Expanded Hedge Coverage, Published 2020
Sustainability Report
Murphy Oil Corporation (NYSE: MUR) today
announced its financial and operating results for the third quarter
ended September 30, 2020, including a net loss attributable to
Murphy of $244 million, or $1.59 net loss per diluted share.
Adjusted net loss, which excludes discontinued operations and other
one-off items, was $24 million, or $0.15 net loss per diluted
share.
Unless otherwise noted, the financial and operating highlights
and metrics discussed in this commentary exclude noncontrolling
interest. 1
Significant items include:
- Produced 153 thousand barrels of oil equivalent per day in the
third quarter, including 56 percent or 86 thousand barrels of oil
per day, despite the most severe hurricane season on record
- Continued G&A reduction trajectory, with expenses of $29
million in the third quarter compared to $39 million in second
quarter 2020
- Increased 2021 crude oil hedge position, resulting in a total
of 18 thousand barrels of oil per day hedged at an average price of
$43.31 per barrel
- Added fixed price forward sales contracts related to the Tupper
Montney asset to underpin cash flow in calendar years 2021 through
2024
- Published 2020 Sustainability Report, with expanded disclosures
and greenhouse gas emissions intensity reduction goals
THIRD QUARTER 2020 FINANCIAL RESULTS
The company recorded a net loss, attributable to Murphy, of $244
million, or $1.59 net loss per diluted share, for the third quarter
2020. Adjusted net loss, which excludes both the results of
discontinued operations and certain other items that affect
comparability of results between periods, was $24 million, or $0.15
net loss per diluted share for the same period. The adjusted loss
from continuing operations primarily excludes the following
after-tax items: a $55 million non-cash mark-to-market loss on
crude oil derivative contracts and an $11 million non-cash
mark-to-market loss on liabilities associated with contingent
consideration. It also includes an after-tax $146 million non-cash
charge for the impairment of certain assets primarily related to
the Cascade and Chinook field in the Gulf of Mexico. Details for
third 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 $249 million, or $17.61 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 $262 million, or $18.46 per
BOE sold. Details for third quarter adjusted EBITDA and EBITDAX
reconciliations can be found in the attached schedules.
Third quarter production averaged 153 thousand barrels of oil
equivalent per day (MBOEPD) with 56 percent oil and 63 percent
liquids. Murphy’s offshore production for the quarter was
negatively impacted by an uncharacteristically active hurricane
season, resulting in 12.4 MBOEPD of storm-related downtime,
compared to 4.8 MBOEPD as guided for storm downtime. Offshore storm
downtime was partially offset by stronger performance in the
onshore business. Details for third quarter production can be found
in the attached schedules.
“Murphy, like all Gulf of Mexico operators, experienced the most
severe hurricane season on record this year with four major storms
during the third quarter causing short-term production shut-ins, as
well as two additional storms following in October. Our assets
generated strong production aside from these storms and otherwise
would have reached the high end of guidance. Our cost structure
improvements continue to take hold leading to improving margins.
Further, we were able to safely execute evacuating and re-manning
processes of our facilities, along with managing COVID-19 concerns
with our proven shore base protocols,” stated Roger W. Jenkins,
President and Chief Executive Officer of Murphy Oil
Corporation.
PROTECTING THE COMPANY’S FINANCIAL POSITION
As of September 30, 2020, Murphy had approximately $1.6 billion
of liquidity, comprised of $1.4 billion undrawn under the $1.6
billion senior unsecured credit facility and approximately $220
million of cash and cash equivalents.
At the end of third quarter 2020, Murphy had outstanding debt of
$2.8 billion in long-term, fixed-rate notes with a weighted average
maturity of 7 years and a weighted average coupon of 5.9 percent.
The company also had $200 million drawn under its senior unsecured
credit facility.
For third quarter 2020, Murphy incurred a total $120 million of
CAPEX, including approximately $19 million for the King’s Quay
floating production system (FPS) construction. Note that this total
CAPEX figure excludes Gulf of Mexico noncontrolling interest (NCI).
Murphy incurred a total $663 million of CAPEX for the nine months
ended September 30, 2020, including $81 million for King’s
Quay.
The company generated free cash flow of $74 million in the third
quarter, including NCI. Excluding the impact of a working capital
outflow of $28 million, free cash flow was $102 million.
COMMODITY HEDGE POSITIONS MITIGATE CASH FLOW
VOLATILITY
The company employs commodity derivative instruments to manage
certain risks associated with commodity price volatility and
underpin capital returns associated with certain assets. During the
third quarter, Murphy layered on hedges to protect cash flow with
the execution of WTI fixed price swaps, resulting in a total 18
thousand barrels of oil per day (MBOPD) hedged for full year 2021
at an average price of $43.31 per barrel. Also during the quarter,
the company entered into fixed price forward sales contracts for
the delivery of 20 million cubic feet per day (MMCFD) at the Malin
hub in Oregon at an average price of $2.60 per thousand cubic feet
(MCF) for calendar years 2021 and 2022.
Subsequent to quarter end, Murphy entered into fixed price
forward sales contracts for physical delivery at the AECO hub in
Canada for calendar year 2021, resulting in total contracts of 96
MMCFD at an average price of C$2.53 per MCF. Murphy further
extended its price protection with fixed price forward sales
contracts at AECO for full years 2022 through 2024 for the delivery
of 71 MMCFD at an average price of C$2.50 per MCF.
