of tools when executing the share repurchase.

Arun Thanks for the question, yes with regard to share repurchases. Obviously, we just spent 30 minutes talking about the fact that we've been aggressively buying back shares when we think thats good value really move the needle by buying back 8% of the stock and so we expect us to continue with that kind of program in terms of how we execute on that.

We use a couple of tools.

When executing the share repurchases.

Speaker 3: And I think of it sort of as a base program, and that's sort of a top-up program. The base program, we establish simple 10B51 programs. Most recently, we've sized those around $250 million, and we set those in motion to be purchased ratably over a set period of time, typically 30 to 45 days.

I think of it sort of as a base program and that sort of a top up program.

Based program, we established simple <unk> one.

Programs, most recently with size of those around $250 million and we set those in motion to be purchased Ratably over a period a set period of time typically 30% to 45 days.

Speaker 3: We establish those 10B5 ones when we're not in a blackout period.

We establish those tend to be <unk>.

We're not in a blackout period.

Speaker 3: course and then they can execute daily through blackout period. So, for example, we're buying back stock today under a 10D51 and earnings data is the ultimate definition of a blackout period.

And then they can execute daily through blackout periods. So for example, we're buying back stock today under attendee five one in earnings data is the ultimate definition.

Thank you gentlemen.

Speaker 3: So, so great ability to that great ability to that.

So.

The variability of that variability.

Sorry, I'm getting a little feedback here.

Speaker 3: Sorry, I'm getting a little feedback here. The readability of that daily program really helps when you're in a period of volatility. You know, you're not trying to hunt and peck for low points in the stock price. You just ride it through and dollar cost average into it.

The readability of that Daily program really helps when you are in a period of volatility.

We're not trying to hunt and Peck for low points in the stock price you just right through in dollar cost average into it.

Speaker 3: And, you know, if we get to the end of a period and our cash flow is sufficient to top up on top of what we've done with these 10B51s, we can go in with daily purchases under what's called a 10B18, and we can do those in fairly significant size. We can really...

And.

If we get to the end of a period and our cash flow was sufficient to top up on top of what we've done with these can be five loans. We can go in with daily purchases under what's called our EMEA team and we can do those in fairly significant size.

We can really.

Speaker 3: move a lot of stock in a short period of time under that mechanism if we have the capacity to do it. So I would expect, you know, probably a scrap price to continue to execute like this with a base load, and then we have the ability to adjust based on how commodity prices and other factors in our business contribute.

Move a lot of stock in a short period of time under that mechanism. If we have the capacity to do it so I would expect.

You should probably expect for us to continue to execute like this with a base load and then we have the ability to adjust based on how commodity prices and other factors in our business contributes to our cash flow.

Speaker 2: And maybe if I could just wrap up, I think fourth quarter was a great example of that model. You know, we had signaled that kind of at least the 50% of CFO getting back to shareholders, but as the quarter progressed and as we implemented these structured programs, we saw an opportunity with price support and the cash flow generation that we were seeing to go above and beyond that, and that's, in fact, how we got to that 70% marker.

And maybe if I can just wrap up our brands I think fourth quarter was a great example of that model, we had signaled it kind of at least 50%.

Our CFO getting back to shareholders, but as the quarter progressed and as we implemented the structure programs, we saw an opportunity with price support and the cash flow generation that we were seeing to go above and beyond that and that's how we got to that 70% Mark.

Great great.

Speaker 5: Great, great. Appreciate that color. And my follow up was with Mike. I was wondering if you could provide maybe a little bit more.

I appreciate that color and my follow up is with Mike I was wondering if you could provide maybe a little bit more.

Speaker 5: asset level color on the 2022 program, specifically maybe in the Bakken. I'd love to hear about maybe the well mix between Hector and Myrmidon and maybe some thoughts.

Asset level color on the 2022 program.

Specifically, maybe in the Bakken I'd love to hear about maybe the well mix between.

Sector in Myrmidon and.

Maybe some thoughts.

Speaker 5: within the Permian as well as in the mid-continent, some of the areas that you're targeting as you increase activity from last year's levels.

Within the Permian as well as in the mid continent. Some of the areas that youre targeting as you increase activity from last year's levels.

Yes, good morning, Ryan can certainly take you through that.

Speaker 4: Yeah, good morning. We can certainly take you through that and I'll start with the back and I'll probably jump on to Eagleford, but in the back end, we're as as we.

Start with the Bakken and I'll, probably jump on to Eagle Ford and the Bakken.

<unk>.

Speaker 4: included in the presentation. Looking at 50 to 60 wells to sales, what I would say is probably more weighted towards the first half of the year. It is a higher working interest program this year, which also works in our favour. What I would say is largely focused

Included in the presentation looking at 50 to 60 wells to sales what I would say is probably more weighted towards the first half of the year it.

It is a higher working interest program this year, which also works in our favor, but what I would say is largely focused.

Speaker 4: in Hector. Eagleford, again as we mentioned in the presentation, 120 wells to sales.

Hector.

Eagle Ford again, as we mentioned in the presentation 100, 120 wells to sales.

Speaker 4: Activity is going to be across our core areas, so we're looking at about 45% of the activity in Carnes, 35% in Atascosa, and the remainder up in Gonzales.

Activity is going to be across our core areas. So we're looking at about 45% of the activity in karnes, 35%.

Got it.

The remainder.

Often the consolidation we are looking at longer laterals on average in Eagle Ford This year, so that should enhance our <unk>.

Speaker 4: We are looking at longer laterals on average in Eagleford this year, so that should enhance our

Speaker 4: efficiencies. We're also going to be continuing the redevelopment testing that I think it was this time last year you asked the question.

<unk>, we're also going to be continuing the redevelopment testing that alright, I think it was this time last year you asked the question so.

Speaker 4: probably make a date for this time next year. We'll give you another update, but we're continuing the redevelopment testing there. We've got 15 wells planned in 2022, had some good success in 2021. We've added a little over 100 high-return redevelopment locations to inventory there, so it seems pretty logical to continue that activity into 2022.

