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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, 2021
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
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.)
5555 San Felipe Street, Houston, Texas  
77056-2723
(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 788,153,032 shares of Marathon Oil Corporation common stock outstanding as of April 30, 2021.



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 2020 Annual Report on Form 10-K.
 Table of Contents
 Page
 
 
 
 
 
 
 

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)20212020
Revenues and other income:  
Revenues from contracts with customers$1,177 $1,024 
Net gain (loss) on commodity derivatives(153)202 
Income (loss) from equity method investments44 (12)
Net gain on disposal of assets 9 
Other income3 7 
Total revenues and other income1,071 1,230 
Costs and expenses:  
Production121 160 
Shipping, handling and other operating152 144 
Exploration 21 28 
Depreciation, depletion and amortization496 644 
Impairments1 97 
Taxes other than income74 66 
General and administrative 89 76 
Total costs and expenses954 1,215 
Income from operations117 15 
Net interest and other(13)(64)
Other net periodic benefit (costs) credits3  
Income (loss) before income taxes107 (49)
Provision (benefit) for income taxes10 (3)
Net income (loss)$97 $(46)
Net income (loss) per share:  
Basic$0.12 $(0.06)
Diluted$0.12 $(0.06)
Weighted average common shares outstanding:  
Basic789 794 
Diluted789 794 
 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)20212020
Net income (loss)$97 $(46)
Other comprehensive income (loss), net of tax 
Change in actuarial gain (loss) and other for postretirement and postemployment plans(3) 
Change in derivative hedges unrecognized gain (loss) 44 (22)
Reclassification of de-designated forward interest rate swaps(2) 
Other comprehensive income (loss)39 (22)
Comprehensive income (loss)$136 $(68)
 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)20212020
Assets  
Current assets:  
Cash and cash equivalents$1,125 $742 
Receivables, less reserve of $24 and $22
921 747 
Inventories78 76 
Other current assets26 47 
Total current assets2,150 1,612 
Equity method investments460 447 
Property, plant and equipment, less accumulated depreciation, depletion and amortization of $20,810 and $20,358
15,313 15,638 
Other noncurrent assets310 259 
Total assets$18,233 $17,956 
Liabilities  
Current liabilities:  
Accounts payable$918 $837 
Payroll and benefits payable37 57 
Accrued taxes78 72 
Other current liabilities366 247 
Long-term debt due within one year500  
Total current liabilities1,899 1,213 
Long-term debt4,905 5,404 
Deferred tax liabilities160 163 
Defined benefit postretirement plan obligations176 180 
Asset retirement obligations251 241 
Deferred credits and other liabilities171 194 
Total liabilities7,562 7,395 
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, 2021 and December 31, 2020)
937 937 
Held in treasury, at cost – 149 million shares and 148 million shares
(4,113)(4,089)
Additional paid-in capital7,195 7,174 
Retained earnings6,540 6,466 
Accumulated other comprehensive income112 73 
Total stockholders’ equity10,671 10,561 
Total liabilities and stockholders’ equity$18,233 $17,956 
 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)20212020
Increase (decrease) in cash and cash equivalents  
Operating activities:  
Net income (loss)$97 $(46)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:  
Depreciation, depletion and amortization496 644 
Impairments1 97 
Exploratory dry well costs and unproved property impairments17 22 
Net gain on disposal of assets (9)
Deferred income taxes(4)(1)
Unrealized (gain) loss on derivative instruments, net82 (171)
Pension and other post retirement benefits, net(7)(11)
Stock-based compensation6 15 
Equity method investments, net(14)28 
Changes in: 
Current receivables(175)407 
Inventories(2)(6)
Current accounts payable and accrued liabilities101 (234)
Other current assets and liabilities 61 (16)
All other operating, net(37)(18)
Net cash provided by operating activities622 701 
Investing activities:  
Additions to property, plant and equipment(209)(620)
Additions to other assets (1)
Disposal of assets, net of cash transferred to the buyer3 3 
Equity method investments - return of capital 7 
All other investing, net(1) 
Net cash used in investing activities(207)(611)
Financing activities:  
Purchases of common stock(9)(92)
Dividends paid(23)(40)
All other financing, net 1 
Net cash used in financing activities(32)(131)
Net increase (decrease) in cash and cash equivalents383 (41)
Cash and cash equivalents at beginning of period 742 858 
Cash and cash equivalents at end of period$1,125 $817 
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, 2020
December 31, 2019 Balance$ $937 $(4,089)$7,207 $7,993 $105 $12,153 
Cumulative-effect adjustment— — — — (12)— (12)
Shares issued - stock-based compensation— — 121 (83)— — 38 
Shares repurchased— — (91)— — — (91)
Stock-based compensation— — — (22)— — (22)
Net income (loss)— — — — (46)— (46)
Other comprehensive income (loss)— — — — — (22)(22)
Dividends paid (per share amount of $0.05)
— — — — (40)— (40)
March 31, 2020 Balance$ $937 $(4,059)$7,102 $7,895 $83 $11,958 
Three Months Ended March 31, 2021
December 31, 2020 Balance$ $937 $(4,089)$7,174 $6,466 $73 $10,561 
Shares issued - stock based compensation— — (15)10 — — (5)
Shares repurchased— — (9)— — — (9)
Stock-based compensation— — — 11 — — 11 
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 
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 2020 Annual Report on Form 10-K. The results of operations for the first quarter of 2021 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 2021 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 6 million of stock options for the three months ended March 31, 2021 and 2020 that were antidilutive.
Three Months Ended March 31,
(In millions, except per share data)20212020
Net income (loss)$97 $(46)
Weighted average common shares outstanding789 794 
Effect of dilutive securities  
Weighted average common shares, diluted789 794 
Net income (loss) per share:
Basic $0.12 $(0.06)
Diluted$0.12 $(0.06)
Dividends per share$0.03 $0.05 
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, 2021 and December 31, 2020, receivables from contracts with customers, included in receivables, less reserves were $761 million and $572 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 as follows:
United States
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 
March 31, 2020
(In millions)Eagle FordBakkenOklahomaNorthern DelawareOther U.S.Total
Crude oil and condensate$307 $330 $84 $74 $33 $828 
Natural gas liquids16 10 21 3 2 52 
Natural gas 23 8 29 3 3 66 
Other2    22 24 
Revenues from contracts with customers$348 $348 $134 $80 $60 $970 
International (E.G.)
Three Months Ended March 31,
(In millions)20212020
Crude oil and condensate$37 $45 
Natural gas liquids1 1 
Natural gas 7 8 
Revenues from contracts with customers$45 $54 

