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 5, 2020
(Exact name of registrant as specified in its charter)
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| 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) | |||||
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| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
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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 5, 2020 Murphy Oil Corporation issued a news release announcing its financial and operating results for the quarter ended September 30, 2020. 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 5, 2020 | | |||||||
By: | /s/ Christopher D. Hulse | |||||||
| Christopher D. Hulse | |||||||
| Vice President and Controller | |||||||
Exhibit Index
| Exhibit No. | |||||
| 101. INS | XBRL Instance Document | ||||
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| 101. SCH | XBRL Taxonomy Extension Schema Document | ||||
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| 101. CAL | XBRL Taxonomy Extension Calculation Linkbase Document | ||||
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| 101. DEF | XBRL Taxonomy Extension Definition Linkbase Document | ||||
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| 101. LAB | XBRL Taxonomy Extension Labels Linkbase Document | ||||
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| 101. PRE | XBRL Taxonomy Extension Presentation Linkbase | ||||
EXHIBIT 99.1
MURPHY OIL CORPORATION ANNOUNCES THIRD QUARTER 2020
OPERATING AND FINANCIAL RESULTS
Expanded Hedge Coverage, Published 2020 Sustainability Report
HOUSTON, Texas, November 5, 2020 – Murphy Oil Corporation (NYSE: MUR) today announced its financial and operating results for the third quarter ended September 30, 2020, including a net loss attributable to Murphy of $244 million, or $1.59 net loss per diluted share. Adjusted net loss, which excludes discontinued operations and other one-off items, was $24 million, or $0.15 net loss per diluted share.
Unless otherwise noted, the financial and operating highlights and metrics discussed in this commentary exclude noncontrolling interest. 1
Significant items include:
•Produced 153 thousand barrels of oil equivalent per day in the third quarter, including 56 percent or 86 thousand barrels of oil per day, despite the most severe hurricane season on record
•Continued G&A reduction trajectory, with expenses of $29 million in the third quarter compared to $39 million in second quarter 2020
•Increased 2021 crude oil hedge position, resulting in a total of 18 thousand barrels of oil per day hedged at an average price of $43.31 per barrel
•Added fixed price forward sales contracts related to the Tupper Montney asset to underpin cash flow in calendar years 2021 through 2024
•Published 2020 Sustainability Report, with expanded disclosures and greenhouse gas emissions intensity reduction goals
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THIRD QUARTER 2020 FINANCIAL RESULTS
The company recorded a net loss, attributable to Murphy, of $244 million, or $1.59 net loss per diluted share, for the third quarter 2020. Adjusted net loss, which excludes both the results of discontinued operations and certain other items that affect comparability of results between periods, was $24 million, or $0.15 net loss per diluted share for the same period. The adjusted loss from continuing operations primarily excludes the following after-tax items: a $55 million non-cash mark-to-market loss on crude oil derivative contracts and an $11 million non-cash mark-to-market loss on liabilities associated with contingent consideration. It also includes an after-tax $146 million non-cash charge for the impairment of certain assets primarily related to the Cascade and Chinook field in the Gulf of Mexico. 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 $249 million, or $17.61 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 $262 million, or $18.46 per BOE sold. Details for third quarter adjusted EBITDA and EBITDAX reconciliations can be found in the attached schedules.
Third quarter production averaged 153 thousand barrels of oil equivalent per day (MBOEPD) with 56 percent oil and 63 percent liquids. Murphy’s offshore production for the quarter was negatively impacted by an uncharacteristically active hurricane season, resulting in 12.4 MBOEPD of storm-related downtime, compared to 4.8 MBOEPD as guided for storm downtime. Offshore storm downtime was partially offset by stronger performance in the onshore business. Details for third quarter production can be found in the attached schedules.
“Murphy, like all Gulf of Mexico operators, experienced the most severe hurricane season on record this year with four major storms during the third quarter causing short-term production shut-ins, as well as two additional storms following in October. Our assets generated strong production aside from these storms and otherwise would have reached the high end of guidance. Our cost structure improvements continue to take hold leading to improving margins. Further, we were able to safely execute evacuating and re-manning processes of our facilities, along with managing COVID-19 concerns with our proven shore base protocols,” stated Roger W. Jenkins, President and Chief Executive Officer of Murphy Oil Corporation.
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PROTECTING THE COMPANY’S FINANCIAL POSITION
As of September 30, 2020, Murphy had approximately $1.6 billion of liquidity, comprised of $1.4 billion undrawn under the $1.6 billion senior unsecured credit facility and approximately $220 million of cash and cash equivalents.
At the end of third quarter 2020, Murphy had outstanding debt of $2.8 billion in long-term, fixed-rate notes with a weighted average maturity of 7 years and a weighted average coupon of 5.9 percent. The company also had $200 million drawn under its senior unsecured credit facility.
For third quarter 2020, Murphy incurred a total $120 million of CAPEX, including approximately $19 million for the King’s Quay floating production system (FPS) construction. Note that this total CAPEX figure excludes Gulf of Mexico noncontrolling interest (NCI). Murphy incurred a total $663 million of CAPEX for the nine months ended September 30, 2020, including $81 million for King’s Quay.
The company generated free cash flow of $74 million in the third quarter, including NCI. Excluding the impact of a working capital outflow of $28 million, free cash flow was $102 million.
COMMODITY HEDGE POSITIONS MITIGATE CASH FLOW VOLATILITY
The company employs commodity derivative instruments to manage certain risks associated with commodity price volatility and underpin capital returns associated with certain assets. During the third quarter, Murphy layered on hedges to protect cash flow with the execution of WTI fixed price swaps, resulting in a total 18 thousand barrels of oil per day (MBOPD) hedged for full year 2021 at an average price of $43.31 per barrel. Also during the quarter, the company entered into fixed price forward sales contracts for the delivery of 20 million cubic feet per day (MMCFD) at the Malin hub in Oregon at an average price of $2.60 per thousand cubic feet (MCF) for calendar years 2021 and 2022.
Subsequent to quarter end, Murphy entered into fixed price forward sales contracts for physical delivery at the AECO hub in Canada for calendar year 2021, resulting in total contracts of 96 MMCFD at an average price of C$2.53 per MCF. Murphy further extended its price protection with fixed price forward sales contracts at AECO for full years 2022 through 2024 for the delivery of 71 MMCFD at an average price of C$2.50 per MCF.
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Details for the current hedge positions can be found in the attached schedules.
FOURTH QUARTER 2020 GUIDANCE
Murphy reaffirms its previously stated full year 2020 capital budget guidance of $680 million to $720 million, excluding Gulf of Mexico NCI and King’s Quay floating production system (FPS) construction spending. In the fourth quarter, Murphy anticipates production volumes of approximately 146 MBOEPD to 154 MBOEPD. This guidance range is primarily affected by two factors – Gulf of Mexico storm downtime of 8.2 MBOEPD due to impacts from hurricanes Delta and Zeta, as well as 6.4 MBOEPD of planned downtime.
