A Letter to Our Stakeholders
As a public company, we must also deliver competitive returns to our shareholders. In a world changed by the COVID-19 pandemic and an energy sector devastated by the associated supply and demand shocks and the resulting prices for oil and gas, we remain committed to these core values. We are focused on protecting our strong financial foundation and ensuring business continuity.
In light of the rapid onset of this global pandemic, Marathon Oil acted quickly to implement remote work for the health and safety of our office-based employees and contractors and their communities. Throughout the COVID-19 crisis, our field staff has remained hard at work, as essential critical infrastructure providers, expertly doing their job to keep the U.S. supplied with made-in-America energy, while implementing protocols to protect their health during the crisis. In our Equatorial Guinea operations, our workforce protections included reducing personnel onsite by 45% and increasing medical and quarantine capabilities. We also worked with industry to share best practices, and leveraged the Bioko Island Malaria Elimination Project vaccine lab to test and diagnose COVID-19 on behalf of the EG Ministry of Health and Social Welfare, all while also protecting our assets and implementing business continuity protocols.
We’ve taken immediate and decisive action in response to the macro challenges and the uncertainty associated with the timeline for recovery. Our response has been prudent but strong – reducing our 2020 capital expenditure program, lowering our cost structure, and protecting our balance sheet, liquidity and cash generation. Behind all of these actions, we are prioritizing the financial strength of the enterprise.
We believe our response to the COVID-19 pandemic demonstrates our ability to manage risk effectively, an essential aspect of good governance. Our critical business functions – which include operating responsibly - have gone on without interruption.
Transparency on Our 2019 ESG Performance
Even as we navigate these unprecedented challenges, Marathon Oil must also remain accountable for reporting our environmental, social and governance (ESG) performance. This 2019 Sustainability Report continues our practice of enhancing transparency on information that is meaningful to our stakeholders. For the first time, we’re incorporating relevant disclosures from the TCFD (Task Force on Climate-related Financial Disclosures) and SASB (Sustainability Accounting Standards Board), two frameworks valued by our stakeholders. The climate risk report we issued in 2019 is also now integrated into this report.
Keeping our workforce safe is and always will be our top priority. 2019 marked the best year of safety performance in our company’s history, as measured by the Total Recordable Incident Rate (TRIR), and we work every day to strengthen the culture at the heart of this performance. When safety is top of mind, it builds trust with our workforce and their families, protects our license to operate and helps us stay competitive in the marketplace. We believe a safe company is a well-run company.
We fully acknowledge the dual challenge of meeting the world’s growing energy demand and responding to the risks of climate change. Failure on either front is not acceptable. Both the risks and opportunities associated with climate change will shape our company and our sector in the years to come.
Oil and gas will be part of any energy transition and needed for transportation, manufacturing and other fundamental economic drivers. In addition, reliable, affordable and accessible energy is the great social equalizer and is necessary to raise standards of living and reduce poverty. Companies that can deliver oil and gas economically and responsibly will not only be the most competitive and sustainable, but will also play a vital social role in lifting up the more than 1 billion people who still live in energy poverty. With our strategy to be a low-cost, high-margin, responsible operator, we believe Marathon Oil is such a company.
As part of our strategy, we seek to continuously improve our environmental performance, particularly regarding air emissions. Through companywide efforts, we’ve reduced methane emissions 35% in the last five years, and our Emissions Management Committee ensures an enterprise-level focus to prioritize and fund additional high-impact projects to drive down greenhouse gas (GHG) intensity. We’re also working diligently to mitigate the impacts of ongoing gas capture infrastructure limitations causing flaring in our North Dakota Bakken asset. Specific to the Bakken, we expect to make a step change in our gas capture to about 90% in the third quarter of 2020. Importantly, GHG intensity has been added to our executive compensation scorecard to underpin our commitment.
Our society, our industry and our company face a long journey to recovery. We believe the best solution to our current crisis is to get the world healthy and back to work. Our industry has been a powerful engine of U.S. economic growth for the last decade; and the clean, affordable energy we provide will unquestionably be critical in powering our nation’s eventual economic recovery. Marathon Oil is well positioned to deliver on this mandate.
As we’ve faced these challenges, Marathon Oil employees and contractors have shown their innovative spirit and resilience. I’m grateful for their dedication to keeping our business operating safely and responsibly. In addition, I thank our board of directors for their guidance and support, and all of our stakeholders for their continued interest in our ESG performance. It will take all of us working hard, collaborating and staying focused to come out of this period stronger and prepared for the future.
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