Q1 2024 Marathon Oil Corp Earnings Call

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Operator: If you have a question, you may press star then 1 on your touch-tone phone. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Guy Baber, Vice President of Investor Relations.

I would now like to turn the conference over to Guy Baber, Vice President of Investor Relations. Please go ahead.

Guy Allen Baber: Thank you very much, Danielle. And thank you as well to everyone for joining us on our call this morning. Yesterday, after the close, we issued a press release, a slide presentation, and an investor packet that addressed our first quarter 2024 results. Those documents can be found on our website at MarathonOil.com. Joining me on today's call are Lee Tillman, our Chairman, President, and CEO. Dane Whitehead, who, as of yesterday, is now our advisor to the CEO.

Guy Allen Baber: Thank you very much Danielle and thank you as well to everyone for joining us on our call. This morning, yes.

Guy Allen Baber: Yesterday after the close we issued a press release, a slide presentation and Investor packet that address our first quarter 2024 results.

Guy Allen Baber: These documents can be found on our website at marathon oil dot com.

Guy Allen Baber: Dane's successor is our EVP and CFO, also effective yesterday, Rob White. Welcome, Rob. Pat Wagner, Executive VP of Corporate Development and Strategy, and Mike Henderson, our Executive VP of Operations. As a reminder, today's call will contain forward-looking statements subject to risks and uncertainties.

Guy Allen Baber: Joining me on today's call are Lee Tillman, our chairman President and CEO.

Guy Allen Baber: Dane Whitehead with of yesterday is now our advisor to the CEO.

Guy Allen Baber: <unk> successor, as our EVP and CFO also effective yesterday, Rob wide welcome Rob.

Guy Allen Baber: Pat Wagner executive VP of corporate development and strategy and Mike Henderson, our executive VP of operations.

Guy Allen Baber: It could cause actual results to differ materially from those expressed or implied by such statements. I'll refer everyone to the cautionary language included in the press release and presentation materials, as well as to the risk factors described in our NSECE file. We'll also reference certain non-GAP terms in today's discussion, which have been reconciled and defined in our argumentation. So with that, I'll turn the call over to Lee, and the rest of the team will provide prepared remarks.

Guy Allen Baber: 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.

Guy Allen Baber: For everyone to the cautionary language included in the press release and presentation materials.

Guy Allen Baber: As well as to the risk factors described in our SEC filings.

Guy Allen Baber: We will also reference certain non-GAAP terms, and todays discussion, which have been reconciled and defined in our earnings materials.

Guy Allen Baber: So with that I'll turn the call over to Lee and the rest of the team will provide prepared remarks. After the completion of their remarks, we will move to a question and answer session and in the interest of time, we have a lot to cover today. So we ask that you limit yourselves to one question and a follow up.

Guy Allen Baber: After the completion of their remarks, we'll move to a question and answer session. And in the interest of time, we have a lot to cover today, so we ask that you all limit yourselves to one question and a follow-up. Lee?

Guy Allen Baber: <unk>.

Lee M. Tillman: Thank you, Guy, and good morning to everyone joining us on the call. I want to start by again extending my heartfelt thanks to our employees and contractors. We built a track record of execution excellence that is differentiated in our peer space and the S&P 500, a track record that now spans multiple years through the ups and downs of the commodity cycle. Such execution is only made possible through the hard work and dedication of our talented people, who, through it all, remain committed to our core values, including safety and environmental excellence. Now turning to the first quarter results. We have a lot to cover today.

Lee M. Tillman: Thank you Guy and good morning to everyone joining us on the call.

Lee M. Tillman: I want to start by again, extending my heartfelt thanks to our employees and contractors we.

Lee M. Tillman: We built a track record of execution excellence that is differentiated in our peer space and the S&P 500.

Track record that now spans multiple years through the ups and downs of the commodity cycle.

Guy Allen Baber: Such execution is only made possible through the hard work and dedication of our talented people go through it all remain committed to our core values, including safety and environmental excellence.

Lee M. Tillman: Now turning to first quarter results.

Lee M. Tillman: I'll start with three key takeaways. First, the first quarter with another strong financial and operational performance. We executed our plan, and we built on our multi-year track record of sustainable free capital generation, meaningful return of capital to shareholders, and strong capital and operating efficiency. More specifically, we returned 41%, or $350 million, of our cash flow from operations back to our investors. This is consistent with our cash flow driven return of capital framework that provides our investors with the first call on capital.

Lee M. Tillman: We have a lot to cover today ill start with three key takeaways first first quarter was another strong financial and operational quarter, we executed our plan and we built on our multiyear track record of sustainable free cash flow generation meaningful return of capital to shareholders and strong capital and operating efficiency.

Lee M. Tillman: More specifically, we returned 41% or $350 million of our cash flow from operations back to our investors.

Lee M. Tillman: <unk> with our cash flow driven return of capital framework that provides our investors with the first call on capital.

Lee M. Tillman: Oil production of 181,000 barrels of oil per day was just above our guidance, and pre-cash flow generation was solid, despite not receiving any EG cash distributions from equity affiliates. This is purely due to timing, and we expect to receive a catch-up in EG cash distributions during Second, Importantly, and similar to last year, the first quarter marked the starting point for both our oil production and free cash flow generation for 2024. Pre-task flow momentum should build significantly as the year progresses, starting with the second quarter. This is driven by several factors, including the expected catch-up in EG cash distributions, a significant increase in our oil production, especially into the second and third quarters, and a moderating capital spending profile over the second half of the year, consistent with the phasing of our capital. My second key takeaway this morning is:

Lee M. Tillman: Oil production of 181000 barrels of oil per day was just above our guidance and free cash flow generation was solid despite not receiving any EEG cash distributions from equity affiliates.

Lee M. Tillman: This is purely due to timing and we expect to receive a catch up in EG cash distributed distributions during the second quarter.

Lee M. Tillman: Importantly, and similar to last year first quarter marked the trough for both our oil production and free cash flow generation for 2024.

Lee M. Tillman: Free cash flow momentum should build significantly as the year progresses, starting with the second quarter.

Lee M. Tillman: This is driven by several factors, including the expected catch up in EEG cash distributions, a significant increase to our oil production, especially into the second and third quarters and a moderating capital spending profile over the second half of the year consistent with the phasing of our capital program.

Lee M. Tillman: My second key takeaway this morning.

Lee M. Tillman: We continue to make important strides to organically enhance our asset base, making Marathon Oil a stronger, more resilient, and more sustainable company. Specifically, we're improving our capital efficiency through extended lateral drilling. About 25% of our first-quarter wells to cells were three-mile laterals spread across the Permian, Bakken, and Eagle.

Lee M. Tillman: We continue to make important strides to organically enhance our asset base, making marathon or a stronger more resilient and more sustainable company.

Lee M. Tillman: Specifically, we're improving our capital efficiency through extended lateral drilling.

Lee M. Tillman: About 25% of our first quarter wells to sales were three mile laterals spread across the Permian Bakken and Eagle Ford.

Lee M. Tillman: Execution on this program was excellent, including a record pad in the Permian Basin. We continue to bolster the strength of our asset base through refracts and redevelopment. Disclosure of approximately 600 opportunities across the Bakken and Igbo. These opportunities are complementary and additive to our company's decade-plus of primary development inventory, and have been de-risked through multiple years of technical work by our teams and actual results generated in the field. Notably, 30% of these opportunities are concentrated in the acquired in-site acreage and add upside to our acquisition. And we continue to progress the EG Gas Mega Hub, a key competitive differentiator for our company. During the first quarter, we realized the long-awaited shift to global LNG pricing for our ALBA LNG.

Lee M. Tillman: Execution on this program was excellent including a record pad in the Permian Basin.

Lee M. Tillman: We continue to bolster the strength of our asset base through re fracs and redevelopment disclosing approximately 600 opportunities across the Bakken and Eagle Ford.

Lee M. Tillman: These opportunities are complementary and additive to our company's decade, plus our primary development inventory life and have been derisked through multiple years of technical work by our team and actual results generated in the field.

Lee M. Tillman: Notably 30% of these opportunities are concentrated in the acquired inside acreage and upside to our acquisition basis.

Lee M. Tillman: And we continue to progress the EG gas Mega hub, a key competitive differentiator for our company.

Lee M. Tillman: During first quarter, we realized the long awaited shift global LNG pricing for our Elba LNG.

Lee M. Tillman: We started optimizing our integrated gas operations by diverting a portion of our ALBA gas away from methanol production and toward higher margin LNG cells. And we sanctioned a high-competence, low-execution risk ALBA infill program that offers risk-adjusted full-cycle returns that are competitive with our U.S. onshore portfolio. So not only are we realizing improved financial performance this year on the back of our shift to global LNG price realization, but we believe this improvement is sustainable due to all the great work our teams continue to do to advance the EG MegaHUB concept. My third and final key takeaway this morning.

Lee M. Tillman: We started optimizing our integrated gas operations by diverting a portion of our Alba gas away from ethanol production and toward higher margin LNG sales.

Lee M. Tillman: And we sanctioned a high confidence low execution risk Alba infill program that offers risk adjusted full cycle returns that are competitive with our U S onshore portfolio.

Lee M. Tillman: So not only are we realizing improved financial performance. This year on the back of our shift to global LNG price realizations.

Lee M. Tillman: We believe this improvement is sustainable.

Lee M. Tillman: Due to all the great work our teams continue to do to advance the EG Mega hub concept.

Lee M. Tillman: My third and final key takeaway this morning.

Lee M. Tillman: We remain fully on track to deliver a 2024 business plan that once again benchmarks at the top of the E&P sector on the metrics that I believe matter most, free cash flow generation, capital efficiency, and shareholder returns. This is demonstrated by the strength of our first quarter execution, supporting no changes to our annual guidance. This data is comprehensively summarized on slides 8 and 9 of our deck and is a compelling endorsement of our value proposition in the marketplace. No peer offers such comprehensive top quartile performance across this powerful combination of methods.

Lee M. Tillman: We remain fully on track to deliver a 2024 business plan that once again benchmarks at the top of the E&P sector on the metrics that I believe matter most free cash flow generation capital efficiency and shareholder returns. This is demonstrated by the strength of our first quarter execution supporting no changes to our <unk>.

Lee M. Tillman: Annual guidance.

Lee M. Tillman: This data is comprehensively summarized on slides eight and nine of our deck has a compelling endorsement of our value proposition in the marketplace.

Lee M. Tillman: No peer offers such comprehensive top quartile performance across this powerful combination of metrics.

Lee M. Tillman: More specifically, we're expecting $2.2 billion of free cash flow generation this year, equivalent to a mid-teens precast. We'll stay true to our CFO-driven return of capital framework and expect to again return at least 40% of our CFO back to investors through the combination of our base dividend and material share repurchase. Providing visibility to both a double-digit distribution yield and significant growth and purchase share. We'll keep improving our capital efficiency, delivering flat year-on-year total oil production with fewer net wells to sell. And perhaps most importantly, we believe all these results are sustainable. That's true for our U.S. multi-basin portfolio, and that's true for our integrated gas business, NEG.

Lee M. Tillman: More specifically, we're expecting $2 2 billion of free cash flow generation this year.

Lee M. Tillman: Leveling to a mid teens free cash flow yield.

Lee M. Tillman: We'll stay true to our CFO driven return of capital framework and expect to again return at least 40% of our CFO back to investors through the combination of our base dividend and material share repurchases, providing visibility to both at double digit distribution yield and significant growth in per share metrics.

Lee M. Tillman: We will keep improving our capital efficiency.

Lee M. Tillman: Delivering flat year on year total oil production with fewer net wells to sales.

Lee M. Tillman: Perhaps most importantly, we believe all of these results are sustainable.

Lee M. Tillman: That is true for our U S multi basin portfolio and that's true for our integrated gas business in EG.

