Murphy Oil Corporation Announces Second Quarter Financial and Operating Results

Source Press Release
Company Murphy Oil Corporation 
Tags Eagle Ford, Asset Deals, Deals, Tight Gas & Liquids, Unconventional Resources, Upstream Activities, Guidance, Financial & Operating Data
Date August 08, 2019

Closed Gulf of Mexico Acquisition for $1.2 Billion and, Subsequent to Quarter End, Closed Malaysia Asset Divestiture for $2.0 Billion

Murphy Oil Corporation (NYSE: MUR) today reported financial and operating results for the quarter ended June 30, 2019, including net income attributable to Murphy of $92 million, or $0.54 per diluted share. Adjusted net income, which excludes discontinued operations and other one-off items, was $36 million, or $0.21 per diluted share.

The recently divested Malaysia assets were reported as “discontinued operations” and classified as “held for sale” for financial reporting purposes beginning with the first quarter 2019. Unless otherwise noted, the financial and operating highlights and metrics discussed in this commentary exclude discontinued operations and noncontrolling interest. 1

Operating highlights for the second quarter:

  • Produced 159 thousand barrels of oil equivalent per day, exceeding production guidance
  • Increased Eagle Ford Shale production over 23 percent as compared to first quarter 2019
  • Closed accretive deep water Gulf of Mexico transaction, which included the addition of over 73 million barrels of oil equivalent of proved reserves 2
  • Sanctioned three Gulf of Mexico projects that drive oil-weighted production growth
  • Divested non-core North Midland Basin acreage in Dawson County for approximate $20 million, with acreage still remaining in Andrews County

Financial highlights for the second quarter:

  • Repurchased approximately seven percent of outstanding shares for $300 million, resulting in cumulative share repurchases of more than $1.6 billion since 2012
  • Realized high-value EBITDA per barrel of oil equivalent sold of $35 for the Eagle Ford Shale and $38 for North America Offshore at the field level
  • Reduced lease operating expenses to below $9 per barrel of oil equivalent

Highlights subsequent to quarter end:

  • Closed the divestiture of Malaysia portfolio for $2.0 billion in cash proceeds
  • Drilled successful Hoffe Park #2 well in the Gulf of Mexico
  • Entered into additional crude oil commodity hedge contracts with combined average prices above $60 per barrel WTI for 2019 and 2020, underpinning multi-year capital program
  • Repaid $1.9 billion of debt on the balance sheet at quarter end, resulting in liquidity of more than $2.0 billion as of July 31, 2019

SECOND QUARTER 2019 RESULTS

The company recorded net income, attributable to Murphy, of $92 million, or $0.54 per diluted share, for the second quarter 2019. Adjusted net income, which excludes both the results of discontinued operations and certain other items that affect comparability of results between periods, was $36 million, or $0.21 per diluted share for the same period. The adjusted income from continuing operations excludes the following after-tax items: a $40 million mark-to-market non-cash gain on crude oil derivatives, a $13 million gain from the impact of foreign tax law changes and a $12 million mark-to-market non-cash loss on contingent consideration. Details for second quarter results can be found in the attached schedules.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations attributable to Murphy totaled $362 million, or $25 per barrel of oil equivalent (BOE) sold. Adjusted earnings before interest, tax, depreciation, amortization and exploration expenses (EBITDAX) from continuing operations attributable to Murphy equaled $393 million, or $28 per BOE sold. Details for second quarter EBITDA and EBITDAX reconciliations can be found in the attached schedules.

Second quarter production from continuing operations averaged 159 thousand barrels of oil equivalent per day (MBOEPD) with 67 percent liquids. Overall, production was above guidance due to reduced downtime and better performance from the company’s newly acquired Gulf of Mexico assets, as well as increased drilling efficiencies and asset outperformance in the onshore portfolio. Details for second quarter production can be found in the attached schedules.

“2019 is proving to be an excellent year for Murphy. We closed our Gulf of Mexico and Malaysia transactions, leading to a completely transformed portfolio. Our now simplified and concentrated Gulf Coast asset base, in the Eagle Ford Shale and Gulf of Mexico, has an extensive runway that is able to generate oil-weighted, high-margin production. Additionally, our Eagle Ford Shale team executed beyond their well delivery plan, further supporting forecasted growth expectations,” stated Roger W. Jenkins, President and Chief Executive Officer.

