0000101778-19-000091.txt : 20190807 0000101778-19-000091.hdr.sgml : 20190807 20190807164358 ACCESSION NUMBER: 0000101778-19-000091 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20190807 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20190807 DATE AS OF CHANGE: 20190807 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARATHON OIL CORP CENTRAL INDEX KEY: 0000101778 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 250996816 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05153 FILM NUMBER: 191006109 BUSINESS ADDRESS: STREET 1: P O BOX 3128 CITY: HOUSTON STATE: TX ZIP: 77253-3128 BUSINESS PHONE: 7136296600 MAIL ADDRESS: STREET 1: 5555 SAN FELIPE ROAD CITY: HOUSTON STATE: TX ZIP: 77056 FORMER COMPANY: FORMER CONFORMED NAME: USX CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: UNITED STATES STEEL CORP/DE DATE OF NAME CHANGE: 19860714 8-K 1 mro-20190630er8k.htm 8-K Document




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
 
August 7, 2019

Marathon Oil Corporation
__________________________________________
(Exact name of registrant as specified in its charter)

Delaware
1-1513
25-0996816
_____________________________________________
 (State or other jurisdiction
_______________________________
 (Commission
__________________________________
 (I.R.S. Employer
of incorporation)
File Number)
Identification No.)
  
 
 
 
 
 
5555 San Felipe Street,
Houston,
Texas
 
 
77056-2723
____________________________________________________________
 (Address of principal executive offices)
 
 
___________________________________________
 (Zip Code)
 
 
 
Registrant’s telephone number, including area code:
(713)
629-6600
 

Not Applicable
________________________________________________________________________________
Former name or former address, if changed since last report
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol
 
Name of each exchange on which registered
Common Stock, par value $1.00
 
MRO
 
New York Stock Exchange
 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.







Item 2.02 Results of Operations and Financial Condition.

On August 7, 2019, Marathon Oil Corporation issued a press release announcing results for the quarter ended June 30, 2019. The press release is furnished as Exhibit 99.1 to this report and is incorporated herein by reference.

The information in this Current Report on Form 8-K, including Exhibit 99.1 furnished herewith, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and will not be incorporated by reference into any filing under the Exchange Act or the Securities Act of 1933, as amended, unless specifically identified as such.


Item 9.01. Financial Statements and Exhibits.






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
Marathon Oil Corporation
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
August 7, 2019
 
By:
 
 /s/ Gary E. Wilson
 
 
 
 
 
 
 
 
 
Name: Gary E. Wilson
 
 
 
 
Title: Vice President, Controller and Chief Accounting Officer










EX-99.1 2 ex991mro-20190630xer.htm EXHIBIT 99.1 Exhibit
Marathon Oil Reports Second Quarter 2019 Results
$250 Million Share Repurchases Year-to-Date Supported by Continued Strong Free Cash Flow;
Buyback Authorization Raised to $1.5 Billion

HOUSTON, August 7, 2019 - Marathon Oil Corporation (NYSE:MRO) today reported second quarter 2019 net income of $161 million, or $0.20 per diluted share, which includes the impact of certain items not typically represented in analysts' earnings estimates and that would otherwise affect comparability of results. Adjusted net income was $189 million, or $0.23 per diluted share. Net operating cash flow was $797 million, or $771 million before changes in working capital.

Highlights
$137 million of organic free cash flow post-dividend, bringing year-to-date organic free cash flow to $217 million
$250 million of year-to-date share repurchases in addition to $82 million of dividend payments; approximately 25% of year-to-date net operating cash flow returned to shareholders
Board of Directors approved increase of the share repurchase authorization to $1.5 billion
Development capital spend of $636 million second quarter and $1.2 billion year-to-date; annual $2.4 billion development capital budget remains unchanged
U.S. oil production averaged 192,000 net bopd during second quarter, up 17% from year-ago quarter, divestiture-adjusted, and above top end of guidance range
Total Company oil production averaged 218,000 net bopd during second quarter, up 14% from year-ago quarter, divestiture-adjusted
Closed on sale of U.K. business July 1, removing $966 million of asset retirement obligations; coupled with second quarter close on sale of remaining block in Kurdistan, these two complete country exits simplify the international portfolio to the free cash flow generating integrated business in Equatorial Guinea
Strong financial position with investment grade rating at all three primary credit ratings agencies reflecting peer leading leverage metrics and free cash flow breakeven oil price