OPERATIONS SUMMARY
North American Onshore
The North American onshore business produced approximately 90 MBOEPD in the third quarter. No operated drilling and completions activity is planned across the onshore business for the remainder of 2020.
Eagle Ford Shale – Production averaged 35 MBOEPD with 71 percent oil volumes in the third quarter. As planned, eight non-operated Karnes wells came online in the quarter. Murphy’s operating partner plans to drill four Karnes wells during the fourth quarter, with completions anticipated in early 2021.
Tupper Montney – For the quarter, natural gas production averaged 235 MMCFD. No drilling or completions activity occurred in the third quarter.
Kaybob Duvernay – Production averaged 13 MBOEPD in the third quarter. Four wells were brought online during the quarter.
Placid Montney – Murphy’s non-operated position produced 3 MBOEPD in the third quarter. As previously disclosed, six non-operated wells resumed production in July after being shut in for May and June due to low commodity prices.
Global Offshore
The offshore business produced 63 MBOEPD in the third quarter, comprised of 82 percent oil. This excludes production from discontinued operations and noncontrolling interest. Gulf of Mexico production in the quarter averaged 59 MBOEPD, consisting of 80 percent oil. Canada offshore production averaged 4 MBOEPD, comprised of 100 percent oil.
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EXPLORATION
Gulf of Mexico – The non-operated Highgarden well (Green Canyon 895) was spud in the third quarter for an estimated $11 million cost net to Murphy as a 20 percent working interest owner. Drilling was delayed due to an active Gulf of Mexico storm season.
SUSTAINABILITY REPORT
Subsequent to quarter-end, Murphy published its 2020 Sustainability Report, taking into consideration various third-party reporting standards and ratings, and including additional disclosures spanning climate-related performance metrics to workforce diversity. As part of this report, the company announced its goal of reducing its greenhouse gas emissions intensity by 15 to 20 percent by 2030 from 2019 levels, excluding Malaysia.
CONFERENCE CALL AND WEBCAST SCHEDULED FOR NOVEMBER 5, 2020
Murphy will host a conference call to discuss third quarter 2020 financial and operating results on Thursday, November 5, 2020, at 9:00 a.m. ET. 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 19218031.
FINANCIAL DATA
Summary financial data and operating statistics for third quarter 2020, with comparisons to the same period from the previous year, are contained in the following schedules. Additionally, a schedule indicating the impacts of items affecting comparability of results between periods, a reconciliation of EBITDA and EBITDAX between periods, as well as guidance for the fourth quarter 2020, are also included.
1 In 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 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.
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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. It challenges the norm, taps into its strong legacy and uses its foresight and financial discipline to deliver inspired energy solutions. Murphy 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 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
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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) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
| Revenues and other income | |||||||||||||||||||||||
| Revenue from sales to customers | $ | 425,324 | 750,337 | 1,311,627 | 2,060,127 | ||||||||||||||||||
| (Loss) gain on crude contracts | (5,290) | 63,247 | 319,502 | 121,163 | |||||||||||||||||||
| Gain on sale of assets and other income | 1,831 | 3,493 | 6,006 | 10,283 | |||||||||||||||||||
| Total revenues and other income | 421,865 | 817,077 | 1,637,135 | 2,191,573 | |||||||||||||||||||
| Costs and expenses | |||||||||||||||||||||||
| Lease operating expenses | 124,491 | 147,632 | 478,283 | 416,460 | |||||||||||||||||||
| Severance and ad valorem taxes | 6,781 | 13,803 | 22,645 | 36,972 | |||||||||||||||||||
| Transportation, gathering and processing | 41,322 | 54,305 | 126,779 | 128,748 | |||||||||||||||||||
| Exploration expenses, including undeveloped lease amortization | 12,092 | 12,358 | 61,686 | 75,570 | |||||||||||||||||||
| Selling and general expenses | 28,509 | 55,366 | 104,381 | 176,258 | |||||||||||||||||||
| Restructuring expenses | 4,982 | — | 46,379 | — | |||||||||||||||||||
| Depreciation, depletion and amortization | 231,603 | 325,562 | 769,151 | 819,270 | |||||||||||||||||||
| Accretion of asset retirement obligations | 10,778 | 10,587 | 31,213 | 29,824 | |||||||||||||||||||
| Impairment of assets | 219,138 | — | 1,206,284 | — | |||||||||||||||||||
| Other (benefit) expense | 20,224 | (29,000) | (2,957) | 26,442 | |||||||||||||||||||
| Total costs and expenses | 699,920 | 590,613 | 2,843,844 | 1,709,544 | |||||||||||||||||||
| Operating (loss) income from continuing operations | (278,055) | 226,464 | (1,206,709) | 482,029 | |||||||||||||||||||
| Other (loss) | |||||||||||||||||||||||
| Interest and other (loss) | (5,177) | (4,418) | (10,107) | (18,134) | |||||||||||||||||||
| Interest expense, net | (45,182) | (44,930) | (124,877) | (145,095) | |||||||||||||||||||
| Total other (loss) | (50,359) | (49,348) | (134,984) | (163,229) | |||||||||||||||||||
| (Loss) income from continuing operations before income taxes | (328,414) | 177,116 | (1,341,693) | 318,800 | |||||||||||||||||||
| Income tax (benefit) expense | (62,584) | 18,782 | (248,890) | 38,719 | |||||||||||||||||||
| (Loss) income from continuing operations | (265,830) | 158,334 | (1,092,803) | 280,081 | |||||||||||||||||||
