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3Q 2012 Earnings Call – Marathon Oil Corp

Marathon Oil Corp · Nov 6, 2012 · 47 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 1
    Third Quarter 2012 Earnings Conference Call and Web Cast November 6, 2012 Marathon Oil Corporation
  2. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 2
    3Q-12 Earnings 9% 3Q 2012 2Q 2012 3Q 2011 Net Income 450 MM 393 MM 405 MM Adjusted Net Income 454 MM 416 MM 421 MM Net Income per Diluted Share 0.63 0.56 0.57 Adj. Net Income per Diluted Share 0.64 0.59 0.59 Adjusted Net…
  3. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 3
    Adjusted Net Income 3Q-12 vs. 2Q-12 Variance Analysis 800 23 (243) 30 146 17 600 65 454 416 MM 400 200 0 2Q 2012 U.S. E&P Int E&P OSM IG Other Income Taxes 3Q 2012 (Pre-tax) (Pre-tax) (Pre-tax) (Pre-tax)…
  4. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 4
    Upstream LHC Sales Volumes Excluding Libya 3Q-12 actual vs. 2Q-12 actual 2Q Actual Sales Volumes 3Q Actual Sales Volumes 271 MBOD 297 MBOD Canada 16% Canada 18% Norway Norway 29% 27% U.S. 34% U.K. 5% U.K. 8% U.S. 37% E.G.…
  5. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 5
    E&P Earnings 3Q-12 vs. 2Q-12 Variance Analysis 1,000 800 269 (5) (35) (18) (142) 600 486 MM 417 400 200 0 2Q 2012 Volume Price DD&A Other Income Taxes 3Q 2012 Variance Variance (Pre-tax) (Pre-tax) (Pre-tax)…
  6. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 6
    U.S. E&P Earnings 3Q-12 vs. 2Q-12 Variance Analysis 300 250 167 0 (69) 200 (33) MM 150 (25) 110 100 70 50 0 2Q 2012 Volume Variance Price Variance DD&A Other Income Taxes 3Q 2012 (Pre-tax) (Pre-tax) (Pre-tax)…
  7. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 7
    U.S. E&P Cost per BOE Trend 70 60 50 40 /BOE 30 20 10 0 1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q 2012 2Q 2012 3Q 2012 Field level controllable cost DD&A Other Production & ad valorem taxes Exploration expenses…
  8. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 8
    Lower 48 Onshore Production Forecast Available for Sale 175 P90 150 +25% P10 Previous 125 Forecast +7% +12% 100 +20% MBOED 75 50 25 0 3Q 2011A 4Q 2011A 1Q 2012A 2Q 2012A 3Q 2012A 4Q 2012E % Oil 51 56 57…
  9. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 9
    International E&P Earnings 3Q-12 vs. 2Q-12 Variance Analysis 600 16 (117) 34 15 81 400 376 347 MM 200 0 2Q 2012 Volume Variance Price Variance DD&A Other Income Taxes 3Q 2012 (Pre-tax) (Pre-tax) (Pre-tax)…
  10. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 10
    International E&P Cost per BOE Trend 25 20 15 /BOE 10 5 0 1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q 2012 2Q 2012 3Q 2012 Field level controllable cost DD&A Other Production & ad valorem taxes Exploration…
  11. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 11
    E&P Segment 3Q-12 E&P Volumes, including Libya Production available for sale was 16% higher than 2Q-12 Continued ramp-up in U.S. resource plays; Eagle Ford, Bakken, and Woodford, offset by turnarounds in the U.K. Libya available for…
  12. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 12
    E&P Segment E&P Production Available for Sale Volumes without Libya 400 392 374 370 375 371 362 359 340 343 328 317 300 MBOED 200 100 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2010 2010 2010 2010 2011 2011 2011 2011 2012…
  13. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 13
    Oil Sands Mining Earnings 3Q-12 vs. 2Q-12 Variance Analysis 140 12 (10) 120 53 (20) 100 (18) 80 (3) 65 MM 60 51 40 20 0 2Q 2012 Volume Price Variance DD&A Operating Other Income Taxes 3Q 2012 Variance (Pre-tax)…
  14. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 14
    3Q-12 Integrated Gas Results Segment income: 3Q-12 39 MM, 2Q-12 13 MM Net LNG sales volumes MTD : 3Q-12 7,065 vs. 2Q-12 5,467 16 Cargoes in 3Q-12 Net methanol sales volumes MTD : 3Q-12 1,146 vs. 2Q-12 1,268 116 109 99 102…
  15. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 15
    Total Company Cash Flow 2012 YTD 4,500 4,000 3,308 (496) 3,500 (3,509) 3,000 2,500 2,000 MM 1,500 1,000 129 671 493 1,719 500 0 -500 193 -1,000 (806) (360) -1,500 12/31/11 Op Cash Flow Working Capital Cash…
  16. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 16
