2019
FOURTH QUARTER EARNINGS
CONFERENCE CALL & WEBCAST
JANUARY 30, 2020
ROGER W. JENKINS
PRESIDENT& CHIEF EXECUTIVE OFFICER
Cautionary Statement & Investor Relations Contacts
Cautionary Note to U.S. Investors - The United States Securities and Exchange Commission (SEC) requires oil and natural gas companies, in their filings with the SEC, to disclose proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We may use certain terms in this presentation, such as "resource", "gross resource", "recoverable resource", "net risked PMEAN resource", "recoverable oil", "resource base", "EUR" or "estimated ultimate recovery" and similar terms that the SEC's rules prohibit us from including in filings with the SEC. The SEC permits the optional disclosure of probable and possible reserves in our filings with the SEC. Investors are urged to consider closely the disclosures and risk factors in our most recent Annual Report on Form 10-K filed with the 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.
Forward-Looking Statements - This presentation 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: 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; natural hazards impacting our operations; 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 presentation refers to certain forward looking non-GAAP measures such as future "Free Cash Flow". Definitions of these measures are included in the appendix.
Kelly Whitley
VP, Investor Relations & Communications 281-675-9107kelly_whitley@murphyoilcorp.com
Bryan Arciero
Sr. Investor Relations Advisor 281-675-9339bryan_arciero@murphyoilcorp.com
Megan Larson
Sr. Investor Relations Analyst 281-675-9470megan_larson@murphyoilcorp.com
January 2020 | www. m u rp h yo i l c o rp . c o m | 1 | |
NYSE: MUR | |||
Executing Our 2019 Plan
PRODUCING | GENERATING | INCREASING | TRANSFORMING | BUILDING | ||||||||
Oil-Weighted | High Margin | Capital Returns | Portfolio for | Profitable | ||||||||
Assets | Realizations | to Shareholders | Future Value | Production | ||||||||
Produced 173 MBOEPD in | 94% oil volumes sold at | Returned >$660 MM to | Closed Gulf of Mexico and | Brought 91 operated wells | ||||||||
FY 2019, ~60% oil | premium to WTI in FY 2019 | shareholders in FY 2019 | Malaysia transactions | online in Eagle Ford Shale | ||||||||
Increased Gulf of Mexico | Adjusted EBITDA $404 MM | Completed $500 MM | Transformed into a top 5 | Sanctioned several Gulf of | ||||||||
production >200% from | 4Q 2019 | share buyback program | Gulf of Mexico operator | Mexico projects set to deliver | ||||||||
FY 2018 | $23 adj. EBITDA/BOE | Delivered 4% dividend yield | by production | sustainable FCF | ||||||||
Increased Eagle Ford Shale | 4Q 2019 | Benefitted shareholders within | Issued Inaugural | Successfully completed multiple | ||||||||
production >23% from | Sustainability Report | workovers and tiebacks in Gulf | ||||||||||
4Q 2018 | Generated $145 MM of free | cash flow including sale | of Mexico on schedule | |||||||||
cash in FY 2019 | proceeds | Added new blocks in Sergipe- | ||||||||||
Accelerated oil-weighted growth | Alagoas and Potiguar basins | |||||||||||
in long-term plan | in Brazil | |||||||||||
Drilled successful wells in Gulf | ||||||||||||
of Mexico, offshore Mexico | ||||||||||||
and Vietnam | ||||||||||||
Note: Production volumes, sales volumes, reserves and financial amounts exclude noncontrolling interest, unless otherwise stated | ||||||||||||
Free cash generated includes NCI | ||||||||||||
January 2020 | www. m u rp h yo i l c o rp . c o m | 2 | ||||||||||
NYSE: MUR | ||||||||||||
2019 Production Update
4Q 2019 and FY 2019 Production
4Q 2019 Production 194 MBOEPD, 67% Liquids | 4Q 2019 Production | |||
• >115,000 BOPD oil production | 60% Oil | |||
• Gulf of Mexico (3,500) BOEPD | 33% Natural Gas | |||
27% | ||||
• (1,500) BOEPD at Neidermeyer (Mississippi Canyon 209) | 30% | |||
194 | Eagle Ford Shale | |||
subsea equipment malfunction | Offshore | |||
• (1,900) BOEPD extended non-operated downtime | MBOEPD | Canada Onshore | ||
- Canada offshore (1,000) BOEPD
- Extended non-operated downtime at Terra Nova
- Eagle Ford Shale (3,600) BOEPD
- Workover activity on higher rate Catarina wells
- New East Tilden wells outperforming historical rates but below current corporate forecast
FY 2019 Production 173 MBOEPD, 67% Liquids
- >103,000 BOPD oil production
- Increased oil volumes 14% from FY 2018
- 57% onshore, 43% offshore
7% NGL | 43% |
FY 2019 Production
33% Natural Gas | 60% Oil | ||
31% | 26% | ||
Eagle Ford Shale | |||
173 | |||
Offshore | |||
MBOEPD | Canada Onshore | ||
7% NGL
Note: Production volumes, sales volumes, reserves and financial amounts exclude noncontrolling interest, unless otherwise stated FY 2018 oil volumes include contribution from Malaysia assets
