UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): November 4, 2021
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
| (Address of principal executive offices, including zip code) | ||||||||||||||
| Registrant’s telephone number, including area code | |||||||||||
| Not applicable | |||||||||||
| (Former Name or Former Address, if Changed Since Last Report) | |||||||||||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition
The following information is furnished pursuant to Item 2.02, “Results of Operations and Financial Condition.”
On November 4, 2021 Murphy Oil Corporation issued a news release announcing its financial and operating results for the quarter ended September 30, 2021. The full text of this news release is attached hereto as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
MURPHY OIL CORPORATION | ||||||||
| Date: November 4, 2021 | ||||||||
By: | /s/ Christopher D. Hulse | |||||||
Christopher D. Hulse | ||||||||
Vice President and Controller | ||||||||
Exhibit Index
| Exhibit No. | |||||
| 101. INS | XBRL Instance Document | ||||
| 101. SCH | XBRL Taxonomy Extension Schema Document | ||||
| 101. CAL | XBRL Taxonomy Extension Calculation Linkbase Document | ||||
| 101. DEF | XBRL Taxonomy Extension Definition Linkbase Document | ||||
| 101. LAB | XBRL Taxonomy Extension Labels Linkbase Document | ||||
| 101. PRE | XBRL Taxonomy Extension Presentation Linkbase | ||||
EXHIBIT 99.1
MURPHY OIL CORPORATION ANNOUNCES THIRD QUARTER 2021 RESULTS
AND FULL YEAR 2021 UPDATE
AND FULL YEAR 2021 UPDATE
Achieves 2021 Long-Term Debt Reduction Goal of $300 Million Following Recent Bond Notice of Redemption,
Lowers 2021 CAPEX Midpoint $20 Million to $680 Million
HOUSTON, Texas, November 4, 2021 – Murphy Oil Corporation (NYSE: MUR) today announced its financial and operating results for the third quarter ended September 30, 2021, including net income attributable to Murphy of $108 million, or $0.70 net income per diluted share. Adjusted net income, which excludes discontinued operations and other one-off items, was $37 million, or $0.24 net income per diluted share.
Unless otherwise noted, the financial and operating highlights and metrics discussed in this commentary exclude noncontrolling interest. 1
Highlights for the third quarter include:
•Generated adjusted earnings before interest, tax, depreciation, amortization and exploration expenses of $312 million, or $21.95 per barrel of oil equivalent
•Advanced debt reduction goal with redemption of $150 million of 6.875 percent senior notes due 2024
•Finalized Terra Nova asset life extension project agreement with partners and government, increasing Murphy’s working interest to 18 percent from 10.475 percent
•Maintained schedule of major projects in the Gulf of Mexico ahead of first oil in the first half of 2022 with drilling Khaleesi #3 and spudding Samurai #4 during the quarter, with no timing impacts from Hurricane Ida
•Transported the King’s Quay floating production system successfully, safely and on schedule to the Texas coast from South Korea
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EXHIBIT 99.1
Subsequent to the third quarter:
•Reduced 2021 capital expenditures guidance midpoint by $20 million down to $680 million, with a range of $675 to $685 million
•Continued delevering by announcing the redemption of $150 million of 6.875 percent senior notes due 2024 to occur on December 2, thereby achieving $300 million long-term debt reduction goal and 17 percent total debt reduction for 2021
“Our team continues to successfully execute our major Gulf of Mexico projects as planned, while maintaining consistent onshore production volumes, enabling us to capitalize on rising oil prices and generate excess cash to achieve our goal of reducing long-term debt by $300 million in the second half of this year,” said Roger W. Jenkins, President and Chief Executive Officer. “By strengthening our balance sheet through significant debt reduction, the company will close out the year well-positioned to navigate all commodity price cycles as we continue our exploration program with spudding the non-operated Cutthroat well in Brazil in fourth quarter 2021.”
“Prior to Hurricane Ida at the end of August, our Gulf of Mexico assets were performing above guidance. Our offshore facilities did not experience significant damage, and due to our preparations, five days after evacuation we were able to redeploy personnel safely with no incidents and, shortly thereafter, resumed drilling. This enabled our team to complete planned maintenance while awaiting downstream functionality, thereby reducing our operated planned downtime for fourth quarter 2021,” said Jenkins. “Today, all hurricane-related production issues have been resolved with the exception of one field, which produces about 1 thousand barrels of oil equivalent per day.”
THIRD QUARTER 2021 RESULTS
The company recorded net income, attributable to Murphy, of $108 million, or $0.70 net income per diluted share, for the third quarter 2021. This includes a realized after-tax loss of $91 million and an unrealized after-tax gain on crude oil derivative contracts of $44 million. Adjusted net income, which excludes both the results of discontinued operations and certain other items that affect comparability of results between periods, was $37 million, or $0.24 net income per diluted share for the same period. The adjusted net income from continuing operations adjusts for the following after-tax items: a $54 million gain on asset retirement obligations due to the multi-year deferral of expected abandonment expenditures at Terra Nova in offshore Canada, the previously mentioned $44 million non-cash mark-to-market gain on derivative instruments and a $22
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EXHIBIT 99.1
million non-cash mark-to-market loss on contingent consideration. Details for third quarter results can be found in the attached schedules.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations attributable to Murphy was $288 million, or $20 per barrel of oil equivalent (BOE) sold. Adjusted earnings before interest, tax, depreciation, amortization and exploration expenses (EBITDAX) from continuing operations attributable to Murphy was $312 million, or $22 per BOE sold. Details for third quarter EBITDA and EBITDAX reconciliations can be found in the attached schedules.
Third quarter production averaged 155 thousand barrels of oil equivalent per day (MBOEPD) with 52 percent oil and 59 percent liquids. Approximately 12.8 MBOEPD of Gulf of Mexico production was shut-in due to Hurricane Ida during the quarter. Production downtime following the significant storm was extended as a result of damage and power loss at third-party downstream facilities, including oil terminals, natural gas processing plants and refineries, causing them to remain offline for several weeks. Gulf of Mexico production volumes steadily ramped up as third-party facilities returned to operations with approximately 1 MBOEPD expected to remain offline for repairs through first quarter 2022.
Details for third quarter results can be found in the attached schedules.
FINANCIAL POSITION
Murphy had approximately $2.1 billion of liquidity as of September 30, 2021, comprised of the $1.6 billion senior unsecured credit facility and approximately $505 million of cash and cash equivalents.
On August 16, 2021, Murphy redeemed $150 million of its 6.875 percent senior notes due 2024 for a redemption price of 101.719 percent. Total debt of $2.6 billion as of the end of third quarter 2021 consists of long-term, fixed-rate notes with a weighted average maturity of 7.5 years and a weighted average coupon of 6.3 percent.
Subsequent to quarter end, the company announced it will redeem an additional $150 million of its 6.875 percent senior notes due 2024. Following this redemption, Murphy will have achieved its long-term debt reduction goal of $300 million for the second half of 2021, as well as reduced total debt by $530 million, or 17 percent, since year-end 2020, after achieving $230 million total debt reduction in first quarter 2021.
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EXHIBIT 99.1
OPERATIONS SUMMARY
Onshore
The onshore business produced approximately 95 MBOEPD with 40 percent liquids volumes in the third quarter. No wells were brought online across Murphy’s onshore assets during the quarter.
Eagle Ford Shale – Third quarter production averaged 37 MBOEPD with 70 percent oil volumes.
Tupper Montney – In the third quarter, natural gas production averaged 292 million cubic feet per day (MMCFD).
Kaybob Duvernay – Production averaged 7 MBOEPD with 71 percent liquids volumes during the third quarter.
Offshore
Excluding noncontrolling interest, the offshore business produced 60 MBOEPD for the third quarter, comprised of 82 percent oil, which was negatively impacted by 12.8 MBOEPD of shut-in production as a result of Hurricane Ida.
