Murphy Oil Corporation Announces First Quarter 2020 Operating and Financial Results
Unless otherwise noted, the financial and operating highlights and metrics discussed in this commentary exclude noncontrolling interest. 1
Significant items include:
- Delivered first quarter production of 186 thousand barrels of oil equivalent per day (MBOEPD), comprised of more than 110 thousand barrels of oil per day (MBOPD) and 66 percent liquids
- Received
$42 million of cash crude oil hedge settlements for the quarter and recorded a$358 million non-cash mark-to-market gain on crude oil contracts - Reduced cash flow volatility by entering into additional crude oil hedges of 20 MBOPD for May and
June 2020 at an average price of$26.45 per barrel. Overall for full year 2020, Murphy will have an average of 48 MBOPD hedged at an average price of$54.35 per barrel - Recorded
$968 million non-cash impairment charge due to low commodity prices in first quarter 2020 - Lowered planned capital expenditures further to a midpoint of
$740 million , representing approximately a 50 percent reduction from the original 2020 capital budget - Announced the closure of corporate headquarters in
El Dorado, Arkansas and office inCalgary, Alberta - Targeted
$30 to$40 million reduction in operating expenses and approximately$50 million in cash G&A and related expenses in 2020 - Decreased quarterly dividend by 50 percent to
$0.50 per share annualized
FIRST QUARTER 2020 FINANCIAL RESULTS
The company recorded a net loss, attributable to Murphy, of
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations attributable to Murphy was
First quarter production averaged 186 thousand barrels of oil equivalent per day (MBOEPD) with 59 percent oil and 66 percent liquids. Details for first quarter production can be found in the attached schedules.
PROTECTING THE COMPANY’S STRONG FINANCIAL POSITION
At the end of first quarter 2020, Murphy had outstanding debt of
As of
“We remain focused on protecting our balance sheet and liquidity through this unstable market while maintaining future flexibility through our long-dated debt maturity profile, with the first tranche not due until mid-2022,” said
COMMODITY HEDGE POSITIONS MITIGATE CASH FLOW VOLATILITY
The company employs derivative commodity instruments to manage certain risks associated with commodity price volatility and underpin capital spending associated with certain assets. For full year 2020, Murphy will have an average of 48 thousand barrels of oil per day (MBOPD) hedged at an average price of
Additionally, subsequent to quarter end, Murphy entered into fixed price forward sales contracts for the delivery of 25 million cubic feet per day (MMCFD) at the AECO hub in
Details for the current hedge positions can be found in the attached schedules.
REDUCING CAPTIAL EXPENDITURES AND IMPROVING COST STRUCTURE
As previously announced, in response to challenging macroeconomic conditions, the severe decline in commodity prices and reduced demand for crude oil and natural gas, Murphy lowered its 2020 planned capital expenditures to a midpoint of
In addition to lowering capital expenditures, the company continues to prudently and dynamically manage all expenses. Currently, Murphy is focusing on improving its operating cost structure and cash position, and is targeting
REGIONAL OPERATIONS SUMMARY
North American Onshore
The North American onshore business produced approximately 95 MBOEPD in the first quarter.
Kaybob Duvernay – First quarter production averaged 10 MBOEPD. Murphy brought online 11 wells during the quarter with strong gross 30-day initial production (IP30) rates averaging above 900 barrels of oil equivalent per day (BOEPD) and average liquids content of more than 80 percent. Drilling and completions costs continue to decrease, with the best well year-to-date at less than
Global Offshore
The offshore business produced 91 MBOEPD for the first quarter, comprised of 79 percent oil. This excludes production from discontinued operations and noncontrolling interest.
Construction of the King’s Quay floating production system (FPS) continues to progress. Transaction documentation with
Canada Offshore – As previously announced, non-operated
EXPLORATION
2020 PRODUCTION AND CAPITAL EXPENDITURE OUTLOOK
For the month of
“Given the current industry turmoil, including shut-ins and curtailments across the sector, it is difficult to accurately forecast production volumes. However, if we assume NYMEX strip oil prices occur, we are confident that the combination of the King’s Quay transaction proceeds, hedge realizations, and lower CAPEX, operating and G&A costs will allow us to exit 2020 with a strong liquidity position. This enables us to methodically continue our cost reduction plans over the course of this year and next, so that we are better positioned to weather a possible long-term low commodity price environment,” commented Jenkins.
The table below illustrates the capital allocation by area.