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”) – explores for, 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 which 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, 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, 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 14).
(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.
9

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)
 Three Months Ended March 31, 2020
(In millions)U.S.Int’l Not Allocated to SegmentsTotal
Revenues from contracts with customers$970 $54 $ $1,024 
Net gain on commodity derivatives31  171 
(b)
202 
Income (loss) from equity method investments (12) (12)
Net gain on disposal of assets  9 9 
Other income4 2 1 7 
Less costs and expenses:
Production143 17  160 
Shipping, handling and other operating140 3 1 144 
Exploration28   28 
Depreciation, depletion and amortization617 21 6 644 
Impairments  97 
(c)
97 
Taxes other than income66   66 
General and administrative32 4 40 76 
Net interest and other  64 64 
Income tax benefit(1) (2)(3)
Segment loss$(20)$(1)$(25)$(46)
Total assets$17,453 $1,405 $857 $19,715 
Capital expenditures(a)
$561 $ $7 $568 
(a)Includes accruals.
(b)Unrealized gain on commodity derivative instruments (See Note 14).
(c)Includes the full impairment of the International reporting unit goodwill of $95 million (see Note 13).









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, 2021 and 2020, our effective income tax rates were as follows:
Three Months Ended March 31,
20212020
Effective income tax rate9 %6 %
The following items caused the effective income tax rates to be different from our U.S. statutory tax rate of 21% for 2021 and 2020:
We currently have a valuation allowance on net federal deferred tax assets in the U.S., which results in no federal deferred tax expense or benefit on current year U.S. activity. This impact along with the income mix within E.G. between equity method investees and subsidiaries reduces the effective tax rate below the statutory tax rate for the periods ended March 31, 2021 and 2020.
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, 2021December 31, 2020
Beginning balance as of January 1$22 $11 
Cumulative-effect adjustment 12 
Current period provision(a)
2 22 
Current period write offs (13)
Recoveries of amounts previously reserved (10)
Ending balance$24 $22 
(a)As of March 31, 2021 and December 31, 2020, the current period provision consisted of $1 million and $10 million in joint interest receivables, respectively, and $1 million and $12 million in trade receivables, respectively.
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, 2021December 31, 2020
Crude oil and natural gas$13 $10 
Supplies and other items65 66 
Inventories $78 $76 
11