43%
January 2020 | www. m u rp h yo i l c o rp . c o m | 3 | |
NYSE: MUR | |||
Maintaining High-Margin Reserves in 2019
- Sustaining 50% oil-weighted portfolio
- Organic reserves replacement 172%
- Increased proved developed reserves from 50% to 57% year-over-year
- 3-yearaverage total F&D cost of $12.95/BOE
- Reserve life index of 11.8 years
2019E Proved Reserves
38% | 36% | |||
800 | 43% | 57% | 50% | |
MMBOE | Liquids-Weighted | |||
26% | 7% | |||||||||
US Onshore | Offshore | Canada Onshore | Oil | NGL | Natural Gas | |||||
Proved Reserves MMBOE
Malaysia divestment of 121 MMBOE excludes 7 MMBOE attributable to production
Lowering 3-Year Average Organic F&D Costs $/BOE
$20
$15
$10
$5
$0
2016 | 2017 | 2018 | 2019 |
Note: Production volumes, sales volumes, reserves and financial amounts exclude noncontrolling interest, unless otherwise stated
Reserves are based on preliminary SEC year-end 2019 audited proved reserves and exclude noncontrolling interest
January 2020 | www. m u rp h yo i l c o rp . c o m | 4 | |
NYSE: MUR | |||
4Q 2019 Financial Results
4Q 2019 Results
- Net loss $72 MM
- Adjusted net income $25 MM
4Q 2019 Accounting Adjustments
- One-offincome adjustments after-tax:
- MTM loss on crude oil derivatives $106 MM
- MTM loss on contingent consideration $7 MM
- Loss on extinguishment of debt $25 MM
4Q 2019 ($MM Except Per Share)
Net Income Attributable to Murphy
Income (loss) | ($72) |
$/Diluted share | ($0.46) |
Adjusted Income from Cont. Ops. | |
Adjusted income (loss) | $25 |
$/Diluted share | $0.16 |
Note: Production volumes, sales volumes, reserves and financial amounts exclude noncontrolling interest, unless otherwise stated
January 2020 | www. m u rp h yo i l c o rp . c o m | 5 | |
NYSE: MUR | |||
Maintaining Financial Discipline & Balance Sheet Strength
4Q 2019 Cash Flow from Continuing Operations
- Cash flow exceeded property additions and dry hole costs by $1 MM
- $57 MM working capital increase
- $16 MM non-cashlong-term compensation
Other Highlights
- Completed $500 MM share repurchase program
- Issued $550 MM of 5.875% senior notes due 2027
- Proceeds used to repurchase aggregate $521 MM of senior notes due 2022
Cash Flow Attributable to Murphy ($MM) | 4Q 2019 | FY 2019 |
Net cash provided by continuing operations | $336 | $1,489 |
Property additions and dry hole costs | ($335) | ($1,344) |
Free Cash Flow | $1 | $145 |
Adjusted EBITDA Attributable to Murphy ($MM) | 4Q 2019 | FY 2019 |
EBITDA attributable to Murphy | $289 | $2,460 |
Discontinued operations (income) | ($37) | ($1,065) |
Mark-to-market loss on crude oil derivatives contracts | $142 | $42 |
and contingent consideration | ||
Other | $10 | $77 |
Adjusted EBITDA | $404 | $1,514 |
• Net debt / annualized adjusted EBITDAX of 1.5x at 4Q 2019
Note: Production volumes, sales volumes, reserves and financial amounts exclude noncontrolling interest, unless otherwise stated
Free cash flow includes NCI
January 2020 | www. m u rp h yo i l c o rp . c o m | 6 | |
NYSE: MUR | |||
Achieving Premium Oil-Weighted Realizations
>112,000BBLS/Day 95%SOLD
SOLD 4Q 2019At Premium
to $56.96 WTI
Sales Volumes & Differential Basis
Eagle Ford | North America | 4Q 2019 Total Company | |||||
Shale | Offshore | Other - Onshore Canada | |||||
33% | Mars - GOM | ||||||
EBITDA/BOE | $31/BOE | $30/BOE | Brent - Offshore Canada | 5% | +$1.31/BBL | ||
+$5.54/BBL | 6% | ||||||
4Q 2019 | |||||||
Differentials | |||||||
FIELD-LEVEL | |||||||
vs | |||||||
HLS - GOM | $56.96 WTI | ||||||
+$4.32/BBL | 22% | MEH - Eagle Ford | |||||
+$3.10/BBL |
34%
Note: Production volumes, sales volumes, reserves and financial amounts exclude noncontrolling interest, unless otherwise stated
January 2020 | www. m u rp h yo i l c o rp . c o m | 7 | |
NYSE: MUR | |||
Accelerating Returns to Shareholders
Disciplined and Flexible Strategy
Free Cash Flow ($MM) 2019E
- Returned >$660 MM cash in 2019
- >$500 MM in share repurchases
- Repurchased 12% of shares outstanding
- Generated free cash flow1 in 2019
- No equity issuances
$600 $400 $200 $0 -$200-$400-$600-$800-$1,000
- Delivered industry leading dividend yield
- Returned >$3.9 BN cash since 2012
Note: FCF = 2019E Median Consensus Cash Flow from Operations less Annual CAPEX at 1/28/2020
Source: FactSet
Peer Group: APA, CHK, CNX, COG, DVN, ECA, HES, MRO, MTDR, NBL, RRC, SM, SWN, WLL, XEC
- Repurchased >$1.8 BN shares since 2012
- >22% of shares outstanding
- Continued focus on generating cash flow in excess of capital spending and dividends
1 Free cash flow calculated as cash flow from operations less annual CAPEX, excluding proved property additions and including noncontrolling interest
