Executive Summary

Solid operational execution with oil at 181 mbbl/d and total production at 371 mboe/d; free cash flow of $271M (adjusted FCF $239M) despite zero EG dividends in the quarter, with management guiding to a Q2 catch-up and sequential FCF ramp through 2024 .
Return of capital consistent with framework: 41% of adjusted CFO returned ($349M; $285M buybacks, $64M dividend); over the last 10 quarters, $5.8B returned and share count reduced by 29% .
Guidance unchanged: 2024 capex ~$2.0B, oil 190 mbbl/d, total 390 mboe/d; adjusted FCF scenario of ~$2.2B at $80 WTI, $2.50 Henry Hub, $10 TTF (scenario, not a guidance raise) .
Key narratives: extended laterals (12 three-mile wells; >20% lower cost/ft), refrac/redevelopment set (~600 wells), Permian outperformance (first 3-mile pad >5,000 boe/d per well 30-day IP), and EG uplift from global LNG pricing ($7.21/mcf realized) .

What Went Well and What Went Wrong

What Went Well
- Capital returns and balance sheet: Returned 41% of adjusted CFO ($349M) and refinanced $1.2B of notes to retire the term loan, targeting ~$20M annualized interest savings .
- Capital efficiency and productivity: 12 three-mile laterals at >20% lower cost per foot vs 2-mile wells; first three-mile Permian pad averaged >5,000 boe/d per well (30-day IP) .
- EG value uplift: Transitioned to global LNG pricing, realizing $7.21/mcf for Alba LNG; sanctioned two Alba infill wells, with first gas expected 2H25 and 2024 EG EBITDAX expected at $550–$600M (reiterated) .
What Went Wrong
- Seasonal downtimes: Winter storms reduced oil by ~4 mbbl/d in Q1, primarily Bakken; U.S. unit costs were $6.77/boe (seasonally high) but expected to decline as volumes rise .
- Lower sequential revenue and margins: Revenues from contracts fell 3% Q/Q ($1.538B vs. $1.585B), EBIT margin compressed to 28.9% from 30.8% due to mix/timing and no EG cash distributions .
- Estimates visibility: S&P Global consensus data unavailable via our tool this quarter, limiting beat/miss assessment (see “Estimates Context”) [Values retrieved from S&P Global unavailable via tool].

Financial Results

Metric	Q3 2023	Q4 2023	Q1 2024
Revenues from contracts with customers ($USD Billions)	$1.771	$1.585	$1.538
Total revenues and other income ($USD Billions)	$1.813	$1.691	$1.551
Diluted EPS (GAAP) ($)	$0.75	$0.68	$0.52
Adjusted EPS ($)	$0.77	$0.69	$0.55
EBIT ($USD Millions)	$669	$520	$448
DD&A ($USD Millions)	$583	$549	$524
EBIT Margin % (EBIT / Total revenues and other)*	36.9%	30.8%	28.9%
EBITDA Margin % ((EBIT+DD&A)/Total revenues and other)*	69.1%	63.2%	62.7%
Net Income Margin % (Net income / Total revenues and other)*	25.0%	23.5%	19.1%

*Calculated from reported figures; see citations in each cell.

EPS non-GAAP adjustments: Q1 adjustments +$20M driven primarily by unrealized commodity derivative losses; adjusted EPS $0.55 vs GAAP $0.52 .

Segment income (profitability mix)

Metric ($USD Millions)	Q3 2023	Q4 2023	Q1 2024
United States segment income	$505	$468	$334
International segment income	$62	$51	$82
Not allocated to segments	$(114)	$(122)	$(119)
Net income	$453	$397	$297

Operational and cash KPIs

KPI	Q3 2023	Q4 2023	Q1 2024
Oil production (mbbl/d)	198	189	181
Total production (mboe/d)	421	404	371
U.S. unit production cost ($/boe)	$5.07	$6.51	$6.77
Capital expenditures ($USD Millions)	$449 (accrued)	$360	$603
Net cash from operating activities ($USD Millions)	$1,066	$1,080	$757
Adjusted CFO ($USD Millions)	$1,144	$980	$861
Free cash flow ($USD Millions)	$573	$681	$271
Adjusted free cash flow ($USD Millions)	$718	$624	$239
Return of capital ($USD Millions)	$476	$417	$349

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Oil production (mbbl/d)	FY 2024	~190 at midpoint	~190 at midpoint	Maintained
Total production (mboe/d)	FY 2024	~390 at midpoint	~390 at midpoint	Maintained
Capital expenditures	FY 2024	$1.9–$2.1B (midpoint ~$2.0B)	~$2.0B (unchanged)	Maintained
Adjusted FCF scenario	FY 2024	~$1.9B at $75 WTI/$2.50 HH/$10 TTF	~$2.2B at $80 WTI/$2.50 HH/$10 TTF	Maintained (scenario deck updated)
EG EBITDAX	FY 2024	$550–$600M at $10 TTF	$550–$600M at $10 TTF (reiterated)	Maintained
Return of capital	FY 2024	≥40% of adjusted CFO	≥40% of adjusted CFO (reiterated)	Maintained
U.S. unit cost midpoint	FY 2024	Consistent with 2023 avg	Midpoint unchanged	Maintained
AMT and R&D credits	FY 2024	15% AMT on U.S. pre-tax income offset by ~$150M R&D credits	No change communicated (still applicable)	Maintained

