UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): April 23, 2019 (April 19, 2019)
MURPHY OIL CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
| Delaware | 1-8590 | 71-0361522 |
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| 300 Peach Street P.O. Box 7000 El Dorado, Arkansas |
71730-7000 |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: 870-862-6411
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):
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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 o
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.
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| Item 1.01. | Entry into a Material Definitive Agreement. |
On April 23, 2019, Murphy Oil Corporation (the “Company”) announced that its wholly owned subsidiary, Murphy Exploration & Production Company - USA (“Murphy”), has entered into a definitive agreement (the "Agreement") to acquire deep water Gulf of Mexico assets from LLOG Exploration Offshore, L.L.C. and LLOG Bluewater Holdings, L.L.C. (“LLOG”). Murphy will pay a cash consideration of $1.375 billion. Additional contingent consideration payments are based on the following: up to $200 million in the event that revenue from certain properties exceeds certain contractual thresholds between 2019 and 2022; and $50 million following first oil from certain development projects.
The Agreement was entered into on April 19, 2019, and the transaction has an effective economic valuation date of January 1, 2019. Closing is expected to occur during the second quarter 2019 and is subject to customary conditions precedent including, among other things, necessary regulatory approvals.
This Current Report on Form 8-K, including the information furnished pursuant to Item 7.01 and the related Item 9.01 hereto, 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: the Company’s ability to complete the acquisition of the Gulf of Mexico assets or the previously announced Malaysia divestiture due to the failure to obtain regulatory approvals, the failure of the respective counterparties to perform their obligations under the relevant transaction agreements, the failure to satisfy all closing conditions, or otherwise; increased volatility or deterioration in the success rate of the Company’s exploration programs or in the Company’s ability to maintain production rates and replace reserves; reduced customer demand for the Company’s products due to environmental, regulatory, technological or other reasons; adverse foreign exchange movements; political and regulatory instability in the markets where the Company does business; natural hazards impacting the Company’s operations; any other deterioration in the Company’s business, markets or prospects; any failure to obtain necessary regulatory approvals; any inability to service or refinance the Company’s 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 the Company’s 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 the Company files, available from the SEC’s website and from the Company’s website at http://ir.murphyoilcorp.com. The Company undertakes no duty to publicly update or revise any forward-looking statements.
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| Item 7.01. | Regulation FD Disclosure. |
Attached hereto as Exhibit 99.1 is a copy of the news release issued by the Company announcing the Gulf of Mexico asset acquisition described in Item 1.01 hereto, and attached hereto as Exhibit 99.2 is a copy of the investor presentation prepared by the Company in connection therewith.
The information in this Item 7.01, including Exhibits 99.1 and 99.2 attached hereto, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or otherwise subject to the liabilities of that Section, and shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise expressly stated in such filing.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits
| 99.1 | News release of the Company dated April 23, 2019. |
| 99.2 | Investor presentation of the Company dated April 23, 2019. |
.
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SIGNATURES
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.
| Date: April 23, 2019 | MURPHY OIL CORPORATION | |||
| By: | /s/ Christopher D. Hulse | |||
| Name: | Christopher D. Hulse | |||
| Title: | Vice President and Controller | |||
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Exhibit 99.1
|
NEWS RELEASE
|
MURPHY OIL CORPORATION ANNOUNCES STRATEGIC DEEP WATER,
OIL-WEIGHTED GULF OF MEXICO ACQUISITION
Accretive Cash Flow Generating Acquisition that Increases Operatorship in the Region
Murphy Continues Strategic Multi-Year Transformation
EL DORADO, Arkansas, April 23, 2019 – Murphy Oil Corporation (NYSE: MUR) announced today that its wholly owned subsidiary, Murphy Exploration & Production Company – USA (“Murphy”), has entered into a definitive agreement to acquire deep water Gulf of Mexico assets from LLOG Exploration Offshore, L.L.C. and LLOG Bluewater Holdings, L.L.C., (“LLOG”). The accretive, cash flow providing Gulf of Mexico assets currently produce approximately 38,000 barrels of oil equivalent per day net (Boepd) and are expected to add approximately 66 million barrels of oil equivalent net (Mmboe) of Proven (1P) reserves and 122 Mmboe of Proven and Probable (2P) reserves1. The transaction will have an effective date of January 1, 2019 and is expected to close in the second quarter, subject to normal closing adjustments.
