Marathon Oil Reports Second Quarter 2017 Results

Outstanding Operational Results Drive 7% Sequential Oil Growth;� Raising 2017 Production Guidance with Greater Capital Efficiency

HOUSTON, Aug. 02, 2017 (GLOBE NEWSWIRE) -- Marathon Oil Corporation (NYSE:MRO) today reported a second quarter 2017 net loss of $139 million, or $0.16 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. The adjusted net loss was $145 million, or $0.17 per diluted share. Net operating cash flow was $422 million, or $471 million before changes in working capital.

Highlights

• Total Company production from continuing operations increased 6% sequentially to 349,000 net boed, excluding 11,000 net boed from Libya; oil grew 7% excluding Libya
• U.S. resource play production grew 6% sequentially, averaging 202,000 net boed
• Oklahoma Resource Basin production grew 11% sequentially with continued focus on leasehold, delineation and infill spacing; 6 new standard lateral wells from the high-density Hansens STACK pilot delivered average 30-day IPs of 915 boed (55% oil)
• Eagle Ford production up sequentially with fewer wells to sales due to outstanding new well performance; top 10 wells to sales had 30-day IPs averaging 2,340 boed (69% oil)
• First two Bakken Hector wells with enhanced completion designs achieved 30-day IPs averaging 2,500 boed (85% oil)
• Successful first MRO-designed completion in Northern Delaware achieved 30-day IP of 1,500 boed (72% oil), pushing delineation farther west in Eddy County
• Ended the quarter with $2.6 billion of cash on the balance sheet, up from the previous quarter

"With outstanding operational results across all our assets in the second quarter, we delivered on our commitment to resume sequential growth with total Company production, excluding Libya, and the U.S. resource plays increasing 6 percent," said Marathon Oil President and CEO Lee Tillman. "We also made important progress on several key strategic objectives in the resource plays, while exceeding expectations on efficiency, base performance and new well productivity.

"As a result, we're increasing our full-year total Company oil and BOE production growth guidance of 6 percent at the midpoint, adjusted for divestitures, to 7 percent, as well as increasing our 20 to 25 percent exit rate growth in the U.S. resource plays to 23 to 27 percent growth, all within a 10 percent lower capital budget.

"Our operational momentum has us well positioned to continue our sequential growth in the resource plays into 2018, with an objective to live within cash flows."

U.S. E&P
U.S. E&P production available for sale averaged 222,000 net barrels of oil equivalent per day (boed) for second quarter 2017, up 7 percent compared to 208,000 net boed in the prior quarter and up 9 percent from the year-ago quarter, adjusted for dispositions. Second quarter unit production costs were $5.86 per barrel of oil equivalent (boe).

OKLAHOMA RESOURCE BASINS: The Company's unconventional Oklahoma production increased 11 percent to 49,000 net boed during second quarter 2017, compared to 44,000 net boed in the prior quarter and up more than 80 percent from the year-ago quarter. Marathon Oil's second STACK infill spacing pilot, the Hansens pad located in the normally pressured Meramec black oil window east of the Yost pad, tested a tighter well spacing design. The six new standard lateral wells had 30-day initial production (IP) rates averaging 915 boed (55% oil). The Company also continued delineation and leasehold activity with strong results, including a STACK Meramec extended-lateral well, the Chapman, which achieved a 30-day IP averaging 3,185 boed (52% oil) expanding the volatile oil window farther west in Blaine County.

EAGLE FORD: Marathon Oil's production in the Eagle Ford averaged 100,000 net boed in second quarter 2017, up from 99,000 net boed in the prior quarter. The Company brought 41 gross Company-operated wells to sales in the second quarter, compared to 47 wells to sales in the previous quarter. The top 10 wells to sales had 30-day IP rates averaging 2,340 boed (69% oil). During the quarter, a new Company record was set again for the fastest well drilled in the Eagle Ford at a rate of more than 4,200 feet per day.

BAKKEN: In second quarter 2017, Marathon Oil's Bakken production averaged 49,000 net boed, compared to 48,000 net boed in the prior quarter. The Company's first two Hector wells with enhanced completion designs are performing above expectations with 30-day IP rates averaging 2,500 boed (85% oil). Seven Myrmidon wells were brought to sales in July with 24-hour IP rates averaging over 4,000 net boed (78% oil).

