Murphy Oil Corporation Announces Second Quarter 2018 Results
Successful Exploration Well at Samurai-2
Financial highlights for the second quarter include:
- Generated adjusted income of
$63 million , or$0.36 per diluted share - Achieved annualized year-to-date EBITDA to average capital employed of 20 percent
- Returned 13 percent of operating cash flow to shareholders through dividend
- Preserved balance sheet strength with 30 percent net debt to total capital employed ratio
- Maintained approximately
$2.0 billion of liquidity
Operating highlights for the second quarter include:
- Produced 171,000 BOEPD, exceeding the high end of production guidance, with 59 percent liquids
- Increased mid-point of annual production guidance by 1,000 BOEPD to 169,500 BOEPD
- Successfully delineated existing pay zones in the Samurai Field with the Samurai-2 well and drilled additional successful zones in the exploration portion of the well
- Increased Kaybob Duvernay production by 108 percent, year-over-year
- Achieved average IP30 rates of 1,750 BOEPD at a Karnes 10-well pad in the
Eagle Ford Shale , with seven of the wells producing at company-record peak rates - Negotiated operatorship and increased working interest to 40 percent in
Vietnam Block 15-1/05, which includes the previously discovered LDV Field
SECOND QUARTER 2018 RESULTS
Murphy recorded net income of
Earnings before interest, taxes, depreciation and amortization (EBITDA) totaled
In the second quarter 2018, the company produced 171,000 barrels of oil equivalent per day (BOEPD). Production exceeded the high end of guidance primarily driven by the outperformance of the high-margin Front Runner, Clipper, Thunder Hawk and Kodiak Fields in the Gulf of
“We continue to implement our 2018 plan, with annual production guidance being increased for the second consecutive quarter. Our high-margin offshore fields continue to lead the way in production performance. By successfully executing our operating and financial goals, we are able to deliver cash to our shareholders through our competitive dividend yield and generate significant cash returns on our invested capital,” stated
FINANCIAL POSITION
As of
REGIONAL OPERATIONS SUMMARY
North American Onshore
The North American onshore business produced 95 thousand barrels of oil equivalent per day (MBOEPD) in the second quarter, a ten percent increase year-over-year.
Tupper Montney – Natural gas production in the quarter averaged 236 million cubic feet per day (MMCFD). During the quarter, the company brought five wells online with an average expected ultimate recovery of 18 billion cubic feet (BCF) per well.
The company entered into a long-term expansion agreement to increase the processing capabilities at third party plants in the Tupper Montney. The expansion project will enable Murphy to produce an additional 200 MMCFD by late 2020 and has additional reserve potential of over 400 BCF. Murphy has firm natural gas transportation service to match the increase in processing capacity. The project has an AECO break-even price1 of approximately
Kaybob Duvernay – During the quarter, the company achieved record production averaging over 7,300 BOEPD with 63 percent liquids. Late in the second quarter, the company brought a four-well pad online in the Kaybob West development area, with an initial average rate approaching 800 BOEPD and 80 percent liquids. In the second half of 2018, the company plans to allocate an additional
“Since taking over operatorship of this asset two years ago, our Kaybob
Global Offshore
The offshore business produced over 76 MBOEPD for the second quarter, with 72 percent liquids.
EXPLORATION
Gulf of Mexico Exploration – During the second quarter, Murphy spud the Samurai-2 appraisal well (
“I am thrilled to report the commercial pay success in the Samurai-2 well, which is the first well drilled under our new, focused exploration strategy. We have encountered multiple high-quality, oil-bearing reservoirs, which will generate meaningful value as we move into development. I look forward to continued evaluation of the successful Samurai-2 well during the third quarter,” stated Jenkins.
Mexico Exploration – During the second quarter, Murphy received approval from the Comisión Nacional de Hidrocarburos (CNH) for the Deepwater Block 5 Exploration Plan. The approval is a key step in the process towards spudding the first exploration well on the block late in 2018.
Vietnam Exploration – Murphy secured all approvals of the farm-in terms for the Block 15-01/05 in the
PRODUCTION AND CAPITAL EXPENDITURE GUIDANCE
Production for the third quarter 2018 is estimated to be in the range of 166,500 to 168,500 BOEPD. Third quarter guidance is below second quarter production primarily due to the annual turn-arounds at the non-operated offshore
The company is increasing estimated full year 2018 production guidance to be in the range of 168,500 to 170,500 BOEPD. The mid-point for full year production guidance represents a 1,000 BOEPD increase from the previous annual guidance range. The increase is supported by year-over-year production growth of eight percent in Murphy’s North American onshore assets.
Full year capital expenditure guidance is being increased by six percent from
CONFERENCE CALL AND WEBCAST SCHEDULED FOR
Murphy will host a conference call to discuss second quarter 2018 financial and operating results on
FINANCIAL DATA
Summary financial data and operating statistics for second quarter 2018, 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 and schedules comparing EBITDA and EBITDAX between periods are included with these schedules as well as guidance for the third quarter and full year 2018.
1Break-even natural gas price to achieve a 10 percent rate of return.