“Second quarter featured exceptional operational performance across our advantaged multi-basin portfolio driving compelling bottom-line financial outcomes,” said Chairman, President and CEO Lee Tillman. “Through differentiated execution, we're improving our corporate returns, generating meaningful free cash flow, and returning significant capital back to our shareholders. Already in 2019, we've returned about 25% of our net operating cash flow back to our shareholders. Since the beginning of 2018, we have repurchased $950 million of our own shares, funded entirely by post-dividend organic free cash flow, equating to about a 6% reduction in our share count. The refreshed $1.5 billion share repurchase authorization positions us well to continue executing against our well-defined strategic framework. This is our sixth consecutive quarter of organic free cash flow generation, and our underlying free cash flow momentum only continues to improve. We believe our unwavering commitment to capital discipline and low enterprise breakeven oil price delivers success across a wide range of commodity price environments.”




United States (U.S.)
U.S. production averaged 332,000 net barrels of oil equivalent per day (boed) for second quarter 2019, including 192,000 net barrels of oil per day (bopd), both above the top end of the second quarter guidance ranges. Oil production was up 17% from the year-ago quarter on a divestiture-adjusted basis. U.S. unit production costs were $4.89 per barrel of oil equivalent (boe), down 14% from the year-ago quarter, the lowest quarterly average unit production costs since becoming an independent exploration and production company in 2011.

EAGLE FORD: Marathon Oil's Eagle Ford production averaged 109,000 net boed in the second quarter 2019. The Company brought 41 gross Company-operated wells to sales in the quarter. Second quarter activity featured impressive results across the Company’s acreage position. In Karnes County, a four-well pad achieved an average 30-day initial production (IP) rate of 3,230 boed (67% oil), establishing a new pad record for the Company in the Eagle Ford. The Company continued to deliver strong results from the expanded core of Atascosa County, where 15 wells achieved an average 30-day IP rate of 1,860 boed (81% oil). As the Company continues its efforts to uplift performance outside of the Karnes and Atascosa core, enhanced completion techniques were successfully applied in Gonzales County, where a six-well pad achieved an average 30-day IP rate of 1,600 boed (70% oil). Despite a majority of wells to sales outside of Karnes County during second quarter, the Eagle Ford asset achieved a quarterly record for average 30 day initial well productivity, while continuing to drive a trend of lower completed well costs per lateral foot.

BAKKEN: Marathon Oil's Bakken production averaged 104,000 net boed in the second quarter 2019. The Company brought 30 gross Company-operated wells to sales, balanced between Myrmidon and Hector. The Company continues to deliver impressive capital efficiency, highlighted by a six-well pad in Myrmidon that delivered an average 30-day IP rate of 3,160 boed (78% oil) at an average completed well cost of $5.3 million. The average completed well cost for all of Marathon Oil’s second quarter wells was $5.2 million, down approximately 15% in comparison to the 2018 average.

OKLAHOMA: Marathon Oil's Oklahoma production averaged 82,000 net boed in the second quarter 2019. The Company brought 18 gross Company-operated wells to sales. Marathon Oil continues to deliver strong results from the overpressured STACK, where the eight-well per section Mike Stroud infill achieved an average 30-day IP rate of 2,480 boed (38% oil) with average completed well costs more than 30% below the previously drilled parent well. The Company continues to make significant progress in reducing its cost structure and improving efficiencies. Marathon Oil’s two most recent overpressured STACK infills achieved an average completed well cost of $6.3 million normalized to a 10,000 foot lateral.




NORTHERN DELAWARE: Marathon Oil's Northern Delaware production averaged 28,000 net boed in the second quarter 2019. The Company brought 16 gross Company-operated wells to sales, including a mix of development and delineation wells in both the Malaga and Red Hills areas. Marathon Oil continues to make significant progress in reducing its cost structure and improving margins, with second quarter cash costs down approximately 10% sequentially on a per boe basis, 100% of water on pipe for all second quarter wells to sales, and a rising percentage of total oil production on pipe. Second quarter again featured strong Upper Wolfcamp productivity in Malaga, where 11 development wells achieved an average 30-day IP rate of 1,520 boed (63% oil), or 345 boed per one thousand foot lateral, with completed well costs per lateral foot 5% below the 2018 average.

