MARATHON OIL CORPORATION Executive Overview Outlook Operations Market Conditions Results of Operations Critical Accounting Estimates Accounting Standards Not Yet Adopted Cash Flows Liquidity and Capital Resources Environmental Matters and Other Contingencies The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the preceding consolidated financial statements and notes in Item 1 . Executive Overview We are an independent exploration and production company based inHouston, Texas . Our strategy is to deliver competitive and improving corporate level returns by focusing our capital investment in our lower cost, higher marginU.S. resource plays (Eagle Ford inTexas , Bakken inNorth Dakota , STACK and SCOOP inOklahoma andNorthern Delaware inNew Mexico ). Our reinvestment rate capital allocation framework prioritizes free cash flow generation across a wide range of commodity prices to make available significant cash flow for investor-friendly purposes, including return of capital to shareholders and balance sheet enhancement. Keeping our workforce safe, minimizing our environmental impact, strong corporate governance and protecting our balance sheet are foundational to the execution of our strategy. Throughout the COVID-19 pandemic, we leveraged our emergency response protocols and business continuity plans to help manage our operations and workforce. Our workforce worked remotely for a significant period of time since the pandemic began. We implemented a process for a phased return of employees to the office last year and, duringApril 2021 , the majority of our corporate workforce returned to the office. Working remotely did not significantly impact our ability to maintain operations, allowed our field offices to operate without any disruption and did not cause us to incur significant additional expenses. Key highlights include the following: Maintained focus on balance sheet and liquidity •At the end of the first quarter 2021, we had approximately$4.1 billion of liquidity, comprised of an undrawn$3.0 billion revolving credit facility and$1.1 billion in cash. We remain investment grade at all three primary rating agencies, with Moody's recently upgrading their rating outlook to stable. •In the first quarter of 2021, we generated$622 million of cash provided by operating activities, which was more than sufficient to fund our additions to property, plant and equipment of$209 million and dividends of$23 million . •Subsequent to the end of first quarter, we fully redeemed our$500 million aggregate principal amount of 2.8% Senior Notes due 2022. •TheMarch 31, 2021 cash balance reflects an increase of approximately$383 million from year-end, primarily due to higher commodity price realizations. OurU.S. segment average realized prices for crude oil and condensate, NGLs and natural gas for the quarter were$55.38 per bbl,$23.94 per bbl and$6.31 per mcf, respectively. •We continue to maintain capital discipline in the first quarter and are within our Capital Budget of$1.0 billion . Financial and operational results •U.S. net sales volumes decreased by 19% to 275 mboed, including a 22% reduction inU.S. crude oil net sales volumes compared to the same quarter last year as a result of overall lower drilling and completion activities and natural decline. 23 -------------------------------------------------------------------------------- •Our net income per share was$0.12 in the first quarter of 2021 as compared to a net loss per share of$(0.06) in the same period last year. Included in our financial results for the current quarter: •Revenues from contracts with customers increased$153 million compared to the same quarter last year. We experienced significant increases in realized prices for both crude oil and condensate, NGLs and natural gas. These increased price realizations were partially offset by lower production. •Net loss on commodity derivatives of$153 million , of which$71 million related to realized net losses and$82 million related to unrealized net losses, for the first quarter of 2021, as compared to a net gain of$202 million in 2020. •Lower depreciation, depletion and amortization expenses of$148 million , primarily a result of lower production. •Continued to maintain production expense rates consistent with fourth quarter 2020 levels which were reflective of lower operational activity and cost management efforts. Compensation and ESG Highlights and Initiatives •CEO andBoard of Director total compensation reduced by approximately 25% with Board compensation mix shifted more toward equity and CEO mix further aligned with broader industry norms (exclusive of temporary reductions announced in 