    3Q-12 Select Financial Data 3Q-12 Corporate effective tax rate of 74% 65% excluding Libya Net Debt-to-Cap Ratio Cash + Cash Equivalents 30% 6 25% 4.7 4.6 Cash + Cash Equivalents 21% 20% 20% Net Debt-to-Cap % 20%…
  17. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 17
    2012-2013 U.S. E&P Crude Oil Derivatives Term Bbls per day Weighted Average Benchmark Price per Bbl Swaps Oct 2012 Dec 2013 20,000 96.29 WTI Oct 2012 Dec 2013 25,000 109.19 Brent Option Collars Oct 2012 Dec 2013 15,000 90.00 Floor…
  18. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 18
    MRO Delivering Value Through Execution Resource play execution now clearly demonstrated Strong position in three of the highest value resource plays Potential 2P resource 2.5 billion BOE 10+ year drilling inventory Ability to scale…
  19. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 19
    U.S. Resource Plays Game Changers Raising resource and production forecasts Eagle Ford - 230,000 core net acres Currently producing 60,000 net BOED Projected 2012 exit 65,000 net BOED Raising 2013 target from 70,000 net BOED to…
  20. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 20
    MRO Production Profile Value in liquids focused growth with gas upside 750 Libya Unrest EF, Bakken, Woodford 7% All Other 5% 500 P90 Resource Plays P10 25% of Total MBOED 250 - 2010 2011 2012 2013 2014 2015 2016 2017…
  21. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 21
    Eagle Ford Shale Delivering our promise 60 Gas Q3 Average 40.3 MBOED NGL Oil Available for Sale, MBOED 40 Q2 Average 20.9 MBOED Q1 Average 20 14.4 MBOED 0 2012 Q1 2012 Q2 2012 Q3 Gross wells 22 50 73 to…
  22. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 22
    Eagle Ford Shale Wells Performing as Expected Condensate High-GOR Oil 500000 250000 2012 Wells Only 400000 200000 Cumulative BOE Cumulative BOE 300000 150000 200000 100000 100000 50000 0 0 0 100 200 300 400 500…
  23. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 23
    Eagle Ford Shale Experimenting with choke management Oil Condensate Dry Gas High-Rate Test* in Q4 * Stable 24-hour tests Burrow 2H 6,275 BOED* 4,646 BOPD 4,988 MCFD 798 BNGLD Core Acreage Marathon Oil Corporation…
  24. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 24
    Eagle Ford Shale Spacing Pilot Locations Oil Condensate Dry Gas Pilot Longhorn Sugarloaf Excelsior 74 Ranch High-GOR Oil Spacing pilots (40-, 60- & 80-acre) Condensate Heel-to-Toe pilot (60-acre) Condensate Spacing &…
  25. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 25
    Eagle Ford Shale Acreage and Resource Original Hilcorp Acquisition 1,186 Net Wells* Resource Net Wells (MMBOE) Well rate life = 40 years Low-GOR Oil 1,500 3,500 169 High-GOR Oil 368 3,018 Condensate 1,200 2,800 649 2,072 900…
  26. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 26
    Bakken Shale Production Profile Proven Track Record Big Fields get Bigger 60 2013 Plan 2012 Plan 2011 Plan 2010 Plan 40 2009 Plan MBOED 20 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Marathon Oil…
  27. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 27
    Bakken Shale Acreage and Resource Current View 957 Net Wells* Resource Net Wells Well rate life = 40 years (MMBOE) 1453 600 1500 Middle Bakken 310 Three Forks 1076 647 400 1000 740 320-Acre Development Case 489 1,453…
  28. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 28
    Oklahoma Resource Basin Opportunities Continued growth plus new play development Woodford Shale Value driven production growth Mississippian 163,000 net acres 600 MMBOE net 2P resource Growth Areas Evaluation of legacy assets…
  29. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 29
    Oklahoma Resource Basin Growth Acreage and Resource Current View 587 Net Wells* Resource Net Wells Well rate life = 30 years (MMBOE) Woodford 1000 1600 1509 587 Mississippian, Granite Wash, 750 1200 Tonkawa, Cleveland,…
  30. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 30
    Oklahoma Resource Basin Production Profile Value in liquids focused growth with gas upside 60 Large variability a result of uncertainty around natural gas prices P90 40 MBOED P10 20 P90 P10 - 2010 2011 2012 2013…
  31. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 31
