Marathon Oil chooses cash returns over oil production ramp-up

Paul Takahashi 2/17/2022

(Bloomberg) — Marathon Oil Corp. said oil and natural gas production won’t increase this year as it concentrates on pouring cash into dividends and share buybacks. 

The shale giant announced plans to spend $1.2 billion on capital projects this year, in line with analysts’ expectations for a 20% increase from the 2021 level, according to a statement on Wednesday. The company forecasts generating more than $3 billion of free cash flow, exceeding estimates by half a billion dollars.  

Marathon said it expects to exceed its commitment to return a minimum of 40% of cash from operations to investors, assuming oil prices average around $60 a barrel or higher. Per-share adjusted earnings of 77 cents exceeded the average estimate by 22 cents. 

The company pledged to continue buying back shares after repurchasing $1 billion since October, reducing share count by 8%. The promise comes three weeks after Marathon increased its quarterly dividend by 17%.

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