Lee M. Tillman: Before I close my introductory remarks, I'd be remiss if I didn't use this time to recognize Dane Whitehead and his contributions to Marathon Oil as our Executive VP and CFO over the last seven years. Under Dane's watch, we've established a truly differentiated track record of sustainable free cash flow generation and return of capital to our shareholders underpinned by an investment of great value. Dane's contributions to this success have been invaluable, but more than that, he's led his organization with the utmost integrity and humility. Dane, on behalf of the entire organization, thank you, and you'll be missed.

Speaker Change: Before I close my introductory remarks, I'd be remiss if I didn't it is this time to recognize Dane Whitehead and his contributions to marathon oil is our executive VP and CFO over the last seven years.

Lee M. Tillman: Under <unk> watch we've established a truly differentiated track record of sustainable free cash flow generation and return of capital to our shareholders underpinned by an investment grade balance sheet.

Lee M. Tillman: <unk> contributions to the success have been invaluable but more than that.

Lee M. Tillman: Let his organization with the utmost integrity and humility.

Speaker Change: And on behalf of the entire organization, Thank you and you'll be missed.

Dane E. Whitehead: Well, Lee, thank you for those kind words. I really appreciate them.

Dane E. Whitehead: Well, we thank you for those kind words I really appreciate it.

Dane E. Whitehead: The past seven years at Marathon Oil have certainly been the highlight of my 25-year career, working with you, our executive leadership team and board, and with all of our talented employees in forums like this with our analysts and investors. Rob and I have been working very closely together in recent months, and that will continue for a while as we ensure a seamless transition. Rob's been with the company for more than 30 years, and they have all the confidence in the world in his leadership. With that, I'll pass the CFO torch to Rob, who will be handling our prepared commentary today on our financial performance and return of capital initiatives. Rob, welcome to the show.

Lee M. Tillman: The past seven years at marathon oil certainly been the highlight my 40 year career working with you our executive leadership team and board.

Rob: All of our talented employees in forums like this with our analysts and investors.

Dane E. Whitehead: <unk> been working very closely together in recent months and that will continue for a while as we ensure a seamless transition Rob has been with the company for more than 30 years. They have all the confidence in the world against leadership.

Dane E. Whitehead: With that I'll pass the CFO towards to Rob who will be here and we are prepared commentary today on our financial performance and return of capital.

Dane E. Whitehead: Initiatives.

Rob: Welcome to the show.

Rob: Thanks Sterling.

Dane E. Whitehead: As Lee mentioned, under Dane's leadership, our company has built a track record of providing a truly compelling shareholder return proposition while at the same time continuing to enhance our investment grade balance. You can expect more of the same going forward, with continuity in our long-held capital allocation framework and conservative financial policy.

Rob: As Lee mentioned under <unk> leadership, our company has built a track record of providing a truly compelling shareholder return proposition.

Dane E. Whitehead: At the same time, continuing to enhance our investment grade balance sheet.

Dane E. Whitehead: You can expect more of the same going forward.

Dane E. Whitehead: Continuity and our long held capital allocation framework and conservative financial policies.

Dane E. Whitehead: I'll now walk through a few key highlights regarding our first quarter performance and reiterate our key financial priorities for this year. First quarter cash flow and pre-cash flow generation were solid and consistent with our plan despite not receiving any EG Equity Affiliate cash distributions in the quarter. As Lee mentioned, this is purely a timing issue.

Speaker Change: I'll now walk through a few key highlights regarding our first quarter performance and reiterate our key financial priorities for this year.

Dane E. Whitehead: First quarter cash flow and free cash flow generation were solid and consistent with our plan.

Dane E. Whitehead: Despite not receiving any EG equity affiliate cash distributions in the quarter.

Dane E. Whitehead: We mentioned this is purely a timing issue for the full year, we expect total EG cash distributions to approximate our annual equity earnings starting with catch up payments during <unk>.

Dane E. Whitehead: The EG catch up distributions during the second quarter will contribute to an overall significant improvement in our free cash flow momentum as 2024 progresses.

Dane E. Whitehead: This was driven primarily by a significant production increase, especially in the second and third quarters and a moderation of our capital spending starting in the third quarter, given the front half weighted nature of our capital program.

Dane E. Whitehead: For the full year, we expect total EGCAS distributions to approximate our annual equity earnings, starting with catch-up payments during 2Q. The EG catch-up distributions during the second quarter will contribute to an overall significant improvement in our free cash flow momentum as 2024 progresses. This is driven primarily by a significant production increase, especially in the second and third quarters, and a moderation of our capital spending starting in the third quarter, given the front half-weighted nature of our capital program. Turning now to our key financial priorities for this year, priority one is clear: continuing to return at least 40% of our cash flow from operations to shareholders. Transcripts provided by Transcription Outsourcing, LLC.

Dane E. Whitehead: Yes.

Dane E. Whitehead: Turning now to our key financial priorities for this year priority one is clear continuing.

Dane E. Whitehead: Continuing to return at least 40% of our cash flow from operations to shareholders consistent with our return on capital framework, which represents one of the strongest shareholder return commitments in our peer space and across the entire S&P 500.

Dane E. Whitehead: For 2024, our minimum 40% commitment translates to $1.7 billion of total distributions to shareholders at $80 per barrel WTI price tag, providing our investors visibility to double-digit shareholder distribution yield, a truly compelling shareholder return. During 1Q, we returned 350,041% of CFO to shareholders. We believe our commitment to shareholder returns and the consistency and transparency of our approach have positively differentiated our company. Over the trailing 10 quarters, we have now returned $5.8 billion to equity holders, including $5.2 billion of share repurchase.

Dane E. Whitehead: For 2024, our minimum 40% commitment translates to $1 7 billion of total distributions to shareholders at $80 per barrel WT high price deck, providing our investors visibility to double digit shareholder distribution yield.

Dane E. Whitehead: A truly compelling shareholder return proposition.

Dane E. Whitehead: During <unk>, we returned 350 million, 41% of CFO to shareholders.

Dane E. Whitehead: We believe our commitment to shareholder returns and the consistency and transparency of our approach and positively differentiated our company.

Dane E. Whitehead: Over the trailing 10 quarters. We now returned five 8 billion to equity holders, including $5 2 billion of share repurchases, reducing our outstanding share count by 29% and contributing to peer leading growth in our per share metrics.

Dane E. Whitehead: Reducing our outstanding share count by 29% and contributing to peer-leading growth in our per share method. We continue to see share repurchases as the preferred return vehicle. With our stock trading on a free cash flow yield in the mid-teens, repurchases remain value accretive, are a very efficient means to continue driving per share growth, and are highly synergistic with sustainable based dividends. Regarding the base dividend, as we've communicated before, our focus remains on competitiveness and sustainability, given the ongoing benefits of our material share repurchase program, as well as the interest expense savings from our gross debt reduction initiative.

Dane E. Whitehead: We continue to see share repurchases as the preferred return vehicles with our stock trading at a free cash flow yield in the mid teens.

Dane E. Whitehead: Repurchases remain value accretive.

Dane E. Whitehead: Our very efficient means to continue driving per share growth and are highly synergistic with sustainable base dividend growth.

Dane E. Whitehead: Regarding the base dividend as we've messaged before our focus remains on competitiveness and sustainability.

Dane E. Whitehead: Given the ongoing benefits of our materials share repurchase program as well as the interest expense savings from our gross debt reduction initiatives, we see clear potential for further base dividend growth, while protecting our lowest enterprise free cash flow breakeven in the peer group.

Dane E. Whitehead: We see clear potential for further base dividend growth while protecting the lowest enterprise free cash flow break even in the pure. After meeting our shareholder return commitment, our second priority this year remains continued enhancement of our investment-grade balance sheet through gross debt reduction. Last year, we returned meaningful capital to shareholders and also reduced our gross debt by $500 million. My expectation is that you'll see more of the same from us in 2024.

Dane E. Whitehead: After meeting our shareholder return commitment our second priority. This year remains continued enhancement of our investment grade balance sheet through gross debt reduction.

Dane E. Whitehead: Last year, we returned meaningful capital to shareholders and also reduced our gross debt by $500 million.

Dane E. Whitehead: And my expectation is that Youll see more of the same from ops in 2024.

Dane E. Whitehead: During the first quarter, we strengthened our financial flexibility by completing a $1.2 billion offering of five and 10 year bonds. Investor demand was strong at greater than seven times oversubscribed, which enabled us to achieve a timely and competitive weighted average interest rate of 5.5%. Proceeds from the offering were used to repay the remaining balance on our variable rate term loan facility in its entirety, which in turn delivers 20 million in annual interest savings.

Dane E. Whitehead: During first quarter, we strengthened our financial flexibility by completing a $1 2 billion offering of five and 10 year bonds investor.

Dane E. Whitehead: Investor demand was strong at greater than seven times, oversubscribed, which enabled us to achieve a timely and competitive weighted average interest rate of five 5%.

Dane E. Whitehead: Proceeds from the offering were used to repay the remaining balance on our variable rate term loan facility in its entirety, which in turn delivered $20 million of annual interest savings.

Dane E. Whitehead: With the term loan facility paid off, our focus now turns to the $400 million of tax-exempt bonds that are due in July. As a reminder, this is a very unique vehicle in our capital structure with advantaged interest rates relative to taxable debt. As such, we will likely remarket those bonds as we've done previously. As the bottom right graphic on slide 11 of our deck shows, after having paid off the term loan, we have minimal bond maturities over the next five years.

Dane E. Whitehead: With the term loan facility paid off our focus now turns to the $400 million of tax exempt bonds that are due in July.

Dane E. Whitehead: As a reminder, this is a very unique vehicle and our capital structure with advantaged interest rates relative to taxable debt instruments.

Dane E. Whitehead: As such we will likely remarket those bonds as we've done previously.

Dane E. Whitehead: At the bottom right graphic on slide 11 of our deck shows after having paid off term the term loan we have minimal bond maturities over the next five years.

Dane E. Whitehead: We do, however, retain the ability to efficiently lever down to our medium-term growth-stead objective of $4 billion, which would make our current debt-to-IBIDOB one times its strip durable in a more conservative $50 to $60 WBTI pricing environment. To be clear, our balance sheet is in great shape and provides us with tremendous financial flexibility, including $2.2 billion of liquidity at quarter end. Our top priority remains consistently meeting our 40% of CFO shareholder return commitment, but we are also reducing debt over the medium term down to our $4 billion gross debt objective. We can do both. With that, I'll turn the call over to Mike to walk through the operational highlights. Thanks.

Dane E. Whitehead: We do however, retain the ability to efficiently deliver it down to a medium term growth objective of $4 billion, which would make our current debt to EBITDA of one times that strip durable down to a more conservative $50 to $60.

Mike: Ti pricing environment.

Mike: To be clear our balance sheet is in great shape and provides us with tremendous financial flexibility, including $2 2 billion of liquidity at quarter end.

Mike: Our top priority remains consistently meeting our 40% of CFO shareholder return commitment.

Mike: We are also committed to reducing debt over the medium term down to a $4 billion gross debt objective.

Mike: We can do both.

Dane E. Whitehead: With that I will turn the call over to Mike walked through the operational highlights.

Mike: Thanks, Rob with strong first quarter execution consistent with our plan. We've made no changes to our annual guidance and remain fully on track to deliver a 2024 program.

Michael A. Henderson: Strong first quarter execution consistent with our plan. We've made no changes to our annual guidance and remain fully on track to deliver a 2024 program. But once again, benchmarks at the top of our sector on the metrics that we believe matter most, the combination of free cash flow generation, capital efficiency, and shareholder returns. During the first quarter, oil production of 181,000 barrels of oil per day was slightly better than our guidance, while capital expenditures of $603 million were endlossed. It's been a very strong start to the year for us.

Michael A. Henderson: Once again benchmarks at the top of our sector are metrics that we believe modern walls.

Michael A. Henderson: Combination of free cash flow generation capital efficiency and shareholder returns.