International
International production averaged 103,000 net boed for second quarter 2019. During the quarter, E.G. production returned to normal levels after successful completion of the planned triennial turnaround during first quarter 2019. Second quarter 2019 International unit production costs averaged $4.72 per boe.

During the second quarter, the Company closed on the sale of its 15% participating interest in the Atrush Block in Kurdistan, marking a complete country exit. Subsequent to quarter end on July 1, the Company closed on the sale of its U.K business, representing the tenth country exit since 2013.

Excluding Kurdistan and U.K operations, second quarter international production averaged 91,000 net boed with unit production costs of $2.21 per boe. As of July 1, the Company’s international operations are limited to the integrated business in Equatorial Guinea.

Cash Flow, Development Capital and Resource Capture
Net cash provided by operations was $797 million during second quarter 2019, or $771 million before changes in working capital.

Second quarter development capital expenditures were $636 million, with year-to-date development capital of $1.2 billion. The Company’s 2019 development capital budget remains unchanged at $2.4 billion.

Outside of the development capital budget, second quarter resource play leasing and exploration (REx) capital expenditures were $37 million, with year-to-date expenditures of $74 million. The Company’s 2019 REx capital budget remains unchanged at $200 million.

Organic free cash flow during second quarter totaled $137 million post-dividend, bringing year-to-date organic free cash flow generation to $217 million.




Production Guidance
For third quarter 2019, the Company forecasts total U.S. oil production of 190,000 to 200,000 net bopd. Third quarter 2019 international oil production guidance is 12,000 to 16,000 net bopd, reflecting both the U.K. and Kurdistan asset divestitures. Adjusted full year 2019 production guidance now excludes divested U.K. and Kurdistan volumes for the second half of 2019, but otherwise remains unchanged. There is no change to annual divestiture-adjusted oil production growth guidance of 10% for total Company and 12% for U.S.

Corporate
The Company has executed $250 million of year-to-date share repurchases, returning additional capital to shareholders beyond the $82 million of year-to-date dividend payments. On a year-to-date basis, the Company has returned approximately 25% of net operating cash flow back to shareholders. Since the beginning of 2018, Marathon Oil has repurchased $950 million of its own shares, representing approximately 6% of its outstanding share count, funded entirely by post-dividend organic free cash flow generation of over $1 billion over the same period. The board of directors authorized an increase in the remaining share repurchase authorization to a total of $1.5 billion, representing an increase in authorization of $950 million.

Total liquidity as of June 30 was approximately $4.4 billion, which consisted of $1.0 billion in cash and cash equivalents and an undrawn revolving credit facility of $3.4 billion. End of quarter cash and cash equivalents reflect cash balances classified as held for sale associated with U.K. properties, but do not include the $95 million of sales proceeds received upon July 1 close.

Marathon Oil’s credit rating was upgraded to investment grade by Moody’s Investor’s Service on April 24. The Company’s credit rating was also upgraded from BBB- to BBB by S&P on June 19. Marathon Oil is rated investment grade at all three primary credit ratings agencies.

The adjustments to net income for second quarter 2019 totaled $28 million before tax, primarily due to impairments and loss on sale associated with asset dispositions, partially offset by the income impact associated with unrealized gains on derivative instruments.

As of August 5, 2019, the Company's open crude hedge positions for 2019 include an average of 80,000 bopd at a weighted average floor price of $56.75 per bbl and a weighted average ceiling price of $74.19 per bbl, hedged through three-way collars. The Company has also hedged 19,945 bopd of 2020 oil production at a weighted average floor price of $55.00 per bbl.

A slide deck and Quarterly Investor Packet will be posted to the Company's website following this release today, Aug. 7. On Thursday, Aug. 8, at 9:00 a.m. ET, the Company will conduct a question and answer webcast/call, which will include forward-looking information. The live webcast, replay and all related materials will be available at https://www.marathonoil.com/Investors.


# # #



Definitions
Organic free cash flow - Operating cash flow before working capital (excluding exploration costs other than well costs), less development capital expenditures, less dividends, plus other.