NORTHERN DELAWARE: The Company's Northern Delaware production averaged 4,000 net boed in second quarter 2017, reflecting the May 1 closing of BC Operating assets and June 1 closing of Black Mountain assets. During the second quarter, the Company brought online its first well with a Marathon Oil-designed completion. The Cypress 1H well, a Wolfcamp X-Y well in Eddy County, was a western delineation test that achieved a 30-day IP rate averaging 1,500 boed (72% oil) from a 4,600-foot lateral. The Black River well, a Wolfcamp X-Y well with a 9,400-foot lateral, was brought online in early second quarter and has a 90-day IP rate of 1,275 boed (73% oil).

International E&P
International E&P production available for sale (excluding Libya) averaged 127,000 net boed for second quarter 2017, up 4 percent compared to 122,000 net boed in the prior quarter, and up 6 percent over the year-ago quarter. Second quarter 2017 unit production costs (excluding Libya) were $4.03 per boe. Equatorial Guinea production available for sale averaged 107,000 net boed in second quarter 2017 compared to 105,000 net boed in the previous quarter. U.K. production available for sale averaged 18,000 net boed in second quarter 2017, up 20 percent compared to 15,000 net boed in the previous quarter. Marathon Oil had two liftings in Libya, with production available for sale averaging 11,000 net boed in the second quarter.

Guidance
Marathon Oil expects third quarter 2017 U.S. E&P production available for sale to average 230,000 to 240,000 net boed. Third quarter International E&P production available for sale, excluding Libya, is expected to be within a range of 115,000 to 125,000 net boed including scheduled turnarounds in the U.K.

Marathon Oil expects its 2017 capital program to be in a range of $2.1 to $2.2 billion, down from $2.4 billion. The Company raised its full-year 2017 production available for sale forecast from the combined U.S. and International E&P segments, excluding Libya, to a range of 345,000 to 360,000 net boed, an increase to 7 percent at the midpoint on a divestiture-adjusted basis. U.S. resource plays are expected to exit the year with both oil and BOE production 23 to 27 percent higher than fourth quarter 2016, up from the previous estimate of 20 to 25 percent growth.

Corporate
Net cash provided by operating activities from continuing operations was $422 million during second quarter 2017, and net cash provided by continuing operations before changes in working capital was $471 million. Cash additions to property, plant and equipment were $492 million in second quarter 2017. In the second quarter, adjusted net loss and operating cash flow before working capital included expenses of approximately $26 million due to accruals for a legal matter, and sales-and-use tax assessments related to previous tax periods.

Total liquidity as of June 30 was $5.9 billion, which consists of $2.6 billion in cash and cash equivalents and an undrawn revolving credit facility of $3.3 billion. In June, the Company extended the maturity of its undrawn revolving credit facility by one year to 2021, and in July it upsized the credit facility from $3.3 billion to $3.4 billion.

In July the Company priced an offering of $1 billion of 4.4 percent Senior Notes due in 2027. The net proceeds from the offering plus existing cash on hand will be used to redeem Senior Notes due in 2017, 2018 and 2019. The redemption of these notes will be completed on Aug. 14, 2017. The offering and redemption will result in a reduction in total gross debt of approximately $750 million, generate annual cash interest savings of approximately $60 million, and extend the maturity schedule. In July, Marathon Oil also terminated $750 million in interest rate hedges for cash proceeds of $54 million.

The Company's webcast commentary and associated slides related to Marathon Oil's financial and operational review, as well as the Quarterly Investor Packet, will be posted to the Company's website at http://ir.marathonoil.com� as soon as practicable following this release today, Aug. 2. The Company will conduct a question and answer webcast/call on Thursday, Aug. 3, at 10:00 a.m. ET. The associated commentary and answers to questions will include forward-looking information. To listen to the live webcast, visit the Marathon Oil website at http://www.marathonoil.com. The audio replay of the webcast will be posted by Aug. 4.

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 (loss) and net cash provided by operations before changes in working capital, to 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 (loss) as another way to meaningfully represent our 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. See the tables below for reconciliations between each non-GAAP financial measure and its most directly comparable GAAP financial measure. 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 future performance, business strategy, asset quality, drilling plans, production guidance, capital plans, use of proceeds from the Company's debt offering, 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; the inability for any party to satisfy closing conditions with respect to the disposition; 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 2016 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 Contact:

Zach Dailey: 713-296-4140