Produced 170 MBOEPD with 89 MBOPD, Repurchased $50 Million of Shares
Murphy Oil has announced its financial and operating results for the first quarter ended March 31, 2024, including net income attributable to Murphy of $90 million, or $0.59 net income per diluted share. Excluding discontinued operations and other items affecting comparability between periods, adjusted net income attributable to Murphy was $131 million, or $0.85 adjusted net income per diluted share.
Unless otherwise noted, the financial and operating highlights and metrics discussed in this commentary exclude noncontrolling interest (NCI).
Highlights for the first quarter include:
- Produced 170 thousand barrels of oil equivalent per day (MBOEPD), at the high end of guidance, with 89 thousand barrels of oil per day (MBOPD) or 52 percent oil volumes
- Repurchased $50 million of stock, or 1.3 million shares, at an average price of $39.25 per share
- Awarded six deepwater blocks from Gulf of Mexico Federal Lease Sale 261
Subsequent to the first quarter:
- Maintained the quarterly dividend of $0.30 per share or $1.20 per share annualized
- Received positive outlooks from Moody’s and Fitch credit rating agencies, revised from stable outlooks
'Murphy had another solid quarter. We progressed our offshore plans and produced above expectations from our onshore assets. We advanced our 2024 onshore well delivery program, with new wells in the Eagle Ford Shale, Tupper Montney and Kaybob Duvernay either currently flowing or expected to come online in the near term. Further, our upcoming Gulf of Mexico and Vietnam exploration wells have the potential to expand our resource base,' said Roger W. Jenkins, Chief Executive Officer. 'I am pleased we repurchased $50 million of stock at an average price below $40 per share, advancing our share repurchase program. I look forward to production growth as we execute our 2024 plans, leading to increased free cash flow that will continue to enhance shareholder returns.'
FIRST QUARTER 2024 RESULTS
The company recorded net income attributable to Murphy of $90 million, or $0.59 net income per diluted share, for the first quarter 2024. Adjusted net income, which excludes both the results of discontinued operations and certain other items that affect comparability of results between periods, was $131 million, or $0.85 adjusted net income per diluted share for the same period. Adjustments to net income totaled $50 million before tax and were comprised of a $35 million impairment of assets and a $26 million write-off of a previously suspended exploration well, offset by a $11 million foreign exchange gain. Details for first quarter results and an adjusted net income reconciliation can be found in the attached schedules.
Earnings before interest, taxes, depreciation and amortization (EBITDA) attributable to Murphy were $343 million. Earnings before interest, tax, depreciation, amortization and exploration expenses (EBITDAX) attributable to Murphy were $387 million. Adjusted EBITDA attributable to Murphy was $405 million. Adjusted EBITDAX attributable to Murphy was $424 million. Reconciliations for first quarter EBITDA, EBITDAX, adjusted EBITDA and adjusted EBITDAX can be found in the attached schedules.
First quarter production averaged 170 MBOEPD and included 52 percent oil volumes, or 89 MBOPD. Volumes were at the high end of the guidance range as a result of strong well performance across onshore assets.
Accrued capital expenditures (CAPEX) for first quarter 2024 totaled $264 million, excluding NCI. Details for first quarter production and CAPEX can be found in the attached schedules.
During the quarter, Murphy received a positive outlook from Moody’s with the Ba2 rating affirmed. Additionally, Murphy received a positive outlook from Fitch, with the BB+ rating affirmed. Both outlooks were revised from stable.
CAPITAL ALLOCATION FRAMEWORK
Murphy had approximately $1.1 billion of liquidity on March 31, 2024, with no borrowings on the $800 million senior unsecured credit facility and $323 million of cash and cash equivalents, inclusive of NCI.
At the end of the first quarter, Murphy’s total debt was $1.3 billion, and consisted of long-term, fixed-rate notes with a weighted average maturity of 7.9 years and a weighted average coupon of 6.2 percent.