Dividend Yield
4%
3%
2%
1%
0%
Source: FactSet at 1/28/2020
Peer Group: APA, CHK, CNX, COG, DVN, ECA, HES, MRO, MTDR, NBL, RRC, SM, SWN, WLL, XEC
Note: No dividend paid by CHK, CNX, MTDR, SWN, WLL
January 2020 | www. m u rp h yo i l c o rp . c o m | 8 | |
NYSE: MUR | |||
Effective Governance Supports Long-Term Financial Strength
Expert and Independent Board
Long-term industry, operating and HSE expertise
Separate CEO and Chairman
12 out of 13 directors are independent
Board of Directors elected with average vote of 99% over past 5 years
ESG Management
75%
ISS Governance Score
vs Peer Average
Health, Safety and Environmental
Committee established in 1994
- Worldwide HSE policy and management system applied to every employee, contractor and partner
Safety and environmental metrics in annual incentive plan performance since 2008
Climate change focus
- Emissions forecasting in long-term planning improves full-cycle asset management
- Developed guiding principles for climate change
January 2020 | www. m u rp h yo i l c o rp . c o m | 9 | |
NYSE: MUR | |||
Mitigating Risk Through Sustainable Environmental Operations
Safe Operations | Environmental Management | GHG Emissions Reduction | ||
0.36 average TRIR over past 5 years (vs | One IOGP** recordable spill in 2019, | 50% reduction in GHG emissions |
4-year average of 0.38 for US E&P | equaling rate of 1.2 BBLS per MMBOE | anticipated from 2018 - 2020 |
companies*) | Gulf of Mexico IOGP spill free since 2014 | Potential for long-term reductions with |
Eagle Ford Shale well work 5.5 years lost | ||
natural gas-fueled frac pumps in NA | ||
time incident free | Recycle 100% of produced water in | Onshore |
Gulf of Mexico 7.5 years lost time incident | Tupper Montney | |
free |
Proud member of
Internal targets for incident rate, spill rate and emissions
drive continual improvement
- Company reported data as of FY 2018, sourced from Bloomberg
- IOGP - International Association of Oil & Gas Producers
January 2020 | www. m u rp h yo i l c o rp . c o m | 10 | |
NYSE: MUR | |||
Onshore Portfolio Update
Eagle Ford Shale
4Q 2019 and FY 2019 Update
FY 2019 45 MBOEPD, 76% Oil, 89% Liquids
- 91 operated, 9 non-operated wells online
- Increased oil weighting from 73% at FY 2018
4Q 2019 50 MBOEPD, 77% Oil, 89% Liquids
- Production increased >23% from 4Q 2018
- 18 wells online
- 8 Tilden - Lower EFS
- 10 Catarina - 9 Lower EFS, 1 Upper EFS
Lowered Drilling and Completions Costs
• <$6 MM average per well in FY 2019
Improved IP30 Rates in 2019
- Increased median IP30 oil rates >18% from 2018
- Increased median IP30 oil rates >50% from 2016
Eagle Ford Shale Acreage
Wilson | KARNES | |
Atascosa | Karnes | |
Zavala | Frio | |
TILDEN | ||
CATARINA | ||
Dimmit | ||
La Salle | Bee | |
Live Oak | ||
McMullen |
Murphy Acreage | Rig on Location |
EUR per Well MBOE by Year
750
584
500 | 499 | 528 | |||||||||
250 | 429 | ||||||||||
2016 | 2017 | 2018 | 2019 | ||||||||
Interquartile Range | Median | ||||||||||
Note: EFS = Eagle Ford Shale | Note: Interquartile range shows difference between 75th and 25th percentile of well EURs |
January 2020 | www. m u rp h yo i l c o rp . c o m | 12 | |
NYSE: MUR | |||
Kaybob Duvernay
4Q 2019 and FY 2019 Update
FY 2019 10 MBOEPD, 54% Oil, 65% Liquids
- 16% production increase over FY 2018
- 10 wells online
- Well performance exceeded expectations by 17%
Kaybob Duvernay Acreage
Kaybob North
Kaybob East
4Q 2019 9 MBOEPD, 55% Oil, 68% Liquids
• 8 wells drilled for lease retention
Strong Results in 2019
• Drilled and completed lowest cost well <$6.3 MM | |
• Drilled longest lateral to-date >13,600' | |
• | Drilled fastest well to-date <12 days |
• | Utilizing bi-fuel to reduce diesel costs and |
Simonette
Kaybob West
Saxon
Two Creeks
greenhouse gas emissions | |
• | Achieved >30% CO2 reduction in emissions |
• | Resulted in CAPEX savings |
0 Miles 10
Murphy Acreage | Battery | Facility | Pipeline | ||
January 2020 | www. m u rp h yo i l c o rp . c o m | 13 | |
NYSE: MUR | |||
Tupper Montney
4Q 2019 and FY 2019 Update
FY 2019 243 MCFD | Successful AECO Price Mitigation | |
• | 8 wells online | • Realized FY19 C$2.15/MCF* vs AECO realized |
• | Generated positive free cash for the year | average of C$1.64/MCF |
4Q 2019 260 MCFD
• New wells trending in line with 24 BCF type curve
* C$0.29 transportation cost to AECO not subtracted
Mitigating AECO Exposure | Tupper Montney Natural Gas Realizations FY 2019 | $CAD/MCF | ||
FY 2019 Tupper Montney Natural Gas Sales | ||||
Dawn Price Exposure | AECO Price Exposure | |||
Malin Price Exposure | 4% | 49% | ||
8% |
Chicago Price Exposure
15%
24%
Hedged
* C$0.29 of transportation cost not subtracted
