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Murphy Oil releases 1Q20 results

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Oilfield Technology,

Murphy Oil Corp. has announced its financial and operating results for 1Q20, including a net loss attributable to Murphy of US$416 million, or US$2.71 net loss per diluted share. Adjusted net loss, which excludes discontinued operations and other one-off items, was US$46 million, or US$0.30 per diluted share.

The adjusted loss from continuing operations excludes the following after-tax items: a US$693 million non-cash impairment of certain Gulf of Mexico and other foreign properties, a US$283 million mark-to-market non-cash gain on crude oil derivatives and a US$47 million mark-to-market non-cash gain on liabilities associated with future contingent consideration.

Adjusted earnings before EBITDA from continuing operations attributable to Murphy was US$287 million, or nearly US$17 /boe sold. Adjusted earnings before EBITDAX from continuing operations attributable to Murphy was US$307 million, or nearly US$18/boe sold.

1Q20 production averaged 186 000 boe/d with 59% oil and 66% liquids.

At the end of 1Q20, Murphy had outstanding debt of US$2.8 billion in long-term, fixed-rate notes and US$170 million drawn under its US$1.6 billion senior unsecured credit facility. The fixed-rate notes had a weighted average maturity of 7.5 years and a weighted average coupon of 5.8%.

As of 31March 2020, Murphy had approximately US$1.8 billion of liquidity, comprised of US$1.4 billion undrawn under the US$1.6 billion senior unsecured credit facility and approximately US$408 million of cash and cash equivalents.

“We remain focused on protecting our balance sheet and liquidity through this unstable market while maintaining future flexibility through our long-dated debt maturity profile, with the first tranche not due until mid-2022,” said Roger W. Jenkins, President and Chief Executive Officer.

For full year 2020, Murphy will have an average of 48 000 bpd of oil hedged at an average price of US$54.35/bbl. Since 4Q19, Murphy has executed additional WTI fixed price swaps to hedge an additional 20 000 bpd for May and June 2020 at an average price of US$26.45/bbl, resulting in a total 65 000 bpd of volumes hedged for the months of May and June 2020 at an average price of US$47.20/bbl. For the month of April 2020, as well as July through December 2020, the company has 45 000 bpd of volumes hedged at an average price of US$56.42/bbl.

Additionally, subsequent to quarter end, Murphy entered into fixed price forward sales contracts for the delivery of 25 million ft3/d at the AECO hub in Canada at an average price of CAN$2.62 per thousand cubic feet (MCF) for calendar year 2021.

As previously announced, in response to challenging macroeconomic conditions, the severe decline in commodity prices and reduced demand for crude oil and natural gas, Murphy lowered its 2020 planned CAPEX to a midpoint of US$780 million. Since 1 April, the company has revised its budget a further US$40 million down to a midpoint of US$740 million, representing an approximate 50% decrease from the original capital guidance midpoint. For 1Q20, Murphy spent a total of US$365 million, or approximately half of the company’s new 2020 budget, consisting of US$345 million for CAPEX, excluding King’s Quay, and US$20 million for exploration.

In addition to lowering CAPEX, Murphy is focusing on improving its operating cost structure and cash position, and is targeting US$30 million to US$40 million in reductions across operating expenses, along with approximately US$50 million in lower cash G&A and related expenses in 2020. This includes the closing of offices in El Dorado, Arkansas, US, and Calgary, Canada, and meaningful executive salary and board compensation reductions. Further, the company announced in April a 50% dividend reduction to US$0.50 per share on an annualised basis.

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