Details for the current hedge positions can be found in the
attached schedules.
FOURTH QUARTER 2020 GUIDANCE
Murphy reaffirms its previously stated full year 2020 capital
budget guidance of $680 million to $720 million, excluding Gulf of
Mexico NCI and King’s Quay floating production system (FPS)
construction spending. In the fourth quarter, Murphy anticipates
production volumes of approximately 146 MBOEPD to 154 MBOEPD. This
guidance range is primarily affected by two factors – Gulf of
Mexico storm downtime of 8.2 MBOEPD due to impacts from hurricanes
Delta and Zeta, as well as 6.4 MBOEPD of planned downtime.
OPERATIONS SUMMARY
North American Onshore The North American onshore
business produced approximately 90 MBOEPD in the third quarter. No
operated drilling and completions activity is planned across the
onshore business for the remainder of 2020.
Eagle Ford Shale – Production averaged 35 MBOEPD with 71
percent oil volumes in the third quarter. As planned, eight
non-operated Karnes wells came online in the quarter. Murphy’s
operating partner plans to drill four Karnes wells during the
fourth quarter, with completions anticipated in early 2021.
Tupper Montney – For the quarter, natural gas production
averaged 235 MMCFD. No drilling or completions activity occurred in
the third quarter.
Kaybob Duvernay – Production averaged 13 MBOEPD in the
third quarter. Four wells were brought online during the
quarter.
Placid Montney – Murphy’s non-operated position produced
3 MBOEPD in the third quarter. As previously disclosed, six
non-operated wells resumed production in July after being shut in
for May and June due to low commodity prices.
Global Offshore The offshore business produced 63 MBOEPD
in the third quarter, comprised of 82 percent oil. This excludes
production from discontinued operations and noncontrolling
interest. Gulf of Mexico production in the quarter averaged 59
MBOEPD, consisting of 80 percent oil. Canada offshore production
averaged 4 MBOEPD, comprised of 100 percent oil.
EXPLORATION
Gulf of Mexico – The non-operated Highgarden well (Green
Canyon 895) was spud in the third quarter for an estimated $11
million cost net to Murphy as a 20 percent working interest owner.
Drilling was delayed due to an active Gulf of Mexico storm
season.
SUSTAINABILITY REPORT
Subsequent to quarter-end, Murphy published its 2020
Sustainability Report, taking into consideration various
third-party reporting standards and ratings, and including
additional disclosures spanning climate-related performance metrics
to workforce diversity. As part of this report, the company
announced its goal of reducing its greenhouse gas emissions
intensity by 15 to 20 percent by 2030 from 2019 levels, excluding
Malaysia.
CONFERENCE CALL AND WEBCAST SCHEDULED FOR NOVEMBER 5,
2020
Murphy will host a conference call to discuss third quarter 2020
financial and operating results on Thursday, November 5, 2020, at
9:00 a.m. ET. 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 19218031.
FINANCIAL DATA
Summary financial data and operating statistics for third
quarter 2020, 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 fourth quarter 2020,
are also included.
1 In 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.
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. It 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 September
30,
Nine Months Ended September
30,
(Thousands of
dollars, except per share amounts)
2020
2019
2020
2019
Revenues and other income
Revenue from sales to customers
$
425,324
750,337
1,311,627
2,060,127
(Loss) gain on crude contracts
(5,290
)
63,247
319,502
121,163
Gain on sale of assets and other
income
1,831
3,493
6,006
10,283
Total revenues and other income
421,865
817,077
1,637,135
2,191,573
Costs and expenses
Lease operating expenses
124,491
147,632
478,283
416,460
Severance and ad valorem taxes
6,781
13,803
22,645
36,972
Transportation, gathering and
processing
41,322
54,305
126,779
128,748
Exploration expenses, including
undeveloped lease amortization
12,092
12,358
61,686
75,570
Selling and general expenses
28,509
55,366
104,381
176,258
Restructuring expenses
4,982
—
46,379
—
Depreciation, depletion and
amortization
231,603
325,562
769,151
819,270
Accretion of asset retirement
obligations
10,778
10,587
31,213
29,824
Impairment of assets
219,138
—
1,206,284
—
Other (benefit) expense
20,224
(29,000
)
(2,957
)
26,442
Total costs and expenses
699,920
590,613
2,843,844
1,709,544
Operating (loss) income from continuing
operations
(278,055
)
226,464
(1,206,709
)
482,029
Other (loss)
Interest and other (loss)
(5,177