2020 Revised |
||
Area |
Percent of |
|
US Onshore |
27 |
|
|
43 |
|
Canada Onshore |
16 |
|
Exploration |
8 |
|
Canada Offshore |
3 |
|
Other |
3
|
Approximately
2020 Revised Onshore Wells Online |
|||||||||||
1Q 2020 |
2Q 2020 |
3Q 2020 |
4Q 2020 |
2020 Total |
|||||||
|
14 |
11 |
- |
- |
25 |
|
|||||
Kaybob Duvernay |
11 |
5 |
- |
- |
16 |
|
|||||
|
- |
- |
- |
- |
- |
|
|||||
|
- |
5 |
- |
- |
5 |
|
|||||
Non-Op Placid Montney |
4 |
6 |
- |
- |
10 |
|
Note: Non-operated wells are shown gross.
Murphy has reduced its capital allocation to approximately
Murphy has adjusted its 2020 exploration plans to a one-well non-operated program, deferring the two exploration wells in offshore
RESPONSE TO COVID-19
The effects of COVID-19 have been dramatic and vast, impacting everything from the overall economy and global oil demand to personal interactions. Murphy is grateful to all the healthcare workers, first responders and volunteers fighting the virus on the front lines, and to its field employees and contractors who continue to operate safely.
Murphy quickly recognized the growing concern of COVID-19 overseas and initiated its Incident Management Team in the first quarter 2020. The team began monitoring the situation and establishing a strategy for the safety and wellbeing of its worldwide employees, while various departments collaborated in preparation for a possibly prolonged work-at-home scenario. In conjunction with government officials and health organizations advising citizens to stay at home in
“We’re continually focused on the safety and health of our employees, partners and the communities in which we work, in addition to maintaining safe operations while ensuring business continuity. With gratitude, I would like to commend everyone for being flexible, supporting each other and showing resilience during this challenging time. Thank you as well to our incident and crisis teams for their outstanding planning and execution that has kept our employees and contractors safe, and to other internal groups for ensuring a smooth and stable transition for office employees to work remotely,” said Jenkins.
CONFERENCE CALL AND WEBCAST SCHEDULED FOR
Murphy will host a conference call to discuss first quarter 2020 financial and operating results on
FINANCIAL DATA
Summary financial data and operating statistics for first 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 second quarter 2020, are also included.
1With the close of the previously announced
ABOUT
As an independent oil and natural gas exploration and production company,
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
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.
|
||||||
SUMMARIZED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) |
||||||
|
|
Three Months Ended |
||||
(Thousands of dollars, except per share amounts) |
|
2020 |
|
2019 |
||
Revenues and other income |
|
|
|
|
||
Revenue from sales to customers |
|
600,558 |
|
|
629,354 |
|
Gain on crude contracts |
|
400,672 |
|
|
— |
|
Gain on sale of assets and other income |
|
2,498 |
|
|
1,192 |
|
Total revenues and other income |
|
1,003,728 |
|
|
630,546 |
|
Costs and expenses |
|
|
|
|
||
Lease operating expenses |
|
209,148 |
|
|
131,696 |
|
Severance and ad valorem taxes |
|
9,422 |
|
|
10,097 |
|
Transportation, gathering and processing |
|
44,367 |
|
|
39,542 |
|
Exploration expenses, including undeveloped lease amortization |
|
20,126 |
|
|
32,538 |
|
Selling and general expenses |
|
36,772 |
|
|
63,360 |
|
Depreciation, depletion and amortization |
|
306,102 |
|
|
229,406 |
|
Accretion of asset retirement obligations |
|
9,966 |
|
|
9,340 |
|
Impairment of assets |
|
967,530 |
|
|
— |
|
Other (benefit) expense |
|
(45,188) |
|
|
30,005 |
|
Total costs and expenses |
|
1,558,245 |
|
|
545,984 |
|
Operating (loss) income from continuing operations |
|
(554,517) |
|
|
84,562 |
|
Other income (loss) |
|
|
|
|
||
Interest and other income (loss) |
|
241 |
|
|
(4,748) |
|
Interest expense, net |
|
(41,097) |
|
|
(46,069) |
|
Total other loss |
|
(40,856) |
|
|
(50,817) |
|
(Loss) income from continuing operations before income taxes |
|
(595,373) |
|
|
33,745 |
|
Income tax (benefit) expense |
|
(91,533) |
|
|
10,822 |
|
(Loss) income from continuing operations |
|
(503,840) |
|
|
22,923 |
|
(Loss) income from discontinued operations, net of income taxes |
|
(4,862) |
|
|
49,846 |
|
Net (loss) income including noncontrolling interest |
|
(508,702) |
|
|
72,769 |
|
Less: Net (loss) income attributable to noncontrolling interest |
|
(92,598) |
|
|
32,587 |
|
NET (LOSS) INCOME ATTRIBUTABLE TO MURPHY |
|
(416,104) |
|
|
40,182 |
|
|
|
|
|
|
||
(LOSS) INCOME PER COMMON SHARE – BASIC |