Murphy will pay a cash consideration of $1.375 billion. Additional contingent consideration payments are based on the following: up to $200 million in the event that revenue from certain properties exceeds certain contractual thresholds between 2019 and 2022; $50 million following first oil from certain development projects.
The acquisition will be funded by a combination of cash on hand and availability under the company’s $1.6 billion revolving credit facility. Total outstanding borrowings under the revolving credit facility, including the current balance of $325 million, are expected to be fully repaid immediately following the closing of the previously announced $2.127 billion divestiture of Murphy’s Malaysian assets. The company still intends to execute the previously announced $500 million share repurchase program, expiring on December 31, 2020, of which $300 million is planned in the first tranche, with the remaining $200 million expected in the second tranche. The previously announced $750 million debt repayment has been revised to only include the $325
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million that was drawn on the revolving credit facility as the company will no longer plan to repurchase or redeem outstanding senior notes at this time.
TRANSACTION HIGHLIGHTS
The acquired assets will be fully owned by Murphy and not part of MP Gulf of Mexico, LLC (“MP GOM”), the entity which currently owns all of Murphy’s producing Gulf of Mexico assets.
| · | Adds approximately 32,000 to 35,000 net Boepd on an annualized basis for full year 2019 to Murphy’s Gulf of Mexico production, comprised of approximately 60 percent oil |
| · | Total Murphy Gulf of Mexico full year annualized 2019 production is anticipated to be approximately 85,000 net Boepd, excluding non-controlling interest |
| · | Increases deep water offshore footprint with the addition of 26 Gulf of Mexico blocks containing seven producing fields, four development projects with future start-ups, in the Mississippi Canyon and Green Canyon areas |
| · | Expands operated production throughout Gulf of Mexico to 66 percent of daily production, an increase from the current 49 percent, excluding non-controlling interest |
| · | Lease operating expense for acquired assets of approximately $10 to $12 per barrel of oil equivalent |
| · | Adds approximately 66 Mmboe of Proven (1P) reserves and 122 Mmboe of Proven and Probable (2P) reserves1, of which 72 percent is oil |
“This immediately accretive transaction continues to strengthen our Gulf of Mexico portfolio by adding quality assets at a very attractive price. We expect these newly acquired assets to generate meaningful cash flow over the next several years that will provide us with additional flexibility for future capital allocation,” stated Roger W. Jenkins, President and Chief Executive Officer. “Since selling our refining business and successfully spinning-out our retail gasoline business over five years ago, we have implemented significant strategic changes in revamping Murphy’s portfolio. Specifically, over the last few months alone we have increased our deepwater, oil-weighted, tax advantaged, Gulf of Mexico assets while we simplified our company by divesting our Malaysian portfolio, again at a very attractive price. What I am most proud of is that through these transactions we have created significant shareholder value. As a result, we have increased our ability to generate meaningfully more cash flow in our long term plan as Murphy is now positioned to grow oil production with an overall compound annual growth rate of seven to nine percent, all while maintaining our compelling dividend, repurchasing our stock, and decreasing our debt levels.”
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ATTRACTIVE ACQUISITION METRICS
The acquisition cost of the acquired asset is approximately $20.75 per barrel of oil equivalent (BOE) for the estimated Proven (1P) reserves and approximately $11.25 per BOE for estimated Proven and Probable (2P) reserves. The implied cost per flowing barrel of oil equivalent, based on current production, is approximately $36,200 per BOE.
An investor presentation is available on the company’s website at www.murphyoilcorp.com.
CONFERENCE CALL AND WEBCAST SCHEDULED FOR APRIL 23 2019
Murphy will host a conference call and webcast to discuss the transaction on April 23, 2019, at 9:00 a.m. (EDT). The call can be accessed either via the Internet through the Investor Relations section of Murphy’s website at http://ir.murphyoilcorp.com or via the telephone by dialing toll free 1-888-396-8049, reservation number 37858321.
Scotia Capital (USA) Inc. and Baker Botts L.L.P. are serving as advisors to Murphy on the transaction.
Barclays is serving as exclusive financial advisor and Jones Walker LLP, Gieger, Laborde, & Laperouse, LLC and Kirkland & Ellis LLP are serving as legal advisors to LLOG on the transaction.