)
(4,418
)
(10,107
)
(18,134
)
Interest expense, net
(45,182
)
(44,930
)
(124,877
)
(145,095
)
Total other (loss)
(50,359
)
(49,348
)
(134,984
)
(163,229
)
(Loss) income from continuing operations
before income taxes
(328,414
)
177,116
(1,341,693
)
318,800
Income tax (benefit) expense
(62,584
)
18,782
(248,890
)
38,719
(Loss) income from continuing
operations
(265,830
)
158,334
(1,092,803
)
280,081
(Loss) income from discontinued
operations, net of income taxes
(778
)
953,368
(6,907
)
1,027,632
Net (loss) income including noncontrolling
interest
(266,608
)
1,111,702
(1,099,710
)
1,307,713
Less: Net (loss) income attributable to
noncontrolling interest
(23,055
)
22,700
(122,869
)
86,257
NET (LOSS) INCOME ATTRIBUTABLE TO
MURPHY
$
(243,553
)
1,089,002
(976,841
)
1,221,456
(LOSS) INCOME PER COMMON SHARE –
BASIC
Continuing operations
$
(1.58
)
0.85
(6.31
)
1.16
Discontinued operations
(0.01
)
5.94
(0.05
)
6.14
Net (loss) income
$
(1.59
)
6.79
(6.36
)
7.30
(LOSS) INCOME PER COMMON SHARE –
DILUTED
Continuing operations
$
(1.58
)
0.84
(6.31
)
1.16
Discontinued operations
(0.01
)
5.92
(0.05
)
6.11
Net (loss) income
$
(1.59
)
6.76
(6.36
)
7.27
Cash dividends per Common share
0.125
0.25
0.50
0.75
Average Common shares outstanding
(thousands)
Basic
153,596
160,366
153,480
167,310
Diluted
153,596
160,980
153,480
168,105
MURPHY OIL CORPORATION
CONSOLIDATED STATEMENTS OF CASH
FLOWS (unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
(Thousands of
dollars)
2020
2019
2020
2019
Operating Activities
Net (loss) income including noncontrolling
interest
$
(266,608
)
1,111,702
(1,099,710
)
1,307,713
Adjustments to reconcile net (loss) income
to net cash provided by continuing operations activities:
Loss (income) from discontinued
operations
778
(953,368
)
6,907
(1,027,632
)
Depreciation, depletion and
amortization
231,603
325,562
769,151
819,270
Previously suspended exploration costs
578
—
8,255
12,901
Amortization of undeveloped leases
7,181
6,530
21,951
21,680
Accretion of asset retirement
obligations
10,778
10,587
31,213
29,824
Impairment of assets
219,138
—
1,206,284
—
Deferred income tax (benefit) expense
(63,846
)
32,596
(231,748
)
50,597
Mark to market (gain) loss on contingent
consideration
14,053
(28,378
)
(29,476
)
512
Mark to market (gain) loss of crude
contracts
69,385
(49,245
)
(104,463
)
(100,076
)
Noncash restructuring expense
—
—
17,565
—
Long-term non-cash compensation
12,440
15,812
35,200
60,567
Net decrease (increase) in noncash
operating working capital
(27,596
)
45,623
(26,261
)
40,257
Other operating activities, net
768
(19,274
)
(26,837
)
(62,386
)
Net cash provided by continuing operations
activities
208,652
497,796
578,031
1,153,227
Investing Activities
Property additions and dry hole costs
(111,124
)
(350,340
)
(648,725
)
(995,509
)
Property additions for King's Quay FPS
(23,301
)
(13,637
)
(74,936
)
(13,637
)
Acquisition of oil and gas properties
—
13,312
—
(1,212,949
)
Proceeds from sales of property, plant and
equipment
—
2,256
—
19,072
Net cash required by investing
activities
(134,425
)
(348,409
)
(723,661
)
(2,203,023
)
Financing Activities
Borrowings on revolving credit
facility
80,000
500,000
450,000
1,575,000
Repayment of revolving credit facility
(50,000
)
(1,900,000
)
(250,000
)
(1,900,000
)
Cash dividends paid
(19,200
)
(39,934
)
(76,790
)
(125,437
)
Distributions to noncontrolling
interest
(11,273
)
(28,734
)
(43,673
)
(97,510
)
Early retirement of debt
—
—
(12,225
)
—
Withholding tax on stock-based incentive
awards
153
—
(7,094
)
(6,991
)
Debt issuance, net of cost
—
—
(613
)
—
Repayment of term loan and other loans
(371
)
(500,000
)
—
—
Capital lease obligation payments
(178
)
(175
)
(514
)
(510
)
Repurchase of common stock
—
(106,014
)
—
(405,938
)
Net cash (required) provided by financing
activities
(869
)
(2,074,857
)
59,091
(961,386
)
Cash Flows from Discontinued Operations
1
Operating activities
—
(47,911
)
(1,202
)
74,361
Investing activities
—
2,035,000
4,494
1,985,202
Financing activities
—
—
—
(4,914
)
Net cash provided by discontinued
operations
—
1,987,089
3,292
2,054,649
Cash transferred from discontinued
operations to continuing operations
—
2,035,000
—
2,083,565
Effect of exchange rate changes on cash
and cash equivalents
773
(675
)
(585
)
2,593
Net increase (decrease) in cash and cash
equivalents
74,131
108,855
(87,124
)
74,976
Cash and cash equivalents at beginning of
period
145,505
326,044
306,760
359,923
Cash and cash equivalents at end of
period
$
219,636
434,899
219,636
434,899
1 Net cash provided by discontinued
operations is not part of the cash flow reconciliation.
