Marathon Oil Earnings Call Nuggets: Downspacing Scenario, Norway & Libya
Doug Leggate – Bank of America Merrill Lynch: Lee, congratulations on your appointment. It seems a long time in stakes on Upstream Advisor, but two questions if I may. First of all on the Eagle Ford so you’re going to wait until December to give us downspacing results, but (indiscernible) purposes I guess EOG is very – and a lot of peers have pretty much already shown us what the asset can do. I guess my question is on downspacing scenario, you have 10-year drilling inventory. Is that an inventory that you would want to accelerate going forward or is the current drilling pace optimal in your mind and then I have a follow up, please?
Clarence P. Cazalot Jr. – Executive Chairman: Doug, this is Clarence and I think you are right that others are more advanced perhaps in their overall understanding of reservoir in terms of the potential for downspacing and recognizing that the geology does change a bit across even the core of the Eagle Ford. I think it’s important for us to do our diligence to do the right technical work, so we indeed can make the right capital allocation decisions as we indicated earlier. I will say part of what you will hear I believe in December will be spot on relative to your question which is the issue of acceleration, we all recognized the value of acceleration, but at the same time as we have spoken to you before, it’s very important that you not outrun certainly the capabilities to process, transport, market the hydrocarbon or indeed outrun the capabilities of the overall industry infrastructure, so I think what you will see from us is a plan that we believe optimizes the value of the resource we have there but does in an appropriate way and is at right pace.
Doug Leggate – Bank of America Merrill Lynch: Thanks for that, Clarence, and I apologize I should offer you congratulations as well and everything you’ve done here while you have been here. If I may my follow-up is I guess is to either of you two gentlemen, and in terms of the portfolio, Clarence, you are leaving the Company with a great deal of cash flow, tremendous balance sheet, but also an international declining asset base, and beyond the Eagle Ford, one could argue not a great deal of visibility. So I’m just kind of thinking about what’s the next part of the story for Marathon? Is there an acquisition story in terms of do you feel is if you have an inventory to sustain the current visibility, or do you see using that cash and I’ll leave it there?
Lee M. Tillman – President and CEO: Doug, this is Lee and thanks for the kind words. In terms of looking forward, Doug, I think we want to keep the opportunity aperture wide open. I think we’ve talked already about potential acceleration in the Eagle Ford, I would also add that it probably applies to the Bakken as well. We have a lot of running room in both of those areas. I think we’ll be able to talk more in depth about that in the December Analyst Meeting that Howard has already mentioned. All of that work will be underpinned by the sound science that we’re currently doing certainly in the Eagle Ford on the downspacing pilots. As we look more broadly, we are looking at high impact exploration wells and some key plays around the world that would have the net effect to potentially strengthening our international portfolio. Within our international portfolio of base assets, they are still strong performing assets. If you look at the uptime and reliability performance, clearly its top tier in the industry and those barrels are some of our most profitable barrels, and we’ll continue to look for incremental investments in those base assets. In addition to that, we remain open to acquisitions that that make sense to our portfolio and we will continue to look for bolt-on acquisitions in North America that are going to be accretive to our overall portfolio. So, I think we have a lot of levers to pull to continue to drive the portfolio. We’ll also continue to look at those assets that may no longer fit our portfolio. Most recently, of course, we announced the sale of the Block in Angola and I think that’s indicative of us continuing to high-grade our portfolio and look to develop a very competitive portfolio in our peer group.
Clarence P. Cazalot Jr. – Executive Chairman: Doug, I would simply say, you’re right. Our international assets particularly in the North Sea are declining, but you’ll recognize our overall 5% to 7% growth rate incorporates that decline. So, indeed, we are managing that. As Lee said, these are assets that generate very significant cash flow that help fund, if you will, our domestic growth. So, again, I would simply say we recognize those declines. They are built into our projections and our projections don’t include any acceleration, which indeed could enhance or increase even to 5% to 7%, if we believe that’s the right thing to do.
Norway & Libya
Arjun Murti – Goldman Sachs: My thanks to the new format of emailing out the prepared remarks the night before. I didn’t mind the font, Howard, but regardless appreciate the – to get all that stuff ahead of time and just going straight to Q&A. Just a follow-up question…
Lee M. Tillman – President and CEO: At least, now Arjun, you don’t have to decide whether we are alive or Memorex…
Arjun Murti – Goldman Sachs: Definitely cuts out that risk. Just a few follow-up questions on the portfolio and you may not be able to comment on all of this, but there have been some reports about whether you continue to have an interest in Libya, if you can address that. On the Norway piece, I think that the clients are meeting your expectations. Can you talk about things that you can do that can either alleviate that decline or is it just kind of normal course there? And then maybe for Lee, comments on the oil sands which at various times have been talked about as a potential divestiture candidate, how you are feeling about that asset?
Clarence P. Cazalot Jr. – Executive Chairman: Maybe – first of all with respect to Norway, Arjun I think the declines thus far this year have been less than we expect and that has really helped drive stronger performance or stronger results out of our international production side. And again, I would attribute it as Lee said earlier, very strong reliability. Our teams are really outstanding and keeping those assets running at the optimum rate. But the reality is, is we’ve talked about before that that asset is going to go into decline. It’s a managed decline, because we have a number of offsets satellite field will tie back. You know the boiler project which is under development currently will come on stream in the fourth quarter of 2014, all of which will begin to flatten that decline, but nonetheless a decline. But again, as we’ve discussed many, many times, the Norwegian barrels are high revenue and very low cost – cash cost, and so very high strong cash margin despite a 78% tax rate. But again that will be a portfolio decision Lee will have make, and then I think with respect to Libya, as we have done with other assets that we are potentially reviewing, we don’t comment on specific assets that we may or may not sell Arjun. Again as we’ve discussed that puts us in an awkward position in terms of any negotiations we have or government approvals. So, we prefer not to comment on that one.
Lee M. Tillman – President and CEO: I think it’s important, Arjun, though we recognize that we have delivered on our assets high-grading. I think commitments were at the upper end of the range of what we’ve talked about in the past that doesn’t mean that we’ve completed that process. It’s an Evergreen process and as Clarence said we won’t comment specifically on Libya or oil sands, but we do recognize that high-grading our portfolio is one of the tools that’s available to us to continue to deliver competitive returns and we will continue to use that.
A Closer Look: Marathon Oil Earnings Cheat Sheet>>