Gulf of Mexico – During the quarter, production averaged 56 MBOEPD, consisting of 81 percent oil. Murphy brought Calliope #1 (Mississippi Canyon 609) online in August prior to the hurricane.
Murphy’s major projects continue to advance on schedule, with the Khaleesi, Mormont, Samurai project expected to achieve first oil in the first half of 2022 through the King’s Quay floating production system, and the non-operated St. Malo waterflood project scheduled to complete in 2023. Murphy drilled Khaleesi #3 and spud Samurai #4 in the third quarter, while the King’s Quay floating production system safely reached shoreside in Texas after sailing from South Korea. Additionally, the final producer well of the non-operated St. Malo waterflood campaign was brought online in August prior to the hurricane.
Canada – Production averaged 4 MBOEPD in the third quarter, comprised of 100 percent oil.
Operations at the Terra Nova field have remained offline since December 2019. During the third quarter, the partner group finalized an agreement to advance the Terra Nova asset life extension project, which is expected to extend production life by approximately 10 years. As part of this agreement, the Government of Newfoundland and Labrador will provide royalty and financial
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EXHIBIT 99.1
support up to $164 million (C$205 million) total to the partner group, which will contribute on a matching basis. Murphy’s working interest has increased to 18 percent from 10.475 percent, while Suncor as operator now holds 48 percent and Cenovus owns the remaining 34 percent. Work began on the floating production storage and offloading vessel in the third quarter 2021 and it will remain offline throughout 2022 with an anticipated return to operations in fourth quarter 2022. Murphy’s future net investment in the project is approximately $60 million, after adjusting for government funding and exiting partners.
EXPLORATION
Gulf of Mexico – Chevron U.S.A. Inc. drilled an exploration well at Silverback (Mississippi Canyon 35) and reached a measured depth of 23,240 feet. The operator plugged and abandoned the well and is evaluating the results. Murphy has fully expensed the well.
COMMODITY HEDGES
Murphy employs commodity derivative instruments to manage certain risks associated with commodity price volatility and underpin capital returns associated with certain assets.
During and subsequent to the third quarter, Murphy added hedges to protect cash flow with the execution of West Texas Intermediate (WTI) costless collars, resulting in a total 23 thousand barrels of oil per day (MBOPD) hedged for full year 2022 with a weighted average put price of $62.65 per barrel and average call price of $74.77 per barrel.
For the remainder of 2021, the company has 45 MBOPD hedged with WTI fixed price swaps at an average price of $42.77 per barrel, while 20 MBOPD of full-year 2022 production is hedged at an average price of $44.88 per barrel.
Murphy continues to maintain its natural gas price risk protection with fixed price forward sales contracts for physical delivery at the AECO hub in Canada for calendar years 2021 through 2024. Details for the current hedge positions can be found in the attached schedules.
CAPITAL EXPENDITURE AND PRODUCTION GUIDANCE
Production for fourth quarter 2021 is estimated to be in the range of 145.5 to 153.5 MBOEPD. This includes 4.5 MBOEPD of Gulf of Mexico facility downtime that occurred in October and 2.2 MBOEPD of net planned non-operated Gulf of Mexico downtime to occur later in the quarter. Murphy is reducing its 2021 capital expenditures (CAPEX) guidance midpoint by $20 million down to $680 million, with a range of $675 to $685 million. Due to production impacts
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EXHIBIT 99.1
from the hurricane, full year 2021 production guidance has been revised to a range of 156.5 to 158.5 MBOEPD, with the low end of original guidance now set as the midpoint. Full year production is forecast to be comprised of approximately 55 percent oil and 62 percent total liquids volumes. Both production and CAPEX guidance ranges exclude Gulf of Mexico noncontrolling interest (NCI).
CAPEX by Quarter ($ MMs) | |||||||||||||||||
1Q 2021A* | 2Q 2021A | 3Q 2021A | 4Q 2021E | FY 2021E | |||||||||||||
| $230 | $198 | $103 | $149 | $680 | |||||||||||||
Accrual CAPEX, based on midpoint of guidance range and excluding NCI
* Excludes King’s Quay CAPEX of $17 million, includes $20 million Lucius working interest acquisition
“This year’s focus on delevering the balance sheet could only have been achieved with continuous capital discipline,” said Jenkins. “I am especially proud to maintain the low end of our original production guidance, exceed our original oil production volumes, and achieve our debt reduction goals – all accomplished with less capital, including our Lucius working interest acquisition in the first quarter, and despite experiencing a major hurricane that struck the most significant Gulf Coast location in the oil and natural gas industry.”
CONFERENCE CALL AND WEBCAST SCHEDULED FOR NOVEMBER 4, 2021
Murphy will host a conference call to discuss third quarter 2021 financial and operating results on Thursday, November 4, 2021, at 9:00 a.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 toll free 1-888-886-7786, reservation number 88455077.
FINANCIAL DATA
Summary financial data and operating statistics for third quarter 2021, 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 fourth quarter and full year 2021, are also included.
1In accordance with GAAP, Murphy reports the 100 percent interest, including a 20 percent noncontrolling interest (NCI), in its subsidiary, MP Gulf of Mexico, LLC (MP GOM). The GAAP
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EXHIBIT 99.1
financials include the NCI portion of revenue, costs, assets and liabilities and cash flows. Unless otherwise noted, the financial and operating highlights and metrics discussed in this news release, but not the accompanying schedules, exclude the NCI, thereby representing only the amounts attributable to Murphy.
ABOUT MURPHY OIL CORPORATION
As an independent oil and natural gas exploration and production company, Murphy Oil Corporation believes in providing energy that empowers people by doing right always, staying with it and thinking beyond possible. Murphy challenges the norm, taps into its strong legacy and uses its foresight and financial discipline to deliver inspired energy solutions. The company sees a future where it is an industry leader who is positively impacting lives for the next 100 years and beyond. Additional information can be found on the company’s website at www.murphyoilcorp.com.
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
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EXHIBIT 99.1
prices; or 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 U.S. Securities and Exchange Commission (“SEC”) and any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K that we file, available from the SEC’s website and from Murphy Oil Corporation’s website at http://ir.murphyoilcorp.com. Murphy Oil Corporation undertakes no duty to publicly update or revise any forward-looking statements.
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.
