Lee M. Tillman
Chairman, President & Chief Executive Officer at Marathon Oil
Thank you, Guy, and good morning to everyone listening to our call today. To start, I want to once again thank all of our employees and contractors for their dedication and hard work as well as their commitment to our core values, especially safety and environmental excellence. We are results-driven but equally focused on how we achieve those results. While both equity and commodity markets remain characterized by significant day-to-day volatility, a few underlying trends remain well entrenched.
Global demand for oil and gas continues to recover from the depths of the pandemic, while supply of oil and gas remains constrained by multiple years of underinvestment, strained supply chain, labor shortages and inconsistent, if not outright hostile regulatory policy on a global scale. Physical commodity markets are tight, global inventories are well below historic norms, and global spare capacity is limited at best. The ongoing Russian invasion of the Ukraine and the associated humanitarian crisis has only exacerbated these underlying trends.
And even in the unlikely event of a near-term resolution, the dying has been cast in actions, particularly by European countries, are already well underway to move away from Russian oil, natural gas and refined products. Here at home, the U.S. consumer is facing inflationary pressures across the board, including energy. The potential for recession looms and American families are suffering, but the U.S. Energy Renaissance led by the Shell revolution has provided a measure of protection from the forced and more austere measures now being considered in Europe.
We are experiencing firsthand the value of energy security and Made in America oil and gas, while witnessing the fallout of failed energy policies that have put much of Europe at risk. We must ensure that the U.S. economy does not fall victim to the same four choices. So while we are fully aware, we are price takers and remain steadfastly committed to capital discipline, we could be in for an extended period of elevated commodity prices globally, both for oil and natural gas.
All of this underscores the need for an orderly energy transition or more accurately and energy expansion as part of an all-of-the-above strategy to meet the world's growing demand for reliable, affordable and responsible energy. And it highlights the critical role the U.S. oil and gas sector must play on a global scale, especially as one of the world's lowest GHG emissions intensity producers. As I've said before, our mandate is clear, and it is a statement of Marathon Oil's corporate purpose to help responsibly meet global energy demand by operating with the highest standards, prioritizing all elements of safety, environmental, social and governance performance while delivering strong financial returns to our shareholders.
We have conviction we are pursuing the right strategy for our shareholders and stakeholders alike. It's best summarized by our framework for success on slide four of our deck. Strong corporate returns, sustainable free cash flow generation and meaningful return of capital to our shareholders through the commodity price cycle, all underpinned by a high-quality portfolio of U.S. unconventional resources complemented by global LNG exposure via our EG Integrated Gas business. A bullet through balance sheet and a transparent commitment to comprehensive ESG excellence.
Importantly, second quarter once again represented another quarter of comprehensive delivery against this differentiated framework highlighted by record quarterly financial performance. I would like to focus on a few key takeaways this morning. First, we are building a market-leading track record of returning capital to our shareholders. returning a significant amount of capital to our shareholders through the commodity price cycle is foundational to our value proposition in the marketplace. Our return of capital framework is uniquely calibrated to operating cash flow, not free cash flow, prioritizing our shareholders as the first call on capital instead of the drill bit.
Basing our return on capital framework on a percentage of operating cash flow instead of free cash flow has been an intentional decision. It reflects the confidence we have in our high-quality asset base and the strength of our commitment to shareholders. This is an especially important distinction in an inflationary environment, where capital inflation will necessarily reduce the cash available for peer companies to return to investors based on the inherent design of their frameworks. It won't for us. While frameworks and commitments are important, we continue to believe that establishing a consistent track record of delivery quarter in and quarter out is key to building and maintaining trust and credibility in the market.
We are in the process of building one of the strongest return of capital track records in the entire S&P 500. Since achieving our leverage objective in October of 2021 through significant gross debt reduction, we have returned $2.5 billion of capital to our shareholders. Over the trailing three quarters, we've returned approximately 55% of our CFO, equating to approximately 75% of our free cash flow. This includes $2.3 billion of share repurchases driving a 15% reduction to our outstanding share count in just 10 months and contributing to significant underlying growth in all of the per share financial metrics that matter most to our equity valuation.
My second key point. We are delivering financial outcomes that are not only at the top of our E&P peer group, but at the very top of the S&P 500. We must compete with investment alternatives across the broader market. As I already mentioned, second quarter represented a record financial quarter for our company in many respects, an all-time high for adjusted earnings, free cash flow and shareholder distributions. The full year outlook is just as strong. We expect to generate around $4.5 billion of free cash flow for the full year, assuming $100 WTI and $6 Henry Hub, consistent with guidance provided last quarter.
That's good for a free cash flow yield north of 25%, not only one of the best yields in the large key space, but the second highest free cash flow yield in the entire S&P 500. For full year 2022, we expect to continue returning at least 50% of our operating cash flow to our shareholders, significantly outperforming the minimum 40% of CFO commitment per our framework. That translates to an annualized shareholder distribution yield of around 20%, one of the strongest return of capital profiles in the S&P 500. Market-leading free cash flow yield and return on capital all at an attractive valuation with our shares trading at an EV to EBITDA multiple among the most attractive in the entire S&P.
My third key point is perhaps the most important. It is that these market-leading financial results I just highlighted are all sustainable. Our continued financial delivery is supported by a high-quality U.S. unconventional portfolio with over a decade of high return inventory and a track record of superior capital efficiency and execution excellence, a world-class integrated gas business in EG with differentiated exposure to the global LNG market, a transparent, disciplined reinvestment rate capital allocation business model and a unique operating cash flow linked return of capital framework.
Our five and 10-year benchmark maintenance scenarios that highlight our confidence in continuing to deliver peer-leading financial outcomes. And finally, by our commitment to comprehensive ESG excellence, including our objectives to deliver top quartile safety performance while driving peer-leading GHG and methane intensity reductions by 2030 and that are consistent with the trajectory called for by the Paris Climate Agreement.
I will now pass it off to Dane, who will provide a financial update.