MURPHY OIL CORPORATION
SCHEDULE OF ADJUSTED INCOME
(LOSS)
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
(Millions of
dollars, except per share amounts)
2020
2019
2020
2019
Net (loss) income attributable to Murphy
(GAAP)
$
(243.6
)
1,089.0
(976.8
)
1,221.5
Discontinued operations loss (income)
0.8
(953.4
)
6.9
(1,027.6
)
(Loss) income from continuing
operations
(242.8
)
135.6
(969.9
)
193.9
Adjustments (after tax):
Impairment of assets
145.9
—
854.2
—
Mark-to-market loss (gain) on crude oil
derivative contracts
54.8
(38.9
)
(82.5
)
(79.1
)
Mark-to-market loss (gain) on contingent
consideration
11.1
(22.4
)
(23.3
)
0.4
Restructuring expenses
3.9
—
35.5
—
Unutilized rig charges
4.1
—
10.4
—
(Gain) loss on extinguishment of debt
—
—
(4.2
)
—
Inventory loss
—
—
3.8
—
Foreign exchange losses (gains)
0.8
0.8
(1.7
)
5.9
Business development transaction costs
—
3.3
—
19.3
Write-off of previously suspended
exploration wells
—
—
—
13.2
Impact of tax reform
—
—
—
(13.0
)
Tax benefits on investments in foreign
areas
—
(15.0
)
—
(15.0
)
Seal insurance proceeds
(1.3
)
(6.2
)
(1.3
)
(6.2
)
Total adjustments after taxes
219.3
(78.4
)
790.9
(74.5
)
Adjusted (loss) income from continuing
operations attributable to Murphy
$
(23.5
)
57.2
(179.0
)
119.4
Adjusted (loss) income from continuing
operations per average diluted share
$
(0.15
)
0.36
(1.17
)
0.71
Non-GAAP Financial Measures
Presented above is a reconciliation of Net (loss) income to
Adjusted (loss) income from continuing operations attributable to
Murphy. Adjusted (loss) income 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 (loss)
income is a non-GAAP financial measure and should not be considered
a substitute for Net (loss) income as determined in accordance with
accounting principles generally accepted in the United States of
America.
Amounts shown above as reconciling items between Net (loss)
income and Adjusted (loss) income 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 September 30,
2020
Nine Months Ended September 30,
2020
(Millions of
dollars)
Pretax
Tax
Net
Pretax
Tax
Net
Exploration & Production:
United States
$
205.7
(44.6
)
161.1
1,021.3
(215.9
)
805.4
Canada
(1.7
)
0.4
(1.3
)
(1.7
)
0.4
(1.3
)
Other International
—
—
—
39.7
—
39.7
Total E&P
204.0
(44.2
)
159.8
1,059.3
(215.5
)
843.8
Corporate:
75.3
(15.8
)
59.5
(65.8
)
12.9
(52.9
)
Total adjustments
$
279.3
(60.0
)
219.3
993.5
(202.6
)
790.9
MURPHY OIL CORPORATION
SCHEDULE OF EARNINGS BEFORE
INTEREST, TAXES, DEPRECIATION
AND AMORTIZATION (EBITDA)
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
(Millions of
dollars, except per barrel of oil equivalents sold)
2020
2019
2020
2019
Net (loss) income attributable to Murphy
(GAAP)
$
(243.6
)
1,089.0
(976.8
)
1,221.5
Income tax (benefit) expense
(62.6
)
18.8
(248.9
)
38.7
Interest expense, net
45.2
44.9
124.9
145.1
Depreciation, depletion and amortization
expense ¹
219.7
308.3
725.1
766.4
EBITDA attributable to Murphy
(Non-GAAP)
(41.3
)
1,461.0
(375.7
)
2,171.7
Impairment of assets ¹
186.5
—
1,072.5
—
Mark-to-market loss (gain) on crude oil
derivative contracts
69.3
(49.2
)
(104.5
)
(100.1
)
Mark-to-market loss (gain) on contingent
consideration
14.0
(28.4
)
(29.5
)
0.5
Restructuring expenses
5.0
—
46.4
—
Accretion of asset retirement
obligations
10.8
10.6
31.2
29.8
Unutilized rig charges
5.2
—
13.2
—
Discontinued operations loss (income)
0.8
(953.4
)
6.9
(1,027.6
)
Inventory loss
—
—
4.8
—
Foreign exchange losses (gains)
0.8
0.8
(2.5
)
6.4
Business development transaction costs
—
4.1
—
24.4
Write-off of previously suspended
exploration wells
—
—
—
13.2
Seal insurance proceeds
(1.7
)
(8.0
)
(1.7
)
(8.0
)
Adjusted EBITDA attributable to Murphy
(Non-GAAP)
$
249.4
437.5
661.1
1,110.3
Total barrels of oil equivalents sold from
continuing operations attributable to Murphy (thousands of
barrels)
14,166
17,745
46,478
45,511
Adjusted EBITDA per barrel of oil
equivalents sold
$
17.61
24.65
14.22
24.40
Non-GAAP Financial Measures
Presented above is a reconciliation of Net (loss) income 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 (loss) income 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.
1 Depreciation, depletion, and amortization expense used in the
computation of EBITDA and impairment of assets used in the
computation of Adjusted EBITDA exclude the portion attributable to
the non-controlling interest.