| (Loss) income from discontinued operations, net of income taxes | (778) | 953,368 | (6,907) | 1,027,632 | |||||||||||||||||||
| Net (loss) income including noncontrolling interest | (266,608) | 1,111,702 | (1,099,710) | 1,307,713 | |||||||||||||||||||
| Less: Net (loss) income attributable to noncontrolling interest | (23,055) | 22,700 | (122,869) | 86,257 | |||||||||||||||||||
| NET (LOSS) INCOME ATTRIBUTABLE TO MURPHY | $ | (243,553) | 1,089,002 | (976,841) | 1,221,456 | ||||||||||||||||||
| (LOSS) INCOME PER COMMON SHARE – BASIC | |||||||||||||||||||||||
| Continuing operations | $ | (1.58) | 0.85 | (6.31) | 1.16 | ||||||||||||||||||
| Discontinued operations | (0.01) | 5.94 | (0.05) | 6.14 | |||||||||||||||||||
| Net (loss) income | $ | (1.59) | 6.79 | (6.36) | 7.30 | ||||||||||||||||||
| (LOSS) INCOME PER COMMON SHARE – DILUTED | |||||||||||||||||||||||
| Continuing operations | $ | (1.58) | 0.84 | (6.31) | 1.16 | ||||||||||||||||||
| Discontinued operations | (0.01) | 5.92 | (0.05) | 6.11 | |||||||||||||||||||
| Net (loss) income | $ | (1.59) | 6.76 | (6.36) | 7.27 | ||||||||||||||||||
| Cash dividends per Common share | 0.125 | 0.25 | 0.50 | 0.75 | |||||||||||||||||||
| Average Common shares outstanding (thousands) | |||||||||||||||||||||||
| Basic | 153,596 | 160,366 | 153,480 | 167,310 | |||||||||||||||||||
| Diluted | 153,596 | 160,980 | 153,480 | 168,105 | |||||||||||||||||||
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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) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Operating Activities | |||||||||||||||||||||||
| Net (loss) income including noncontrolling interest | $ | (266,608) | 1,111,702 | (1,099,710) | 1,307,713 | ||||||||||||||||||
| Adjustments to reconcile net (loss) income to net cash provided by continuing operations activities: | |||||||||||||||||||||||
| Loss (income) from discontinued operations | 778 | (953,368) | 6,907 | (1,027,632) | |||||||||||||||||||
| Depreciation, depletion and amortization | 231,603 | 325,562 | 769,151 | 819,270 | |||||||||||||||||||
| Previously suspended exploration costs | 578 | — | 8,255 | 12,901 | |||||||||||||||||||
| Amortization of undeveloped leases | 7,181 | 6,530 | 21,951 | 21,680 | |||||||||||||||||||
| Accretion of asset retirement obligations | 10,778 | 10,587 | 31,213 | 29,824 | |||||||||||||||||||
| Impairment of assets | 219,138 | — | 1,206,284 | — | |||||||||||||||||||
| Deferred income tax (benefit) expense | (63,846) | 32,596 | (231,748) | 50,597 | |||||||||||||||||||
| Mark to market (gain) loss on contingent consideration | 14,053 | (28,378) | (29,476) | 512 | |||||||||||||||||||
Mark to market (gain) loss of crude contracts | 69,385 | (49,245) | (104,463) | (100,076) | |||||||||||||||||||
| Noncash restructuring expense | — | — | 17,565 | — | |||||||||||||||||||
| Long-term non-cash compensation | 12,440 | 15,812 | 35,200 | 60,567 | |||||||||||||||||||
| Net decrease (increase) in noncash operating working capital | (27,596) | 45,623 | (26,261) | 40,257 | |||||||||||||||||||
| Other operating activities, net | 768 | (19,274) | (26,837) | (62,386) | |||||||||||||||||||
| Net cash provided by continuing operations activities | 208,652 | 497,796 | 578,031 | 1,153,227 | |||||||||||||||||||
| Investing Activities | |||||||||||||||||||||||
| Property additions and dry hole costs | (111,124) | (350,340) | (648,725) | (995,509) | |||||||||||||||||||
| Property additions for King's Quay FPS | (23,301) | (13,637) | (74,936) | (13,637) | |||||||||||||||||||
| Acquisition of oil and gas properties | — | 13,312 | — | (1,212,949) | |||||||||||||||||||
| Proceeds from sales of property, plant and equipment | — | 2,256 | — | 19,072 | |||||||||||||||||||
| Net cash required by investing activities | (134,425) | (348,409) | (723,661) | (2,203,023) | |||||||||||||||||||
| Financing Activities | |||||||||||||||||||||||
| Borrowings on revolving credit facility | 80,000 | 500,000 | 450,000 | 1,575,000 | |||||||||||||||||||
| Repayment of revolving credit facility | (50,000) | (1,900,000) | (250,000) | (1,900,000) | |||||||||||||||||||
| Cash dividends paid | (19,200) | (39,934) | (76,790) | (125,437) | |||||||||||||||||||
| Distributions to noncontrolling interest | (11,273) | (28,734) | (43,673) | (97,510) | |||||||||||||||||||
| Early retirement of debt | — | — | (12,225) | — | |||||||||||||||||||
| Withholding tax on stock-based incentive awards | 153 | — | (7,094) | (6,991) | |||||||||||||||||||
| Debt issuance, net of cost | — | — | (613) | — | |||||||||||||||||||
| Repayment of term loan and other loans | (371) | (500,000) | — | — | |||||||||||||||||||
| Capital lease obligation payments | (178) | (175) | (514) | (510) | |||||||||||||||||||
| Repurchase of common stock | — | (106,014) | — | (405,938) | |||||||||||||||||||
| Net cash (required) provided by financing activities | (869) | (2,074,857) | 59,091 | (961,386) | |||||||||||||||||||
Cash Flows from Discontinued Operations 1 | |||||||||||||||||||||||
| Operating activities | — | (47,911) | (1,202) | 74,361 | |||||||||||||||||||
| Investing activities | — | 2,035,000 | 4,494 | 1,985,202 | |||||||||||||||||||
| Financing activities | — | — | — | (4,914) | |||||||||||||||||||
| Net cash provided by discontinued operations | — | 1,987,089 | 3,292 | 2,054,649 | |||||||||||||||||||
| Cash transferred from discontinued operations to continuing operations | — | 2,035,000 | — | 2,083,565 | |||||||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | 773 | (675) | (585) | 2,593 | |||||||||||||||||||
| Net increase (decrease) in cash and cash equivalents | 74,131 | 108,855 | (87,124) | 74,976 | |||||||||||||||||||
| Cash and cash equivalents at beginning of period | 145,505 | 326,044 | 306,760 | 359,923 | |||||||||||||||||||
| Cash and cash equivalents at end of period | $ | 219,636 | 434,899 | 219,636 | 434,899 | ||||||||||||||||||