|
|
|
|
||
Continuing operations |
|
(2.68) |
|
|
(0.06) |
|
Discontinued operations |
|
(0.03) |
|
|
0.29 |
|
Net (loss) income |
|
(2.71) |
|
|
0.23 |
|
|
|
|
|
|
||
(LOSS) INCOME PER COMMON SHARE – DILUTED |
|
|
|
|
||
Continuing operations |
|
(2.68) |
|
|
(0.06) |
|
Discontinued operations |
|
(0.03) |
|
|
0.29 |
|
Net (loss) income |
|
(2.71) |
|
|
0.23 |
|
Cash dividends per Common share |
|
0.25 |
|
|
0.25 |
|
Average Common shares outstanding (thousands) |
|
|
|
|
||
Basic |
|
153,313 |
|
|
173,341 |
|
Diluted |
|
153,313 |
|
|
174,491 |
|
|
||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) |
||||||
|
|
Three Months Ended |
||||
(Thousands of dollars) |
|
2020 |
|
2019 |
||
Operating Activities |
|
|
|
|
||
Net (loss) income including noncontrolling interest |
|
(508,702) |
|
|
72,769 |
|
Adjustments to reconcile net (loss) income to net cash provided by continuing operations activities: |
|
|
|
|
||
Loss (income) from discontinued operations |
|
4,862 |
|
|
(49,846) |
|
Depreciation, depletion and amortization |
|
306,102 |
|
|
229,406 |
|
Previously suspended exploration costs |
|
97 |
|
|
13,251 |
|
Amortization of undeveloped leases |
|
7,478 |
|
|
8,045 |
|
Accretion of asset retirement obligations |
|
9,966 |
|
|
9,340 |
|
Impairment of assets |
|
967,530 |
|
|
— |
|
Deferred income tax (benefit) charge |
|
(81,373) |
|
|
15,589 |
|
Mark to market (gain) loss on contingent consideration |
|
(59,151) |
|
|
13,530 |
|
Mark to market (gain) loss of crude contracts |
|
(358,302) |
|
|
— |
|
Long-term non-cash compensation |
|
9,805 |
|
|
22,388 |
|
Net decrease (increase) in noncash operating working capital |
|
107,827 |
|
|
(98,505) |
|
Other operating activities, net |
|
(13,482) |
|
|
(18,770) |
|
Net cash provided by continuing operations activities |
|
392,657 |
|
|
217,197 |
|
Investing Activities |
|
|
|
|
||
Property additions and dry hole costs |
|
(354,834) |
|
|
(270,338) |
|
Property additions for King's Quay FPS |
|
(21,296) |
|
|
— |
|
Net cash required by investing activities |
|
(376,130) |
|
|
(270,338) |
|
Financing Activities |
|
|
|
|
||
Borrowings on revolving credit facility |
|
170,000 |
|
|
— |
|
Debt issuance, net of cost |
|
(613) |
|
|
— |
|
Early retirement of debt |
|
(3,570) |
|
|
— |
|
Capital lease obligation payments |
|
(168) |
|
|
(160) |
|
Withholding tax on stock-based incentive awards |
|
(7,094) |
|
|
(6,991) |
|
Distributions to noncontrolling interest |
|
(32,399) |
|
|
(18,437) |
|
Cash dividends paid |
|
(38,392) |
|
|
(43,398) |
|
Net cash provided (required) by financing activities |
|
87,764 |
|
|
(68,986) |
|
Cash Flows from Discontinued Operations 1 |
|
|
|
|
||
Operating activities |
|
(1,202) |
|
|
123,469 |
|
Investing activities |
|
4,494 |
|
|
(26,438) |
|
Financing activities |
|
— |
|
|
(2,547) |
|
Net cash provided by discontinued operations |
|
3,292 |
|
|
94,484 |
|
Cash transferred from discontinued operations to continuing operations |
|
— |
|
|
46,080 |
|
Effect of exchange rate changes on cash and cash equivalents |
|
(3,298) |
|
|
2,405 |
|
Net increase (decrease) in cash and cash equivalents |
|
100,993 |
|
|
(73,642) |
|
Cash and cash equivalents at beginning of period |
|
306,760 |
|
|
359,923 |
|
Cash and cash equivalents at end of period |
|
407,753 |
|
|
286,281 |
|
1 Net cash provided by discontinued operations is not part of the cash flow reconciliation. |
|
||||||
SCHEDULE OF ADJUSTED INCOME (LOSS) |
||||||
(unaudited) |
||||||
|
|
Three Months Ended |
||||
(Millions of dollars, except per share amounts) |
|
2020 |
|
2019 |
||
Net (loss) income attributable to Murphy (GAAP) |
|
(416.1) |
|
|
40.2 |
|
Discontinued operations loss (income) |
|
4.9 |
|
|
(49.8) |
|
(Loss) income from continuing operations |
|
(411.2) |
|
|
(9.6) |
|
Adjustments (after tax): |
|
|
|
|
||
Impairment of assets |
|
692.7 |
|
|
— |
|
Mark-to-market (gain) loss on crude oil derivative contracts |
|
(283.1) |
|
|
— |
|
Mark-to-market (gain) loss on contingent consideration |
|
(46.7) |
|
|
10.7 |
|
Foreign exchange (gains) losses |
|
(4.0) |
|
|
2.4 |
|
Inventory loss |
|
3.8 |
|
|
— |
|
Unutilized rig charges |
|
2.8 |
|
|
— |
|
Business development transaction costs |
|
— |
|
|
9.8 |
|
Write-off of previously suspended exploration wells |
|
— |
|
|
13.2 |
|
Total adjustments after taxes |
|
365.5 |
|
|
36.1 |
|
Adjusted (loss) income from continuing operations attributable to Murphy |
|
(45.7) |
|
|
26.5 |
|
|
|
|
|
|
||
Adjusted (loss) income from continuing operations per average diluted share |
|
(0.30) |
|
|
0.15 |
|
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
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.