We'll probably make a date or the spend next year.

Another update but we're continuing to redevelopment exiting 15 wells planned in 2022, but some good success in 2021, we bought at a little over 100 high return redevelopment locations to inventory and Theyre still seems pretty logical to continue that act.

And since <unk> 2022.

Speaker 4: Permian, again, 20 to 25 wells to sales.

Permian get 20% to 25 wells to sales.

<unk>.

Speaker 4: That's probably going to be more focused on the second half of the year, targeting the upper World Cup and what I'd say is Split.

It's probably going to be more focused on the second half of the year targeting the upper Wolfcamp and what I'd say is split pretty much 50, 50 between Red Hills Mall.

Speaker 4: pretty much 50-50 between Red Hills and Margaret.

Speaker 4: And then racking up Oklahoma, again, 20 to 25, Wells, DeSeals, what I see here is heavy scoop.

And then ramping up Oklahoma again, 20% 25 wells to sales what I would see there is heavy scoop Woodford focus.

Speaker 8: Woodford focused and similar to what we're seeing in Eaglesburg, we're going to benefit there from some longer average lateral lengths, I think we're 30% up from when we had our last full year of activity in Oklahoma.

Similar to maybe what were seeing and in the Eagle Ford, we're going to benefit there from some some longer average lateral lengths I think were 30% up from when we had our last full year activity in Oklahoma.

Great. Thanks, a lot.

From Barclays, We have Jeanine Wai. Please go ahead.

Hi, good morning, everyone. Thanks for taking our questions.

Anthony.

Speaker 6: First question, we noticed that you reported 47 million of acquisitions during the quarter on the cash flow statement after not doing any for several quarters.

Your first question, we noticed that you reported $47 million of acquisitions during the quarter on the cash flow statement after not doing any for several quarters can you just provide a little bit of color on what that acquisition capital is spent on and maybe a little bit on your perspective on the A&D market for marathon.

Speaker 6: provide a little bit of color on what that acquisition capital is spent on and maybe a little bit on your perspective on the A&E market for Marathon.

Good morning, Jeanine, it's Mike here.

Speaker 4: Morning Janine, it's Mike here. I'll give you a little bit of detail on the acquisition and then I'll kick it over to Lee to provide a little bit of that broader perspective.

Give you a little bit of detail on the acquisition and then I'll kick it over to Lee to provide a little bit of a broader perspective.

Speaker 8: So the acquisition, it was a small eagle for bolt-on in the core, it added a few sticks, but I think more importantly for us, it allowed us to drill some extended laterals down in Carnes County there. Maybe on the broader question, I'll fire that over to Lee, if that's okay? Yeah, no, that's great Mike, thanks.

The acquisition it was a small eagle Eagle Ford bolt on and.

In the core.

It added a few steps, but I think more importantly for us it allowed us to drill some extended laterals got ahead in Karnes County, there maybe on the broader question is helpful.

Part of that over to leave US Okay, Yes, now thats great Mike. Thanks.

Speaker 2: You know, from a broader AMD perspective, Janine, I think first and foremost, we're going to view all opportunities, inorganic opportunities to the lens of really our high confidence organic case, which we obviously spent a lot of time describing.

From a broader A&D perspective, Janine I think first and foremost we're going to view all opportunities inorganic opportunities to the land really our high confidence organic case, which we obviously spent a lot of time, describing today and the types of financial metrics that that's that's delivering so needless to say.

Speaker 2: today and the types of financial metrics that that's delivering. So needless to say, it sets a relatively high bar for any opportunity that's inorganic in nature.

It sets a relatively high bar for any opportunity that that's inorganic in nature and of course to pursue something we're going to have to see it as accretive to that organic case and again, that's going to be a challenge we will continue to assess and evaluate those things.

Speaker 2: to pursue something, we're gonna have to see it as a creative to that organic case. And again, that's gonna be.

Speaker 2: We will continue to assess and evaluate those things in the marketplace, particularly those that are around our core areas, but we're going to be very disciplined. The same discipline that you see us applying in our organic business, you should expect that when we look at A&D activities as well. I think the opportunity that Mike described is a great example of an creative opportunity that brought a little bit of PDP, but generally allowed us.

In the marketplace, particularly those that are.

Around our core areas, but we're going to be very disciplined in the same discipline that you see us applying.

In our organic business you should expect that when we look at AMD activities as well I think the opportunity that Mike described is a great example of an accretive opportunity of up a little bit of PDP, but generally allowed us to build on our core area and extend our lateral lengths and improve our capital.

Speaker 2: to build on a core area and extend our lateral links and improve our capital efficiency. And so those are the type of kind of hand-in-glove fits that we'll be looking at.

Efficiency and so those are the type of kind of hand in glove fits that we'll be looking for.

Okay, great. Thank you for all that color.

Speaker 6: Great. Thank you for all that color. Our second question is maybe just revisiting the method of the cash payout. If the strip holds and the 70% of cash flow comes to fruition, there's a lot of cash to be allocated, which is a very nice high-class problem. In this upside case, does your preference between buybacks, variables, and base dividends change on that allocation split? I know so far you've had a very strong preference for buybacks.

Second question is maybe just revisiting the method of the cash payout.

It holds and the 70% of cash flow comes to fruition. There is a lot of cash to be allocated which is a very nice high class problem and this upside case does your preference between buybacks variables and base dividend change on that allocation split I noticed so far you've had a very strong preference for buybacks, which is.

Speaker 6: which you described very nicely in the prepared remarks about per share growth. But we've just been noticing we've been getting a little bit more pushback and questions from investors on pro-cyclical buyback.

Would you decide very nicely and the prepared remarks about per share growth, but we've just been noticing we would be getting a little bit more pushback and questions from investors on pro cyclical buyback. Thank you.

Speaker 8: Yeah. Hey, Jeanine, this is Dan. Let me take a cut at that. So really, we've got three choices for returning cash to shareholders, the base dividend, shareholder purchases, or some sort of a variable cash return that people often describe as variable dividend.

