馬拉松石油 (MRO) 2013 Q4 法說會逐字稿

Good morning, and welcome to Marathon Oil Corporation's fourth quarter 2013 earnings call. I'm Howard Thill, Vice President of Corporate, Government and Investor Relations. Also on the call this morning are Lee Tillman, CEO and President, and J.R. Sult, EVP and CFO. As has become our custom, we released prepared remarks last night in conjunction with the earnings release. You can find those remarks and the associated slides at marathonoil.com.

As a reminder today's call is being recorded, and our comments and answers to questions will contain forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. I refer you back to the aforementioned slides where you can find our full Safe Harbor statement. With that, I will turn the call over to Lee.

Well, good morning to everyone joining us on the call and the webcast. Prior to opening up for your questions, I want to recognize the outstanding operational performance achieved by our dedicated employees and contractors, and not in the only the fourth quarter, but for the full year.

Since I joined Marathon Oil in August of last year, I have had the privilege of getting to know the people and the assets that drive our results. We are a results-driven Company with a clear focus on shareholder value.

And it's not just our results, but how we achieve those results. Our firm commitment to core values, safety, health, the environment, security, business ethics, compliance and social responsibility is part of our DNA and how we run the business each and every day.

It has been a remarkable 2013 for our Company and for our shareholders. We grew year-over-year production 11%, excluding Libya and Alaska, exceeding our commitment of 8% to 10%, and our US resource play production increased 86% over 2012. Our outstanding Eagle Ford team set the pace with 138% increase in production over 2012. And notably, during the last two weeks of the year, our Eagle Ford production crossed a significant milestone, averaging in excess of 100,000 barrels of oil equivalent per day.

We also had an outstanding reserve replacement ratio for 2013 of 194%, excluding divestitures. As part of our rigorous portfolio management, we reached $3.5 billion in closed or agreed divestitures over the past three years, and we anticipate closing the Angola Block 31 sale on or around February 11.

Additionally, we have commenced the marketing of our UK and Norway businesses. We maintained our capital discipline by delivering our results within our $5.2 billion capital budget, excluding acquisitions. And during 2013, we increased our quarterly dividend 12% to $0.19 per share and repurchased 14 million shares of stock, returning about $1 billion to our shareholders.

We recognize the importance of delivering on our commitments and our guidance quarter on quarter, year on year, and the fourth quarter continued that theme. $1.1 billion in cash flow from continuing operations, over 98% reliability in our operated assets, 35% production increase in the US resource plays, and combined production in our North American international segments above the midpoint of our guidance.

With our high-quality assets and ability to execute, we look for continued solid production growth and believe there's a strong investment case for Marathon Oil. Not only achieving, but excelling across the seven strategic imperatives that we laid out at our analyst day is our corporate strategy and the road map for how we plan to become the premier independent E&P. With that, I'll turn it back to Howard.

Thanks, Lee. Before we open the call for questions, we'd like to remind you that we'd request that you ask no more than two questions with associated clarifications, and you can reprompt as time permits. With that, Christine, we'll open the lines for questions.

Thank you. We will now begin the question-and-answer session.

(Operator Instructions)

And our first question is from Guy Baber of Simmons.

Thanks. Good morning, everybody.

Good morning, Guy.

Understanding it was just a couple of months ago that you made the announcement about divesting North Sea assets, I was just wondering if you could talk about how that marketing process is progressing, when you expect to have a data room open. Just trying to get a better sense of timing and how quickly you all have been able to move that process along so far.

Thanks for the question, Guy. This is Lee. Yes, we are off and running on the marketing effort. We are still committed towards a target of closing that transaction toward the end of 2014. Consistent with that, we're working hard to get a data room open here in the first quarter to ensure that we stay on track relative to that timing.

Okay, great. And then my follow-up is, F&D costs at $16 a barrel, saw a reserve replacement, the lowest F&D rate for you all in a number of years. My question is how that compared to what you had expected and were striving for internally coming into 2013, if there were any areas that may have surprised positively relative to your expectations? And then relatedly, do you all have any targets that you could share with respect to your goals for F&D costs on a go forward basis?

We're very pleased with our F&D cost performance. I probably should emphasize that that is based on total GAAP incurred costs as well, as you start comparing that number perhaps out to some of our peer groups.

A lot of that, of course, is driven by some outstanding performance in our US resource plays. As you looked at our proved reserve adds, you can see the contribution, certainly from North America that is the standout.