1Transaction reserves are based on internal engineering estimates as of January 1, 2019, using strip prices in effect on April 3, 2019.
ABOUT MURPHY OIL CORPORATION
Murphy Oil Corporation is a global independent oil and natural gas exploration and production company. The company’s diverse resource base includes production from North America onshore plays in the Eagle Ford Shale, Kaybob Duvernay, Tupper Montney and Placid Montney, as well as offshore Gulf of Mexico, Canada and Southeast Asia. Additional information is available on the company’s website 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”,
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“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: our ability to complete the acquisition of the Gulf of Mexico assets or the Malaysia divestiture due to the failure to obtain regulatory approvals, the failure of the respective counterparties to perform their obligations under the relevant transaction agreements, the failure to satisfy all closing conditions, or otherwise, 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; 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 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.
Murphy Investor Contacts:
Kelly Whitley, kelly_whitley@murphyoilcorp.com, 281-675-9107
Bryan Arciero, bryan_arciero@murphyoilcorp.com, 832-319-5374
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Exhibit 99.2
MURPHY OIL CORPORATION MURPHY CONTINUES TRANSFORMATION WITH STRATEGIC DEEP WATER, OIL - WEIGHTED GULF OF MEXICO ACQUISITION APRIL 23, 2019 ROGER W. JENKINS PRESIDENT & CHIEF EXECUTIVE OFFICER
Cautionary Statement & Investor Relations Contacts MURPHY OIL CORPORATION www.murphyoilcorp.com NYSE: MUR 2 Cautionary Note to U.S. Investors – The United States Securities and Exchange Commission (SEC) requires oil and natural gas companies, in their filings with the SEC, to disclose proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We may use certain terms in this presentation, such as “resource”, “gross resource”, “recoverable resource”, “net risked P MEAN resource”, “recoverable oil”, “resource base”, “EUR” or “estimated ultimate recovery” and similar terms that the SEC’s rules prohibit us from including in filings with the SEC. The SEC permits the optional disclosure of probable and possible reserves in our filings with the SEC. Investors are urged to consider closely the disclosures and risk factors in our most recent Annual Report on Form 10 - K filed with the 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. Forward - Looking Statements – This presentation 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: our ability to complete the acquisition of the Gulf of Mexico assets or the Malaysia divestiture due to the failure to obtain regulatory approvals, the failure of the respective counterparties to perform their obligations under the relevant transaction agreements, the failure to satisfy all closing conditions, or otherwise, 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; 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 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 presentation refers to certain forward looking non - GAAP measures such as future “Free Cash Flow” and future “EBITDA”. Definitions of these measures are included in the appendix. Investor Relations Contacts Kelly Whitley VP, Investor Relations & Communications 281 - 675 - 9107 Email: kelly_whitley@murphyoilcorp.com Bryan Arciero Sr. Investor Relations Advisor 832 - 319 - 5374 Email: bryan_arciero@murphyoilcorp.com