(Millions of dollars) |
|
Three Months Ended |
|||||||
|
|
Pretax |
|
Tax |
|
Net |
|||
Exploration & Production: |
|
|
|
|
|
|
|||
|
|
775.8 |
|
|
(162.9) |
|
|
612.9 |
|
Other International |
|
39.7 |
|
|
— |
|
|
39.7 |
|
Total E&P |
|
815.5 |
|
|
(162.9) |
|
|
652.6 |
|
Corporate: |
|
(363.0) |
|
|
75.9 |
|
|
(287.1) |
|
Total adjustments |
|
452.5 |
|
|
(87.0) |
|
|
365.5 |
|
|
||||||
SCHEDULE OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION |
||||||
AND AMORTIZATION (EBITDA) |
||||||
(unaudited) |
||||||
|
|
Three Months Ended |
||||
(Millions of dollars, except per barrel of oil equivalents sold) |
|
2020 |
|
2019 |
||
Net (loss) income attributable to Murphy (GAAP) |
|
(416.1) |
|
|
40.2 |
|
Income tax (benefit) expense |
|
(91.5) |
|
|
10.8 |
|
Interest expense, net |
|
41.1 |
|
|
46.1 |
|
Depreciation, depletion and amortization expense ¹ |
|
286.2 |
|
|
212.1 |
|
EBITDA attributable to Murphy (Non-GAAP) |
|
(180.3) |
|
|
309.2 |
|
Impairment of assets ¹ |
|
866.4 |
|
|
— |
|
Mark-to-market (gain) loss on crude oil derivative contracts |
|
(358.3) |
|
|
— |
|
Mark-to-market (gain) loss on contingent consideration |
|
(59.2) |
|
|
13.5 |
|
Accretion of asset retirement obligations |
|
10.0 |
|
|
9.3 |
|
Discontinued operations loss (income) |
|
4.9 |
|
|
(49.8) |
|
Inventory loss |
|
4.8 |
|
|
— |
|
Foreign exchange (gains) losses |
|
(4.7) |
|
|
2.6 |
|
Unutilized rig charges |
|
3.5 |
|
|
— |
|
Business development transaction costs |
|
— |
|
|
12.5 |
|
Write-off of previously suspended exploration wells |
|
— |
|
|
13.2 |
|
Adjusted EBITDA attributable to Murphy (Non-GAAP) |
|
287.1 |
|
|
310.5 |
|
|
|
|
|
|
||
Total barrels of oil equivalents sold from continuing operations attributable to Murphy (thousands of barrels) |
|
17,071 |
|
|
13,497 |
|
|
|
|
|
|
||
Adjusted EBITDA per barrel of oil equivalents sold |
|
16.82 |
|
|
23.01 |
|
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
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.
|
||||||
SCHEDULE OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION |
||||||
AND AMORTIZATION AND EXPLORATION (EBITDAX) |
||||||
(unaudited) |
||||||
|
|
Three Months Ended |
||||
(Millions of dollars, except per barrel of oil equivalents sold) |
|
2020 |
|
2019 |
||
Net (loss) income attributable to Murphy (GAAP) |
|
(416.1) |
|
|
40.2 |
|
Income tax (benefit) expense |
|
(91.5) |
|
|
10.8 |
|
Interest expense, net |
|
41.1 |
|
|
46.1 |
|
Depreciation, depletion and amortization expense 1 |
|
286.2 |
|
|
212.1 |
|
EBITDA attributable to Murphy (Non-GAAP) |
|
(180.3) |
|
|
309.2 |
|
Exploration expenses |
|
20.1 |
|
|
32.5 |
|
EBITDAX attributable to Murphy (Non-GAAP) |
|
(160.2) |
|
|
341.7 |
|
Impairment of assets ¹ |
|
866.4 |
|
|
— |
|
Mark-to-market (gain) loss on crude oil derivative contracts |
|
(358.3) |
|
|
— |
|
Mark-to-market (gain) loss on contingent consideration |
|
(59.2) |
|
|
13.5 |
|
Accretion of asset retirement obligations |
|
10.0 |
|
|
9.3 |
|
Discontinued operations loss (income) |
|
4.9 |
|
|
(49.8) |
|
Inventory loss |
|
4.8 |
|
|
— |
|
Foreign exchange (gains) losses |
|
(4.7) |
|
|
2.6 |
|
Unutilized rig charges |
|
3.5 |
|
|
— |
|
Business development transaction costs |
|
— |
|
|
12.5 |
|
Adjusted EBITDAX attributable to Murphy (Non-GAAP) |
|
307.2 |
|
|
329.8 |
|
|
|
|
|
|
||
Total barrels of oil equivalents sold from continuing operations attributable to Murphy (thousands of barrels) |
|
17,071 |
|
|
13,497 |
|
|
|
|
|
|
||
Adjusted EBITDAX per barrel of oil equivalents sold |
|
17.99 |
|
|
24.44 |
|
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
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.
