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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period EndedMarch 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from _____ to _____
Commission file number 1-1513
mro-20220331_g1.jpg
Marathon Oil Corporation
(Exact name of registrant as specified in its charter)
Delaware25-0996816
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
990 Town and Country Boulevard, Houston, Texas  
77024-2217
(Address of principal executive offices)
(713) 629-6600
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading SymbolName of each exchange on which registered
Common Stock, par value $1.00 MRONew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.       Yes þ No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerþAccelerated filer
o  
Non-accelerated filer
o   
Smaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes No þ  
There were 707,690,859 shares of Marathon Oil Corporation common stock outstanding as of April 29, 2022.



MARATHON OIL CORPORATION
 
Unless the context otherwise indicates, references to “Marathon Oil,” “we,” “our,” or “us” in this Form 10-Q are references to Marathon Oil Corporation, including its wholly owned and majority-owned subsidiaries, and its ownership interests in equity method investees (corporate entities, partnerships, limited liability companies and other ventures over which Marathon Oil exerts significant influence by virtue of its ownership interest).
For certain industry specific terms used in this Form 10-Q, please see “Definitions” in our 2021 Annual Report on Form 10-K.
 

1


Part I – FINANCIAL INFORMATION
Item 1. Financial Statements

MARATHON OIL CORPORATION
Consolidated Statements of Income (Unaudited)
Three Months Ended
March 31,
(In millions, except per share data)20222021
Revenues and other income:  
Revenues from contracts with customers$1,761 $1,177 
Net gain (loss) on commodity derivatives(143)(153)
Income (loss) from equity method investments127 44 
Other income8 3 
Total revenues and other income1,753 1,071 
Costs and expenses:  
Production152 121 
Shipping, handling and other operating185 152 
Exploration 11 21 
Depreciation, depletion and amortization423 496 
Impairments 1 
Taxes other than income104 74 
General and administrative 73 89 
Total costs and expenses948 954 
Income (loss) from operations805 117 
Net interest and other(22)(13)
Other net periodic benefit (costs) credits4 3 
Income (loss) before income taxes787 107 
Provision (benefit) for income taxes(517)10 
Net income (loss)$1,304 $97 
Net income (loss) per share:  
Basic$1.79 $0.12 
Diluted$1.78 $0.12 
Weighted average common shares outstanding:  
Basic730 789 
Diluted732 789 
 The accompanying notes are an integral part of these consolidated financial statements.
2


MARATHON OIL CORPORATION
Consolidated Statements of Comprehensive Income (Unaudited)
Three Months Ended
March 31,
(In millions)20222021
Net income$1,304 $97 
Other comprehensive income (loss), net of tax 
Change in actuarial gain (loss) and other for postretirement and postemployment plans(4)(3)
Change in derivative hedges unrecognized gain (loss) 12 44 
Reclassification of de-designated forward interest rate swaps (2)
Other comprehensive income8 39 
Comprehensive income$1,312 $136 
 The accompanying notes are an integral part of these consolidated financial statements.

3



MARATHON OIL CORPORATION
Consolidated Balance Sheets (Unaudited)
March 31,December 31,
(In millions, except par value and share amounts)20222021
Assets  
Current assets:  
Cash and cash equivalents$681 $580 
Receivables, less reserve of $15 and $15
1,443 1,142 
Inventories78 77 
Other current assets28 22 
Total current assets2,230 1,821 
Equity method investments522 450 
Property, plant and equipment, less accumulated depreciation, depletion and amortization of $22,753 and $22,412
14,422 14,499 
Deferred tax assets554  
Other noncurrent assets253 224 
Total assets$17,981 $16,994 
Liabilities  
Current liabilities:  
Accounts payable$1,299 $1,110 
Payroll and benefits payable42 74 
Accrued taxes169 157 
Other current liabilities405 260 
Long-term debt due within one year106 36 
Total current liabilities2,021 1,637 
Long-term debt3,908 3,978 
Deferred tax liabilities144 136 
Defined benefit postretirement plan obligations132 137 
Asset retirement obligations296 288 
Deferred credits and other liabilities114 132 
Total liabilities6,615 6,308 
Commitments and contingencies
Stockholders’ Equity  
Preferred stock – no shares issued or outstanding (no par value, 26 million shares authorized)
  