January 2020 | www. m u rp h yo i l c o rp . c o m | 14 | |
NYSE: MUR | |||
Offshore Portfolio Update
Gulf of Mexico
4Q 2019 Update
4Q 2019 Production 82 MBOEPD, 85% Liquids Nearly Headless Nick (Mississippi Canyon 387)
- Tie-inactivities completed, online 4Q 2019
- Peak gross rate 6,900 BOEPD
Chinook #5 (Walker Ridge 425)
- Workover completed, online 4Q 2019
- Peak gross rate 13,000 BOEPD
Medusa A6 (Mississippi Canyon 582)
- Workover completed, online 4Q 2019
- Peak gross rate 1,600 BOEPD
King's Quay Floating Production System
- Executed memorandum of understanding with ArcLight Capital Partners, LLC
- Negotiating final agreements detailing assumption of future capital requirements, as well as reimbursement of ~$125 MM previous capital outlay
Gulf of Mexico Assets
Neidermeyer | Dalmatian |
Otis | |
VK DD
Delta House | Marmalard |
Son of Bluto II |
Calliope | |||
Powerball | Medusa | ||
Kodiak | Nearly Headless Nick | ||
EW | MC DC | ||
Ourse | |||
Habanero | |||
Front Runner | |||
Samurai | Khaleesi/Mormont | ||
GB | GC | AT LL | |
KC | WR | LU HE | |
Cascade/Chinook | Cascade | |
Chinook | ||
Lucius | St. Malo |
• Closing anticipated late 1Q to early 2Q 2019
Murphy Assets | Offshore Platform | FPSO |
Note: Production volumes and financial amounts exclude noncontrolling interest, unless otherwise stated
January 2020 | www. m u rp h yo i l c o rp . c o m | 16 | |
NYSE: MUR | |||
Gulf of Mexico
Multi-Year Project Execution Update
Tieback & Workover Projects
- Multiple projects to sustain long-term production
- Timely execution of project schedule
- Platform and workover rigs currently on location
Major Project Update
Khaleesi / Mormont
- FEED engineering work complete
- Subsea engineering and construction contracts awarded
Samurai
- Pre-FEEDengineering work complete
- Subsea engineering and construction contracts awarded
Tieback & Workover Projects
Planning & | Drilling & | |||
Project | Engineering | Completions | Subsea Tie-In | First Oil |
Front Runner Rig | ✔ | 1Q -3Q 2020 | n/a | 2Q - 4Q 2020 |
Program - 3 Wells | ||||
Cascade #4 | ✔ | 1Q 20201 | n/a | 2Q 2020 |
workover | ||||
Dalmatian 134 #2 | ✔ | 1Q 20201 | n/a | 2Q 2020 |
workover | ||||
Calliope | Ongoing | ✔ | 3Q 2020 | 4Q 2020 |
Ourse | Ongoing | 2H 20212 | 2H 2021 | 4Q 2021 |
Son of Bluto II | Ongoing | 2H 2021 | 2H 2021 | 4Q 2021 |
Major Projects
Planning & | Drilling & | |||
Project | Engineering | Completions | Subsea Tie-In | First Oil |
Khaleesi / Mormont | Ongoing | 4Q 2020 - 4Q 20212 | 2021 | 1H 2022 |
Samurai | Ongoing | 4Q 2020 - 4Q 2021 | 2021 | 1H 2022 |
St. Malo Waterflood | Ongoing | 2Q 2020 - 2Q 2021 | 2022 | 2023 |
1 Well workover. No drilling/completions activities.
2 Completion only. Well previously drilled. Khaleesi / Mormont 4 of 5 wells previously drilled.
January 2020 | www. m u rp h yo i l c o rp . c o m | 17 | |
NYSE: MUR | |||
Looking Ahead
2020 Capital Program
Production | 181 - 193 MBOEPD | |
1Q 2020 | 190 - 202 MBOEPD | |
Production | ||
FY 2020 | ||
2020 | CAPEX | $1.4 - $1.5 Billion |
GUIDANCE | FY 2020 | |
Focusing CAPEX on High Margin Assets
- $1.2 BN allocated to Eagle Ford Shale and offshore
- 92% allocated to field development and development drilling
Producing from our Oil-Weighted Portfolio
- 60% oil-weighted production in 2020
- 95% of oil forecasted at premium to WTI
2020 Total CAPEX
47%
1%
US Onshore | |||
7% | Offshore | ||
Canada Onshore | |||
12% | Exploration | ||
Other | |||
33% | |||
CAPEX by Production Year
2%
72% | 2020 Production | |
2021 Production | ||
22% | 2022+ Production | ||
Other | |||
4% | |||
Generating Free Cash to Cover Dividend at $55 WTI
Note: 2022+ production includes exploration and St. Malo waterflood, Khaleesi, | |||||
Note: Production volumes, sales volumes, reserves and financial amounts exclude noncontrolling interest, unless otherwise stated | Mormont and Samurai projects | ||||
January 2020 | www. m u rp h yo i l c o rp . c o m | 19 | |||
NYSE: MUR | |||||
Gulf of Mexico
Sustaining Production Through Short-Cycle Projects
Delivering Free Cash Flow with Efficient | 2020 Estimated Gulf of Mexico Production MBOEPD | ||||||
Capital Spending | 100 | ||||||
• Producing 86 MBOEPD in 2020 | 90 | 13 | 3 | 86 | |||
• $440 MM CAPEX in 2020 | 82 | ||||||
• Generating ~$1 BN in operating cash flow | 80 | ||||||
70 | |||||||
70 | |||||||
Executing 2020 Gulf of Mexico Projects | 60 | ||||||
• 6 operated wells online | 50 | ||||||
• 3 platform-rig wells | |||||||
• | 2 workovers | 40 | |||||
• | 1 subsea tieback | 30 | |||||
• 5 non-operated wells online | |||||||
20 | |||||||
10 | |||||||
- | |||||||
4Q 2019 | Base | Operated Wells | Non-Operated | 2020E Gulf of | |||
Note: Assumes WTI $55/BBL | Production | Production | Wells | Mexico Prouction | |||
