Marathon Oil (NYSE:MRO) recently reported excellent third-quarter results, all things considered. The oil producer was able to shrug off the impact from Hurricane Harvey to deliver production above the high end of its guidance range. That kept the company on pace to meet its lofty expectations for 2017.

The performance showed that the company's turnaround plan is working. It's a plan that positions Marathon to deliver improving results in the coming quarters even if oil slips a bit. That was evident from CEO Lee Tillman's comments on the accompanying conference call, during which he laid out four things investors can expect from the company.

An oil pumping unit at sunset.

Image source: Getty Images.

1. Ending the year on a high note

Tillman started off by saying:

We now expect to end the year toward the high-end of our updated 2017 production guidance range, which is complemented by an increased exit rate guidance in the resource plays, all while living within our means at current strip pricing. This highlights the strength of our transformed portfolio and sets the stage for 2018, as we integrate the same discipline into our ongoing budget efforts.

At the beginning of the year, Marathon thought that by the end of the fourth quarter, its U.S. resource plays would be producing 20% to 25% more than they were at the end of 2016. However, thanks to stronger-than-expected well performance, the company now anticipates that its exit rate will be 25% to 30% higher by the end of this year than it was when 2016 ended. Even more impressive, the company expects to achieve that higher aim while living within cash flow at current oil prices.

2. Living within its means next year

Tillman then provided a brief glimpse at 2018:

While it's too early to talk about 2018 budget specifics, our capital allocation philosophy remains the same. We ... expect to deliver a returns-focused program, while living within our means at a moderate oil price of around $50 [West Texas Intermediate crude oil].

That plan lines up with the general trend in the industry. While some rivals still plan to outspend cash flow next year, more are planning to live within their means. Devon Energy's (NYSE:DVN) CEO Dave Hager, for example, stated on the company's third-quarter conference call that while it's still working on the 2018 budget, it anticipates spending between $2 billion and $2.5 billion next year. Devon's CEO made it clear that the company expects "to deliver this capital spend within operating cash flow at $50" oil. He also pointed out that even though oil is currently in the mid-$50s, Devon has "no plans to modify our capital range and we would expect to generate free cash flow."

3. Having a dual focus for any excess cash

Marathon's plan, likewise, positions the company to generate free cash flow next year since the company only needs $50 oil to provide it with the money necessary to deliver on its goals. Tillman gave investors an overview of what it intends on doing with any excess cash:

With both cash on hand and anticipated strong operating cash flows, you should expect us to continue focusing on reducing gross debt, as well as looking to pursue low entry cost opportunities within our resource play exploration group, opportunistically acquire small acreage packages in our core basins, fund our high-return organic investment program and support our dividend. And just as a reminder, we will receive the second OSM installment of $750 million in first quarter of 2018.

Tillman noted that the company plans to use any extra money to pay down debt and buy more land that would expand its opportunity set. He also pointed out that the company will receive the final payment from the sale of its Canadian oil sands business early next year, which should give it a nice windfall to use for those purposes.

An oil pump out in a field.

Image source: Getty Images.

4. Positioning itself to grow at current oil prices

While Marathon wants to do some work around the edges by using its cash resources to strengthen its balance sheet and resource position further, it has mostly completed its turnaround plan. Tillman noted:

All the work we've done the last couple of years around the balance sheet, cost reductions and portfolio transformation have all been done to position Marathon Oil to deliver profitable growth within cash flows at moderate oil pricing. That is our investment case. And thanks to recent performance in cost efficiencies, we believe we can achieve that objective at a flat $50 WTI. We have moved from portfolio transformation to execution delivery at scale across our differentiated position in the four highest-margin, lowest-cost U.S resource plays.

As the CEO points out, Marathon's story will be about delivering profitable growth at lower oil prices. Being able to achieve that aim at $50 oil puts the company in an elite group.

Marathon's best days are still ahead

If there was one overarching theme from Tillman's comments, it's that Marathon has transformed into a low-cost oil company that can excel at current oil prices. Therefore, it should be able to steadily grow production and profitability in the coming years as it executes on a plan to drill high-return wells across its four U.S. resource plays. That growth should give the stock the fuel it needs to head higher even if oil doesn't budge.

Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.