Common stock:  
Issued – 937 million shares (par value $1 per share, 1.925 billion shares authorized at March 31, 2022 and December 31, 2021)
937 937 
Held in treasury, at cost – 220 million shares and 194 million shares
(5,362)(4,825)
Additional paid-in capital7,178 7,221 
Retained earnings8,523 7,271 
Accumulated other comprehensive income90 82 
Total stockholders’ equity11,366 10,686 
Total liabilities and stockholders’ equity$17,981 $16,994 
 The accompanying notes are an integral part of these consolidated financial statements.
4


MARATHON OIL CORPORATION
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended
March 31,
(In millions)20222021
Increase (decrease) in cash and cash equivalents  
Operating activities:  
Net income$1,304 $97 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation, depletion and amortization423 496 
Impairments 1 
Exploratory dry well costs and unproved property impairments8 17 
Deferred income taxes(548)(4)
Unrealized (gain) loss on derivative instruments, net114 82 
Pension and other post retirement benefits, net(9)(7)
Stock-based compensation9 6 
Equity method investments, net(79)(14)
Changes in: 
Current receivables(307)(175)
Inventories(2)(2)
Current accounts payable and accrued liabilities101 101 
Other current assets and liabilities (5)61 
All other operating, net58 (37)
Net cash provided by operating activities1,067 622 
Investing activities:  
Additions to property, plant and equipment(332)(209)
Disposal of assets, net of cash transferred to the buyer2 3 
Equity method investments - return of capital7  
All other investing, net (1)
Net cash used in investing activities(323)(207)
Financing activities:  
Shares repurchased under buyback programs(592) 
Dividends paid(52)(23)
Purchases of shares for tax withholding obligations(21)(9)
All other financing, net22  
Net cash used in financing activities(643)(32)
Net increase (decrease) in cash and cash equivalents101 383 
Cash and cash equivalents at beginning of period 580 742 
Cash and cash equivalents at end of period$681 $1,125 
The accompanying notes are an integral part of these consolidated financial statements.
5


MARATHON OIL CORPORATION
Consolidated Statements of Stockholders’ Equity (Unaudited)
 Total Equity of Marathon Oil Stockholders
(In millions)Preferred
Stock
Common
Stock
Treasury
Stock
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total
Equity
Three Months Ended March 31, 2021
December 31, 2020 Balance$ $937 $(4,089)$7,174 $6,466 $73 $10,561 
Shares repurchased under buyback programs— — — — — —  
Stock-based compensation— — (24)21 — — (3)
Net income (loss)— — — — 97 — 97 
Other comprehensive income (loss)— — — — — 39 39 
Dividends paid (per share amount of $0.03)
— — — — (23)— (23)
March 31, 2021 Balance$ $937 $(4,113)$7,195 $6,540 $112 $10,671 
Three Months Ended March 31, 2022
December 31, 2021 Balance$ $937 $(4,825)$7,221 $7,271 $82 $10,686 
Shares repurchased under buyback programs— — (592)— — — (592)
Stock-based compensation— — 55 (43)— — 12 
Net income (loss)— — — — 1,304 — 1,304 
Other comprehensive income (loss)— — — — — 8 8 
 Dividends paid (per share amount of $0.07)
— — — — (52)— (52)
March 31, 2022 Balance$ $937 $(5,362)$7,178 $8,523 $90 $11,366 
The accompanying notes are an integral part of these consolidated financial statements.





6

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)

