MURPHY OIL ANNOUNCES PRELIMINARY THIRD QUARTER 2014 EARNINGS
EL DORADO, Arkansas, October 29, 2014 - Murphy Oil Corporation (NYSE: MUR) announced today that net income was $245.7 million ($1.37 per diluted share) in the 2014 third quarter, down from $284.8 million ($1.51 per diluted share) in the third quarter 2013. Income from continuing operations in the 2014 third quarter was $271.0 million ($1.51 per diluted share) compared to $265.0 million ($1.41 per diluted share) earned in the third quarter a year ago.
Adjusted earnings, which exclude both the results of discontinued operations and certain other items that affect comparability of results between periods, in the third quarter of 2014 was $205.6 million ($1.15 per diluted share). This was a decrease of $24.8 million ($0.07 per diluted share) compared to the prior year's quarter.
Earnings before interest, taxes, depreciation and amortization (EBITDA) for continuing operations totaled $925.3 million in the third quarter 2014, up from $878.9 million in the third quarter of 2013. EBITDA per barrel of oil equivalent sold was $44.15 in the 2014 quarter compared to $47.05 in the 2013 quarter.
Earnings were negatively impacted in the 2014 quarter compared to the prior year due to lower average realized oil sales prices of near $9.00 per barrel.
Third quarter 2014 highlights were as follows:
Signed a Sales and Purchase Agreement to sell 30% of Murphy's Malaysia business for $2.0 billion
Authorized a new $500 million share repurchase program on August 6, 2014 and announced a 12% dividend increase to $1.40 per share on an annualized basis
Set a new quarterly production record of 229,759 barrels of oil equivalent per day (boepd)
Grew Eagle Ford Shale production 15% compared to the second quarter and set a new quarterly record of 60,563 boepd
Closed on the sale of the U.K. retail gasoline business on September 30, 2014 and remain on-track to close on the Milford Haven refinery sale October 31, 2014
Roger W. Jenkins, President and Chief Executive Officer, commented, "I am pleased with the progress we are making in portfolio optimization, production operations, and return to shareholders. The signing of the Malaysia sales agreement marks the value of those long term assets at near $7 billion, and we continue to progress our exit of the downstream business in the United Kingdom. In production we continue to set quarterly production records, with the Eagle Ford Shale and offshore Malaysia projects leading in oil growth. Our recently announced share repurchase authorization and dividend increase continue to reward our shareholders. We have now returned nearly $4 billion to our shareholders since 2012 through the spin-off of Murphy USA, cash dividends and share repurchases. We look forward to a strong closing quarter of the year, and I anticipate setting another quarterly production record as we maintain our current annual guidance."
Third quarter production averaged 229,759 boepd. This production level was approximately 2% over our guidance of 225,000 boepd for the quarter and was primarily attributed to higher production across the Gulf of Mexico and in Sarawak, Malaysia.
North America Onshore
In the Eagle Ford Shale, third quarter production, which was comprised of 90% liquids, averaged 60,563 boepd net, up from 52,814 boepd in the prior quarter as we brought 64 new wells on line. We have reduced to seven drilling rigs and three completion spreads across the play and expect to bring on close to 40 new wells in the fourth quarter for a total of just over 200 wells (including non-operated locations) this year. We continue with downspacing development and piloting to test staggered spacing with the Upper Eagle Ford Shale zone with continued positive results. We are currently adding to our acreage position in the Eagle Ford Shale with a bolt-on acquisition of approximately 5,800 net acres adjacent to our current operations in North Tilden in Atascosa County. This new acreage provides close to 35 well locations at 160 acre spacing, with upside potential associated with downspacing which is under review.
At the Tupper gas fields in Western Canada, third quarter production was 146 mmcfd as we move forward with our plan to "drill to fill" our existing gas plant capacity. We currently have three rigs and one completion spread in operation to deliver 19 wells this year. We continue to see positive results using our new completion and choke management strategies.
Syncrude was hampered by unplanned maintenance during the third quarter with production averaging 11,200 bopd. Operations have recovered and are on track for improved production levels in the fourth quarter.
In Malaysia, we announced the signing of a Sale and Purchase Agreement to sell-down 30% of our oil and gas assets for $2 billion subject to customary approvals, closing costs and adjustments. The effective date of the transaction is January 1, 2014 with closing expected to take place in two phases. The first phase, comprising two-thirds of the transaction, is expected to close late in the fourth quarter of this year with the second phase expected to close in the first quarter of 2015. Production offshore Sabah was 35,090 boepd for the third quarter with 94% liquids. At Siakap North-Petai, where we currently hold a 32% working interest, we have completed eight producers and five water injectors and are currently drilling an additional producer for the field. The Kakap-Gumusut main project, where we have a 14% working interest, declared first oil on October 8, 2014. The project is expected to ramp up in stages over the fourth quarter and into early next year. The floating LNG project in Block H continues to progress on schedule. In shallow water offshore Sarawak (SK), gas production for the third quarter was 175 million cubic feet per day, with the quarter having strong nominations into the LNG facility. SK liquids production was 22,646 bopd for the quarter. The new field developments continue to perform above plan. Drilling continues at the South Acis field where we delivered four oil wells during the third quarter and expect to complete another four in the fourth quarter.