Operated Wells includes Chinook 5 well online 4Q 2019 | |||||||
Production Volumes & Financial Amounts Exclude Non-Controlling Interest, Unless Otherwise Stated | |||||||
January 2020 | www. m u rp h yo i l c o rp . c o m | 20 | |||||
NYSE: MUR | |||||||
North America Onshore
Growing Eagle Ford Shale With Continued Investment
2020 Onshore Capital Budget $855 MM | Eagle Ford Shale Well Locations | |||||||||||||||||||||||||
• $680 MM Eagle Ford Shale | Inter-Well | Remaining | ||||||||||||||||||||||||
Area | Net Acres | Reservoir | Spacing (ft) | Wells | ||||||||||||||||||||||
• 97 operated wells + 59 non-operated wells online | Lower EFS | 300 | 99 | |||||||||||||||||||||||
• $125 MM Kaybob Duvernay | Karnes | 10,101 | Upper EFS | 800 | 155 | |||||||||||||||||||||
• 16 operated wells online | Austin Chalk | 1,200 | 102 | |||||||||||||||||||||||
Lower EFS | 500 | 354 | ||||||||||||||||||||||||
• $35 MM Tupper Montney | ||||||||||||||||||||||||||
Tilden | 64,756 | Upper EFS | 500 | 140 | ||||||||||||||||||||||
• 5 operated wells online | Austin Chalk | 600 | 100 | |||||||||||||||||||||||
• $15 MM Placid Montney | Catarina | 48,384 | Lower EFS | 450 | 272 | |||||||||||||||||||||
• 11 non-operated wells online | Upper EFS | 900 | 349 | |||||||||||||||||||||||
Austin Chalk | 1,200 | 149 | ||||||||||||||||||||||||
2020 Wells Online | Total | 123,241 | 1,720 | |||||||||||||||||||||||
70 | ||||||||||||||||||||||||||
60 | Kaybob Duvernay Well Locations | |||||||||||||||||||||||||
50 | ||||||||||||||||||||||||||
Inter-Well | Remaining | |||||||||||||||||||||||||
40 | ||||||||||||||||||||||||||
Area | Net Acres | Spacing (ft) | Wells | |||||||||||||||||||||||
30 | Two Creeks | 34,784 | 984 | 137 | ||||||||||||||||||||||
20 | ||||||||||||||||||||||||||
Kaybob East | 37,744 | 984 | 158 | |||||||||||||||||||||||
10 | ||||||||||||||||||||||||||
Kaybob West | 25,984 | 984 | 106 | |||||||||||||||||||||||
0 | ||||||||||||||||||||||||||
Kaybob North | 27,328 | 984 | 135 | |||||||||||||||||||||||
1Q 2020 | 2Q 2020 | 3Q 2020 | 4Q 2020 | |||||||||||||||||||||||
Eagle Ford Shale | Eagle Ford Shale (Non-Op) | Kaybob Duvernay | Simonette | 33,459 | 984 | 115 | ||||||||||||||||||||
Saxon | 12,746 | 984 | 55 | |||||||||||||||||||||||
Tupper Montney | Placid Montney (Non-Op) | |||||||||||||||||||||||||
Total | 172,045 | 706 | ||||||||||||||||||||||||
Note: Non-op well cadence subject to change per operator plans | ||||||||||||||||||||||||||
Average 24% WI for Eagle Ford Shale non-operated wells | ||||||||||||||||||||||||||
January 2020 | www. m u rp h yo i l c o rp . c o m | 21 | ||||||||||||||||||||||||
NYSE: MUR | ||||||||||||||||||||||||||
2020 Exploration Plan
Focusing on Core Growth Areas
Targeting >500 MMBOE in Annual Program
• $100 MM 2020 CAPEX
Mt. Ouray, US Gulf of Mexico
- Murphy 20% WI, non-operated
- Green Canyon 767
- Expected spud 2Q 2020
Cholula-2DEL Appraisal Well, Offshore Mexico
- Murphy 40% WI, operator
- Targeting 3Q-4Q 2020
Batopilas Prospect, Offshore Mexico
- Murphy 40% WI, operator
- Targeting 4Q 2020
- Targeting new, sub-salt play
Sergipe-Alagoas Basin, Brazil
- Murphy 20% WI, non-operated
- >1.2 BN BOE reserves discovered nearby
- Several prospects of material volume identified
- Well planning ongoing in 2020; drilling planned early 2021
US GULF OF MEXICO
OFFSHORE MEXICO | ||||
BRAZIL | ||||
January 2020 | www. m u rp h yo i l c o rp . c o m | 22 | |
NYSE: MUR | |||
Overview of Long Range Strategic Plan 2020 - 2024
Positioning Company for Long-Term Value Creation
Generates ~$1.4 BN in Free Cash Flow Over | Annual Average Capital Spend | ||
2020 - 2024 | |||
5 Years After Dividend | Exploration | US Onshore | |
Delivering Consistent Oil-Weighted Production | 8% | ||
• Maintain ~60% oil-weighting from 2020 - 2024 | |||
Canada Onshore | 12% | 54% | |
Average Annual CAPEX ~$1.3 BN | $1.3 BN | ||
• 2020 is peak CAPEX in 5-year plan | WH Offshore | 26% |
Balancing Onshore / Offshore Portfolio
- Increasing US onshore production by 10-12% CAGR through organic growth
2020E - 2024E Production Growth MBOEPD
• Sustaining production levels through multiple | 250 | ||||||
200 | |||||||
offshore development projects | Offshore | ||||||
Exploration - Focused Strategy | 150 | Offshore | |||||
• CAPEX ~$100 MM per year, flexible as needed | 100 | US | US | ||||
Onshore | |||||||
• Ongoing plan of 3-5 wells annually | Onshore | ||||||
50 | CAN | CAN | |||||
Onshore | |||||||
Onshore | |||||||
0 | |||||||
Note: Assumes WTI $55/BBL | 2020E | US Onshore | Canada Onshore | 2024E | |||
Production Volumes & Financial Amounts Exclude Non-Controlling Interest, Unless Otherwise Stated | |||||||
