Murphy Oil Corporation Announces Second Quarter 2017 Financial and Operating Results

Source Press Release
Company Murphy Oil Corporation 
Tags Hedging, Financial & Operating Data
Date August 02, 2017

Murphy Oil Corporation (NYSE: MUR) today announced its financial and operating results for the second quarter ended June 30, 2017, including a net loss from continuing operations of $17 million, or $0.10 per diluted share.

Operating and financial highlights for the second quarter 2017 include:

  • Produced volumes of 163 Mboepd, on track to achieve full year production guidance
  • Invested $201 million on capital expenditures, in line with $890 million annual capital program
  • Achieved decade-low lease operating expense of $7.63 per boe
  • Completed Murphy record well in the Kaybob Duvernay achieving an IP30 rate approaching 1,800 boepd
  • Committed to increase Tupper Montney natural gas volumes by 200 MMcfd by 2020 through additional firm transport capacity on TransCanada Corporation’s pipeline system
  • Executed pacesetter wells in the Eagle Ford Shale, drilling two wells averaging 4.5 days
  • Drilled discovery well in Vietnam Block 11-2/11 in the Nam Con Son Basin and signed an application for Block 15-2 in the Cuu Long Basin

SECOND QUARTER 2017 FINANCIAL RESULTS

Murphy recorded a net loss from continuing operations of $17 million, or $0.10 per diluted share, for the second quarter 2017. The company reported an adjusted loss, which excludes both the results of discontinued operations and certain other items that affect comparability of results between periods, of $19 million, or $0.11 per diluted share. The most significant items affecting the adjusted loss were a U.S. tax benefit of $21 million related to investments in foreign exploration areas and an after-tax gain of $15 million for mark-to-market of open crude oil hedge contracts. These were essentially offset by a $31 million non-cash foreign exchange loss due to the weakening U.S. dollar compared to the Canadian dollar and a $6 million deferred tax expense on undistributed foreign earnings. Details for second quarter results can be found in the attached schedules.

Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations totaled $258 million, or $17.71 per barrel of oil equivalent (boe) sold. Earnings before interest, taxes, depreciation, amortization and exploration expenses (EBITDAX) totaled $278 million, or $19.10 per boe sold. Production in the second quarter 2017 averaged 163 thousand barrels of oil equivalent per day (Mboepd).

“We continue to successfully execute on our 2017 plan. We have stabilized production levels and maintained high uptime performance across all our operated assets while employing data analytics to drive down unit operating costs to their lowest levels in a decade. We drilled a record setting well in the Kaybob Duvernay while successfully progressing the delineation of the asset, drilled a discovery well offshore Vietnam in Block 11-2/11, and maintained our healthy balance sheet,” stated Roger W. Jenkins, President and Chief Executive Officer.

FINANCIAL POSITION

As of June 30, 2017, the company had $2.8 billion of outstanding fixed rate notes and $1.1 billion in cash and liquid invested securities. The long term, fixed-rate notes, excluding the current maturity, have a weighted average maturity of 9.6 years and a weighted average coupon of 5.6 percent. Following the December 2017 bond maturity of $550 million, Murphy will not have any debt maturities until 2022. There were no borrowings on the senior credit facility at quarter end. Over the first half of 2017, Murphy has improved its cash position while executing capital expenditures as planned and paying dividends to shareholders. Total cash and liquid invested securities increased by approximately $114 million from year end 2016.

REGIONAL OPERATIONS SUMMARY

North American Onshore

The North American onshore business produced over 86 Mboepd in the second quarter, with 51 percent liquids. Second quarter 2017 operating expenses were $6.53 per boe, a 16 percent decrease from second quarter 2016.

Eagle Ford Shale – Production in the quarter averaged 46 Mboepd, with 87 percent liquids. During the quarter, the company brought online 19 wells, of which 12 were in the Tilden area. The company continued to test the play’s multi-stacked potential with 16 Lower Eagle Ford Shale wells, one Upper Eagle Ford Shale well, and two Austin Chalk wells.

During the quarter the company brought 11 wells online employing a new slick water completion style, with tighter cluster spacing, higher sand concentrations, and finer mesh sand. Of the 11 wells, eight outperformed their pre-drill initial production estimate for the first 30 days (IP30) by over 30 percent. In response to the improved results, the company will continue using this completion technique more widely across the field with the expectation of achieving higher production that should lead to additional resource recovery over the long-term.

The two Austin Chalk wells were both drilled in the Karnes area. One well was drilled in the conventional Austin Chalk landing zone while the other was drilled in a higher landing zone. The well that was drilled in the higher landing zone outperformed pre-drill estimates by over 45 percent, as compared to the other well that utilized the conventional landing zone and performed in line with pre-drill expectations. These early results are encouraging as they validate our Austin Chalk well count.

For the second half of 2017, the company expects to bring 46 wells online, of which 24 will be in the third quarter, all in the prolific Karnes and Catarina areas. This will bring the number of online wells to 78 in 2017, as compared to the previously guided 72, with full year production averaging nearly 50 Mboepd. As a result of accelerating the completion schedule, the six additional wells are planned to come online late in the fourth quarter.