Michael A. Henderson: During the first quarter.

Michael A. Henderson: Oil production of 181000 barrels of oil per day slightly better than our guidance.

Michael A. Henderson: Capital expenditures of $603 million and lunch.

Michael A. Henderson: It's been a very strong start to the year for our asset teams.

Michael A. Henderson: That's especially true in Eagleford, as our first quarter drilling rate of penetration was among the best it's been in the last five years. Parts of Order Eagleford Completion Efficiencies also continue to, And in the back end, despite the challenging winter weather, we held on to the same execution efficiency, on both the drilling and completion side, that we were delivering during the second half of last year, a trend which bodes very well for execution in the future. Referencing slide 14 of our deck,

Michael A. Henderson: That's especially true in the Eagle Ford as our first quarter drilling rate of penetration was among the best it's been in the last five years.

Michael A. Henderson: First quarter Eagle Eagle Ford completion efficiencies also continue to increase.

Michael A. Henderson: And in the Bakken.

Michael A. Henderson: Right the challenging winter weather, we held onto the same execution efficiencies.

Michael A. Henderson: The drilling and completion side.

Michael A. Henderson: But we were delivering during the second half of last year, a trend, which bodes very well for execution in future quarters.

Michael A. Henderson: Referencing slide 14 of our deck.

Michael A. Henderson: I'd like to highlight the performance of our Permian team. The first quarter was another excellent execution quarter, marked by significant production. The primary driver of the production increase was our growth while outperforming. 3, Upper Wolf Camp, Wales, and Core Redhill.

Michael A. Henderson: I'd like to highlight the performance of our Permian team.

Michael A. Henderson: Quarter was another excellent execution quarter marked by significant production growth.

Michael A. Henderson: The primary driver of the production increase was our growth.

Michael A. Henderson: Performance.

Michael A. Henderson: Three upper Wolfcamp wells and core Red Hills.

Michael A. Henderson: All at 100% working interest are significantly outperforming fighters, realizing early well productivity almost four times that of the average Delaware Basin well. But this isn't just about one pod or one quart of performance. Our Permian team has now built up a clear track record of execution success. For all wells brought online since 2022, our premium program has delivered among the best results of any Delaware Basin operator for oil productivity. And the team has done so, with very competitive drilling and completion execution, now almost exclusively bringing online 2-mile-plus lathe. Additionally After taking a two-year break in the Permian during the 2020 pandemic,

Michael A. Henderson: It all at 100% working interest are significantly outperforming type.

Michael A. Henderson: Realizing early well productivity almost four times that of the Outreached, Delaware basin well.

Michael A. Henderson: But this isn't just about one time or one quarter ago performance, our Permian teams not built up a clear track record of execution success.

Michael A. Henderson: For all wells brought online since the 2022, our Permian program has delivered among the best results of any Delaware basin, operator for oil productivity per foot.

Michael A. Henderson: And the team has done so very competitive drilling and completion execution.

Michael A. Henderson: Almost exclusively bringing online two mile plus laterals.

Michael A. Henderson: Additionally.

Michael A. Henderson: After taking a two year break in the Permian during the 2020 pandemic. We note of one of the more lightly developed acreage positions in the fleet.

Michael A. Henderson: We now have one of the more lightly developed acreage positions in the place, with over two decades of high quality drilling industry experience at the current activity level. We're allocating more capital to Permian, and the asset will continue to be a growth driver for us. But we'll continue to increase our capital investment at a disciplined pace with an eye on maintaining our execution, with this exceptionally strong star across our U.S. asset base. Our annual guidance midpoints for both production and capital expenditures remain unchanged, and my confidence in delivering on our full year guidance commitment is high.

Michael A. Henderson: Over two decades of high quality drilling inventory at current activity levels.

Michael A. Henderson: We're allocating more capital to Permian and the asset will continue to be a growth driver for us.

Michael A. Henderson: But we will continue to increase our capital investment at a disciplined pace with an eye on maintaining our execution excellence.

Michael A. Henderson: What's the exceptionally strong start across our U S asset base our.

Michael A. Henderson: Our annual guidance mid points for both production and capital expenditures remain unchanged.

Michael A. Henderson: Confidence in delivering on our full year guidance commitments is high.

Michael A. Henderson: Consistent with our initial outlook, we expect our 2024 capital program to be heavily weighted for the first half of the year, similar to the profile we've seen from ourselves. However, driven by real eye execution efficiencies, we're pulling forward some of our activity. This should result in a slight increase to both our expected capital spending and our oil production during the second quarter versus our original assumption. We now expect our capital spending to be just over 60% weighted for the first half of the year, which will drive a significant sequential increase in second quarter oil production, up to the midpoint of our annual guidance range of 190,000 barrels of oil, in addition to delivering on our guidance commitments.

Michael A. Henderson: Consistent with our initial outlook, we expect our 2024 capital program to be heavily weighted to the first half of the year.

Michael A. Henderson: Similar to the profile that you've seen from us before.

Michael A. Henderson: Driven by realized execution efficiencies, we're pulling forward some of our activity.

Michael A. Henderson: This should result in a slight increase to our expected capital spending.

Michael A. Henderson: And our oil production during second quarter versus our original assumptions.

Michael A. Henderson: We now expect our capital spending to be just over 60% weighted to the first half of the year, which will drive a significant sequential increase in second quarter oil production.

Michael A. Henderson: Up to the midpoint of our annual guidance range 190000 barrels of oil.

Michael A. Henderson: In addition to delivering on our guidance commitments.

Michael A. Henderson: We also remain focused on continuing to enhance our capital efficiency and the strength of our underlying assets through both the application of extended laterals and other organic enhancement initiatives, summarized in more detail on slide 13 of our deck. Extended laterals remain a compelling opportunity to continue enhancing our capitalist economy. At a high level, we're expecting significantly lower total well cost per foot, yet similar EUR per foot, and thus better returns and higher per well NPV in comparison to shorter landfills. And that's exactly what our initial cohort of 12 three-milers during the first quarter, representing 25% of our total well count, is delivering.

Michael A. Henderson: We also remained focused on continuing to enhance our capital efficiency on the strength of our underlying asset base.

Michael A. Henderson: Through both the application of extended laterals and other organic enhancement initiatives summarize more detail on slide 13 of our deck.

Michael A. Henderson: Extended laterals remains a compelling opportunity to continue enhancing our capital efficiency.

Michael A. Henderson: At a high level, we're expecting significantly more total well cost per foot yet.

Michael A. Henderson: Similar EUR per foot, and thus better returns and higher per well NPV and comparison to shorter laterals.

Michael A. Henderson: And that's exactly what our initial cohort of 12 <unk> during first quarter, representing 25% our total well said is delivering.

Michael A. Henderson: Execution on the cost front is a clear positive, as we're consistently realigning well-cost savings on a per-foot basis of more than 20% versus comparable two-mile platforms. Early production in the Bakken and Eagle Firth has been consistent with our expectations. Our first three-mile pad in the Permian Basin, as previously mentioned, has dramatically outperformed. It's shaping up to be one of the strongest pads in basin history.

Michael A. Henderson: Execution on the cost front is a clear positive as.

Michael A. Henderson: As we're consistently realizing well cost savings on a per foot basis more than 20% versus comparable two mile laterals.

Michael A. Henderson: While early train production in the Bakken and Eagle Ford has been consistent with our expectations. Our first three mile part in the Permian Basin as previously mentioned has dramatically outperformed.

Michael A. Henderson: Shaping up to be one of the strongest pods and basin history.

Michael A. Henderson: In addition to extending laterals, we also continue to further bolster the strength of our asset base through refracts and redevelopment. More specifically, we're disclosing approximately 600 high-quality refrack and redevelopment opportunities across the Barking and Eagle families. Approximately 30% of these opportunities are concentrated in our Ensign Acreage in Eagleford, representing upside to our acquisition base. These refrack and redevelopment opportunities are complementary and additive to our decade-plus primary drilling inventory at the total company level.

Michael A. Henderson: In addition to the extending laterals. We also continue to further bolster the strength of our asset base through re fracs and redevelopment.

Michael A. Henderson: More specifically, we're disclosing approximately 600 high quality <unk> and redevelopment opportunities.

Michael A. Henderson: Cross the Bakken and Eagle Ford.

Michael A. Henderson: Approximately 30% of these opportunities are concentrated in our ensign acreage in the Eagle Ford.

Michael A. Henderson: Presenting upside to our acquisition basis.

Michael A. Henderson: These re frac and redevelopment opportunities are complementary and additive to our decade, plus primary drilling inventory at the total company level.

Michael A. Henderson: They've been de-risked through multiple years of technical work, numerous trials over the last five plus years, and a recent track record of very strong bottom-line results. Importantly, we progressed this opportunity set with tremendous discipline and intentionality. ReDev and ReFrac testing has been a key part of what we've long described as our organic enhancement program, which typically comprises 5-10% of our total capital budget for a given year. This is capital dedicated to enhancing the returns and resource recovery of our existing asset base through targeted testing of the best concepts the asset teams bring forward each year.

Michael A. Henderson: They've been derisked through multiple years of tank work.

Michael A. Henderson: <unk> trials over the last five plus years and our recent track record of very strong bottom line results.

Michael A. Henderson: Importantly, we progressed this opportunity set tremendous discipline and intentionality.

Michael A. Henderson: <unk> and re Frac testing has been a key part of what we've long described our organic enhancement program.

Michael A. Henderson: It's typically comprises 5% to 10% of our total capital budget for a given year.

Michael A. Henderson: This is capital dedicated to enhancing the returns and resource recovery of our existing asset base.

Michael A. Henderson: Targeted testing of the best concepts the asset teams bring forward each year.

Michael A. Henderson: For re-debs and re-frags, we've specifically identified potentially stranded reserves from early vintage completions that we can economically access through integration into our primary plan of development. In total, we've brought online over 100 refracts and 50 redevelopment wells across Barking and Eagleford today. As a result, we've compiled a rich technical data set and amassed a deep operational understanding.

Michael A. Henderson: For redemption Refracts.

Michael A. Henderson: Specifically identify potentially stranded resource from.

Michael A. Henderson: From early Ben is completions that we can economically access through integration and to our primary plan with development.

Michael A. Henderson: In total we brought online over 100 100 re fracs on 53 development wells across the Bakken and Eagle Ford to date.

Michael A. Henderson: So we've compiled rich technical dataset on a master deep operational understanding.

Michael A. Henderson: All 600 of the future opportunities we are disclosing are strongly economic at prevailing commodity prices, and about half of the 600 we believe are directly competitive with the Tier 1 primary development and inventory industry are drilling today. More recently, we've been bringing on around 20 or so of these opportunities per year. This year, we're expecting to bring online just over 25.

Michael A. Henderson: All 600 of future opportunities, we are disclosing our strongly economic at prevailing commodity prices on about half of the 600, we believe are directly competitive with the tier one primary development inventory industry is drilling today.

Michael A. Henderson: More recently we've.

Michael A. Henderson: Bringing off around 20, or so these opportunities per year.

Michael A. Henderson: This year, we're expecting to bring online just over 25.

Michael A. Henderson: Again, this can account for around 10% of our activity in the Bakken and East. In terms of our development approach, for the most part, we aren't doing refracts or redevelopment as part of a separate, standalone program. Rather, these opportunities are mostly integrated into our primary plan of development, typically directly offsetting our primary activity with the goal of maximizing the capital efficiency and financial returns of our overall program.

Michael A. Henderson: Again, this can account for around 10% of our activity in the Bakken and Eagle Ford.

Michael A. Henderson: In terms of our development approach for the most part we arent doing re fracs or redevelopment as part of a separate Standalone program.

Michael A. Henderson: Rather these opportunities are mostly integrated into our primary plan of development.

Michael A. Henderson: Typically directly offsetting our primary activity with the goal of maximizing the capital efficiency financial returns of our.

