Strong Initial Performance From New Gulf of
Mexico Production and Onshore Wells, Balance Sheet Strengthening
with Debt Reduction Announcement and Increasing Shareholder
Returns
Murphy Oil Corporation (NYSE: MUR) today announced its financial
and operating results for the first quarter ended March 31, 2022,
including a net loss attributable to Murphy of $113 million, or
$0.73 net loss per diluted share. Adjusted net income, which
excludes discontinued operations and other one-off items, was $113
million, or $0.73 net income per diluted share.
Unless otherwise noted, the financial and operating highlights
and metrics discussed in this commentary exclude noncontrolling
interest.1
Highlights for the first quarter include:
- Produced 141 thousand barrels of oil equivalent per day, with
60 percent liquids volumes, due to strong operational performance
across oil-weighted assets
- Generated $409 million of adjusted earnings before interest,
tax, depreciation, amortization and exploration, or $32.54 per
barrel of oil equivalent sold
- Raised 2022 debt reduction goal to a range of $600 million to
$650 million from $300 million as a continuation of the delevering
strategy, assuming an $85 per barrel West Texas Intermediate oil
price
- Received a Moody’s corporate family rating upgrade to Ba2 from
Ba3 with a stable outlook, and received an S&P outlook revision
to positive from stable while affirmed at an issuer credit rating
of BB – both actions progressing goal to achieve investment grade
rating
Subsequent to quarter-end:
- Achieved first oil at the Murphy-operated King’s Quay floating
production system, with two of seven planned wells currently
flowing from the Khaleesi, Mormont, Samurai field development
project in the Gulf of Mexico
- Declared 17 percent increase of quarterly dividend to $0.175
per share, payable on June 1 and representing a 40 percent increase
from fourth quarter 2021
- Announced the redemption of $200 million of 6.875 percent
senior notes due 2024, progressing 2022 debt reduction goal
“The Murphy-operated King’s Quay floating production system
(FPS) has been performing above expectations since it began
receiving volumes in early April. I am pleased at the team’s
achievements in bringing the project to fruition safely, and with
strong current production rates from the first two wells in the
Khaleesi, Mormont, Samurai field development project, I am looking
forward to flowing the next well imminently as we progress with
additional completions,” said Roger W. Jenkins, President and Chief
Executive Officer. “Achieving production from this significant
project on schedule and within budget was a key priority within our
overall strategy of delever, execute, explore. Through precise
execution, the cash flow that will be generated from this
development enables us to achieve our debt reduction goals in 2022
and 2023 while simultaneously reviewing our dividend.”
FIRST QUARTER 2022 RESULTS
The company recorded a net loss attributable to Murphy of $113
million, or $0.73 net loss per diluted share, for the first quarter
2022. This includes both a realized after-tax loss on crude oil
derivative contracts of $104 million and an unrealized after-tax
mark-to-market loss on crude oil derivative contracts of $149
million. Adjusted net income, which excludes both the results of
discontinued operations and certain other items that affect
comparability of results between periods, was $113 million, or
$0.73 adjusted net income per diluted share for the same period.
The adjusted net income from continuing operations adjusts for the
following after-tax items: $149 million non-cash mark-to-market
loss on derivative instruments and $77 million non-cash
mark-to-market loss on contingent consideration. Details for first
quarter results can be found in the attached schedules.
Adjusted earnings before interest, taxes, depreciation and
amortization (EBITDA) from continuing operations attributable to
Murphy was $361 million, or $28.75 per barrel of oil equivalent
(BOE) sold. Adjusted earnings before interest, tax, depreciation,
amortization and exploration expenses (EBITDAX) from continuing
operations attributable to Murphy was $409 million, or $32.54 per
BOE sold. Details for first quarter EBITDA and EBITDAX
reconciliations can be found in the attached schedules.
First quarter production was at the high end of the guidance
range due to strong well performance in oil-weighted assets, and
averaged 141 thousand barrels of oil equivalent per day (MBOEPD)
with 53 percent oil and 60 percent liquids. Details for first
quarter production results can be found in the attached
schedules.
First quarter accrued capital expenditures (CAPEX) of $301
million were $31 million above guidance due primarily to the
following factors:
- inflationary impacts on hydraulic fracing services and oil
country tubular goods (OCTG),
- operational scope changes due to higher completions intensity
in the Eagle Ford Shale,
- altered development plans in Tupper Montney based on well
permits to include longer lateral wells, and
- additional rig standby costs due to delayed permits for
non-operated Brazil exploration drilling.
FINANCIAL POSITION
Murphy had approximately $2.1 billion of liquidity as of March
31, 2022, comprised of the $1.6 billion undrawn senior unsecured
credit facility and $481 million of cash and cash equivalents,
inclusive of noncontrolling interest (NCI). Of note, cash was
expended in the first quarter for a total of $55 million in
contingent payments per the terms of two Gulf of Mexico
acquisitions closed in 2018 and 2019.
Total debt of $2.47 billion as of the end of first quarter 2022
consists of long-term, fixed-rate notes with a weighted average
maturity of 7.2 years and a weighted average coupon of 6.2
percent.
Subsequent to quarter end, Murphy announced the redemption of
$200 million of 6.875 percent senior notes due 2024 as of June 2,
2022, thereby achieving the first step toward the company’s 2022
debt reduction goal of $600 to $650 million.