Tupper Montney – Natural gas production in the quarter averaged 204 million cubic feet per day (MMcfd) despite a planned seven-day processing plant turnaround. There were five wells brought online during the second quarter, three in the Upper Montney and two in the Middle Montney. Strong production results from these wells are yielding estimated recoveries on trend with an 18 billion cubic feet (Bcf) per well type curve, as compared to the previously projected recovery range of 10 to 14 Bcf per well. The robust well performance continues to support the company’s new well designs of longer laterals that are approaching 10,000 feet, with completion trials that test tighter stage spacing and various sand concentrations. Although a majority of the company’s development has been in the Lower Montney, it is evident that there is significant development potential in multi-stacked pay across the play.

Murphy plans to increase Tupper Montney natural gas production by executing on a “drill-to-fill” strategy for current plant capacity. The company is pursuing additional natural gas processing capacity, including 20 MMcfd that will be available late in the fourth quarter 2017, as well as 60 MMcfd that will be available in the third quarter 2019. In addition to the planned increased production associated with natural gas processing plant capacity, the company has committed to a long-term volume expansion with the TransCanada Pipeline system for an additional 200 MMcfd capacity available in late 2020. To facilitate this expansion, the company has executed a Front-End Engineering and Design (FEED) contract with Enbridge Inc. for additional processing capacity. The sanction of the project is planned to occur in the first quarter of 2018. The new pipeline commitment and FEED work for additional processing is the first step towards a long-term plan to increase production and bring value forward in this low-cost, long-life asset.

Kaybob Duvernay – Production in the quarter averaged over 3,500 barrels of oil equivalent per day (boepd), a 24 percent increase from first quarter 2017, with 58 percent liquids. During the second quarter, the 04-32 two well pad in the oil window was brought online with an average pad IP30 over 1,300 boepd and 75 percent liquids. One well reached peak production of over 2,000 boepd and recorded an IP30 approaching 1,800 boepd. Early in the third quarter, three wells were brought online at the 11-18 pad that are delineating the transition between the oil and condensate windows. These wells had a cumulative peak production rate upwards of 3,000 boepd. The company will continue to modify completion designs and test well placement, lateral length, frac design, and flow-back strategy.

For the remainder of 2017, the company expects to drill nine wells and bring online two wells. The two online wells will test the condensate window as part of the ongoing appraisal and de-risking of the play. This will bring the full year wells drilled to 16 and wells online to ten. The current well results, along with learnings from the play and low royalty rates, continue to point to long-term value creation and production growth in this low-cost entry asset.

Offshore

The offshore business produced 77 Mboepd for the second quarter, with 71 percent liquids.

Malaysia – Production in the quarter averaged 54 Mboepd, with 63 percent liquids. Block K and Sarawak averaged 34 thousand barrels of liquids per day, while Sarawak natural gas production averaged 113 MMcfd. Sarawak oil cumulative production has now exceeded 100 million barrels of gross oil since the first field came online in 2003.

North America – Production in the quarter for the Gulf of Mexico and East Coast Canada averaged 22 Mboepd, with 91 percent liquids. This is despite the Gulf of Mexico non-operated Kodiak well suffering a mechanical failure of a tubing string component late in the quarter. The well requires a rig repair, which is scheduled for the fourth quarter. Prior to the mechanical failure, the well was producing near 3,500 boepd net.

Vietnam Exploration – Murphy successfully drilled an oil discovery at the CT-1X well in Block 11-2/11 in the Nam Con Son Basin. Following this discovery, the second exploration well in the area was delayed in order to plan for a location to further test the interval discovered in the CT-1X well. The second well in the plan, the CM-1X well, will be drilled later in the third quarter.

In the Cuu Long Basin, Murphy is working with the operator on the Block 15-1/05 LDV discovery for a sanction in early 2018, as well as planning the next exploration well. The company also signed an application to operate the adjacent 15-2 block, where we plan to ultimately test a feature similar to the company’s successful LDV project nearby the adjoining block.

PRODUCTION AND CAPITAL EXPENDITURE GUIDANCE

Production for the third quarter 2017 is estimated in the range of 156 to 158 Mboepd. Third quarter guidance is below second quarter production due to pre-planned downtime work at our Sarawak oil and natural gas fields and the non-operated Terra Nova field, as well as the previously described loss of the non-operated Kodiak well in the Gulf of Mexico. There is also planned downtime at the Keyera processing plant in the Kaybob Duvernay. The temporary production loss of approximately 10,000 boepd in these four areas is partially offset by increased approximate production levels of 1,300 boepd offshore and 2,700 boepd at North American Onshore assets. The company is tightening estimated full year 2017 production guidance to be in the range of 163 to 167 Mboepd. The maintained guidance range is supported by the North American Onshore assets which are growing over 15 percent from fourth quarter 2016 to fourth quarter 2017, adjusted for divestitures. Full year capital expenditure guidance is being maintained at $890 million. Details for production and guidance can be found in the attached schedules.

“Our high-margin offshore assets continue to provide valuable cash flow which is being used to grow our short-cycle North American Onshore portfolio. Our financial discipline is paying off as we have a healthy balance sheet with appropriate leverage, allowing us to weather the continued commodity price volatility. Our 2017 plan is delivering value by paying a competitive dividend yield, providing upside optionality through enhancing our exploration portfolio and growing onshore production,” Jenkins added.