Transaction Overview Gulf of Mexico Deep Water Acquisition • Producing Assets from LLOG Exploration Offshore, L.L.C. and LLOG Bluewater Holdings, L.L.C., (“LLOG”) • 26 Gulf of Mexico Blocks • 7 Producing Fields • 4 Development Projects in 5 Fields • Effective Date Jan 1 2019, Expected Closing 2Q 2019 • Acquired Assets Fully Owned by Murphy, Held Outside MP GOM Transaction Consideration • Murphy Pays $1.375 BN – Funded Through Cash on Hand & $1.6 BN Revolving Credit Facility • $50 MM tied to 1st Oil at Certain Development Projects ($25 MM in 2022; $25 MM in 2023) • Up to $ 200 MM Contingent Consideration if Revenue Thresholds (Excluding Certain Development Projects) are Exceeded Between 2019 - 2022 *Subject to Normal Closing Adjustments MURPHY OIL CORPORATION www.murphyoilcorp.com NYSE: MUR 3 Transaction Summary Purchase Price $1.375 BN Additional Contingent Payments 1 Up to $250 MM Cost Per Flowing Barrel 2 $36 , 200/B OE $/BOE (1P) $20.71 $/BOE (2P) $11.28 Properties Summary Current Production 38 MBOEPD 2019E Annualized Production 32 - 35 MBOEPD 2018 Net 1P Reserves 66 MMBOE 2018 Net 2P Reserves 122 MMBOE Oil (72%) 88 MMBO NGL (5%) 6.2 MMBOE Natural Gas (23%) 167 BCF 1 Contingent on First Oil at Certain Development Projects and Additional Revenue Thresholds 2 Calculated by Dividing Purchase Price by Current Production NOTE: Transaction Reserves are Based on Internal Engineering Estimates as of January 1 2019 Using Strip Prices in Effect on April 3 2019
Strengthening Gulf of Mexico Position Murphy’s Key US Gulf of Mexico Assets Post - Transaction 1 Includes 23.2% WI as part of MP GOM (Excluding Non - Controlling Interest) Producing Assets Asset Operator Murphy WI Marmalard Murphy 26.8% Marmalard East Murphy 69.6% Neidermeyer Murphy 52.8% Kodiak 1 Kosmos 48.2% Son of Bluto II Murphy 26.8% Powerball Murphy 75% Otis Murphy 70% Breton Sound 25 Tana 25% Development Assets Asset Operator Murphy WI Khaleesi / Mormont Murphy 34% Calliope Murphy 31.3% Ourse Murphy 28.5% Nearly Headless Nick Murphy 26.8% Existing Murphy Assets Acquired Assets Acquiring 26 Gulf of Mexico Blocks, 7 Producing Fields, 4 Development Projects GC WR EW GB KC MC DC AT LL LU HE VK DD Front Runner Medusa Samurai Khaleesi/Mormont P ower ball Ou r se Ko diak Breton Sound 25 Otis N e id ermeye r Son of Bluto II Nearly Headless Nick Marmalard East Calliope Marmalard St. Malo Lucius Habanero Dalmatian Cas c ade Chinook MURPHY OIL CORPORATION www.murphyoilcorp.com NYSE: MUR 4
Increasing Oil - Weighting of Operated Production & Reserves • Adds 32 – 35 MBOEPD on Annualized Basis for FY 2019, Increasing Murphy’s Production in Gulf of Mexico to > 85 MBOEPD • Adds 46 MMBO of Estimated Proven Oil Reserves, Increasing Total Corporate Oil Reserves by 13 % • Increases Estimated Total Corporate Proven Reserves by 10% to ~753 MMBOE Transaction Metrics Murphy Pre - Transaction Murphy P o s t - T r a n s a c ti on Gulf of Mexico Net Blocks 95 121 Gulf of Mexico Net Annualized Production, MBOEPD 52 > 85 Gulf of Mexico Operated Production – Percentage 49 66 Gulf of Mexico Proven (1P) Reserves, MMBOE 113 179 Gulf of Mexico Proven (1P) Oil Reserves – MMBO 102 148 Production Volumes, Sales Volumes, Reserves & Financial Amounts Exclude Non - Controlling Interest, Unless Otherwise Stated NOTE: Pre - Transaction Reserves are SEC Year - End 2018 Audited Proved Reserves, and Transaction Reserves are Based on Internal Engineering Estimates as of January 1 2019 Using Strip Prices in Effect on April 3 2019 MURPHY OIL CORPORATION www.murphyoilcorp.com NYSE: MUR 5 Production Volumes, Sales Volumes, Reserves & Financial Amounts Exclude Non - Controlling Interest, Unless Otherwise Stated Reserves are Based on SEC Year - End 2018 Audited Proved Reserves Excluding Malaysia