Non-GAAP Measures
In analyzing and planning for its business, Marathon Oil supplements its use of GAAP financial measures with non-GAAP financial measures, including adjusted net income, adjusted net income per share, net cash provided by operations before changes in working capital, and organic free cash flow because the Company believes this information is useful to investors to help evaluate the Company's financial performance between periods and to compare the Company's performance to certain competitors. Management also uses net cash provided by operations before changes in working capital to demonstrate the Company's ability to internally fund capital expenditures, pay dividends and service debt. The Company considers adjusted net income and adjusted net income per share as another way to meaningfully represent the Company's operational performance for the period presented; consequently, it excludes the impact of mark-to-market accounting, impairment charges, dispositions, pension settlements, and other items that could be considered “non-operating” or “non-core” in nature. These non-GAAP financial measures reflect an additional way of viewing aspects of the business that, when viewed with GAAP results may provide a more complete understanding of factors and trends affecting the business and are a useful tool to help management and investors make informed decisions about Marathon Oil's financial and operating performance. These measures should not be considered substitutes for their most directly comparable GAAP financial measures. A reconciliation to their most directly comparable GAAP financial measures can be found in our investor package on our website at www.marathonoil.com and in the tables below. Marathon Oil strongly encourages investors to review the Company's consolidated financial statements and publicly filed reports in their entirety and not rely on any single financial measure.

Forward-looking Statements
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, including without limitation statements regarding the Company's 2019 capital budget and allocations (including development capital budget and resource play leasing and exploration spend),  future performance, organic free cash flow, free cash flow, corporate-level cash returns on invested capital, business strategy, asset quality, drilling plans, production guidance, cash margins, asset sales and acquisitions, leasing and exploration activities, production, oil growth and other plans and objectives for future operations, are forward-looking statements. Words such as "anticipate," "believe," "could," "estimate," "expect," "forecast," "guidance," "intend," "may," "plan," "project," "seek," "should," "target," "will," "would," or similar words may be used to identify forward-looking statements; however, the absence of these words does not mean that the statements are not forward-looking. While the Company believes its assumptions concerning future events are reasonable, a number of factors could cause actual results to differ materially from those projected, including, but not limited to: conditions in the oil and gas industry, including supply/demand levels and the resulting impact on price; changes in expected reserve or production levels; changes in political or economic conditions in the jurisdictions in which the Company operates; risks related to the Company's hedging activities; capital available for exploration and development; drilling and operating risks; well production timing; availability of drilling rigs, materials and labor, including associated costs; difficulty in obtaining necessary approvals and permits; non-performance by third parties of contractual obligations; unforeseen hazards such as weather conditions, acts of war or terrorist acts and the government or military response thereto; cyber-attacks; changes in safety, health, environmental, tax and other regulations; other geological, operating and economic considerations; and the risk factors, forward-looking statements and challenges and uncertainties described in the Company’s 2018 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other public filings and press releases, available at www.marathonoil.com. Except as required by law, the Company undertakes no obligation to revise or update any forward-looking statements as a result of new information, future events or otherwise.

Media Relations Contact:
Lee Warren: 713-296-4103

Investor Relations Contacts:
Guy Baber: 713-296-1892
John Reid: 713-296-4380



Consolidated Statements of Income (Unaudited)
Three Months Ended
 
June 30

Mar. 31

June 30

(In millions, except per share data)
2019

2019

2018

Revenues and other income:
 
 
 
   Revenues from contracts with customers
$
1,381

$
1,200

$
1,447

   Net gain (loss) on commodity derivatives
16

(91
)
(152
)
   Income from equity method investments
31

11

60

   Net gain (loss) on disposal of assets
(8
)
42

50

   Other income
13

35

12

Total revenues and other income
1,433

1,197

1,417

Costs and expenses:
 

 
 
   Production
193

187

205

   Shipping, handling and other operating
170

154

126

   Exploration
26

59

65

   Depreciation, depletion and amortization
605

554

612

   Impairments
18

6

34

   Taxes other than income
79

72

65

   General and administrative
87

94

105

Total costs and expenses
1,178

1,126

1,212

Income from operations
255

71

205

   Net interest and other
(64
)
(49
)
(65
)
   Other net periodic benefit costs
2

5


Income before income taxes
193

27

140

  Provision (benefit) for income taxes
32

(147
)
44

Net income
$
161

$
174

$
96

 
 
 
 