Yes, Jeanine this is being let me take a cut at that so really we've got three choices for returning cash to shareholders. The base dividend share repurchases or some sort of a variable cash return people often described as variable dividends and here's how we think speeds.

Speaker 8: And kind of here's how we think of each the base dividend. So

The base dividend so.

Speaker 8: You know, our objective there with the base dividend is to have a competitive yield when compared to peer average and the S&P 500. And also, in addition to competitive, we need it to be sustainable. And we think of that in the context of a pretty conservative.

Our objective there with the base dividend is to have a competitive yield when compared to peer average and the.

S&P 500, and then also an additional competitive we needed to be sustainable and we think of that in the context of a pretty conservative.

Speaker 3: planning basis price deck sort of in a $45 to $50 world where we know investors can count on that base dividend in virtually any circumstance.

Planning basis price deck sort of in a $45 to $50 world.

We know investors can count on that base dividend in virtually any circumstance.

Speaker 8: With our recent fourth consecutive increase, the base dividend yields competitive peer average and a little bit better than the S&P 500. So, check that box. From a sustainability perspective, we really think about 10% of cash flow from operations is being...

With our recent fourth consecutive increase the base dividend yields competitive BRAF with your average and a little bit better near S&P 500, So check that box from a sustainability perspective, we really think.

About 10% of cash flow from operations has been.

Speaker 8: where we want to target that dividend, again, in that $45, $50 world. We want to keep the enterprise break-even, free cash flow break-even after dividend below $40. We're well below that, so we're in good shape there. The $0.07, again, is about right in line with the 10% at that stated price deck.

Where we wanted to target that dividend again in that $45 $50 world.

But keep the enterprise breakeven free cash flow breakeven after dividend below 40, we're well below that so we're in good shape there.

<unk> again is about right in line with the 10% at that stated price deck.

Speaker 8: And then keep in mind there are synergies between the base dividend and shareholder purchases.

And then keep in mind, there are synergies between the base dividend share repurchases.

Speaker 3: As we reduce outstanding shares, we can increase the base dividend further and still stay within that 10% CFO threshold. So we really like that in our play.

As we reduce outstanding shares we can increase the base dividend further and still stay within that 10% CFO threshold. So we really like that interplay.

Share repurchases, we just went through that in quite a bit of detail, but we still got the value proposition is so strong they're just hard to take your eyes off of that.

Speaker 3: Shareware purchases, we just went through that in quite a bit of detail, but we still did. The value proposition is so strong there, it's just hard to take your eyes off that as the largest attractor of return of cash to shareholders.

As the largest.

Attractor of return of cash to shareholders.

Speaker 3: We certainly, from a variable dividend perspective, have considered that and it remains a potential tool for us to use in the future to supplement the base dividend and share our purchases.

Certainly from a variable dividend perspective have considered that and it remains a potential tool for us to use in the future to supplement the base dividend and share repurchases.

Speaker 8: I wouldn't want to do it to the detriment of either the base dividend or shareholder purchases.

Don't want to do it to the detriment of either the base dividend or share repurchases, especially when the implied free cash flow yield is so high on those repurchases and the program so efficient.

Speaker 8: Especially when the implied free cash flow yield is so high on those repurchases and the program is so efficient.

Speaker 3: But you know we're not closing the door on any any techniques that I do think on your pro cyclicality question Just keep in mind when the free cash flow yield is that high doesn't feel pro cyclical to me at all And because we've really bulletproofed our Company for down price cycles. We can keep buying pretty much any price cycle, so and that's really kind of our intention Great. Thank you very much

But.

We're not closing the door on any any techniques that I do think on your pro cyclicality question just keep in mind when the free cash flow yield is that high doesn't fuel pro cyclical.

At all and because we have really a bullet proofed our company's per gallon.

Price cycles, we can keep buying pretty much any price cycles, so and thats really kind of our attention.

Great. Thank you very much.

From Wolfe Research, we have Josh Silverstein. Please go ahead.

Speaker 7: Good morning, guys. Just sticking on the capital return plans, you still do have some small maturities coming up over the next year and a half or so. Is the game plan still to pay those down with cash, reducing some of the capital returns to shareholders, or are there refinancing thoughts that maybe keep more cash going back to shareholders?

Yeah. Thanks, good morning, guys.

Just sticking on the capital return plans you still do have some small maturities coming up over the next kind of year on year and a half or so is the game plan is still to pay those down with cash.

<unk> some of the capital returns to shareholders or are there refinancing thoughts that maybe keep more cash going back to shareholders.

Yes, My base case is pay them off with cash.

Speaker 8: Yeah, my base case is pay them off with cash. They're really kind of small bite sized maturities. There's

Kind of a small bite sized maturities.

Speaker 3: We've got like $38 million of old USX debt, if you can believe that, with an average coupon of about close to 10%, it would be nice to get that out of the system.

B.

Got like $38 million of U S O U S. Ex Pat if you can believe that with an average coupon of about close to 10% you can actually get that out of the system.

Speaker 3: The following year or so, there's another $200 million of USX debt like that, and then we get into a couple of maturities that are the muni bond debt that's pretty unique.

The following year or so there is another $200 million of use fixed debt like that and then we get into a couple of maturities that are the muni bond debt, that's pretty unique to us we like that one because we can we can buy it back and put it into treasury, if you will and keep it as capacity to reissue.

Speaker 8: to us. We like that one because we can buy it back and put it in the treasury, if you will, and keep it as capacity to reissue in the future. And it's relatively low cost debt compared to taxation.

In the future and its relatively low cost debt compared to taxable Pat.

Speaker 8: So short answer to your question, base case, pay it off with cash. I think there's some good synergies with interest production, especially on that higher coupon debt.

<unk>.

Short answer to your question base case paid off with cash I think there are some good synergies with interest production, especially on that higher coupon debt.

Yes.

Speaker 8: As we pay off those munis, we'll kind of retain the optionality, and if we need those going forward to tackle a larger maturity tower or for any other circumstance, it's nice to have.