Continuing to Execute on Our Strategy x Strengthening Offshore Portfolio at Attractive Acquisition Costs x Acquiring Repeatable Low - Cost Tiebacks x Producing From Well Defined, High Quality Sands x Building Partnerships with Proven Gulf of Mexico Operators Continue to be a PREFERRED PARTNER to NOCs & Regional Independents BALANCE our Offshore Business by Acquiring & Developing Advantaged Unconventional NA Onshore Plays DEVELOP & PRODUCE Fields in a Safe, Responsible, Timely & Cost Effective Manner ACHIEVE & MAINTAIN a Sustainable, Diverse & Price Advantaged Oil - Weighted Portfolio x Increasing Offshore Operated Production x Growing Oil - Weighted Production Mix x Solidifying Long - Standing Reputation as Excellent Deep Water Operator x Outstanding Safety Track Record in the Gulf of Mexico x Adding Production & Reserves with Minimal G&A Increase x Driving Synergies Through Exploration Projects & Samurai Development x Accelerating Oil - Weighted Growth in Long Term Plan x Realizing Gulf of Mexico Pricing x Increasing Oil Reserves Develop DIFFERENTIATED PERSPECTIVES In Underexplored Basins & Plays MURPHY OIL CORPORATION www.murphyoilcorp.com NYSE: MUR 6
Strategic Plan For Sources & Uses of Cash Dec 31 2018 Cash Balance MAL Divestiture Proceeds Use of P ro c e ed s P o s t - Tr a n s a c tio n s Cash Balance Free Cash Flow Generated Free Cash Flow Used Dec 31 2023 Cash Balance LLOG A c qui s i t io n $1.375 BN 2019 Transactions & Use of Proceeds P o s t - T r a n s. Beginning Balance CF > CAPEX with Dividend 2019 – 2023 Strategic Plan Share R epur c ha se Auth. $500 MM ~$1.7 BN Dividends $780 MM Other Uses Cash P r o c eeds ~$2.1 BN Free Cash Flow ~$2.3 BN $387 MM RCF Payoff $325 MM ~$300 MM Cash to Ba l a n ce Sheet $ 1 . 4 BN $2.2 BN ~$2.1 BN $2.3 BN $2.3 BN *$55/BBL WTI 2019 – 2023 MURPHY OIL CORPORATION www.murphyoilcorp.com NYSE: MUR 7
Transformation Through Strategic Acquisitions & Divestitures • MP GOM: • LLOG: $961 MM (1) $1.375 BN • Supports Portfolio Shift to Oil - Weighted, Lower Cost Western Hemisphere Basins • ~$675 MM Average per Year of Gulf of Mexico Free Cash Flow from 2019 – 2023 • Increases Net Oil Production • Accretive Valuation Metrics • Top 5 Gulf of Mexico Deep Water Operator by Operated Production • Enables Greater Synergies & Opportunities in the Gulf of Mexico by Leveraging Existing Facilities & Infrastructure • US Corporate Tax Rate Globally Competitive at 21%; Minimal Cash Taxes Paid at Corporate Level • Higher Margins in Higher Price Environment *Subject to Normal Closing Adjustments and Approval by PETRONAS ASSETS A C Q UIR ED ASSETS D I V E S T ED (1) Cash: $794 MM, 20% Working Interest in MP GOM: $167 MM Divested Malaysia Assets For $2.1 BN* Acquired Gulf of Mexico Assets for $2.3 BN MURPHY OIL CORPORATION www.murphyoilcorp.com NYSE: MUR 8 • Strategic Exit from Malaysia Simplifies Portfolio • Gas - Weighted Production Increasing to ~50% by 2020, Resulting in Decreasing Cash Flow Margins • Lower Priority Capital Allocation • Monetizing 2P Reserves at Full Value • In Country Profits Subject to 38% Cash Tax Rate • Production Sharing Contact Terms Limit Upside in Higher Price Environment
Malaysia D i v e s t i t u r e Combined A c qui s i t ions 2019E EBITDA Multiple (1) 4.4x 2.6x 2019E Free Cash Flow Multiple (1) 6.8x 4.2x $ / Flowing BOE ~$45k ~$28k $ / BOE (1P) $16.49 $16.22 $ / BOE (2P) $11.13 $10.59 2019E Production - Oil % 58% 77% 1P Oil % 39% 82% 2P Oil % 40% 82% $2,127 MM $961 MM $1,375 MM Gulf of Mexico Acquisitions Unlocking Value With Multiple Transactions Divestiture Proceeds ~$2.3 BN ~$2.1 BN LL OG (1) Prices Assume @ WTI $55/BBL, Assuming Full Year Impact of LLOG Transaction Production Volumes, Sales Volumes, Reserves & Financial Amounts Exclude Non - Controlling Interest, Unless Otherwise Stated MP GOM (2) Malaysia D i v e s titure (2) Cash: $794 MM, 20% Working Interest in MP GOM: $167 MM MURPHY OIL CORPORATION www.murphyoilcorp.com NYSE: MUR 9 Acquisitions Cost Accretive Transactions with Attractive Valuation Metrics • Acquiring Assets at Lower EBITDA & Free Cash Flow Multiples Than Malaysia Divestiture