“With our team’s outstanding execution in the Gulf of Mexico and
continued progression of our onshore well delivery plans in 2022,
our future cash flow levels are increasing, thereby allowing us to
increase our debt reduction goals as we capitalize on higher oil
prices. We intend to reduce debt by $600 million to $650 million
this year, with optionality for up to $1 billion of debt reduction
in 20232,” said Jenkins. “Importantly, we have raised our quarterly
dividend significantly in the past six months, and at the
discretion of our Board of Directors, will look to continue
quarterly reviews targeting historical payout levels, while
significantly delevering our balance sheet with the remaining free
cash flow.”
2022 CAPITAL EXPENDITURE AND PRODUCTION GUIDANCE
Murphy is revising its 2022 CAPEX guidance, with a 7 percent
increase in the midpoint and an adjusted range of $900 million to
$950 million, primarily due to ongoing inflation impacts onshore,
scope changes to improve productivity and additional costs
attributable to the delay in non-operated Brazil exploration
drilling. The full year 2022 production guidance range remains
unchanged at 164 to 172 MBOEPD, with higher oil volumes leading to
a production mix of approximately 53 percent oil and 58 percent
total liquids volumes.
Second quarter 2022 production is estimated to be in the range
of 156 to 164 MBOEPD with 54 percent oil volumes, and is impacted
by planned operated downtime of 4.9 MBOEPD onshore and 0.6 MBOEPD
offshore, and non-operated downtime of 3.4 MBOEPD offshore. Both
production and CAPEX guidance ranges exclude Gulf of Mexico
NCI.
“While we were unable to maintain our original capital plan for
2022, we are recognizing positive impacts from the additional
capital spending. We elected to alter development plans for our
Tupper Montney asset, which allowed us to maintain our 2022 well
delivery plans by drilling longer laterals that will ultimately
lead to higher well recoveries. We also enhanced our completions
method in Karnes, which has led to early indications of strong
production results. Lastly, following the discovery of additional
pay zones in the Samurai field in the Gulf of Mexico, we have
increased capital for further evaluation and completions in the
planned development zones,” said Jenkins.
2022 Revised CAPEX by Quarter
($ MMs)
1Q 2022A
2Q 2022E
3Q 2022E
4Q 2022E
FY 2022E
$301
$305
$190
$129
$925
Accrual CAPEX, based on midpoint of guidance range and excluding
NCI.
OPERATIONS SUMMARY
Onshore
The onshore business produced approximately 78 MBOEPD, comprised
of 39 percent liquids volumes in the first quarter.
Eagle Ford Shale – First quarter production averaged 30
MBOEPD with 68 percent oil volumes and 85 percent liquids volumes.
As planned, nine gross non-operated wells were brought online, with
five wells in Karnes and four wells in Tilden. While no operated
wells were brought online during the quarter, Murphy initiated a
well workover program on certain shut-in wells, targeting projects
forecast to achieve payout within six months based on current
prices with minimal impact to operating expenses. Additionally,
Murphy adjusted its completions methodology in Karnes based on
real-time frac data, resulting in additional well costs from higher
frac intensities during the quarter.
Tupper Montney – In the first quarter, natural gas
production averaged 242 million cubic feet per day (MMCFD). The
company’s drilling and completions program progressed on schedule
during the quarter, with all permits in place to execute its
adjusted 2022 online well plans.
Kaybob Duvernay – During the first quarter, production
averaged 7 MBOEPD with 70 percent liquids volumes. Murphy brought
online three operated wells in the Two Creeks area as planned. Oil
volumes are performing slightly above the type curve with an
average gross 30-day (IP30) rate of approximately 800 BOEPD and 95
percent liquids volumes.
Offshore
The offshore business produced 63 MBOEPD for the first quarter,
comprised of 81 percent oil and excluding noncontrolling
interest.
Gulf of Mexico – Production averaged 59 MBOEPD,
consisting of 80 percent oil during the quarter.
As previously announced, Murphy achieved first oil from the
Khaleesi, Mormont, Samurai field development project in early
April, with production flowing into the Murphy-operated King’s Quay
floating production system. Two wells are currently achieving a
total gross production rate of approximately 30 MBOEPD with 89
percent oil. Completions work continues, with five wells remaining
in the seven-well program.
While drilling a planned Samurai well during the first quarter,
Murphy found additional pay in the upper zone. Due to the
additional pay, the company has increased its capital for further
logging and completions in the planned development zones.
Canada – Production averaged 3 MBOEPD in the first
quarter, comprised of 100 percent oil. Drydock work continues in
Spain on the non-operated Terra Nova floating, production, storage
and offloading vessel as part of the asset life extension project.
Murphy anticipates a return to production at year-end 2022.
EXPLORATION
Mexico – During the quarter, Murphy received approval of
the first additional exploration period for its exploration program
in Block 5 offshore Mexico. This agreement includes one exploration
well commitment, which the company will meet with drilling the
planned Tulum-1EXP well in the second half of 2022.
Brazil – As previously announced, Murphy and its operated
partner concluded drilling the Cutthroat-1 exploration well in
block SEAL-M-428 in the Sergipe-Alagoas Basin. The presence of
hydrocarbons was not found. The operator plugged and abandoned the
well and the partner group is evaluating the results.