ABOUT
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, increased volatility or deterioration in the level of crude oil and natural gas prices, 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, natural hazards impacting our operations, 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, and 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
NON-GAAP FINANCIAL MEASURES
This news release contains certain non-GAAP financial measures 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 financial measures are broadly used to value and compare companies in the crude oil and natural gas industry, although 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 |
|||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2018 |
20171 |
2018 |
20171 |
||||||||||||
Revenues | |||||||||||||||
Revenue from sales to customers |
$ |
655,150 |
477,560 | 1,262,104 | 986,595 | ||||||||||
(Loss) gain on crude contracts | (37,624 | ) | 26,861 | (67,126 | ) | 63,938 | |||||||||
Gain on sale of assets and other income | 668 | 3,858 | 8,821 | 134,386 | |||||||||||
Total revenues | 618,194 | 508,279 | 1,203,799 | 1,184,919 | |||||||||||
Costs and expenses | |||||||||||||||
Lease operating expenses | 136,589 | 111,179 | 273,085 | 233,321 | |||||||||||
Severance and ad valorem taxes | 12,876 | 10,742 | 25,033 | 21,955 | |||||||||||
Exploration expenses, including undeveloped
lease amortization |
19,145 | 20,201 | 48,073 | 48,864 | |||||||||||
Selling and general expenses | 57,800 | 52,809 | 109,217 | 102,774 | |||||||||||
Depreciation, depletion and amortization | 237,997 | 234,992 | 468,730 | 471,146 | |||||||||||
Accretion of asset retirement obligations | 11,028 | 10,428 | 20,942 | 20,984 | |||||||||||
Other expense (benefit) | 659 | 6,377 | (10,389 | ) | 8,534 | ||||||||||
Total costs and expenses | 476,094 | 446,728 | 934,691 | 907,578 | |||||||||||
Operating income from continuing operations | 142,100 | 61,551 | 269,108 | 277,341 | |||||||||||
Other income (loss) | |||||||||||||||
Interest and other income (loss) | (15,051 | ) | (38,305 | ) | 33 | (54,616 | ) | ||||||||
Interest expense, net | (44,723 | ) | (45,145 | ) | (89,772 | ) | (89,742 | ) | |||||||
Total other loss | (59,774 | ) | (83,450 | ) | (89,739 | ) | (144,358 | ) | |||||||
Income (loss) from continuing operations before income taxes | 82,326 | (21,899 | ) | 179,369 | 132,983 | ||||||||||
Income tax expense (benefit) | 36,410 | (4,545 | ) | (35,237 | ) | 92,842 | |||||||||
Income (loss) from continuing operations | 45,916 | (17,354 | ) | 214,606 | 40,141 | ||||||||||
Income (loss) from discontinued operations, net of income taxes |
(398 | ) | (217 | ) | (835 | ) | 752 | ||||||||
NET INCOME (LOSS) |
$ |
45,518 |
(17,571 | ) | 213,771 | 40,893 | |||||||||
INCOME (LOSS) PER COMMON SHARE – BASIC | |||||||||||||||
Continuing operations | $ | 0.26 | (0.10 | ) | 1.25 | 0.23 | |||||||||
Discontinued operations | - | - | (0.01 | ) | 0.01 | ||||||||||
Net Income (Loss) | $ | 0.26 | (0.10 | ) | 1.24 | 0.24 | |||||||||
INCOME (LOSS) PER COMMON SHARE – DILUTED | |||||||||||||||
Continuing operations | $ | 0.26 | (0.10 | ) | 1.23 | 0.23 | |||||||||
Discontinued operations | - | - | (0.01 | ) | 0.01 | ||||||||||
Net Income (Loss) | $ | 0.26 | (0.10 | ) | 1.22 | 0.24 | |||||||||
Cash dividends per Common share | 0.25 | 0.25 | 0.50 | 0.50 | |||||||||||
Average Common shares outstanding (thousands) | |||||||||||||||
Basic | 173,043 | 172,558 | 172,907 | 172,482 | |||||||||||
Diluted | 173,983 | 172,558 | 174,927 | 173,017 |
1 |
Reclassified to conform to current presentation. |
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MURPHY OIL CORPORATION |
|||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Operating Activities | |||||||||||||||
Net income (loss) | $ | 45,518 | (17,571 | ) | 213,771 | 40,893 | |||||||||
Adjustments to reconcile net income (loss) to net cash provided by continuing operations activities:
|
|||||||||||||||
Loss (Income) from discontinued operations | 398 | 217 | 835 | (752 | ) | ||||||||||
Depreciation, depletion and amortization | 237,997 | 234,992 | 468,730 | 471,146 | |||||||||||
Dry hole costs (credits) | (2 | ) | (1,000 | ) | (11 | ) | 1,904 | ||||||||
Amortization of undeveloped leases | 9,606 | 10,349 | 22,774 | 20,306 | |||||||||||
Accretion of asset retirement obligations | 11,028 | 10,428 | 20,942 | 20,984 | |||||||||||
Deferred income tax (benefit) charge | (10,569 | ) | (25,403 | ) | (156,489 | ) | 33,130 | ||||||||
Pretax (gain) loss from disposition of assets | (221 | ) | 1,334 | 118 | (130,648 | ) | |||||||||