During the first quarter, Murphy repurchased $50 million of stock, or 1.3 million shares, at an average price of $39.25 per share. As of March 31, 2024, Murphy had $400 million remaining under the share repurchase authorization and 152.6 million shares outstanding.
'Since disclosing our capital allocation framework in August 2022, we have consistently executed a combination of debt reductions, share repurchases and dividend increases,' said Jenkins. 'Murphy has repurchased a total of $200 million of stock, or 4.7 million shares, at an average price of $42.68 per share, while also lowering debt by $500 million since third quarter 2023. We remain committed to following our capital allocation framework, which will allow us to reach Murphy 3.0 later this year when we accomplish our 2024 debt reduction goal of $300 million.'
OPERATIONS SUMMARY
Onshore
In the first quarter of 2024, the onshore business produced approximately 91 MBOEPD, which included 30 percent liquids volumes.
Eagle Ford Shale – Production averaged 29 MBOEPD with 71 percent oil volumes and 86 percent liquids volumes in the first quarter. Murphy progressed its 20-well operated 2024 program during the quarter, and four non-operated Tilden wells were brought online. The company plans to bring online seven operated Catarina wells in second quarter 2024.
Tupper Montney – During the first quarter, natural gas production averaged 348 million cubic feet per day (MMCFD). Production was 21 MMCFD above guidance as a result of wells brought online in 2023 continuing to exceed expectations. As planned, Murphy completed drilling its 13-well program during the quarter, with all wells coming online in second quarter 2024.
Kaybob Duvernay – Production averaged 4 MBOEPD with 68 percent liquids volumes in the first quarter. Murphy drilled three operated wells in the first quarter as planned, with completions ongoing. All three wells are scheduled to come online in second quarter 2024.
Offshore
Excluding NCI, in the first quarter of 2024, the offshore business produced approximately 79 MBOEPD, which included 84 percent oil.
Gulf of Mexico – Production averaged approximately 73 MBOEPD, consisting of 82 percent oil during the first quarter. As planned, Murphy drilled a successful well at Khaleesi #4 (Green Canyon 389) and completed the Mormont #2 (Mississippi Canyon 478) subsea equipment repair and returned the well to production. Also during the quarter, Murphy’s operating partner drilled and completed the non-operated Lucius #11 (Keathley Canyon 919) well.
Canada – In the first quarter, production averaged 6 MBOEPD, consisting of 100 percent oil. Production continued to ramp up from the non-operated Terra Nova field during the quarter following completion of the asset life extension project.
EXPLORATION
Gulf of Mexico – During the first quarter, Murphy was awarded six exploration blocks from the Gulf of Mexico Federal Lease Sale 261 with an average working interest of 68 percent. Also during the quarter, Murphy wrote off $26 million of previously suspended exploration well costs related to the 2016 Hoffe Park exploration well.
2024 CAPITAL EXPENDITURE AND PRODUCTION GUIDANCE
Murphy maintains its 2024 accrued CAPEX range of $920 million to $1.02 billion. The company also maintains its full year 2024 production range of 180 to 188 MBOEPD, consisting of approximately 95 MBOPD oil and 105 MBOEPD liquids volumes, equating to 52 percent oil and 57 percent liquids volumes, respectively.
Production for second quarter 2024 is estimated to be in the range of 176 to 184 MBOEPD with 93 MBOPD, or 51 percent, oil volumes. This range is impacted by 2,000 BOEPD of offshore non-operated unplanned maintenance, 1,250 BOEPD of Eagle Ford Shale planned downtime and 11,700 BOEPD of Tupper Montney planned plant maintenance. Both production and CAPEX guidance ranges exclude Gulf of Mexico NCI.
Detailed guidance for the second quarter and full year 2024 is contained in the attached schedules.
FIXED PRICE FORWARD SALES CONTRACTS
Murphy maintains fixed price forward sales contracts in Canada to lessen its dependence on variable AECO prices. These contracts are for physical delivery of natural gas volumes at a fixed price, with no mark-to-market income adjustments. Details for the current fixed price contracts can be found in the attached schedules.
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Source: Murphy Oil