January 2020 | www. m u rp h yo i l c o rp . c o m | 23 | |||||
NYSE: MUR | |||||||
Positioning Company for Long-Term Value Creation
TRANSFORMING | PRODUCING | RAMPING | ||
Portfolio by adding oil-weighted, | Oil-weighted assets that | High value Eagle Ford Shale | ||
high-margin assets | realize premium pricing | production | ||
EXECUTING | OFFERING | FOCUSING | ||||
Short cycle Gulf of Mexico field | Investors exploration upside | On sustainable future | ||||
development projects | ||||||
January 2020 | www. m u rp h yo i l c o rp . c o m | 24 | |
NYSE: MUR | |||
2019
FOURTH QUARTER EARNINGS
CONFERENCE CALL & WEBCAST
JANUARY 30, 2020
ROGER W. JENKINS
PRESIDENT& CHIEF EXECUTIVE OFFICER
Appendix
Appendix
Non-GAAP Reconciliation
Abbreviations
Guidance
Hedging Positions
Current Financial Position
Environmental, Social and Governance
January 2020 | www. m u rp h yo i l c o rp . c o m | 27 | |
NYSE: MUR | |||
Non-GAAP Financial Measure Definitions & Reconciliations
The following list of Non-GAAP financial measure definitions and related reconciliations is intended to satisfy the requirements of Regulation G of the Securities Exchange Act of 1934, as amended. This information is historical in nature. Murphy undertakes no obligation to publicly update or revise any Non-GAAP financial measure definitions and related reconciliations.
January 2020 | www. m u rp h yo i l c o rp . c o m | 28 | |
NYSE: MUR | |||
Non-GAAP Reconciliation
ADJUSTED EARNINGS
Murphy defines Adjusted Earnings as net income attributable to Murphy1 adjusted to exclude discontinued operations and certain other items that affect comparability between periods.
Adjusted Earnings is used by management to evaluate the company's operational performance and trends between periods and relative to its industry competitors.
Adjusted Earnings, as reported by Murphy, may not be comparable to similarly titled measures used by other companies and it should be considered in conjunction with net income, cash flow from operations and other performance measures prepared in accordance with generally accepted accounting principles (GAAP). Adjusted Earnings has certain limitations regarding financial assessments because it excludes certain items that affect net income. Adjusted Earnings should not be considered in isolation or as a substitute for an analysis of Murphy's GAAP results as reported.
$ Millions, except per share amounts | Three Months Ended - Dec 31, 2019 | Three Months Ended - Dec 31, 2018 |
Net income (loss) attributable to Murphy (GAAP) | (71.7) | 103.4 |
Discontinued operations loss (income) | (36.9) | (64.1) |
(Loss) income from continuing operations | (108.6) | 39.3 |
Mark-to-market (gain) loss on crude oil derivative contracts | 105.5 | (27.6) |
Loss on extinguishment of debt | 25.4 | - |
Impact of tax reform | (4.2) | (15.7) |
Tax benefits on investments in foreign areas | - | (14.7) |
Mark-to-market (gain) loss on contingent consideration | 6.5 | (3.8) |
Foreign exchange losses (gains) | - | (8.8) |
Impairment of assets | - | 15.8 |
Adjusted Income (loss) attributable to Murphy (Non-GAAP) | 24.6 | (15.5) |
Adjusted income (loss) from continuing operations per diluted share | 0.16 | (0.09) |
1 'Attributable to Murphy' represents the economic interest of Murphy excluding a 20% noncontrolling interest in MP GOM.
January 2020 | www. m u rp h yo i l c o rp . c o m | 29 | |
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Non-GAAP Reconciliation
EBITDA and EBITDAX
Murphy defines EBITDA as net income attributable to Murphy1 before interest, taxes, depreciation and amortization (DD&A). Murphy defines EBITDAX as net income attributable to Murphy before interest, taxes, depreciation and amortization (DD&A) and exploration expense.
Management believes that EBITDA and EBITDAX provides useful information for assessing Murphy's financial condition and results of operations and it is a widely accepted financial indicator of the ability of a company to incur and service debt, fund capital expenditure programs, and pay dividends and make other distributions to stockholders.
EBITDA and EBITDAX, as reported by Murphy, may not be comparable to similarly titled measures used by other companies and it should be considered in conjunction with net income, cash flow from operations and other performance measures prepared in accordance with generally accepted accounting principles (GAAP). EBITDA and EBITDAX have certain limitations regarding financial assessments because they excludes certain items that affect net income and net cash provided by operating activities. EBITDA and EBITDAX should not be considered in isolation or as a substitute for an analysis of Murphy's GAAP results as reported.