2020). •Short-term incentive scorecard for compensation updated to focus on safety, environmental performance, capital efficiency, capital discipline/free cash flow generation and financial/balance sheet strength. •Added a 2021 GHG emissions intensity target to short-term incentive scorecard. •Adopted a medium-term goal for GHG emissions intensity reduction by 2025. •ContinuedBoard of Director refreshment with two Directors added during the first quarter of 2021, reflecting commitment to refreshment, independence, and diversity. Outlook Capital Budget InFebruary 2021 , we announced a 2021 Capital Budget of$1.0 billion , which is effectively a maintenance Capital Budget. We expect this maintenance-level Capital Budget will allow us to keep total company oil production in 2021 consistent with our fourth quarter 2020 exit rate. Our 2021 Capital Budget is consistent with our capital allocation framework that prioritizes corporate returns and free cash flow generation over production growth. The 2021 Capital Budget is weighted towards the fourU.S. resource plays with approximately 90% allocated to the Eagle Ford and Bakken. Operations The following table presents a summary of our sales volumes for each of our segments. Refer to the Results of Operations section for a price-volume analysis for each of the segments. Three Months Ended March 31, Net Sales Volumes 2021 2020 Increase (Decrease) United States (mboed) 275 338 (19) % International (mboed) 66 81 (19) % Total (mboed) 341 419 (19) % United States Net sales volumes in the segment were lower in the first quarter of 2021 as compared to the first quarter of 2020 with lower capital investment resulting in fewer wells to sales, coupled with natural decline. The decrease in capital investment is a direct result of the demand contraction related to the global pandemic, and the associated effects on hydrocarbon prices. We continue to expect that our planned pace of drilling and completions activity during the remainder of the year will enable us to meet our 2021 production guidance as noted in the preceding Outlook section. 24 -------------------------------------------------------------------------------- The following tables provide additional details regarding net sales volumes, sales mix and operational drilling activity for our significant operations within this segment: Three Months Ended March 31, Net Sales Volumes 2021 2020 Increase (Decrease) Equivalent Barrels (mboed) Eagle Ford 77 114 (32) % Bakken 112 110 2 % Oklahoma 53 73 (27) % Northern Delaware 25 29 (14) % Other United States 8 12 (33) % Total United States 275 338 (19) % Three Months Ended March 31, 2021 Sales Mix - U.S. Resource Plays Eagle Ford Bakken Oklahoma Northern Delaware Total Crude oil and condensate 65 % 69 % 23 % 59 % 58 % Natural gas liquids 15 % 17 % 31 % 18 % 19 % Natural gas 20 % 14 % 46 % 23 % 23 % Three Months Ended March 31, Drilling Activity - U.S. Resource Plays 2021
2020
Gross OperatedEagle Ford : Wells drilled to total depth 30
30
Wells brought to sales 25
38
Bakken:
Wells drilled to total depth 22
24
Wells brought to sales 3
25
Wells drilled to total depth - 9 Wells brought to sales -
13
Northern Delaware : Wells drilled to total depth - 11 Wells brought to sales - 6 •Eagle Ford - Our net sales volumes were 77 mboed in the first quarter of 2021, including oil sales of 50 mbbld and we brought 25 gross company-operated wells to sales. We averaged 3 rigs and 1 frac crew during the quarter. •Bakken - Our net sales volumes were 112 mboed, including 77 mbbld of oil sales and we brought 3 gross company-operated wells to sales. We averaged 3 rigs during the quarter. Improved gas capture efforts resulted in higher gas and NGL sales that offset the lower wells to sales. •Oklahoma - Our net sales volumes were 53 mboed, including 12 mbbld of oil sales. •Northern Delaware - Our net sales volumes were 25 mboed, including 15 mbbld of oil sales. 25 --------------------------------------------------------------------------------
International
Net sales volumes were lower in the first quarter of 2021 compared to the
first quarter of 2020 primarily due to timing of E.G. liftings. The following
table provides details regarding net sales volumes for our operations within
this segment:
Three Months Ended
Increase
Net Sales Volumes 2021 2020 (Decrease)
Equivalent Barrels (mboed)
Equatorial Guinea 66 81 (19) %
Equity Method Investees
LNG (mtd) 3,766 5,064 (26) %
Methanol (mtd) 1,092 1,185 (8) %
Condensate and LPG (boed) 10,730 10,638 1 %
•Equatorial Guinea - Net sales volumes in the first quarter of 2021 were lower compared to the same period in 2020 primarily due to timing of liftings.
