Marathon Oil Corporation (NYSE:MRO) Q4 2022 Earnings Call Transcript

Michael Henderson: It’s Mike here. Yes, just a little bit more detail on ’23. We provided the reg splits and the wells to sales in the deck. So 9 to 10 rigs in total, that’s excluding the JV activity, 4 rigs in the Eagle Ford, and I’ll be 1 on the Ensign acreage with 3 in Bakken and then 2.5 in the Permian then 1.5 JV rigs in Oklahoma. I think Lee mentioned that roughly 80% of the capital is going to Eagle Ford and market Eagle Ford is acute capital asset with the addition of Ensign. And maybe a little bit surprised well, maybe not, it was Permian just grabbing the majority of the remaining capital. And really, that’s driven by the excellent results that we’ve had in Permian last year. That asset is now effectively competing for capital against the Eagle Ford and the Bakken, which is no small mean feat, making a strong case for even more capital in 2024.

And a couple of elements to that well productivity is a big part of it, seen some very, very strong results there in aggregate. The 19 wells that we brought online last year averaged IP30s of over 2,200 barrels of oil equivalent per day and a 70% oil cut. Extended production history in the county is looking really good as well. One of the Thunderbird 4H well in Red Hills, that achieved an IP 120 over 2,100 barrels of oil per day. And I think you then couple that with the team. We’ve seen the teams really excel in their completion activities, we’re probably pumping for over 19 hours a day. I think you can combine all of that together and you see the capital efficiency, a lot to like about 2022 performance then. Just paint great job that the teams have done as well with acreage trades and kind of adding to our average lateral length, it just causes that asset to become even more capital efficient.

Yes, that’s probably.

Lee Tillman: Anita, we’ll take one more question.

Operator: Our next question comes from Neil Mehta with Goldman Sachs. Please go ahead.

Neil Mehta: Thanks for squeezing me in. Just a quick question on capital efficiency. Obviously, you provided the ’23 guide here, but are you seeing any signs of real time of the second derivative of inflation improving with diesel coming off, chemicals getting a little bit better. Just talk about what is sticky and what might actually be moving back into your direction?

Lee Tillman: Well, I think that there’s no doubt that the rate of change on inflation is certainly slow. And we — as Mike said earlier, what we have embedded in this year’s budget to $1.9 billion to $2 billion is basically the inflation levels that we saw as we exited 2022. So from our perspective, to the extent that we see inflation and commodities like diesel, et cetera, start to moderate. We would expect that to be basically a tailwind for us relative to not only our capital program, but also obviously our operating cost as well. Mike, I don’t know if you want to say anything else on that?