COMMODITY HEDGES
Murphy employs commodity derivative instruments to manage
certain risks associated with commodity price volatility and
underpin capital returns associated with certain assets.
Murphy utilizes collars to provide hedge protection on 25
thousand barrels of oil per day (MBOPD) for full-year 2022 with a
weighted average put price of $63.24 per barrel and weighted
average call price of $75.20 per barrel.
The company also utilizes swaps to protect 20 MBOPD of full-year
2022 production with an average fixed price swap price of $44.88
per barrel.
Murphy maintains a combination of fixed price forward sales
contracts and diversification contracts tied to US pricing points
to lessen its dependence on variable AECO prices. Details for the
current fixed price contracts can be found in the attached
schedules.
CONFERENCE CALL AND WEBCAST SCHEDULED FOR MAY 4, 2022
Murphy will host a conference call to discuss first quarter 2022
financial and operating results on Wednesday, May 4, 2022, at 9:00
a.m. EDT. The call can be accessed either via the Internet through
the Investor Relations section of Murphy Oil’s website at
http://ir.murphyoilcorp.com or via the telephone by dialing toll
free 1-888-886-7786, reservation number 86484903.
FINANCIAL DATA
Summary financial data and operating statistics for first
quarter 2022, with comparisons to the same period from the previous
year, are contained in the following schedules. Additionally, a
schedule indicating the impacts of items affecting comparability of
results between periods, a reconciliation of EBITDA and EBITDAX
between periods, as well as guidance for the second quarter and
full year 2022, are also included.
1In accordance with GAAP, Murphy reports the 100 percent
interest, including a 20 percent noncontrolling interest (NCI), in
its subsidiary, MP Gulf of Mexico, LLC (MP GOM). The GAAP
financials include the NCI portion of revenue, costs, assets and
liabilities and cash flows. Unless otherwise noted, the financial
and operating highlights and metrics discussed in this news
release, but not the accompanying schedules, exclude the NCI,
thereby representing only the amounts attributable to Murphy.
2Assuming $85 per barrel WTI oil price in FY 2022, $75 per
barrel WTI oil price in 2023, and based on current production
guidance.
ABOUT MURPHY OIL CORPORATION
As an independent oil and natural gas exploration and production
company, Murphy Oil Corporation believes in providing energy that
empowers people by doing right always, staying with it and thinking
beyond possible. Murphy challenges the norm, taps into its strong
legacy and uses its foresight and financial discipline to deliver
inspired energy solutions. Murphy sees a future where it is an
industry leader who is positively impacting lives for the next 100
years and beyond. Additional information can be found on the
company’s website at www.murphyoilcorp.com.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are generally identified through the
inclusion of words such as “aim”, “anticipate”, “believe”, “drive”,
“estimate”, “expect”, “expressed confidence”, “forecast”, “future”,
“goal”, “guidance”, “intend”, “may”, “objective”, “outlook”,
“plan”, “position”, “potential”, “project”, “seek”, “should”,
“strategy”, “target”, “will” or variations of such words and other
similar expressions. These statements, which express management’s
current views concerning future events or results, are subject to
inherent risks and uncertainties. Factors that could cause one or
more of these future events or results not to occur as implied by
any forward-looking statement include, but are not limited to:
macro conditions in the oil and gas industry, including
supply/demand levels, actions taken by major oil exporters and the
resulting impacts on commodity prices; increased volatility or
deterioration in the success rate of our exploration programs or in
our ability to maintain production rates and replace reserves;
reduced customer demand for our products due to environmental,
regulatory, technological or other reasons; adverse foreign
exchange movements; political and regulatory instability in the
markets where we do business; the impact on our operations or
market of health pandemics such as COVID-19 and related government
responses; other natural hazards impacting our operations or
markets; any other deterioration in our business, markets or
prospects; any failure to obtain necessary regulatory approvals;
any inability to service or refinance our outstanding debt or to
access debt markets at acceptable prices; or adverse developments
in the U.S. or global capital markets, credit markets or economies
in general. For further discussion of factors that could cause one
or more of these future events or results not to occur as implied
by any forward-looking statement, see “Risk Factors” in our most
recent Annual Report on Form 10-K filed with the U.S. Securities
and Exchange Commission (“SEC”) and any subsequent Quarterly Report
on Form 10-Q or Current Report on Form 8-K that we file, available
from the SEC’s website and from Murphy Oil Corporation’s website at
http://ir.murphyoilcorp.com. Murphy Oil Corporation undertakes no
duty to publicly update or revise any forward-looking
statements.
NON-GAAP FINANCIAL MEASURES
This news release contains certain non-GAAP financial measures
that management believes are useful tools for internal use and the
investment community in evaluating Murphy Oil Corporation’s overall
financial performance. These non-GAAP financial measures are
broadly used to value and compare companies in the crude oil and
natural gas industry. Not all companies define these measures in
the same way. In addition, these non-GAAP financial measures are
not a substitute for financial measures prepared in accordance with
GAAP and should therefore be considered only as supplemental to
such GAAP financial measures. Please see the attached schedules for
reconciliations of the differences between the non-GAAP financial
measures used in this news release and the most directly comparable
GAAP financial measures.