1 Net cash provided by discontinued operations is not part of the cash flow reconciliation.
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MURPHY OIL CORPORATION
SCHEDULE OF ADJUSTED INCOME (LOSS)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(Millions of dollars, except per share amounts) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
| Net (loss) income attributable to Murphy (GAAP) | $ | (243.6) | 1,089.0 | (976.8) | 1,221.5 | ||||||||||||||||||
Discontinued operations loss (income) | 0.8 | (953.4) | 6.9 | (1,027.6) | |||||||||||||||||||
| (Loss) income from continuing operations | (242.8) | 135.6 | (969.9) | 193.9 | |||||||||||||||||||
| Adjustments (after tax): | |||||||||||||||||||||||
| Impairment of assets | 145.9 | — | 854.2 | — | |||||||||||||||||||
| Mark-to-market loss (gain) on crude oil derivative contracts | 54.8 | (38.9) | (82.5) | (79.1) | |||||||||||||||||||
Mark-to-market loss (gain) on contingent consideration | 11.1 | (22.4) | (23.3) | 0.4 | |||||||||||||||||||
| Restructuring expenses | 3.9 | — | 35.5 | — | |||||||||||||||||||
| Unutilized rig charges | 4.1 | — | 10.4 | — | |||||||||||||||||||
| (Gain) loss on extinguishment of debt | — | — | (4.2) | — | |||||||||||||||||||
| Inventory loss | — | — | 3.8 | — | |||||||||||||||||||
| Foreign exchange losses (gains) | 0.8 | 0.8 | (1.7) | 5.9 | |||||||||||||||||||
| Business development transaction costs | — | 3.3 | — | 19.3 | |||||||||||||||||||
| Write-off of previously suspended exploration wells | — | — | — | 13.2 | |||||||||||||||||||
| Impact of tax reform | — | — | — | (13.0) | |||||||||||||||||||
| Tax benefits on investments in foreign areas | — | (15.0) | — | (15.0) | |||||||||||||||||||
| Seal insurance proceeds | (1.3) | (6.2) | (1.3) | (6.2) | |||||||||||||||||||
| Total adjustments after taxes | 219.3 | (78.4) | 790.9 | (74.5) | |||||||||||||||||||
| Adjusted (loss) income from continuing operations attributable to Murphy | $ | (23.5) | 57.2 | (179.0) | 119.4 | ||||||||||||||||||
| Adjusted (loss) income from continuing operations per average diluted share | $ | (0.15) | 0.36 | (1.17) | 0.71 | ||||||||||||||||||
Non-GAAP Financial Measures
Presented above is a reconciliation of Net (loss) income to Adjusted (loss) income from continuing operations attributable to Murphy. Adjusted (loss) income excludes certain items that management believes affect the comparability of results between periods. Management believes this is important information to provide because it is used by management to evaluate the Company’s operational performance and trends between periods and relative to its industry competitors. Management also believes this information may be useful to investors and analysts to gain a better understanding of the Company’s financial results. Adjusted (loss) income is a non-GAAP financial measure and should not be considered a substitute for Net (loss) income as determined in accordance with accounting principles generally accepted in the United States of America.
Amounts shown above as reconciling items between Net (loss) income and Adjusted (loss) income are presented net of applicable income taxes based on the estimated statutory rate in the applicable tax jurisdiction. The pretax and income tax impacts for adjustments shown above are as follows by area of operations and exclude the share attributable to non-controlling interests.
| Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2020 | ||||||||||||||||||||||||||||||||||
| (Millions of dollars) | Pretax | Tax | Net | Pretax | Tax | Net | |||||||||||||||||||||||||||||
Exploration & Production: | |||||||||||||||||||||||||||||||||||
United States | $ | 205.7 | (44.6) | 161.1 | 1,021.3 | (215.9) | 805.4 | ||||||||||||||||||||||||||||
| Canada | (1.7) | 0.4 | (1.3) | (1.7) | 0.4 | (1.3) | |||||||||||||||||||||||||||||
Other International | — | — | — | 39.7 | — | 39.7 | |||||||||||||||||||||||||||||
Total E&P | 204.0 | (44.2) | 159.8 | 1,059.3 | (215.5) | 843.8 | |||||||||||||||||||||||||||||
Corporate: | 75.3 | (15.8) | 59.5 | (65.8) | 12.9 | (52.9) | |||||||||||||||||||||||||||||
Total adjustments | $ | 279.3 | (60.0) | 219.3 | 993.5 | (202.6) | 790.9 | ||||||||||||||||||||||||||||
10
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) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
| Net (loss) income attributable to Murphy (GAAP) | $ | (243.6) | 1,089.0 | (976.8) | 1,221.5 | ||||||||||||||||||
| Income tax (benefit) expense | (62.6) | 18.8 | (248.9) | 38.7 | |||||||||||||||||||
| Interest expense, net | 45.2 | 44.9 | 124.9 | 145.1 | |||||||||||||||||||
| Depreciation, depletion and amortization expense ¹ | 219.7 | 308.3 | 725.1 | 766.4 | |||||||||||||||||||
| EBITDA attributable to Murphy (Non-GAAP) | (41.3) | 1,461.0 | (375.7) | 2,171.7 | |||||||||||||||||||
| Impairment of assets ¹ | 186.5 | — | 1,072.5 | — | |||||||||||||||||||
| Mark-to-market loss (gain) on crude oil derivative contracts | 69.3 | (49.2) | (104.5) | (100.1) | |||||||||||||||||||
| Mark-to-market loss (gain) on contingent consideration | 14.0 | (28.4) | (29.5) | 0.5 | |||||||||||||||||||
| Restructuring expenses | 5.0 | — | 46.4 | — | |||||||||||||||||||
| Accretion of asset retirement obligations | 10.8 | 10.6 | 31.2 | 29.8 | |||||||||||||||||||
| Unutilized rig charges | 5.2 | — | 13.2 | — | |||||||||||||||||||
| Discontinued operations loss (income) | 0.8 | (953.4) | 6.9 | (1,027.6) | |||||||||||||||||||
| Inventory loss | — | — | 4.8 | — | |||||||||||||||||||
| Foreign exchange losses (gains) | 0.8 | 0.8 | (2.5) | 6.4 | |||||||||||||||||||
| Business development transaction costs | — | 4.1 | — | 24.4 | |||||||||||||||||||
| Write-off of previously suspended exploration wells | — | — | — | 13.2 | |||||||||||||||||||
| Seal insurance proceeds | (1.7) | (8.0) | (1.7) | (8.0) | |||||||||||||||||||
| Adjusted EBITDA attributable to Murphy (Non-GAAP) | $ | 249.4 | 437.5 | 661.1 | 1,110.3 | ||||||||||||||||||
| Total barrels of oil equivalents sold from continuing operations attributable to Murphy (thousands of barrels) | 14,166 | 17,745 | 46,478 | 45,511 | |||||||||||||||||||
| Adjusted EBITDA per barrel of oil equivalents sold | $ | 17.61 | 24.65 | 14.22 | 24.40 | ||||||||||||||||||
Non-GAAP Financial Measures
Presented above is a reconciliation of Net (loss) income to Earnings before interest, taxes, depreciation and amortization (EBITDA) and adjusted EBITDA. Management believes EBITDA and adjusted EBITDA are important information to provide because they are used by management to evaluate the Company’s operational performance and trends between periods and relative to its industry competitors. Management also believes this information may be useful to investors and analysts to gain a better understanding of the Company’s financial results. EBITDA and adjusted EBITDA are non-GAAP financial measures and should not be considered a substitute for Net (loss) income or Cash provided by operating activities as determined in accordance with accounting principles generally accepted in 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.
1 Depreciation, depletion, and amortization expense used in the computation of EBITDA and impairment of assets used in the computation of Adjusted EBITDA exclude the portion attributable to the non-controlling interest.
