Marathon Oil Corporation Announces Pricing of Offering of $600 Million of Senior Notes Due 2029 and $600 Million of Senior Notes Due 2034

Rhea-AI Summary

Marathon Oil (MRO) announces a $1.2 billion senior notes offering to repay borrowings, with J.P. Morgan, Morgan Stanley among book-runners.

Insights

Financial Analyst

Marathon Oil Corporation's recent announcement of a $1.2 billion senior notes offering is a strategic financial move aimed at optimizing the company's capital structure. By issuing debt with fixed interest rates of 5.300% and 5.700% for notes due in 2029 and 2034 respectively, the company is taking advantage of the current interest rate environment to lock in long-term financing costs. This is particularly relevant given the volatile interest rate forecasts and the potential for rate hikes in the future.

The decision to repay outstanding borrowings under the company's term loan facility with the net proceeds indicates a shift towards longer maturity debt, which could improve the company's liquidity profile and reduce refinancing risks. Investors should note that such corporate actions might reflect the company's confidence in its future cash flows, considering it is willing to commit to fixed long-term payments. However, the impact on the company's debt-to-equity ratio and overall leverage must be monitored, as excessive debt can lead to financial distress, especially if the company's revenues are subject to commodity price fluctuations.

Market Research Analyst

Marathon Oil's bond offering can be seen as a reflection of its broader industry's current financial health and investor sentiment towards energy companies. With oil and gas prices having experienced significant volatility, companies within this sector are seeking to strengthen their balance sheets to navigate uncertain market conditions. The choice of joint book-running managers, which includes prominent investment banks, suggests a strong underwriting process and potentially high investor demand for the notes.

Investors should consider the industry trends such as energy transition and regulatory changes that could affect the company's profitability and, consequently, its ability to service its debt. While the offering may not directly impact the stock price in the short term, it could be indicative of the company's strategic direction and financial planning, which are critical for long-term valuation.

Debt Capital Markets Expert

The structure of the debt offering by Marathon Oil is indicative of a well-calibrated approach to managing its capital needs. By diversifying the maturity dates, the company is spreading its repayment obligations over a longer period, which can alleviate pressure on cash flows. The interest rates attached to the notes are competitive and reflect both the company's creditworthiness and the prevailing market conditions.

Investors should assess the offering's terms in light of the company's historical performance and credit ratings. The successful closure of this offering could signal to the market that Marathon Oil is taking prudent steps to manage its debt profile. However, it is essential to consider the opportunity cost of this capital restructuring, as the interest payments on the new debt will reduce the funds available for other investments or to return value to shareholders through dividends or buybacks.

HOUSTON, March 26, 2024 /PRNewswire/ -- Marathon Oil Corporation (NYSE: MRO) (the "Company") announced today that it has priced an offering of senior notes in an aggregate amount of $1.2 billion, consisting of $600 million principal amount of its 5.300% Senior Notes due 2029 and $600 million principal amount of its 5.700% Senior Notes due 2034.

The Company intends to use the net proceeds from the offering, together with cash on hand, to fund the repayment in full of outstanding borrowings under the Company's term loan facility. The offering is expected to close on March 28, 2024, subject to customary closing conditions.

J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, Mizuho Securities USA LLC, MUFG Securities Americas Inc. and SMBC Nikko Securities America, Inc. are acting as Joint Book-Running Managers for the offering.

The Company has filed a registration statement (including a base prospectus) and a prospectus supplement with the Securities and Exchange Commission (the "SEC") for the offering to which this communication relates. Before investing, investors should read the prospectus in that registration statement, the prospectus supplement and other documents the Company has filed with the SEC for more complete information about the Company and this offering. These documents may be accessed for free by visiting EDGAR on the SEC's website at www.sec.gov or by calling J.P. Morgan Securities LLC collect at 1-212-834-4533, Morgan Stanley & Co. LLC at 1-866-718-1649, Mizuho Securities USA LLC toll-free at 1-866-271-7403, MUFG Securities Americas Inc. toll-free at 1-877-649-6848 or SMBC Nikko Securities America, Inc. toll-free at 1-888-868-6856.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of any securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Marathon Oil