MURPHY OIL CORPORATION
SUMMARIZED CONSOLIDATED
STATEMENTS OF OPERATIONS (unaudited)
Three Months Ended
March 31,
(Thousands
of dollars, except per share amounts)
2022
2021
Revenues and other
income
Revenue from production
$
834,528
592,527
Sales of purchased natural
gas
36,846
—
Total revenue from sales to
customers
871,374
592,527
Loss on crude contracts
(320,777
)
(214,385
)
Gain on sale of assets and other
income
2,364
1,843
Total revenues and other
income
552,961
379,985
Costs and expenses
Lease operating expenses
136,825
147,164
Severance and ad valorem
taxes
14,635
9,231
Transportation, gathering and
processing
46,923
42,912
Costs of purchased natural
gas
33,665
—
Exploration expenses, including
undeveloped lease amortization
47,566
11,780
Selling and general expenses
33,529
29,503
Depreciation, depletion and
amortization
164,124
198,278
Accretion of asset retirement
obligations
11,876
10,492
Other operating expense
105,942
21,079
Impairment of assets
—
171,296
Total costs and expenses
595,085
641,735
Operating loss from continuing
operations
(42,124
)
(261,750
)
Other income (loss)
Other expense
(2,495
)
(5,341
)
Interest expense, net
(37,277
)
(88,100
)
Total other loss
(39,772
)
(93,441
)
Loss from continuing operations
before income taxes
(81,896
)
(355,191
)
Income tax benefit
(16,961
)
(88,159
)
Loss from continuing
operations
(64,935
)
(267,032
)
(Loss) income from discontinued
operations, net of income taxes
(551
)
208
Net loss including noncontrolling
interest
(65,486
)
(266,824
)
Less: Net income attributable to
noncontrolling interest
47,850
20,614
NET LOSS ATTRIBUTABLE TO
MURPHY
$
(113,336
)
(287,438
)
LOSS PER COMMON SHARE –
BASIC
Continuing operations
$
(0.73
)
(1.87
)
Discontinued operations
—
—
Net loss
$
(0.73
)
(1.87
)
LOSS PER COMMON SHARE –
DILUTED
Continuing operations
$
(0.73
)
(1.87
)
Discontinued operations
—
—
Net loss
$
(0.73
)
(1.87
)
Cash dividends per Common
share
0.15
0.125
Average Common shares outstanding
(thousands)
Basic
154,916
153,953
Diluted
154,916
153,953
MURPHY OIL CORPORATION
CONSOLIDATED STATEMENTS OF CASH
FLOWS (unaudited)
Three Months Ended
March 31,
(Thousands
of dollars)
2022
2021
Operating Activities
Net loss including noncontrolling
interest
$
(65,486
)
(266,824
)
Adjustments to reconcile net loss
to net cash provided by continuing operations activities
Loss (income) from discontinued
operations
551
(208
)
Depreciation, depletion and
amortization
164,124
198,278
Unsuccessful exploration well
costs and previously suspended exploration costs
32,831
717
Amortization of undeveloped
leases
4,198
4,602
Accretion of asset retirement
obligations
11,876
10,492
Deferred income tax benefit
(20,253
)
(88,867
)
Mark to market loss on contingent
consideration
98,126
14,923
Mark to market loss on crude
contracts
188,509
153,505
Long-term non-cash
compensation
17,288
12,124
Impairment of assets
—
171,296
Net (increase) in noncash working
capital
(80,922
)
(9,052
)
Other operating activities,
net
(12,512
)
36,780
Net cash provided by continuing
operations activities
338,330
237,766
Investing Activities
Property additions and dry hole
costs
(244,908
)
(240,545
)
Proceeds from sales of property,
plant and equipment
—
268,023
Property additions for King's
Quay FPS
—
(17,734
)
Net cash (required) provided by
investing activities
(244,908
)
9,744
Financing Activities
Borrowings on revolving credit
facility
—
140,000
Repayment of revolving credit
facility
—
(340,000
)
Retirement of debt
—
(576,358
)
Debt issuance, net of cost
—
541,980
Early redemption of debt cost
—
(34,177
)
Distributions to noncontrolling
interest
(39,884
)
(36,006
)
Contingent consideration
payment
(55,169
)
—
Cash dividends paid
(23,300
)
(19,287
)
Withholding tax on stock-based
incentive awards
(15,421
)
(3,794
)
Capital lease obligation
payments
(158
)
(178
)
Net cash (required) by financing
activities
(133,932
)
(327,820
)
Effect of exchange rate changes
on cash and cash equivalents
(87
)
574
Net (decrease) in cash and cash
equivalents
(40,597
)
(79,736
)
Cash and cash equivalents at
beginning of period
521,184
310,606
Cash and cash equivalents at
end of period
$
480,587
230,870
MURPHY OIL CORPORATION
SCHEDULE OF ADJUSTED INCOME
(LOSS) (unaudited)
Three Months Ended
March 31,
(Millions
of dollars, except per share amounts)
2022
2021
Net loss attributable to Murphy
(GAAP)
$
(113.3
)
(287.4
)
Discontinued operations loss
(income)
0.6
(0.2
)
Loss from continuing
operations
(112.7
)
(287.6
)
Adjustments (after tax):
Mark-to-market loss on derivative
instruments
148.9
121.3
Mark-to-market loss on contingent
consideration
77.2
11.8
Foreign exchange (gain) loss
(0.1
)
0.9
Impairment of assets
—
128.0
Early redemption of debt cost
—
29.2
Charges related to Kings Quay
transaction
—
3.9
Unutilized rig charges
—
2.2
Total adjustments after taxes
226.0
297.3
Adjusted income from continuing
operations attributable to Murphy
$
113.3
9.7
Adjusted income from continuing
operations per average diluted share
$
0.73
0.06
Non-GAAP Financial Measures
Presented above is a reconciliation of Net income (loss) to
Adjusted income (loss) from continuing operations attributable to
Murphy. Adjusted income (loss) excludes certain items that
management believes affect the comparability of results between
periods. Management believes this is important information to
provide because it is used by management to evaluate the Company’s
operational performance and trends between periods and relative to
its industry competitors. Management also believes this information
may be useful to investors and analysts to gain a better
understanding of the Company’s financial results. Adjusted income
(loss) is a non-GAAP financial measure and should not be considered
a substitute for Net income (loss) as determined in accordance with
accounting principles generally accepted in the United States of
America.