11
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) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
| Net (loss) income attributable to Murphy (GAAP) | $ | (243.6) | 1,089.0 | (976.8) | 1,221.5 | ||||||||||||||||||
| Income tax (benefit) expense | (62.6) | 18.8 | (248.9) | 38.7 | |||||||||||||||||||
| Interest expense, net | 45.2 | 44.9 | 124.9 | 145.1 | |||||||||||||||||||
| Depreciation, depletion and amortization expense ¹ | 219.7 | 308.3 | 725.1 | 766.4 | |||||||||||||||||||
| EBITDA attributable to Murphy (Non-GAAP) | (41.3) | 1,461.0 | (375.7) | 2,171.7 | |||||||||||||||||||
| Exploration expenses | 12.1 | 12.4 | 61.7 | 75.6 | |||||||||||||||||||
| EBITDAX attributable to Murphy (Non-GAAP) | (29.2) | 1,473.4 | (314.0) | 2,247.3 | |||||||||||||||||||
| Impairment of assets ¹ | 186.5 | — | 1,072.5 | — | |||||||||||||||||||
| Mark-to-market loss (gain) on crude oil derivative contracts | 69.3 | (49.2) | (104.5) | (100.1) | |||||||||||||||||||
| Mark-to-market loss (gain) on contingent consideration | 14.0 | (28.4) | (29.5) | 0.5 | |||||||||||||||||||
| Restructuring expenses | 5.0 | — | 46.4 | — | |||||||||||||||||||
| Accretion of asset retirement obligations | 10.8 | 10.6 | 31.2 | 29.8 | |||||||||||||||||||
| Unutilized rig charges | 5.2 | — | 13.2 | — | |||||||||||||||||||
| Discontinued operations loss (income) | 0.8 | (953.4) | 6.9 | (1,027.6) | |||||||||||||||||||
| Inventory loss | — | — | 4.8 | — | |||||||||||||||||||
| Foreign exchange losses (gains) | 0.8 | 0.8 | (2.5) | 6.4 | |||||||||||||||||||
| Business development transaction costs | — | 4.1 | — | 24.4 | |||||||||||||||||||
| Seal insurance proceeds | (1.7) | (8.0) | (1.7) | (8.0) | |||||||||||||||||||
| Adjusted EBITDAX attributable to Murphy (Non-GAAP) | $ | 261.5 | 449.9 | 722.8 | 1,172.7 | ||||||||||||||||||
| Total barrels of oil equivalents sold from continuing operations attributable to Murphy (thousands of barrels) | 14,166 | 17,745 | 46,478 | 45,511 | |||||||||||||||||||
| Adjusted EBITDAX per barrel of oil equivalents sold | $ | 18.46 | 25.35 | 15.55 | 25.77 | ||||||||||||||||||
Non-GAAP Financial Measures
Presented above is a reconciliation of Net (loss) income to Earnings before interest, taxes, depreciation and amortization, and exploration expenses (EBITDAX) and adjusted EBITDAX. Management believes EBITDAX and adjusted EBITDAX are important information to provide because they are used by management to evaluate the Company’s operational performance and trends between periods and relative to its industry competitors. Management also believes this information may be useful to investors and analysts to gain a better understanding of the Company’s financial results. EBITDAX and adjusted EBITDAX are non-GAAP financial measures and should not be considered a substitute for Net (loss) income or Cash provided by operating activities as determined in accordance with accounting principles generally accepted in 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.
1 Depreciation, depletion, and amortization expense used in the computation of EBITDA and impairment of assets used in the computation of Adjusted EBITDA exclude the portion attributable to the non-controlling interest.
12
MURPHY OIL CORPORATION
FUNCTIONAL RESULTS OF OPERATIONS (unaudited)
| Three Months Ended September 30, 2020 | Three Months Ended September 30, 2019 | |||||||||||||
(Millions of dollars) | Revenues | Income (Loss) | Revenues | Income (Loss) | ||||||||||
| Exploration and production | ||||||||||||||
United States 1 | $ | 330.8 | (172.6) | 656.8 | 170.8 | |||||||||
| Canada | 96.3 | (8.6) | 95.0 | (9.1) | ||||||||||
| Other | — | (11.7) | 1.9 | (3.7) | ||||||||||
| Total exploration and production | 427.1 | (192.9) | 753.7 | 158.0 | ||||||||||
| Corporate | (5.2) | (72.9) | 63.4 | 0.3 | ||||||||||
| Revenue/income from continuing operations | 421.9 | (265.8) | 817.1 | 158.3 | ||||||||||
Discontinued operations, net of tax 3 | — | (0.8) | — | 953.4 | ||||||||||
| Total revenues/net income (loss) including noncontrolling interest | $ | 421.9 | (266.6) | 817.1 | 1,111.7 | |||||||||
| Net (loss) income attributable to Murphy | (243.6) | 1,089.0 | ||||||||||||
| Nine Months Ended September 30, 2020 | Nine Months Ended September 30, 2019 | |||||||||||||
(Millions of dollars) | Revenues | Income (Loss) | Revenues | Income (Loss) | ||||||||||
| Exploration and production | ||||||||||||||
United States 1,2 | $ | 1,070.6 | (1,011.7) | 1,734.3 | 420.0 | |||||||||
| Canada | 245.2 | (35.0) | 323.8 | (7.5) | ||||||||||
Other 2 | 1.8 | (73.0) | 7.9 | (35.4) | ||||||||||
| Total exploration and production | 1,317.6 | (1,119.7) | 2,066.0 | 377.1 | ||||||||||
| Corporate | 319.5 | 26.9 | 125.6 | (97.0) | ||||||||||
| Revenue/income from continuing operations | 1,637.1 | (1,092.8) | 2,191.6 | 280.1 | ||||||||||
Discontinued operations, net of tax 3 | — | (6.9) | — | 1,027.6 | ||||||||||
| Total revenues/net income (loss) including noncontrolling interest | $ | 1,637.1 | (1,099.7) | 2,191.6 | 1,307.7 | |||||||||
| Net income attributable to Murphy | (976.8) | 1,221.5 | ||||||||||||
1 Includes results attributable to a noncontrolling interest in MP Gulf of Mexico, LLC (MP GOM).
2 Includes impairment charges of $1,152.5 million and $39.7 million for the United States and Other for the nine months ended September 30, 2020.