Michael A. Henderson: We're all program.

Michael A. Henderson: Recent results have been very strong, proving out the economic attractiveness of these opportunities, supporting the disclosure we're now providing. On the back end, our opportunity set is more heavily weighted to refract, where we've had good success. Over the last couple of years, our Refract program has delivered six month oil productivity per foot that is competitive with the base and average for industry new drill, and we've delivered this competitive productivity with a total well cost per foot more than 20 percent below the industry average for a new drill well.

Michael A. Henderson: Recent results have been very strong proving out the economic attractiveness of these opportunities supporting the disclosure we're now providing.

Michael A. Henderson: In the Bakken our opportunity set is more heavily weighted to re fracs.

Michael A. Henderson: Where we've had good success over the last couple of years, a re Frac program has delivered six months oil productivity per foot that is competitive with the basin average for industry new drills.

Michael A. Henderson: And we've delivered this competitive productivity with a total well cost per foot more than 20% double the industry average for new drill well.

Michael A. Henderson: Again, most of our backing refracts have not been stand-alone, rather they offset new development wealth. This has had the added benefit of improving the productivity of direct offset middle backing wells by around 10%. In Eagleford, our opportunity set is a bit more balanced, split roughly 55% to refrax and 45% to redevelop. Over the last couple of years, our refract and redevelopment productivity has actually been better than the basin average for industry new drills.

Michael A. Henderson: Again, most of our Bakken re fracs of not being stand alone.

Michael A. Henderson: Other offset new development Wells. This has had the added benefit of improving the productivity of direct offset middle Bakken wells by around 10%.

Michael A. Henderson: In the Eagle Ford our opportunity set is it bit more bonds.

Michael A. Henderson: Split roughly 55% to refract and 45% to redevelopment.

Michael A. Henderson: Over the last couple of years, a retract and redevelopment productivity.

Michael A. Henderson: But even better in the basin average for industry, New drills in fact, that's been closer to top quartile.

Michael A. Henderson: In fact, it's been closer to the top quartile. And with our refracts, we have realized the same positive impact of offset wells that we've seen in the past. To summarise, at approximately 10% of our activity in the BAC at Eagleford, our refract and redevelopment programs aren't primary drivers for capital spend in those places. But they still represent a very valuable opportunity set that is positively contributing to our bottom line results and extending effective inventory life.

Michael A. Henderson: And with our re Fracs.

Michael A. Henderson: The same positive impact offset wells that we've seen in the Bakken.

Michael A. Henderson: To summarize at approximately 10% of our activity in the Bakken and Eagle Ford are re frac and redevelopment programs arent primary drivers our capital spend in those businesses.

Michael A. Henderson: They still represent a very valuable opportunity set that is positively contributing to our bottom line results and extending effective inventory life and there are great example of our ability.

Michael A. Henderson: And they're a great example of our ability to extract the most value possible out of our existing high-quality resource. I'll now turn the call back to Lee, who will wrap up with an EG update and some closing thoughts.

Lee: Greg extract the most value possible out of our existing high quality resource base.

Michael A. Henderson: I'll now turn the call back to Lee, who will wrap up with an update and some closing thoughts.

Lee: Thank you Mike.

Lee M. Tillman: Shifting to our EG operations on slide 15, with the expiration of our legacy Henry Hub-linked LNG contract at the end of last year, the first quarter marked the transition to fully realizing global LNG pricing for AlbaGas. Under the new contractual agreements effective this year, we began marketing our own share of Alba LNG directly into the global LNG market. During the first quarter, the LNG sales at a $7.21 per MCF realization drove a significant increase to the international revenue within our consolidated financial statements, in comparison to previous years when our EG income was dominated by equity affiliates.

Lee: Shifting to our <unk> operations on slide 15, with the exploration of our legacy Henry hub linked LNG contract at the end of last year first quarter, Mark the transition to fully realizing global LNG pricing for Alba gas.

Lee M. Tillman: A greater share of our EG profitability will accrue to the upstream through our Halba LNG sales and will therefore be consolidated in our financial statements. These reporting changes should all result in improved transparency into the underlying operations of our integrated gas business in EG. We see no change to our 2024 guidance as we continue to expect $550 to $600 million of total EG EBITDAX this year, assuming $10 TTS. That's a significant increase from our actual 2023 EBITDAX generation of $390 million. Importantly, we don't expect this to be a one-year financial report.

Lee M. Tillman: Under the new contractual agreements effective this year, we began marketing our own share of Alba LNG directly into the global LNG market during.

Lee M. Tillman: During the first quarter of the LNG sales at $87 21 per Mcf realization drove a significant increase to the international revenue within our consolidated financials.

Lee M. Tillman: In comparison to previous years, when our EG income was dominated by equity affiliates, a greater share of our EG profitability will accrue to the upstream through our <unk> LNG sales and will therefore be consolidated in our financial statements.

Lee M. Tillman: These reporting changes should all result in improved transparency into the underlying operations of our integrated gas business in EG.

Lee M. Tillman: We see no change to our 2024 guidance as we continue to expect $550 to $600 million of total EBITDAX this year, assuming $10 TTS.

Lee M. Tillman: That's a significant increase from our actual 2023 EBITDAX generation of $390 million.

Lee M. Tillman: For some time, we've been focused on sustaining this improved financial performance by progressing all elements of the EG Gas Mega Hub concept. The five-year EG EBITDAX Outlook we provided last quarter demonstrates the sustainability of our EG task load generation. You'll recall the strength of our multi-year outlook is driven by a number of additional factors beyond realizing global LNG prices, ongoing methanol volume optimization, which started during the first quarter, our ALBA infill program, which we've just sanctioned, and further off monetization of third-party gas through the Essane gas cap. A few more details on our just-sanctioned Alva Enfield program.

Lee M. Tillman: Importantly, we don't expect this to be a one year financials for some time, we've been focused on sustaining this improved financial performance by progressing all elements of the EG gas Mega hub concept.

Lee M. Tillman: Five year EG EBITDAX outlook, we provided last quarter demonstrates the sustainability of our <unk> cash flow generation.

Lee M. Tillman: Youll recall the strength of our multi year outlook is driven by a number of additional factors beyond realizing global LNG pricing.

Lee M. Tillman: Ongoing methanol volume optimization, which started during the first quarter.

Lee M. Tillman: Al the infill program, which we just sanctioned and further off monetization of third party gas through the same gas cap.

Lee M. Tillman: A few more details on our just sanctioned elder infill program. This.

Lee M. Tillman: This is a high-confidence, low-execution risk, shorter-cycle project with returns that are competitive with our high-quality U.S. onshore reinvestment opportunities. We successfully contracted a rig within the region and expect a first half of 2025 to spud, with first gas from both wells expected during the second half. These wells will largely mitigate ALBA-based decline, contributing to a flat production profile from full year 2024 to full year 2026. Our 2024 capital spending for this program is limited, but fully accounted for in the capital spending guidance we provide to the market in February. We expect the 2025 capital cost of the program to be about $100 million.

Lee M. Tillman: This is a high confidence low execution risk shorter cycle project with returns that are competitive with our high quality U S onshore reinvestment opportunity.

Lee M. Tillman: We successfully contracted the rig within the region and expect a first half of 2025 spud with first gas from both wells expected during the second half of the year.

Lee M. Tillman: These wells will largely mitigate Alba base decline contributing to a flat production profile from full year 2024 to full year 2026.

Lee M. Tillman: Our 2020 for capital spending for this program is limited, but fully accounted for in the capital spending guidance, we provided the market in February.

Lee M. Tillman: We expect 2025 capital for the program to be about $100 million.

Lee M. Tillman: We covered a lot of ground today, all great stuff, and all intended to further our MORE S&P mandate. Consistent with that mandate, for the last three plus years, we've been delivering financial performance highly competitive with the most attractive investment alternatives in the market, as measured by corporate returns, free cash flow generation, and return of capital. I fully expect 2024 to build on this track record, and we're off to a great start.

Lee M. Tillman: We covered a lot of ground today, all great stuff and all intended to further our more S&P mandate.

Lee M. Tillman: Insistent with that mandate for the last three plus years, we've been delivering financial performance highly competitive with the most attractive investment alternatives in the market as measured by corporate returns free cash flow generation and return of capital.

Lee M. Tillman: I fully expect 2024 to build on this track record and we're off to a great start.

Lee M. Tillman: Our compelling investment case is simple: a high-quality, multi-basin US portfolio and an Integrated Global Gas Business that delivers peer-leading free cash. A unique and differentiated return on capital framework that provides our shareholders with the first call on cash, the output of which is clear visibility to compelling shareholder distributions across a broad range of commodity prices and sector-leading growth and per share methods, and a multi-year track record of consistent execution and proven discipline.

Lee M. Tillman: Compelling investment case is simple.

Lee M. Tillman: A high quality multi basin U S portfolio.

Lee M. Tillman: An integrated global gas business that delivers peer leading free cash flow.

Lee M. Tillman: Our unique and differentiated return capital framework that provides our shareholders with the first call on cash flow.

Lee M. Tillman: The output of which is clear visibility to compelling shareholder distributions across a broad range of commodity prices and sector leading growth in per share metrics.

Lee M. Tillman: And a multiyear track record of consistent execution improvement discipline and perhaps most importantly, everything we're doing is sustainable with resilience through the commodity cycle.

Lee M. Tillman: And perhaps most importantly, everything we're doing is sustainable with resilience through the commodity cycle. This is due to the quality and depth of our U.S. multi-basin portfolio, where we have over a decade of high-return inventory and a disciplined and multi-faceted approach to portfolio renewal, including organic enhancement initiatives. It's also due to our differentiated integrated gas business that's now fully realizing global LNG pricing as we continue to progress all elements of the regional gas mega hub concept. Rest assured, our commendatory strategy is unwavering and is built upon our core values, resilience across the commodity cycle, and our long-term track record of success. And with that, we can open up the line for Q&A.

Lee M. Tillman: This is due to the quality and depth of our U S. Multi basin portfolio, where we have over a decade of high return inventory in a disciplined and multifaceted approach to portfolio renewal, including organic enhancement initiatives.

Lee M. Tillman: It's also due to our differentiated integrated gas business. That's now fully realizing global LNG pricing as we continue to progress all elements of the regional gas Mega hub concept.

Lee M. Tillman: Rest assured our commitment to our strategy is unwavering and is built upon our core values resilience across the commodity cycle and our long term track record of success with that we can open up the line for Q&A.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the key.

Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on you touched on phone.

Operator: If youre using a speakerphone please pick up your handset before pressing the keys.

Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. Please limit yourself to one question and one follow-up. The next question, the first question comes from Scott Hanold from RBC. Please go ahead.

Operator: Anytime Youre question has been addressed and you would like to withdraw your question. Please press Star then two.

Scott Michael Hanold: Please limit yourself to one question and one follow up.

Operator: The next question. The first question comes from Scott Hanold from RBC. Please go ahead.

Scott Michael Hanold: Yeah, hey, thanks. You know, Mike, you spent a lot of time kind of going through the refracts and talking about that a lot. Obviously, it seems like it's going to be, it has been an initiative, but it's got a little bit more prominence.

Scott Michael Hanold: Hey, thanks.

Scott Michael Hanold: Mike you spent a lot of time kind of going through the re fracs and talking about that a lot. Obviously it seems like it's going to be it has been an initiative, but it's got a little bit more prominence but could you just sort of them some of the sort of the economic and productive parameters down for us like what would a typical Bakken and then a typical eagle Ford will be.

Scott Michael Hanold: But could you sort of dumb some of the sort of economic and productive parameters down for us? Like, what would a typical Bakken and then a typical Eagleford whale be producing when you'd kind of played a refract? And you know, what would that bounce to, you know, after that? And could you just give us a sense of the cost associated with it?

Scott Michael Hanold: When you would contemplate a re frac.