Amounts shown above as reconciling items between Net income
(loss) and Adjusted income (loss) are presented net of applicable
income taxes based on the estimated statutory rate in the
applicable tax jurisdiction. The pretax and income tax impacts for
adjustments shown above are as follows by area of operations and
exclude the share attributable to non-controlling interests.
Three Months Ended
March 31, 2022
(Millions
of dollars)
Pretax
Tax
Net
Exploration & Production:
United States
$
98.1
(20.9
)
77.2
Corporate
188.5
(39.7
)
148.8
Total adjustments
$
286.6
(60.6
)
226.0
MURPHY OIL CORPORATION
SCHEDULE OF EARNINGS BEFORE
INTEREST, TAXES, DEPRECIATION
AND AMORTIZATION (EBITDA)
(unaudited)
Three Months Ended
March 31,
(Millions
of dollars, except per barrel of oil equivalents sold)
2022
2021
Net loss attributable to Murphy
(GAAP)
$
(113.3
)
(287.4
)
Income tax benefit
(17.0
)
(88.2
)
Interest expense, net
37.3
88.1
Depreciation, depletion and
amortization expense ¹
156.6
188.3
EBITDA attributable to Murphy
(Non-GAAP)
$
63.6
(99.2
)
Mark-to-market loss on derivative
instruments
188.5
153.5
Mark-to-market loss on contingent
consideration
98.1
14.9
Accretion of asset retirement
obligations ¹
10.5
10.5
Discontinued operations loss
(income)
0.6
(0.2
)
Impairment of assets ¹
—
171.3
Unutilized rig charges
—
2.8
Foreign exchange (gain) loss
—
1.3
Adjusted EBITDA attributable to
Murphy (Non-GAAP)
$
361.3
254.9
Total barrels of oil equivalents
sold from continuing operations attributable to Murphy (thousands
of barrels)
12,565
13,670
Adjusted EBITDA per barrel of oil
equivalents sold
$
28.75
18.65
1 Depreciation, depletion, and
amortization expense, impairment of assets and accretion of asset
retirement obligations used in the computation of Adjusted EBITDA
exclude the portion attributable to the non-controlling interest
(NCI).
Non-GAAP Financial Measures
Presented above is a reconciliation of Net income (loss) to
Earnings before interest, taxes, depreciation and amortization
(EBITDA) and adjusted EBITDA. Management believes EBITDA and
adjusted EBITDA are important information to provide because they
are used by management to evaluate the Company’s operational
performance and trends between periods and relative to its industry
competitors. Management also believes this information may be
useful to investors and analysts to gain a better understanding of
the Company’s financial results. EBITDA and adjusted EBITDA are
non-GAAP financial measures and should not be considered a
substitute for Net income (loss) or Cash provided by operating
activities as determined in accordance with accounting principles
generally accepted in the United States of America.
Presented above is adjusted EBITDA per barrel of oil equivalent
sold. Management believes adjusted EBITDA per barrel of oil
equivalent sold is important information because it is used by
management to evaluate the Company’s profitability of one barrel of
oil equivalent sold in that period. Adjusted EBITDA per barrel of
oil equivalent sold is a non-GAAP financial metric.