As we pay off those munis will kind of retain the optionality, we need those going forward to tackle a larger maturity tower or any other circumstance. It's nice to have us just as a reminder, the $1 $4 billion of gross debt that we took out last year also brought with it at $50 million of Ann.

Speaker 2: Yeah, and just as a reminder, you know, the $1.4 billion of gross debt that we took out, you know, last year also brought with it $50 million of annualized interest rate savings. And so when we think about our overall enterprise pre-cash flow break-even, you know, that's cost structure that's coming out of the business. So it is good to continue to keep retiring that debt as it matures, but we don't see the need to accelerate.

<unk> interest rate savings and so when we think about our overall enterprise free cash flow breakeven.

<unk> cost structure that is coming out of the business. So it is good to continue to keep retiring that debt as it matures, but we don't see the need to accelerate that.

Alright, Thanks, guys and then.

Speaker 7: Thanks, guys. And then, you know, the activity is still heavily weighted with this 75-25 split from the Eagle, Ford, and Bakken. When do you see the shift kind of slowly going towards Oklahoma and Delaware, and how does the capital efficiency change as you guys start to do that?

The activity is still heavily weighted with this 70 525 split from the Eagle Ford Bakken.

When do you see that the shifts kind of slowly going towards Oklahoma in Delaware and how does the capital efficiency change as you guys start to do that.

Yes, maybe I'll just refer you to our kind of five year benchmarks scenario that we just updated to include.

Speaker 2: Yeah, maybe I'll just refer you to, you know, our kind of five year benchmark scenario that we just updated to include.

Speaker 2: from 2022 to 2026, so essentially, we've added a year, we've incorporated kind of what we've seen from an inflation standpoint, et cetera. And what I would say is that that relative capital allocation weighting stays essentially in that same range throughout that five-year view, Josh, so no radical movements. You'll see some capital move in between basins.

2022 to 2026, so essentially we've added a year, we've incorporated kind of what we've seen from an inflation standpoint et cetera, and what I would say is that that relative capital allocation weighting stays essentially in that same range throughout that five year view charges have no radical move.

But you will see some capital move them between basins, but kind of that 20% to 30%.

Speaker 2: But kind of that 20% to 30% going to Delaware and Oklahoma, that's pretty consistent across that five-year benchmark maintenance scenario, just to kind of give you a little bit of a benchmark.

Going to Delaware, and Oklahoma, that's pretty consistent across that five year benchmark maintenance scenario just to just.

Just to kind of give you a little bit of a benchmark.

Got it thanks guys.

From RBC capital markets, we have Scott handled please go ahead.

Speaker 9: RBC Capital Markets, we have Scott Henald, please go ahead.

Speaker 7: Thanks. Thanks, all. Hi. Just to maybe follow up on that question a little bit, and it looks like the Eagleford is getting a little bit higher allocation, say, this year, and I guess, you know, last year relative to, say, the Bakken. But can you give us a sense of, like, where you see the runway in the Eagleford is? I know a lot of conversations with investors kind of discusses, you know, what type of core runway still is left in the Bakken and the Eagleford. And if you can just give us a little bit of color in your perspective on the confidence in that drilling program through that five-year time frame in the Eagleford.

Thanks, Thanks Al.

Just to maybe follow up on that question, a little bit and it looks like the Eagle Ford is getting a little bit higher allocation say this year and I guess.

Last year relative to say the Bakken, but can you give us a sense of like where you see the runway in the Eagle Ford is I know a lot of conversation with investors kind of discusses what type of core runway still left in the Bakken and the Eagle Ford and if you can just give us a little bit of color on your perspective on the confidence in that drilling program through that.

The five year timeframe in the Eagle Ford.

Speaker 2: Yeah. You know, I think, you know, you're seeing a little bit of natural variability as we, you know, optimize across facilities and developmental areas. So, there's not much more of a read-through, I think, than that. But in terms of inventory-wide, we obviously talk at a corporate level about having more than a decade of high-quality inventory. You need only look at the inverse data, which, of course, we included within the appendix of the deck.

Yes, I think youre seeing a little bit of natural variability as we optimize across facilities and developmental area. So there's not much more of a read through I think that but in terms of.

Inventory lie.

Obviously talk at a corporate level about having more than a decade of high quality inventory you need only look at the end of our data which are of course, we included within the appendix of the deck.

Speaker 2: But beyond that, when you look at each of our individual basins, they each independently also have over a decade of inventory for inventory to exploit. So we feel very good about the outlook of the five-year benchmark case. And even the portfolio model work that we've done on the 10-year benchmark continues to show us delivering annualized financial outcomes that look very similar to what we're delivering this year on a price-normalized basis. And from a capital efficiency standpoint, we've been the leader of the pack there for quite some time. We've included, again, a little bit more public available data on that point, but there is no real drop-off, per se, in that capital efficiency.

But beyond that when you look at each of our individual basis. They each independently also have over a decade of inventory for inventory to exploit so we feel very good about the outlook.

<unk> Youre, a benchmark case and even our.

The portfolio model work can be done on the 10 year benchmark continues to show us delivering.

Annualized financial outcomes that look very similar to what we are delivering this year on a price normalized basis and from a capital efficiency standpoint, we've been the leader of the pack there for quite some time.

We've included again, a little bit more public available data on that point.

But there is no.

Real drop off per se in that capital efficiency as we move amongst the players. These are still very economic opportunities across the board both within both Eagle Ford and Bakken, but also within Oklahoma and Delaware with obviously, Oklahoma benefiting somewhat from some of the strength in.

Speaker 2: As we move amongst the plays, these are still very economic opportunities across the board, both within both Eagleford and Bakken, but also within Oklahoma and Delaware, with obviously Oklahoma benefiting somewhat from some of the strength in NGL and gas pricing, but quite frankly that uplifts all of the portfolio.

NGL and gas pricing, but quite frankly that uplifts all of the portfolio so from our perspective.

Speaker 2: So from our perspective, a very strong runway looking ahead. And when we take that inventory and convert it into financial outcomes, we feel very confident in both the five and the 10 year.