CONFERENCE CALL AND WEBCAST SCHEDULED FOR AUGUST 3, 2017

Murphy will host a conference call to discuss second quarter 2017 financial and operating results on Thursday, August 3, 2017, at 11:00 a.m. EDT. The call can be accessed either via the Internet through the Investor Relations section of Murphy Oil’s website at  or via the telephone by dialing 1-877-723-9521. The telephone reservation number for the call is 6836831. Replays of the call will be available through the same address on the company’s website and a recording of the call will be available through August 17, 2017 by calling 1-888-203-1112 and referencing reservation number 6836831. A replay of the conference call will also be available on the Murphy website at  .

FINANCIAL DATA

Summary financial data, operating statistics and a summary balance sheet for the second quarter 2017 with comparisons to the same period from the previous year are contained in the following schedules. Additionally, a schedule indicating the impacts of items affecting comparability of results between periods and schedules comparing EBITDA and EBITDAX between periods are included with these schedules as well as guidance for the third quarter.

MURPHY OIL CORPORATION SUMMARIZED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Thousands of dollars, except per share amounts) 
 
          Three Months Ended      Six Months Ended 
          June 30,      June 30, 
          2017      2016      2017      2016 
                               
Revenues                               
Sales and other operating revenues          509,613        411,217        1,054,271        840,311   
Gain (loss) on sale of assets            (1,334      3,809        130,648        3,831   
Interest and other income (loss)            (33,782      22,436        (45,803      23,615   
Total revenues            474,497        437,462        1,139,116        867,757   
                               
Costs and expenses                               
Lease operating expenses            111,179        156,530        233,321        315,633   
Severance and ad valorem taxes            10,742        13,439        21,955        26,076   
Exploration expenses            20,201        37,128        48,864        64,044   
Selling and general expenses            57,332        67,113        111,587        140,620   
Depreciation, depletion and amortization            234,992        255,239        471,146        541,388   
Accretion of asset retirement obligations            10,428        12,346        20,984        24,471   
Impairment of assets            –        –        –        95,088   
Interest expense            46,261        35,058        91,951        67,119   
Interest capitalized            (1,116      (608      (2,209      (2,449 
Other expense (benefit)            6,377        (7,516      8,534        (7,932 
Total costs and expenses            496,396        568,729        1,006,133        1,264,058   
                               
Income (loss) from continuing operations before income taxes            (21,899      (131,267      132,983        (396,301 
Income tax expense (benefit)            (4,545      (134,172      92,842        (199,721 
Income (loss) from continuing operations            (17,354      2,905        40,141        (196,580 
Income (loss) from discontinued operations, net of income taxes            (217      25        752        708   
                               
NET INCOME (LOSS)          (17,571      2,930        40,893        (195,872 
                               
INCOME (LOSS) PER COMMON SHARE – BASIC                               
Continuing operations          (0.10      0.02        0.23        (1.14 
Discontinued operations                  –        0.01        –   
Net income (loss)          (0.10      0.02        0.24        (1.14 
                               
INCOME (LOSS) PER COMMON SHARE – DILUTED                               
Continuing operations          (0.10      0.02        0.23        (1.14 
Discontinued operations                  –        0.01        –   
Net income (loss)          (0.10      0.02        0.24        (1.14 
                               
Cash dividends per Common share            0.25        0.35        0.50        0.70   
                               
Average Common shares outstanding (thousands)                               
Basic            172,558        172,197        172,482        172,150   
Diluted            172,558        172,800        173,017        172,150   
 

 
MURPHY OIL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Thousands of dollars) 
 
          Three Months Ended      Six Months Ended   
          June 30,      June 30,   
          2017      2016      2017      2016   
Operating Activities                                 
Net income (loss)          (17,571      2,930        40,893        (195,872   
Adjustments to reconcile net loss to net cash provided by continuing  operations activities:                                 
Income from discontinued operations            217        (25      (752      (708   
Depreciation, depletion and amortization            234,992        255,239        471,146        541,388     
Impairment of assets            –        –        –        95,088     
Amortization of deferred major repair costs            –        1,796        –        3,798     
Dry hole costs            (1,000      14,339        1,904        14,270     
Amortization of undeveloped leases            10,349        14,950        20,306        25,419     
Accretion of asset retirement obligations            10,428        12,346        20,984        24,471     
Deferred income tax expense (benefit)            (25,403      (230,518      33,130        (316,201   
Pretax (gains) losses from disposition of assets            1,334        (3,809      (130,648      (3,831   
Net (increase) decrease in noncash operating working capital            (837      17,554        42,581        (86,793 
Other operating activities, net            73,440        (14,736      91,918        12,349     
Net cash provided by continuing operations activities            285,949        70,066        591,462        113,378     
                                 
Investing Activities                                 
Property additions and dry hole costs            (220,023      (394,558      (431,654      (604,587   
Proceeds from sales of property, plant and equipment            206        1,153,292        64,303        1,153,325     
Purchases of investment securities2            –        (601,941      (212,661      (651,218   
Proceeds from maturity of investment securities2            170,983        614,395        284,193        701,378     
Other investing activities, net            –        14,018        –        (7,640   
Net cash (required) provided by investing activities            (48,834      785,206        (295,819      591,258     
                                 
Financing Activities                                 
Repayments of debt            –        (971,000      –        (600,000   
Capital lease obligation payments            (2,323      (2,482      (11,983      (5,172   
Withholding tax on stock-based incentive awards            (1,273      (86      (7,081      (1,138   
Cash dividends paid            (43,142      (60,268      (86,278      (120,535   
Net cash required by financing activities            (46,738      (1,033,836      (105,342      (726,845   
                                 