3 Malaysia is reported as discontinued operations in current and comparative periods effective January 1, 2019.
13
MURPHY OIL CORPORATION
OIL AND GAS OPERATING RESULTS (unaudited)
THREE MONTHS ENDED SEPTEMBER 30, 2020, AND 2019
| (Millions of dollars) | United States 1 | Canada | Other | Total | ||||||||||
| 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 | ||||||||||
| Impairments 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 provisions (benefits) | (38.5) | (3.1) | 0.9 | (40.7) | ||||||||||
| Results of operations (excluding Corporate segment) | $ | (172.6) | (8.6) | (11.7) | (192.9) | |||||||||
| Three Months Ended September 30, 2019 | ||||||||||||||
| Oil and gas sales and other operating revenues | $ | 656.8 | 95.0 | 1.9 | 753.7 | |||||||||
| Lease operating expenses | 116.2 | 31.2 | 0.2 | 147.6 | ||||||||||
| Severance and ad valorem taxes | 13.4 | 0.4 | — | 13.8 | ||||||||||
| Transportation, gathering and processing | 44.1 | 10.2 | — | 54.3 | ||||||||||
| Depreciation, depletion and amortization | 253.5 | 65.3 | 0.6 | 319.4 | ||||||||||
| Accretion of asset retirement obligations | 9.0 | 1.6 | — | 10.6 | ||||||||||
| Exploration expenses | ||||||||||||||
| Dry holes and previously suspended exploration costs | (0.1) | — | — | (0.1) | ||||||||||
| Geological and geophysical | 0.2 | — | 0.2 | 0.4 | ||||||||||
| Other exploration | 1.5 | 0.1 | 3.8 | 5.4 | ||||||||||
| 1.6 | 0.1 | 4.0 | 5.7 | |||||||||||
| Undeveloped lease amortization | 5.2 | 0.3 | 1.0 | 6.5 | ||||||||||
| Total exploration expenses | 6.8 | 0.4 | 5.0 | 12.2 | ||||||||||
| Selling and general expenses | 22.7 | 7.6 | 5.6 | 35.9 | ||||||||||
| Other | (21.0) | (7.3) | 0.5 | (27.8) | ||||||||||
| Results of operations before taxes | 212.1 | (14.4) | (10.0) | 187.7 | ||||||||||
| Income tax provisions (benefits) | 41.3 | (5.3) | (6.3) | 29.7 | ||||||||||
| Results of operations (excluding Corporate segment) | $ | 170.8 | (9.1) | (3.7) | 158.0 | |||||||||
1 Includes results attributable to a noncontrolling interest in MP GOM.
14
MURPHY OIL CORPORATION
OIL AND GAS OPERATING RESULTS (unaudited)
NINE MONTHS ENDED SEPTEMBER 30, 2020, AND 2019
(Millions of dollars) | United States 1 | Canada | Other | Total | ||||||||||
| 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 provisions (benefits) | (244.7) | (19.7) | 1.4 | (263.0) | ||||||||||
| Results of operations (excluding Corporate segment) | $ | (1,011.7) | (35.0) | (73.0) | (1,119.7) | |||||||||
| Nine Months Ended September 30, 2019 | ||||||||||||||
| Oil and gas sales and other operating revenues | $ | 1,734.3 | 323.8 | 7.9 | 2,066.0 | |||||||||
| Lease operating expenses | 308.3 | 107.1 | 1.1 | 416.5 | ||||||||||
| Severance and ad valorem taxes | 36.0 | 1.0 | — | 37.0 | ||||||||||
| Transportation, gathering and processing | 103.4 | 25.3 | — | 128.7 | ||||||||||
| Depreciation, depletion and amortization | 618.6 | 181.6 | 2.9 | 803.1 | ||||||||||
| Accretion of asset retirement obligations | 25.2 | 4.6 | — | 29.8 | ||||||||||
| Exploration expenses | ||||||||||||||
| Dry holes and previously suspended exploration costs | (0.2) | — | 13.1 | 12.9 | ||||||||||
| Geological and geophysical | 16.1 | — | 8.1 | 24.2 | ||||||||||
| Other exploration | 5.5 | 0.3 | 10.9 | 16.7 | ||||||||||
| 21.4 | 0.3 | 32.1 | 53.8 | |||||||||||
| Undeveloped lease amortization | 18.0 | 1.0 | 2.7 | 21.7 | ||||||||||
| Total exploration expenses | 39.4 | 1.3 | 34.8 | 75.5 | ||||||||||
| Selling and general expenses | 52.9 | 21.3 | 17.3 | 91.5 | ||||||||||
| Other | 37.5 | (6.9) | 0.9 | 31.5 | ||||||||||
| Results of operations before taxes | 513.0 | (11.5) | (49.1) | 452.4 | ||||||||||
| Income tax provisions (benefits) | 93.0 | (4.0) | (13.7) | 75.3 | ||||||||||
| Results of operations (excluding Corporate segment) | $ | 420.0 | (7.5) | (35.4) | 377.1 | |||||||||
1 Includes results attributable to a noncontrolling interest in MP GOM.
15
MURPHY OIL CORPORATION
PRODUCTION-RELATED EXPENSES
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(Dollars per barrel of oil equivalents sold) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Continuing operations | |||||||||||||||||||||||
United States – Eagle Ford Shale | |||||||||||||||||||||||
Lease operating expense | $ | 8.11 | 6.74 | 8.97 | 8.92 | ||||||||||||||||||
Severance and ad valorem taxes | 2.04 | 2.87 | 2.08 | 3.01 | |||||||||||||||||||
Depreciation, depletion and amortization (DD&A) expense | 27.09 | 24.29 | 25.72 | 23.94 | |||||||||||||||||||
United States – Gulf of Mexico | |||||||||||||||||||||||
Lease operating expense 1 | $ | 10.16 | 10.20 | 12.60 | 9.70 | ||||||||||||||||||
DD&A expense | 12.33 | 16.86 | 13.82 | 16.01 | |||||||||||||||||||
Canada – Onshore | |||||||||||||||||||||||
Lease operating expense | $ | 4.73 | 4.36 | 4.56 | 5.40 | ||||||||||||||||||
Severance and ad valorem taxes | 0.05 | 0.07 | 0.07 | 0.07 | |||||||||||||||||||
DD&A expense | 10.78 | 11.26 | 9.94 | 11.07 | |||||||||||||||||||
Canada – Offshore | |||||||||||||||||||||||
Lease operating expense | $ | 20.30 | 17.43 | 16.71 | 16.91 | ||||||||||||||||||
DD&A expense | 12.58 | 11.55 | 11.48 | 13.36 | |||||||||||||||||||
Total oil and gas continuing operations | |||||||||||||||||||||||
Lease operating expense 2 | $ | 8.23 | 7.85 | 9.61 | 8.52 | ||||||||||||||||||
Severance and ad valorem taxes | 0.45 | 0.73 | 0.45 | 0.76 | |||||||||||||||||||
DD&A expense | 15.31 | 17.31 | 15.45 | 16.75 | |||||||||||||||||||
Total oil and gas continuing operations – excluding noncontrolling interest | |||||||||||||||||||||||
Lease operating expense | $ | 8.13 | 7.68 | 9.36 | 8.45 | ||||||||||||||||||
Severance and ad valorem taxes | 0.48 | 0.73 | 0.49 | 0.76 | |||||||||||||||||||
DD&A expense | 15.51 | 17.03 | 15.60 | 16.84 | |||||||||||||||||||
1 For the nine months ended September 30, 2020, lease operating expense (LOE) per barrel of oil equivalents (BOE) sold for the U.S. Gulf of Mexico excluding cost associated with well workovers is $9.49. Workovers for the nine months ended September 30, 2020 include Dalmatian and Cascade. There were no significant Gulf of Mexico workovers in the third quarter 2020.