And that was part of a very, I would say, focused effort to ensure that we had appropriately booked and accounted for the growth that we were seeing in those resource plays. And that's really the uplift that you're seeing this year that's driving that excellent reserves replacement.

As we shared at the analyst day, there still remains an incredible amount of 2P resource and potential total resource growth in those resource plays. And again, we of course have internal targets that we look at and challenge our asset teams with, but we have clear line of sight on 100% reserve replacement or greater as we move forward in the next couple of years.

Thank you for the comments.

Thanks, Guy. Appreciate it.

Thank you. Our next question is from Ed Westlake of Credit Suisse. Please go ahead.

Yes, and it's good morning early, and Howard, congratulations on the production growth last year and obviously strong cash flow growth. As we look into 2014, obviously the shale plays can continue to drive cash flows higher, but you will lose something internationally. Maybe just help us understand your view of -- you've given production guidance, but how net cash margins should change into 2014 versus 2013, say on a flat oil price deck.

Then I've got ally follow-on around deferred tax.

Yes, well first, Ed, I think you point out a good component looking forward in our portfolio, which is we are naturally going to move toward a higher weighting toward North America volumes and the margins that those generate. Traditionally, we have seen those to be, of course, higher cash margins than what we had experienced in some aspects of our international portfolio. So, we see that as a net positive.

That, I think, coupled with our continued focus on a high liquids content of both our production as well as our reserves we think are going to contribute to very profitable growth moving forward. So, a lot of that mix effect, I think, we will be able to take advantage of moving forward.

The follow-up is on deferred tax, and you obviously -- you give some details on it in the release, but just looking forward, it seems like it was smaller than perhaps I was modeling, perhaps other people on the call. Maybe just give us a breakdown how much deferred tax was in the US and how much was international and maybe how that will pan out into 2014, given that you're probably a cash taxpayer in our time, but get some benefits in the US.

I'll maybe hand over to J.R. just to address maybe the tax question more on a holistic basis, because we are driving our statutory tax rate down over time. But J.R., if you want to comment on some of the timing effects that we saw at the end of 2013.

Yes, good morning, Ed. How are you? Lee is right. As we outlined at the analyst day, we do see our overall aggregate effective tax rate continue to decline as the mix of our production shifts more and more to North America.

When I look at Q4, Ed, nothing really stands out in terms of being individually significant. As you know, there's always two factors that impact Q4 when you look at our overall tax provision, including our deferred taxes.

Number one is, in Q4, we always ultimately true up our deferred taxes and all our tax accounts to the filed statutory tax returns in all of our jurisdictions, US, sovereign, foreign, as well as state and local. So, that's one element that's always going to be running through Q4. Just as well, as finally trueing up our final effective tax rate.

As you know, we go out throughout the year and we estimate what we think that rate is going to be over next 12 calendar months and ultimately, have to true-up that based on the final mix of our earnings. And I think it's a little bit of both of those component pieces, Ed, in terms of true-up to the final tax return, just as well as getting the final mix of income by jurisdiction that might have driven a few anomalies, none of which are individually significant.

But just in terms of outlook in 2014, do you think that you will be paying some decent tax in Norway and having some benefits in the US? Is that how you see it?

Absolutely. In the US, with the capital program that we have running, you will not see us be a US cash taxpayer for a number of years. Norway EG, all of our tax paying jurisdictions, it's fair to assume effectively that all of my taxes for the most part for modeling purposes are current. And so I think you could -- you should expect to see that going forward into 2014, together with the overall guidance that we gave in terms of the effective tax rate for the year.

Thank you.

Thanks, Ed.

Thank you. Our next question is from Doug Leggate of Bank of America.

I'll take my two as well, if I may. Lee, in the event that you're successful in selling Norway and the UK, you are going to remove some fairly high declining assets from your portfolio. Would you be able to give us some kind of pro forma CapEx and growth rate ex the sales? Because the growth rate obviously has been diluted by the decline rate, so if we really just focus on the on shore assets, ex those assets, what does CapEx and growth look like?

Then I've got a follow-up, please.

Sure, absolutely. Let me maybe take on the volumes growth piece first. I believe in our analyst day we talked a little bit about that on a pro forma basis.

And the way we really couched it in a pro forma sense was to say, well, when you look at our 2012 to 2017 compound annual growth rate based on our current portfolio, we had committed to 5% to 7% externally. When we in a pro forma sense, ex Norway and the UK assets, that pro forma growth moves to 8% to 10% over that 2012 to 2017 period.

