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Hazloc Heaters
Hazloc Heaters

MURPHY OIL CORPORATION ANNOUNCES THIRD QUARTER 2020 OPERATING AND FINANCIAL RESULTS


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These translations are done via Google Translate
Expanded Hedge Coverage, Published 2020 Sustainability Report

HOUSTON–(BUSINESS WIRE)–Nov. 5, 2020

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

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.

 



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