Marathon Oil Corporation (NYSE: MRO) is an independent oil and gas exploration and production (E&P) company focused on four of the most competitive resource plays in the U.S. - Eagle Ford, Texas; Bakken, North Dakota; STACK and SCOOP in Oklahoma; and Permian in New Mexico and Texas, complemented by a world-class integrated gas business in Equatorial Guinea. The Company's Framework for Success is founded on a strong balance sheet, ESG excellence and the competitive advantages of a multi-basin portfolio.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, including, without limitation, statements regarding the Company's plans and expected timing with respect to the offering and the Company's repayment of outstanding borrowings under its term loan facility, are forward-looking statements. Words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "forecast," "future," "guidance," "intend," "may," "outlook," "plan," "positioned," "project," "seek," "should," "target," "will," "would," or similar words may be used to identify forward-looking statements; however, the absence of these words does not mean that the statements are not forward-looking. While the Company believes its assumptions concerning future events are reasonable, these expectations may not prove to be correct. A number of factors could cause actual results to differ materially from those projected, including, but not limited to: conditions in the oil and gas industry, including supply/demand levels for crude oil and condensate, natural gas liquids and natural gas and the resulting impact on price; changes in expected reserve or production levels; changes in political or economic conditions in the U.S. and Equatorial Guinea, including changes in foreign currency exchange rates, interest rates, inflation rates and global and domestic market conditions; actions taken by the members of the Organization of the Petroleum Exporting Countries (OPEC) and Russia affecting the production and pricing of crude oil and other global and domestic political, economic or diplomatic developments; capital available for exploration and development; risks related to the Company's hedging activities; voluntary or involuntary curtailments, delays or cancellations of certain drilling activities; well production timing; liabilities or corrective actions resulting from litigation, other proceedings and investigations or alleged violations of law or permits; drilling and operating risks; lack of, or disruption in, access to storage capacity, pipelines or other transportation methods; availability of drilling rigs, materials and labor, including the costs associated therewith; difficulty in obtaining necessary approvals and permits; the availability, cost, terms and timing of issuance or execution of, competition for, and challenges to, mineral licenses and leases and governmental and other permits and rights-of-way, and our ability to retain mineral licenses and leases; non-performance by third parties of contractual or legal obligations, including due to bankruptcy; administrative impediments or unexpected events that may impact dividends or other distributions, and the timing thereof, from our equity method investees; changes in our credit ratings; hazards such as weather conditions, a health pandemic, acts of war or terrorist acts and the governmental or military response thereto; shortages of key personnel, including employees, contractors and subcontractors; the impacts of supply chain disruptions that began during the COVID-19 pandemic and the resulting inflationary environment; security threats, including cybersecurity threats and disruptions to our business and operations from breaches of our information technology systems, or breaches of the information technology systems, facilities and infrastructure of third parties with which we transact business; changes in safety, health, environmental, tax, currency and other regulations, requirements or initiatives, including those addressing the impact of global climate change, air emissions or water management; our ability to achieve, reach or otherwise meet initiatives, plans, or ambitions with respect to environmental, safety and governance matters; our ability to pay dividends and make share repurchases; our ability to secure increased exposure to global LNG market prices and progress on the Equatorial Guinea Gas Mega Hub; impacts of the Inflation Reduction Act of 2022 and our assumptions relating thereto; the risk that assets we acquire do not perform consistent with our expectations, including with respect to future production or drilling inventory; other geological, operating and economic considerations; and the risk factors, forward-looking statements and challenges and uncertainties described in the Company's 2023 Annual Report on Form 10-K and other public filings. Except as required by law, the Company undertakes no obligation to revise or update any forward-looking statements as a result of new information, future events or otherwise.

Media Relations Contact:
Karina Brooks: 713-296-2191

Investor Relations Contacts:
Guy Baber: 713-296-1892
John Reid: 713-296-4380

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SOURCE Marathon Oil Corporation

FAQ

What is the purpose of Marathon Oil 's (MRO) $1.2 billion senior notes offering?

The offering aims to fund the repayment in full of outstanding borrowings under the Company's term loan facility.

What are the details of Marathon Oil 's (MRO) senior notes offering?

The offering consists of $600 million principal amount of 5.300% Senior Notes due 2029 and $600 million principal amount of 5.700% Senior Notes due 2034.

Who are the Joint Book-Running Managers for Marathon Oil 's (MRO) senior notes offering?

J.P. Morgan Securities , Morgan Stanley & Co. , Mizuho Securities USA , MUFG Securities Americas Inc., and SMBC Nikko Securities America, Inc. are acting as Joint Book-Running Managers.

When is the expected closing date for Marathon Oil 's (MRO) senior notes offering?

The offering is expected to close on March 28, 2024, subject to customary closing conditions.