We haven't given any specific CapEx guidance on that, but what I will tell you, and I think we also shared this in this the analyst day, is that we are in relatively high investment years in both the UK and Norway. As you're aware, Doug, in Norway we are in the installation phase of the Boyla project this year, which will have a very high CapEx demand between the installation, as well as the associated drilling. In addition to that, we are doing some development drilling in the UK also.

So, 2014 is actually a bit of a high investment year. And we're probably north, in a combined sense, in 2014, north of $500 million of capital investment in the UK and Norway.

Okay, that's helpful. I'll put it under the numbers. My follow-up is related because, assuming you secure the sales of these assets at some point, and given the growth in the lower 48, it strikes us that you're fairly flush with cash. Obviously, the buyback is part of the process, but where is management's head at at this point? Bearing in mind you're still relatively new to the Company, are you at the point now where you're ready to reload the portfolio, or are you happy with the current portfolio structure meaning that incremental cash continues to buy back stock? And I'll leave it there, thanks.

Yes, okay, great, good question. And probably maybe a good bridge to my previous answer, Doug, is when I talk about that 8% to 10% CAGR, that also presumes that you're simply removing the pro forma performance of UK and Norway. It makes no assumption about how you might use those reinvestment proceeds to grow the business organically. So, I think it's important to make that statement.

But in terms of if we are successful, in the North Sea marketing case, I think we're going to go back to the capital allocation process that we talked about and described pretty fully in the analyst day. Our first call on capital is going to be looking for those long-term accretive organic investments in the business. From there we'll take a look at, how can we do an effective job of resource capture, whether that be through business development or through our exploration program.

After that, we're going to ensure that we deliver our dividend commitment to our shareholders. And as I mentioned, that's running just around $500 million a year at current rates. Of course, on all the while ensuring that we're protecting our investment grade balance sheet.

And I think once we work through those calls on capitals, we're going to look very carefully at opportunistic share repurchases, as well as an option to bring value to our shareholder. But that's the strategy that you will see us apply. Of course, we have to do that in the context of the business environment at that point in time that we find ourselves from a commodity price standpoint, et cetera.

Got it. Thanks for the answers, Lee.

Thank you, Doug.

Thank you. Our next question is from Evan Calio, Morgan Stanley. Please go ahead.

Good morning, guys, and thanks for bigger question allocations. First, I know realization has impacted the quarter, and I'm really given uncertainty and volatility in the spreads, particularly Brent LLS, as it relates to your Eagle Ford Volumes. Do you have any greater interest or see the potential to term up volumes with the refier to provide surety around that forward spread?

Yes, I'll maybe start the answer, then invite Howard and J.R. to jump in there, because that's clearly a big feature of the release this quarter, is the realizations. And I think you bring up a great point, which is our Eagle Ford volumes are really driven from a realization standpoint to LLS. There are a lot of activities, the LLS Brent spread was under some challenge.

We also, of course, saw some challenge in the Bakken as well on the spread, and then finally on western Canada Select, we also saw some challenges there. So, the spreads and realizations are very important to us this quarter.

On the positive, those have generally moved back in line with where we had been earlier in 2013. But maybe I'll ask Howard just to comment specifically on some of the factors we saw impacting the Eagle Ford LLS impact, and then perhaps J.R. could comment a bit on our overall, I would say risk management strategy around commodity risk.

Sure. Thanks, Lee, and thanks for the question, Evan. To Lee's point, what we saw was from the third quarter, where LLS and Brent were essentially in parity, we saw that really widen to about an $8 differential between the LLS and Brent. And of course, a lot of the crudes that you wouldn't typically think of, besides just the Eagle Ford, that has an LLS component to it, the Bakken being one of them, because of rail and other pricing mechanisms that saw that drive those prices lower.

To Lee's point, in January, we've already seen that discount close from that $8 down to about $4. So, it continues to narrow. That was really, from what we've seen, that was really driven by the opening up of the southern leg of Keystone XL, as well as reversal of the Ho-Ho line into Houston.

And so what you had was that bottleneck really move from a WTI price in Cushing, to a Gulf Coast price, LLS, and as that's been absorbed, you've seen those differentials, as I said, really start to close. And maybe not back to normal, but getting back to more to where we were on a pre-fourth quarter basis.

Thanks for that, Howard. J.R., comment on.

Two quick things, Evan. Not to pile on to listen to three folks answer your single question, but number one is as we are also looking at additional commercial solutions that would give us additional outlets for our crude to increase our optionality around what markets we ultimately go to. The other thing I would say, so that's more of a commercial focus.