Net decrease in noncash operating working capital | 43,886 | (837 | ) | 85,440 | 42,581 | ||||||||||
Other operating activities, net | 8,384 | 73,440 | (31,564 | ) | 91,918 | ||||||||||
Net cash provided by continuing operations activities | 346,025 | 285,949 | 624,546 | 591,462 | |||||||||||
Investing Activities | |||||||||||||||
Property additions and dry hole costs | (341,243 | ) | (220,023 | ) | (615,144 | ) | (431,654 | ) | |||||||
Proceeds from sales of property, plant and equipment | 363 | 206 | 623 | 64,303 | |||||||||||
Purchases of investment securities 1 | – | – | – | (212,661 | ) | ||||||||||
Proceeds from maturity of investment securities 1 | – | 170,983 | – | 284,193 | |||||||||||
Net cash required by investing activities | (340,880 | ) | (48,834 | ) | (614,521 | ) | (295,819 | ) | |||||||
Financing Activities | |||||||||||||||
Capital lease obligation payments | (2,244 | ) | (2,323 | ) | (4,648 | ) | (11,983 | ) | |||||||
Withholding tax on stock-based incentive awards | (280 | ) | (1,273 | ) | (6,922 | ) | (7,081 | ) | |||||||
Cash dividends paid | (43,259 | ) | (43,142 | ) | (86,517 | ) | (86,278 | ) | |||||||
Net cash required by financing activities | (45,783 | ) | (46,738 | ) | (98,087 | ) | (105,342 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents | 3,331 | (7,743 | ) | 24,382 | (4,611 | ) | |||||||||
Net increase (decrease) in cash and cash equivalents | (37,307 | ) | 182,634 | (63,680 | ) | 185,690 | |||||||||
Cash and cash equivalents at beginning of period | 938,615 | 875,853 | 964,988 | 872,797 | |||||||||||
Cash and cash equivalents at end of period | $ | 901,308 | 1,058,487 | 901,308 | 1,058,487 |
1 |
Investments are Canadian government securities with maturities greater than 90 days at the date of acquisition. | |
MURPHY OIL CORPORATION |
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Three Months Ended | Six Months Ended | |||||||||||||
June 30, | June 30, | |||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||
Net income (loss) | $ | 45.5 | (17.6 | ) | 213.8 | 40.9 | ||||||||
Discontinued operations loss (income) | 0.4 | 0.2 | 0.8 | (0.8 | ) | |||||||||
Income (loss) from continuing operations |
45.9 | (17.4 | ) | 214.6 | 40.1 | |||||||||
Adjustments: | ||||||||||||||
Mark-to-market (gain) loss on crude oil derivative contracts | 10.1 | (14.7 | ) | 21.4 | (40.7 | ) | ||||||||
Foreign exchange losses (gains) | 7.1 | 31.1 | (4.8 | ) | 42.7 | |||||||||
Impact of tax reform | – | – | (120.0 | ) | – | |||||||||
Seal insurance proceeds | – | – | (8.2 | ) | – | |||||||||
Deferred tax on undistributed foreign earnings | – | 5.8 | – | 60.4 | ||||||||||
Tax benefits on investments in foreign areas | – | (21.1 | ) | – | (32.9 | ) | ||||||||
Gain on sale of assets | – | – | – | (96.0 | ) | |||||||||
Oil Insurance Limited dividends | – | (2.8 | ) | – | (2.8 | ) | ||||||||
Total adjustments after taxes | 17.2 | (1.7 | ) | (111.6 | ) | (69.3 | ) | |||||||
Adjusted income (loss) | $ | 63.1 | (19.1 | ) | 103.0 | (29.2 | ) | |||||||
Adjusted income (loss) per diluted share | $ | 0.36 | (0.11 | ) | 0.59 | (0.17 | ) | |||||||
Non-GAAP Financial Measures
Presented above is a reconciliation of Net income (loss) to Adjusted income (loss). Adjusted income (loss) 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 income (loss) is a non-GAAP financial measure and should not be considered a substitute for Net income (loss) as determined in accordance with accounting principles generally accepted in
Note: |
Amounts shown above as reconciling items between Net income (loss) and Adjusted income (loss) 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. |
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Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, 2018 | June 30, 2018 | ||||||||||||||||||
Pretax | Tax | Net | Pretax | Tax | Net | ||||||||||||||
Exploration & Production: | |||||||||||||||||||
Canada | – | – | – | (11.3 | ) | 3.1 | (8.2 | ) | |||||||||||
Other International | – | – | – | – | – | – | |||||||||||||
Total E&P | – | – | – | (11.3 | ) | 3.1 | (8.2 | ) | |||||||||||
Corporate 1: | 24.7 | (7.5 | ) | 17.2 | 22.5 | (125.9 | ) | (103.4 | ) | ||||||||||
Total adjustments | $ | 24.7 | (7.5 | ) | 17.2 | 11.2 | (122.8 | ) | (111.6 | ) |
1 |
In 2018, the Company reported realized and unrealized gains and losses on crude oil contracts in the Corporate segment to reflect how segments are currently evaluated, how resources are allocated and how risk is managed by the Company. The 2017 amounts have been reclassified from the Exploration and Production business for comparable disclosure. |