    Global Exploration Portfolio Norwegian Sea Utgard High Cretaceous-Jurassic Sandstones 315,000 acres 1,100 - 2,300 MMBOE Kurdistan Fractured Gulf of Mexico Mesozoic-Permian Subsalt Miocene Carbonates and Paleogene 582,000 acres…
  32. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 32
    Global Exploration Drilling 2012 Q4 - 2013 Country Well 2012 2013 Nov Dec Q1 Q2 Q3 Q4 Gabon Diaman - 1 21.25% WI Norway Veselmoy 10% WI Norway Sverdrup 30% WI Ethiopia Sabisa - 1 20% WI Ethiopia South Omo - 2 20% WI Kenya…
  33. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 33
    MRO Delivering Value Through Execution Execution clearly demonstrated but not resting on success Drive for continued top quartile operations Strong position in three of the highest value resource plays Potential 2P resource 2.5…
  34. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 34
    Q&A Session Marathon Oil Corporation
  35. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 35
    Appendix Marathon Oil Corporation
  36. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 36
    Upstream Volumes, Exploration Expenses & Effective Tax Rate 2012 Actuals & Estimates (excluding Libya) 2012 1QA 2QA 3QA 4QE Year Est* U.S. E&P Net Sales Volumes*: Liquid Hydrocarbons (MBD) 90 93 111 127 - 132 Natural Gas (MMCFD) 344 319…
  37. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 37
    Upstream LHC Sales Volumes Excluding Libya 3Q-12 actual vs. 4Q-12 estimate 3Q Actual Sales Volumes 4Q Estimated Sales Volumes 297 MBOD 295 - 315 MBOD Canada Canada Norway 16% Norway 18% 27% 25% U.K. U.K. U.S. U.S. 6% 5%…
  38. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 38
    Reconciliation Net Income to Adjusted Net Income (MM) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2011 2011 2011 2011 2012 2012 2012 2012 Net Income 996 996 405 549 417 393 450 Exclude discontinued operations (541) (698) 0 0 0 0 0 Income from…
  39. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 39
    Net Income (MM unless otherwise noted) 2011 2012 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q E&P Segment Income 668 601 330 558 477 417 486 Oil Sands Mining Segment Income 32 69 92 63 41 51 65 Integrated Gas Segment Income 60 43 55 20 4 13 39…
  40. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 40
    Select Balance Sheet / Cash Flow Data (B unless otherwise noted) 2011 2012 2Q 3Q 4Q 1Q 2Q 3Q 4Q As of quarter ended: Cash and cash equivalents 4.7 4.6 0.5 0.5 0.5 0.7 Total debt 5.0 5.0 4.8 4.8 5.3 6.5 Cash-adjusted total debt…
  41. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 41
    Capital, Investment & Exploration* Spending Reconciliation MM 2012 3Q 2012 Forecast YTD Capital expenditures 4,602 3,679 Investments in equity method investees 1 0 & others Exploration costs other than 419 204 well…
  42. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 42
    E&P Supplemental Financial Data Operating Costs per BOE - 2012 Estimates 2012 U.S. E&P Field level controllable costs 8.00-9.00 DD&A* 22.50-23.50 Other** 9.50-10.50 Total Costs** 40.00-43.00 International E&P *** Field…
  43. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 43
    E&P Cost per BOE Trend 40.00 35.00 30.00 25.00 /BOE 20.00 15.00 10.00 5.00 0.00 1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q 2012 2Q 2012 3Q 2012 Field level controllable cost DD&A Other Production & ad valorem taxes…
  44. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 44
    3Q-12 E&P Expenses and Profitability 3Q-12 Income per BOE increased 4% from 2Q-12, 11.70/BOE vs 11.23/BOE Increase primarily due to higher volumes, lower operating expenses and DD&A Total expenses decreased from 2Q-12, 30.14/BOE vs…
  45. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 45
    E&P Realizations Average Realized Prices (excluding 1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q 2012 2Q 2012 3Q 2012 3Q VS 2Q hedging) U.S. Crude Oil & Condensate (/BBL) 88.20 101.96 90.67 98.13 97.28 88.68 90.16 1.48 U.S. Natural Gas Liquids…
  46. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 46
    Estimated 2012 Production & Tax Rates by Jurisdiction Jurisdiction Approximate Production % Statutory Tax Rate U.S. 42 36%* Norway 21 78%** EG 30 25%** Angola 1 50% U.K. 6 62%** Total E&P 100 (exc Libya) Libya 93%**…
  47. 3Q 2012 Earnings Call – Marathon Oil Corp – slide 47
    Marathon Oil Corporation

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