On the financial focus, of course we have had in the past and we will continue to look for opportunistic financial hedging potential. We just had some fairly successful positions in 2013.

I would tell you that, given the strength of our financial position, however, I think we have a lot of optionality in terms of how we manage our aggregate risk from a cash flow standpoint. But, again, we watch very carefully and constantly those forward markets, and we'll take advantage of opportunities as they present themselves.

Great. My second question, and thanks for that full response. My second question is related on the commercial side on crude oil exports. Has Marathon filed for an export permit, or swap, which sounds more right, with commerce, and if not, why not? And what is your strategy there to help break that potential supply logjam in the Gulf Coast?

Well, clearly, it's encouraging to us as a company to see the crude export issue being out there and discussed openly now. If you rewind back, not so long ago, that was not the case. We were hard-pressed to get any traction around that.

But now I think there is some traction in the political circles. I still think it's a challenge to move it all the way to a full opening of exports, but some of the swaps and some of the export permits that folks are talking about, we're monitoring that. We've not entered into any swaps or any export permits at this time.

We're really spending our time ensuring that we communicate the significant advantages that an export option will generate for the US, both on the producers, the refiners, as well as the consumer side. And so we're spending our time with the influence leaders, the policy makers, to ensure that they have the facts, they understand how that will positively impact the overall situation here in the US.

Whether you take a look at it from the a consumer position and price at the pump, or whether you look at it from a balance of trade standpoint. But certainly, with the growth and the economic growth that is being generated in the North America resource plays, we need to continue to enable that. And to me, it's a natural next step for us to move into a commodity situation where we're in the world open market that benefits the producers, it benefits the consumers, it doesn't in any way damage our energy security, but rather, I think creates opportunities for further growth here in the US.

Great. Thanks, guys.

Thank you, Evan.

Thank you. Our next question is from John Herrlin of Society Generale. Please go ahead.

Two quick ones that are unconventional. Could you split your Anadarko base and anchorage between the SCOOP, the Cana-Woodford and missed plays? And is it fair to say if you do monetize your North Sea assets, that capital will flow towards this region as well?

I would maybe answer the question a bit generally. We typically have not split out our acreage. We've shown some maps, I think, in our analyst day, which gives you a feel of the general acreage spread between SCOOP, as well as the Southern Mississippi trend, the core kind of Cana-Woodford and then also, even the Granite Wash as well.

What I will tell you is that we are essentially doubling and have doubled the rig count in our Oklahoma resource basins. You might recall from our analyst day, we talked about ramping up across all of our resource plays to a 28-rig program. I'm pleased to confirm that we are at that 28-rig count today. So we have ramped up very effectively early in 2014.

We are looking very closely at the SCOOP. We're doing some work there on some extended reach wells where we're looking at much longer horizontal sections to continue to drive those wells to be economically competitive with our best wells in the Eagle Ford, as well as the Bakken. We absolutely see the Oklahoma resource basin as an area of future growth and future capital allocation competition. So, we see it very much as a growth opportunity for us.

Okay, thanks, Lee. The next one is on the Bakken. You have been completing a lot of Three Forks wells. How have they been performing?

Yes, I know there's been a little bit of chatter out there on Three Forks' performance, but let me be really clear on this. We've got a considerable amount of our production today that's in Three Forks' first bench, about 20% of our production today is there. We have a very aggressive Three Forks development program in 2014 that includes not only first bench, but also second bench piloting.

In our particular acreage areas, which we believe to be very high quality, we are seeing excellent performance and type curves from the Three Forks first bench, and we look forward to testing what the second bench can deliver as well. I think what you are hearing is that there is a natural variability across the plays, which, whether you're talking about the middle Bakken or the Three Forks first bench, depending upon where your acreage is located, there's going to be a natural variability in the quality. And based on the type curves that we've seen thus far, particularly in the Three Forks first bench, we have no concerns there.

Thanks.

Thanks, John.

Thank you. Our next question is from Pavel Molchanov, Raymond James. Please go ahead.

Thanks for taking the question. So, obviously some kind of discouraging results initially in Ethiopia and Kenya. As you look to your next prospect, can you give us a sense of the capital at risk in both countries?

Of course, we have a relatively robust exploration program in 2014. It's running right now, our capital budget is right around $500 million for our global exploration program.

In Ethiopia and Kenya, you're right, I would say we've had mixed results there. What we're currently doing in both basins, though, as you know, in these risk plays, you have basins and sub basins.