MURPHY OIL CORPORATION
SCHEDULE OF EARNINGS BEFORE
INTEREST, TAXES, DEPRECIATION
AND AMORTIZATION AND EXPLORATION
(EBITDAX)
(unaudited)
Three Months Ended
March 31,
(Millions
of dollars, except per barrel of oil equivalents sold)
2022
2021
Net loss attributable to Murphy
(GAAP)
$
(113.3
)
(287.4
)
Income tax benefit
(17.0
)
(88.2
)
Interest expense, net
37.3
88.1
Depreciation, depletion and
amortization expense ¹
156.6
188.3
EBITDA attributable to Murphy
(Non-GAAP)
63.6
(99.2
)
Exploration expenses
47.6
11.8
EBITDAX attributable to Murphy
(Non-GAAP)
111.2
(87.4
)
Mark-to-market loss on derivative
instruments
188.5
153.5
Mark-to-market loss on contingent
consideration
98.1
14.9
Accretion of asset retirement
obligations ¹
10.5
10.5
Discontinued operations loss
(income)
0.6
(0.2
)
Impairment of assets ¹
—
171.3
Unutilized rig charges
—
2.8
Foreign exchange (gain) loss
—
1.3
Adjusted EBITDAX attributable to
Murphy (Non-GAAP)
$
408.9
266.7
Total barrels of oil equivalents
sold from continuing operations attributable to Murphy (thousands
of barrels)
12,565
13,670
Adjusted EBITDAX per barrel of
oil equivalents sold
$
32.54
19.51
1 Depreciation, depletion, and
amortization expense, impairment of assets and accretion of asset
retirement obligations used in the computation of adjusted EBITDAX
exclude the portion attributable to the non-controlling interest
(NCI).
Non-GAAP Financial Measures
Presented above is a reconciliation of Net income (loss) to
Earnings before interest, taxes, depreciation and amortization, and
exploration expenses (EBITDAX) and adjusted EBITDAX. Management
believes EBITDAX and adjusted EBITDAX are important information to
provide because they are used by management to evaluate the
Company’s operational performance and trends between periods and
relative to its industry competitors. Management also believes this
information may be useful to investors and analysts to gain a
better understanding of the Company’s financial results. EBITDAX
and adjusted EBITDAX are non-GAAP financial measures and should not
be considered a substitute for Net income (loss) or Cash provided
by operating activities as determined in accordance with accounting
principles generally accepted in the United States of America.
Presented above is adjusted EBITDAX per barrel of oil equivalent
sold. Management believes adjusted EBITDAX per barrel of oil
equivalent sold is important information because it is used by
management to evaluate the Company’s profitability of one barrel of
oil equivalent sold in that period. Adjusted EBITDAX per barrel of
oil equivalent sold is a non-GAAP financial metric.
MURPHY OIL CORPORATION
FUNCTIONAL RESULTS OF OPERATIONS
(unaudited)
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(Millions
of dollars)
Revenues
Income
(Loss)
Revenues
Income
(Loss)
Exploration and production
United States ¹
$
707.4
252.9
490.3
119.0
Canada
166.1
22.7
104.0
(124.3
)
Other
—
(44.2
)
—
(6.9
)
Total exploration and
production
873.5
231.4
594.3
(12.2
)
Corporate
(320.5
)
(296.3
)
(214.3
)
(254.8
)
Continuing operations
553.0
(64.9
)
380.0
(267.0
)
Discontinued operations, net of
tax
—
(0.6
)
—
0.2
Total including noncontrolling
interest
$
553.0
(65.5
)
380.0
(266.8
)
Net loss attributable to
Murphy
(113.3
)
(287.4
)
1 Includes results attributable to a
noncontrolling interest in MP Gulf of Mexico, LLC (MP GOM).
MURPHY OIL CORPORATION
OIL AND GAS OPERATING RESULTS
(unaudited)
THREE MONTHS ENDED MARCH 31,
2022, AND 2021
(Millions
of dollars)
United
States 1
Canada
Other
Total
Three Months Ended March 31,
2022
Oil and gas sales and other
operating revenues
$
707.4
129.3
—
836.7
Sales of purchased natural
gas
—
36.8
—
36.8
Lease operating expenses
99.9
36.9
—
136.8
Severance and ad valorem
taxes
14.2
0.4
—
14.6
Transportation, gathering and
processing
29.2
17.7
—
46.9
Costs of purchased natural
gas
—
33.7
—
33.7
Depreciation, depletion and
amortization
126.5
34.2
0.1
160.8
Accretion of asset retirement
obligations
9.4
2.5
—
11.9
Exploration expenses
Dry holes and previously
suspended exploration costs
—
—
32.8
32.8
Geological and geophysical
2.6
—
0.2
2.8
Other exploration
1.5
0.1
6.1
7.7
4.1
0.1
39.1
43.3
Undeveloped lease
amortization
2.4
0.1
1.8
4.3
Total exploration expenses
6.5
0.2
40.9
47.6
Selling and general expenses
8.3
5.1
2.4
15.8
Other
102.8
5.1
0.4
108.3
Results of operations before
taxes
310.6
30.3
(43.8
)
297.1
Income tax provisions
(benefits)
57.7
7.6
0.4
65.7
Results of operations (excluding
Corporate segment)
$
252.9
22.7
(44.2
)
231.4
Three Months Ended March 31,
2021
Oil and gas sales and other
operating revenues
$
490.3
104.0
—
594.3
Lease operating expenses
116.1
30.8
0.3
147.2
Severance and ad valorem
taxes
8.9
0.3
—
9.2
Transportation, gathering and
processing
28.5
14.4
—
42.9
Depreciation, depletion and
amortization
149.6
44.8
0.5
194.9
Accretion of asset retirement
obligations
9.0
1.5
—
10.5
Impairment of assets
—
171.3
—
171.3
Exploration expenses
Dry holes and previously
suspended exploration costs
0.7
—
—
0.7
Geological and geophysical
0.6
—
0.2
0.8
Other exploration
0.6
—
5.0
5.6
1.9
—
5.2
7.1
Undeveloped lease
amortization
2.3
0.1
2.2
4.6
Total exploration expenses
4.2
0.1
7.4
11.7
Selling and general expenses
5.5
4.1
1.4
11.0
Other
21.5
3.1
(3.5
)
21.1
Results of operations before
taxes
147.0
(166.4
)
(6.1
)
(25.5
)
Income tax (benefits)
provisions
28.0
(42.1
)
0.8
(13.3
)
Results of operations (excluding
Corporate segment)
$
119.0
(124.3
)
(6.9
)
(12.2
)
1 Includes results attributable to a
noncontrolling interest in MP GOM.