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MURPHY OIL CORPORATION |
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Three Months Ended | Six Months Ended | |||||||||||||
June 30, | June 30, | |||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||
Net income (loss) (GAAP) | $ | 45.5 | (17.6 | ) | 213.8 | 40.9 | ||||||||
Discontinued operations loss (income) | 0.4 | 0.2 | 0.8 | (0.8 | ) | |||||||||
Income tax expense (benefit) | 36.4 | (4.5 | ) | (35.2 | ) | 92.8 | ||||||||
Interest expense, net | 44.7 | 45.1 | 89.8 | 89.7 | ||||||||||
Depreciation, depletion and amortization expense | 238.0 | 235.0 | 468.7 | 471.1 | ||||||||||
EBITDA (Non-GAAP) 1 | $ | 365.0 | 258.2 | 737.9 | 693.7 | |||||||||
Exploration expenses | 19.2 | 20.2 | 48.1 | 48.9 | ||||||||||
EBITDAX (Non-GAAP) 1 | $ | 384.2 | 278.4 | 786.0 | 742.6 | |||||||||
Total barrels of oil equivalents sold (thousands of barrels) | 15,532.0 | 14,578.5 | 30,575.8 | 29,335.9 | ||||||||||
EBITDA per barrel of oil equivalents sold | $ | 23.50 | 17.71 | 24.13 | 23.65 | |||||||||
EBITDAX per barrel of oil equivalents sold | $ | 24.74 | 19.10 | 25.71 | 25.31 | |||||||||
1 | Certain pretax items that increase (decrease) EBITDA and EBITDAX above include: |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Gain (loss) on foreign exchange 2 | $ | (12.2 | ) | (35.9 | ) | 4.4 | (49.2 | ) | |||||||
Mark-to-market gain (loss) on crude oil derivative contracts | (12.7 | ) | 22.6 | (27.1 | ) | 62.6 | |||||||||
Gain (loss) on sale of assets 3 | 0.2 | (1.3 | ) | (0.1 | ) | 130.6 | |||||||||
Accretion of asset retirement obligations | (11.0 | ) | (10.4 | ) | (20.9 | ) | (21.0 | ) | |||||||
$ | (35.7 | ) | (25.0 | ) | (43.7 | ) | 123.0 |
2 |
Gain (loss) on foreign exchange principally relates to the revaluation of Malaysian Ringgit monetary assets and liabilities. In 2017 foreign exchange also includes revaluation of intercompany loans (settled in the first quarter of 2018). |
|
3 |
Gain (loss) on sale of assets in the six months ended June 30, 2017 primarily consists of a pretax gain of $132.4 million related to the sale of the Seal heavy oil asset in Canada. |
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Non-GAAP Financial Measures
Presented above is a reconciliation of Net income (loss) to Earnings before interest, taxes, depreciation and amortization (EBITDA) and Earnings before interest, taxes, depreciation, amortization, and exploration expenses (EBITDAX). Management believes EBITDA and 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. EBITDA and EBITDAX are non-GAAP financial measures and should not be considered a substitute for Net income (loss) or Cash provided by operating activities as determined in accordance with accounting principles generally accepted in
Presented above is EBITDA per barrel of oil equivalents sold and EBITDAX per barrel of oil equivalents sold. Management believes EBITDA per barrel of oil equivalents sold and EBITDAX per barrel of oil equivalents sold are important information because they are used by management to evaluate the Company’s profitability of one barrel of oil equivalent sold in that period. EBITDA per barrel of oil equivalent sold and EBITDAX per barrel of oil equivalent sold are non-GAAP financial metrics.
MURPHY OIL CORPORATION |
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Three Months Ended |
Three Months Ended |
|||||||||||||
Revenues |
Income |
Revenues |
Income |
|||||||||||
Exploration and production | ||||||||||||||
United States 1 | $ | 318.8 | 72.6 | 212.5 | (9.6 | ) | ||||||||
Canada | 108.4 | 9.7 | 88.2 | 5.2 | ||||||||||
Malaysia | 228.6 | 83.9 | 176.5 | 47.7 | ||||||||||
Other | – | (15.0 | ) | – | 7.2 | |||||||||
Total exploration and production | 655.8 | 151.2 | 477.2 | 50.5 | ||||||||||
Corporate 1 | (37.6 | ) | (105.3 | ) | 31.1 | (67.9 | ) | |||||||
Revenue/income from continuing operations | 618.2 | 45.9 | 508.3 | (17.4 | ) | |||||||||
Discontinued operations, net of tax | – | (0.4 | ) | – | (0.2 | ) | ||||||||
Total revenues/net income (loss) |
$ | 618.2 | 45.5 | 508.3 | (17.6 | ) | ||||||||
Six Months Ended |
Six Months Ended |
|||||||||||||
Revenues |
Income |
Revenues | Income (Loss) |
|||||||||||
Exploration and production | ||||||||||||||
United States | $ | 596.9 | 108.7 | 436.7 | (10.6 | ) | ||||||||
Canada 2 |
226.7 | 34.3 | 306.1 | 105.8 | ||||||||||
Malaysia | 439.5 | 154.3 | 373.9 | 106.3 | ||||||||||
Other | – | (30.5 | ) | – | 0.1 | |||||||||
Total exploration and production | 1,263.1 | 266.8 | 1,116.7 | 201.6 | ||||||||||