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)
9.    Property, Plant and Equipment
(In millions)March 31, 2021December 31, 2020
United States$14,853 $15,156 
International396 414 
Corporate64 68 
Net property, plant and equipment$15,313 $15,638 

As of March 31, 2021 and December 31, 2020, we had $145 million and $98 million, respectively, of exploratory well costs capitalized greater than one year related to suspended wells. Management believes these wells exhibit sufficient quantities of hydrocarbons to justify potential development. The vast majority of the suspended wells require completion activities and installation of infrastructure in order to classify the reserves as proved.
10.    Impairments
    The following table summarizes impairment charges of proved properties and goodwill and their corresponding fair values.
 Three Months Ended March 31,
 20212020
(In millions)Fair ValueImpairmentFair ValueImpairment
Long-lived assets held for use$ $1 $ $2 
Goodwill$ $ $ $95 

2020 – Impairments included $95 million of goodwill impairment in the International reporting unit. See Note 13 for further information.
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:
Three Months Ended March 31,
(In millions)20212020
Beginning balance as of January 1$254 $254 
Incurred liabilities, including acquisitions4 1 
Settled liabilities, including dispositions(1)(2)
Accretion expense (included in depreciation, depletion and amortization)3 3 
Revisions of estimates2 (9)
Ending balance as of March 31 (a)
$262 $247 
(a)    Ending balances include $11 million classified as short-term at March 31, 2021 and 2020.
12. Leases
We enter into various lease agreements to support our operations including drilling rigs, well fracturing equipment, compressors, buildings, aircraft, 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.





12

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)
Supplemental balance sheet information related to leases was as follows:
(In millions)March 31, 2021December 31, 2020
Operating Leases:Balance Sheet Location:
Right-of-use assetOther noncurrent assets$112 $133 
Current portion of long-term lease liabilityOther current liabilities$62 $70 
Long-term lease liabilityDeferred credits and other liabilities$58 $67 
    Our wholly owned subsidiary, Marathon E.G. Production Limited, is a lessor for residential housing in Equatorial Guinea, which is occupied by EGHoldings, a related party equity method investee see Note 22. 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
2021$5 
20226 
20236 
20246 
20256 
Thereafter54 
Total undiscounted cash flows$83 
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 lessor and other participants are providing financing for up to $340 million to fund the estimated project costs. As of March 31, 2021, project costs incurred totaled approximately $182 million, including land acquisition and construction costs. The initial lease term is five years and will commence once construction is substantially complete and the new Houston office is ready for occupancy, which is expected to occur in the second half of 2021. 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 approximately 89% of the total acquisition and construction costs.
13.  Goodwill
Goodwill is tested for impairment on an annual basis, or between annual tests when events or changes in circumstances indicate the fair value of a reporting unit with goodwill may have been reduced below its carrying value. During the first quarter of 2020, a global pandemic caused a substantial deterioration in the worldwide demand of hydrocarbons. The commensurate decline in our market capitalization indicated that it was more likely than not that the fair value of the International reporting unit was less than its carrying value.
We estimated the fair value of our International reporting unit using a combination of market and income approaches. The market approach referenced observable inputs specific to us and our industry, such as the price of our common equity, our enterprise value and valuation multiples of us and peers from the investor analyst community. The income approach utilized discounted cash flows, which were based on forecasted assumptions. These valuation methodologies represent Level 3 fair value measurements. Based on the results, we concluded our goodwill was fully impaired, and recorded an impairment of $95 million in the consolidated statements of income for the first quarter of 2020. This represented the entirety of our goodwill on our consolidated balance sheet.


13

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)
14.  Derivatives
For further information regarding the fair value measurement of derivative instruments, see Note 15. 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.
March 31, 2021
(In millions)AssetLiabilityNet Asset (Liability)Balance Sheet Location
Not Designated as Hedges
Commodity$2 $107 $(105)Other current liabilities
Interest Rate54  54 Other noncurrent assets
Total Not Designated as Hedges$56 $107 $(51)
Cash Flow Hedges
Interest Rate$48 $ $48 Other noncurrent assets
Interest Rate 1 (1)Other current liabilities
Interest Rate 5 (5)Deferred credits and other liabilities
Total Designated Hedges$48 $6 $42 
Total$104 $113 $(9)
December 31, 2020
(In millions)AssetLiabilityNet Asset (Liability)Balance Sheet Location
Not Designated as Hedges
Commodity$3 $1 $2 Other current assets
Commodity7 32 (25)Other current liabilities
Interest Rate10