1.    Basis of Presentation
These consolidated financial statements are unaudited; however, in the opinion of management, these statements reflect all adjustments necessary for a fair statement of the results for the periods reported. All such adjustments are of a normal recurring nature unless disclosed otherwise. These consolidated financial statements, including notes, have been prepared in accordance with the applicable rules of the SEC and do not include all of the information and disclosures required by U.S. GAAP for complete financial statements.
These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2021 Annual Report on Form 10-K. The results of operations for the first quarter of 2022 are not necessarily indicative of the results to be expected for the full year.
2.    Accounting Standards
No accounting standards were adopted in the first quarter of 2022 that had a material impact on our consolidated financial statements.
3.    Income (loss) and Dividends per Common Share
Basic income (loss) per share is based on the weighted average number of common shares outstanding. Diluted income (loss) per share assumes exercise of stock options in all periods, provided the effect is not antidilutive. The per share calculations below exclude 2 million of stock options for the three months ended March 31, 2022 and 6 million of stock options for the three months ended March 31, 2021 that were antidilutive.
Three Months Ended March 31,
(In millions, except per share data)20222021
Net income (loss)$1,304 $97 
Weighted average common shares outstanding730 789 
Effect of dilutive securities2  
Weighted average common shares, diluted732 789 
Net income (loss) per share:
Basic $1.79 $0.12 
Diluted$1.78 $0.12 
Dividends per share$0.07 $0.03 
4.    Revenues
The majority of our revenues are derived from the sale of crude oil and condensate, NGLs and natural gas under spot and term agreements with our customers in the United States and Equatorial Guinea.
As of March 31, 2022 and December 31, 2021, receivables from contracts with customers, included in receivables, less reserves were $1.2 billion and $961 million, respectively.
7

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)
The following tables present our revenues from contracts with customers disaggregated by product type and geographic areas for the three months ended March 31:
United States
March 31, 2022
(In millions)Eagle FordBakkenOklahomaNorthern DelawareOther U.S.Total
Crude oil and condensate$459 $652 $99 $88 $43 $1,341 
Natural gas liquids44 89 59 15 9 216 
Natural gas 33 43 56 12 7 151 
Other2    4 6 
Revenues from contracts with customers$538 $784 $214 $115 $63 $1,714 
March 31, 2021
(In millions)Eagle FordBakkenOklahomaNorthern DelawareOther U.S.Total
Crude oil and condensate$259 $372 $61 $77 $22 $791 
Natural gas liquids26 41 37 9 3 116 
Natural gas 47 25 109 25 9 215 
Other2    8 10 
Revenues from contracts with customers$334 $438 $207 $111 $42 $1,132 
International (E.G.)
Three Months Ended March 31,
(In millions)20222021
Crude oil and condensate$40 $37 
Natural gas liquids1 1 
Natural gas 5 7 
Other1  
Revenues from contracts with customers$47 $45 
8

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)
5.    Segment Information
    We have two reportable operating segments. Both of these segments are organized and managed based upon geographic location and the nature of the products and services offered.
United States (“U.S.”) – explores for, produces and markets crude oil and condensate, NGLs and natural gas in the United States
International (“Int’l”) – produces and markets crude oil and condensate, NGLs and natural gas outside of the United States as well as produces and markets products manufactured from natural gas, such as LNG and methanol, in Equatorial Guinea (“E.G.”)
    Segment income represents income that excludes certain items not allocated to our operating segments, net of income taxes. A portion of our corporate and operations general and administrative support costs are not allocated to the operating segments. These unallocated costs primarily consist of employment costs (including pension effects), professional services, facilities and other costs associated with corporate and operations support activities. Additionally, items which affect comparability such as: gains or losses on dispositions, impairments of proved and certain unproved properties, goodwill and equity method investments, changes in our valuation allowance, unrealized gains or losses on commodity and interest rate derivative instruments, effects of pension settlements and curtailments or other items (as determined by the chief operating decision maker (“CODM”)) are not allocated to operating segments.
 Three Months Ended March 31, 2022
(In millions)U.S.Int’l Not Allocated to SegmentsTotal
Revenues from contracts with customers$1,714 $47 $ $1,761 
Net gain (loss) on commodity derivatives(29) (114)
(b)
(143)
Income (loss) from equity method investments 127  127 
Other income4 2 2 8 
Less costs and expenses:
Production141 11  152 
Shipping, handling and other operating150 9 26 

185 
Exploration11   

11 
Depreciation, depletion and amortization404 15 4 423 
Taxes other than income99  5 104 
General and administrative30 3 40 73 
Net interest and other  22 
(c)
22 
Other net periodic benefit costs  (4)

(4)
Income tax provision (benefit)193 23 (733)
(d)
(517)
Segment income$661 $115 $528 $1,304 
Total assets$15,684 $1,102 $1,195 $17,981 
Capital expenditures(a)
$346 $(1)$3 $348 
(a)Includes accruals.
(b)Unrealized loss on commodity derivative instruments (See Note 13).
(c)Includes a $17 million gain on 2025 interest rate swaps (See Note 13).
(d)Includes a $685 million benefit related to the partial release of our valuation allowance (See Note 6).
9