Scott Michael Hanold: And what would the bones to after that and could you just give us a sense of the cost associated with it.

Michael A. Henderson: Yeah, let me start with the cost, Scott. So I mean, typically, when you look at these refracts, I mean, refracts, we've got a deeper history in the Bakken than the Eagleford necessarily. But when you look at the cost, we're kind of thinking about it, you know, roughly 80% of a new Grassroots Well, and that's kind of how we'd be thinking about it on a go-forward basis. In terms of well productivity, I think I covered that in some of the prepared comments that we just gave you.

Speaker Change: Yes, let me, let me start with the key.

Speaker Change: Costs go up so I mean typically play when when you look at these refractory <unk>.

Michael A. Henderson: <unk> got a deeper history in the Bakken and the Eagle Ford necessarily but.

Michael A. Henderson: When you look at the costs were kind of thinking about it.

Michael A. Henderson: Roughly 80% of off from you.

Michael A. Henderson: Grassroots wells on and Thats kind of how we'd be thinking about it.

Michael A. Henderson: On a go forward basis.

Michael A. Henderson: In terms of the well productivity I think I covered that in some of the prepared.

Michael A. Henderson: You know, the refracts that we're seeing in the back end are pretty comparable when we look at some of the new wells that the peers are bringing online. In Eagleford, it's actually a more constructive story where we're seeing the refract-redead wells actually outperforming some of the new wells that they are bringing online. In fact, if anything, you're looking at kind of top quartile performance there.

Michael A. Henderson: So we just gave you.

Michael A. Henderson: The re fracs that we're seeing in the Bakken pretty comparable from when you look at some of the new wells.

Michael A. Henderson: The peers are bringing online.

Michael A. Henderson: And Eagle Ford, it's actually it's actually been more constructive story.

Michael A. Henderson: We're seeing the re fried <unk> actually outperforming.

Michael A. Henderson: Some of the new wells that are bringing online if I guess, if anything they're kind of.

Michael A. Henderson: Youre looking at kind of top quartile performance there.

Scott Michael Hanold: Yeah, and I guess maybe the point I was trying to ask is, are these wells producing like 50 or 100, you know, 100 a day, and then they're gonna get back to a new well and kind of continue the typical profile that you would see with a new well, or, you know, that, I guess that was my specific kind of question.

Speaker Change: And I guess, maybe the point I wanted to ask is there these wells like producing 50 or 100.

Scott Michael Hanold: 100, a day and then theyre going to get back to a new well and kind of continue the typical profile that you would see with a new well.

Scott Michael Hanold: I guess that was my specific question.

Michael A. Henderson: Yeah, I mean, you, I mean, very similar to the UL, you get that initial production, and then you get back on to that, uh, that. A pretty regular decline rate that you would expect with a new well.

Scott Michael Hanold: Yes.

Scott Michael Hanold: Very similar to the <unk> you get an initial production and then you get back onto that.

Michael A. Henderson: Got.

Michael A. Henderson: Pretty regular decline rates.

Michael A. Henderson: You would expect with a new well.

Scott Michael Hanold: Okay. And then my follow-up question to Permian: obviously, you guys really stood out this quarter with those Lee County wells. And you talked about having like two decades roughly of inventory but looking to maybe increase that pace. Where should we think about Marathon kind of moving the Permian in terms of capital allocation as you think about 2025 and beyond? Because obviously, 20 years is nice, but optimally, it seems like your investment there should probably increase given your returns and your visibility of inventory.

Michael A. Henderson: Okay and then my follow up question is the Permian, Obviously, you guys really stood out this quarter with those.

Scott Michael Hanold: Lee County Wells.

Scott Michael Hanold: You talked about having two decades roughly of inventory, but looking to maybe increase that pace like where where should we think about like marathon kind of moving.

Scott Michael Hanold: The Permian in terms of capital allocation as you think about 2025 and beyond because obviously.

Scott Michael Hanold: 20 years is nice, but optimally it seemed like your investment there should should probably increase given given your returns and your visibility of inventory.

Lee M. Tillman: Yeah, maybe I'll start, Scott, and let's see if Mike wants to add any additional color. You know, I think we've been very methodical in our approach to the Permian. I think, as we stated in the prepared comments, it's probably one of the lightest, more lightly developed positions in the basin because we have pasted. I mean, we have fantastic black oil assets right at the bottom of the Eagleford that deliver superior, you know, top of tier one kind of returns.

Speaker Change: Yeah, maybe maybe I'll start Scott and then let's see if Mike wants to add any additional color I think we've been very methodical in our approach.

Lee M. Tillman: Or to the Permian I think as we stated in the prepared comments, it's probably one of the more lightly developed positions and the basin because we have patient I mean, we have fantastic black oil assets right in the Bakken in the Eagle Ford to deliver.

Speaker Change: Superior top of tier one kind of returns and so it's taken a bit of time for Permian to kind of penetrate into the capital allocation, but based on the results that we've really seen kind of post I would tell you. The pandemic pause. They are now competing what you've seen is a steady increase in the capital.

Lee M. Tillman: And so it's taken a bit of time for, you know, Permian to kind of penetrate into the mainstream. But based on the results that we've really seen kind of post, I'd say, the past pandemic pause, they are now competing. What you've seen is a steady increase in the capital that is flowing into the Permian Fund, and you should expect to see that continue. We don't view it as a it's going to be a step change increase in one given budget cycle, but you should expect to continue to see us drive more investment there.

Lee M. Tillman: That is flowing into the Permian and you should expect to see that continue we don't view it as a it's going to be a step change increase in one given.

Lee M. Tillman: Its cycle, but you should expect to continue to see us drive more investment there as Permian as you said is going to be a growth asset for us as we move into the future and there is a tremendous amount of potential and so with no doubt as that consumption of wells to sales goes up that 20 plus years.

Lee M. Tillman: As Permian, as you said, it is going to be a growth asset for us as we move into the future, and there's a tremendous amount of potential. And so, with no doubt, as that consumption of wells to cells goes up, that 20-plus years of inventory will obviously moderate. But the strength of that inventory is unquestioned, and probably at least half of that inventory life, we believe we can ascribe to extended lateral drilling as well. So we're very excited about it. I mean, the Permian team has definitely earned their spot in capital allocation now.

Lee M. Tillman: <unk> of inventory will obviously moderate but the strength of that inventory is on question and probably at least half of that inventory like we believe we can ascribe to extended lateral drilling as well. So it's we're very excited about it I mean, the Permian team has definitely earned there.

Lee M. Tillman: Spot and capital allocation now.

Michael A. Henderson: I think maybe the only other thing I'd chime in on is that we've been very thoughtful in terms of both. How do we re-engage with that asset? And I think, you know, I described it in your comments.

Lee M. Tillman: I think maybe the only other thing I'd say minutes, we've been very thoughtful in terms of boat.

Michael A. Henderson: So we reengage with that asset and I think.

Michael A. Henderson: Described in prepared comments, we have been doing things that are very disciplined pace.

Michael A. Henderson: We've been doing things at a very disciplined pace. I mean, we did that for a number of reasons. It certainly allows us to mitigate any potential execution risk and move too quickly. It also provides us with the ability to integrate any learnings into what we're doing. You know, maybe the final thing I'll say is when I think about our Go Forward program and the pyramid, I'd probably characterize it as. You know, we've been, we have been focused on the World Camp, but as I think about the Go Forward program, I say, we're going to be targeting, it's going to be proven benches, at a very proven wealth spacing, maybe even slightly conservative wealth spacing. So I think it just echoes Lee's comments about how we feel very, very good about the GoFundMe program there. And the last thing I would maybe add, you know, Scott, is this is

Michael A. Henderson: We've done that for a number of reasons that certainly allows us to mitigate any potential execution risks can move into quickly.

Michael A. Henderson: It also provides us the ability to integrate any learnings and to what we're doing.

Michael A. Henderson: Maybe the final thing I'll say is when I think about our go forward program in the Permian I'd probably characterize.

Michael A. Henderson: We've been we have been focused in the wolfcamp, but as I think about the go forward program I'd say, we're going to be targeting it's going to be proven benches.

Michael A. Henderson: Very proven well spacing, maybe even slightly conservative well spacing. So I think tobaccos Lee's comments about we feel we feel very very good about it.

Lee M. Tillman: And the last thing I would maybe add, you know, Scott, is this is also a great demonstration of the strength of the multibasin portfolio and how we kind of feather these other assets. I mean, today, as you see the dislocation between value between oil and natural gas, obviously, the true black oil areas are very strong, the Eagleford and the Bakken. And then even if you look at some of the realizations coming out of the Permian, which, you know, are challenged today on the gas side, very little of our revenue and production is being sourced or being exposed to that today. And again, it just really demonstrates the strength of having a multibasin approach, where you can move capital allocation around.

Michael A. Henderson: Run there and the last thing I would maybe add Scott is this is also a great demonstration of the strength of the multi basin portfolio and how we kind of feather. These other assets I mean today as you see the dislocation between value between oil and natural gas obviously, the true black oil for areas are very.

Lee M. Tillman: Strong Eagle Ford and the Bakken and then you even even if you look at some of the realizations coming out of the Permian, which are challenged today on the gas side very little of our revenue and production is being sourced or being exposed to that today and again it just really demonstrates the strength.

Lee M. Tillman: Having a multi basin approach, where you can move capital allocation around.

Scott: Thanks for the color.

Operator: The next question comes from Arun Jayaram from J.P. Morgan. Please go ahead.

Lee M. Tillman: Okay.

Lee M. Tillman: The next question comes from Arun <unk> from Jpmorgan. Please go ahead.

Arun Jayaram: Good morning, team. Mike, I wanted to get a little bit more details on the Refract program. As you know, the buy side has historically been a little reticent to give value for Refracts versus primary sticks on the map. So, you mentioned that you're doing kind of 25 Refracts this year. I'd love to get a sense of, you know, what kind of MPVs per well you see in this program versus a primary development.

Operator: Yes.

Arun Jayaram: Good morning team.

Operator: Up.

Arun Jayaram: Mike I wanted to get a little bit more details on the refresh program as you know the buy side has historically been a little reticent to give value for re fracs versus call. It primary sticks on the map.

Arun Jayaram: So you mentioned that Youre doing kind of 'twenty five re fracs this year.

Arun Jayaram: I'd love to get a sense of.

Arun Jayaram: What kind of NPV per well do you see.

Arun Jayaram: And this program versus our primary development and how do you think about the value creation.

Arun Jayaram: Creation potential.

Arun Jayaram: You highlighted 600 opportunities across the Bakken in the Eagle Ford.

Michael A. Henderson: Yeah, I mean, as I mentioned to Scott in the last call, in terms of value, we're looking at these back-end refracts being very comparable to industry new drills, so I think you could hang a number off that, Arun. And then similarly, in the Eagleford, again, we mentioned that the refracts there were probably out-competing some of the new drills that industry was bringing on, and So I think you could get at a number there, and you can do the math, 600 times that number, it gets your potential volume up.

Mike: Yes, I mean, as I mentioned to Scott on the last call.

Michael A. Henderson: In terms of volume we're looking at these Bakken re fracs being very comparable to industry, new drill so I think you're hiring a number of <unk> and then similarly in the Eagle Ford again, we mentioned that.

Michael A. Henderson: Re fracs there were probably.

Michael A. Henderson: Competing some of the new drills at industry was bringing on its if anything they're kind of top quartile. So again I think.

Michael A. Henderson: You could get at a number there.

Michael A. Henderson: You can do the math 600 times that number it gets you to get your potential value uplift.

Lee M. Tillman: Yeah, and maybe just to stress, you know, we're not looking at refrac and redevelopment and necessarily displacing primary development opportunities within our portfolio, but when we benchmark them against what others are drilling today, economically, they're very, very competitive. But it's going to be, you know, Massa Mainish, you know, kind of 10% of the Eagleford Bakken program. It's not, you know, it's not a major driver necessarily in terms of capital, but it is of very high value.