Corporate 3 | (59.3 | ) | (52.2 | ) | 68.2 | (161.5 | ) | |||||||
Revenue/income from continuing operations | 1,203.8 | 214.6 | 1,184.9 | 40.1 | ||||||||||
Discontinued operations, net of tax | – | (0.8 | ) | – | 0.8 | |||||||||
Total revenues/net income |
$ | 1,203.8 | 213.8 | 1,184.9 | 40.9 |
1 |
In 2018, the Company reported realized and unrealized gains and losses on crude oil contracts in the Corporate segment to reflect how segments are currently evaluated, how resources are allocated and how risk is managed by the Company. The 2017 amounts have been reclassified from the U.S. Exploration and production business to reflect comparable disclosure. Realized and unrealized gains (losses) of ($37.6) million and $26.9 million are included in the Corporate segment for the three months ended June 30, 2018 and 2017, respectively. Realized and unrealized gains (losses) of ($67.1) million and $63.9 million are included in the Corporate segment for the six months ended June 30, 2018 and 2017, respectively. Corporate segment loss for the three-month periods ended June 30, 2018 and 2017 included foreign exchange losses of $12.6 million and $35.6 million, respectively. Corporate segment loss for the six-month periods ended June 30, 2018 and 2017 included foreign exchange gains of $2.8 million and $51.7 million, respectively. |
|
2 | 2017 revenue includes a pretax gain of $132.4 million ($96.0 million after-tax) related to the sale of the Seal heavy oil asset in Canada. | |
3 |
Income for the six-month period ended June 30, 2018 included a credit to income tax expense of $120.0 million related to an IRS interpretation of the Tax Cuts and Jobs Act. |
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MURPHY OIL CORPORATION |
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United | ||||||||||||||||||||
(Millions of dollars) | States 1 | Canada | Malaysia | Other | Total | |||||||||||||||
Three Months Ended June 30, 2018 | ||||||||||||||||||||
Oil and gas sales and other revenues | $ | 318.8 | 108.4 | 228.6 | – | 655.8 | ||||||||||||||
Lease operating expenses | 52.0 | 29.2 | 55.4 | – | 136.6 | |||||||||||||||
Severance and ad valorem taxes | 12.7 | 0.2 | – | – | 12.9 | |||||||||||||||
Depreciation, depletion and amortization | 128.3 | 56.8 | 49.8 | 0.7 | 235.6 | |||||||||||||||
Accretion of asset retirement obligations | 4.5 | 1.9 | 4.6 | – | 11.0 | |||||||||||||||
Exploration expenses | ||||||||||||||||||||
Geological and geophysical | 0.2 | – | 0.3 | 0.7 | 1.2 | |||||||||||||||
Other exploration | 2.4 | – | – | 5.9 | 8.3 | |||||||||||||||
2.6 | – | 0.3 | 6.6 | 9.5 | ||||||||||||||||
Undeveloped lease amortization | 8.7 | 0.2 | – | 0.7 | 9.6 | |||||||||||||||
Total exploration expenses | 11.3 | 0.2 | 0.3 | 7.3 | 19.1 | |||||||||||||||
Selling and general expenses | 10.5 | 6.6 | 2.0 | 5.9 | 25.0 | |||||||||||||||
Other | 6.9 | 0.3 | (0.1 | ) | 1.1 | 8.2 | ||||||||||||||
Results of operations before taxes | 92.6 | 13.2 | 116.6 | (15.0 | ) | 207.4 | ||||||||||||||
Income tax provisions | 20.0 | 3.5 | 32.7 | – | 56.2 | |||||||||||||||
Results of operations (excluding corporate overhead and interest) |
$ | 72.6 | 9.7 | 83.9 | (15.0 | ) | 151.2 | |||||||||||||
Three Months Ended June 30, 2017 | ||||||||||||||||||||
Oil and gas sales and other revenues | $ | 212.5 | 88.2 | 176.5 | – | 477.2 | ||||||||||||||
Lease operating expenses | 44.3 | 25.5 | 41.4 | – | 111.2 | |||||||||||||||
Severance and ad valorem taxes | 10.4 | 0.3 | – | – | 10.7 | |||||||||||||||
Depreciation, depletion and amortization | 135.5 | 46.0 | 48.3 | 1.0 | 230.8 | |||||||||||||||
Accretion of asset retirement obligations | 4.2 | 1.9 | 4.3 | – | 10.4 | |||||||||||||||
Exploration expenses | ||||||||||||||||||||
Dry holes | (1.0 | ) | – | – | – | (1.0 | ) | |||||||||||||
Geological and geophysical | 0.6 | – | – | 0.1 | 0.7 | |||||||||||||||
Other exploration | 2.0 | 0.1 | – | 8.1 | 10.2 | |||||||||||||||
1.6 | 0.1 | – | 8.2 | 9.9 | ||||||||||||||||
Undeveloped lease amortization | 10.2 | 0.1 | – | – | 10.3 | |||||||||||||||
Total exploration expenses | 11.8 | 0.2 | – | 8.2 | 20.2 | |||||||||||||||
Selling and general expenses | 10.1 | 6.4 | 3.2 | 5.0 | 24.7 | |||||||||||||||
Other | 10.1 | 0.6 | 2.9 | – | 13.6 | |||||||||||||||
Results of operations before taxes | (13.9 | ) | 7.3 | 76.4 | (14.2 | ) | 55.6 | |||||||||||||
Income tax provisions (benefits) | (4.3 | ) | 2.1 | 28.7 | (21.4 | ) | 5.1 | |||||||||||||
Results of operations (excluding corporate overhead and interest) |
$ | (9.6 | ) | 5.2 | 47.7 | 7.2 | 50.5 |
1 |