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)
 Three Months Ended March 31, 2021
(In millions)U.S.Int’l Not Allocated to SegmentsTotal
Revenues from contracts with customers$1,132 $45 $ $1,177 
Net gain (loss) on commodity derivatives(71) (82)
(b)
(153)
Income (loss) from equity method investments 44  44 
Other income1 1 1 3 
Less costs and expenses:
Production111 10  121 
Shipping, handling and other operating144 4 4 152 
Exploration21   21 
Depreciation, depletion and amortization472 19 5 496 
Impairments  1 1 
Taxes other than income74   74 
General and administrative23 2 64 
(c)
89 
Net interest and other  13 
(d)
13 
Other net periodic benefit costs  (3)(3)
Income tax provision5 5  10 
Segment income (loss)$212 $50 $(165)$97 
Total assets$15,949 $1,046 $1,238 $18,233 
Capital expenditures(a)
$183 $ $1 $184 
(a)Includes accruals.
(b)Unrealized loss on commodity derivative instruments (See Note 13).
(c)Includes $13 million associated with the termination of an aircraft lease agreement and $11 million arising from severance expenses associated with a workforce reduction.
(d)Includes a $41 million gain on 2022 interest rate swaps not designated as cash flow hedges.










10

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)
6.    Income Taxes
Effective Tax Rate
The effective income tax rate is influenced by a variety of factors including the geographic and functional sources of income and the relative magnitude of these sources of income. The difference between the total provision and the sum of the amounts allocated to segments is reported in the “Not Allocated to Segments” column of the tables in Note 5.
For the three months ended March 31, 2022 and 2021, our effective income tax rates were as follows:
Three Months Ended March 31,
20222021
Effective income tax rate(66)%9 %
2022 Our effective income tax rate was different from our U.S. statutory tax rate of 21% for the three months ended March 31, 2022, due to the release of the valuation allowance on certain U.S. and state deferred tax assets resulting in a non-cash deferred tax benefit of $685 million. As we previously disclosed in our 2021 Form 10-K, we maintained a full valuation allowance on our net federal deferred tax assets and would continue to do so until there exists sufficient positive evidence to support a reversal of the allowance. In the first quarter, as a result of significant increases in commodity prices, corresponding increases in projections of our future taxable income, and the absence of objective negative evidence such as a cumulative loss in recent years, we determined we have sufficient positive evidence to release a majority of the federal valuation allowance. We have retained a partial valuation allowance on certain U.S. deferred tax assets primarily as a result of volatility in commodity prices impacting assessed likelihood of future realizability.
2021 Our effective income tax rate was different from our U.S. statutory tax rate of 21% for the three months ended March 31, 2021, as a result of the valuation allowance on net federal deferred tax assets in the U.S. which was in place at the time. In addition, the income mix of our U.S. and E.G. operations, including the income mix within E.G. between equity method investees and subsidiaries, contributed to the difference.
7.    Credit Losses
    The majority of our receivables are from purchasers of commodities or joint interest owners in properties we operate, both of which are recorded at estimated or invoiced amounts and do not bear interest. The majority of these receivables have payment terms of 30 days or less. At the end of each reporting period, we assess the collectability of our receivables and estimate the expected credit losses using historical data, current market conditions, reasonable and supportable forecasts of future economic conditions and other data as deemed appropriate.
Changes in the allowance for doubtful accounts balance were as follows:    
(In millions)March 31, 2022December 31, 2021
Beginning balance as of January 1$15 $22 
Current period provision 3 
Current period write offs (5)
Recoveries of amounts previously reserved (5)
Ending balance$15 $15 
8.    Inventories
    Crude oil and natural gas are recorded at weighted average cost and carried at the lower of cost or net realizable value. Supplies and other items consist principally of tubular goods and equipment which are valued at weighted average cost and reviewed periodically for obsolescence or impairment when market conditions indicate.
(In millions)March 31, 2022December 31, 2021
Crude oil and natural gas$13 $8 
Supplies and other items65 69 
Inventories $78 $77 
11