There's been good success, of course, in Ethiopia and Kenya in the rift plays, and we're now moving over in general to the opposite side of the rift to test fully those very large acreage positions. But we are looking to moderate our capital exposure in those areas until we can confirm working hydrocarbon systems and prospectively. We're doing that in really a non-operated position with our partners there, with two very reliable operators, Tullow and Africa Oil.

We're -- we remain hopeful. These are extremely large acreage positions that we're looking at here. They're still, in our view, competing favorably for capital within our exploration program. But I would just caution that it's still very early days in these plays.

Okay. You also remarked in the press release that even so far this year you have not had any liftings from Libya and the oil terminals closed. But we have heard from some other operators that, in fact, there has been improvement over the last, perhaps, three to four weeks. Are your operations kind of distinct from that, or are you seeing any improvement, perhaps more recently?

Yes, well I think there, of course, is news each and every day coming out of Libya, and I know you guys read it, just like we do. It remains a very fluid situation there. Very unpredictable. Hence, the reason we carry Libya volumes really below the line due to that unpredictability.

There is positive data. There is a lot of difference, though, between the east and the west and where your terminals happen to be located. And, of course, we still today are not doing liftings. We don't after clear view of when those liftings may or may not restart.

On the positive side, we do know that the quality of the resources such is that when we can restart, we will be able to ramp up production relatively quickly and efficiently and get back on track in Libya. That's the real shame here, is that this really is a world-class resource, and if we can just get access again to our export solution, it has some real benefits for the partners that we have there in the Waha concession.

Okay, appreciate it, guys.

Thanks, Pavel.

Our next question is from John Malone. Please go ahead.

Good morning, gentlemen. Sticking with international for a moment, you saw drop in international reserves, if I read correctly. Can you lay out sort of what the international project sanctions are that are coming up that will push that back into the black?

Yes. I guess just on the reserves piece, we did have adds in the international space. If you look at the table that was provided in the press release, we did have proved reserves in our international E&P space, and they were relatively significant. In addition, we did have some reserves as well in our oil sands mining.

In terms of investment opportunities, I've mentioned one of those already, which is the Boyla project that's going in in Norway. Along with Boyla, there is some development drilling that's occurring also in Norway, as well as in the UK, which are contributing to those proved reserve adds.

Looking forward in time, we are also have development drilling this year in Equatorial Guinea, where we'll be drilling one development well. And so we continue to see investment opportunities, as well as a very strong reservoir performance.

Norway, case in point, we continue to move the needle there in overall base reservoir performance. That remains the case. We're still seeing very strong performance, even with water breakthrough at the all-time field. The overall reservoir performance there is quite strong.

Okay. Thanks. And then just specific to Kurdistan, you're looking for first oil potential out of Atrush next year. Given the current political situation, what do you see having to change before you would be comfortable actually exporting oil out of your assets?

Well, again, this is a discussion that's ongoing between the south and the north. And clearly, we're going to comply with the guidance that we received, not only from the Kurdistan regional authority, but also the sovereign government of Iraq. Our field development plan that was put in for Atrush reflected essentially what we would consider to be an early production system, a first phase of development that essentially would be three wells producing around 30,000 gross barrels a day.

The plan that was submitted reflected an export solution of trucking as opposed to a pipeline solution. We're, of course, keenly interested in an export solution via pipe from Kurdistan, but we're going to let that process play out between the regional authority as well as the sovereign government there.

That's something we're certainly encouraging. It adds a tremendous amount of value to our blocks in Kurdistan, of which we have three blocks today. We're doing no more work and have a transition to Safen Block over to [Totale].

So, we have three blocks, one operated, two non-operated, with discoveries on all three. We're still very positive on our position in Kurdistan. If the export solution does come to fruition on the pipe side, that's just going to add incremental value and potentially allow us to proceed at a faster pace from a phasing standpoint as we won't be limited to a trucking solution.

That's helpful. Thanks, Lee.

Thanks, John.

Thank you. The next question is from Jeffrey [Lombujon] of Tudor Pickering Holt. Please go ahead.

Good morning, guys. More questions on US ops. Are there any updates to the spacing [pallets] and progress in the Bakken or what you are thinking about in terms of down spacing potential across your position, or what you'd like to see from offset operators who move to tighter spacing there?

On the Bakken, I think we did a pretty comprehensive job of describing where we were headed in the Bakken on spacing. One of the things we talked about at the analyst day, of course, are high-density pilots where we're combining the middle Bakken as well as the Three Forks off of single-pad drilling.