Investor Contacts:
Kelly Whitley, kelly_whitley@murphyoilcorp.com, 281-675-9107
Megan Larson, megan_larson@murphyoilcorp.com, 281-675-9470
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MURPHY OIL CORPORATION
SUMMARIZED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(Thousands of dollars, except per share amounts) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| Revenues and other income | |||||||||||||||||||||||
| Revenue from sales to customers | $ | 687,549 | 425,324 | $ | 2,038,905 | 1,311,627 | |||||||||||||||||
| (Loss) gain on derivative instruments | (59,164) | (5,290) | (499,794) | 319,502 | |||||||||||||||||||
| Gain on sale of assets and other income | 2,315 | 1,831 | 21,217 | 6,006 | |||||||||||||||||||
| Total revenues and other income | 630,700 | 421,865 | 1,560,328 | 1,637,135 | |||||||||||||||||||
| Costs and expenses | |||||||||||||||||||||||
| Lease operating expenses | 130,131 | 124,491 | 403,708 | 478,283 | |||||||||||||||||||
| Severance and ad valorem taxes | 11,670 | 6,781 | 32,215 | 22,645 | |||||||||||||||||||
| Transportation, gathering and processing | 44,588 | 41,322 | 137,196 | 126,779 | |||||||||||||||||||
| Exploration expenses, including undeveloped lease amortization | 24,517 | 12,092 | 49,840 | 61,686 | |||||||||||||||||||
| Selling and general expenses | 27,210 | 28,509 | 85,826 | 104,381 | |||||||||||||||||||
| Restructuring expenses | — | 4,982 | — | 46,379 | |||||||||||||||||||
| Depreciation, depletion and amortization | 189,806 | 231,603 | 615,372 | 769,151 | |||||||||||||||||||
| Accretion of asset retirement obligations | 12,198 | 10,778 | 34,854 | 31,213 | |||||||||||||||||||
| Impairment of assets | — | 219,138 | 171,296 | 1,206,284 | |||||||||||||||||||
| Other (benefit) expense | (32,791) | 20,224 | 58,616 | (2,957) | |||||||||||||||||||
| Total costs and expenses | 407,329 | 699,920 | 1,588,923 | 2,843,844 | |||||||||||||||||||
| Operating income (loss) from continuing operations | 223,371 | (278,055) | (28,595) | (1,206,709) | |||||||||||||||||||
| Other income (loss) | |||||||||||||||||||||||
| Interest income and other (loss) | (1,593) | (5,177) | (11,459) | (10,107) | |||||||||||||||||||
| Interest expense, net | (46,925) | (45,182) | (178,399) | (124,877) | |||||||||||||||||||
| Total other loss | (48,518) | (50,359) | (189,858) | (134,984) | |||||||||||||||||||
| Income (loss) from continuing operations before income taxes | 174,853 | (328,414) | (218,453) | (1,341,693) | |||||||||||||||||||
| Income tax expense (benefit) | 36,838 | (62,584) | (62,498) | (248,890) | |||||||||||||||||||
| Income (loss) from continuing operations | 138,015 | (265,830) | (155,955) | (1,092,803) | |||||||||||||||||||
| (Loss) from discontinued operations, net of income taxes | (706) | (778) | (600) | (6,907) | |||||||||||||||||||
| Net income (loss) including noncontrolling interest | 137,309 | (266,608) | (156,555) | (1,099,710) | |||||||||||||||||||
| Less: Net income (loss) attributable to noncontrolling interest | 28,853 | (23,055) | 85,509 | (122,869) | |||||||||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO MURPHY | $ | 108,456 | (243,553) | $ | (242,064) | (976,841) | |||||||||||||||||
| INCOME (LOSS) PER COMMON SHARE – BASIC | |||||||||||||||||||||||
| Continuing operations | $ | 0.70 | (1.58) | $ | (1.57) | (6.31) | |||||||||||||||||
| Discontinued operations | — | (0.01) | — | (0.05) | |||||||||||||||||||
| Net income (loss) | $ | 0.70 | (1.59) | $ | (1.57) | (6.36) | |||||||||||||||||
| INCOME (LOSS) PER COMMON SHARE – DILUTED | |||||||||||||||||||||||
| Continuing operations | $ | 0.70 | (1.58) | $ | (1.57) | (6.31) | |||||||||||||||||
| Discontinued operations | — | (0.01) | — | (0.05) | |||||||||||||||||||
| Net income (loss) | $ | 0.70 | (1.59) | $ | (1.57) | (6.36) | |||||||||||||||||
| Cash dividends per Common share | $ | 0.125 | 0.125 | 0.375 | 0.500 | ||||||||||||||||||
| Average Common shares outstanding (thousands) | |||||||||||||||||||||||
| Basic | 154,439 | 153,596 | 154,239 | 153,480 | |||||||||||||||||||
| Diluted | 155,932 | 153,596 | 154,239 | 153,480 | |||||||||||||||||||
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MURPHY OIL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(Thousands of dollars) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
Operating Activities | |||||||||||||||||||||||
| Net income (loss) including noncontrolling interest | $ | 137,309 | (266,608) | $ | (156,555) | (1,099,710) | |||||||||||||||||
| Adjustments to reconcile net income (loss) to net cash provided by continuing operations activities | |||||||||||||||||||||||
| Loss from discontinued operations | 706 | 778 | 600 | 6,907 | |||||||||||||||||||
| Depreciation, depletion and amortization | 189,806 | 231,603 | 615,372 | 769,151 | |||||||||||||||||||
| Dry hole and previously suspended exploration costs | 17,266 | 578 | 17,899 | 8,255 | |||||||||||||||||||
| Amortization of undeveloped leases | 4,990 | 7,181 | 13,872 | 21,951 | |||||||||||||||||||
| Accretion of asset retirement obligations | 12,198 | 10,778 | 34,854 | 31,213 | |||||||||||||||||||
| Impairment of assets | — | 219,138 | 171,296 | 1,206,284 | |||||||||||||||||||
| Deferred income tax (benefit) expense | 36,046 | (63,846) | (65,149) | (231,748) | |||||||||||||||||||
| Mark to market loss (gain) on contingent consideration | 28,434 | 14,053 | 105,111 | (29,476) | |||||||||||||||||||
| Mark to market loss (gain) on derivative instruments | (55,863) | 69,385 | 228,497 | (104,463) | |||||||||||||||||||
| Noncash restructuring expense | — | — | — | 17,565 | |||||||||||||||||||
| Long-term non-cash compensation | 16,762 | 12,440 | 42,080 | 35,200 | |||||||||||||||||||
| Net decrease (increase) in noncash working capital | 90,765 | (27,596) | 117,330 | (26,261) | |||||||||||||||||||
| Other operating activities, net | (73,418) | 768 | (33,924) | (26,837) | |||||||||||||||||||
| Net cash provided by continuing operations activities | 405,001 | 208,652 | 1,091,283 | 578,031 | |||||||||||||||||||
| Investing Activities | |||||||||||||||||||||||
| Property additions and dry hole costs | (118,916) | (111,124) | (564,230) | (648,725) | |||||||||||||||||||
| Proceeds from sales of property, plant and equipment | 675 | — | 270,038 | — | |||||||||||||||||||
| Property additions for King's Quay FPS | — | (23,301) | (17,734) | (74,936) | |||||||||||||||||||
| Net cash required by investing activities | (118,241) | (134,425) | (311,926) | (723,661) | |||||||||||||||||||
| Financing Activities | |||||||||||||||||||||||
| Borrowings on revolving credit facility | — | 80,000 | 165,000 | 450,000 | |||||||||||||||||||
| Repayment of revolving credit facility | — | (50,000) | (365,000) | (250,000) | |||||||||||||||||||
| Retirement of debt | (150,000) | — | (726,358) | (12,225) | |||||||||||||||||||
| Debt issuance, net of cost | (61) | — | 541,913 | (613) | |||||||||||||||||||
| Early redemption of debt cost | (2,579) | — | (36,756) | — | |||||||||||||||||||
| Distributions to noncontrolling interest | (25,642) | (11,273) | (100,880) | (43,673) | |||||||||||||||||||
| Cash dividends paid | (19,306) | (19,200) | (57,896) | (76,790) | |||||||||||||||||||
| Withholding tax on stock-based incentive awards | (1,078) | 153 | (4,973) | (7,094) | |||||||||||||||||||
| Proceeds from term loan and other loans | — | (371) | — | — | |||||||||||||||||||
| Capital lease obligation payments | (272) | (178) | (643) | (514) | |||||||||||||||||||
| Net cash (required) provided by financing activities | (198,938) | (869) | (585,593) | 59,091 | |||||||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (855) | 773 | 697 | (585) | |||||||||||||||||||
| Net increase (decrease) in cash and cash equivalents | 86,967 | 74,131 | 194,461 | (87,124) | |||||||||||||||||||
| Cash and cash equivalents at beginning of period | 418,100 | 145,505 | 310,606 | 306,760 | |||||||||||||||||||
| Cash and cash equivalents at end of period | $ | 505,067 | 219,636 | $ | 505,067 | 219,636 | |||||||||||||||||
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SCHEDULE OF ADJUSTED INCOME (LOSS) (unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(Millions of dollars, except per share amounts) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| Net income (loss) attributable to Murphy (GAAP) | $ | 108.5 | (243.6) | $ | (242.1) | (976.8) | |||||||||||||||||
| Discontinued operations loss | 0.7 | 0.8 | 0.6 | 6.9 | |||||||||||||||||||
| Income (loss) from continuing operations | 109.2 | (242.8) | (241.5) | (969.9) | |||||||||||||||||||
| Adjustments (after tax): | |||||||||||||||||||||||
| Mark-to-market (gain) loss on derivative instruments | (44.1) | 54.8 | 180.5 | (82.5) | |||||||||||||||||||
| Impairment of assets | — | 145.9 | 128.0 | 854.2 | |||||||||||||||||||
| Mark-to-market loss (gain) on contingent consideration | 22.4 | 11.1 | 83.0 | (23.3) | |||||||||||||||||||
| Asset retirement obligation (gains) losses | (53.6) | — | (53.6) | — | |||||||||||||||||||
| Early redemption of debt cost | 2.7 | — | 31.9 | — | |||||||||||||||||||
| Unutilized rig charges | 2.5 | 4.1 | 6.7 | 10.4 | |||||||||||||||||||
| Charges related to Kings Quay transaction | — | — | 3.9 | — | |||||||||||||||||||
| Foreign exchange (gains) losses | (2.0) | 0.8 | (1.1) | (1.7) | |||||||||||||||||||
| Restructuring expenses | — | 3.9 | — | 35.5 | |||||||||||||||||||
| (Gain) loss on extinguishment of debt | — | — | — | (4.2) | |||||||||||||||||||
| Inventory loss | — | — | — | 3.8 | |||||||||||||||||||
| Seal insurance proceeds | — | (1.3) | — | (1.3) | |||||||||||||||||||
| Total adjustments after taxes | (72.1) | 219.3 | 379.3 | 790.9 | |||||||||||||||||||
| Adjusted income (loss) from continuing operations attributable to Murphy | $ | 37.1 | (23.5) | $ | 137.8 | (179.0) | |||||||||||||||||
| Adjusted income (loss) from continuing operations per average diluted share | $ | 0.24 | (0.15) | $ | 0.89 | (1.17) | |||||||||||||||||
Non-GAAP Financial Measures
Presented above is a reconciliation of Net income (loss) to Adjusted income (loss) from continuing operations attributable to Murphy. 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 the United States of America.