Note: Adjusted FCF figures are scenario-based at stated price decks; company did not “raise” guidance—Q1 materials updated the scenario deck to $80 WTI while reiterating no change to operational guidance .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3’23 and Q4’23)	Current Period (Q1’24)	Trend
Capital returns discipline	≥40% CFO to shareholders; $1.7B in 2023	41% of adjusted CFO in Q1; buybacks preferred vehicle	Steady execution
Extended laterals & efficiency	Emphasis building into 2024 plan	12 three-mile wells; >20% cost/ft savings; strong Permian IPs	Strengthening
Refracs/redevelopment	Organic enhancement part of plan	~600 opportunities disclosed; ~10% of Bakken/EF activity; strong economics	Expanding
EG global LNG pricing	TTF-linked contract announced (Oct ‘23)	Realized $7.21/mcf; consolidating EG LNG revenue; EG EBITDAX reiterated	Uplifting, sustained
Permian performance & capital	Growing but disciplined allocation	Record pad performance; 20+ years of inventory at current pace; more capital likely over time	Positive momentum
Macro: oil vs gas allocation	Favor oil due to weak gas pricing	Continued focus on oil-heavy mix; production ramps Q2–Q3	Consistent
Hedging	Modest oil collars in 2024	2025 gas collars added ($2.50–$5.77 floor/ceiling) opportunistically	Opportunistic risk mgmt

Management Commentary

“We returned 41% or $350 million of our cash flow from operations back to our investors… Oil production of 181,000 barrels of oil per day was just above our guidance. And free cash flow generation was solid, despite not receiving any EG cash distributions… we expect to receive a catch-up in EG cash distributions during the second quarter.” — CEO, Lee Tillman .
“We continue to make important strides to organically enhance our asset base… improving our capital efficiency through extended lateral drilling… disclosing approximately 600 [refrac/redevelopment] opportunities across the Bakken and Eagle Ford.” — CEO, Lee Tillman .
“Priority 1 is clear: continuing to return at least 40% of our cash flow from operations to shareholders… We continue to see share repurchases as the preferred return vehicle.” — CFO, Rob White .
“First quarter… marked the transition to fully realizing global LNG pricing for Alba Gas… LNG sales at $7.21 per mcf realization drove a significant increase to the international revenue within our consolidated financials.” — CEO, Lee Tillman .
“We now expect our capital spending to be just over 60% weighted to the first half of the year, which will drive a significant sequential increase in second quarter oil production up to the midpoint of our annual guidance range, 190,000 barrels of oil per day.” — EVP Ops, Mike Henderson .

Q&A Highlights

Refracs economics and scale: Typical refrac costs ~80% of a new well; Bakken refracs competitive with basin new drills; Eagle Ford refracs/redev top quartile; ~25 refracs in 2024 as part of integrated development (~10% of EF/Bakken activity) .
Permian capital and sustainability: Expect steady increases in Permian allocation over time, not a step change; high-quality inventory with many extended laterals; targeting proven benches and conservative spacing .
EG accounting and cash flow: Consolidation of LNG sales should be positive for CFO timing vs prior equity dividends, though subject to lifting schedules; underlying EG results aligned with expectations .
Hedging strategy: 2025 Henry Hub two-way collars added at attractive floors/ceilings ($2.50/$5.77) despite limited revenue exposure to gas; opportunistic risk management .
Capital returns vs M&A: Buybacks remain preferred; M&A bar remains high post-Ensign; focus on accretion to returns, inventory life, and balance sheet .

Estimates Context

We attempted to retrieve S&P Global/Capital IQ consensus for Q1 2024 (EPS and revenue) but could not access the mapping for MRO via our tool at this time; as a result, we cannot provide an objective beat/miss analysis vs Wall Street consensus for this quarter. Values typically retrieved from S&P Global were unavailable via tool.
Reported results: Adjusted EPS $0.55; Revenues from contracts with customers $1.538B; see Financial Results tables for full comparisons vs prior quarters .

Key Takeaways for Investors

Capital return machine intact: ≥40% CFO returned; buybacks favored; Q1 delivery at 41% despite timing of EG dividends .
2024 framework unchanged with rising 2H momentum: Capex front-half weighted; production expected to ramp to 190 mbbl/d by Q2 midpoint, boosting FCF in Q2–Q3 .
Structural uplift from EG LNG pricing now visible in reported results; $7.21/mcf realization and consolidated accounting improve transparency; EG EBITDAX $550–$600M reiterated .
Capital efficiency compounding: Extended laterals (>20% cost/ft savings), refrac/redev (~600 opportunities), and Permian outperformance offer durable returns and inventory life extension .
Short-term trading catalysts: Q2 EG dividend “catch-up,” sequential oil growth to guidance midpoint, and potential continued Permian well outperformance .
Watch costs: U.S. unit costs were seasonally high in Q1 but guided to decline with rising activity volumes; margin recovery should follow volumes .
Estimate visibility: With S&P consensus unavailable via tool, market reaction may key off operational momentum and capital returns; monitor sell-side revisions once published (“Estimates Context”).

Appendix: Additional Q1 details

International specifics: EG production 45 mboe/d; sales 43 mboe/d (underlift of 24 mmcfd LNG offset by condensate overlift); International net income $82M (incl. $39M equity method investee income) .
Derivative positions: 2024 oil three-way collars (Q2–Q4) 50–60 kbbl/d; 2025 gas two-way collars 100,000 MMBtu/d at $2.50–$5.77 .

MARATHON OIL CORP (MRO)·Q1 2024 Earnings Summary