Cash Flows from Discontinued Operations                                 
Operating activities            –        2,873        –        5,185     
Changes in cash included in current assets held for sale            –        (2,873      –        (5,185   
Net change in cash and cash equivalents of discontinued operations            –        –        –        –     
Effect of exchange rate changes on cash and cash equivalents            (7,743      22,984        (4,611      6,509     
Net increase in cash and cash equivalents            182,634        (155,580      185,690        (15,700   
Cash and cash equivalents at beginning of period            875,853        423,063        872,797        283,183     
Cash and cash equivalents at end of period          1,058,487        267,483        1,058,487        267,483     
 

  2016 balance includes payments for deepwater rig contract exit of $261.8 million. 
  Investments are Canadian government securities with maturities greater than 90 days at the date of acquisition. 
 

 
MURPHY OIL CORPORATION SCHEDULE OF ADJUSTED LOSS (Unaudited) (Millions of dollars, except per share amounts) 
 
          Three Months Ended      Six Months Ended 
          June 30,      June 30, 
          2017      2016      2017      2016 
Net income (loss)          (17.6      2.9        40.9        (195.9 
Discontinued operations loss (income)            0.2        –        (0.8      (0.7 
Income (loss) from continuing operations            (17.4      2.9        40.1        (196.6 
Adjustments:                               
Mark-to-market (gain) loss on crude oil derivative contracts            (14.7      38.6        (40.7      51.9   
Foreign exchange losses (gains)            31.1        (19.5      42.7        (21.3 
Gain on sale of assets            –        (51.9      (96.0      (47.9 
Deferred tax on undistributed foreign earnings            5.8        –        60.4        –   
Income tax benefits associated with Montney midstream divestiture            –        (20.9      –        (20.9 
Tax benefits on investments in foreign areas            (21.1      (9.4      (32.9      (9.4 
Oil Insurance Limited dividends            (2.8      (2.2      (2.8      (2.2 
Impairments of assets            –        –        –        68.9   
Restructuring charges            –        –        –        6.2   
Total adjustments after taxes            (1.7      (65.3      (69.3      25.3   
Adjusted loss            (19.1      (62.4      (29.2      (171.3 
                               
Adjusted loss per diluted share          (0.11      (0.36      (0.17      (1.00 
 

Non-GAAP Financial Measures

Presented above is a reconciliation of Net income (loss) to Adjusted loss. Adjusted loss excludes certain items that management believes affect the comparability of results between periods. Management believes this is important information to provide because it is used by management to evaluate the Company's operational performance and trends between periods and relative to its industry competitors. Management also believes this information may be useful to investors and analysts to gain a better understanding of the Company's financial results. Adjusted loss is a non-GAAP financial measure and should not be considered a substitute for Net income (loss) as determined in accordance with accounting principles generally accepted in the United States of America.

Note: Amounts shown above as reconciling items between Net income (loss) and Adjusted loss are presented net of applicable income taxes based on the statutory rate applicable by jurisdiction. The 2017 pretax and income tax impacts for adjustments shown above are as follows by area of operations.

 
          Three Months Ended      Six Months Ended 
          June 30, 2017      June 30, 2017 
          Pretax      Tax      Net      Pretax      Tax      Net 
Exploration & Production:                                         
United States          (22.6      7.9        (14.7      (62.6      21.9        (40.7 
Canada          –        –        –        (132.4      36.4        (96.0 
Other International          –        (21.1      (21.1      –        (32.9      (32.9 
Total E&P          (22.6      (13.2      (35.8      (195.0      25.4        (169.6 
Corporate:          31.1        3.0        34.1        44.5        55.8        100.3   
Total adjustments          8.5        (10.2      (1.7      (150.5      81.2        (69.3 
 

Income taxes are presented based on the estimated statutory tax effect each adjustment item had on taxes in the applicable tax jurisdiction.

 
MURPHY OIL CORPORATION SCHEDULE OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA) (Unaudited) (Millions of dollars, except per barrel of oil equivalents sold) 
 
          Three Months Ended      Six Months Ended 
          June 30,      June 30, 
          2017      2016      2017      2016 
Income (loss) from continuing operations          (17.4)      2.9      40.1      (196.6) 
Income tax expense (benefit)            (4.6)      (134.2)      92.9      (199.7) 
Interest expense            46.3      35.1      92.0      67.1 
Interest capitalized            (1.1)      (0.6)      (2.2)      (2.4) 
Depreciation, depletion and amortization expense            235.0      255.2      471.1      541.4 
Impairments of long-lived assets            –      –      –      95.1 
Earnings before interest, taxes, depreciation and   amortization (EBITDA)          258.2      158.4      693.9      304.9 
                               
Total barrels of oil equivalents sold (thousands of barrels)            14,578.5      15,198.9      29,335.9      32,744.5 
                               
EBITDA per barrel of oil equivalents sold          17.71      10.42      23.65      9.31 
 

Non-GAAP Financial Measures

Presented above is a reconciliation of Income (loss) from continuing operations to Earnings before interest, taxes, depreciation and amortization (EBITDA). Management believes EBITDA 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. EBITDA is a non-GAAP financial measure and should not be considered a substitute for Net income (loss) or Cash provided by operating activities as determined in accordance with accounting principles generally accepted in the United States of America.