Adjusted Net Income
 
 
 
Net income
$
161

$
174

$
96

Adjustments for special items (pre-tax):
 
 
 
Net (gain) loss on disposal of assets
8

(42
)
(50
)
Proved property impairments
18

6

34

Pension settlement
2


2

Unrealized (gain) loss on derivative instruments
(11
)
113

45

Other
11

12

(8
)
Benefit for income taxes related to special items

(7
)
7

Adjustments for special items
28

82

30

Adjusted net income (a)
$
189

$
256

$
126

Per diluted share:
 
 
 
Net income
$
0.20

$
0.21

$
0.11

Adjusted net income (a)
$
0.23

$
0.31

$
0.15

Weighted average diluted shares
814

820

855

(a) Non-GAAP financial measure. See "Non-GAAP Measures" above for further discussion.




Supplemental Statistics (Unaudited)
Three Months Ended
 
June 30

Mar. 31

June 30

(In millions)
2019

2019

2018

Segment income
 
 
 
United States
$
215

$
132

$
123

International
96

61

142

Segment income
311

193

265

Not allocated to segments
(150
)
(19
)
(169
)
Net income
$
161

$
174

$
96

Exploration expenses
 
 
 
United States
$
26

$
59

$
64

International


1

Total
$
26

$
59

$
65

Cash flows
 

 
 
Net cash provided by operating activities
$
797

$
515

$
767

Minus: changes in working capital
26

(157
)
(82
)
Net cash provided by operations before changes in working capital (a)
$
771

$
672

$
849

 
 
 
 
Cash additions to property, plant and equipment
$
(647
)
$
(615
)
$
(638
)
(a)  Non-GAAP financial measure. See "Non-GAAP Measures" above for further discussion.

Supplemental Statistics (Unaudited)
Three Months Ended
Six Months Ended
(In millions)
June 30, 2019
June 30, 2019
Organic Free Cash Flow
 
 
Net cash provided by operating activities
$
797

$
1,312

Minus: changes in working capital
26

(131
)
Minus: exploration costs other than well costs
(6
)
(16
)
Development capital expenditures
(636
)
(1,205
)
Dividends
(41
)
(82
)
EG LNG return of capital and other
37

45

Organic free cash flow (a)
$
137

$
217

(a)  Non-GAAP financial measure. See "Non-GAAP Measures" above for further discussion.



Supplemental Statistics (Unaudited)
Three Months Ended
 
June 30

Mar. 31

June 30

(mboed)
2019

2019

2018

Net production
 
 
 
United States
332

296

298

International
103

92

121

Total net production
435

388

419



Supplemental Statistics (Unaudited)
Three Months Ended
 
June 30

Mar. 31

June 30

(mboed)
2019

2019

2018

Net production
 
 
 
United States
332

296

298

Less: Divestitures (a)
1


6

Total divestiture-adjusted United States
331

296

292

 
 
 
 
International
103

92

121

Less: Divestitures (b)
12

14

18

Total divestiture-adjusted International
91

78

103

 
 
 
 
Total net production divestiture-adjusted (a)(b)
422

374

395

(a) The Company closed on the sale of certain United States non-core conventional assets primarily in the Gulf of Mexico in third quarter 2018 and first quarter 2019. The production volumes relating to these dispositions have been removed from all corresponding prior periods to derive the divestiture-adjusted United States net production.
(b) Divestitures include volumes associated with the sale of our U.K. business, which closed in third quarter 2019, the sale of our non-operated interest in Kurdistan, which closed in second quarter 2019 and third quarter 2018. These production volumes have been removed from historical periods above in arriving at total divestiture-adjusted International net production.