$ Millions | Three Months Ended - Dec 31, 2019 | Three Months Ended - Dec 31, 2018 |
Net income (loss) attributable to Murphy (GAAP) | (71.7) | 103.4 |
Income tax expense (benefit) | (24.0) | (35.0) |
Interest expense, net | 74.2 | 47.3 |
DD&A expense | 310.1 | 199.6 |
EBITDA attributable to Murphy (Non-GAAP) | 288.6 | 315.3 |
Exploration expense | 19.5 | 32.5 |
EBITDAX attributable to Murphy (Non-GAAP) | 308.1 | 347.8 |
1 'Attributable to Murphy' represents the economic interest of Murphy excluding a 20% noncontrolling interest in MP GOM.
January 2020 | www. m u rp h yo i l c o rp . c o m | 30 | |
NYSE: MUR | |||
Non-GAAP Reconciliation
ADJUSTED EBITDA
Murphy defines Adjusted EBITDA as income from continuing operations attributable to Murphy1 before interest, taxes, depreciation and amortization (DD&A), impairment expense, foreign exchange gains and losses, mark-to-market loss on crude oil derivative contracts, accretion of asset retirement obligations and certain other items that management believes affect comparability between periods.
Adjusted EBITDA is used by management to evaluate the company's operational performance and trends between periods and relative to its industry competitors.
Adjusted EBITDA may not be comparable to similarly titled measures used by other companies and it should be considered in conjunction with net income, cash flow from operations and other performance measures prepared in accordance with generally accepted accounting principles (GAAP). Adjusted EBITDA has certain limitations regarding financial assessments because it excludes certain items that affect net income and net cash provided by operating activities. Adjusted EBITDA should not be considered in isolation or as a substitute for an analysis of Murphy's GAAP results as reported.
$ Millions, except per BOE amounts | Three Months Ended - Dec 31, 2019 | Three Months Ended - Dec 31, 2018 |
EBITDA attributable to Murphy (Non-GAAP) | 288.6 | 315.3 |
Discontinued operations loss (income) | (36.9) | (64.2) |
Mark-to-market (gain) loss on crude oil derivative contracts | 133.5 | (35.0) |
Accretion of asset retirement obligations | 10.7 | 7.9 |
Foreign exchange losses (gains) | - | (10.2) |
Mark-to-market (gain) loss on contingent consideration | 8.2 | (4.8) |
Impairment of assets | - | 20.0 |
Adjusted EBITDA attributable to Murphy (Non-GAAP) | 404.1 | 229.0 |
Total barrels of oil equivalents sold from continuing operations attributable to | 17,617 | 11,814 |
Murphy (thousands of barrels) | ||
Adjusted EBITDA per BOE (Non-GAAP) | 22.94 | 19.39 |
1 'Attributable to Murphy' represents the economic interest of Murphy excluding a 20% noncontrolling interest in MP GOM.
January 2020 | www. m u rp h yo i l c o rp . c o m | 31 | |
NYSE: MUR | |||
Non-GAAP Reconciliation
ADJUSTED EBITDAX
Murphy defines Adjusted EBITDAX as income from continuing operations attributable to Murphy1 before interest, taxes, depreciation and amortization (DD&A), exploration expense, impairment expense, foreign exchange gains and losses, mark-to-market loss on crude oil derivative contracts, accretion of asset retirement obligations and certain other items that management believes affect comparability between periods.
Adjusted EBITDAX is used by management to evaluate the company's operational performance and trends between periods and relative to its industry competitors.
Adjusted EBITDAX may not be comparable to similarly titled measures used by other companies and it should be considered in conjunction with net income, cash flow from operations and other performance measures prepared in accordance with generally accepted accounting principles (GAAP). Adjusted EBITDAX has certain limitations regarding financial assessments because it excludes certain items that affect net income and net cash provided by operating activities. Adjusted EBITDAX should not be considered in isolation or as a substitute for an analysis of Murphy's GAAP results as reported.
$ Millions, except per BOE amounts | Three Months Ended - Dec 31, 2019 | Three Months Ended - Dec 31, 2018 |
EBITDAX attributable to Murphy (Non-GAAP) | 308.1 | 347.8 |
Discontinued operations loss (income) | (36.9) | (64.2) |
Accretion of asset retirement obligations | 10.7 | 7.9 |
Mark-to-market loss (gain) on crude oil derivative contracts | 133.5 | (35.0) |
Mark-to-market loss (gain) on contingent consideration | 8.2 | (4.8) |
Foreign exchange losses (gains) | - | (10.2) |
Impairment of assets | - | 20.0 |
Adjusted EBITDAX attributable to Murphy (Non-GAAP) | 423.6 | 261.5 |
Total barrels of oil equivalents sold from continuing operations attributable to | 17,617 | 11,814 |
Murphy (thousands of barrels) | ||
Adjusted EBITDAX per BOE (Non-GAAP) | 24.05 | 22.14 |
1 'Attributable to Murphy' represents the economic interest of Murphy excluding a 20% noncontrolling interest in MP GOM.