In 2018, the Company reported realized and unrealized gains and losses on crude oil contracts in the Corporate segment to reflect how segments are currently evaluated, how resources are allocated and how risk is managed by the Company. The 2017 amounts have been reclassified from the Exploration and Production business for comparable disclosure. |
|
MURPHY OIL CORPORATION |
|||||||||||||||||||||
United | |||||||||||||||||||||
(Millions of dollars) | States 1 | Canada 2 | Malaysia | Other | Total | ||||||||||||||||
Six Months Ended June 30, 2018 | |||||||||||||||||||||
Oil and gas sales and other revenues | $ | 596.9 | 226.7 | 439.5 | – | 1,263.1 | |||||||||||||||
Lease operating expenses | 110.5 | 59.5 | 103.1 | – | 273.1 | ||||||||||||||||
Severance and ad valorem taxes | 24.5 | 0.5 | – | – | 25.0 | ||||||||||||||||
Depreciation, depletion and amortization | 249.9 | 112.5 | 97.5 | 1.5 | 461.4 | ||||||||||||||||
Accretion of asset retirement obligations | 8.9 | 3.9 | 8.1 | – | 20.9 | ||||||||||||||||
Exploration expenses | |||||||||||||||||||||
Geological and geophysical | 6.2 | – | 0.5 | 3.6 | 10.3 | ||||||||||||||||
Other exploration | 3.6 | 0.1 | – | 11.3 | 15.0 | ||||||||||||||||
9.8 | 0.1 | 0.5 | 14.9 | 25.3 | |||||||||||||||||
Undeveloped lease amortization | 21.4 | 0.4 | – | 1.0 | 22.8 | ||||||||||||||||
Total exploration expenses | 31.2 | 0.5 | 0.5 | 15.9 | 48.1 | ||||||||||||||||
Selling and general expenses | 24.9 | 14.3 | 4.8 | 11.9 | 55.9 | ||||||||||||||||
Other | 7.7 | (11.4 | ) | (1.3 | ) | 1.0 | (4.0 | ) | |||||||||||||
Results of operations before taxes | 139.3 | 46.9 | 226.8 | (30.3 | ) | 382.7 | |||||||||||||||
Income tax provisions (benefits) | 30.6 | 12.6 | 72.5 | 0.2 | 115.9 | ||||||||||||||||
Results of operations (excluding corporate overhead and interest) |
$ | 108.7 | 34.3 | 154.3 | (30.5 | ) | 266.8 | ||||||||||||||
Six Months Ended June 30, 2017 | |||||||||||||||||||||
Oil and gas sales and other revenues | $ | 436.7 | 306.1 | 373.9 | – | 1,116.7 | |||||||||||||||
Lease operating expenses | 92.2 | 48.1 | 93.0 | – | 233.3 | ||||||||||||||||
Severance and ad valorem taxes | 21.1 | 0.9 | – | – | 22.0 | ||||||||||||||||
Depreciation, depletion and amortization | 273.8 | 90.5 | 96.2 | 1.9 | 462.4 | ||||||||||||||||
Accretion of asset retirement obligations | 8.4 | 3.9 | 8.7 | – | 21.0 | ||||||||||||||||
Exploration expenses | |||||||||||||||||||||
Dry holes | (1.3 | ) | – | 3.2 | – | 1.9 | |||||||||||||||
Geological and geophysical | 0.9 | 0.1 | – | 4.6 | 5.6 | ||||||||||||||||
Other exploration | 4.0 | 0.1 | – | 17.0 | 21.1 | ||||||||||||||||
3.6 | 0.2 | 3.2 | 21.6 | 28.6 | |||||||||||||||||
Undeveloped lease amortization | 19.0 | 1.3 | – | – | 20.3 | ||||||||||||||||
Total exploration expenses | 22.6 | 1.5 | 3.2 | 21.6 | 48.9 | ||||||||||||||||
Selling and general expenses | 25.6 | 13.6 | 5.5 | 9.9 | 54.6 | ||||||||||||||||
Other | 7.3 | 0.6 | 8.0 | – | 15.9 | ||||||||||||||||
Results of operations before taxes | (14.3 | ) | 147.0 | 159.3 | (33.4 | ) | 258.6 | ||||||||||||||
Income tax provisions (benefits) | (3.7 | ) | 41.2 | 53.0 | (33.5 | ) | 57.0 | ||||||||||||||
Results of operations (excluding corporate overhead and interest) |
$ | (10.6 | ) | 105.8 | 106.3 | 0.1 | 201.6 |
1 |
In 2018, the Company reported realized and unrealized gains and losses on crude oil contracts in the Corporate segment to reflect how segments are currently evaluated, how resources are allocated and how risk is managed by the Company. The 2017 amounts have been reclassified from the Exploration and Production business for comparable disclosure. |
|
2 | 2017 revenue includes a pretax gain of $132.4 million related to the sale of Seal heavy oil assets in Canada. | |
MURPHY OIL CORPORATION |
|||||||||||
Three Months Ended | Six Months Ended | ||||||||||
June 30, | June 30, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
United States – Eagle Ford Shale | |||||||||||
Lease operating expense | $ | 8.09 | 7.95 | 8.22 | 7.92 | ||||||
Severance and ad valorem taxes | 3.15 | 2.49 | 3.08 | 2.53 | |||||||
Depreciation, depletion and amortization (DD&A) expense | 24.50 | 25.47 | 24.67 | 25.90 | |||||||
United States – Gulf of Mexico | |||||||||||
Lease operating expense | $ | 11.02 | 8.60 | 14.10 | 9.78 | ||||||
DD&A expense | 16.86 | 22.60 | 17.08 | 21.61 | |||||||
Canada – Onshore | |||||||||||
Lease operating expense | $ | 4.92 | 4.93 | 4.88 | 4.91 | ||||||
Severance and ad valorem taxes | 0.03 | 0.08 | 0.06 | 0.10 | |||||||
DD&A expense | 10.55 | 9.87 | 10.36 | 9.94 | |||||||
Canada – Offshore | |||||||||||
Lease operating expense | $ | 9.94 | 9.09 | 10.50 | 8.39 | ||||||