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 and exclude the share attributable to non-controlling interests.
| Three Months Ended September 30, 2021 | Nine Months Ended September 30, 2021 | ||||||||||||||||||||||||||||||||||
| (Millions of dollars) | Pretax | Tax | Net | Pretax | Tax | Net | |||||||||||||||||||||||||||||
Exploration & Production: | |||||||||||||||||||||||||||||||||||
United States | $ | 31.6 | (6.6) | 25.0 | $ | 118.5 | (24.9) | 93.6 | |||||||||||||||||||||||||||
| Canada | (71.8) | 18.2 | (53.6) | 99.5 | (25.1) | 74.4 | |||||||||||||||||||||||||||||
Total E&P | (40.2) | 11.6 | (28.6) | 218.0 | (50.0) | 168.0 | |||||||||||||||||||||||||||||
Corporate: | (55.2) | 11.7 | (43.5) | 267.4 | (56.1) | 211.3 | |||||||||||||||||||||||||||||
Total adjustments | $ | (95.4) | 23.3 | (72.1) | $ | 485.4 | (106.1) | 379.3 | |||||||||||||||||||||||||||
11
MURPHY OIL CORPORATION
SCHEDULE OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION
AND AMORTIZATION (EBITDA)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(Millions of dollars, except per barrel of oil equivalents sold) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| Net income (loss) attributable to Murphy (GAAP) | $ | 108.5 | (243.6) | $ | (242.1) | (976.8) | |||||||||||||||||
| Income tax expense (benefit) | 36.8 | (62.6) | (62.5) | (248.9) | |||||||||||||||||||
| Interest expense, net | 46.9 | 45.2 | 178.4 | 124.9 | |||||||||||||||||||
| Depreciation, depletion and amortization expense ¹ | 182.8 | 219.7 | 588.4 | 725.1 | |||||||||||||||||||
| EBITDA attributable to Murphy (Non-GAAP) | $ | 375.0 | (41.3) | $ | 462.2 | (375.7) | |||||||||||||||||
| Mark-to-market (gain) loss on derivative instruments | (55.9) | 69.3 | 228.5 | (104.5) | |||||||||||||||||||
| Impairment of assets ¹ | — | 186.5 | 171.3 | 1,072.5 | |||||||||||||||||||
| Mark-to-market loss (gain) on contingent consideration | 28.4 | 14.0 | 105.1 | (29.5) | |||||||||||||||||||
| Asset retirement obligation (gains) losses | (71.8) | — | (71.8) | — | |||||||||||||||||||
| Accretion of asset retirement obligations ¹ | 10.8 | 10.8 | 30.8 | 31.2 | |||||||||||||||||||
| Unutilized rig charges | 3.2 | 5.2 | 8.5 | 13.2 | |||||||||||||||||||
| Foreign exchange (gains) losses | (2.8) | 0.8 | (1.5) | (2.5) | |||||||||||||||||||
| Discontinued operations loss | 0.7 | 0.8 | 0.6 | 6.9 | |||||||||||||||||||
| Restructuring expenses | — | 5.0 | — | 46.4 | |||||||||||||||||||
| Inventory loss | — | — | — | 4.8 | |||||||||||||||||||
| Seal insurance proceeds | — | (1.7) | — | (1.7) | |||||||||||||||||||
| Adjusted EBITDA attributable to Murphy (Non-GAAP) | $ | 287.6 | 249.4 | $ | 933.7 | 661.1 | |||||||||||||||||
| Total barrels of oil equivalents sold from continuing operations attributable to Murphy (thousands of barrels) | 14,219 | 14,166 | 43,536 | 46,478 | |||||||||||||||||||
| Adjusted EBITDA per barrel of oil equivalents sold | $ | 20.23 | 17.61 | $ | 21.45 | 14.22 | |||||||||||||||||
1 Depreciation, depletion, and amortization expense, impairment of assets and accretion of asset retirement obligations used in the computation of Adjusted EBITDA exclude the portion attributable to the non-controlling interest (NCI).
Non-GAAP Financial Measures
Presented above is a reconciliation of Net income (loss) 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 income (loss) or Cash provided by operating activities as determined in accordance with accounting principles generally accepted in the United States of America.
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.
