MURPHY OIL CORPORATION ANNOUNCES PRELIMINARY THIRD QUARTER 2016 FINANCIAL AND OPERATING RESULTS
EL DORADO, Arkansas, October 26, 2016 - Murphy Oil Corporation (NYSE: MUR) today announced its preliminary financial and operating results for the third quarter ended September 30, 2016, including a net loss of $16.2 million, or $0.09 per diluted share.
Operating and financial highlights for the third quarter 2016 include:
- Produced volumes over 169.8 Mboepd in the third quarter
- Lowered G&A expense by 23 percent from third quarter 2015
- Continued successful employment of high-intensity fracs in the Eagle Ford Shale
- Commenced well flow back on a four well pad in the Kaybob Duvernay
- Entered into a new $1.2 billion senior unsecured guaranteed revolving credit facility
- Issued $550.0 million of 6.875 percent senior notes due 2024
THIRD QUARTER FINANCIAL RESULTS
Murphy incurred a net loss of $16.2 million, or $0.09 per diluted share, for the third quarter 2016. The company reported an adjusted loss, which excludes both the results of discontinued operations and certain other items that affect comparability of results between periods, of $31.7 million, or $0.18 per diluted share. Details for third quarter can be found in the attached schedules.
Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations totaled $278.3 million, or $17.80 per barrel of oil equivalent (boe) sold. Earnings before interest, taxes, depreciation, amortization and exploration expenses (EBITDAX) totaled $298.2 million, or $19.07 per boe sold. Details for third quarter EBITDA and EBITDAX can be found in the attached schedules.
Production in the third quarter 2016 averaged over 169.8 thousand barrels of oil equivalent per day (Mboepd), exceeding the high end of production guidance.
Third quarter 2016 lease operating expense, excluding Syncrude, was $7.65 per boe, a five percent reduction from third quarter 2015. In addition, third quarter 2016 general and administrative cost declined 23 percent from third quarter 2015, to $55.5 million.
"I am pleased with our third quarter operational results as well as our continued focus on reducing costs. We had an outstanding quarter in our high-cash margin offshore fields and our onshore business achieved continued success in high sand concentration fracs in the Eagle Ford Shale and Tupper Montney. Furthermore, we brought online our first four well pad in the Kaybob Duvernay and are encouraged by the early results," stated Roger W. Jenkins, President and Chief Executive Officer. "Additionally, we were successful in obtaining a new unsecured credit facility while issuing new senior notes allowing for continued flexibility and ample liquidity on our balance sheet," Jenkins added.
FINANCIAL STRENGTH AND LIQUIDITY
During the third quarter, Murphy entered into a $1.2 billion revolving credit facility and issued $550.0 million of 6.875 percent senior notes due in August 2024. The new revolving credit facility is a senior unsecured guaranteed facility expiring in August 2019. The net proceeds from the senior notes will be used for general corporate purposes, which may include the repayment, repurchase or redemption of the company's $550.0 million of 2.5 percent senior notes due in December 2017. Additionally, the company has available borrowing capacity of $630.0 million until June 2017 on its 2011 credit facility.
As of September 30, 2016, the company had $2.8 billion of outstanding debt, exclusive of capital lease obligations, and $871.0 million in cash and liquid invested securities. The long-term, fixed-rate notes, including the $550.0 million notes issued in the third quarter, have a weighted average maturity of 8.5 years and a weighted average coupon of 5.2 percent.
REGIONAL OPERATIONS SUMMARY
North American Onshore
Eagle Ford Shale - Production in the quarter averaged over 46 Mboepd, which includes 87 percent liquids. There were 23 Eagle Ford Shale wells brought online during the quarter including 17 lower Eagle Ford Shale wells, four upper Eagle Ford Shale wells, and two Austin Chalk wells. In the fourth quarter, the company expects to bring online 17 wells late in the quarter, an increase of 10 wells from previous guidance. The drilling program continues with the evaluation and de-risking of multiple zones and optimal spacing across the acreage that is expected to lead to increased resource potential over time.