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Market Conditions
Commodity prices are the most significant factor impacting our revenues,
profitability, operating cash flows, the amount of capital we invest in our
business, redemption of our debt, payment of dividends and funding of share
repurchases. Beginning in December 2020 and continuing through the first three
months of 2021, commodity prices increased due to rising oil demand as COVID-19
vaccination rates and global economic activity increased. This was also
supported by ongoing petroleum supply limitations by OPEC . Extreme winter
weather in February also put upward pressure on natural gas prices during the
quarter. However, we continue to expect commodity price volatility as worldwide
demand remains below pre-pandemic levels and the pace of global economic
recovery remains uncertain. Refer to Item 1A. Risk Factors in our 2020 Annual
Report on Form 10-K for further discussion on how declines in commodity prices
could impact us.
United States The following table presents our average price realizations and the related benchmarks for crude oil and condensate, NGLs and natural gas for the first quarter of 2021 and 2020.
Three Months Ended
Increase
2021 2020 (Decrease)
Average Price Realizations(a)
Crude oil and condensate (per bbl)(b) $ 55.38 $ 44.23 25 %
Natural gas liquids (per bbl) 23.94 9.97 140 %
Natural gas (per mcf)(c) 6.31 1.60 294 %
Benchmarks
WTI crude oil average of daily prices (per bbl)$ 58.14 $ 45.78 27 %
Magellan
59.31 49.54 20 %
Mont Belvieu NGLs (per bbl)(d) 23.98 13.27 81 %
1.95 38 %
(a)Excludes gains or losses on commodity derivative instruments.
(b)Inclusion of realized gains (losses) on crude oil derivative instruments
would have decreased average price realizations by $4.61 per bbl for first
quarter 2021 and increased average price realizations by $1.47 per bbl for the
first quarter 2020.
(c)Inclusion of realized gains (losses) on natural gas derivative instruments
would have a minimal impact on average price realizations for the periods
presented.
(d)Bloomberg Finance LLP : Y-grade Mix NGL of 55% ethane, 25% propane, 5% butane,
8% isobutane and 7% natural gasoline.
Crude oil and condensate - Price realizations may differ from benchmarks due to
the quality and location of the product.
Natural gas liquids - The majority of our sales volumes are sold at reference to
Mont Belvieu prices.
Natural gas - A significant portion of our volumes are sold at bid-week prices,
or first-of-month indices relative to our producing areas.
International
The following table presents our average price realizations and the related
benchmark for crude oil for the first quarter of 2021 and 2020.
Three Months Ended
Increase
2021 2020 (Decrease)
Average Price Realizations
Crude oil and condensate (per bbl) $ 44.13 $ 36.88 20 %
Natural gas liquids (per bbl) 1.00 1.00 - %
Natural gas (per mcf) 0.24 0.24 - %
Benchmark
Brent (Europe) crude oil (per bbl)(a)$ 60.82 $ 50.44 21 %
(a)Average of monthly prices obtained from the
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Equatorial Guinea
Crude oil and condensate - Alba field liquids production is primarily condensate
and generally sold in relation to the Brent crude benchmark. Alba Plant LLC
processes the rich hydrocarbon gas which is supplied by the Alba field under a
fixed price long term contract. Alba Plant LLC extracts NGLs and secondary
condensate which is then sold by Alba Plant LLC at market prices, with our share
of the revenue reflected in income from equity method investments on the
consolidated statements of income. Alba Plant LLC delivers the processed dry
natural gas to the Alba field for distribution and sale to AMPCO and EG LNG.
Natural gas liquids - Wet gas is sold to Alba Plant LLC at a fixed-price term
contract resulting in realized prices not tracking market price. Alba Plant LLC
extracts and keeps NGLs, which are sold at market price, with our share of
income from Alba Plant LLC being reflected in the income from equity method
investments on the consolidated statements of income.