12
MURPHY OIL CORPORATION
SCHEDULE OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION
AND AMORTIZATION AND EXPLORATION (EBITDAX)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(Millions of dollars, except per barrel of oil equivalents sold) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| Net income (loss) attributable to Murphy (GAAP) | $ | 108.5 | (243.6) | $ | (242.1) | (976.8) | |||||||||||||||||
| Income tax expense (benefit) | 36.8 | (62.6) | (62.5) | (248.9) | |||||||||||||||||||
| Interest expense, net | 46.9 | 45.2 | 178.4 | 124.9 | |||||||||||||||||||
| Depreciation, depletion and amortization expense ¹ | 182.8 | 219.7 | 588.4 | 725.1 | |||||||||||||||||||
| EBITDA attributable to Murphy (Non-GAAP) | 375.0 | (41.3) | 462.2 | (375.7) | |||||||||||||||||||
| Exploration expenses | 24.5 | 12.1 | 49.8 | 61.7 | |||||||||||||||||||
| EBITDAX attributable to Murphy (Non-GAAP) | 399.5 | (29.2) | 512.0 | (314.0) | |||||||||||||||||||
| Mark-to-market (gain) loss on derivative instruments | (55.9) | 69.3 | 228.5 | (104.5) | |||||||||||||||||||
| Impairment of assets ¹ | — | 186.5 | 171.3 | 1,072.5 | |||||||||||||||||||
| Mark-to-market loss (gain) on contingent consideration | 28.4 | 14.0 | 105.1 | (29.5) | |||||||||||||||||||
| Asset retirement obligation (gains) losses | (71.8) | — | (71.8) | — | |||||||||||||||||||
| Accretion of asset retirement obligations ¹ | 10.8 | 10.8 | 30.8 | 31.2 | |||||||||||||||||||
| Unutilized rig charges | 3.2 | 5.2 | 8.5 | 13.2 | |||||||||||||||||||
| Foreign exchange (gains) losses | (2.8) | 0.8 | (1.5) | (2.5) | |||||||||||||||||||
| Discontinued operations loss | 0.7 | 0.8 | 0.6 | 6.9 | |||||||||||||||||||
| Restructuring expenses | — | 5.0 | — | 46.4 | |||||||||||||||||||
| Inventory loss | — | — | — | 4.8 | |||||||||||||||||||
| Seal insurance proceeds | — | (1.7) | — | (1.7) | |||||||||||||||||||
| Adjusted EBITDAX attributable to Murphy (Non-GAAP) | $ | 312.1 | 261.5 | $ | 983.5 | 722.8 | |||||||||||||||||
| Total barrels of oil equivalents sold from continuing operations attributable to Murphy (thousands of barrels) | 14,219 | 14,166 | 43,536 | 46,478 | |||||||||||||||||||
| Adjusted EBITDAX per barrel of oil equivalents sold | $ | 21.95 | 18.46 | $ | 22.59 | 15.55 | |||||||||||||||||
1 Depreciation, depletion, and amortization expense, impairment of assets and accretion of asset retirement obligations used in the computation of adjusted EBITDAX exclude the portion attributable to the non-controlling interest (NCI).
Non-GAAP Financial Measures
Presented above is a reconciliation of Net income (loss) 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 income (loss) or Cash provided by operating activities as determined in accordance with accounting principles generally accepted in the United States of America.
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.
13
MURPHY OIL CORPORATION
FUNCTIONAL RESULTS OF OPERATIONS (unaudited)
| Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | |||||||||||||
(Millions of dollars) | Revenues | Income (Loss) | Revenues | Income (Loss) | ||||||||||
| Exploration and production | ||||||||||||||
United States 1,2 | $ | 565.2 | 168.1 | $ | 330.8 | (172.6) | ||||||||
| Canada | 124.6 | 73.9 | 96.3 | (8.6) | ||||||||||
| Other | — | (5.2) | — | (11.7) | ||||||||||
| Total exploration and production | 689.8 | 236.8 | 427.1 | (192.9) | ||||||||||
| Corporate | (59.1) | (98.8) | (5.2) | (72.9) | ||||||||||
| Continuing operations | 630.7 | 138.0 | 421.9 | (265.8) | ||||||||||
| Discontinued operations, net of tax | — | (0.7) | — | (0.8) | ||||||||||
| Total including noncontrolling interest | $ | 630.7 | 137.3 | $ | 421.9 | (266.6) | ||||||||
| Net income (loss) attributable to Murphy | 108.5 | (243.6) | ||||||||||||
| Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | |||||||||||||
(Millions of dollars) | Revenues | Income (Loss) | Revenues | Income (Loss) | ||||||||||
| Exploration and production | ||||||||||||||
United States 1,2 | $ | 1,704.4 | 481.8 | $ | 1,070.6 | (1,011.7) | ||||||||
Canada 2 | 349.2 | (37.7) | 245.2 | (35.0) | ||||||||||
Other 2 | — | (22.5) | 1.8 | (73.0) | ||||||||||
| Total exploration and production | 2,053.6 | 421.6 | 1,317.6 | (1,119.7) | ||||||||||
| Corporate | (493.3) | (577.6) | 319.5 | 26.9 | ||||||||||
| Continuing operations | 1,560.3 | (156.0) | 1,637.1 | (1,092.8) | ||||||||||
| Discontinued operations, net of tax | — | (0.6) | — | (6.9) | ||||||||||
| Total including noncontrolling interest | $ | 1,560.3 | (156.6) | $ | 1,637.1 | (1,099.7) | ||||||||
| Net loss attributable to Murphy | (242.1) | (976.8) | ||||||||||||
1 Includes results attributable to a noncontrolling interest in MP Gulf of Mexico, LLC (MP GOM).
2 For the three months ended September 30, 2021, income (loss) includes no impairment charges (2020: $205.1 million). For the nine months ended September 30, 2021, income (loss) includes impairment charge of $171.3 million in Canada for Terra Nova due to the status of agreements with the partners as of March 31, 2021 (2020: U.S. impairment charge of $1,152.5 million, Other impairment charge $39.7 million).
14
MURPHY OIL CORPORATION
OIL AND GAS OPERATING RESULTS (unaudited)
THREE MONTHS ENDED SEPTEMBER 30, 2021, AND 2020
| (Millions of dollars) | United States 1 | Canada | Other | Total | ||||||||||
| Three Months Ended September 30, 2021 | ||||||||||||||
| Oil and gas sales and other operating revenues | $ | 565.2 | 124.6 | — | 689.8 | |||||||||
| Lease operating expenses | 96.7 | 33.4 | 0.1 | 130.2 | ||||||||||
| Severance and ad valorem taxes | 10.8 | 0.8 | — | 11.6 | ||||||||||
| Transportation, gathering and processing | 28.4 | 16.2 | — | 44.6 | ||||||||||
| Depreciation, depletion and amortization | 147.0 | 39.7 | 0.1 | 186.8 | ||||||||||
| Accretion of asset retirement obligations | 9.3 | 2.9 | — | 12.2 | ||||||||||
| Exploration expenses | ||||||||||||||
| Dry holes and previously suspended exploration costs | 17.3 | — | — | 17.3 | ||||||||||
| Geological and geophysical | — | — | 0.3 | 0.3 | ||||||||||
| Other exploration | 1.3 | 0.1 | 0.5 | 1.9 | ||||||||||
| 18.6 | 0.1 | 0.8 | 19.5 | |||||||||||
| Undeveloped lease amortization | 3.1 | 0.1 | 1.8 | 5.0 | ||||||||||
| Total exploration expenses | 21.7 | 0.2 | 2.6 | 24.5 | ||||||||||
| Selling and general expenses | 4.2 | 4.0 | 1.2 | 9.4 | ||||||||||
| Other ² | 39.1 | (71.7) | 2.0 | (30.6) | ||||||||||
| Results of operations before taxes | 208.0 | 99.1 | (6.0) | 301.1 | ||||||||||
| Income tax provisions (benefits) | 39.9 | 25.2 | (0.8) | 64.3 | ||||||||||
| Results of operations (excluding Corporate segment) | $ | 168.1 | 73.9 | (5.2) | 236.8 | |||||||||
| Three Months Ended September 30, 2020 | ||||||||||||||
| Oil and gas sales and other operating revenues | $ | 330.8 | 96.3 | — | 427.1 | |||||||||
| Lease operating expenses | 91.5 | 32.6 | 0.4 | 124.5 | ||||||||||
| Severance and ad valorem taxes | 6.4 | 0.3 | — | 6.7 | ||||||||||
| Transportation, gathering and processing | 29.3 | 12.0 | — | 41.3 | ||||||||||
| Depreciation, depletion and amortization | 166.2 | 59.6 | 0.5 | 226.3 | ||||||||||
| Accretion of asset retirement obligations | 9.4 | 1.4 | — | 10.8 | ||||||||||
| Impairment of assets | 205.1 | — | — | 205.1 | ||||||||||
| Exploration expenses | ||||||||||||||
| Dry holes and previously suspended exploration costs | 0.6 | — | — | 0.6 | ||||||||||
| Geological and geophysical | 0.1 | — | (0.1) | — | ||||||||||
| Other exploration | 0.6 | 0.1 | 3.6 | 4.3 | ||||||||||
| 1.3 | 0.1 | 3.5 | 4.9 | |||||||||||
| Undeveloped lease amortization | 4.9 | 0.1 | 2.3 | 7.3 | ||||||||||
| Total exploration expenses | 6.2 | 0.2 | 5.8 | 12.2 | ||||||||||
| Selling and general expenses | 5.3 | 3.4 | 1.6 | 10.3 | ||||||||||
| Other | 22.5 | (1.5) | 2.5 | 23.5 | ||||||||||
| Results of operations before taxes | (211.1) | (11.7) | (10.8) | (233.6) | ||||||||||
| Income tax (benefits) provisions | (38.5) | (3.1) | 0.9 | (40.7) | ||||||||||
| Results of operations (excluding Corporate segment) | $ | (172.6) | (8.6) | (11.7) | (192.9) | |||||||||
1 Includes results attributable to a noncontrolling interest in MP GOM.
2 For the three months ended September 30, 2021, Canada includes $71.8 million of income related to the deferral of an asset retirement obligation at Terra Nova.