DD&A expense | 12.57 | 12.03 | 13.06 | 12.68 | |||||||
Malaysia – Sarawak | |||||||||||
Lease operating expense | $ | 9.42 | 4.85 | 8.41 | 5.59 | ||||||
DD&A expense | 9.01 | 8.02 | 8.71 | 7.90 | |||||||
Malaysia – Block K | |||||||||||
Lease operating expense | $ | 17.32 | 16.37 | 16.73 | 16.59 | ||||||
DD&A expense | 14.61 | 14.76 | 14.51 | 13.56 | |||||||
Total oil and gas operations | |||||||||||
Lease operating expense | $ | 8.80 | 7.63 | 8.93 | 7.95 | ||||||
Severance and ad valorem taxes | 0.83 | 0.74 | 0.82 | 0.75 | |||||||
DD&A expense | 15.17 | 15.82 | 15.09 | 15.77 | |||||||
MURPHY OIL CORPORATION |
|||||||||||
Three Months Ended | Six Months Ended | ||||||||||
June 30, | June 30, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Capital expenditures | |||||||||||
Exploration and production | |||||||||||
United States | $ | 178.9 | 124.3 | 326.4 | 222.7 | ||||||
Canada | 83.3 | 47.8 | 202.3 | 136.0 | |||||||
Malaysia | 25.4 | 9.3 | 44.5 | 11.1 | |||||||
Other | 8.0 | 16.1 | 17.7 | 41.4 | |||||||
Total | 295.6 | 197.5 | 590.9 | 411.2 | |||||||
Corporate | 5.1 | 3.0 | 10.2 | 3.8 | |||||||
Total capital expenditures | 300.7 | 200.5 | 601.1 | 415.0 | |||||||
Charged to exploration expenses 1 | |||||||||||
United States | 2.6 | 1.6 | 9.8 | 3.6 | |||||||
Canada | – | 0.1 | 0.1 | 0.2 | |||||||
Malaysia | 0.3 | – | 0.5 | 3.2 | |||||||
Other | 6.6 | 8.2 | 14.9 | 21.6 | |||||||
Total charged to exploration expenses | 9.5 | 9.9 | 25.3 | 28.6 | |||||||
Total capitalized | $ | 291.2 | 190.6 | 575.8 | 386.4 |
1 |
Excludes amortization of undeveloped leases of $9.6 million and $10.3 million for the three months ended June 30, 2018 and 2017, respectively, and $22.8 million and $20.3 million for the six months ended June 30, 2018 and 2017, respectively. |
|
MURPHY OIL CORPORATION | |||||||
CONDENSED BALANCE SHEETS (unaudited) | |||||||
(Millions of dollars) | |||||||
June 30, 2018 | December 31, 2017 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 901.3 | 965.0 | ||||
Other current assets | 414.0 | 406.6 | |||||
Property, plant and equipment – net | 8,208.1 | 8,220.0 | |||||
Other long-term assets | 422.0 | 269.3 | |||||
Total assets | $ | 9,945.4 | 9,860.9 | ||||
Liabilities and Stockholders' Equity | |||||||
Current maturities of long-term debt | $ | 9.7 | 9.9 | ||||
Other current liabilities | 893.9 | 824.3 | |||||
Long-term debt 1 | 2,897.3 | 2,906.5 | |||||
Other long-term liabilities | 1,472.9 | 1,500.0 | |||||
Total stockholders' equity | 4,671.6 | 4,620.2 | |||||
Total liabilities and stockholders' equity | $ | 9,945.4 | 9,860.9 |
1 | Includes a capital lease on production equipment of $122.9 million at June 30, 2018 and $134.0 million at December 31, 2017. | |
MURPHY OIL CORPORATION |
||||||||||
Three Months Ended | Six Months Ended | |||||||||
June 30, |
June 30, |
|||||||||
2018 | 2017 | 2018 | 2017 | |||||||
Net crude oil and condensate produced – barrels per day | 90,067 | 89,033 | 89,303 | 92,300 | ||||||
United States – Eagle Ford Shale | 31,936 | 33,195 | 31,630 | 33,397 | ||||||
– Gulf of Mexico | 15,365 | 11,329 | 14,113 | 11,844 | ||||||
Canada – Onshore | 5,254 | 3,051 | 4,809 | 2,470 | ||||||
– Offshore | 7,982 | 8,199 | 8,085 | 9,053 | ||||||
– Heavy 1 | – | – | – | 303 | ||||||
Malaysia – Sarawak | 11,354 | 13,176 | 12,103 | 13,346 | ||||||
– Block K | 17,596 | 20,083 | 17,981 | 21,887 | ||||||
Brunei | 580 | – | 582 | – | ||||||
Net crude oil and condensate sold – barrels per day | 89,995 | 86,851 | 88,838 | 88,361 | ||||||
United States – Eagle Ford Shale | 31,936 | 33,195 | 31,630 | 33,397 | ||||||
– Gulf of Mexico | 15,365 | 11,329 | 14,113 | 11,844 | ||||||
Canada – Onshore | 5,254 | 3,051 | 4,809 | 2,470 | ||||||
– Offshore | 7,333 | 8,938 | 8,255 | 8,463 | ||||||
– Heavy 1 | – | – | – | 303 | ||||||
Malaysia – Sarawak | 13,491 | 13,495 | 13,407 | 13,486 | ||||||
– Block K | 16,616 | 16,843 | 16,624 | 18,398 | ||||||
Net natural gas liquids produced – barrels per day | 10,120 | 9,374 | 9,510 | 9,145 | ||||||
United States – Eagle Ford Shale | 6,824 | 6,921 | 6,772 | 6,884 | ||||||
– Gulf of Mexico | 1,391 | 880 | 1,114 | 996 | ||||||
Canada – Onshore | 1,033 | 457 | 959 | 359 | ||||||
Malaysia – Sarawak | 872 | 1,116 | 665 | 906 | ||||||
|
||||||||||
Net natural gas liquids sold – barrels per day | 9,880 | 8,902 | 9,643 | 9,140 | ||||||
United States – Eagle Ford Shale | 6,824 | 6,921 | 6,772 | 6,884 | ||||||
– Gulf of Mexico | 1,391 | 880 | 1,114 | 996 | ||||||
Canada – Onshore | 1,033 | 457 | 959 | 359 | ||||||
Malaysia – Sarawak | 632 | 644 | 798 | 901 | ||||||
|