Very strong runway looking ahead, and when we take that inventory and converted in the financial outcomes, we feel very confident in both the five and the 10 year view.

Great. Thanks for that and then.

Speaker 7: Great. Thanks for that. And then, you know, as, and I think you've been pretty clear on, you know, your views on growth, especially where we are at right now, but I know there is, you know, some, I guess I'd call flexibility to grow upwards of 5% if the market, you know, needs barrels or, or you think it's the right decision. And, and, you know, as you started thinking about 2023 and beyond, you know, can you give us your thoughts on, you know, the, you know, looking, you know, what would get you to move toward, you know, something closer to 5% growth, you know, okay.

And I think you've been pretty clear on your views on growth, especially where we're at right now, but I know there is.

Some.

I would call a flexibility to grow upwards of 5% if the market needs of barrels or you think it's the right decision and as you start thinking about 2023 and beyond can you give us your thoughts on that.

Looking what would get you to move toward.

It's something closer to 5% growth.

Case.

Speaker 2: Yeah, I believe right now our focus guide is really, again, on per share accretion, whether that be pre-cash flow, cash flow, or even production on a per share basis.

Yes, I believe right now our focus is really again on per share accretion whether that the free cash flow cash flow or even production on a per share basis.

Speaker 2: You know, we're going to be informed by the macro, but at the end of the day, we're price takers, not price predictors. And there's a wide range of potential outcomes that are going to be driven, clearly, by...

We're going to be informed by the macro but at the end of the day, we're price takers that price predictors and Theres a wide range of potential outcomes that are going to be driven clearly by <unk>.

Speaker 2: you know, events, as well as supply and demand fundamentals, but our strategy is predicated on really generating outsized free cash flow when we are in a constructive pricing environment. And I don't really see that mantra changing as we move out in time. And I think that the growth and per share metrics for...

Events, as well as supply and demand fundamentals, but our strategy is predicated on really generating outsized free cash flow.

When we are in a constructive pricing environment and I don't really see that mantra changing as we move out in time and I think the.

The growth in per share metrics for US is the right approach I think for a mature business that is trying to attract more of a broad investor universe.

Speaker 2: is the right approach, I think, for a mature business that is trying to attract more of a broad investor universe. I appreciate that. Thank you.

I appreciate that thank you.

Wells Fargo, we hit the team Kumar. Please go ahead.

Speaker 11: Hi, good morning, and thanks for taking my questions. Lee, you've covered this a bit this morning, but looking at your slide eight and the allocation of cash flow.

Hi, good morning, and thanks for taking my questions you've covered this a bit this morning, but looking at your slide eight and the allocation of cash flow.

Speaker 11: You stand out in terms of the buyback, but when I look at the base dividend against your peers, the allocation of cash flows, the base dividend is a little bit lower. So you talked a little bit earlier about mid-cycle prices and stuff, but where is the room for that to grow, or what is the appetite to grow that, to be a little bit more competitive with your peers, if not the S&P 500?

You stand out in terms of the buyback, but when I look at the base dividend.

It appears the allocation of cash flow to the base dividend.

Little bit lower so.

You talk a little bit about mid cycle prices stuff, but what is there is there room for that to grow what is the appetite to grow that.

Be a little bit more competitive with your peers, if not the S&P 500.

Okay.

Got it.

Speaker 3: As I mentioned earlier, in an earlier answer, we really are focused on maintaining a competitive yield with that base dividend, and we're right on top of the average for the peer group today and a little bit ahead of the S&P 500. And we have raised that base dividend four quarters consecutively to the point now we're paying $50 million a quarter.

Okay.

And earlier in an earlier answer.

We are focused on maintaining a competitive yield with that base dividend and we're right on top of the average for the peer group today and a little bit ahead of the S&P 500, and we have raised that base dividend fourth quarters consecutively. Two point now, we're paying $50 million a quarter.

Two shareholders.

Speaker 8: to shareholders, we do want to make sure that it passes the sustainability test. So with 10% of cash flow from operations in a pretty conservative $45 to $50 planning basis price environment, and we want to keep the enterprise-free cash flow break even below 40, and it's well below 40 at this point.

We do want to make sure that it passes the sustainability test so 10% of cash flow from operations, we noticed.

Pretty conservative $45 $50.

Planning basis price environment.

We want to keep the enterprise free cash flow breakeven below 40% is well below $40 disappointed.

Speaker 1: probably 35 or less after give and end.

Probably 45 robust after dividend.

<unk>.

Speaker 8: You know, the other synergies that I keep pointing to because they're real is as we continue to buy back shares, we create more

The other synergies that I keep pointing to cook. The real is as we continue to buy back shares we create more capacity.

Speaker 8: for that dividend, for that base dividend, and frankly, as we pay down some of that high coupon debt, there's going to be more capacity for the base dividend as well. So we're very focused on keeping that competitive, but we also want to keep it sustainable. We think we've got a flywheel effect going here that's going to feed that base dividend.

For that dividend.

Or that base dividend and frankly, as we as we pay down some of that high coupon debt more capacity.

Basically the name as well so we're very focused on keeping that competitive but we also bought animals. We think we've got a flywheel effect, calling here thats going to feed that base dividend.

Sure.

Speaker 11: Great, great. I appreciate that. I guess the other question I have is, you know, you've highlighted the lack of hedges as one of your competitive advantages, but you're presenting a financial model, right? It's a cash generation, cash return model.

Great Great I appreciate that.

I guess the other question I have is you highlighted the lack of hedges.

Our competitive advantages.

But it does.

Presenting a financial model ways to cash generation cash recurring model.

At what point do new hedges for our key is taking some of that down.

Speaker 11: At what point do hedges, or at least taking some of that downside risk in commodity prices, become important?

Downside risk and commodity prices become important.

Speaker 11: if you could answer the thought around hedging going forward in the long term.

If you could answer that.

Todd on hedging going forward in the long term.

I did see that Gee this is Pat I'll.

Speaker 12: I didn't see. This is Pat. I'll take that one. You know, Lee covered it in his opening remarks, and you just reiterated that we have significant leverage, even to further quality price strength. And we think it's really important to preserve that strength for our shareholders. That's why we showed the slide on 14, showing what our current book looks like at a couple of different prices.