MURPHY OIL CORPORATION
PRODUCTION-RELATED EXPENSES
(unaudited)
Three Months Ended
March 31,
(Dollars
per barrel of oil equivalents sold)
2022
2021
United States – Eagle Ford
Shale
Lease operating expense
$
12.31
10.80
Severance and ad valorem
taxes
5.14
3.13
Depreciation, depletion and
amortization (DD&A) expense
25.79
28.45
United States – Gulf of
Mexico
Lease operating expense
$
11.07
12.30
Severance and ad valorem
taxes
0.09
0.08
DD&A expense
9.53
10.37
Canada – Onshore
Lease operating expense
$
7.50
5.72
Severance and ad valorem
taxes
0.09
0.08
DD&A expense
7.10
8.90
Canada – Offshore
Lease operating expense
$
16.21
17.00
DD&A expense
12.54
16.00
Total E&P continuing
operations
Lease operating expense
$
10.25
10.11
Severance and ad valorem
taxes
1.10
0.63
DD&A expense
12.29
13.62
Total E&P continuing
operations – excluding noncontrolling interest
Lease operating expense
$
10.11
9.75
Severance and ad valorem
taxes
1.16
0.67
DD&A expense
12.46
13.78
MURPHY OIL CORPORATION
CAPITAL EXPENDITURES
(unaudited)
Three Months Ended
March 31,
(Millions
of dollars)
2022
2021
Exploration and production
United States
$
192.8
211.1
Canada
76.8
30.6
Other
29.8
5.6
Total
299.4
247.3
Corporate
5.3
3.8
Total capital expenditures -
continuing operations 1
304.7
251.1
Charged to exploration expenses
2
United States
4.1
1.9
Canada
0.1
—
Other
39.1
5.2
Total charged to exploration
expenses - continuing operations
43.3
7.1
Total capitalized
$
261.4
244.0
1 For the three months ended March 31,
2022, total capital expenditures excluding noncontrolling interest
(NCI) of $3.6 million (2021: $3.6 million) is $301.1 million (2021:
$247.5 million).
2 For the three months ended March 31,
2022, charges to exploration expense exclude amortization of
undeveloped leases of $4.3 million (2021: $4.6 million).
MURPHY OIL CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited)
(Millions
of dollars)
March 31, 2022
December 31, 2021
ASSETS
Current assets
Cash and cash equivalents
$
480.6
521.2
Accounts receivable
371.8
258.2
Inventories
59.3
54.2
Prepaid expenses
32.6
31.9
Assets held for sale
15.7
15.5
Total current assets
960.1
880.9
Property, plant and equipment, at
cost
8,237.7
8,127.9
Operating lease assets
907.5
881.4
Deferred income taxes
408.3
385.5
Deferred charges and other
assets
28.1
29.3
Total assets
$
10,541.7
10,304.9
LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term
debt, finance lease
$
0.7
0.7
Accounts payable
939.9
623.1
Income taxes payable
21.6
20.0
Other taxes payable
21.4
20.3
Operating lease liabilities
173.9
139.4
Other accrued liabilities
441.4
360.9
Total current liabilities
1,598.9
1,164.3
Long-term debt, including finance
lease obligation
2,466.1
2,465.4
Asset retirement obligations
859.3
839.8
Deferred credits and other
liabilities
472.7
570.6
Non-current operating lease
liabilities
752.4
761.2
Deferred income taxes
188.0
182.9
Total liabilities
6,337.4
5,984.1
Equity
Common Stock, par $1.00
195.1
195.1
Capital in excess of par
value
880.5
926.7
Retained earnings
5,082.0
5,218.7
Accumulated other comprehensive
loss
(506.4
)
(527.7
)
Treasury stock
(1,618.5
)
(1,655.4
)
Murphy Shareholders' Equity
4,032.8
4,157.3
Noncontrolling interest
171.5
163.5
Total equity
4,204.3
4,320.8
Total liabilities and equity
$
10,541.7
10,304.9
MURPHY OIL CORPORATION
PRODUCTION SUMMARY
(unaudited)
Three Months Ended
March 31,
Barrels per day unless otherwise
noted
2022
2021
Net crude oil and condensate
United States
Onshore
20,330
22,165
Gulf of Mexico 1
55,253
64,363
Canada
Onshore
4,380
6,288
Offshore
3,321
4,589
Other
276
70
Total net crude oil and
condensate - continuing operations
83,560
97,475
Net natural gas liquids
United States
Onshore
4,833
3,933
Gulf of Mexico 1
3,526
4,679
Canada
Onshore
983
1,233
Total net natural gas liquids -
continuing operations
9,342
9,845
Net natural gas – thousands of
cubic feet per day
United States
Onshore
27,361
22,016
Gulf of Mexico 1
56,058
72,658
Canada
Onshore
258,291
253,697
Total net natural gas -
continuing operations
341,710
348,371
Total net hydrocarbons -
continuing operations including NCI 2,3
149,854
165,382
Noncontrolling interest
Net crude oil and condensate –
barrels per day
(8,128
)
(9,174
)
Net natural gas liquids – barrels
per day
(287
)
(354
)
Net natural gas – thousands of
cubic feet per day 2
(2,590
)
(4,159
)
Total noncontrolling interest
(8,847
)
(10,221
)
Total net hydrocarbons -
continuing operations excluding NCI 2,3
141,007
155,161
1 Includes net volumes attributable to a
noncontrolling interest in MP GOM.