Repositioning Murphy’s Portfolio Increasing Margins with Oil - Weighted, Gulf of Mexico Production & Reserves 2019E Production, MBOEPD SCALE QUALITY GOM EBITDA / BOE vs Oil Reserves (2P) Acquisition & Divestiture of Assets 2019E Prod MBOEPD 2019 - 2023 Avg Prod M BO E PD 2019 - 2023 Avg Oil Prod MBOPD Reserves (1P) MMBOE % Oil (1P) 2019E EBITDA/ BOE Malaysia – Divestiture 46 – 48 50 25 129 39% $29 Combined GOM – Acquisitions 67 54 44 144 (3) 82% $35 Prices 2019 2020 – 2022 (Avg) WTI $55.00 $55.00 Brent $65.00 $61.00 HH $2.79 $2.79 AECO $1.00 $1.44 (1) Assuming Estimated Midpoint of Full Year Annualized Production of LLOG Acquisition (2) Net Production Impact of MP GOM Transaction (3) Pre - Transaction Reserves are SEC Year - End 2018 Audited Proved Reserves, and Transaction Reserves are Based on Internal Engineering Estimates as of January 1 2019 Using Strip Prices in Effect on April 3 2019 (4) Production Volumes, Sales Volumes, Reserves & Financial Amounts Exclude Non - Controlling Interest, Unless Otherwise Stated $27 $37 $32 Malaysia LLOG (+) MP GOM 2019E EB IT D A / BO E Oil Reserves (2P) Malaysia Dives t i t ur e Gulf of Mexico Acquisitions MP GOM LOG 67 MBOEPD 46 - 48 MBOEPD 34 (1) MBO EPD L 33 (2) MBO EPD 2019 Pro du c ti o n R a te UPSIDE 2019 – 2023 FCF vs Oil Reserves (2P) $3 BN MURPHY OIL CORPORATION www.murphyoilcorp.com NYSE: MUR 10 $1 BN $2 BN 2019E – 2023E F CF Oil Reserves (2P) Total MUR Pre - Transactions Total MUR Post - Transactions
Murphy’s Revitalized Gulf of Mexico Assets Delivering Free Cash Flow with Efficient Capital Spending • Provides Annualized Average Production of ~85 MBOEPD • Generates ~$1.0 BN Annual Average EBITDA Per Year • Requires ~$325 MM of Annual Average CAPEX • Results in Annual Average Free Cash Flow ~$675 MM • Average EBITDA/BOE ~$35 WTI $55/BBL, Assuming Full Year Impact of LLOG Transaction Production Volumes, Sales Volumes, Reserves & Financial Amounts Exclude Non - Controlling Interest, Unless Otherwise Stated (1) Includes Medusa, Front Runner, Dalmatian, Habanero, and Kodiak (2) Includes All Development Project Capital M urphy Gulf of Mex i co 2019E MURPHY OIL CORPORATION www.murphyoilcorp.com NYSE: MUR 11 LL O G M urphy Gulf of Mexico 0 10 20 30 40 50 60 70 80 90 2 0 19E Base P ro duc tion Samurai D e ve lo p m ent 2 0 23E MBO E PD 85 (42) 11 14 83 15 $35 MM $65 MM $105 MM $120 MM Annual Avg CAPEX ~$325 MM 2019 – 2023 Avg Annual CAPEX 2019 – 2023 Estimated Gulf of Mexico Production LLOG (2) Development Rig Program (1) Multiple Fields
Long - Term Strategy For Cash Flow Generation & Production Growth Providing Solid Five - Year Production Growth • Total Production CAGR ~8% • Oil Production CAGR ~12% Balancing Onshore / Offshore Portfolio • Increases US Onshore Production by 15% CAGR Through Organic Growth • Multiple Offshore Development Projects to Maintain High Production Levels Increasing Free Cash Flow • Generates ~$1.4 BN in Free Cash Flow Over 5 Years After Dividends • $1BN Increase in Incremental FCF Compared to Pre - Transaction Assets WTI $55/BBL, Assuming Full Year Impact of LLOG Transaction Production Volumes, Sales Volumes, Reserves & Financial Amounts Exclude Non - Controlling Interest, Unless Otherwise Stated (1) Also Includes Samurai Development (2) NA Offshore includes US Gulf of Mexico and Offshore Canada CAN O n s hor e CAN O n s hor e US On s h o r e US On s h o r e US On s h o r e NA Off s h o r e NA Off s h o r e Ma l a y s i a Malaysia Oth er LLOG (+) MP GOM SE Asia 0 50 100 150 200 250 2 0 18A Malaysia D i v e s titure O r g a n ic G r o wth 2 0 23E MBO E PD 2018A – 2023E Production Growth Gulf of Mexico (1) Acquisitions MURPHY OIL CORPORATION www.murphyoilcorp.com NYSE: MUR 12