MURPHY OIL CORPORATION
SCHEDULE OF EARNINGS BEFORE
INTEREST, TAXES, DEPRECIATION
AND AMORTIZATION AND EXPLORATION
(EBITDAX)
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
(Millions of
dollars, except per barrel of oil equivalents sold)
2020
2019
2020
2019
Net (loss) income attributable to Murphy
(GAAP)
$
(243.6
)
1,089.0
(976.8
)
1,221.5
Income tax (benefit) expense
(62.6
)
18.8
(248.9
)
38.7
Interest expense, net
45.2
44.9
124.9
145.1
Depreciation, depletion and amortization
expense ¹
219.7
308.3
725.1
766.4
EBITDA attributable to Murphy
(Non-GAAP)
(41.3
)
1,461.0
(375.7
)
2,171.7
Exploration expenses
12.1
12.4
61.7
75.6
EBITDAX attributable to Murphy
(Non-GAAP)
(29.2
)
1,473.4
(314.0
)
2,247.3
Impairment of assets ¹
186.5
—
1,072.5
—
Mark-to-market loss (gain) on crude oil
derivative contracts
69.3
(49.2
)
(104.5
)
(100.1
)
Mark-to-market loss (gain) on contingent
consideration
14.0
(28.4
)
(29.5
)
0.5
Restructuring expenses
5.0
—
46.4
—
Accretion of asset retirement
obligations
10.8
10.6
31.2
29.8
Unutilized rig charges
5.2
—
13.2
—
Discontinued operations loss (income)
0.8
(953.4
)
6.9
(1,027.6
)
Inventory loss
—
—
4.8
—
Foreign exchange losses (gains)
0.8
0.8
(2.5
)
6.4
Business development transaction costs
—
4.1
—
24.4
Seal insurance proceeds
(1.7
)
(8.0
)
(1.7
)
(8.0
)
Adjusted EBITDAX attributable to Murphy
(Non-GAAP)
$
261.5
449.9
722.8
1,172.7
Total barrels of oil equivalents sold from
continuing operations attributable to Murphy (thousands of
barrels)
14,166
17,745
46,478
45,511
Adjusted EBITDAX per barrel of oil
equivalents sold
$
18.46
25.35
15.55
25.77
Non-GAAP Financial Measures
Presented above is a reconciliation of Net (loss) income 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 (loss) income 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.
1 Depreciation, depletion, and amortization expense used in the
computation of EBITDA and impairment of assets used in the
computation of Adjusted EBITDA exclude the portion attributable to
the non-controlling interest.
MURPHY OIL CORPORATION
FUNCTIONAL RESULTS OF OPERATIONS
(unaudited)
Three Months Ended September 30,
2020
Three Months Ended September 30,
2019
(Millions of dollars)
Revenues
Income (Loss)
Revenues
Income (Loss)
Exploration and production
United States 1
$
330.8
(172.6
)
656.8
170.8
Canada
96.3
(8.6
)
95.0
(9.1
)
Other
—
(11.7
)
1.9
(3.7
)
Total exploration and production
427.1
(192.9
)
753.7
158.0
Corporate
(5.2
)
(72.9
)
63.4
0.3
Revenue/income from continuing
operations
421.9
(265.8
)
817.1
158.3
Discontinued operations, net of tax 3
—
(0.8
)
—
953.4
Total revenues/net income (loss) including
noncontrolling interest
$
421.9
(266.6
)
817.1
1,111.7
Net (loss) income attributable to
Murphy
(243.6
)
1,089.0
Nine Months Ended September 30,
2020
Nine Months Ended September 30,
2019
(Millions of dollars)
Revenues
Income (Loss)
Revenues
Income (Loss)
Exploration and production
United States 1,2
$
1,070.6
(1,011.7
)
1,734.3
420.0
Canada
245.2
(35.0
)
323.8
(7.5
)
Other 2
1.8
(73.0
)
7.9
(35.4
)
Total exploration and production
1,317.6
(1,119.7
)
2,066.0
377.1
Corporate
319.5
26.9
125.6
(97.0
)
Revenue/income from continuing
operations
1,637.1
(1,092.8
)
2,191.6
280.1
Discontinued operations, net of tax 3
—
(6.9
)
—
1,027.6
Total revenues/net income (loss) including
noncontrolling interest
$
1,637.1
(1,099.7
)
2,191.6
1,307.7
Net income attributable to Murphy
(976.8
)
1,221.5
1 Includes results attributable to a noncontrolling interest in
MP Gulf of Mexico, LLC (MP GOM). 2 Includes impairment charges of
$1,152.5 million and $39.7 million for the United States and Other
for the nine months ended September 30, 2020. 3 Malaysia is
reported as discontinued operations in current and comparative
periods effective January 1, 2019.