January 2020 | www. m u rp h yo i l c o rp . c o m | 32 | |
NYSE: MUR | |||
Glossary of Abbreviations
BBL: Barrels (equal to 42 US gallons)
BCF: Billion cubic feet
BCFE: Billion cubic feet equivalent
BN: Billions
BOE: Barrels of oil equivalent (1 barrel of oil or 6,000 cubic feet of natural gas)
BOEPD: Barrels of oil equivalent per day
BOPD: Barrels of oil per day
CAGR: Compound annual growth rate
D&C: Drilling & completion
DD&A: Depreciation, depletion & amortization
EBITDA: Income from continuing operations before taxes, depreciation, depletion and amortization, and net interest expense
EBITDAX: Income from continuing operations before taxes, depreciation, depletion and amortization, net interest expense, and exploration expenses
EFS: Eagle Ford Shale
EUR: Estimated ultimate recovery
F&D: Finding & development
G&A: General and administrative expenses
GOM: Gulf of Mexico
LOE: Lease operating expense
MBOE: Thousands barrels of oil equivalent
MBOEPD: Thousands of barrels of oil equivalent per day
MCF: Thousands of cubic feet
MCFD: Thousands cubic feet per day
- Millions
MMBOE: Millions of barrels of oil equivalent
MMCF: Millions of cubic feet
MMCFD: Millions of cubic feet per day
NA: North America
NGL: Natural gas liquid
ROR: Rate of return
R/P: Ratio of reserves to annual production
TCF: Trillion cubic feet
TCPL: TransCanada Pipeline
TOC: Total organic content
WI: Working interest
WTI: West Texas Intermediate (a grade of crude oil)
January 2020 | www. m u rp h yo i l c o rp . c o m | 33 | |
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1Q 2020 Guidance
Producing Asset | Oil | NGLs | Gas | Total |
(BOPD) | (BOPD) | (MCFD) | (BOEPD) | |
US - Eagle Ford Shale | 32,100 | 5,400 | 30,400 | 42,600 |
- Gulf of Mexico excluding NCI1 | 69,600 | 5,500 | 77,000 | 87,900 |
Canada - Tupper Montney | - | - | 240,000 | 40,000 |
- Kaybob Duvernay and Placid Montney | 6,200 | 1,600 | 22,200 | 11,500 |
- Offshore | 4,500 | - | - | 4,500 |
Other | 500 | - | - | 500 |
1Q Production Volume (BOEPD) excl. NCI 1 | 181,000 - 193,000 | |||
1Q Exploration Expense ($MM) | $28 | |||
Full Year 2020 CAPEX ($BN) excl. NCI 2 | $1.4 - $1.5 | |||
Full Year 2020 Production (BOEPD) excl. NCI 3 | 190,000 - 202,000 | |||
1 Excludes noncontrolling interest of MP GOM of 12,800 BOPD oil, 600 BOPD NGLs and 5,200 MCFD gas 2 Excludes noncontrolling interest of MP GOM of $62 MM and $3 MM for assets held for sale
3 Excludes noncontrolling interest of MP GOM of 12,600 BOPD oil, 600 BOPD of NGLs, and 5,600 MCFD gas
January 2020 | www. m u rp h yo i l c o rp . c o m | 34 | |
NYSE: MUR | |||
2020 Hedging Positions
United States | |||||
Commodity | Type | Volumes | Price | Start Date | End Date |
(BBL/D) | (BBL) | ||||
WTI | Fixed Price Derivative Swap | 45,000 | $56.42 | 1/1/2020 | 12/31/2020 |
Montney, Canada | |||||
Commodity | Type | Volumes | Price | Start Date | End Date |
(MMCF/D) | (MCF) | ||||
Natural Gas | Fixed Price Forward Sales at | 97 | C$2.71 | 1/1/2020 | 3/31/2020 |
AECO | |||||
Natural Gas | Fixed Price Forward Sales at | 59 | C$2.81 | 4/1/2020 | 12/31/2020 |
AECO | |||||
* As of January 29, 2020
January 2020 | www. m u rp h yo i l c o rp . c o m | 35 | |
NYSE: MUR | |||
Current Financial Position
As of December 31, 2019
- $2.8 BN total debt, excluding capital leases
- Total liquidity $1.9 BN
- $307 MM of cash and cash equivalents
- Undrawn $1.6 BN unsecured senior credit facility
- 34% total debt to cap
- 31% net debt to cap
Maturity Profile*
Total Bonds Outstanding $BN | $2.8 |
Weighted Avg Fixed Coupon | 5.8% |
Weighted Avg Years to Maturity | 7.7 |
Note Maturity Profile $MM
2,000
1,500
1,000
500
10 Year | 20 Year | 30 Year |
0
Notes Undrawn RCF
* As of December 31, 2019
January 2020 | www. m u rp h yo i l c o rp . c o m | 36 | |
NYSE: MUR | |||
Employee and Community Investments Support Stable Operations
In the Workplace | In the Community | |
Human Capital Initiatives
- Reviewing pay equity annually across employee groups and the organization
- Offering training and development through a variety of platforms to empower employees individually and professionally
- Partnering with external organizations to target diverse talent pools
Employee Engagement
- Solicit ongoing feedback and increase employee engagement through Ambassador program
- Ongoing review of benefit enhancements to attract and retain top talent
- Support employee communications with company-wide quarterly town halls
Culture Assimilation
- Corporate culture affirmed through internal Mission, Vision, Values and behaviors program
- Employee performance reviews include alignment with corporate behavior policies
United States & Canada
- El Dorado Promise
- Tuition scholarship provided to El Dorado High School graduates
- Benefitted more than 2,600 students since inception
- College enrollment rate surpasses state and national levels
- United Way
- Partners for more than 50 years
- Over $13 MM contributed in past 20 years across multiple locations
- >90% employee participation company-wide
International
- Process in place for new country entry
- Includes assessment of ESG risks and social impact
- Community consultation processes
- Supporting local suppliers and initiatives
- Threshold investment targets for local content
January 2020 | www. m u rp h yo i l c o rp . c o m | 37 | |
NYSE: MUR | |||
2019
FOURTH QUARTER EARNINGS
CONFERENCE CALL & WEBCAST
JANUARY 30, 2020
ROGER W. JENKINS
PRESIDENT& CHIEF EXECUTIVE OFFICER
Attachments
- Original document
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Disclaimer
Murphy Oil Corporation published this content on 30 January 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 January 2020 11:14:14 UTC