|
|||||||||||||
FUNCTIONAL RESULTS OF OPERATIONS (unaudited) |
|||||||||||||
|
Three Months Ended |
Three Months Ended |
|||||||||||
(Millions of dollars) |
Revenues |
Income |
Revenues |
Income |
|||||||||
Exploration and production |
|
|
|
|
|||||||||
|
$ |
511.5 |
|
(696.0) |
|
500.8 |
|
116.2 |
|
||||
|
89.7 |
|
(6.9) |
|
126.8 |
|
7.5 |
|
|||||
Other |
1.8 |
|
(52.3) |
|
2.9 |
|
(28.3) |
|
|||||
Total exploration and production |
603.0 |
|
(755.2) |
|
630.5 |
|
95.4 |
|
|||||
Corporate |
400.7 |
|
251.4 |
|
— |
|
(72.4) |
|
|||||
Revenue/income from continuing operations |
1,003.7 |
|
(503.8) |
|
630.5 |
|
23.0 |
|
|||||
Discontinued operations, net of tax 2 |
— |
|
(4.9) |
|
— |
|
49.8 |
|
|||||
Total revenues/net income (loss) including noncontrolling interest |
$ |
1,003.7 |
|
(508.7) |
|
630.5 |
|
72.8 |
|
||||
Net income attributable to Murphy |
|
(416.1) |
|
|
40.2 |
|
1 |
Includes results attributable to a noncontrolling interest in MP |
2 |
Effective |
|
|||||||||||||
OIL AND GAS OPERATING RESULTS (unaudited) |
|||||||||||||
THREE MONTHS ENDED |
|||||||||||||
(Millions of dollars) |
United |
|
Other |
Total |
|||||||||
Three Months Ended |
|
|
|
|
|||||||||
Oil and gas sales and other operating revenues |
$ |
511.5 |
|
89.7 |
|
1.8 |
|
603.0 |
|
||||
Lease operating expenses |
178.2 |
|
30.6 |
|
0.3 |
|
209.1 |
|
|||||
Severance and ad valorem taxes |
9.1 |
|
0.3 |
|
— |
|
9.4 |
|
|||||
Transportation, gathering and processing |
34.6 |
|
9.8 |
|
— |
|
44.4 |
|
|||||
Depreciation, depletion and amortization |
247.5 |
|
52.0 |
|
0.5 |
|
300.0 |
|
|||||
Accretion of asset retirement obligations |
8.6 |
|
1.4 |
|
— |
|
10.0 |
|
|||||
Impairment of assets |
927.8 |
|
— |
|
39.7 |
|
967.5 |
|
|||||
Exploration expenses |
|
|
|
|
|||||||||
Dry holes and previously suspended exploration costs |
0.1 |
|
— |
|
— |
|
0.1 |
|
|||||
Geological and geophysical |
1.3 |
|
— |
|
3.7 |
|
5.0 |
|
|||||
Other exploration |
0.8 |
|
0.2 |
|
6.5 |
|
7.5 |
|
|||||
|
2.2 |
|
0.2 |
|
10.2 |
|
12.6 |
|
|||||
Undeveloped lease amortization |
5.1 |
|
0.2 |
|
2.2 |
|
7.5 |
|
|||||
Total exploration expenses |
7.3 |
|
0.4 |
|
12.4 |
|
20.1 |
|
|||||
Selling and general expenses |
3.7 |
|
4.4 |
|
1.6 |
|
9.7 |
|
|||||
Other |
(45.7) |
|
0.2 |
|
(1.2) |
|
(46.7) |
|
|||||
Results of operations before taxes |
(859.6) |
|
(9.4) |
|
(51.5) |
|
(920.5) |
|
|||||
Income tax provisions (benefits) |
(163.6) |
|
(2.5) |
|
0.8 |
|
(165.3) |
|
|||||
Results of operations (excluding Corporate segment) |
$ |
(696.0) |
|
(6.9) |
|
(52.3) |
|
(755.2) |
|
||||
|
|
|
|
|
|||||||||
Three Months Ended |
|
|
|
|
|||||||||
Oil and gas sales and other operating revenues |
$ |
500.8 |
|
126.8 |
|
2.9 |
|
630.5 |
|
||||
Lease operating expenses |
92.4 |
|
39.0 |
|
0.3 |
|
131.7 |
|
|||||
Severance and ad valorem taxes |
9.8 |
|
0.3 |
|
— |
|
10.1 |
|
|||||
Transportation, gathering and processing |
31.6 |
|
7.9 |
|
— |
|
39.5 |
|
|||||
Depreciation, depletion and amortization |
163.9 |
|
59.5 |
|
1.0 |
|
224.4 |
|