2 For the nine months ended September 30, 2020, total LOE per BOE excluding cost associated with Gulf of Mexico well workovers is $7.86. There were no significant Gulf of Mexico workovers in the third quarter 2020.
16
MURPHY OIL CORPORATION
OTHER FINANCIAL DATA
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(Millions of dollars) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
| Capital expenditures for continuing operations | |||||||||||||||||||||||
| Exploration and production | |||||||||||||||||||||||
| United States | $ | 116.6 | 295.5 | 521.7 | 2,042.3 | ||||||||||||||||||
| Canada | (1.6) | 45.9 | 116.6 | 201.6 | |||||||||||||||||||
| Other | 5.8 | 12.3 | 32.7 | 76.7 | |||||||||||||||||||
| Total | 120.8 | 353.7 | 671.0 | 2,320.6 | |||||||||||||||||||
| Corporate | 1.9 | 2.9 | 9.3 | 8.5 | |||||||||||||||||||
Total capital expenditures - continuing operations 1 | 122.7 | 356.6 | 680.3 | 2,329.1 | |||||||||||||||||||
Charged to exploration expenses 2 | |||||||||||||||||||||||
| United States | 1.3 | 1.6 | 22.0 | 21.4 | |||||||||||||||||||
| Canada | 0.1 | 0.1 | 0.5 | 0.3 | |||||||||||||||||||
| Other | 3.5 | 4.0 | 17.2 | 32.1 | |||||||||||||||||||
| Total charged to exploration expenses - continuing operations | 4.9 | 5.7 | 39.7 | 53.8 | |||||||||||||||||||
| Total capitalized | $ | 117.8 | 350.9 | 640.6 | 2,275.3 | ||||||||||||||||||
1 For the three and nine months ended September 30, 2020, includes noncontrolling interest (NCI) capital expenditures of $2.3 million and $17.8 million, respectively. For the three and nine months ended September 30, 2020, includes capital expenditures associated with the King’s Quay project of $19.3 million and $80.7 million.
2 Excludes amortization of undeveloped leases of $7.3 million and $6.5 million for the three months ended September 30, 2020 and 2019, respectively. Excludes amortization of undeveloped leases of $22.0 million and $21.7 million for the nine months ended September 30, 2020 and 2019, respectively.
17
MURPHY OIL CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited)
| (Millions of dollars) | September 30, 2020 | December 31, 2019 | |||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 219.6 | 306.8 | ||||||||
| Accounts receivable | 279.1 | 426.7 | |||||||||
| Inventories | 67.9 | 76.1 | |||||||||
| Prepaid expenses | 58.1 | 40.9 | |||||||||
| Assets held for sale | 108.9 | 123.9 | |||||||||
| Total current assets | 733.7 | 974.3 | |||||||||
Property, plant and equipment, at cost | 8,592.8 | 9,969.7 | |||||||||
| Operating lease assets | 765.5 | 598.3 | |||||||||
| Deferred income taxes | 347.1 | 129.3 | |||||||||
| Deferred charges and other assets | 30.3 | 46.9 | |||||||||
| Total assets | $ | 10,469.4 | 11,718.5 | ||||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | 295.4 | 602.1 | ||||||||
| Income taxes payable | 17.8 | 19.0 | |||||||||
| Other taxes payable | 23.8 | 18.6 | |||||||||
| Operating lease liabilities | 100.2 | 92.3 | |||||||||
| Other accrued liabilities | 157.6 | 197.4 | |||||||||
| Liabilities associated with assets held for sale | 14.7 | 13.3 | |||||||||
| Total current liabilities | 609.4 | 942.8 | |||||||||
| Long-term debt, including capital lease obligation | 2,987.1 | 2,803.4 | |||||||||
| Asset retirement obligations | 856.9 | 825.8 | |||||||||
| Deferred credits and other liabilities | 636.0 | 613.4 | |||||||||
| Non-current operating lease liabilities | 686.5 | 521.3 | |||||||||
| Deferred income taxes | 179.5 | 207.2 | |||||||||
| Total liabilities | 5,955.3 | 5,913.9 | |||||||||
| Equity | |||||||||||
Common Stock, par $1.00 | 195.1 | 195.1 | |||||||||
| Capital in excess of par value | 936.3 | 949.4 | |||||||||
| Retained earnings | 5,560.7 | 6,614.3 | |||||||||
| Accumulated other comprehensive loss | (658.0) | (574.2) | |||||||||
| Treasury stock | (1,690.7) | (1,717.2) | |||||||||
| Murphy Shareholders' Equity | 4,343.4 | 5,467.5 | |||||||||
| Noncontrolling interest | 170.6 | 337.2 | |||||||||
| Total equity | 4,514.0 | 5,804.6 | |||||||||
| Total liabilities and equity | $ | 10,469.4 | 11,718.5 | ||||||||
18
MURPHY OIL CORPORATION
PRODUCTION SUMMARY
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| Barrels per day unless otherwise noted | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||
| Continuing operations | ||||||||||||||||||||||||||
| Net crude oil and condensate | ||||||||||||||||||||||||||
| United States | Onshore | 24,851 | 40,582 | 27,945 | 33,256 | |||||||||||||||||||||
Gulf of Mexico 1 | 56,517 | 70,583 | 67,377 | 64,266 | ||||||||||||||||||||||
| Canada | Onshore | 9,595 | 7,101 | 8,106 | 6,503 | |||||||||||||||||||||
| Offshore | 4,428 | 4,333 | 5,136 | 6,302 | ||||||||||||||||||||||
| Other | — | 351 | 114 | 435 | ||||||||||||||||||||||
| Total net crude oil and condensate - continuing operations | 95,391 | 122,950 | 108,678 | 110,762 | ||||||||||||||||||||||
| Net natural gas liquids | ||||||||||||||||||||||||||
| United States | Onshore | 5,489 | 5,582 | 5,459 | 5,621 | |||||||||||||||||||||
Gulf of Mexico 1 | 3,521 | 6,597 | 5,131 | 4,172 | ||||||||||||||||||||||
| Canada | Onshore | 1,513 | 1,422 | 1,311 | 1,197 | |||||||||||||||||||||
| Total net natural gas liquids - continuing operations | 10,523 | 13,601 | 11,901 | 10,990 | ||||||||||||||||||||||
| Net natural gas – thousands of cubic feet per day | ||||||||||||||||||||||||||
| United States | Onshore | 27,520 | 29,122 | 29,054 | 30,203 | |||||||||||||||||||||
Gulf of Mexico 1 | 53,046 | 72,897 | 67,850 | 44,029 | ||||||||||||||||||||||
| Canada | Onshore | 260,895 | 296,883 | 262,279 | 267,205 | |||||||||||||||||||||
| Total net natural gas - continuing operations | 341,461 | 398,902 | 359,183 | 341,437 | ||||||||||||||||||||||
Total net hydrocarbons - continuing operations including NCI 2,3 | 162,824 | 203,035 | 180,443 | 178,658 | ||||||||||||||||||||||
| Noncontrolling interest | ||||||||||||||||||||||||||
| Net crude oil and condensate – barrels per day | (9,298) | (10,322) | (10,674) | (11,215) | ||||||||||||||||||||||
| Net natural gas liquids – barrels per day | (327) | (478) | (443) | (496) | ||||||||||||||||||||||
Net natural gas – thousands of cubic feet per day 2 | (3,269) | (3,403) | (4,137) | (3,933) | ||||||||||||||||||||||
| Total noncontrolling interest | (10,170) | (11,367) | (11,807) | (12,367) | ||||||||||||||||||||||
Total net hydrocarbons - continuing operations excluding NCI 2,3 | 152,654 | 191,668 | 168,636 | 166,292 | ||||||||||||||||||||||
| Discontinued operations | ||||||||||||||||||||||||||
| Net crude oil and condensate – barrels per day | — | 1,748 | — | 16,331 | ||||||||||||||||||||||
| Net natural gas liquids – barrels per day | — | 37 | — | 434 | ||||||||||||||||||||||
Net natural gas – thousands of cubic feet per day 2 | — | 9,624 | — | 67,863 | ||||||||||||||||||||||
| Total discontinued operations | — | 3,389 | — | 28,076 | ||||||||||||||||||||||
Total net hydrocarbons produced excluding NCI 2,3 | 152,654 | 195,057 | 168,636 | 194,367 | ||||||||||||||||||||||
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.