||||||||||
Net natural gas sold – thousands of cubic feet per day | 424,836 | 386,700 | 422,673 | 387,457 | ||||||
United States – Eagle Ford Shale | 32,679 | 34,835 | 31,894 | 34,583 | ||||||
– Gulf of Mexico | 14,284 | 11,625 | 13,548 | 11,868 | ||||||
Canada – Onshore | 264,748 | 220,171 | 263,036 | 218,641 | ||||||
Malaysia – Sarawak | 105,199 | 112,993 | 105,932 | 114,767 | ||||||
– Block K | 7,926 | 7,076 | 8,263 | 7,598 | ||||||
Total net hydrocarbons produced – equivalent barrels per day 2 | 170,993 | 162,857 | 169,259 | 166,021 | ||||||
Total net hydrocarbons sold – equivalent barrels per day 2 | 170,681 | 160,203 | 168,927 | 162,077 |
1 | The Company sold the Seal area heavy oil field in January 2017. | |
2 | Natural gas converted on an energy equivalent basis of 6:1. | |
MURPHY OIL CORPORATION |
||||||||||||
Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Weighted average Exploration and Production sales prices | ||||||||||||
Crude oil and condensate – dollars per barrel | ||||||||||||
United States 1 – Eagle Ford Shale | $ | 68.14 | 47.42 | $ | 66.24 | 48.44 | ||||||
– Gulf of Mexico | 68.11 | 46.65 | 65.81 | 47.73 | ||||||||
Canada 2 – Onshore | 59.45 | 42.04 | 57.12 | 41.43 | ||||||||
– Offshore | 72.40 | 47.78 | 68.69 | 49.54 | ||||||||
Malaysia – Sarawak 3 | 69.72 | 48.66 | 67.13 | 51.43 | ||||||||
– Block K 3 | 67.20 | 50.07 | 65.20 | 49.42 | ||||||||
Natural gas liquids – dollars per barrel | ||||||||||||
United States – Eagle Ford Shale | $ | 21.29 | 14.35 | $ | 20.62 | 14.99 | ||||||
– Gulf of Mexico | 23.27 | 15.57 | 23.01 | 17.69 | ||||||||
Canada 2 – Onshore | 36.66 | 21.16 | 39.83 | 20.18 | ||||||||
Malaysia – Sarawak 3 | 69.61 | 57.34 | 70.57 | 52.40 | ||||||||
Natural gas – dollars per thousand cubic feet | ||||||||||||
United States – Eagle Ford Shale | $ | 2.11 | 2.49 | $ | 2.25 | 2.38 | ||||||
– Gulf of Mexico | 2.18 | 2.74 | 2.36 | 2.62 | ||||||||
Canada 2 – Onshore | 1.17 | 1.89 | 1.42 | 1.97 | ||||||||
Malaysia – Sarawak 3 | 3.86 | 3.48 | 3.62 | 3.58 | ||||||||
– Block K 3 | 0.25 | 0.25 | 0.24 | 0.24 |
1 |
In 2018, the Company reported realized and unrealized gains and losses on crude oil contracts in the Corporate segment to reflect how segments are currently evaluated, how resources are allocated and how risk is managed by the Company. The 2017 amounts have been reclassified from the Exploration and Production business for comparable disclosure. |
|
2 | U.S. dollar equivalent. | |
3 | Prices are net of payments under the terms of the respective production sharing contracts. | |
MURPHY OIL CORPORATION | ||||||||||||
COMMODITY HEDGE POSITIONS (unaudited) | ||||||||||||
AS OF JUNE 30, 2018 | ||||||||||||
Volumes | Price | Remaining Period | ||||||||||
Area | Commodity | Type | (Bbl/d) | (USD/Bbl) | Start Date | End Date | ||||||
United States | WTI | Fixed price derivative swap 1 | 21,000 | $54.88 | 7/1/2018 | 12/31/2018 | ||||||
Volumes | Price | Remaining Period | ||||||||||
Area | Commodity | Type | (MMcf/d) | (Mcf) | Start Date | End Date | ||||||
Montney | Natural Gas | Fixed price forward sales | 59 | C$2.81 | 7/1/2018 | 12/31/2020 |
1 |
Realized and unrealized gains and losses on Fixed price derivatives swaps are reported in the Corporate segment to reflect how segments are currently evaluated, how resources are allocated and how risk is managed by the Company. |
|
MURPHY OIL CORPORATION |
|||||||
Liquids | Gas | ||||||
BOPD | MCFD | ||||||
Production – net | |||||||
U.S. – Eagle Ford Shale |
41,775 |
31,650 |
|||||
– Gulf of Mexico |
15,625 |
14,100 | |||||
Canada – Tupper Montney | – |
234,500 |
|||||
– Kaybob Duvernay and Placid Montney |
7,200 |
32,000 |
|||||
– Offshore |
5,000 |
– | |||||
Malaysia – Sarawak | 11,900 |
99,250 |
|||||
– Block K / Brunei |
16,800 |
3,700 |
|||||
Total net production (BOEPD) |
166,500 - 168,500 |
||||||
Total net sales (BOEPD) | 164,000 - 166,000 | ||||||
Realized oil prices (dollars per barrel): | |||||||
Malaysia – Sarawak | $61.70 | ||||||
– Block K | $66.60 | ||||||
Realized natural gas price ($ per MCF): | |||||||
Malaysia – Sarawak | $4.00 | ||||||
Exploration expense ($ millions) |
$32 |
||||||
FULL YEAR 2018 GUIDANCE | |||||||
Total production (BOEPD) | 168,500 to 170,500 | ||||||
Capital expenditures ($ billions) | $1.18 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20180808005832/en/
Source:
Murphy Oil Corporation
Investor Contacts:
Kelly Whitley, 281-675-9107
kelly_whitley@murphyoilcorp.com
or
Amy Garbowicz, 281-675-9201
amy_garbowicz@murphyoilcorp.com
or
Emily McElroy, 870-864-6324
emily_mcelroy@murphyoilcorp.com