|||||
Accretion of asset retirement obligations |
7.8 |
|
1.5 |
|
— |
|
9.3 |
|
|||||
Exploration expenses |
|
|
|
|
|||||||||
Dry holes and previously suspended exploration costs |
0.1 |
|
— |
|
13.1 |
|
13.2 |
|
|||||
Geological and geophysical |
0.5 |
|
— |
|
5.5 |
|
6.0 |
|
|||||
Other exploration |
1.2 |
|
0.1 |
|
4.0 |
|
5.3 |
|
|||||
|
1.8 |
|
0.1 |
|
22.6 |
|
24.5 |
|
|||||
Undeveloped lease amortization |
6.9 |
|
0.3 |
|
0.8 |
|
8.0 |
|
|||||
Total exploration expenses |
8.7 |
|
0.4 |
|
23.4 |
|
32.5 |
|
|||||
Selling and general expenses |
17.3 |
|
7.6 |
|
5.6 |
|
30.5 |
|
|||||
Other |
30.6 |
|
0.2 |
|
0.3 |
|
31.1 |
|
|||||
Results of operations before taxes |
138.7 |
|
10.4 |
|
(27.7) |
|
121.4 |
|
|||||
Income tax provisions (benefits) |
22.5 |
|
2.9 |
|
0.6 |
|
26.0 |
|
|||||
Results of operations (excluding Corporate segment) |
$ |
116.2 |
|
7.5 |
|
(28.3) |
|
95.4 |
|
||||
1 Includes results attributable to a noncontrolling interest in MP GOM. |
|
||||||
PRODUCTION-RELATED EXPENSES |
||||||
(unaudited) |
||||||
|
|
Three Months Ended |
||||
(Dollars per barrel of oil equivalents sold) |
|
2020 |
|
2019 |
||
Continuing operations |
|
|
|
|
||
|
|
|
|
|
||
Lease operating expense |
|
10.47 |
|
|
12.92 |
|
Severance and ad valorem taxes |
|
2.42 |
|
|
3.03 |
|
Depreciation, depletion and amortization (DD&A) expense |
|
25.03 |
|
|
23.90 |
|
|
|
|
|
|
||
|
|
|
|
|
||
Lease operating expense 1 |
|
15.03 |
|
|
8.11 |
|
DD&A expense |
|
16.58 |
|
|
14.39 |
|
|
|
|
|
|
||
|
|
|
|
|
||
Lease operating expense |
|
4.45 |
|
|
5.89 |
|
Severance and ad valorem taxes |
|
0.06 |
|
|
0.06 |
|
DD&A expense |
|
9.65 |
|
|
11.03 |
|
|
|
|
|
|
||
|
|
|
|
|
||
Lease operating expense |
|
19.53 |
|
|
17.43 |
|
DD&A expense |
|
12.09 |
|
|
13.70 |
|
|
|
|
|
|
||
Total oil and gas continuing operations |
|
|
|
|
||
Lease operating expense 2 |
|
11.41 |
|
|
8.93 |
|
Severance and ad valorem taxes |
|
0.51 |
|
|
0.68 |
|
DD&A expense |
|
16.70 |
|
|
15.78 |
|
|
|
|
|
|
||
Total oil and gas continuing operations – excluding noncontrolling interest |
|
|
|
|
||
Lease operating expense |
|
11.05 |
|
|
9.01 |
|
Severance and ad valorem taxes |
|
0.55 |
|
|
0.75 |
|
DD&A expense |
|
16.76 |
|
|
15.54 |
|
1
|
In 2020, lease operating expense (LOE) per barrel of oil equivalents (BOE) sold for the |
2 |
In 2020, LOE per BOE excluding cost associated with a well workover at Cascade is |
|
||||||
OTHER FINANCIAL DATA |
||||||
(unaudited) |
||||||
|
|
Three Months Ended |
||||
(Millions of dollars) |
|
2020 |
|
2019 |
||
Capital expenditures for continuing operations |
|
|
|
|
||
Exploration and production |
|
|
|
|
||
|
|
245.4 |
|
|
205.5 |
|
|
|
108.2 |
|
|
95.7 |
|
Other |
|
20.9 |
|
|
41.3 |
|
Total |
|
374.5 |
|
|
342.5 |
|
|
|
|
|
|
||
Corporate |
|
3.5 |
|
|
4.1 |
|
Total capital expenditures - continuing operations 1 |
|
378.0 |
|
|
346.6 |
|
|
|
|
|
|
||
Charged to exploration expenses 2 |
|
|
|
|
||
|
|
2.2 |
|
|
1.8 |
|
|
|
0.2 |
|
|
0.1 |
|
Other |
|
10.2 |
|
|
22.6 |
|