15
MURPHY OIL CORPORATION
OIL AND GAS OPERATING RESULTS (unaudited)
NINE MONTHS ENDED SEPTEMBER 30, 2021, AND 2020
(Millions of dollars) | United States 1 | Canada | Other | Total | ||||||||||
| Nine Months Ended September 30, 2021 | ||||||||||||||
| Oil and gas sales and other operating revenues | $ | 1,704.4 | 349.2 | — | 2,053.6 | |||||||||
| Lease operating expenses | 303.3 | 100.0 | 0.4 | 403.7 | ||||||||||
| Severance and ad valorem taxes | 30.6 | 1.6 | — | 32.2 | ||||||||||
| Transportation, gathering and processing | 90.5 | 46.7 | — | 137.2 | ||||||||||
| Depreciation, depletion and amortization | 476.6 | 128.0 | 1.1 | 605.7 | ||||||||||
| Accretion of asset retirement obligations | 27.5 | 7.4 | — | 34.9 | ||||||||||
| Impairment of assets | — | 171.3 | — | 171.3 | ||||||||||
| Exploration expenses | ||||||||||||||
| Dry holes and previously suspended exploration costs | 17.9 | — | — | 17.9 | ||||||||||
| Geological and geophysical | 2.7 | — | 1.3 | 4.0 | ||||||||||
| Other exploration | 4.2 | 0.2 | 9.6 | 14.0 | ||||||||||
| 24.8 | 0.2 | 10.9 | 35.9 | |||||||||||
| Undeveloped lease amortization | 7.9 | 0.2 | 5.8 | 13.9 | ||||||||||
| Total exploration expenses | 32.7 | 0.4 | 16.7 | 49.8 | ||||||||||
| Selling and general expenses | 15.0 | 12.0 | 4.7 | 31.7 | ||||||||||
| Other ² | 133.5 | (67.7) | (1.2) | 64.6 | ||||||||||
| Results of operations before taxes | 594.7 | (50.5) | (21.7) | 522.5 | ||||||||||
| Income tax provisions (benefits) | 112.9 | (12.8) | 0.8 | 100.9 | ||||||||||
| Results of operations (excluding Corporate segment) | $ | 481.8 | (37.7) | (22.5) | 421.6 | |||||||||
| Nine Months Ended September 30, 2020 | ||||||||||||||
| Oil and gas sales and other operating revenues | $ | 1,070.6 | 245.2 | 1.8 | 1,317.6 | |||||||||
| Lease operating expenses | 386.5 | 90.6 | 1.2 | 478.3 | ||||||||||
| Severance and ad valorem taxes | 21.6 | 1.0 | — | 22.6 | ||||||||||
| Transportation, gathering and processing | 95.4 | 31.4 | — | 126.8 | ||||||||||
| Depreciation, depletion and amortization | 589.5 | 161.3 | 1.5 | 752.3 | ||||||||||
| Accretion of asset retirement obligations | 27.1 | 4.1 | — | 31.2 | ||||||||||
| Impairment of assets | 1,152.5 | — | 39.7 | 1,192.2 | ||||||||||
| Exploration expenses | ||||||||||||||
| Dry holes and previously suspended exploration costs | 8.3 | — | — | 8.3 | ||||||||||
| Geological and geophysical | 9.4 | 0.1 | 4.1 | 13.6 | ||||||||||
| Other exploration | 4.3 | 0.4 | 13.1 | 17.8 | ||||||||||
| 22.0 | 0.5 | 17.2 | 39.7 | |||||||||||
| Undeveloped lease amortization | 14.8 | 0.3 | 6.9 | 22.0 | ||||||||||
| Total exploration expenses | 36.8 | 0.8 | 24.1 | 61.7 | ||||||||||
| Selling and general expenses | 16.6 | 13.2 | 5.5 | 35.3 | ||||||||||
| Other | 1.0 | (2.5) | 1.4 | (0.1) | ||||||||||
| Results of operations before taxes | (1,256.4) | (54.7) | (71.6) | (1,382.7) | ||||||||||
| Income tax (benefits) provisions | (244.7) | (19.7) | 1.4 | (263.0) | ||||||||||
| Results of operations (excluding Corporate segment) | $ | (1,011.7) | (35.0) | (73.0) | (1,119.7) | |||||||||
1 Includes results attributable to a noncontrolling interest in MP GOM.
2 For the nine months ended September 30, 2021, Canada includes $71.8 million of income related to the deferral of an asset retirement obligation at Terra Nova.
16
MURPHY OIL CORPORATION
PRODUCTION-RELATED EXPENSES
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(Dollars per barrel of oil equivalents sold) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
Continuing operations | |||||||||||||||||||||||
United States – Eagle Ford Shale | |||||||||||||||||||||||
Lease operating expense | $ | 8.85 | 8.11 | $ | 8.50 | 8.97 | |||||||||||||||||
Severance and ad valorem taxes | 3.00 | 2.04 | 2.95 | 2.08 | |||||||||||||||||||
Depreciation, depletion and amortization (DD&A) expense | 27.01 | 27.09 | 28.02 | 25.72 | |||||||||||||||||||
United States – Gulf of Mexico | |||||||||||||||||||||||
Lease operating expense 1 | $ | 11.13 | 10.16 | $ | 10.55 | 12.60 | |||||||||||||||||
| Severance and ad valorem taxes | 0.08 | — | 0.08 | — | |||||||||||||||||||
DD&A expense | 9.16 | 12.33 | 9.63 | 13.82 | |||||||||||||||||||
Canada – Onshore | |||||||||||||||||||||||
Lease operating expense | $ | 5.59 | 4.73 | $ | 6.02 | 4.56 | |||||||||||||||||
Severance and ad valorem taxes | 0.17 | 0.05 | 0.11 | 0.07 | |||||||||||||||||||
DD&A expense | 6.87 | 10.78 | 7.93 | 9.94 | |||||||||||||||||||
Canada – Offshore | |||||||||||||||||||||||
| Lease operating expense | $ | 13.25 | 20.30 | $ | 12.72 | 16.71 | |||||||||||||||||
DD&A expense | 11.53 | 12.58 | 13.08 | 11.48 | |||||||||||||||||||
Total oil and gas continuing operations | |||||||||||||||||||||||
| Lease operating expense | $ | 8.69 | 8.23 | $ | 8.74 | 9.61 | |||||||||||||||||
Severance and ad valorem taxes | 0.78 | 0.45 | 0.70 | 0.45 | |||||||||||||||||||
DD&A expense | 12.67 | 15.31 | 13.33 | 15.45 | |||||||||||||||||||
Total oil and gas continuing operations – excluding noncontrolling interest | |||||||||||||||||||||||
Lease operating expense 2 | $ | 8.51 | 8.13 | $ | 8.53 | 9.36 | |||||||||||||||||
Severance and ad valorem taxes | 0.82 | 0.48 | 0.74 | 0.49 | |||||||||||||||||||
DD&A expense | 12.84 | 15.51 | 13.51 | 15.60 | |||||||||||||||||||
1 For the nine months ended September 30, 2021, lease operating expense (LOE) per barrel of oil equivalents (BOE) sold for the U.S. Gulf of Mexico excluding cost associated with well workovers was $9.05 (2020: $9.49), respectively. Workovers for the nine months ended September 30, 2021 principally relate to St. Malo (2020: Cascade and Dalmatian).
