2018 Annual meeting oF SHAREHOLDERS

houston, Texas
MAY 2018


Thank you and let me add my welcome to the Marathon Oil Annual Meeting of Shareholders.

2017 was truly a pivotal year in our ongoing transformation to a US resource play focused independent E&P.  We made progress across every element of our playbook—balance sheet, cost structure, portfolio—and we achieved high return growth within cash flows at moderate oil pricing. 

Our differentiated position in the four lowest cost, highest margin oil plays demonstrated its strength as we consistently outperformed quarter after quarter.

We achieved cash flow neutrality, inclusive of our dividend, at an oil price of just over $50 WTI while delivering on all our 2017 commitments—including near the top end of our total company production guidance, driven by a strong 31% exit rate from our US resource plays. 

We ended 2017 with:

  • A stronger balance sheet from our $1.75 billion reduction in gross debt
  • A lower cost structure with $115 million in annualized interest expense savings, a 35% reduction in unit G&A expense over the last three years and the lowest US unit production expense since becoming an independent E&P

We also finished the year with:

  • A more concentrated portfolio with the sale of Canadian Oil Sands and entry into the Northern Delaware
  • And outstanding, consistent execution across all four basins evidenced by peer-leading well results.


2018 is off to a great start and has continued our returns-focused momentum with our development capital program on track to achieve over 65% annual improvement in corporate cash returns at strip pricing. 

We’ll direct over 90% of development capital to the US resource plays, and maximize corporate returns by focusing on high-efficiency development in the Bakken and the Eagle Ford while providing flexibility for the Northern Delaware and Oklahoma to transition to multi-well pads at the appropriate pace while continuing delineation and appraisal work. 

Already in the first quarter of 2018, our differentiated, multi-basin model delivered strong 9% sequential U.S. oil growth and our asset-level execution underpinned our confidence to raise our full year 2018 resource play guidance while also steering to the upper end of our total company guidance. 

We now expect to grow our resource plays 25-30% year over year for both oil and BOE with our development capital budget unchanged.

Our financial flexibility is at the top of our peer group. 

Yet while our financial flexibility allows us to pursue multiple high-return uses of free cash, we’re taking a disciplined approach.  Our objective is to strike the right balance between additional direct return of capital to shareholders and accretive opportunistic low-entry cost resource capture.

Specifically, we have successfully added quality operated locations in the Northern Delaware through trades and a small bolt-on AND have captured over 250,000 acres across multiple onshore exploration plays, including a material position in the emerging Louisiana Austin Chalk.


"We thank all our dedicated employees and contractors who are driving execution excellence in every asset, every quarter."


In closing, a remarkable 2017 has positioned us strongly for 2018 success.  We have transitioned from portfolio transformation to execution delivery at scale across our US resource plays. 

We expect our margins to expand as we continue to shift our production mix to a greater weighting of U.S. unconventionals--better aligning our volumes to our investment concentration. 

This margin expansion story coupled with outstanding financial flexibility will help drive improvements in corporate level cash returns, and position us favorably to outperform the competition in 2018 and beyond. 

Our actions will always be driven by seeking the greatest long-term value for our shareholders, while remaining steadfast in our core values that include first and foremost being a safe and responsible operator.

We thank all our dedicated employees and contractors who are driving execution excellence in every asset, every quarter.

I also want to acknowledge the important role that our board of directors plays in Marathon Oil’s long-term success. And we welcome Doug Foshee and Lisa Hyland to our board.

And on behalf of the board of directors, I want to thank our stockholders.

Thank you.