MURPHY OIL CORPORATION
OIL AND GAS OPERATING RESULTS
(unaudited)
THREE MONTHS ENDED SEPTEMBER 30,
2020, AND 2019
(Millions of dollars)
United States 1
Canada
Other
Total
Three Months Ended September 30,
2020
Oil and gas sales and other operating
revenues
$
330.8
96.3
—
427.1
Lease operating expenses
91.5
32.6
0.4
124.5
Severance and ad valorem taxes
6.4
0.3
—
6.7
Transportation, gathering and
processing
29.3
12.0
—
41.3
Depreciation, depletion and
amortization
166.2
59.6
0.5
226.3
Accretion of asset retirement
obligations
9.4
1.4
—
10.8
Impairments of assets
205.1
—
—
205.1
Exploration expenses
Dry holes and previously suspended
exploration costs
0.6
—
—
0.6
Geological and geophysical
0.1
—
(0.1
)
—
Other exploration
0.6
0.1
3.6
4.3
1.3
0.1
3.5
4.9
Undeveloped lease amortization
4.9
0.1
2.3
7.3
Total exploration expenses
6.2
0.2
5.8
12.2
Selling and general expenses
5.3
3.4
1.6
10.3
Other
22.5
(1.5
)
2.5
23.5
Results of operations before taxes
(211.1
)
(11.7
)
(10.8
)
(233.6
)
Income tax provisions (benefits)
(38.5
)
(3.1
)
0.9
(40.7
)
Results of operations (excluding Corporate
segment)
$
(172.6
)
(8.6
)
(11.7
)
(192.9
)
Three Months Ended September 30,
2019
Oil and gas sales and other operating
revenues
$
656.8
95.0
1.9
753.7
Lease operating expenses
116.2
31.2
0.2
147.6
Severance and ad valorem taxes
13.4
0.4
—
13.8
Transportation, gathering and
processing
44.1
10.2
—
54.3
Depreciation, depletion and
amortization
253.5
65.3
0.6
319.4
Accretion of asset retirement
obligations
9.0
1.6
—
10.6
Exploration expenses
Dry holes and previously suspended
exploration costs
(0.1
)
—
—
(0.1
)
Geological and geophysical
0.2
—
0.2
0.4
Other exploration
1.5
0.1
3.8
5.4
1.6
0.1
4.0
5.7
Undeveloped lease amortization
5.2
0.3
1.0
6.5
Total exploration expenses
6.8
0.4
5.0
12.2
Selling and general expenses
22.7
7.6
5.6
35.9
Other
(21.0
)
(7.3
)
0.5
(27.8
)
Results of operations before taxes
212.1
(14.4
)
(10.0
)
187.7
Income tax provisions (benefits)
41.3
(5.3
)
(6.3
)
29.7
Results of operations (excluding Corporate
segment)
$
170.8
(9.1
)
(3.7
)
158.0
1 Includes results attributable to a
noncontrolling interest in MP GOM.
MURPHY OIL CORPORATION
OIL AND GAS OPERATING RESULTS
(unaudited)
NINE MONTHS ENDED SEPTEMBER 30,
2020, AND 2019
(Millions of
dollars)
United
States 1
Canada
Other
Total
Nine Months Ended September 30,
2020
Oil and gas sales and other operating
revenues
$
1,070.6
245.2
1.8
1,317.6
Lease operating expenses
386.5
90.6
1.2
478.3
Severance and ad valorem taxes
21.6
1.0
—
22.6
Transportation, gathering and
processing
95.4
31.4
—
126.8
Depreciation, depletion and
amortization
589.5
161.3
1.5
752.3
Accretion of asset retirement
obligations
27.1
4.1
—
31.2
Impairment of assets
1,152.5
—
39.7
1,192.2
Exploration expenses
Dry holes and previously suspended
exploration costs
8.3
—
—
8.3
Geological and geophysical
9.4
0.1
4.1
13.6
Other exploration
4.3
0.4
13.1
17.8
22.0
0.5
17.2
39.7
Undeveloped lease amortization
14.8
0.3
6.9
22.0
Total exploration expenses
36.8
0.8
24.1
61.7
Selling and general expenses
16.6
13.2
5.5
35.3
Other
1.0
(2.5
)
1.4
(0.1
)
Results of operations before taxes
(1,256.4
)
(54.7
)
(71.6
)
(1,382.7
)
Income tax provisions (benefits)
(244.7
)
(19.7
)
1.4
(263.0
)
Results of operations (excluding Corporate
segment)
$
(1,011.7
)
(35.0
)
(73.0
)
(1,119.7
)
Nine Months Ended September 30,
2019
Oil and gas sales and other operating
revenues
$
1,734.3
323.8
7.9
2,066.0
Lease operating expenses
308.3
107.1
1.1
416.5
Severance and ad valorem taxes
36.0
1.0
—
37.0
Transportation, gathering and
processing
103.4
25.3
—
128.7
Depreciation, depletion and
amortization
618.6
181.6
2.9
803.1
Accretion of asset retirement
obligations
25.2
4.6
—
29.8
Exploration expenses
Dry holes and previously suspended
exploration costs
(0.2
)
—
13.1
12.9
Geological and geophysical
16.1
—
8.1
24.2
Other exploration
5.5
0.3
10.9
16.7
21.4
0.3
32.1
53.8
Undeveloped lease amortization
18.0
1.0
2.7
21.7
Total exploration expenses
39.4
1.3
34.8
75.5
Selling and general expenses
52.9
21.3
17.3
91.5
Other
37.5
(6.9
)
0.9
31.5
Results of operations before taxes
513.0
(11.5
)
(49.1
)
452.4
Income tax provisions (benefits)
93.0
(4.0
)
(13.7
)
75.3
Results of operations (excluding Corporate
segment)
$
420.0
(7.5
)
(35.4
)
377.1
1 Includes results attributable to a
noncontrolling interest in MP GOM.