EBITDA for the six months ended June 30, 2017 included $132.4 million pre-tax gain on sale of Seal properties in Canada in January 2017.

EBITDA for the three months and six months periods ended June 30, 2017 included unrealized foreign exchange losses on intercompany loans of $31.7 million and $43.7 million, respectively.

 
MURPHY OIL CORPORATION SCHEDULE OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AMORTIZATION AND EXPLORATION (EBITDAX) (Unaudited) (Millions of dollars, except per barrel of oil equivalents sold) 
 
          Three Months Ended      Six Months Ended 
          June 30,      June 30, 
          2017      2016      2017      2016 
Income (loss) from continuing operations          (17.4      2.9        40.1        (196.6 
Income tax expense (benefit)            (4.6      (134.2      92.9        (199.7 
Interest expense            46.3        35.1        92.0        67.1   
Interest capitalized            (1.1      (0.6      (2.2      (2.4 
Depreciation, depletion and amortization expense            235.0        255.2        471.1        541.4   
Exploration expenses            20.2        37.1        48.8        64.0   
Impairment of long-lived assets            –        –        –        95.1   
Earnings before interest, taxes, depreciation, amortization   and exploration expenses (EBITDAX)          278.4        195.5        742.7        368.9   
                               
Total barrels of oil equivalents sold (thousands of barrels)            14,578.5        15,198.9        29,335.9        32,744.5   
                               
EBITDAX per barrel of oil equivalents sold          19.10        12.86        25.32        11.27   
 

Non-GAAP Financial Measures

Presented above is a reconciliation of Income (loss) from continuing operations to Earnings before interest, taxes, depreciation, amortization and exploration (EBITDAX). Management believes EBITDAX 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. EBITDAX is a non-GAAP financial measure and should not be considered a substitute for Net income (loss) or Cash provided by operating activities as determined in accordance with accounting principles generally accepted in the United States of America.

EBITDAX for the six months ended June 30, 2017 included $132.4 million pre-tax gain on sale of Seal properties in Canada in January 2017.

EBITDAX for the three months and six months periods ended June 30, 2017 included unrealized foreign exchange losses on intercompany loans of $31.7 million and $43.7 million, respectively.

 
MURPHY OIL CORPORATION FUNCTIONAL RESULTS OF OPERATIONS (Unaudited) (Millions of dollars) 
 
 
          Three Months Ended June 30, 2017        Three Months Ended June 30, 2016 
          Revenues        Income (Loss)        Revenues        Income (Loss) 
Exploration and production                                     
United States          239.5          8.0          143.6          (65.7 
Canada            88.2          5.2          77.4          55.3   
Malaysia            176.5          47.7          190.5          47.7   
Other            –          7.2          (0.1        (5.1 
Total exploration and production            504.2          68.1          411.4          32.2   
Corporate and other            (29.7        (85.5        26.1          (29.3 
Revenue/income from continuing operations            474.5          (17.4        437.5          2.9   
Discontinued operations, net of tax            –          (0.2        –          –   
Total revenues/net income (loss)          474.5          (17.6        437.5          2.9   
 
 
 
          Six Months Ended June 30, 2017        Six Months Ended June 30, 2016 
            Revenues        Income (Loss)        Revenues        Income (Loss) 
Exploration and production                                     
United States          500.8          31.0          318.3          (131.4 
Canada            306.1          105.8          183.5          (31.9 
Malaysia            373.9          106.3          338.8          70.1   
Other            –          0.1          –          (31.2 
Total exploration and production            1,180.8          243.2          840.6          (124.4 
Corporate and other            (41.7        (203.1        27.2          (72.2 
Revenue/income from continuing operations            1,139.1          40.1          867.8          (196.6 
Discontinued operations, net of tax            –          0.8          –          0.7   
Total revenues/net income (loss)          1,139.1          40.9          867.8          (195.9 
 

 
MURPHY OIL CORPORATION OIL AND GAS OPERATING RESULTS (Unaudited) THREE MONTHS ENDED JUNE 30, 2017 AND 2016 
 
                  Canada       
            United      Conven-      Syn-                   
(Millions of dollars)            States      tional      thetic      Malaysia      Other      Total 
Three Months Ended June 30, 2017                                           
Oil and gas sales and other revenues          239.5        88.2        –        176.5      –        504.2   
Lease operating expenses            44.3        25.5        –        41.4      –        111.2   
Severance and ad valorem taxes            10.4        0.3        –        –      –        10.7   
Depreciation, depletion and amortization            135.5        46.0        –        48.3      1.0        230.8   
Accretion of asset retirement obligations            4.2        1.9        –        4.3      –        10.4   
Exploration expenses                                           
Dry holes            (1.0      –        –        –      –        (1.0 
Geological and geophysical            0.6        –        –        –      0.1        0.7   
Other            2.0        0.1        –        –      8.1        10.2   
            1.6        0.1        –        –      8.2        9.9   
Undeveloped lease amortization            10.2        0.1        –        –      –        10.3   
Total exploration expenses            11.8        0.2        –        –      8.2        20.2   
Selling and general expenses            16.6        7.0        –        3.3      5.0        31.9   
Other expenses            3.6        –        –        2.8      –        6.4   
Results of operations before taxes            13.1        7.3        –        76.4      (14.2      82.6   
Income tax provisions (benefits)            5.1        2.1        –        28.7      (21.4      14.5   
Results of operations (excluding   corporate overhead and interest)          8.0        5.2        –        47.7      7.2        68.1   
                                           