Those pilots are still moving forward, but we are aggressively pursuing down spacing, particularly in our high-quality acreage. It's something we're keenly interested in. That's what's contributing to the increase in resource potential that we described at the analyst day.

But really I would say, we haven't -- we don't really have new data to share today relative it to the analyst day. That's only a couple months, and that really hasn't given us enough run time yet to come out and state definitively the impact ultimately of the down spacing.

And on the SCOOP, you guys talked about that on the analyst day as well, in regards to extended laterals. Is there any update there as far as how those are progressing?

We're just now starting our extended lateral program there. Again, we feel very encouraged about what we're seeing as we continue to optimize completions in the SCOOP area. We see very strong incremental well economics.

So, again, it's really a question now, Jeffrey, of getting a bit of cumulative production from those wells and being able to really understand the impact, not only on IPs, but ultimately the EUR.

Thanks, guys.

Okay, thanks, Jeffrey.

Thank you. Our next question is from Amir Arif of Stifel.

Thanks, good morning, guys. Yes, first question on the Oklahoma resource basin. Can you give us a breakout of the roughly, the 20, 25 wells you are going to be drilling this Year? How much are going each in the Southern Miss, the SCOOP and the Granite Wash?

I don't think we've given specific breakdown on the well count. I would say that, really, what we're trying to do, though, in the Oklahoma Woodford is ensure that we work the capital efficiency and optimization question in the SCOOP.

In the Granite Wash, as well as the Southern Mississippi lime, it's more a question of really understanding the resource space there. So, those two programs are really kind of somewhat complimentary to one another.

But right now, we're looking at something like probably a couple of wells in the Granite Wash to, again, start proving up that resource. Four wells in the Southern Mississippi lime trend to, again, help us really understand that resource space, and ultimately position us for the development. So, SCOOP really focused on capital efficiency, completion optimization, the extended laterals, and then in parallel, really testing the development potential that exists in the Granite Wash and the Southern Mississippi lime.

Okay, and then as a follow-up, for the Southern Miss, where you have drilled the two wells, could you tell us what you thought of the results, what the oil cuts were and how that compares in terms of returns to what you have in the SCOOP?

I would just say right now, Amir, we're way too early probably to talk about those results with high confidence. I would say maybe stay tuned and watch this space. As soon as we're comfortable that we've got enough production behind us, we're going to -- we'll bring out those results and talk about them in a more fulsome sense.

Okay, thank you.

Thanks, Amir.

(Operator Instructions)

And our next question is from Jeff Campbell of Tuohy Brothers investments. Please go ahead.

Good morning.

Good morning.

My first question is with regard to the Austin Chalk and the Eagle Ford. I was wondering, first of all, what percentage of your current acreage is essentially prospective for these Austin Chalk Eagle Ford completions? And as a second part of that, how many successful tests do you require before you can begin to talk more specifically about locations in EUR uplift?

Good question, Jeff, and again, we spent quite a bit of time at the analyst day on the Austin Chalk. When you talk about prospectivity across our acreage position, really, what we're doing with our pilots, Jeff, is really delineating that prospectivity today. We have our models, but we really need to confirm that by stepping around our play with the bit, and that's exactly what we're doing with our pilot testing.

The early results from the Austin Chalk wells, though, are very compelling. As we shared at the analyst day, the type curves of the Austin Chalk wells look very, very similar to what we have observed in our Eagle Ford wells of similar lateral lengths. So, we remain very encouraged.

Again, as we get more run time on the pilots, we will bring that story forward. But we are in the process of really understanding the full extent of the Austin Chalk around our core acreage position.

Okay, great, that's helpful. My other question was with regard to the Southern Mississippi trend. I was wondering if you also have exposure to the Hunton lime, and if that's something you're taking a look at. I'm just thinking like Logan, Kingfisher County, that area.

I'm sorry, I lost the first part of the question, Jeff.

What I was asking was, I was wondering if you had any exposure to the Hunton limestone. I'm thinking Kingfisher, Logan County, that kind of area, if that's something you have exposure to and if you might plan any testing of it.

I would probably have to get back to you. I don't have a specific answer on that one, Jeff. I know the horizons we are looking at, but I'm not familiar if we've really assessed the position in the lime there.

Okay. We can take that up later off-line. Thanks very much.

That would be great. Thank you.

Thank you. We have no further questions. I will now turn the call back over to Howard Thill.

Thanks, Christine, and we appreciate all the interest in Marathon, all the questions. If you have additional questions, please don't hesitate to call Chris or myself. We hope you have a wonderful day.

Thank you. And thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.