Tupper Montney - Murphy produced 192 million cubic feet per day (MMcfd) of natural gas in the quarter. The well data from the longer lateral, high sand concentration test pilots completed earlier in the year is meeting the anticipated type curve of 10 to 14 billion cubic feet equivalent Estimated Ultimate Recoveries (EURs).
Kaybob Duvernay and Placid Montney - Production was over 3 Mboepd, which includes 44 percent liquids, during the quarter. In the operated Kaybob Duvernay, four wells, which were previously drilled by the joint venture partner at an effective average lateral length of 3,400 feet, were brought online in the gas condensate area late in the quarter. The wells are in the early stages of production and performing as expected. Drilling at a new two well pad in the gas condensate window is planned late in the fourth quarter with expected production online in first quarter 2017. These initial gas condensate wells will aid in determining optimal well lengths and completion techniques in association with lowering well costs and de-risking the Kaybob Duvernay.
In the non-operated Placid Montney, four wells were drilled in the third quarter and eight are planned for late 2016 or early 2017. These 12 wells will be completed over the course of the fourth quarter 2016 and first quarter 2017.
Malaysia - Block K and Sarawak liquids production in the quarter was over 39 thousand barrels of liquids per day, while Sarawak natural gas production was approximately 116 MMcfd. As part of the original field development plan, a second platform at the South Acis oil field was installed and brought online as scheduled during the quarter. The resource size of the South Acis field has doubled since it came online in December 2013.
North America - Gulf of Mexico and East Coast Canada produced over 25 Mboepd, comprised of 89 percent liquids, in the quarter.
2016 AND FOURTH QUARTER GUIDANCE
Production for full-year 2016 is being tightened to the range of 174 - 175 Mboepd with fourth quarter 2016 production estimated in the range of 162 - 164 Mboepd. Capital spending for full-year 2016 is being maintained at $620.0 million, excluding $206.7 million associated with the acquisition cost of the Kaybob Duvernay and Placid Montney joint venture closed earlier this year. Details for production and capital expenditures guidance can be found in the attached schedules.
CONFERENCE CALL AND WEBCAST SCHEDULED FOR OCTOBER 27, 2016
Murphy will host a conference call to discuss third quarter 2016 results on Thursday, October 27, 2016, at 1:00 p.m. EDT. 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 1-888-587-0613. The telephone reservation number for the call is 3675259. Replays of the call will be available through the same address on the company's website, and a recording of the call will be available through November 10, 2016, by calling 1-888-203-1112 and referencing reservation number 3675259. A replay of the conference call will also be available on the Murphy website at http://ir.murphyoilcorp.com.
Summary financial data, operating statistics and a summary balance sheet for the third quarter and first nine months of 2016 with comparisons to the same periods the previous year are contained in the following schedules. Additionally, a schedule indicating the impacts of items affecting comparability of results between periods and a schedule comparing EBITDA and EBITDAX between periods are included with these schedules as well as guidance for the fourth quarter and full-year.
ABOUT MURPHY OIL CORPORATION
Murphy Oil Corporation is a global independent oil and natural gas exploration and production company. The company's diverse resource base includes offshore production in Southeast Asia, Canada and Gulf of Mexico, as well as North America onshore plays in the Eagle Ford Shale, Kaybob Duvernay and Montney. Additional information can be found on the company's website at http://www.murphyoilcorp.com
This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as "targets", "expectations", "plans", "forecasts", "projections" and other comparable terminology often identify forward-looking statements. 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 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, adverse developments in Murphy business' markets, adverse developments in the U.S. or global capital markets, credit markets or economies in general. 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 Murphy's 2015 Annual Report on Form 10-K, 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.
RESERVE REPORTING TO THE SECURITIES EXCHANGE COMMISSION
The Securities and Exchange Commission (SEC) requires oil and natural 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. We may use certain terms in this news release, such as "resource", "gross resource", "recoverable resource", "net risked PMEAN resource", "recoverable oil", "resource base", "EUR or estimated ultimate recovery" and similar terms that the SEC's rules strictly prohibit us from including in filings with the SEC. 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. 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 website at http://ir.murphyoilcorp.com.
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