In the Gulf of Mexico, the Dalmatian wells, where we hold a 70% working interest, continue to perform well. Production for the quarter was 10,157 boepd with 53% liquids. The levels are above original plans but were limited by maintenance work at the Petronius host platform. At Medusa in Mississippi Canyon, where we have a 60% working interest, we started drilling the first of two expansion wells. This development consists of drilling two subsea wells this year with a subsea tieback to the Medusa facility and first production from the new wells in mid-2015.
In the GOM, the rig is now on location at the Urca prospect in Mississippi Canyon Block 697. We currently hold a 50% working interest as operator and are in final negotiations to reduce our equity interest to 35%. This lower Miocene sub-salt structure has a pre-drill gross mean resource size of 130 million barrels.
We plan to start an 8,000 square kilometer 3D seismic program across Block EPP 43 in the Ceduna Basin offshore Australia in November.
In the U.K. downstream business, we closed on the sale of the U.K. retail business on September 30, 2014. We are scheduled to close on the sale of the Milford Haven refinery on October 31, 2014. The results of our U.K. Downstream business continue to be reflected as discontinued operations for financial reporting purposes.
Earnings Conference Call
The public is invited to access the Company's conference call to discuss third quarter 2014 results on Thursday, October 30 at 12:00 p.m. CDT either via the Internet through the Investor Relations section of Murphy Oil's Web site at http://ir.murphyoilcorp.com or via the telephone by dialing 1-877-723-9518. The telephone reservation number for the call is 6263299. Replays of the call will be available through the same address on Murphy Oil's Web site, and a recording of the call will be available through August 4 by calling 1-888-203-1112 and referencing reservation number 6263299. A replay of the conference call will also be available on the Murphy Web site for 30 days after the event and via Thomson StreetEvents for their service subscribers.
Summary financial data and operating statistics for the third quarter of 2014 with comparisons to 2013 are contained in the following tables. Additionally, a schedule indicating the impacts of items affecting comparability of earnings between periods and a schedule comparing EBITDA between periods are included with these tables as well as guidance for the fourth quarter.
This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements, which express management's current views concerning future events or results, including Murphy's plans to divest its U.K. downstream operations, are subject to inherent risks and uncertainties. Factors that could cause one or more of these forecasted events not to occur include, but are not limited to, a failure to obtain necessary regulatory approvals, a deterioration in the business or prospects of Murphy or its U.K. refining business, adverse developments in Murphy or its U.K. refining and marketing business' markets, adverse developments in the U.S. or global capital markets, credit markets or economies in general, or a failure to execute a sale of the U.K. downstream operations on acceptable terms or in the timeframe contemplated. Factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements include, but are not limited to, the volatility and level of crude oil and natural gas prices, the level and success rate of our exploration programs, our ability to maintain production rates and replace reserves, customer demand for our products, adverse foreign exchange movements, political and regulatory instability, and uncontrollable natural hazards. For further discussion of risk factors, see both Murphy's 2013 Annual Report on Form 10-K and Form 10-Q for the quarterly period ended June 30, 2014, on file with the U.S. Securities and Exchange Commission. Murphy undertakes no duty to publicly update or revise any forward-looking statements.
This news release also contains certain historical non-GAAP measures of financial performance that management believes are good tools for internal use and the investment community in evaluating Murphy Oil Corporation's overall financial performance. These non-GAAP measures are broadly used to value and compare companies in the crude oil and natural gas industry. Please see the attached schedules for reconciliations of the differences between non-GAAP measures used in this news release and the most directly comparable GAAP financial measures.
The Securities and Exchange Commission requires oil and gas companies, in their filings with the SEC, to disclose proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. The SEC permits the optional disclosure of probable and possible reserves; however, we have not disclosed the Company's probable and possible reserves in our filings with the SEC. We use the term "gross mean resources" in this news release. These estimates are by their nature more speculative than estimates of proved, probable and possible reserves and accordingly are subject to substantially greater risk of being actually realized. The SEC guidelines strictly prohibit us from including these estimates in filings with the SEC. Investors are urged to consider closely the disclosures and risk factors in our most recent annual report on Form 10-K and in other reports on file with the SEC, available from Murphy Oil Corporation's offices or Web site at http://ir.murphyoilcorp.com.
For further information contact Barry Jeffery, Vice President. Investor Relations at 870-864-6501.
3Q Schedules accessible at link below.