Total charged to exploration expenses - continuing operations |
|
12.6 |
|
|
24.5 |
|
|
|
|
|
|
||
Total capitalized |
|
365.4 |
|
|
322.1 |
|
1
|
Includes noncontrolling interest (NCI) capital expenditures of |
2 |
Excludes amortization of undeveloped leases of |
|
|||||||
CONSOLIDATED BALANCE SHEETS |
|||||||
(unaudited) |
|||||||
(Millions of dollars) |
|
|
|
||||
ASSETS |
|
|
|
||||
Current assets |
|
|
|
||||
Cash and cash equivalents |
$ |
407.8 |
|
|
306.8 |
|
|
Accounts receivable |
597.2 |
|
|
426.7 |
|
||
Inventories |
68.3 |
|
|
76.1 |
|
||
Prepaid expenses |
50.6 |
|
|
40.9 |
|
||
Assets held for sale |
88.4 |
|
|
123.9 |
|
||
Total current assets |
1,212.4 |
|
|
974.3 |
|
||
Property, plant and equipment, at cost |
8,956.3 |
|
|
9,969.7 |
|
||
Operating lease assets |
797.3 |
|
|
598.3 |
|
||
Deferred income taxes |
210.1 |
|
|
129.3 |
|
||
Deferred charges and other assets |
29.7 |
|
|
46.9 |
|
||
Total assets |
$ |
11,205.8 |
|
|
11,718.5 |
|
|
LIABILITIES AND EQUITY |
|
|
|
||||
Current liabilities |
|
|
|
||||
Accounts payable |
554.6 |
|
|
602.1 |
|
||
Income taxes payable |
19.4 |
|
|
19.0 |
|
||
Other taxes payable |
13.5 |
|
|
18.6 |
|
||
Operating lease liabilities |
109.5 |
|
|
92.3 |
|
||
Other accrued liabilities |
155.3 |
|
|
197.4 |
|
||
Liabilities associated with assets held for sale |
12.6 |
|
|
13.3 |
|
||
Total current liabilities |
864.8 |
|
|
942.8 |
|
||
Long-term debt, including capital lease obligation |
2,970.2 |
|
|
2,803.4 |
|
||
Asset retirement obligations |
825.5 |
|
|
825.8 |
|
||
Deferred credits and other liabilities |
550.7 |
|
|
613.4 |
|
||
Non-current operating lease liabilities |
702.8 |
|
|
521.3 |
|
||
Deferred income taxes |
193.6 |
|
|
207.2 |
|
||
Total liabilities |
6,107.5 |
|
|
5,913.9 |
|
||
Equity |
|
|
|
||||
Common Stock, par |
195.1 |
|
|
195.1 |
|
||
Capital in excess of par value |
924.9 |
|
|
949.4 |
|
||
Retained earnings |
6,159.8 |
|
|
6,614.3 |
|
||
Accumulated other comprehensive loss |
(702.0) |
|
|
(574.2) |
|
||
|
(1,691.7) |
|
|
(1,717.2) |
|
||
Murphy Shareholders' Equity |
4,886.1 |
|
|
5,467.5 |
|
||
Noncontrolling interest |
212.2 |
|
|
337.2 |
|
||
Total equity |
5,098.3 |
|
|
5,804.6 |
|
||
Total liabilities and equity |
$ |
11,205.8 |
|
|
11,718.5 |
|
|
|||||||
PRODUCTION SUMMARY |
|||||||
(unaudited) |
|||||||
|
|
|
Three Months Ended |
||||
Barrels per day unless otherwise noted |
|
2020 |
|
2019 |
|||
Continuing operations |
|
|
|
|
|
||
Net crude oil and condensate |
|
|
|
|
|||
|
Onshore |
|
31,033 |
|
|
25,880 |
|
|
|
|
78,730 |
|
|
61,048 |
|
|
Onshore |
|
6,833 |
|
|
6,457 |
|
|
Offshore |
|
5,138 |
|
|
7,928 |
|
Other |
|
|
344 |
|
|
507 |
|
Total net crude oil and condensate - continuing operations |
|
122,078 |
|
|
101,820 |
|
|
Net natural gas liquids |
|
|
|
|
|
||
|
Onshore |
|
5,585 |
|
|
5,301 |
|
|
|
|
6,670 |
|
|
2,760 |
|
|
Onshore |
|
1,401 |
|
|
1,093 |
|
Total net natural gas liquids - continuing operations |
|
13,656 |
|
|
9,154 |
|
|
Net natural gas – thousands of cubic feet per day |