2 Natural gas converted on an energy
equivalent basis of 6:1.
3 NCI – noncontrolling interest in MP
GOM.
MURPHY OIL CORPORATION
WEIGHTED AVERAGE PRICE
SUMMARY
(unaudited)
Three Months Ended
March 31,
2022
2021
Crude oil and condensate –
dollars per barrel
United States
Onshore
$
93.87
$
57.41
Gulf of Mexico 1
95.02
58.78
Canada 2
Onshore
93.09
52.84
Offshore
110.66
59.39
Natural gas liquids – dollars per
barrel
United States
Onshore
38.32
21.25
Gulf of Mexico 1
44.05
23.87
Canada 2
Onshore
55.02
35.92
Natural gas – dollars per
thousand cubic feet
United States
Onshore
4.61
3.27
Gulf of Mexico 1
5.19
3.39
Canada 2
Onshore
2.52
2.26
1 Prices include the effect of
noncontrolling interest in MP GOM.
2 U.S. dollar equivalent.
MURPHY OIL CORPORATION
COMMODITY HEDGE POSITIONS
(unaudited)
AS OF MAY 2, 2022
Volumes
(MMcf/d)
Price/Mcf
Remaining Period
Area
Commodity
Type
Start Date
End Date
Montney
Natural Gas
Fixed price forward sales
176
C$2.34
4/1/2022
4/30/2022
Montney
Natural Gas
Fixed price forward sales
205
C$2.34
5/1/2022
5/31/2022
Montney
Natural Gas
Fixed price forward sales
247
C$2.34
6/1/2022
10/31/2022
Montney
Natural Gas
Fixed price forward sales
266
C$2.36
11/1/2022
12/31/2022
Montney
Natural Gas
Fixed price forward sales
269
C$2.36
1/1/2023
3/31/2023
Montney
Natural Gas
Fixed price forward sales
250
C$2.35
4/1/2023
12/31/2023
Montney
Natural Gas
Fixed price forward sales
162
C$2.39
1/1/2024
12/31/2024
Montney
Natural Gas
Fixed price forward sales
45
US$2.05
4/1/2022
12/31/2022
Montney
Natural Gas
Fixed price forward sales
25
US$1.98
1/1/2023
10/31/2024
Montney
Natural Gas
Fixed price forward sales
15
US$1.98
11/1/2024
12/31/2024
Commodity
Type
Volumes
(Bbl/d)
Price
(USD/Bbl)
Remaining Period
Area
Start Date
End Date
United States
WTI ¹
Fixed price derivative swap
20,000
$44.88
4/1/2022
12/31/2022
Volumes
(Bbl/d)
Average
Put
(USD/Bbl)
Average
Call
(USD/Bbl)
Remaining Period
Area
Commodity
Type
Start Date
End Date
United States
WTI ¹
Derivative collars
25,000
$63.24
$75.20
4/1/2022
12/31/2022
¹ West Texas Intermediate
MURPHY OIL CORPORATION
SECOND QUARTER 2022 GUIDANCE
Oil
BOPD
NGLs
BOPD
Gas
MCFD
Total
BOEPD
Production – net
U.S. – Eagle Ford Shale
26,000
4,100
29,500
35,000
– Gulf of Mexico excluding
NCI
53,300
4,300
61,800
67,900
Canada – Tupper Montney
—
—
281,200
46,900
– Kaybob Duvernay and Placid
Montney
4,300
800
14,800
7,600
– Offshore
2,300
—
—
2,300
Other
300
—
—
300
Total net production (BOEPD) -
excluding NCI 1
156,000 to 164,000
Exploration expense ($
millions)
$11
FULL YEAR 2022 GUIDANCE
Total net production (BOEPD) -
excluding NCI 2
164,000 to 172,000
Capital expenditures – excluding
NCI ($ millions) 3
$900 to $950
¹ Excludes noncontrolling
interest of MP GOM of 7,600 BOPD of oil, 400 BOPD of NGLs, and
3,100 MCFD gas.
² Excludes noncontrolling
interest of MP GOM of 8,000 BOPD of oil, 400 BOPD of NGLs, and
3,300 MCFD gas.
³ Excludes noncontrolling
interest of MP GOM of $33 MM.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220503006112/en/
Investor Contacts: Kelly Whitley,
kelly_whitley@murphyoilcorp.com, 281-675-9107 Megan Larson,
megan_larson@murphyoilcorp.com, 281-675-9470
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