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)
9.    Property, Plant and Equipment
(In millions)March 31, 2022December 31, 2021
United States$14,038 $14,097 
International330 347 
Corporate54 55 
Net property, plant and equipment$14,422 $14,499 
As of March 31, 2022 and December 31, 2021, we had $53 million and $80 million, respectively, of exploratory well costs capitalized greater than one year related to suspended wells. Management believes these wells exhibit sufficient quantities of hydrocarbons to justify potential development. The vast majority of the suspended wells require completion activities and installation of infrastructure in order to classify the reserves as proved.
10.    Impairments
    The following table summarizes impairment charges of proved properties and their corresponding fair values.
 Three Months Ended March 31,
 20222021
(In millions)Fair ValueImpairmentFair ValueImpairment
Long-lived assets held for use$ $ $ $1 
Asset retirement costs of long-lived assets$ $ $ $ 
11.    Asset Retirement Obligations
Asset retirement obligations primarily consist of estimated costs to remove, dismantle and restore land or seabed at the end of oil and gas production operations. Changes in asset retirement obligations were as follows:
March 31,
(In millions)20222021
Beginning balance as of January 1$316 $254 
Incurred liabilities, including acquisitions7 4 
Settled liabilities, including dispositions(3)(1)
Accretion expense (included in depreciation, depletion and amortization)4 3 
Revisions of estimates 2 
Ending balance as of March 31, total
$324 $262 
Ending balance as of March 31, short-term
$28 $11 
12. Leases
Lessee
Balance sheet information related to right-of-use (‘ROU’) assets and lease liabilities was as follows:
12

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)
(In millions)Balance Sheet Location:March 31, 2022December 31, 2021
ROU assets:
Operating leasesOther noncurrent assets$103 $59 
Finance leasesOther noncurrent assets33 28 
Total ROU assets$136 $87 
Lease liabilities:
Current liabilities
Operating leasesOther current liabilities$70 $40 
Finance leasesOther current liabilities7 6 
Noncurrent liabilities
Operating leasesDeferred credits and other liabilities37 23 
Finance leasesDeferred credits and other liabilities26 24 
Total lease liabilities$140 $93 
Operating Leases
We enter into various lease agreements to support our operations including drilling rigs, well fracturing equipment, compressors, buildings, vessels, vehicles and miscellaneous field equipment. We primarily act as a lessee in these transactions and the majority of our existing leases are classified as either short-term or long-term operating leases.
Finance Leases
In 2018, we signed an agreement with an owner/lessor to construct and lease a new build-to-suit office building in Houston, Texas. The initial lease term is five years and commenced in late September 2021 after the new Houston office was ready for occupancy. In March 2022, we made our first cash lease payment. For the three months ended March 31, 2022, our cash lease payments were immaterial. At the end of the initial lease term, we can negotiate to extend the lease term for an additional five years, subject to the approval of the participants; purchase the property subject to certain terms and conditions; or remarket the property to an unrelated third party. The lease contains a residual value guarantee of 100% of the total acquisition and construction costs.
Lessor
Our wholly owned subsidiary, Marathon E.G. Production Limited, is a lessor for residential housing in E.G., which is occupied by EGHoldings, a related party equity method investee see Note 21. The lease was classified as an operating lease and expires in 2024, with a lessee option to extend through 2034. Lease payments are fixed for the entire duration of the agreement at approximately $6 million per year. Our lease income is reported in other income in our consolidated statements of income for all periods presented. The undiscounted cash flows to be received under this lease agreement are summarized below.
(In millions)Operating Lease Future Cash Receipts
2022$5 
20236 
20246 
20256 
20266 
Thereafter48 
Total undiscounted cash flows$77 
13.  Derivatives
For further information regarding the fair value measurement of derivative instruments, see Note 14. All of our commodity derivatives are subject to enforceable master netting arrangements or similar agreements under which we report net amounts.
The following tables present the gross fair values of derivative instruments and the reported net amounts along with where they appear on the consolidated balance sheets.
13

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)
March 31, 2022
(In millions)AssetLiabilityNet Asset (Liability)Balance Sheet Location
Not Designated as Hedges
Commodity$ $122 $(122)Other current liabilities
Interest Rate1  1 Other noncurrent assets
Total Not Designated as Hedges$1 $122 $(121)
Cash Flow Hedges
Interest Rate$1 $ $1 Other current assets
Interest Rate9  9 Other noncurrent assets
Total Designated Hedges$10 $ $10 
Total$11 $122 $(111)

December 31, 2021
(In millions)AssetLiability