19
MURPHY OIL CORPORATION
PRICE SUMMARY
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
Weighted average Exploration and Production sales prices 1 | ||||||||||||||||||||||||||
| Continuing operations | ||||||||||||||||||||||||||
| Crude oil and condensate – dollars per barrel | ||||||||||||||||||||||||||
| United States | Onshore | $ | 37.83 | 58.80 | 35.56 | 60.33 | ||||||||||||||||||||
Gulf of Mexico 2 | 40.82 | 60.69 | 38.08 | 61.90 | ||||||||||||||||||||||
Canada 3 | Onshore | 36.65 | 48.61 | 30.29 | 49.98 | |||||||||||||||||||||
| Offshore | 43.81 | 62.44 | 37.85 | 64.97 | ||||||||||||||||||||||
| Other | — | 67.96 | 63.51 | 69.86 | ||||||||||||||||||||||
| Natural gas liquids – dollars per barrel | ||||||||||||||||||||||||||
| United States | Onshore | 13.39 | 10.82 | 10.78 | 14.66 | |||||||||||||||||||||
Gulf of Mexico 2 | 14.71 | 13.86 | 9.43 | 15.96 | ||||||||||||||||||||||
Canada 3 | Onshore | 19.97 | 21.03 | 16.95 | 27.50 | |||||||||||||||||||||
| Natural gas – dollars per thousand cubic feet | ||||||||||||||||||||||||||
| United States | Onshore | 1.78 | 2.18 | 1.76 | 2.51 | |||||||||||||||||||||
Gulf of Mexico 2 | 2.01 | 2.37 | 1.91 | 2.46 | ||||||||||||||||||||||
Canada 3 | Onshore | 1.74 | 1.16 | 1.62 | 1.50 | |||||||||||||||||||||
1 Effective September 30, 2019, weighted average realized prices are reported excluding transportation, gathering and processing costs.
2 Prices include the effect of noncontrolling interest share for MP GOM.
3 U.S. dollar equivalent.
20
MURPHY OIL CORPORATION
COMMODITY HEDGE POSITIONS (unaudited)
AS OF NOVEMBER 4, 2020
| 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 | $56.42 | 10/1/2020 | 12/31/2020 | ||||||||||||||||||||||||||||||||
| United States | WTI ¹ | Fixed price derivative swap | 18,000 | $43.31 | 1/1/2021 | 12/31/2021 | ||||||||||||||||||||||||||||||||
1 West Texas Intermediate
| Volumes (MMcf/d) | Price (CAD/Mcf) | Remaining Period | ||||||||||||||||||||||||||||||||||||
| Area | Commodity | Type | Start Date | End Date | ||||||||||||||||||||||||||||||||||
| Montney | Natural Gas | Fixed price forward sales at AECO | 59 | C$2.81 | 10/1/2020 | 12/31/2020 | ||||||||||||||||||||||||||||||||
| Montney | Natural Gas | Fixed price forward sales at AECO | 96 | C$2.53 | 1/1/2021 | 12/31/2021 | ||||||||||||||||||||||||||||||||
| Montney | Natural Gas | Fixed price forward sales at AECO | 71 | C$2.50 | 1/1/2022 | 12/31/2024 | ||||||||||||||||||||||||||||||||
| Volumes (MMcf/d) | Price (USD/MMBtu) | Remaining Period | ||||||||||||||||||||||||||||||||||||
| Area | Commodity | Type | Start Date | End Date | ||||||||||||||||||||||||||||||||||
| Montney | Natural Gas | Fixed price forward sales at Malin | 20 | $2.60 | 1/1/2021 | 12/31/2022 | ||||||||||||||||||||||||||||||||
21
MURPHY OIL CORPORATION
FOURTH QUARTER 2020 GUIDANCE
| Oil BOPD | NGLs BOPD | Gas MCFD | Total BOEPD | ||||||||||||||||||||
| Production – net | |||||||||||||||||||||||
| U.S. – Eagle Ford Shale | 21,200 | 4,600 | 25,000 | 30,000 | |||||||||||||||||||
| – Gulf of Mexico excluding NCI | 50,900 | 5,300 | 61,000 | 66,400 | |||||||||||||||||||
| Canada – Tupper Montney | — | — | 225,000 | 37,500 | |||||||||||||||||||
– Kaybob Duvernay and Placid Montney | 7,000 | 1,400 | 22,400 | 12,100 | |||||||||||||||||||
– Offshore | 4,000 | — | — | 4,000 | |||||||||||||||||||
Total net production (BOEPD) - excluding NCI 1 | 146,000 to 154,000 | ||||||||||||||||||||||
| Exploration expense ($ millions) | $25 | ||||||||||||||||||||||
| FULL YEAR 2020 GUIDANCE | |||||||||||||||||||||||
Capital expenditures – excluding NCI ($ millions) 2 | $680 to $720 | ||||||||||||||||||||||
1 Excludes noncontrolling interest of MP GOM of 8,300 BOPD of oil, 500 BOPD of NGLs, and 3,800 MCFD gas. | |||||||||||||||||||||||
2 Excludes noncontrolling interest of MP GOM of $41 MM. | |||||||||||||||||||||||
22