Three Months Ended June 30, 2016                                           
Oil and gas sales and other revenues          143.6        61.6        15.8        190.5      (0.1      411.4   
Lease operating expenses            54.5        25.0        31.8        45.2      –        156.5   
Severance and ad valorem taxes            11.0        1.1        1.3        –      –        13.4   
Depreciation, depletion and amortization            146.6        45.9        3.1        54.0      1.6        251.2   
Accretion of asset retirement obligations            4.3        2.8        1.2        4.0      –        12.3   
Exploration expenses                                           
Dry holes            (0.8      –        –        4.5      10.7        14.4   
Geological and geophysical            0.3        –        –        0.2      –        0.5   
Other            1.0        0.1        –        –      6.2        7.3   
            0.5        0.1        –        4.7      16.9        22.2   
Undeveloped lease amortization            13.7        1.0        –        –      0.2        14.9   
Total exploration expenses            14.2        1.1        –        4.7      17.1        37.1   
Selling and general expenses            12.7        8.1        0.2        5.0      9.1        35.1   
Other expenses (benefits)            (0.1      1.6        –        0.9      (9.9      (7.5 
Results of operations before taxes            (99.6      (24.0      (21.8      76.7      (18.0      (86.7 
Income tax provisions (benefits)            (33.9      (27.4      (73.7      29.0      (12.9      (118.9 
Results of operations (excluding   corporate overhead and interest)          (65.7      3.4        51.9        47.7      (5.1      32.2   
 

 
MURPHY OIL CORPORATION OIL AND GAS OPERATING RESULTS (Unaudited) SIX MONTHS ENDED JUNE 30, 2017 AND 2016 
 
                  Canada       
            United      Conven-      Syn-                   
(Millions of dollars)            States      tional      thetic      Malaysia      Other      Total 
Six Months Ended June 30, 2017                                           
Oil and gas sales and other revenues          500.8        306.1        –        373.9      –        1,180.8   
Lease operating expenses            92.2        48.1        –        93.0      –        233.3   
Severance and ad valorem taxes            21.1        0.9        –        –      –        22.0   
Depreciation, depletion and amortization            273.8        90.5        –        96.2      1.9        462.4   
Accretion of asset retirement obligations            8.4        3.9        –        8.7      –        21.0   
Exploration expenses                                           
Dry holes            (1.3      –        –        3.2      –        1.9   
Geological and geophysical            0.9        0.1        –        –      4.6        5.6   
Other            4.0        0.1        –        –      17.0        21.1   
            3.6        0.2        –        3.2      21.6        28.6   
Undeveloped lease amortization            19.0        1.3        –        –      –        20.3   
Total exploration expenses            22.6        1.5        –        3.2      21.6        48.9   
Selling and general expenses            32.2        14.2        –        5.7      9.9        62.0   
Other expenses            0.7        –        –        7.8      –        8.5   
Results of operations before taxes            49.8        147.0        –        159.3      (33.4      322.7   
Income tax provisions (benefits)            18.8        41.2        –        53.0      (33.5      79.5   
Results of operations (excluding   corporate overhead and interest)          31.0        105.8        –        106.3      0.1        243.2   
                                           
Six Months Ended June 30, 2016                                           
Oil and gas sales and other revenues          318.3        119.2        64.3        338.8      –        840.6   
Lease operating expenses            110.0        42.7        69.8        93.1      –        315.6   
Severance and ad valorem taxes            21.4        2.2        2.5        –      –        26.1   
Depreciation, depletion and amortization            315.3        90.8        16.5        108.1      3.0        533.7   
Accretion of asset retirement obligations            8.6        5.4        2.4        8.1      –        24.5   
Impairment of assets            –        95.1        –        –      –        95.1   
Exploration expenses                                           
Dry holes            (0.5      –        –        4.1      10.7        14.3   
Geological and geophysical            0.6        2.9        –        0.5      4.3        8.3   
Other            2.1        0.4        –        –      13.5        16.0   
            2.2        3.3        –        4.6      28.5        38.6   
Undeveloped lease amortization            22.7        2.3        –        –      0.4        25.4   
Total exploration expenses            24.9        5.6        –        4.6      28.9        64.0   
Selling and general expenses            35.2        15.7        0.5        8.4      19.2        79.0   
Other expenses (benefits)            0.1        –        –        0.9      (8.9      (7.9 
Results of operations before taxes            (197.2      (138.3      (27.4      115.6      (42.2      (289.5 
Income tax provisions (benefits)            (65.8      (58.5      (75.3      45.5      (11.0      (165.1 
Results of operations (excluding   corporate overhead and interest)          (131.4      (79.8      47.9        70.1      (31.2      (124.4 
 

 
MURPHY OIL CORPORATION PRODUCTION-RELATED EXPENSES (Dollars per barrel of oil equivalents sold) 
 
          Three Months Ended      Six Months Ended 
          June 30,      June 30, 
          2017      2016      2017      2016 
                               
United States – Eagle Ford Shale                               
Lease operating expense          7.95      9.32      7.92      8.57 
Severance and ad valorem taxes            2.49      2.58      2.53      2.27 
Depreciation, depletion and amortization (DD&A) expense            25.47      25.29      25.90      25.10 
                               