MURPHY OIL CORPORATION
PRODUCTION-RELATED EXPENSES
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
(Dollars per barrel
of oil equivalents sold)
2020
2019
2020
2019
Continuing operations
United States – Eagle Ford Shale
Lease operating expense
$
8.11
6.74
8.97
8.92
Severance and ad valorem taxes
2.04
2.87
2.08
3.01
Depreciation, depletion and amortization
(DD&A) expense
27.09
24.29
25.72
23.94
United States – Gulf of Mexico
Lease operating expense 1
$
10.16
10.20
12.60
9.70
DD&A expense
12.33
16.86
13.82
16.01
Canada – Onshore
Lease operating expense
$
4.73
4.36
4.56
5.40
Severance and ad valorem taxes
0.05
0.07
0.07
0.07
DD&A expense
10.78
11.26
9.94
11.07
Canada – Offshore
Lease operating expense
$
20.30
17.43
16.71
16.91
DD&A expense
12.58
11.55
11.48
13.36
Total oil and gas continuing
operations
Lease operating expense 2
$
8.23
7.85
9.61
8.52
Severance and ad valorem taxes
0.45
0.73
0.45
0.76
DD&A expense
15.31
17.31
15.45
16.75
Total oil and gas continuing operations –
excluding noncontrolling interest
Lease operating expense
$
8.13
7.68
9.36
8.45
Severance and ad valorem taxes
0.48
0.73
0.49
0.76
DD&A expense
15.51
17.03
15.60
16.84
1 For the nine months ended September 30,
2020, lease operating expense (LOE) per barrel of oil equivalents
(BOE) sold for the U.S. Gulf of Mexico excluding cost associated
with well workovers is $9.49. Workovers for the nine months ended
September 30, 2020 include Dalmatian and Cascade. There were no
significant Gulf of Mexico workovers in the third quarter 2020.
2 For the nine months ended September 30,
2020, total LOE per BOE excluding cost associated with Gulf of
Mexico well workovers is $7.86. There were no significant Gulf of
Mexico workovers in the third quarter 2020.
MURPHY OIL CORPORATION
OTHER FINANCIAL DATA
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
(Millions of
dollars)
2020
2019
2020
2019
Capital expenditures for continuing
operations
Exploration and production
United States
$
116.6
295.5
521.7
2,042.3
Canada
(1.6)
45.9
116.6
201.6
Other
5.8
12.3
32.7
76.7
Total
120.8
353.7
671.0
2,320.6
Corporate
1.9
2.9
9.3
8.5
Total capital expenditures - continuing
operations 1
122.7
356.6
680.3
2,329.1
Charged to exploration expenses 2
United States
1.3
1.6
22.0
21.4
Canada
0.1
0.1
0.5
0.3
Other
3.5
4.0
17.2
32.1
Total charged to exploration expenses -
continuing operations
4.9
5.7
39.7
53.8
Total capitalized
$
117.8
350.9
640.6
2,275.3
1 For the three and nine months ended
September 30, 2020, includes noncontrolling interest (NCI) capital
expenditures of $2.3 million and $17.8 million, respectively. For
the three and nine months ended September 30, 2020, includes
capital expenditures associated with the King’s Quay project of
$19.3 million and $80.7 million.
2 Excludes amortization of undeveloped
leases of $7.3 million and $6.5 million for the three months ended
September 30, 2020 and 2019, respectively. Excludes amortization of
undeveloped leases of $22.0 million and $21.7 million for the nine
months ended September 30, 2020 and 2019, respectively.
MURPHY OIL CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited)
(Millions of dollars)
September 30, 2020
December 31, 2019
ASSETS
Current assets
Cash and cash equivalents
$
219.6
306.8
Accounts receivable
279.1
426.7
Inventories
67.9
76.1
Prepaid expenses
58.1
40.9
Assets held for sale
108.9
123.9
Total current assets
733.7
974.3
Property, plant and equipment, at cost
8,592.8
9,969.7
Operating lease assets
765.5
598.3
Deferred income taxes
347.1
129.3
Deferred charges and other assets
30.3
46.9
Total assets
$
10,469.4
11,718.5
LIABILITIES AND EQUITY
Current liabilities
Accounts payable
$
295.4
602.1
Income taxes payable
17.8
19.0
Other taxes payable
23.8
18.6
Operating lease liabilities
100.2
92.3
Other accrued liabilities
157.6
197.4
Liabilities associated with assets held
for sale
14.7
13.3
Total current liabilities
609.4
942.8
Long-term debt, including capital lease
obligation
2,987.1
2,803.4
Asset retirement obligations
856.9
825.8
Deferred credits and other liabilities
636.0
613.4
Non-current operating lease
liabilities
686.5
521.3
Deferred income taxes
179.5
207.2
Total liabilities
5,955.3
5,913.9
Equity
Common Stock, par $1.00
195.1
195.1
Capital in excess of par value
936.3
949.4
Retained earnings
5,560.7
6,614.3
Accumulated other comprehensive loss
(658.0
)
(574.2
)
Treasury stock
(1,690.7
)
(1,717.2
)
Murphy Shareholders' Equity
4,343.4
5,467.5
Noncontrolling interest
170.6
337.2
Total equity
4,514.0
5,804.6
Total liabilities and equity
$
10,469.4
11,718.5
MURPHY OIL CORPORATION
PRODUCTION SUMMARY