Natural gas - Dry natural gas, processed by Alba Plant LLC on behalf of the Alba
field is sold by the Alba field to EG LNG and AMPCO at fixed-price long term
contracts resulting in realized prices not tracking market price. We derive
additional value from the equity investment in our downstream gas processing
units EG LNG and AMPCO. EG LNG sells LNG on a market-based long-term contract
and AMPCO markets methanol at market prices.
Results of Operations
Three Months Ended March 31, 2021 vs. Three Months Ended March 31, 2020
Revenues from contracts with customers are presented by segment in the table
below:
Three Months Ended March 31,
(In millions) 2021 2020
Revenues from contracts with customers
United States $ 1,132 $ 970
International 45 54
Segment revenues from contracts with customers $
1,177
Below is a price/volume analysis for each segment. Refer to the preceding
Operations and Market Conditions sections for additional detail related to our net sales volumes and average price realizations.
Increase (Decrease) Related to
Three Months Ended Price Net Sales Three Months Ended
(In millions) March 31, 2020 Realizations Volumes March 31, 2021
United States Price/Volume Analysis
Crude oil and condensate $ 828 $ 159 $ (196) $ 791
Natural gas liquids 52 68 (4) 116
Natural gas 66 161 (12) 215
Other sales 24 10
Total $ 970 $ 1,132
International Price/Volume Analysis
Crude oil and condensate $ 45 $ 6 $ (14) $ 37
Natural gas liquids 1 - - 1
Natural gas 8 - (1) 7
Other sales - -
Total $ 54 $ 45
Net gain (loss) on commodity derivatives in the first quarter of 2021, was a
loss of $153 million , compared to a net gain of $202 million for the same period
in 2020. We have multiple crude oil, natural gas and NGL derivative contracts
that settle against various indices. We record commodity derivative gains/losses
as the index pricing and forward curves change each period. See Note 14 to
the consolidated financial statements for further information.
Income from equity method investments increased $56 million in first quarter of
2021 primarily due to AMPCO's triennial turnaround in first quarter of 2020
coupled with higher price realizations in first quarter of 2021.
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Production expenses decreased $39 million in the first quarter of 2021 versus
the same period in 2020, primarily as a result of the U.S. segment's lower
operational costs and continued cost management, specifically staffing and
contract labor. International segment production expense decreased due to lower
contract services and timing of E.G. liftings.
The following table provides production expense and production expense rates
(expense per boe) for each segment:
Three Months Ended
Increase Increase
($ in millions; rate in $ per boe) 2021 2020 (Decrease) 2021 2020 (Decrease)
Production Expense and Rate Expense Rate
United States $ 111 $ 143 (22) % $ 4.46 $ 4.63 (4) %
International $ 10 $ 17 (41) % $ 1.68 $ 2.35 (29) %
Shipping, handling and other operating increased $8 million despite a 19%
decline in production volumes. Winter Storm Uri caused a significant increase in
our realized natural gas prices in the U.S. segment during the current quarter.
As disclosed in our Form 10-K, certain of our processing arrangements with
midstream entities are percentage-of-proceeds contracts. We classify the
proceeds retained by the midstream companies as shipping and handling cost. The
increase in shipping and handling costs of these percentage-of-proceeds
contracts coincides with the increase in realized natural gas prices.
Impairments decreased $96 million . In the first quarter of 2020, we recognized
an impairment of goodwill related to our International reporting unit. See
Note 10 to the consolidated financial statements for more detail. Exploration expenses include unproved property impairments, dry well costs, geological and geophysical, and other costs. The following table summarizes the components of exploration expenses:
Three Months Ended
Increase
(In millions) 2021 2020 (Decrease)
Exploration Expenses
Unproved property impairments $ 15 $ 22 (32) %
Dry well costs 2 - - %
Geological and geophysical 2 1 100 %
Other 2 5 (60) %
Total exploration expenses $ 21 $ 28 (25) %
Depreciation, depletion and amortization decreased $148 million in the first
quarter of 2021 as a result of lower sales volumes in our U.S. and International
segments. Our segments apply the units-of-production method to the majority of
their assets, including capitalized asset retirement costs; therefore volumes
have an impact on DD&A expense.
The DD&A rate (expense per boe) is impacted by field-level changes in reserves,
capitalized costs and sales volume mix between fields. The following table
provides DD&A expense and DD&A expense rates for each segment:
Three Months Ended
Increase Increase
($ in millions; rate in $ per boe) 2021 2020 (Decrease) 2021 2020 (Decrease)
DD&A Expense and Rate Expense Rate
United States $ 472 $ 617 (24) % $ 19.05 $ 20.03 (5) %
International $ 19 $ 21 (10) % $ 3.09 $ 2.86 8 %
General and administrative expenses increased $13 million in the first quarter
of 2021. Included in the first quarter of 2021 are expenses of $13 million
related to terminating an aircraft lease agreement and severance related
expenses of $11 million . The severance expenses were partially offset by the
realization of cost savings from the 2020 workforce reductions, which were
reflected in lower general and administrative costs in each of our U.S. and
International segments.
Net interest and other decreased $51 million in the first quarter of 2021 versus
the same period in 2020, primarily as a result of a $41 million mark-to-market
gain on interest rate derivative contracts. The interest rate swaps were
executed to hedge variations in cash flows related to interest rate fluctuations
on our 2022 debt. See Note 14 to the consolidated financial statements for
further information.
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Segment Income
Segment income represents income which excludes certain items not allocated to
our operating segments, net of income taxes. A portion of our corporate and
operations general and administrative support costs are not allocated to the
operating segments. These unallocated costs primarily consist of employment
costs (including pension effects), professional services, facilities and other
costs associated with corporate and operations support activities. Additionally,
items which affect comparability such as: gains or losses on dispositions,
impairments of proved and certain unproved properties, goodwill and equity
method investments, unrealized gains or losses on commodity and interest rate
derivative instruments, effects of pension settlements and curtailments or other
items (as determined by the CODM) are not allocated to operating segments.
The following table reconciles segment income (loss) to net income (loss):
Three Months Ended March 31,
(In millions) 2021 2020
United States $ 212 $ (20)
International 50 (1)
Segment income (loss) 262 (21)
Items not allocated to segments, net of income taxes (165) (25)
Net income (loss) $ 97 $ (46)
United States segment income (loss) in the first quarter of 2021 was $212
million of income versus a $20 million loss for the same period in 2020. The
increase in income was primarily due to higher price realizations and lower DD&A
expense. These favorable changes were partially offset by lower sales volumes
and a realized loss on commodity derivatives in the first quarter of 2021,
whereas the prior quarter realized a gain on commodity derivatives.
International segment income (loss) in the first quarter of 2021 was $50 million
of income versus a $1 million loss for the same period in 2020. Income from
equity method investments significantly increased as a result of higher price
realizations and lower costs due to the first quarter 2020 turnaround at AMPCO's
facility. This was partially offset by lower production volumes in E.G. in the
first quarter of 2021.
Critical Accounting Estimates
There have been no material changes or developments in the evaluation of the
accounting estimates and the underlying assumptions or methodologies pertaining
to our Critical Accounting Estimates disclosed in our Form 10-K for the year
ended December 31, 2020 .
Accounting Standards Not Yet Adopted
See Note 2 to the consolidated financial statements.
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Commodity prices are the most significant factor impacting our revenues,
profitability, operating cash flows, the amount of capital we invest in our
business, payment of dividends, and funding of share repurchases. As commodity
prices increased during the first three months of 2021, we generated positive
cash flow from operations. We continue to expect volatility in commodity prices
and that could impact how much cash flow from operations we generate. The
following table presents sources and uses of cash and cash equivalents:
Three Months Ended March 31,
(In millions) 2021 2020
Sources of cash and cash equivalents
Operating activities $ 622 Disposal of assets, net of cash transferred to the buyer 3 3 Other - 8 Total sources of cash and cash equivalents $ 625$ 712 Uses of cash and cash equivalents Additions to property, plant and equipment $ (209)$ (620) Additions to other assets - (1) Purchases of common stock (9) (92) Dividends paid (23) (40) Other (1) - Total uses of cash and cash equivalents $
(242)
Cash flows generated from operating activities in the first three months of 2021
were 11% lower compared to the same period in 2020, primarily as a result of
lower production volumes, a net loss on realized commodity derivatives (as
compared to a gain in the prior quarter), and lower cash flows from working
capital. These were partially offset by higher realized commodity prices.
The following table shows capital expenditures by segment and reconciles to
additions to property, plant and equipment as presented in the consolidated
statements of cash flows:
Three Months Ended March 31,
(In millions) 2021 2020
United States $ 183 $ 561
International - -
Corporate 1 7
Total capital expenditures 184 568
Change in capital expenditure accrual 25 52
Total use of cash and cash equivalents for property, plant and equipment
$
209
The decline in our capital expenditures for theU.S. segment in the first three months of 2021 compared to the same period in 2020, was caused by lower drilling and completions activities across all four of our shale basins. Liquidity and Capital Resources Available Liquidity Our main sources of liquidity are cash and cash equivalents, internally generated cash flow from operations, sales of non-core assets, capital market transactions and our revolving Credit Facility. AtMarch 31, 2021 , we had approximately$4.1 billion of liquidity consisting of$1.1 billion in cash and cash equivalents and$3.0 billion available under our revolving Credit Facility. 31 -------------------------------------------------------------------------------- Our working capital requirements are supported by our cash and cash equivalents and our Credit Facility. We may draw on our revolving Credit Facility to meet short-term cash requirements, or issue debt or equity securities through the shelf registration statement discussed below as part of our longer-term liquidity and capital management program. Because of the alternatives available to us as discussed above, we believe that our short-term and long-term liquidity are adequate to fund not only our current operations, but also our near-term and long-term funding requirements including our capital spending programs, defined benefit plan contributions, repayment of debt maturities and other amounts that may ultimately be paid in connection with contingencies. General economic conditions, commodity prices, and financial, business and other factors, including the global pandemic, could affect our operations and our ability to access the capital markets. We continue to be rated investment grade at all three primary credit rating agencies. A downgrade in our credit ratings could increase our future cost of financing or limit our ability to access capital and could result in additional credit support requirements. We do not have any triggers on any of our corporate debt that would cause an event of default in the case of a downgrade of our credit ratings. See Item 1A. Risk Factors in our Annual Report on Form 10-K for the year endedDecember 31, 2020 for a discussion of how a downgrade in our credit ratings could affect us. OnApril 29, 2021 , our Board of Directors approved a dividend of$0.04 per share payableJune 10, 2021 to stockholders of record at the close of business onMay 19, 2021 . Capital Resources Credit Arrangements and Borrowings AtMarch 31, 2021 , we had no borrowings against our Credit Facility and$4.9 billion of total long-term debt outstanding. InMarch 2021 , we announced our intention to fully redeem our outstanding$500 million 2.8% Senior Notes due 2022. The redemption settled onApril 29, 2021 and the redemption will reduce annual cash interest expense by$14 million . Our next significant debt maturity will be the$900 million 3.85% Senior Notes dueJune 2025 . Refer to our 2020 Annual Report on Form 10-K for a listing of our long-term debt maturities. In 2018, we signed an agreement with an owner/lessor to construct and lease a new build-to-suit office building inHouston, Texas . The lessor and other participants are providing financing for up to$340 million to fund the estimated project costs. As ofMarch 31, 2021 , project costs incurred totaled approximately$182 million , including land acquisition and construction costs. Shelf Registration We have a universal shelf registration statement filed with theSEC under which we, as a "well-known seasoned issuer" for purposes ofSEC rules, have the ability to issue and sell an indeterminate amount of various types of debt and equity securities. Debt-To-Capital Ratio The Credit Facility includes a covenant requiring that our total debt to total capitalization ratio not exceed 65% as of the last day of the fiscal quarter. Our ratio was 26% atMarch 31, 2021 andDecember 31, 2020 . Capital Requirements Share Repurchase Program No share repurchases were made under our share repurchases program during the three months endedMarch 31, 2021 ; however, we repurchased$9 million of shares during the first quarter related to our tax withholding obligation associated with the vesting of employee restricted stock awards. Our share repurchase program has$1.3 billion of remaining authorization. Contractual Cash Obligations As ofMarch 31, 2021 , there are no material changes to our consolidated cash obligations to make future payments under existing contracts, as disclosed in our 2020 Annual Report on Form 10-K. 32 -------------------------------------------------------------------------------- Environmental Matters and Other Contingencies We have incurred and will continue to incur capital, operating and maintenance and remediation expenditures as a result of environmental laws and regulations. If these expenditures, as with all costs, are not ultimately offset by the prices we receive for our products and services, our operating results will be adversely affected. We believe that substantially all of our competitors must comply with similar environmental laws and regulations. However, the specific impact on each competitor may vary depending on a number of factors, including the age and location of its operating facilities, marketing areas and production processes. These laws generally provide for control of pollutants released into the environment and require responsible parties to undertake remediation of hazardous waste disposal sites. Penalties may be imposed for noncompliance. Other than the items set forth in Item 1. Legal Proceedings, there have been no significant changes to the environmental, health and safety matters under Item 1. Business or Item 3. Legal Proceedings in our 2020 Annual Report on Form 10-K. See Note 23 to the consolidated financial statements for a description of other contingencies. 33 -------------------------------------------------------------------------------- Forward-Looking Statements This Quarterly Report on Form 10-Q 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 (the "Exchange Act"). All statements, other than statements of historical fact, including without limitation statements regarding our future performance, business strategy, reserve estimates, asset quality, production guidance, drilling plans, capital plans, cost and expense estimates, asset acquisitions and dispositions, future financial position and other plans and objectives for future cash flow from operations, are forward-looking statements. Words such as "anticipate," "believe," "could," "estimate," "expect," "forecast," "future," "guidance," "intend," "may," "outlook," "plan," "positioned," "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 we believe our assumptions concerning future events are reasonable, a number of factors could cause results to differ materially from those projected, including, but not limited to: •conditions in the oil and gas industry, including supply and demand levels for crude oil and condensate, NGLs and natural gas and the resulting impact on price; •changes in expected reserve or production levels; •changes in political and economic conditions in theU.S. and E.G., including changes in foreign currency exchange rates, interest rates, and inflation rates; •actions taken by the members ofOPEC andRussia affecting the production and pricing of crude oil; and other global and domestic political, economic or diplomatic developments; •risks related to our hedging activities; •voluntary and involuntary volume curtailments; •delays or cancellations of certain drilling activities; •liability resulting from litigation or other proceedings and investigations; •capital available for exploration and development; •the inability of any party to satisfy closing conditions or delays in execution with respect to our asset acquisitions and dispositions; •drilling and operating risks; •lack of, or disruption in, access to storage capacity, pipelines or other transportation methods; •well production timing; •availability of drilling rigs, materials and labor, including the costs associated therewith; •difficulty in obtaining necessary approvals and permits; •non-performance by third parties of their contractual obligations, including due to bankruptcy; •hazards such as weather conditions, a health pandemic (including COVID-19), acts of war or terrorist acts and the governmental or military response thereto; •shortages of key personnel, including employees, contractors and subcontractors; •cyber-attacks; •changes in safety, health, environmental, tax and other regulations or requirements or initiatives including those addressing the impact of global climate change, air emissions or water management; •other geological, operating and economic considerations; and •the risk factors, forward-looking statements and challenges and uncertainties described in our 2020 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other filings with theSEC . All forward-looking statements included in this report are based on information available to us on the date of this report. Except as required by law, we undertake no obligation to revise or update any forward-looking statements as a result of new information, future events or otherwise. 34
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