I'll take that one yeah Lee covered it in his opening remarks can you just reiterated that we have significant leverage to further commodity price strength that we think it's really important to preserve the strength of our shareholders. That's why we showed the slide 14.

Showing what our current book looks like in a couple of different prices.

Speaker 12: We have intentionally structured our crude hedges such that they tie to our return of cash framework, so we've set our floors at $60 and we have high calls so that we can share that upside and that helps preserve our ability to return that minimum 40% of cash flow.

We have intentionally structured our crude hedges such that they tie to our return of cash framework. So we've set our floors at $60.

We have high calls so that we can share that upside is that best helps preserve our ability to return that fit of a 40% of cash flow from operations for investors.

Speaker 12: from operations to investors. And hedging is just one dimension of our commodity risk management approach. I think we've hit on these before, but other dimensions include our strong balance sheet, our low cost structure, our low corporate pre-cash flow rate, even as Dane mentioned, below $35 a barrel. And then of course our diversified portfolio.

Hedging is just one dimension of our commodity risk management approach.

I think we've hit on these before but other debentures include our strong balance sheet.

Cost structure, our low corporate free cash flow breakeven as Dave mentioned $35, a barrel and then of course, our diversified portfolio.

Speaker 12: with our significant balance sheet improvement in 21 and those break evens, you know, we can be patient and take

With our significant balance sheet improvement has plenty of blood and those.

Breakeven.

We can be patient.

<unk>.

Speaker 12: our time in assessing hedging opportunities so that we make sure we preserve the upside. And then lastly, I'd just say that we have a good product diversity mix with 50% of oil. And so we feel comfortable with what we did today. Great. Appreciate the answers.

Our time and assessing hedging opportunities so that we make sure we preserve the upside and then lastly, I'll just say that we have a good product diversity mix.

50% of oil.

Feel comfortable with where we sit today.

Great I appreciate the answers.

Yes.

From <unk> Securities, we have fielding but please go ahead.

Speaker 1: Thanks for the time. First question is just on the ops plans. I really like that slide 21 that you go over inventory depth and hopefully some of the other analysts are seeing the same slides. My question around that is, you know, given the sample acreage, we all want to drill and complete even longer laterals and very extended wells in order to potentially boost returns. Or can you just maybe talk about the operational plans given

Hi, good morning, Thanks for the time.

First question is just on the odds plans I really like that slide 21 that.

Inventory depth.

And the other analysts have seen the same slides my question around that is.

Given the sample acreage, we all look to drill and complete an even longer laterals.

Extended wells in order to.

Can you just maybe talk about the operational plans given it.

Speaker 2: Yeah, I think what you're asking there is, are we kind of leveraging longer laterals in the portfolio this year? I think Mike hit upon a few of those points, but Mike, maybe you wanted to talk broadly, not only about extended laterals, but some of the other things that we're doing from an efficiency standpoint, you know, as we look to mitigate some of the inflationary pressure.

Yes, I think I think what you're asking there is are we kind of leveraging longer laterals in the portfolio. This year I think I think Mike hit upon a few of those points, but Mike maybe you want to just talk broadly not only about extended lateral that some of the other things that we're doing from an efficiency standpoint, as we look to mitigate some of the inflationary pressures.

Speaker 4: Just touching on the laterals, we're looking at a 10% increase in Eagleford year-over-year. You mentioned Oklahoma, we're going back in there. I think it's a 30% increase in Oklahoma from the last time we were operating there. And then in Permian it's actually over a 50% increase.

Yes, just touching on the laterals.

Maybe mentioned in previous calls, but we're looking at a 10% increase in the Eagle Ford year over year.

<unk> mentioned, Oklahoma Bakken there I think it's a 30% increase in Oklahoma from the last time, we were we were operating there and then in Permian, it's actually over 50% increase.

Speaker 4: So, all of those things are obviously going to benefit capital efficiency. The other thing that I've mentioned, and this is something that we've touched on in the

So all of those things are obviously going to benefit capital efficiency.

The other thing that the other things I've mentioned.

These touched on us.

<unk>.

Speaker 4: You know, we've got a bit of a track record in terms of just improving capital efficiency, and it isn't just down to lateral lens. I think we continually look at our well design and we're always looking to optimize there and we try to maximize value.

We've got a bit of a track record in terms of just improving capital efficiency and it isn't just one lateral lengths I think we continually look at our well design.

We're always looking to optimize data and do we try to maximize volume.

Speaker 4: The second area is execution efficiency, what I'd say is we've got a...

The secondary is execution efficiency, what I'd say.

Speaker 4: pretty relentless focus there just on how we drill and how we improve and quite honestly how we operate our wells. And then the third element is maybe supply chain optimisation.

Pretty relentless focus there just on how do we drove in how we've proven quite honestly, how we operate our wells and then we started to element as maybe supply chain optimization I think we've got it.

Speaker 4: We're continually looking at a cost model, really trying to determine what ultimately makes.

Continually looking at looking at our cost models really trying to determine.

What ultimately makes sense for us so while we're seeing a little bit of inflation at the moment, we do try to offset by by all the things that I've just mentioned.

Speaker 4: stands for us. So while we're seeing a little bit of inflation at the moment, we do try to offset by all the things that I've just mentioned.

Speaker 1: Great, great added details. I appreciate that. And then just a quick follow-up. I really like that slide 14 that shows your leverage commodity prices. That's my question.

Great Great added details I appreciate that guys and then just a quick follow up.

Slide 14 shows the leveraged commodity prices Michael question.

Speaker 1: around that, really just kind of looking at that bottom corner, does your advantage, and you touched on this earlier, having no upcoming cash tax for quite some time.

Around that.

Look at that bottom quarter does your advantage.

When you touched on this earlier has no upcoming.

For quite some time. Unlike most of your peers does that maybe change how you think about some of your operational plans or is it still a capital discipline sort of way.

