While some Oklahoma oil and gas operations intend to pour more funds into new exploration, one operator in the state isn’t doing the same.
It’s what Marathon Oil announced this week, stating it will spend $1.2 billion on capital projects in 2022 which is about a 20% increase from last year’s level. The company also expects to generate more than $3 billion of free cash flow, beating estimates by half a billion dollars.
Marathon stated that the 2022 capital budget is “consistent with disciplined framework that prioritizes free cash flow generation over production growth.”
“During fourth quarter, we returned more than 70% of our cash flow from operations to equity investors, significantly exceeding our minimum 40% commitment,” stated Chairman, President, and CEO Lee Tillman. “We are demonstrating that investors will get the first call on cash flow generation, as evidenced by $1 billion of share repurchases since October and four consecutive increases to our quarterly base dividend.”
Tillman said more of the same can be expected in 2022…significant free cash flow generation and a return of capital to shareholders.
For 2022, by staying disciplined and maintaining a low reinvestment rate, Marathon Oil expects to exceed its commitment to return a minimum of 40% of CFO to equity investors, assuming an oil price of $60/bbl WTI or higher.
In May of 2021, the Houston-based company said it was returning to limited operations in Oklahoma and the Permian Basin’s western Delaware Basin in New Mexico before ramping up in 2022. After focusing on larger operations in North Dakota and South Texas in 2020, Marathon planned “measured” activity in Oklahoma and New Mexico in 2021.
This week, Marathon reported fourth quarter 2022 net income of $649 million or 84 cents per diluted share. Adjusted net income was $592 million or 77 cents a diluted share. Net operating cash flow was $1.1 billion.
Full year 2021 net income was $946 million or $1.20 per diluted share but the adjusted net income was $1.2 billion or $1.57 per diluted share.
Click below for Marathon Oil release
file:///C:/Users/User/Downloads/4Q21%20Earnings%20Deck_Final.pdf