United States – Gulf of Mexico                               
Lease operating expense          8.60      9.37      9.78      8.93 
DD&A expense            22.60      24.54      21.61      24.08 
                               
Canada – Conventional operations                               
Lease operating expense          5.70      6.14      5.53      5.06 
Severance and ad valorem taxes            0.08      0.27      0.10      0.26 
DD&A expense            10.26      11.28      10.42      10.80 
                               
Canada – Synthetic oil operations*                               
Lease operating expense          –      112.81      –      41.15 
Severance and ad valorem taxes            –      4.76      –      1.46 
DD&A expense            –      10.89      –      9.72 
                               
Malaysia – Sarawak                             
Lease operating expense            4.85      4.42      5.59      6.25 
DD&A expense            8.02      9.43      7.90      9.60 
                               
Malaysia – Block K                               
Lease operating expense          16.37      13.38      16.59      12.95 
DD&A expense            14.76      12.05      13.56      12.35 
                               
Total oil and gas operations                               
Lease operating expense          7.63      10.30      7.95      9.64 
Severance and ad valorem taxes            0.74      0.88      0.75      0.80 
DD&A expense            15.82      16.53      15.77      16.30 
                               
Total oil and gas operations – excluding synthetic oil operations                               
Lease operating expense          7.63      8.36      7.95      7.92 
Severance and ad valorem taxes            0.74      0.81      0.75      0.76 
DD&A expense            15.82      16.63      15.77      16.66 
 

* The Company sold its 5% non-operated interest in Syncrude Canada Ltd. on June 23, 2016.

 
MURPHY OIL CORPORATION OTHER FINANCIAL DATA (Unaudited) (Millions of dollars) 
 
          Three Months Ended        Six Months Ended   
          June 30,        June 30,   
          2017        2016        2017        2016   
Capital expenditures                                       
Exploration and production                                       
United States          124.3        35.2        222.7        100.7   
Canada            47.8        240.9      136.0        273.5 
Malaysia            9.3        14.4        11.1        41.9   
Other            16.1        16.0        41.4        26.8   
Total            197.5        306.5        411.2        442.9   
                                       
Corporate            3.0        12.3        3.8        20.7   
Total capital expenditures            200.5        318.8        415.0        463.6   
                                       
Charged to exploration expenses1                                       
United States            1.6        0.5        3.6        2.2   
Canada            0.1        0.1        0.2        3.3   
Malaysia            –        4.7        3.2        4.6   
Other            8.2        16.9        21.6        28.5   
Total charged to exploration expenses            9.9        22.2        28.6        38.6   
                                       
Total capitalized          190.6        296.6        386.4        425.0   
                                       
1 Excludes amortization of undeveloped leases of          10.3        14.9        20.3        25.4   

2 Includes costs of $206.7 million associated with acquisition of Kaybob Duvernay and liquids rich Montney.

 
MURPHY OIL CORPORATION 
CONDENSED BALANCE SHEET (Unaudited) 
(Millions of dollars) 
 
            June 30, 2017        December 31, 2016 
                     
Assets                     
Cash and cash equivalents          1,058.5        872.8 
Canadian government securities            40.1        111.5 
Other current assets            442.0        574.8 
Property, plant and equipment – net            8,164.1        8,316.2 
Other long-term assets            432.1        420.6 
Total assets          10,136.8        10,295.9 
                     
Liabilities and Stockholders' Equity                     
Current maturities of long-term debt          559.2        569.8 
Other current liabilities            798.5        932.6 
Long-term debt*            2,367.1        2,422.8 
Other long-term liabilities            1,434.3        1,454.0 
Total stockholders' equity            4,977.7        4,916.7 
Total liabilities and stockholders' equity          10,136.8        10,295.9 
 

* Includes a capital lease on production equipment of $137.9 million at June 30, 2017 and $195.8 million at December 31, 2016.

 
MURPHY OIL CORPORATION STATISTICAL SUMMARY 
 
          Three Months Ended        Six Months Ended 
          June 30,        June 30, 
          2017        2016        2017        2016 
Net crude oil and condensate produced – barrels per day          89,033        98,995        92,300        111,235 
United States – Eagle Ford Shale          33,195        34,563        33,397        38,550 
– Gulf of Mexico          11,329        12,564        11,844        13,331 
Canada – onshore          3,051        950        2,470        540 
– offshore          8,199        7,217        9,053        8,020 
– heavy1          –        2,200        303        2,759 
– synthetic1          –        3,093        –        9,326 
Malaysia – Sarawak          13,176        13,944        13,346        13,490 
– Block K          20,083        24,464        21,887        25,219 
                                   
Net crude oil and condensate sold – barrels per day          86,851        96,918        88,361        108,054 
United States – Eagle Ford Shale          33,195        34,563        33,397        38,550 
– Gulf of Mexico          11,329        12,564        11,844        13,331 
Canada – onshore          3,051        950        2,470        540 
– offshore          8,938        7,315        8,463        8,348 
– heavy1          –        2,200        303        2,759 
– synthetic1          –        3,093        –        9,326 
Malaysia – Sarawak          13,495        9,666        13,486        11,712 
– Block K          16,843        26,567        18,398        23,488 
                                   