Transforming Portfolio with Focus on Western Hemisphere Assets Acquiring 2P Reserves at Attractive Price Accelerating CAGR on Long Term Oil - Weighted Production Continuing the Legacy of Rewarding Shareholders Maintaining Financial Flexibility & Balance Sheet Positioning Company for Long - Term Value Creation MURPHY OIL CORPORATION www.murphyoilcorp.com NYSE: MUR 13
MURPHY OIL CORPORATION A PPE NDIX
Non - GAAP Financial Measure Definitions & Reconciliations MURPHY OIL CORPORATION www.murphyoilcorp.com NYSE: MUR 15 The following list of Non - GAAP financial measure definitions and related reconciliations is intended to satisfy the requirements of Regulation G of the Securities Exchange Act of 1934 , as amended . Management cannot reliably predict certain of the necessary components of the most directly comparable forward - looking GAAP measures, such as future impairments and future changes in working capital . Accordingly, Murphy is unable to present a quantitative reconciliation of the aforementioned forward - looking non - GAAP financial measures to their most directly comparable forward - looking GAAP financial measures . Amounts excluded from non - GAAP measures in future periods could be significant .
Non - GAAP Reconciliation MURPHY OIL CORPORATION www.murphyoilcorp.com NYSE: MUR 16 EBITDA and EBITDAX Murphy defines EBITDA as income from continuing operations attributable to Murphy before interest, taxes, depreciation and amortization (DD&A). Murphy defines EBITDAX as income from continuing operations attributable to Murphy before interest, taxes, depreciation and amortization (DD&A) and exploration expense. EBITDA and EBITDAX is used by management to evaluate the company’s operational performance and trends between periods and relative to its industry competitors . EBITDA and EBITDAX, as reported by Murphy, may not be comparable to similarly titled measures used by other companies and it should be considered in conjunction with net income, cash flow from operations and other performance measures prepared in accordance with generally accepted accounting principles (GAAP) . EBITDA and EBITDAX have certain limitations regarding financial assessments because they excludes certain items that affect net income and net cash provided by operating activities . EBITDA and EBITDAX should not be considered in isolation or as a substitute for an analysis of Murphy's GAAP results as reported . FREE CASH FLOW Murphy defines Free Cash Flow as net cash provided from continuing operations activities (as stated in the Consolidated Statements of Cash Flows) reduced by capital expenditures and investments. Free Cash Flow is used by management to evaluate the company’s ability to internally fund acquisitions, exploration and development and evaluate trends between periods and relative to its industry competitors. Free Cash Flow, as reported by Murphy, may not be comparable to similarly titled measures used by other companies and it should be considered in conjunction with net income, cash flow from operations and other performance measures prepared in accordance with generally accepted accounting principles (GAAP). Free Cash Flow should not be considered in isolation or as a substitute for an analysis of Murphy's GAAP results as reported. Free cash flow is defined as operating cashflow less capex . Forward looking metrics and associated reconciliations of non - GAAP to GAAP metrics are not provided on the basis forward looking metrics are for guidance only ; exact timing of underlying sales and expenditures, and hence the timing of cash - flows for these underlying sales and expenditures represented in equivalent GAAP metrics are not any more accurately estimable than those presented in the non - GAAP metric .
MURPHY OIL CORPORATION MURPHY CONTINUES TRANSFORMATION WITH STRATEGIC DEEP WATER, OIL - WEIGHTED GULF OF MEXICO ACQUISITION APRIL 23, 2019 ROGER W. JENKINS PRESIDENT & CHIEF EXECUTIVE OFFICER