Speaker Change: Yeah, and maybe just.

Michael A. Henderson: To stress right. We're not we're not looking at re Frac and redevelopments at necessarily displacing primary development opportunities within our portfolio.

Lee M. Tillman: But when we benchmark them against what others are drilling today economic wise theyre very very competitive.

Lee M. Tillman: But it is going to be.

Lee M. Tillman: <unk> kind of 10% of the Eagle Ford Bakken program, it's not a major driver necessarily in terms of capital, but it is very high value and Thats. What I think is very exciting and the other thing that I'll. Just emphasize is if you rewind back to when we talked about the Ensign acquisition we were.

Lee M. Tillman: And that's what I think is very exciting. The other thing that I'll just emphasize is, you know, if you rewind back to when we talked about the Ensign acquisition, we were very clear that we ascribed no value in that transaction to refrac and redevelopment. And, and here, and so the importance, I think, of this disclosure is multifold, you know, not only at the enterprise level, but even zooming in on that acquisition, 30% of these opportunities lie in the Ensign acquisition, which is that upside that we referenced when we described that act.

Lee M. Tillman: Clear.

Lee M. Tillman: That we ascribe no value in that transaction to re frac in redevelopment and in here and so the importance I think of this disclosure is multi fold not only in an enterprise level, but even zooming in on that acquisition, 30% of these opportunities lie in the ensign acreage.

Lee M. Tillman: Which is that upside that we referenced when we described that acquisition.

Speaker Change: Craig I'll make it.

Speaker Change: Final point Arun.

Michael A. Henderson: When I think about us doing 10% refracts and redevs every year, I think that talks to the quality of our primary inventory. You know, the fact that we are undertaking the refract redevelopment as part of the overall primary development, it's not a standalone program. Again, I think it just talks to the quality that we've got in the existing primary portfolio.

Lee M. Tillman: When I think of boats were doing 10% re fracs <unk> every year.

Michael A. Henderson: Talks to the quality of our primary inventory.

Michael A. Henderson: The fact that we are undertaking.

Michael A. Henderson: Three Frac suite development as part of the overall primary.

Michael A. Henderson: <unk>, it's not a standalone program again, just talks to the quality that we got in the existing primary.

Michael A. Henderson: Portfolio.

Arun Jayaram: Great. And just my follow-up, I know that some of the accounting in EG will change this year due to the change in the marketing agreements. We'll have to spend some time with Guy to go through this in terms of our model, but one of the questions that's come in is, does it impact how you're recognizing, you know, cash flow from operations versus CFI? Just wanted to see if there are any changes to how this will impact the reporting of cash flow on a go-forward basis.

Michael A. Henderson: Great.

Michael A. Henderson: My follow up I know that some of the accounting and EG will change.

Arun Jayaram: This year, giving the change in the marketing.

Arun Jayaram: <unk>.

Arun Jayaram: We will have to spend some time with guidance to go through this in terms of our model, but one of the questions. That's come in is does it impact how you are recognizing cash flow from ops versus CFR just wanted to see if there's any changes to how you are.

Arun Jayaram: How this will impact the reporting of cash flow.

Arun Jayaram: On a go forward basis.

Lee M. Tillman: I'll maybe hand over here in just a minute to Rob and or Dane, but you know, first of all, I want to be clear: don't let the accounting situation kind of take away from the results in EG. If you look at the bottom line results that we generated this quarter, they were very much in line with the expectations of capturing that global LNG pricing. So, we can get into the vagaries of consolidated versus equity accounting, but from a bottom-line delivery standpoint, the asset is delivering exactly what we described. Okay, so now I'll turn over to the green eye shades here and let them talk a little bit about the accounting piece. Hey, everyone. This is Rob.

Speaker Change: I'll, maybe hand over here in just a minute to Rob entertained, but first of all I want to be clear is don't let the accounting.

Rob: Situation kind of takeaway from the results in <unk>. If you look at the bottom line results that we generated this quarter. They were very much in line with the expectations of capturing that global LNG pricing. So we can get into the vagaries of consolidated versus equity accounting, but from a bar.

Rob: Online delivery standpoint, the asset is delivering exactly what we described okay. So now I'll turn it over to the to the Green eye shade here and let them to add a little bit about <unk>.

Dane E. Whitehead: Hey Arun, this is Rob. Just a quick point there. I think actually a difference you would see would be a positive difference on the cash flow perspective with more of our business flowing through the consolidated side. It kind of eliminates the timing issue of the dividends. So as we've migrated that from the EG, LNG, and EMI earnings over to the consolidated side, these LNG liftings, the cash would come in without a dividend process. We'll be subject to lifting schedules, so the timing of some of those liftings might put us in an under-overlift position at the end.

Lee M. Tillman: Pete.

Rob: This is rob.

Rob: Just a quick point, there I think actually.

Dane E. Whitehead: A difference you would see would be a positive difference on the cash flow perspective with more of our business flowing through the consolidated fund it kind of eliminates the timing issue the dividend.

Dane E. Whitehead: So as we've migrated that from the EG LNG EMI earnings.

Dane E. Whitehead: Over to the consolidated five of these LNG lifting.

Dane E. Whitehead: The cash would come in without a dividend process will be subject to lifting schedules. So the timing of some of those listings.

Dane E. Whitehead: They're overly position.

Dane E. Whitehead: At the end of any quarter.

Dane E. Whitehead: Would.

Dane E. Whitehead: Essentially be a positive one on dividend timing.

Arun Jayaram: Great. Dane, I wanted to thank you for all of your counsel and help over the years, and I'm glad you had a successful act after EPE. But great work, and we'll miss you.

Speaker Change: Great David I wanted to thank you for all of your counsel.

Arun Jayaram: Council would help over the years and I'm glad you had a successful act after EP, but great work.

Dane E. Whitehead: Thanks Arun, I really appreciate it. Yeah, thinking back to the early days of EP Energy, boy, there's been a lot of water under the bridge, but it's been a great run here at Marathon, and I'm really proud of where this company is right now. Thank you for all your support.

Arun Jayaram: We will Miss you.

Speaker Change: Thanks, Rune I really appreciate it yeah I come back to the early days of EP energy.

Dane E. Whitehead: There's been a lot of water under the bridge, but it's been a great run here at marathon I'm really proud of where this company is running now but.

Speaker Change: Thank you.

Dane E. Whitehead: Thanks.

Operator: The next question comes from Betty Zhang of Barclays. Please go ahead.

Dane E. Whitehead: The next question comes from Betty Jang of Barclays. Please go ahead.

Betty Zhang: Good morning. I want to ask about the continued value maximization efforts that we're seeing here at EG Integrated Gas Assets. Lee, perhaps you could help us think about the value uplift from redirecting the volumes into the methanol plant instead of LNG sales and, basically, is there opportunity to do more of that before that gas contract expires in 2026?

Betty Zhang: Good morning.

Betty Zhang: I wanted to ask about.

Betty Zhang: The continued value maximization efforts that we're seeing here at EG integrated gas assets.

Betty Zhang: Perhaps if you could help us think about the value uplift from re directing the volumes into the methanol plant.

Betty Zhang: LNG sales.

Betty Zhang: Basically is there opportunity to do more of that before that gas contract expires.

Lee: <unk> thousand and 26 I believe.

Lee M. Tillman: Yeah, no, thanks. Thanks for the question, Betty. Yeah, I think the overall approach to EG has been very comprehensive. You know, we've always talked about EG in terms of a value proposition that consists of the ALBA gas condensate field but also this world-class infrastructure and how we can maximize taking advantage of that. And so, we're always looking to drive more opportunities here. And, you know, you just highlighted one of the very key ones, as we look to optimize gas flows within this integrated gas asset.

Lee: Yes, no. Thanks, Thanks for the question, Matt, Yes, I think the.

Lee M. Tillman: The overall approach and in EG has been very comprehensive we've always talked about <unk> in terms of the volume proposition that consist of.

Lee M. Tillman: The Alba gas condensate field, but also of this world class infrastructure and how how we can maximize taking advantage of that.

Lee M. Tillman: And so we're always looking to drive more opportunity here and you just highlighted one of the very key ones as we look to optimize gas flows within this integrated gas assets and and for where methanol stands today, and where obviously uplift to global LNG stands today.

Lee M. Tillman: And for where Methanol stands today, and where, obviously, Uplift to Global LNG stands today, it makes a lot of sense to divert a large component of the gas feed into AMCO, or the Methanol Facility, into LNG. It's best for our partners. It's also best for the state, as well, in terms of maximizing, you know, revenues. The GSA, the gas sales agreement that we have with the Methanol Plant, runs its course in 2026.

Lee M. Tillman: It makes a lot of sense to divert a large component of the gas feed into ampco or the methanol facility and to LNG. It's best for our partners is also best for the state as well in terms of maximizing revenues.

Lee M. Tillman: And obviously, at that point in time, we'll have another strategic decision to make going forward around what the future of that facility is. But again, we would not be subject to that gas sales agreement in 2026. So, maximizing flow to EGLNG becomes a real option for us at that stage. Today, you should really think about it as, you know, we're taking advantage of that arbitrage to the extent that we can, while also keeping AMCO running in good stead and continuing to meet our marketing obligations on the Methanol side.

Lee M. Tillman: <unk> the gas sales agreement that we have with the methanol plant runs its course in 2026 and obviously at that point in time, we'll have another strategic decision to make going forward.

Lee M. Tillman: Around what what is the future of that facility, but again, we would not be subject to the gas sales agreement in 2026, so maximizing flow to EG LNG becomes a real option for us at that stage today, you should really think about it as a.

Lee M. Tillman: We're taking advantage of that arbitrage to the extent that we can while also keeping ampco running in good stead and continuing to meet our marketing obligations on the methanol side.

Speaker Change: Got it that's clear thanks.

Lee M. Tillman: And then.

Lee M. Tillman: Another question on the Permian, it's great to see that the <unk> results showcased the strength of the wells that were brought online during the quarter.

Betty Zhang: But I'm also wondering how sustainable is this level of productivity that we're seeing in the Permian? Basically, as you start ramping up activities in the basin, as the development approach potentially evolves, can we expect to see this level of productivity going forward? Or would there be some level of dilution as you get into full development?

Lee M. Tillman: But I'm also wondering how sustainable is this level of productivity that we're seeing in the Permian.

Betty Zhang: Basically.

Betty Zhang: As you start ramping up activity in the basin asset development approach potentially evolve can we expect to see this level of productivity, calling for or would there be some level of dilution is that you're going to full development.

Michael A. Henderson: Hey, Benny, it's Mike here. I'll, I'll take that question. Yeah, I mean, we probably touched on that one a little bit in one of the earlier responses, but you know, and when I look at farming, we talked about over 20 years of inventory at the current drilling pace. And when I look at what we're going to be targeting in the future, again, I'd describe it as if we're going to be targeting proven benches at proven if not conservative well spacing. So when I think about the capital efficiency coming out of that basin, um, you know, I think it's, it's going to be pretty consistent.

Betty Zhang: Hey, Ben it's Mike <unk> I'll take that question, yes, I mean, we.

Michael A. Henderson: Probably touched on that one a little bit one of the earlier responses, but when I look at the Permian, we talked about over 20 years of inventory.

Michael A. Henderson: Current drilling pace.

Michael A. Henderson: When when I look at what we're going to be targeting in the future again I would describe it as.

Michael A. Henderson: We're going to be targeting proven benches are proven ethanol conservative well spacing. So when I think about the capital efficiency coming out of that basin.

Michael A. Henderson: I think it's going to be pretty consistent.

Speaker Change: Certainly certainly in the near term. So you should expect more of the same.

Mike: As we as we potentially look to even ramp up some activity there in the coming years.

Lee M. Tillman: Yeah, I would just reference the fact again that, you know, when you look at our acreage.