Supplemental Statistics (Unaudited)
Three Months Ended
 
June 30

Mar. 31

June 30

 
2019

2019

2018

United States - net sales volumes
 
 
 
  Crude oil and condensate (mbbld)
190

177

168

     Eagle Ford
61

61

63

     Bakken
88

79

69

     Oklahoma
21

16

18

     Northern Delaware
15

15

11

     Other United States (a)
5

6

7

  Natural gas liquids (mbbld)
64

55

57

     Eagle Ford
25

23

22

     Bakken
8

7

7

     Oklahoma
24

18

24

     Northern Delaware
6

6

3

     Other United States (a)
1

1

1

  Natural gas (mmcfd)
459

392

435

     Eagle Ford
139

127

127

     Bakken
42

36

35

     Oklahoma
223

173

230

     Northern Delaware
36

33

18

     Other United States (a)
19

23

25

Total United States (mboed)
330

297

298

International - net sales volumes
 
 
 
  Crude oil and condensate (mbbld)
30

23

32

     Equatorial Guinea
20

12

18

     United Kingdom
8

9

10

     Other International
2

2

4

  Natural gas liquids (mbbld)
10

8

12

     Equatorial Guinea
10

8

11

     United Kingdom


1

  Natural gas (mmcfd)
403

342

461

     Equatorial Guinea
392

330

443

     United Kingdom (b)
11

12

18

Total International (mboed)
107

88

121

Total Company - net sales volumes (mboed)
437

385

419

Net sales volumes of equity method investees
 
 
 
     LNG (mtd)
5,321

4,636

6,141

     Methanol (mtd)
1,134

1,003

1,316

Condensate and LPG (boed)
11,080

9,890

12,689

(a)
The three months ended June 30, 2018 includes sales volumes from the sale of certain United States non-core conventional assets primarily in the Gulf of Mexico which closed in third quarter 2018 and first quarter 2019.
(b)
Includes natural gas acquired for injection and subsequent resale.



Supplemental Statistics (Unaudited)
Three Months Ended
 
June 30

Mar. 31

June 30

 
2019

2019

2018

United States - average price realizations (a)
 
 
 
  Crude oil and condensate ($ per bbl) (b)
$
59.18

$
54.05

$
66.03

     Eagle Ford
63.10

57.69

68.77

     Bakken
56.84

52.15

64.41

     Oklahoma
58.66

53.39

66.90

     Northern Delaware
55.33

48.97

60.01

     Other United States (c)
66.21

56.19

64.42

  Natural gas liquids ($ per bbl)
$
14.60

$
15.66

$
22.09

     Eagle Ford
13.19

17.05

22.68

     Bakken
18.68

16.17

25.52

     Oklahoma
14.39

13.66

20.75

     Northern Delaware
15.02

15.27

19.10

     Other United States (c)
17.25

18.92

25.62

  Natural gas ($ per mcf) (d)
$
1.89

$
2.93

$
2.18

     Eagle Ford
2.51

2.99

2.82

     Bakken
1.70

3.77

2.46

     Oklahoma
1.78

2.90

1.84

     Northern Delaware
0.18

1.93

1.48

     Other United States (c)
2.26

2.89

2.11

International - average price realizations
 
 
 
  Crude oil and condensate ($ per bbl)
$
58.21

$
53.93

$
66.12

     Equatorial Guinea
54.38

44.36

60.30

     United Kingdom
68.40

67.62

77.15

     Other International
55.83

47.76

64.73

  Natural gas liquids ($ per bbl)
$
1.67

$
1.96

$
2.91

     Equatorial Guinea (d)
1.00

1.00

0.99

     United Kingdom
37.63

38.10

43.20

  Natural gas ($ per mcf)
$
0.35

$
0.48

$
0.52

     Equatorial Guinea (d)
0.24

0.24

0.24

     United Kingdom
4.25

7.02

7.39

Benchmark
 
 
 
WTI crude oil (per bbl)
$
59.91

$
54.90

$
67.91

Brent (Europe) crude oil (per bbl) (e)
$
68.92

$
63.17

$
74.50

Henry Hub natural gas (per mmbtu) (f)  
$
2.64

$
3.15

$
2.80

(a) Excludes gains or losses on commodity derivative instruments.
(b) Inclusion of realized gains (losses) on crude oil derivative instruments would have affected average price realizations by $0.32, $1.10 and $(7.04) for second quarter 2019, first quarter 2019, and second quarter 2018.
(c) Includes sales volumes from the sale of certain non-core proved properties in our International and United States segments.
(d)  Represents fixed prices under long-term contracts with Alba Plant LLC, Atlantic Methanol Production Company LLC and/or Equatorial Guinea LNG Holdings Limited, which are equity method investees. The Alba Plant LLC processes the NGLs and then sells secondary condensate, propane, and butane at market prices. Marathon Oil includes its share of income from each of these equity method investees in the International segment.   
(e)  Average of monthly prices obtained from Energy Information Administration website.
(f) Settlement date average per mmbtu.