Net natural gas liquids produced – barrels per day          9,374        8,883        9,145        9,058 
United States – Eagle Ford Shale          6,921        6,751        6,884        6,988 
– Gulf of Mexico          880        1,468        996        1,347 
Canada          457        164        359        88 
Malaysia – Sarawak          1,116        500        906        635 
                                   
Net natural gas liquids sold – barrels per day          8,902        9,339        9,140        9,550 
United States – Eagle Ford Shale          6,921        6,751        6,884        6,988 
– Gulf of Mexico          880        1,468        996        1,347 
Canada          457        164        359        88 
Malaysia – Sarawak          644        956        901        1,127 
                                   
Net natural gas sold – thousands of cubic feet per day          386,700        364,582        387,457        373,864 
United States – Eagle Ford Shale          34,835        36,113        34,583        37,203 
– Gulf of Mexico          11,625        16,779        11,868        20,094 
Canada          220,171        204,753        218,641        207,288 
Malaysia – Sarawak          112,993        96,057        114,767        97,155 
– Block K          7,076        10,880        7,598        12,124 
                                   
Total net hydrocarbons produced – equivalent barrels per day2          162,857        168,642        166,021        182,604 
Total net hydrocarbons sold – equivalent barrels per day2          160,203        167,021        162,077        179,915 
 

1 The Company sold the Seal area heavy oil field in January 2017 and its 5% non-operated interest in Syncrude Canada Ltd. in June 2016.

2 Natural gas converted on an energy equivalent basis of 6:1.

 
MURPHY OIL CORPORATION STATISTICAL SUMMARY (Continued) 
 
          Three Months Ended        Six Months Ended 
          June 30,        June 30, 
          2017        2016        2017        2016 
Weighted average sales prices                                   
Crude oil and condensate – dollars per barrel                                   
United States – Eagle Ford Shale          48.11        43.95        48.38        38.93 
– Gulf of Mexico            47.44          43.41          47.34          39.00 
Canada1 – onshore            42.04          39.35          43.98          33.74 
– offshore            48.93          44.51          50.07          36.82 
– heavy2            –          18.03          25.12          11.83 
– synthetic2            –          45.78          –          35.58 
Malaysia – Sarawak3            48.89          47.22          51.72          41.74 
– Block K3            50.44          46.53          50.59          41.97 
                                   
Natural gas liquids – dollars per barrel                                   
United States – Eagle Ford Shale          14.14        11.21        15.27        9.65 
– Gulf of Mexico            14.93          11.89          17.29          10.59 
Canada1            22.50          30.18          22.32          29.38 
Malaysia – Sarawak3            52.68          34.62          51.05          35.65 
                                   
Natural gas – dollars per thousand cubic feet                                   
United States – Eagle Ford Shale          2.59        1.38        2.56        1.43 
– Gulf of Mexico            2.62          1.46          2.59          1.62 
Canada1            2.06          1.33          2.08          1.44 
Malaysia – Sarawak3            3.57          3.29          3.49          3.52 
– Block K3            0.24          0.23          0.25          0.25 
 

1 U.S. dollar equivalent.

2 The Company sold the Seal area heavy oil field in January 2017 and its 5% non-operated interest in Syncrude Canada Ltd. in June 2016.

3 Prices are net of payments under the terms of the respective production sharing contracts.

 
MURPHY OIL CORPORATION COMMODITY HEDGE POSITIONS AS OF JUNE 30, 2017 
 
                        Volumes        Price        Remaining Period 
Area        Commodity        Type        (Bbl/d)        (USD/Bbl)        Start Date      End Date 
United States        WTI        Fixed price derivative swap        22,000        $50.41        7/1/2017      12/31/2017 
                                         
                        Volumes        Price        Remaining Period 
Area        Commodity        Type        (MMcf/d)        (Mcf)        Start Date      End Date 
Montney        Natural Gas        Fixed price forward sales        124        C$2.97        7/1/2017      12/31/2017 
Montney        Natural Gas        Fixed price forward sales        59        C$2.81        1/1/2018      12/31/2020 
Montney        Natural Gas        Fixed price forward sales        20        US $3.51      11/1/2017      3/31/2018 
 

*Title transfer at Alberta Alliance pipeline. Sale price fixed and transported to Chicago Gate.

 
MURPHY OIL CORPORATION THIRD QUARTER 2017 GUIDANCE 
 
              Liquids            Gas 
              BOPD            MCFD 
Production – net                           
U.S. – Eagle Ford Shale              42,000            31,500 
– Gulf of Mexico              9,500            10,500 
                           
Canada – Tupper Montney              –            213,000 
– Kaybob Duvernay and Placid Montney              4,000            18,000 
– Offshore              8,000            – 
Malaysia – Sarawak              11,500            95,500 
– Block K              19,500            6,500 
                           
                           
Total net production (BOEPD)              156,000 - 158,000 
                         
Total net sales (BOEPD)              157,000 - 160,000 
                         
Realized oil prices ($ per barrel):                         
Malaysia – Sarawak              $50.71 
– Block K              $51.26 
                         
Realized natural gas price ($ per MCF):                         
Malaysia – Sarawak              $3.75 
                         
Exploration expense ($ millions)              $42.0 
                         
                         
                         
FULL YEAR 2017 GUIDANCE 
               
Total production (BOEPD)              163,000 – 167,000 
               
Capital expenditures ($ millions)              $890.0 

Source: EvaluateEnergy® ©2020 EvaluateEnergy Ltd