Speaker 1: unlike most of your peers, does that maybe change how you think about some of your operational plans? Or is it still what capital discipline sort of weighs out in that, that, you know, even though you have that benefit, there's really no change because

Even though you have that benefit there is really no change to that.

No I don't think Theres any certainly no undue influence of that back on our business plan and our capital allocation from that standpoint, Neil but clearly as you pointed out on page 14.

Speaker 2: No, I don't think there's any, certainly no undue influence of that fact on our business plan and our capital allocation from that standpoint, Neil. But clearly, as you pointed out on page 14.

Speaker 2: It does put us in an advantage position in terms of the cash flow generation.

Does put us in an advantaged position in terms of the cash flow generation.

Speaker 2: over, you know, kind of over this midterm period.

Over kind of all of this mid term period and of course, we battle tested this to make sure that between our Nols in our foreign tax credits that.

Speaker 2: And of course, we've battle tested this to, you know, make sure that

Speaker 2: between our NOLs and our foreign tax credits that this is the right zip code for us from a cash tax standpoint. But it doesn't influence us directly from a capital allocation standpoint. We're still gonna be returns and NPV driven on the opportunities we select to invest in. Well said, thank you.

This is the right ZIP code for us from a cash tax standpoint, but.

It doesn't influence us directly from a capital allocation standpoint, we're still going to be returns and NPV driven on the opportunities we select to invest yet.

Well thanks, Dave.

From Bank of America, we have Doug Leggate. Please go ahead.

Thanks, Good morning, everyone.

Speaker 4: Thanks, good morning everyone. Lee, you led the market on this cash return model, so congratulations to you on that. It's obviously working. My question is about the post-cyclicality. I think we all know that oil prices are suffering a number of issues right now, whether it's geopolitics or gas in Europe or whatever is going on, and we know that there's a forward curve substantially below the spot.

You led the market on this cash return model. So congratulations to you or not so obviously working.

My question is about the pro cyclicality I think we are.

No the oil prices are suffering a number of issues right now, whether it's geopolitics or gas in Europe or whatever is going on and we know that there is a forward curve substantially below the spot. So why not build cash on weight on what will inevitably be an opportunity to buy back your stock at a lower level.

Speaker 4: So why not build cash and wait on what will inevitably be an opportunity to buy back your stock at a lower level?

Yes, I think Doug the way I would.

Speaker 2: Yeah, I think, Doug, the way I would kind of phrase that is, you know, we're not going to try to convince ourselves that we're price predictable.

Freight that is.

We're not going to try to convince ourselves that were priced predictors.

Speaker 2: We believe that a more rateable dollar average type approach where we can look through the cycle. I mean, just to give you an example, Doug, if you look at that billion dollars of share repurchases that we did, that was done below a $17 share price.

We believe that a more ratable dollar average type of approach, where we can look through the cycle. I mean, just to give you. An example, Doug if you look at that $1 billion of share repurchases that we did that was done below $17 a share price and of course today on where we are trading in the market. This morning.

Speaker 2: And of course, today, I don't know where we are trading in the market this morning, but certainly north of 20.

Certainly north of 20.

Speaker 2: So I think that, you know, the opportunity that presents itself is when you have a model where you are resilient across a broad range of commodity price outputs.

So I think that the.

The opportunity that presents itself is when you when you have a model where you are resilient across a broad range of commodity price outcomes that kind of pro cyclicality argument starts fading away and I think it's indicative of a new more mature model.

Speaker 2: that kind of pro-cyclicality argument starts fading away. And I think it's indicative of a new, more mature model that we're deploying now, at least at our company, in the EMP space. And so I think, you know, Dane said it well. I think with this new model, it does give us that ability to really invest in our shares through the cycle.

<unk> now at least at our company.

P space and so I think <unk> said, it well I think with this new model. It does give us that ability to really invest in our shares through the cycle and again, assuming we continue to see the types of yields that we're seeing free cash flow yield downturn even down.

Speaker 2: And again, assuming we continue to see the types of yields that we're seeing, free cash flow yields, down to even down to 60 or 10%, we feel very strongly that that is a great option for us. And when we look at the suite of investment options, certainly investing in our own company and the confidence that that shows and the return that it's generating makes the most sense for us.

60 were 10%, we feel very strongly that that is.

Great option for Us and we look at the suite of investment options, certainly investing in our own company and the confidence that that shows in the retirement is generating makes the most sense for us So I would not expect us to try to.

Speaker 2: I would not expect us to try to say for the rainy day and try to predict when that's actually going to occur.

For the rainy day and try to predict when that's actually going to occur.

No. That's fair I think it's really more about what the market is prepared to discount the <unk>.

Speaker 4: No, that's fair. I think it's really more about what the market is prepared to discount and if the curve rolls higher, then you're absolutely right. My follow-on is on the inventory question and you've given a lot of color this morning, so thank you for that. But you've also shown a little bit of sensitivity on the oil price, which is substantially below, you know, the high end is still 50 bucks on your slide deck. What does the inventory depth look like at today's curve?

<unk> is higher than you are absolutely right.

My follow on is on the inventory question and you've given a lot of color. This morning. So thank you for that but you are also showing a little bit of sensitivity on the oil price, which is substantially below the high end is still 50 Bucks.

On your slide deck, what does the inventory depth look like at today's curve.

Yes, well I think if you do look even in just the third party data.

Speaker 2: Yeah, well, I think if you do look even at just the third party data, clearly it does shift in terms of kind of where that higher return inventory lies as that price deck moves up. And when we test all of our opportunities at a very conservative price deck, so when I talk about

And clearly it does shift in terms of kind of where that higher return inventory lies at that price deck moves up and really test all of our opportunities at a very conservative price deck. So when I talk about.

Speaker 2: over a decade of inventory, we typically are testing that inventory at a $50 WTI. So it goes without saying that some of that Tier 3 and Tier 4 inventory, if we continue to see constructive pricing, will allow us to economically grow that inventory just from a price perspective.

Over a decade of inventory, we typically are testing that inventory at a $50 <unk>. So it goes without saying that some of that tier three and tier four inventory. If we continue to see constructive pricing will allow us to economically grow that inventory just from a.