2 For the nine months ended September 30, 2021, total LOE per BOE excluding NCI and costs associated with Gulf of Mexico well workovers was $7.93 (2020: $7.86), respectively.
17
MURPHY OIL CORPORATION
OTHER FINANCIAL DATA
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(Millions of dollars) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| Capital expenditures for continuing operations | |||||||||||||||||||||||
| Exploration and production | |||||||||||||||||||||||
| United States | $ | 111.4 | 116.6 | $ | 473.8 | 521.7 | |||||||||||||||||
| Canada | (5.2) | (1.6) | 67.1 | 116.6 | |||||||||||||||||||
| Other | 0.4 | 5.8 | 15.1 | 32.7 | |||||||||||||||||||
| Total | 106.6 | 120.8 | 556.0 | 671.0 | |||||||||||||||||||
| Corporate | 3.9 | 1.9 | 12.7 | 9.3 | |||||||||||||||||||
Total capital expenditures - continuing operations 1,2 | 110.5 | 122.7 | 568.7 | 680.3 | |||||||||||||||||||
Charged to exploration expenses 3 | |||||||||||||||||||||||
| United States | 18.6 | 1.3 | 24.8 | 22.0 | |||||||||||||||||||
| Canada | 0.1 | 0.1 | 0.2 | 0.5 | |||||||||||||||||||
| Other | 0.8 | 3.5 | 10.9 | 17.2 | |||||||||||||||||||
| Total charged to exploration expenses - continuing operations | 19.5 | 4.9 | 35.9 | 39.7 | |||||||||||||||||||
| Total capitalized | $ | 91.0 | 117.8 | $ | 532.8 | 640.6 | |||||||||||||||||
1 For the three and nine months ended September 30, 2021, total capital expenditures include noncontrolling interest (NCI) capital expenditures of $7.6 million (2020: $2.3 million) and $20.6 million (2020: $17.8 million), respectively.
2 For the nine months ended September 30, 2021, total includes capital expenditures associated with the King’s Quay project of $18.0 million (2020: $80.7 million). King’s Quay was sold to ArcLight Capital Partners, LLC (ArcLight) on March 17, 2021 for proceeds of $267.7 million which reimburses the Company for previously incurred capital expenditures.
3 For the three and nine months ended September 30, 2021, charges to exploration expense exclude amortization of undeveloped leases of $5.0 million (2020: $7.3 million) and $13.9 million (2020: $22.0 million), respectively.
18
MURPHY OIL CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited)
| (Millions of dollars) | September 30, 2021 | December 31, 2020 | |||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 505.1 | 310.6 | ||||||||
| Accounts receivable | 186.7 | 262.0 | |||||||||
| Inventories | 57.4 | 66.1 | |||||||||
| Prepaid expenses | 40.6 | 33.9 | |||||||||
| Assets held for sale | 41.0 | 327.7 | |||||||||
| Total current assets | 830.7 | 1,000.3 | |||||||||
Property, plant and equipment, at cost | 8,112.1 | 8,269.0 | |||||||||
| Operating lease assets | 918.7 | 927.7 | |||||||||
| Deferred income taxes | 442.2 | 395.3 | |||||||||
| Deferred charges and other assets | 27.1 | 28.6 | |||||||||
| Total assets | $ | 10,330.9 | 10,620.9 | ||||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Current maturities of long-term debt, finance lease | $ | 0.6 | — | ||||||||
| Accounts payable | 615.4 | 407.1 | |||||||||
| Income taxes payable | 18.0 | 18.0 | |||||||||
| Other taxes payable | 27.0 | 22.5 | |||||||||
| Operating lease liabilities | 157.3 | 103.8 | |||||||||
| Other accrued liabilities | 316.2 | 150.6 | |||||||||
| Liabilities associated with assets held for sale | — | 14.4 | |||||||||
| Total current liabilities | 1,134.6 | 716.3 | |||||||||
| Long-term debt, including finance lease obligation | 2,613.7 | 2,988.1 | |||||||||
| Asset retirement obligations | 797.6 | 816.3 | |||||||||
| Deferred credits and other liabilities | 723.7 | 680.6 | |||||||||
| Non-current operating lease liabilities | 781.1 | 845.1 | |||||||||
| Deferred income taxes | 166.1 | 180.3 | |||||||||
| Total liabilities | 6,216.9 | 6,226.7 | |||||||||
| Equity | |||||||||||
Common Stock, par $1.00 | 195.1 | 195.1 | |||||||||
| Capital in excess of par value | 921.2 | 941.7 | |||||||||
| Retained earnings | 5,069.6 | 5,369.5 | |||||||||
| Accumulated other comprehensive loss | (580.2) | (601.3) | |||||||||
| Treasury stock | (1,656.2) | (1,690.7) | |||||||||
| Murphy Shareholders' Equity | 3,949.5 | 4,214.3 | |||||||||
| Noncontrolling interest | 164.4 | 179.8 | |||||||||
| Total equity | 4,113.9 | 4,394.1 | |||||||||
| Total liabilities and equity | $ | 10,330.9 | 10,620.9 | ||||||||
19
MURPHY OIL CORPORATION
PRODUCTION SUMMARY
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| Barrels per day unless otherwise noted | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
| Continuing operations | ||||||||||||||||||||||||||
| Net crude oil and condensate | ||||||||||||||||||||||||||
| United States | Onshore | 26,193 | 24,851 | 26,552 | 27,945 | |||||||||||||||||||||
Gulf of Mexico 1 | 53,011 | 56,517 | 61,905 | 67,377 | ||||||||||||||||||||||
| Canada | Onshore | 4,963 | 9,595 | 5,598 | 8,106 | |||||||||||||||||||||
| Offshore | 3,779 | 4,428 | 4,016 | 5,136 | ||||||||||||||||||||||
| Other | 299 | — | 243 | 114 | ||||||||||||||||||||||
| Total net crude oil and condensate - continuing operations | 88,245 | 95,391 | 98,314 | 108,678 | ||||||||||||||||||||||
| Net natural gas liquids | ||||||||||||||||||||||||||
| United States | Onshore | 5,847 | 5,489 | 5,043 | 5,459 | |||||||||||||||||||||
Gulf of Mexico 1 | 3,459 | 3,521 | 4,296 | 5,131 | ||||||||||||||||||||||
| Canada | Onshore | 1,085 | 1,513 | 1,159 | 1,311 | |||||||||||||||||||||
| Total net natural gas liquids - continuing operations | 10,391 | 10,523 | 10,498 | 11,901 | ||||||||||||||||||||||
| Net natural gas – thousands of cubic feet per day | ||||||||||||||||||||||||||
| United States | Onshore | 31,478 | 27,520 | 27,750 | 29,054 | |||||||||||||||||||||
Gulf of Mexico 1 | 46,339 | 53,046 | 63,557 | 67,850 | ||||||||||||||||||||||
| Canada | Onshore | 309,709 | 260,895 | 277,077 | 262,279 | |||||||||||||||||||||
| Total net natural gas - continuing operations | 387,526 | 341,461 | 368,384 | 359,183 | ||||||||||||||||||||||
Total net hydrocarbons - continuing operations including NCI 2,3 | 163,224 | 162,824 | 170,209 | 180,443 | ||||||||||||||||||||||
| Noncontrolling interest | ||||||||||||||||||||||||||
| Net crude oil and condensate – barrels per day | (7,546) | (9,298) | (8,834) | (10,674) | ||||||||||||||||||||||
| Net natural gas liquids – barrels per day | (243) | (327) | (322) | (443) | ||||||||||||||||||||||
Net natural gas – thousands of cubic feet per day 2 | (2,331) | (3,269) | (3,498) | (4,137) | ||||||||||||||||||||||
| Total noncontrolling interest | (8,178) | (10,170) | (9,739) | (11,807) | ||||||||||||||||||||||
Total net hydrocarbons - continuing operations excluding NCI 2,3 | 155,046 | 152,654 | 160,470 | 168,636 | ||||||||||||||||||||||
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.