Q3 2019
Production Guidance
Oil Production (mbbld)
 
Equivalent Production (mboed)
Q3 2019
Q2 2019
Q3 2018
 
Q3 2019
Q2 2019
Q3 2018
 
Low
High
Divestiture-Adjusted (a)
Divestiture-Adjusted (a)
 
Low
High
Divestiture-Adjusted (a)
Divestiture-Adjusted (a)
Net production
 
 
 
 
 
 
 
 
 
United States
190

200

192

172

 
330

340

331

302

International
12

16

16

17

 
80

90

91

99

Total net production
202

216

208

189

 
410

430

422

401

Full Year 2019
Production Guidance
Oil Production (mbbld)
 
Equivalent Production (mboed)
2019
2018
 
2019
2018
 
Low (b)
High (b)
Divestiture-Adjusted (a)
 
Low (b)
High (b)
Divestiture-Adjusted (a)
Net production
 
 
 
 
 
 
 
United States
185

195

169

 
320

330

294

International
18

22

17

 
85

95

98

Total net production
203

217

186

 
405

425

392

(a) Divestiture-adjusted, and also removes volumes associated with the sale of our U.K. business which closed on July 1, 2019.
(b) Annual 2019 guidance includes 1H19 contributions from divested assets.




The following table sets forth outstanding derivative contracts as of August 5, 2019, and the weighted average prices for those contracts:
 
2019
 
 
2020
 
 
2021
Crude Oil
 
Third Quarter
 
Fourth Quarter
 
 
Full Year
 
 
Full Year
NYMEX WTI Three-Way Collars (a)
 
 
 
 
 
 
 
 
 
 
Volume (Bbls/day)
 
80,000

 
80,000

 
 
19,945

 
 

Weighted average price per Bbl:
 
 
 
 
 
 
 
 
 
 
Ceiling
 
$
74.19

 
$
74.19

 
 
$
67.55

 
 

Floor
 
$
56.75

 
$
56.75

 
 
$
55.00

 
 

Sold put
 
$
49.50

 
$
49.50

 
 
$
47.50

 
 

Basis Swaps - Argus WTI Midland (b)
 
 
 
 
 
 
 
 
 
 
Volume (Bbls/day)
 
15,000

 
15,000

 
 
15,000

 
 

Weighted average price per Bbl
 
$
(1.40
)
 
$
(1.40
)
 
 
$
(0.94
)
 
 

Basis Swaps - Net Energy Clearbrook (c)
 
 
 
 
 
 
 
 
 
 
Volume (Bbls/day)
 
1,000

 
1,000

 
 

 
 

Weighted average price per Bbl
 
$
(3.50
)
 
$
(3.50
)
 
 

 
 

Basis Swaps - NYMEX WTI / ICE Brent (d)
 
 
 
 
 
 
 
 
 
 
Volume (Bbls/day)
 
5,000

 
5,000

 
 
5,000

 
 
808

Weighted average price per Bbl
 
$
(7.24
)
 
$
(7.24
)
 
 
$
(7.24
)
 
 
$
(7.24
)
Basis Swaps - Argus WTI Houston (e)
 
 
 
 
 
 
 
 
 
 
Volume (Bbls/day)
 
10,000

 
10,000

 
 

 
 

Weighted average price per Bbl
 
$
5.51

 
$
5.51

 
 
$

 
 
$

NYMEX Roll Basis Swaps
 
 
 
 
 
 
 
 
 
 
Volume (Bbls/day)
 
60,000

 
60,000

 
 

 
 

Weighted average price per Bbl
 
$
0.38

 
$
0.38

 
 

 
 

(a)
Between July 1, 2019 and August 5, 2019, we entered into 10,000 Bbls/day of three-way collars for January - December 2020, with a ceiling of $65.12, a sold put of $48.00, and a floor of $55.00.
(b)
The basis differential price is indexed against Argus WTI Midland.
(c)
The basis differential price is indexed against Net Energy Canada Bakken SW at Clearbrook ("UHC").
(d)
The basis differential price is indexed against International Commodity Exchange ("ICE") Brent and NYMEX WTI.
(e)
The basis differential price is indexed against Argus WTI Houston.