Speaker Change: Yes, I would just reference the fact again that when you look at our acreage position just because of the way we've developed it. It is one of the more lightly developed positions in the peer group, which I think just underpins what Mike says, we've got a lot of running room, there with very high quality inventory, a big chunk of which will.

Lee M. Tillman: We will still be subject to extended lateral drilling as well.

Benny: Great to see thank you.

Operator: The next question comes from Neal Dingmann from Truist Securities. Please go ahead.

Lee M. Tillman: Okay.

Lee M. Tillman: The next question comes from Neal Dingmann from <unk> Securities. Please go ahead.

Neal David Dingmann: Morning, guys. Thanks for your time. Lee, my first question is on capital allocation specifically. I was hoping maybe you could just maybe give a broad comment on how you view the current value of your stock versus what you're seeing out there for potential assets in the market. And I'm just wondering, I mean, I love how you continue to sort of dig in and keep approaching those shares. And I'm just wondering if that's still because of your view on the valuation versus, you know, where some of these external assets are at.

Neal David Dingmann: Good morning, guys. Thanks for my first question really is on capital allocation, specifically I was hoping maybe you could just maybe give a broad comment on how you view the current value of your stock versus what Youre seeing out there for potential assets in the market and I'm just wondering I love, how you continue to sort of dig in to keep repurchasing those shares and I'm just wondering if that's.

Neal David Dingmann: Still.

Neal David Dingmann: Because of your view on the valuation versus where some.

Neal David Dingmann: Some of this external et cetera.

Lee M. Tillman: Well, certainly, as you look at the efficiency of a share repurchase program, you know, when you quickly go to the free cash flow yield that you're generating and are strongly in double-digit yields there, it still makes a lot of sense to see any discretionary cash flow above and beyond our base dividend flowing to that vehicle. I mean, I think, as we said in the opening remarks, that still is our preferred vehicle, the combination of a competitive and sustainable base dividend, as well as, you know, rateable share repurchases. We still believe in that. Now, I would say there are really two independent questions there.

Lee: Well certainly as you look at the efficiency of a share repurchase program quickly.

Lee M. Tillman: Go to the free cash flow yield that youre generating and being strongly and double digit yields there and still makes a lot of sense to see any discretionary cash flow above and beyond our base dividend flowing to that vehicle I mean, I think as we said in my opening remarks that that still is our preferred vehicle the.

Lee M. Tillman: <unk> of our.

Lee M. Tillman: Competitive and sustainable base dividend.

Lee M. Tillman: As well as ratable share repurchases, we still believe in that now I would say theres really two independent questions. There I think that your shares can be a good value in the market, but we obviously continue to watch.

Lee M. Tillman: I think that, you know, your shares can be good value in the market, but we obviously continue to watch all of our basins for opportunities and organic opportunities to enhance our business. Strict criteria for that, and we've been very clear about that, you know, from the beginning, and that was really exemplified in the Ensign transaction. If anything, that criteria is even higher when you consider the addition of Ensign, some of the Permian performance that we just described, and the length and duration of inventory there, and even the refract and redevelopment opportunity set that we've disclosed here.

Lee M. Tillman: All of our basins or for opportunities.

Lee M. Tillman: Inorganic opportunities to enhance our business, but we had a very.

Lee M. Tillman: Strict criteria for that and we've been very clear about that from the beginning and that was really exemplified.

Lee M. Tillman: And the Ensign transaction, if anything that criteria is even higher when you consider the addition of ensign some of the Permian performance that we just described and the length and duration of inventory there and even the re frac and redevelopment opportunity set that we've disclosed here so that bar for that type of <unk>.

Lee M. Tillman: So the bar for that type of opportunity remains high, as it should be in such a high-quality portfolio, but I kind of view those a little bit as two independent decisions. I still think from a return of cash to shareholders standpoint, a 40% CFO commitment reigns supreme, and the best vehicles for accomplishing that are the base dividend and share repurchases. So we're going to continue to obviously watch and evaluate any and all high-quality opportunities that come into the market, but we're going to scrutinize those through the lens of a very exacting M&A criteria.

Lee M. Tillman: Opportunity remains high as it should be in such a high quality portfolio, but I kind of view those a little bit as two independent decisions I still think from a return of cash to shareholders standpoint, a 40% CFO commitment that reigns Supreme and the best vehicles for accomplishing that.

Lee M. Tillman: Our base dividend and share repurchases, but we're going to continue to obviously watch and evaluate any and all high quality opportunities that come in to the market, but we're going to scrutinize those through the lens of a bit here.

Lee M. Tillman: Very exacting M&A criteria.

Lee M. Tillman: No, very clear. And then just a quick second one on EG, I think I know the answer, but I want to ask, is there any room there to expand your current footprint? I'm just wondering, given how positive the contractual terms and other things you have there, are there any opportunities for expansion in EG?

Speaker Change: Very clear and then just a quick second one on ESG I think that know the answer but I wanted to ask.

Lee M. Tillman: Is there any room there to expand your current footprint I'm just wondering given how.

Lee M. Tillman: Positive the contractual terms and other things you have there is there any opportunity for expansion over in Egypt.

Lee M. Tillman: Yeah, I think, you know, when you say expansion, we continue to look at gas aggregation in the area, both indigenous gas and EG, but also cross-border opportunities as well, particularly in Cameroon. So, yeah, I think there is an opportunity there to expand our footprint. Now, that may not necessarily look like upstream investment. It could look like maximizing throughput through EDLNG for an extended duration, but we see a lot of opportunity there.

Speaker Change: Yes, I think when you say expansion, we continue to look at.

Lee M. Tillman: Would say gas aggregation in the area of both indigenous gas in EG, but also cross border opportunities as well, particularly.

Lee M. Tillman: And Cameron.

Lee M. Tillman: So yes, I think there is.

Lee M. Tillman: Opportunity there to expand our footprint now that may not necessarily looked like upstream investment. It could look at look like maximizing throughput through EG LNG for it for an extended duration, but we see a lot of opportunity there, but right now I think as you look at kind of the multiple phases.

Lee M. Tillman: And how we're executing those within the gas Mega hub.

Lee M. Tillman: It really started with the land third party molecules that got that got infrastructure built using someone else's money and we now have access to that infrastructure and we're realizing both tolling plus profit share on those molecules. The next step was really coming into.

Lee M. Tillman: But right now, I think, as you look at kind of the multiple phases and how we're executing those within the gas mega-hub, you know, it really started with the ELN, third-party molecules that got infrastructure built using someone else's money. And we now have access to that infrastructure, and we're realizing both tolling plus profit share on those molecules. The next step was really coming into the global LNG market with our ALBA equity molecules. We can now kind of tick that one off the list.

Lee M. Tillman: The global LNG market with our Alba equity molecules, we can now and ill take that one off the list complementary to that was to get more alba molecules, which the infill program will help us drive more high value molecules equity molecules. There and then finally, we're right now in the <unk>.

Lee M. Tillman: Complementary to that was to get more ALBA molecules, which the infill program will help us drive more high-value molecules, equity molecules there. And then, finally, we're right now in the throes of negotiating the Assam gas processing, which is the Assam gas cap that we know is there. And by extending that runway, you just open up the aperture for even more opportunities, which may look like something like – it could be indigenous EG gas, but it could also very well be cross-border gas, because this facility is going to be the natural aggregation point for regional gas in this area.

Lee M. Tillman: Throes of negotiating the same gas processing, which that's the same gas cap.

Lee M. Tillman: No is there.

Lee M. Tillman: We are well positioned with the infrastructure that was built for a land to bring those molecules to EG LNG and all of these are continuing to extend the runway of this world class infrastructure and by extending that runway you just opened up the aperture for even more opportunity.

Lee M. Tillman: Which may look like something like.

Lee M. Tillman: Could be indigenous EG gas, but it can also very well be cross border gas because this facility is going to be the natural aggregation point for regional gas in this area.

Neal David Dingmann: Very thorough answers. Thank you, Lee, so much.

Speaker Change: Very thorough answer thank you so much.

Operator: The next question comes from Nitin Kumar from Mizuho Securities. Please go ahead.

Speaker Change: The next question comes from <unk> Kumar from Mizuho Securities. Please go ahead.

Nitin Kumar: Hi, good morning, and thanks for taking my question. Lots of good updates this quarter. I just want to focus on the long laterals. Obviously, this quarter you did I think about eight long laterals in the Eagleford and the Botwin and a few less in the Permian. Given that your Bakken and Eagle Ford assets are more developed than your Permian assets, what's the mix of your future inventory when it comes to these three bilaterals?

Nitin Kumar: Hi, good morning, and thanks for taking my question.

Nitin Kumar: Lots of good updates.

Nitin Kumar: This quarter I guess.

Nitin Kumar: Focus on the long laterals.

Nitin Kumar: This quarter, you did I think about it.

Nitin Kumar: Long laterals in the Eagle Ford and the Boston.

Nitin Kumar: And a few less in Permian.

Nitin Kumar: Given that your Bakken and Eagle Ford are more developed than your Permian assets, what's the mix of your future inventory when it comes to the three mile laterals.

Lee M. Tillman: Yeah, maybe I'll take it at a high level, and I'll let Mike jump in and maybe talk a little bit about it at an asset level. You know, year over year, the portfolio is actually, the lateral length has increased by about 5 or 10 percent. And so we are moving the entire portfolio toward longer laterals. Some areas, some leases, and some basins are more adaptable to this extended lateral two, three model kind of approach.

Speaker Change: Yes, maybe I'll take it at a high level and I'll, let Mike jump in and maybe talk a little bit about at an asset level.

Lee M. Tillman: Year over year the portfolio is actually the lateral length has increased by about 5% to 10%.

Lee M. Tillman: And so we are moving the entire portfolio toward longer laterals. Some areas some leases and some basins are more adaptable to extended lateral two three model kind of approach. So it's going to it's going to be very dependent.

Lee M. Tillman: So it's going to be very dependent upon the lease form, you know, our position in that particular basin. But we're definitely pressing hard to drive as much of our capital allocation toward extended laterals because we see just the efficiency of doing that. The reduction in costs on a per foot basis and then essentially very similar EUR per foot in the extended laterals. I mean, what we're seeing in the third mile is, you know, consistent with a lot of capture out of that third mile.

Lee M. Tillman: Upon the lease form the our position in that particular basin, but we're definitely pressing hard to drive as much of our our capital allocation toward extent allowed because we see just the efficiency of doing that the reduction in costs on a on a per foot basis, and then essentially.

Lee M. Tillman: <unk> very similar EUR per foot and the extended laterals I mean, what we're seeing in the in the third mile is consistent with a lot of capture out of that that third mile. So theres a lot of incentive for us to continue to drive and other operators feel the same way and so in areas where perhaps.

Lee M. Tillman: So there's a lot of incentive for us to continue to drive, and other operators feel the same way. And so in areas where perhaps there are some trades or some swaps that you can make, it kind of benefits everyone to continue to consolidate and drive as much of their operated acreage toward extended laterals as they can. I think you've covered it.

Lee M. Tillman: There are some trades or some swaps that you can make it.

Lee M. Tillman: Benefits, everyone to continue to consolidate and drive as much of their operated acreage toward extended laterals as they can I think you've covered it I think maybe the only thing I'd add in.

Lee M. Tillman: I think you've covered it, Lee. I think maybe the only thing I'd add in... Our land team's doing a great job. They've done a great job and will continue to do a great job. I think, as we mentioned, we see the capital efficiency enhancements. There's alignment there with offsetting operators. So, you know, the trend that we've been on in terms of increasing our average lateral lengths obviously gets a little bit more difficult every year, but the land team's done a phenomenal job, and all of the asset teams are very, very active in terms of engaging with those offset operators just to see if there are deals that we could do to just extend the average lateral length.

Lee M. Tillman: Our land team has done a great job.

Lee M. Tillman: Done a great job continue to do.