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
Barrels per day unless otherwise noted
2020
2019
2020
2019
Continuing operations
Net crude oil and condensate
United States
Onshore
24,851
40,582
27,945
33,256
Gulf of Mexico 1
56,517
70,583
67,377
64,266
Canada
Onshore
9,595
7,101
8,106
6,503
Offshore
4,428
4,333
5,136
6,302
Other
—
351
114
435
Total net crude oil and condensate -
continuing operations
95,391
122,950
108,678
110,762
Net natural gas liquids
United States
Onshore
5,489
5,582
5,459
5,621
Gulf of Mexico 1
3,521
6,597
5,131
4,172
Canada
Onshore
1,513
1,422
1,311
1,197
Total net natural gas liquids - continuing
operations
10,523
13,601
11,901
10,990
Net natural gas – thousands of cubic feet
per day
United States
Onshore
27,520
29,122
29,054
30,203
Gulf of Mexico 1
53,046
72,897
67,850
44,029
Canada
Onshore
260,895
296,883
262,279
267,205
Total net natural gas - continuing
operations
341,461
398,902
359,183
341,437
Total net hydrocarbons - continuing
operations including NCI 2,3
162,824
203,035
180,443
178,658
Noncontrolling interest
Net crude oil and condensate – barrels per
day
(9,298
)
(10,322
)
(10,674
)
(11,215
)
Net natural gas liquids – barrels per
day
(327
)
(478
)
(443
)
(496
)
Net natural gas – thousands of cubic feet
per day 2
(3,269
)
(3,403
)
(4,137
)
(3,933
)
Total noncontrolling interest
(10,170
)
(11,367
)
(11,807
)
(12,367
)
Total net hydrocarbons - continuing
operations excluding NCI 2,3
152,654
191,668
168,636
166,292
Discontinued operations
Net crude oil and condensate – barrels per
day
—
1,748
—
16,331
Net natural gas liquids – barrels per
day
—
37
—
434
Net natural gas – thousands of cubic feet
per day 2
—
9,624
—
67,863
Total discontinued operations
—
3,389
—
28,076
Total net hydrocarbons produced excluding
NCI 2,3
152,654
195,057
168,636
194,367
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
PRICE SUMMARY
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2020
2019
2020
2019
Weighted average Exploration and
Production sales prices 1
Continuing operations
Crude oil and condensate – dollars per
barrel
United States
Onshore
$
37.83
58.80
35.56
60.33
Gulf of Mexico 2
40.82
60.69
38.08
61.90
Canada 3
Onshore
36.65
48.61
30.29
49.98
Offshore
43.81
62.44
37.85
64.97
Other
—
67.96
63.51
69.86
Natural gas liquids – dollars per
barrel
United States
Onshore
13.39
10.82
10.78
14.66
Gulf of Mexico 2
14.71
13.86
9.43
15.96
Canada 3
Onshore
19.97
21.03
16.95
27.50
Natural gas – dollars per thousand cubic
feet
United States
Onshore
1.78
2.18
1.76
2.51
Gulf of Mexico 2
2.01
2.37
1.91
2.46
Canada 3
Onshore
1.74
1.16
1.62
1.50
1 Effective September 30, 2019, weighted
average realized prices are reported excluding transportation,
gathering and processing costs.
2 Prices include the effect of
noncontrolling interest share for MP GOM.
3 U.S. dollar equivalent.
MURPHY OIL CORPORATION
COMMODITY HEDGE POSITIONS
(unaudited)
AS OF NOVEMBER 4, 2020
Commodity
Type
Volumes (Bbl/d)
Price (USD/Bbl)
Remaining Period
Area
Start Date
End Date
United States
WTI ¹
Fixed price derivative swap
45,000
$56.42
10/1/2020
12/31/2020
United States
WTI ¹
Fixed price derivative swap
18,000
$43.31
1/1/2021
12/31/2021
1 West Texas Intermediate
Volumes (MMcf/d)
Price (CAD/Mcf)
Remaining Period
Area
Commodity
Type
Start Date
End Date
Montney
Natural Gas
Fixed price forward sales at AECO
59
C$2.81
10/1/2020
12/31/2020
Montney
Natural Gas
Fixed price forward sales at AECO
96
C$2.53
1/1/2021
12/31/2021
Montney
Natural Gas
Fixed price forward sales at AECO
71
C$2.50
1/1/2022
12/31/2024
Volumes (MMcf/d)
Price (USD/MMBtu)
Remaining Period
Area
Commodity
Type
Start Date
End Date
Montney
Natural Gas
Fixed price forward sales at Malin
20
$2.60
1/1/2021
12/31/2022
MURPHY OIL CORPORATION
FOURTH QUARTER 2020 GUIDANCE
Oil BOPD
NGLs BOPD
Gas MCFD
Total BOEPD
Production – net
U.S. – Eagle Ford Shale
21,200
4,600
25,000
30,000
– Gulf of Mexico excluding NCI
50,900
5,300
61,000
66,400
Canada – Tupper Montney
—
—
225,000
37,500
– Kaybob Duvernay and Placid Montney
7,000
1,400
22,400
12,100
– Offshore
4,000
—
—
4,000
Total net production (BOEPD) - excluding
NCI 1
146,000 to 154,000
Exploration expense ($ millions)
$25
FULL YEAR 2020 GUIDANCE
Capital expenditures – excluding NCI ($
millions) 2
$680 to $720
1 Excludes noncontrolling interest of MP
GOM of 8,300 BOPD of oil, 500 BOPD of NGLs, and 3,800 MCFD gas.
2 Excludes noncontrolling interest of MP
GOM of $41 MM.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201105005304/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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