|
|
|
|
|||
|
Onshore |
|
31,962 |
|
|
29,279 |
|
|
|
|
81,950 |
|
|
19,575 |
|
|
Onshore |
|
266,848 |
|
|
254,904 |
|
Total net natural gas - continuing operations |
|
380,760 |
|
|
303,758 |
|
|
Total net hydrocarbons - continuing operations including NCI 2,3 |
|
199,194 |
|
|
161,600 |
|
|
Noncontrolling interest |
|
|
|
|
|
||
Net crude oil and condensate – barrels per day |
|
(12,020) |
|
|
(12,185) |
|
|
Net natural gas liquids – barrels per day |
|
(559) |
|
|
(554) |
|
|
Net natural gas – thousands of cubic feet per day 2 |
|
(5,091) |
|
|
(3,895) |
|
|
Total noncontrolling interest |
|
(13,428) |
|
|
(13,388) |
|
|
Total net hydrocarbons - continuing operations excluding NCI 2,3 |
|
185,767 |
|
|
148,212 |
|
|
Discontinued operations |
|
|
|
|
|
||
Net crude oil and condensate – barrels per day |
|
— |
|
|
25,954 |
|
|
Net natural gas liquids – barrels per day |
|
— |
|
|
744 |
|
|
Net natural gas – thousands of cubic feet per day 2 |
|
— |
|
|
101,592 |
|
|
Total discontinued operations |
|
— |
|
|
43,630 |
|
|
Total net hydrocarbons produced excluding NCI 2,3 |
|
185,767 |
|
|
191,842 |
|
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. |
|
|||||||||
PRICE SUMMARY |
|||||||||
(unaudited) |
|||||||||
|
|
|
Three Months Ended |
||||||
|
|
|
2020 |
|
2019 |
||||
Weighted average Exploration and Production sales prices 1 |
|
|
|
|
|||||
Continuing operations |
|
|
|
|
|
||||
Crude oil and condensate – dollars per barrel |
|
|
|
|
|
||||
|
Onshore |
|
$ |
46.46 |
|
|
$ |
57.82 |
|
|
|
|
47.07 |
|
|
59.63 |
|
||
|
Onshore |
|
37.61 |
|
|
49.80 |
|
||
|
Offshore |
|
57.27 |
|
|
62.93 |
|
||
Other |
|
|
65.55 |
|
|
67.90 |
|
||
Natural gas liquids – dollars per barrel |
|
|
|
|
|
||||
|
Onshore |
|
10.79 |
|
|
17.19 |
|
||
|
|
|
8.28 |
|
|
21.30 |
|
||
|
Onshore |
|
15.96 |
|
|
35.19 |
|
||
Natural gas – dollars per thousand cubic feet |
|
|
|
|
|
||||
|
Onshore |
|
1.85 |
|
|
2.87 |
|
||
|
|
|
2.01 |
|
|
2.54 |
|
||
|
Onshore |
|
1.62 |
|
|
2.15 |
|
1 |
Effective |
2 |
Prices include the effect of noncontrolling interest share for MP GOM. |
3 |
|
|
||||||||||||||
COMMODITY HEDGE POSITIONS (unaudited) |
||||||||||||||
AS OF |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Commodity |
|
Type |
|
Volumes |
|
Price |
|
Remaining Period |
||||
Area |
|
|
|
|
|
Start Date |
|
End Date |
||||||
|
|
WTI ¹ |
|
Fixed price derivative swap |
|
45,000 |
|
|
|
|
|
|
|
|
|
|
WTI |
|
Fixed price derivative swap |
|
65,000 |
|
|
|
|
|
|
|
|
|
|
WTI |
|
Fixed price derivative swap |
|
45,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volumes |
|
Price |
|
Remaining Period |
|||
Area |
|
Commodity |
|
Type |
|
|
|
Start Date |
|
End Date |
|||
Montney |
|
Natural Gas |
|
Fixed price forward sales at AECO |
|
59 |
|
|
|
|
|
|
|
Montney |
|
Natural Gas |
|
Fixed price forward sales at AECO |
|
25 |
|
|
|
|
|
|
|
1 West Texas Intermediate |
View source version on businesswire.com: https://www.businesswire.com/news/home/20200506006090/en/
Investor Contacts:
Source: