Marathon Oil : 1Q 2021 Earnings Investor Package (PDF)

First Quarter 2021

Table of Contents:
Statements of Income	2
Balance Sheets	3
Statements of Cash Flows	4
Segment Income Summary	5
United States Supplemental Financial Data	6
International Supplemental Financial Data	7
Non-GAAP Reconciliations	8 - 11

Guy Baber	713/296-1892
[e-mail]
John Reid	713/296-4380
[e-mail]

Investor Relations

5555 San Felipe Street

Houston, TX 77056-2723

Additional information regarding Investor Relations, Financial Highlights, and News Releases can be reviewed on our website at: https://ir.marathonoil.com/

May 5, 2021

Consolidated Statements of Income

Marathon Oil Corporation

			1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		Year			1st Qtr
(In millions, except per share data)			2020		2020		2020		2020		2020			2021
REVENUES AND OTHER INCOME:
Revenues from contracts with customers		$	1,024	$	490	$	761	$	822	$	3,097		$	1,177
Net gain (loss) on commodity derivatives			202		(70)		(1)		(15)		116			(153)
Income (loss) from equity method investments			(12)		(152)		(10)		13		(161)			44
Net gain (loss) on disposal of assets			9		(2)		1		1		9			-
Other income			7		6		3		9		25			3
Total revenues and other income			1,230		272		754		830		3,086			1,071
COSTS AND EXPENSES:
Production			160		129		129		137		555			121
Shipping, handling and other operating			144		105		183		164		596			152
Exploration			28		26		27		100		181			21
Depreciation, depletion and amortization			644		597		554		521		2,316			496
Impairments			97		-		1		46		144			1
Taxes other than income			66		30		49		55		200			74
General and administrative			76		88		53		57		274			89
Total costs and expenses			1,215		975		996		1,080		4,266			954
Income (loss) from operations			15		(703)		(242)		(250)		(1,180)			117
Net interest and other			(64)		(69)		(62)		(61)		(256)			(13)
Other net periodic benefit costs (credits)			-		7		(6)		(2)		(1)			3
Loss on early extinguishment of debt			-		-		-		(28)		(28)			-
Income (loss) before income taxes			(49)		(765)		(310)		(341)		(1,465)			107
Estimated income tax provision (benefit)
Current			(2)		(2)		(6)		18		8			14
Deferred			(1)		(13)		13		(21)		(22)			(4)
Total provision (benefit) for income taxes			(3)		(15)		7		(3)		(14)			10
NET INCOME (LOSS)		$	(46)	$	(750)	$	(317)	$	(338)	$	(1,451)		$	97
Effective income tax rate			6 %		2 %		(2)%		1 %		1 %			9 %
Per common share data:
Basic:
Weighted average shares (millions)			794		789		790		790		792			789
NET INCOME (LOSS)		$	(0.06)	$	(0.95)	$	(0.40)	$	(0.43)	$	(1.83)		$	0.12
Diluted:
Weighted average shares (millions)			794		789		790		790		792			789
NET INCOME (LOSS)		$	(0.06)	$	(0.95)	$	(0.40)	$	(0.43)	$	(1.83)		$	0.12
Dividends paid per common share		$	0.05	$	-	$	-	$	0.03	$	0.08		$	0.03

2

Consolidated Balance Sheets

Marathon Oil Corporation

			Mar. 31		June 30		Sept. 30		Dec. 31			Mar. 31
(In millions)			2020		2020		2020		2020			2021
ASSETS
Current assets:
Cash and cash equivalents		$	817	$	522	$	1,119	$	742		$	1,125
Receivables less allowance for doubtful accounts			703		620		643		747			921
Inventories			78		77		77		76			78
Derivative assets			193		79		61		23			-
Other current assets			118		107		22		24			26
Total current assets			1,909		1,405		1,922		1,612			2,150
Equity method investments			628		476		467		447			460
Property, plant and equipment, net			16,903		16,424		16,029		15,638			15,313
Other noncurrent assets			275		262		245		259			310
Total assets		$	19,715	$	18,567	$	18,663	$	17,956		$	18,233
LIABILITIES
Current liabilities:
Accounts payable		$	1,104	$	696	$	730	$	837		$	918
Payroll and benefits payable			68		76		72		57			37
Accrued taxes			72		77		45		72			78
Other current liabilities			198		216		219		247			366
Long-term debt due within one year			-		-		500		-			500
Total current liabilities			1,442		1,065		1,566		1,213			1,899
Long-term debt			5,502		5,503		5,405		5,404			4,905
Deferred tax liabilities			185		171		184		163			160
Defined benefit postretirement plan obligations			172		194		182		180			176
Asset retirement obligations			236		242		236		241			251
Deferred credits and other liabilities			220		217		198		194			171
Total liabilities			7,757		7,392		7,771		7,395			7,562
TOTAL STOCKHOLDERS' EQUITY			11,958		11,175		10,892		10,561			10,671
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	19,715	$	18,567	$	18,663	$	17,956		$	18,233
Common stock issued			937		937		937		937			937
Common stock held in treasury			146		147		147		148			149
Net shares outstanding at balance sheet date			791		790		790		789			788

3

Consolidated Statements of Cash Flows (YTD)

Marathon Oil Corporation

		Mar. 31			June 30		Sept. 30		Dec. 31			Mar. 31
(In millions)		2020			2020		2020		2020			2021
OPERATING ACTIVITIES:
Net income (loss)		$	(46)	$	(796)	$	(1,113)	$	(1,451)		$	97
Adjustments to reconcile to net cash provided by operating activities:
Depreciation, depletion and amortization			644		1,241		1,795		2,316			496
Impairments			97		97		98		144			1
Exploratory dry well costs and unproved property impairments			22		40		63		159			17
Net gain on disposal of assets			(9)		(7)		(8)		(9)			-
Loss on early extinguishment of debt			-		-		-		28			-
Deferred income taxes			(1)		(14)		(2)		(22)			(4)
Unrealized (gain) loss on derivative instruments			(171)		(75)		(39)		27			82
Pension and other post retirement benefits, net			(11)		(31)		(35)		(43)			(7)
Stock-based compensation			15		28		43		57			6
Equity method investments, net			28		180		189		210			(14)
Changes in:
Current receivables			407		489		467		367			(175)
Inventories			(6)		(5)		(5)		(4)			(2)
Current accounts payable and accrued liabilities			(234)		(456)		(478)		(381)			101
Other current assets and liabilities			(16)		46		83		75			61
All other operating, net			(18)		(27)		(3)		-			(37)
Net cash provided by operating activities			701		710		1,055		1,473			622
INVESTING ACTIVITIES:
Additions to property, plant and equipment			(620)		(946)		(1,090)		(1,343)			(209)
Additions to other assets			(1)		12		15		15			-
Acquisitions, net of cash acquired			-		3		(1)		(1)			-
Disposal of assets, net of cash transferred to the buyer			3		9		9		18			3
Equity method investments - return of capital			7		7		7		7			-
All other investing, net			-		-		-		1			(1)
Net cash used in investing activities			(611)		(915)		(1,060)		(1,303)			(207)
FINANCING ACTIVITIES:
Borrowings			-		-		400		400			-
Debt repayments			-		-		-		(500)			-
Debt extinguishment costs			-		-		-		(27)			-
Purchases of common stock			(92)		(92)		(92)		(92)			(9)
Dividends paid			(40)		(40)		(40)		(64)			(23)
All other financing, net			1		1		(2)		(3)			-
Net cash provided by (used in) financing activities			(131)		(131)		266		(286)			(32)
Net increase (decrease) in cash and cash equivalents			(41)		(336)		261		(116)			383
Cash and cash equivalents at beginning of period			858		858		858		858			742
Cash and cash equivalents at end of period		$	817	$	522	$	1,119	$	742		$	1,125

4

Segment Income Summary

Marathon Oil Corporation

		1st Qtr			2nd Qtr		3rd Qtr		4th Qtr		Year
(Dollars in millions)		2020			2020		2020		2020		2020
Segment income (loss)
United States		$	(20)	$	(365)	$	(135)	$	(33)	$	(553)
International			(1)		(6)		8		29		30
Segment income (loss)			(21)		(371)		(127)		(4)		(523)
Not allocated to segments - Corporate items:
Net interest and other			(64)		(69)		(62)		(68)		(263)
Other net periodic benefit costs (credits)			-		7		(6)		(2)		(1)
General and administrative			(40)		(40)		(23)		(25)		(128)
Other income and costs			(2)		(8)		4		1		(5)
Income tax (provision) benefit			2		4		(4)		-		2
Not allocated to segments - Adjustments for special items:
Net gain (loss) on disposal of assets			9		(2)		1		1		9
Proved property impairments			(2)		-		(1)		(46)		(49)
Exploratory dry well costs, unproved property impairments and other			-		-		(6)		(78)		(84)
Goodwill impairment			(95)		-		-		-		(95)
Pension settlement			(2)		(14)		(9)		(5)		(30)
Pension curtailment			-		17		-		-		17
Unrealized gain (loss) on derivative instruments			171		(96)		(36)		(66)		(27)
Unrealized gain on interest rate swaps (a)			-		-		-		12		12
Reduction in workforce (b)			-		(13)		(2)		(2)		(17)
Impairment of equity method investment			-		(152)		(18)		(1)		(171)
Loss on early extinguishment of debt			-		-		-		(28)		(28)
Other (c)			(2)		(13)		(28)		(27)		(70)
Total special items			79		(273)		(99)		(240)		(533)
Not allocated to segments - Total			(25)		(379)		(190)		(334)		(928)
Net income (loss)		$	(46)	$	(750)	$	(317)	$	(338)	$	(1,451)

1. Included within Net interest and other on our consolidated statements of income.
2. Included within General and administrative on our consolidated statements of income.
3. For the first quarter 2021, balance includes $13 million related to the termination of an aircraft lease agreement, which is included within General and administrative on our consolidated statements of income.

1st Qtr

2021

• 212
  50

262

(54)

3

(40)

(5)

-

-

(1)

-

-

-

-

(82)

41

(11)

-

-

(16)

(69)

(165)

• 97

5