Price perspective, but.

Speaker 2: But I do think the inverse data is broadly indicative of that effect as you look at the break-even cutoffs that they have shown, clearly as prices move higher, it's going to enhance that inventory depth over time.

I do think the interim data is broadly indicative of that.

That effect as you look at the breakeven cut off that they have shown clearly as prices move higher.

Going to enhance that inventory depth over time.

Speaker 2: So we try to speak, you know, pretty conservatively is the way I would put it, and really not only conservative in terms of our inventory life.

So we try to be pretty conservatively as the way I would put it.

And really not only conservative in terms of our inventory lie, but make sure that we show transparency on what that inventory can generate from a financial outcome standpoint.

Speaker 2: but make sure that we show transparency on what that inventory can generate from a financial outcome standpoint. Because it's not just inventory, it's the quality of inventory. And I think the balance of data that we've shown on capital efficiency, the level of reinvestment rate that we can deliver are all indicative of the capital efficiency embedded in that well over a decade of inventory life. Appreciate the color, thanks guys.

It's not just inventory, it's the quality of inventory and I think the balance of data that we've shown on capital efficiency.

Level of reinvestment rate, we can deliver are all indicative of the capital efficiency embedded in that well over a decade of inventory life.

I appreciate the color thanks, guys.

From Citigroup, we have Scott Gruber. Please go ahead.

Speaker 10: Yes, good morning. Thanks for squeezing me in here. So looking at the Bakken activity.

Yes. Good morning, Thanks for squeezing me in here.

So looking at the Bakken activity.

Speaker 10: The production popped in 4Q, but the 22 tills are going to be down, 10 to 20 wells. At that level of activity, should we expect Bakken production to start to trend lower on a year-over-year basis in the second half, and is the expectation that will be made up for in the second half by the completions in the Permian, and then thinking out into next year, is that the direction of travel we should be thinking about into 2030?

Production popped in <unk> with.

With the 22 tools are going to be down 10 to 20 wells.

The level of activity should we expect Bakken production to start to trend lower on a year over year basis in the second half.

Is the expectation that will be made up for the second half by the completions in the Permian.

And then thinking out into next year is that the direction of travel we should be thinking about.

Into 'twenty three.

Yes, John its Mike here, maybe maybe.

Speaker 13: Yes, Scott, it's Mike here. Maybe how I think about back-end, you know, on an annual kind of year-to-year basis, it's going to be pretty flat, is how I think about it. We're going to see quarterly variability, as I mentioned in my prepared remarks. I mean, that's just to be expected. But, yeah, as I say, I think about it on an annual basis, it's pretty flat.

Think about Bakken and annual.

Kind of year to year basis, its going to be pretty flat.

So I would think about it we're going to see quarterly variability as I mentioned in my prepared remarks.

And just to be expected.

I'd think about it on an annual basis.

Got it.

Okay. So it's flattened the five year plan is the way to think about it.

Again, you're going to see a little bit of variability, there, but but I think it's going to be pretty close to that.

Speaker 13: Again, you're going to see a little bit of variability there, but I think it's going to be pretty close to that.

Okay, Okay, and then the redevelopment.

Speaker 10: And then the redevelopment opportunity in the Eagleford is interesting. What's the rough break even on those redevelopment wells and that strip, how should we think about the redevelopment cadence over the next couple of years?

Opportunity in the Eagle Ford is interesting.

The rough breakeven on those redevelopment wells in strip, how should we think about the redevelopment cadence.

Next couple of years.

Speaker 13: I don't, Scott, it's Mike again. I don't think we've disclosed anything on break-evens. I mean, you know, we had 14, 15 redevelopment tests last year and, as I mentioned a little bit earlier, we've added

Scott, It's Mike again, I don't think we've disclosed anything on breakeven.

We had we had 14 15 redevelopment tax last year.

<unk> a little bit earlier, we provided.

Speaker 13: a little over 106. We've got another 15 wells planned this year to potentially de-risk and some additional areas and potentially look to add some.

A little over 100 specs, we've got another 15 wells planned on this year to potentially de risking.

Some additional areas.

And look to add some are their locations.

Speaker 13: further locations. And, you know, I think we look at this on an annual basis.

I think we look at this on an annual basis.

Speaker 13: We've got a number of these, we call it all yoke.

<unk> got a number of these we call it <unk>.

Speaker 13: opportunities and we'll continue to look at that on an annual basis and we may have some more in the future. I think a lot of it is dependent on the results.

Opportunities in.

We'll continue to look at that a non <unk> basis.

We may have some more in the future I think a lot of it is dependent on the results that we see yes.

Speaker 14: Yeah, but if I can just add in, Scott, the bottom line is that the redevelopment wells compete head-to-head with the rest of the portfolio. They have to compete on a heads-up basis for capital allocation with the rest of the portfolio. So the break-evens, per se, will be not dissimilar to what we see across the rest of the portfolio.

If I could just add and Scott in our bottom line is that the redevelopment wells compete head to head with the rest of the portfolio. They have to compete on a heads up basis for capital allocation with the rest of the portfolio. So breakeven per se will be not dissimilar to what we see across the rest of the portfolio.

Got it appreciate the color. Thank you.

Speaker 9: Thank you. We are now over time and will now turn it back to Lee Tillman for closing comments.

Thank you.

We'll now turn it back to Lee Tillman for closing comments.

Speaker 2: Thank you for your interest in Marathon Oil, and I'd like to close by again thanking all of our dedicated employees and contractors for their commitment to safely and responsibly deliver the energy the world needs each and every day. That ends our call.

Thank you for your interest in marathon oil and I'd like to close by again thanking all of our dedicated employees and contractors for their commitment to safely and responsibly deliver the energy the world needs each and every day that ends our call.

Thank you ladies and gentlemen. This concludes today's conference. Thank you for joining us.

Speaker 9: Ladies and gentlemen, this concludes today's conference. Thank you for joining. You may now disconnect.

Now disconnect.