Lee M. Tillman: Great job.

Lee M. Tillman: Mentioned, we see the capital efficiency enhancements, there's alignment there with with offsetting operators. So.

Lee M. Tillman: The trend that we've been on in terms of increasing our average lateral lengths, obviously gets a little bit more difficult every year, but <unk> done a phenomenal job all of the asset is a very very active in terms of engaging with those offset operators just to see if there are deals that we can do to just extend the average lateral length.

Nitin Kumar: Great, thanks for the answer there. I just wanted to touch on the hedging, you notice that you had added some gas hedges to your portfolio in 2025, they're pretty wide collars. But just the thought process behind hedging some of the gas exposure, it's not like you have much of it anyway, but just any thoughts there?

Lee M. Tillman: So the answer there.

Speaker Change: I just wanted to touch on the hedging.

Nitin Kumar: Noticed that you had added some gas hedges.

Nitin Kumar: <unk> portfolio in 2025, they're pretty light colors, but just to the top.

Nitin Kumar: Behind hedging some of the gas exposure, it's not like you have much of it anyway, but just any thoughts there.

Patrick J. Wagner: Good morning, this is Pat. I'll take that one. I think we've covered our hedging strategy in the past. And, you know, we, as you said, gas is not a big component of our revenue, but we did see a unique opportunity in the market for next year. You may be seeing weakness in the prop this year.

Nitin Kumar: Good morning. This is Pat I'll take that one I think we've covered our hedging strategy in the past.

Patrick J. Wagner: As you said gas is not not a big component of our revenue, but we did see a unique opportunity in the market for next year, you would see a weakness in the.

Patrick J. Wagner: And so we saw some really nice hedges available on a two-way collar left at 250 feet. So we went ahead and took that. I mean, hedging is just a part of how we manage our commodity risk. We have a strong balance sheet. Very low break-evens. We're in a good position, so we don't need to go into the market to protect our capital program, but when we see an opportunity like that, we'll do that. We meet regularly to look at those opportunities, and we're always ready to capitalize on them when we see them.

Patrick J. Wagner: This year and so we saw some really nice.

Patrick J. Wagner: Hedges available on a two way collars last.

Nitin Kumar: Thanks for the answers,

Patrick J. Wagner: The 250 floor. So we went ahead and took that I mean hedging is just a part of how we manage our commodity risk we have a strong balance sheet.

Nitin Kumar: Low breakeven.

Nitin Kumar: We're in a good position so we don't need to go into the market to protect our capital program, but when we see an opportunity like that we will do that we meet regularly to look at those opportunities and we're always ready to capitalize on.

Nitin Kumar: Susan.

Speaker Change: Great. Thanks for the answers.

Operator: The next question comes from Matt Portillo from TPH. Please go ahead.

Nitin Kumar: The next question comes from Matt Portillo from Tpa. Please go ahead.

Matthew Merrel Portillo: Good morning, all. Just maybe a follow-up to Mitten's question on the three-mile laterals. I was actually curious about AJAX specifically, seeing some strong results there with the lighter spacing and the three-mile lateral development. Wondering if you might be able to just speak to the return profile you're seeing at AJAX versus maybe the development program that's a bit more focused on Hector over the last year or so.

Matthew Merrel Portillo: Good morning, all just maybe a follow up question on the three mile laterals I was actually curious on Ajax specifically.

Matthew Merrel Portillo: And strong results there with the wider spacing in the three mile lateral development.

Matthew Merrel Portillo: Wondering if you might be able to just speak to the return profile, you're seeing at Ajax versus maybe the development program is a bit more focused on factor over the last year or so.

Michael A. Henderson: It's Matt, and it's Mike here. It's certainly getting it more competitive. As you know, we've had a pretty successful program there with 11 wells brought online between the fourth quarter last year and the first quarter of this year. We covered that in the prepared comments. Over 20% reduction in TWC per foot savings, and you couple that with the solid initial production, very consistent with our expectations. Now, what I would say is we probably do need to monitor the longer-term production just to make sure that the shallower declines that we're expecting actually come to fruition. But, you know, with the enhanced capital efficiency that we expect is going to come from it, I'd certainly hope that the Ajax portfolio is going to get more competitive.

Matthew Merrel Portillo: Yes.

Michael A. Henderson: Modest Mike here, it's certainly getting more competitive as you know we've got a pretty.

Michael A. Henderson: Pretty successful program there with <unk>.

Michael A. Henderson: 11 wells brought online between the fourth quarter of last year first quarter of this year.

Michael A. Henderson: We covered it in the prepared comments over 20%.

Michael A. Henderson: <unk> and Pwc per foot savings and you coupled out with the.

Michael A. Henderson: The solid initial production.

Michael A. Henderson: Very consistent with our expectations, what I would say is we probably do need to more on the longer term production just to make sure the shallower declines.

Michael A. Henderson: But we're expecting actually come to fruition book.

Michael A. Henderson: With the enhanced capital efficiency that we expect is going to come from it.

Michael A. Henderson: I would certainly hope that the Ajax portfolio is going to get more competitive.

Matthew Merrel Portillo: Great. And then maybe just a high-level question.

Speaker Change: Great and then maybe just a high level question curious if you might be able to speak to maybe the drilling and completion efficiency gains you've seen this year I know that was a big theme for you all last year, but it seems like youre continuing to see success on that front, both on the drill bit and on the.

Matthew Merrel Portillo: Curious if you might be able to speak to maybe the drilling and completion efficiency gains you've seen this year. I know that was a big theme for you all last year, but it seems like you're continuing to see success on that front, both on the drill bit and on the frac side. And what that may mean, I guess, as we think about the guidance range for the wells to sales. It's a little bit early, but should we be thinking about biasing our expectations towards the higher end of the range if you guys continue to see success on efficiency gains?

Matthew Merrel Portillo: Frac side, and what that May mean, I guess as we think about the guidance range for the wells to sales is a little bit early but should we be thinking about biasing our expectations.

Matthew Merrel Portillo: Towards the higher end of the range. If you guys continue to see success.

Michael A. Henderson: Now, you shouldn't expect much of a change in terms of wells to sales. It's really just a phased in within the year, Matt, is how I would describe it.

Matthew Merrel Portillo: This multi game.

Matthew Merrel Portillo: So you shouldn't expect much of a change in terms of wells to sales, it's really just a phasing within within the year, Matt It's always describe it.

Lee M. Tillman: I think, you know, just on your specific question, I think, you know, Mike hit upon a little bit of this in his opening comments, but, you know, on the D and the C side, we've definitely seen improvements in rate of penetration. Certainly, Eagleford was a bit of a standout there on the drilling side. I mean, we continue to find ways to drive execution efficiency there and even on the frac side as well. I think we're continuing to see, in terms of stages per day and hours, pump hours, improvements there. And I don't know, Mike, if you want to clarify that a little bit.

Matt: Yes, I think just on your specific question I think Mike hit upon a little bit of this in his opening comments, but on the D and the C side, we've definitely seen improvements on rate of penetration certainly Eagle Ford was a bit of a stand out there on the drilling side and then we continue to find ways.

Lee M. Tillman: Private execution efficiency, there and even on the Frac side as well I think we're continuing to see in terms of stages per day, and our pump hours see the improvements there and I don't know if Mike.

Michael A. Henderson: I think we touched on Eagleford and Bakken. I think Bakken, despite the winter weather challenges that we had in the first quarter, held on to a lot of the efficiencies that we secured in the second half of last year. When we look at peer data, it looks like we drilled those wells 40% faster than the peer average. You know, we're also just completing drilling in the Texas-Delaware multi-well pad. Looking at some of the numbers there, our ROT is 25% faster than the last time we were drilling wells there.

Lee M. Tillman: By that I think we touched on the Eagle Ford and the Bakken I think Bakken despite the winter weather challenges that we had in the first quarter, we held onto a lot of the efficiencies that we.

Michael A. Henderson: We secured the second half of last year that obviously bodes.

Michael A. Henderson: Really well for future quarters interestingly in Permian.

Michael A. Henderson: First quarter three mile Wolfcamp program, when we look at peer data it looks like we drilled those wells, 40% faster done done.

Michael A. Henderson: The peer average.

Michael A. Henderson: We're also just getting off the drilling in the Texas, Delaware multi well path looking at some of the numbers there.

Michael A. Henderson: Yes.

Michael A. Henderson: 25% faster than the last time, we were drilling wells there.

Lee M. Tillman: Yeah, I think there's a lot going into that. We certainly took advantage of the improved market situation towards the back end of last year when it made sense. We've invested in certain areas of the business, and I think you're seeing the benefits of that in the performance. You know, a lot of effort has gone into the pre-planning side of things. We actually brought in a couple of new rigs, and we go for it at the beginning of the year, and we have not missed a beat there.

Speaker Change: I think there's a lot going into that.

Lee M. Tillman: We certainly took advantage of the improved market situation towards the backend backend of last year.

Lee M. Tillman: Since we've high graded in certain areas of the business.

Lee M. Tillman: We're seeing the benefits of that in the performance and a lot of effort is going into the pre planning side of things. We actually brought on a couple of rigs in Eagle Ford at the beginning of the year, we have not missed a beat there.

Lee M. Tillman: They very quickly got up to the expected pace, you know, and then just continuing to work with the longer-term program contractors, implementing a lot of changes with them. You know, we're drawing these extended laterals. What we're finding, we're drilling a lot more of these laterals with a single trip, and that includes some of the three milers that we've recently drilled. You know, it's a little bit of a balancing act, but we've had some success there just in terms of trying to get a little bit more probabilistic in terms of how we should manage the directional plan.

Lee M. Tillman: Very quickly got up to.

Lee M. Tillman: We expected pace than just continuing to work with the longer term program contractors implement in a lot of changes with them.

Lee M. Tillman: No.

Lee M. Tillman: We're drilling these extended laterals.

Lee M. Tillman: What we're finding we're drilling a lot more of these laterals what a single threat not includes some of the three milers.

Lee M. Tillman: Recent withdrawal.

Lee M. Tillman: A little bit of a balancing act, but we found some success there just in terms of trying to get a little bit more probabilistic in terms of how we should modest correctional plans. So.

Lee M. Tillman: So, you know, a lot going on in the execution space. But great to be off to such a solid start at the beginning of the year, and I think it bodes well for the rest of the year. I think at the end of the day, it provides us with very high competence and delivery of our full year guidance. It's more of a timing question, as Mike said, about pulling forward a little bit of activity. And that just enhances our competence and overall delivery on both our financial and operating commitments.

Lee M. Tillman: A lot going on in the execution space, but Greg to be off to such a solid start beginning of the year.

Lee M. Tillman: Well for the rest of the year.

Lee M. Tillman: I think at the end of the day. It provides us very high confidence in delivery of our full year guidance. It's more of a timing question as Mike said, it's pulling forward a little bit of activity in that that just enhances our confidence and overall delivery on both our financial and operating commitments this year.

Lee M. Tillman: Yes.

Speaker Change: Thanks, so much.

Lee M. Tillman: This concludes our question and answer session. I would like to turn the conference back over to Lee Tillman for closing remarks.

Lee M. Tillman: This concludes our question and answer session I would like to turn the conference back over to Lee Tillman for closing remarks.

Lee M. Tillman: Thank you for your interest in Marathon Oil, and I'd like to close by again recognizing all our dedicated employees and contractors for their commitment to safely and responsibly deliver the energy the world needs now more than ever. And let me end also by just thanking Dane once again for his commitment as well to Marathon Oil. So thank you, and that concludes our call.

Lee M. Tillman: Thank you for your interest in marathon oil and I'd like to close by again, recognizing all our dedicated employees and contractors for their commitment to safely and responsibly deliver the energy the world needs now more than ever and let me add also by just thanking Dave once again for.

Lee M. Tillman: For his commitment as well to marathon oil. So thank you and that concludes our call.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.