20
MURPHY OIL CORPORATION
PRICE SUMMARY
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| Weighted average Exploration and Production sales prices | ||||||||||||||||||||||||||
| Continuing operations | ||||||||||||||||||||||||||
| Crude oil and condensate – dollars per barrel | ||||||||||||||||||||||||||
| United States | Onshore | $ | 69.30 | 37.83 | $ | 64.16 | $ | 35.56 | ||||||||||||||||||
Gulf of Mexico 1 | 68.93 | 40.82 | 64.44 | 38.08 | ||||||||||||||||||||||
Canada 2 | Onshore | 63.76 | 36.65 | 58.70 | 30.29 | |||||||||||||||||||||
| Offshore | 72.64 | 43.81 | 68.93 | 37.85 | ||||||||||||||||||||||
| Natural gas liquids – dollars per barrel | ||||||||||||||||||||||||||
| United States | Onshore | 30.37 | 13.39 | 24.29 | 10.78 | |||||||||||||||||||||
Gulf of Mexico 1 | 34.71 | 14.71 | 27.17 | 9.43 | ||||||||||||||||||||||
Canada 2 | Onshore | 45.12 | 19.97 | 37.05 | 16.95 | |||||||||||||||||||||
| Natural gas – dollars per thousand cubic feet | ||||||||||||||||||||||||||
| United States | Onshore | 3.85 | 1.78 | 3.23 | 1.76 | |||||||||||||||||||||
Gulf of Mexico 1 | 4.09 | 2.01 | 3.28 | 1.91 | ||||||||||||||||||||||
Canada 2 | Onshore | 2.47 | 1.74 | 2.33 | 1.62 | |||||||||||||||||||||
1 Prices include the effect of noncontrolling interest share for MP GOM.
2 U.S. dollar equivalent.
21
MURPHY OIL CORPORATION
COMMODITY HEDGE POSITIONS (unaudited)
AS OF NOVEMBER 2, 2021
| Volumes (MMcf/d) | Price/Mcf | Remaining Period | ||||||||||||||||||||||||||||||||||||
| Area | Commodity | Type | Start Date | End Date | ||||||||||||||||||||||||||||||||||
| Montney | Natural Gas | Fixed price forward sales | 196 | C$2.55 | 10/1/2021 | 12/31/2021 | ||||||||||||||||||||||||||||||||
| Montney | Natural Gas | Fixed price forward sales | 186 | C$2.36 | 1/1/2022 | 1/31/2022 | ||||||||||||||||||||||||||||||||
| Montney | Natural Gas | Fixed price forward sales | 176 | C$2.34 | 2/1/2022 | 4/30/2022 | ||||||||||||||||||||||||||||||||
| Montney | Natural Gas | Fixed price forward sales | 205 | C$2.34 | 5/1/2022 | 5/31/2022 | ||||||||||||||||||||||||||||||||
| Montney | Natural Gas | Fixed price forward sales | 247 | C$2.34 | 6/1/2022 | 10/31/2022 | ||||||||||||||||||||||||||||||||
| Montney | Natural Gas | Fixed price forward sales | 266 | C$2.36 | 11/1/2022 | 12/31/2022 | ||||||||||||||||||||||||||||||||
| Montney | Natural Gas | Fixed price forward sales | 269 | C$2.35 | 1/1/2023 | 3/31/2023 | ||||||||||||||||||||||||||||||||
| Montney | Natural Gas | Fixed price forward sales | 250 | C$2.35 | 4/1/2023 | 12/31/2023 | ||||||||||||||||||||||||||||||||
| Montney | Natural Gas | Fixed price forward sales | 162 | C$2.39 | 1/1/2024 | 12/31/2024 | ||||||||||||||||||||||||||||||||
| Montney | Natural Gas | Fixed price forward sales | 45 | US$2.05 | 10/1/2021 | 12/31/2022 | ||||||||||||||||||||||||||||||||
| Montney | Natural Gas | Fixed price forward sales | 25 | US$1.98 | 1/1/2023 | 10/31/2024 | ||||||||||||||||||||||||||||||||
| Montney | Natural Gas | Fixed price forward sales | 15 | US$1.98 | 11/1/2024 | 12/31/2024 | ||||||||||||||||||||||||||||||||
| Commodity | Type | Volumes (Bbl/d) | Price (USD/Bbl) | Remaining Period | ||||||||||||||||||||||||||||||||||
| Area | Start Date | End Date | ||||||||||||||||||||||||||||||||||||
| United States | WTI ¹ | Fixed price derivative swap | 45,000 | $42.77 | 10/1/2021 | 12/31/2021 | ||||||||||||||||||||||||||||||||
| United States | WTI ¹ | Fixed price derivative swap | 20,000 | $44.88 | 1/1/2022 | 12/31/2022 | ||||||||||||||||||||||||||||||||
| Volumes (Bbl/d) | Average Put (USD/Bbl) | Average Call (USD/Bbl) | Remaining Period | |||||||||||||||||||||||||||||||||||||||||
| Area | Commodity | Type | Start Date | End Date | ||||||||||||||||||||||||||||||||||||||||
| United States | WTI ¹ | Derivative collars | 23,000 | $62.652 | $74.774 | 1/1/2022 | 12/31/2022 | |||||||||||||||||||||||||||||||||||||
1 West Texas Intermediate
22
MURPHY OIL CORPORATION
FOURTH QUARTER 2021 GUIDANCE
| Oil BOPD | NGLs BOPD | Gas MCFD | Total BOEPD | ||||||||||||||||||||
| Production – net | |||||||||||||||||||||||
| U.S. – Eagle Ford Shale | 22,600 | 5,100 | 27,200 | 32,200 | |||||||||||||||||||
| – Gulf of Mexico excluding NCI | 50,500 | 3,400 | 49,800 | 62,200 | |||||||||||||||||||
| Canada – Tupper Montney | — | — | 258,600 | 43,100 | |||||||||||||||||||
| – Kaybob Duvernay and Placid Montney | 4,500 | 1,000 | 16,600 | 8,300 | |||||||||||||||||||
| – Offshore | 3,400 | — | — | 3,400 | |||||||||||||||||||
| Other | 300 | — | — | 300 | |||||||||||||||||||
Total net production (BOEPD) - excluding NCI 1 | 145,500 to 153,500 | ||||||||||||||||||||||
| Exploration expense ($ millions) | $32 | ||||||||||||||||||||||
| FULL YEAR 2021 GUIDANCE | |||||||||||||||||||||||
Total net production (BOEPD) - excluding NCI 2 | 156,500 to 158,500 | ||||||||||||||||||||||
Capital expenditures – excluding NCI ($ millions) 3 | $675 to $685 | ||||||||||||||||||||||
| ¹ Excludes noncontrolling interest of MP GOM of 8,400 BOPD of oil, 200 BOPD of NGLs, and 2,300 MCFD gas. | |||||||||||||||||||||||
| ² Excludes noncontrolling interest of MP GOM of 8,700 BOPD of oil, 300 BOPD of NGLs, and 3,200 MCFD gas. | |||||||||||||||||||||||
| ³ Excludes noncontrolling interest of MP GOM of $25 MM. | |||||||||||||||||||||||
23