FINANCIAL POSITION

As of June 30, 2019, the company had total debt outstanding of $4.7 billion, consisting of $2.8 billion of outstanding long-term, fixed-rate notes, $1.4 billion of borrowings on the $1.6 billion unsecured senior credit facility and a $500 million unsecured senior term loan. The fixed-rate notes had a weighted average maturity of 7.3 years and a weighted average coupon of 5.5 percent. Subsequent to quarter end, the unsecured senior credit facility was repaid to a zero balance and the unsecured seniorterm loan was repaid and terminated.

As previously announced, Murphy completed $300 million in share repurchases in the second quarter 2019 at an average price of $26.34 per share. This share repurchase is part of the authorized $500 million program, which expires December 31, 2020. Overall, the company reduced its share count by 11.4 million shares, or approximately seven percent, to 162.3 million sharesoutstanding as of June 30, 2019.

As of July 31, 2019, liquidity totaled more than $2.0 billion, including approximately $450 million in cash and cash equivalents.

“I am very pleased with our financial position. We have completed the execution of a year-long business development plan that resulted in a transformed company with a strong liquidity position. Furthermore, I am most proud of setting up the company with an improved asset base capable of generating fourth quarter 2019 production of approximately 200,000 barrels of oil equivalent per day with more oil production and reserves, all while reducing share count and providing a leading dividend yield to our shareholders,” stated Jenkins.

REGIONAL OPERATIONS SUMMARY

North American Onshore

The North American onshore business produced approximately 93 MBOEPD in the second quarter.

Eagle Ford Shale – Production for the quarter averaged approximately 44 MBOEPD, a 23 percent increase over the previous quarter, and was comprised of 88 percent liquids, 74 percent oil. As planned, Murphy brought online 23 Karnes wells in the second quarter with six wells in the Austin Chalk, three wells in the Upper Eagle Ford Shale and 14 wells in the Lower Eagle Ford Shale. The Austin Chalk wells had gross 30-day (IP30 rate) rates averaging 925 barrels of oil equivalent per day (BOEPD), with the Upper Eagle Ford Shale wells averaging over 1,200 BOEPD IP30 and the Lower Eagle Ford Shale wells averaging 1,300 BOEPD IP30.

Additionally, the company advanced its 2019 drilling program ahead of schedule, bringing online an additional 12 Tilden wells in late June. The Tilden wells have achieved strong results, as eight Central Tilden wells exceeded expectations in the area with average IP30 rates over 1,350 BOEPD, and four East Tilden wells averaged 700 BOEPD IP30.

“Our Eagle Ford Shale well campaign is on track to achieve guided third quarter production of more than 50 thousand barrels of oil equivalent per day, with forecasted fourth quarter volumes approaching 57 thousand barrels of oil equivalent per day. The last time we experienced production at these high levels was in 2015,” stated Jenkins. “The team continues to improve efficiencies and reduce downtime, leading to operating expenses of $8.26 per barrel of oil equivalent in the second quarter.”

Tupper Montney – Natural gas production for the quarter averaged 219 million cubic feet per day (MMCFD). Murphy brought online five wells in Tupper Montney, with initial performance trending in line with an 18 Bcf type curve. No further drilling is planned for the remainder of the year.

Kaybob Duvernay – During the quarter, production averaged approximately 9 MBOEPD, comprised of 61 percent liquids. Murphy brought online two wells in Kaybob North and four wells in Two Creeks, with average facility-constrained IP30 rates of more than 1,050 BOEPD for Kaybob North and 750 BOEPD for Two Creeks. Drilling in this area will resume in the third quarter as part of ongoing re-risking along with satisfying lease maintenance requirements. These wells are expected to be brought online in 2020.

Global Offshore

The offshore business produced 65 MBOEPD for the second quarter, comprised of 91 percent liquids. This excludes production from discontinued operations. Gulf of Mexico production in the quarter averaged 58 MBOEPD, consisting of 90 percent liquids. Canada offshore production averaged 7 MBOEPD with 100 percent liquids.

Gulf of Mexico – As previously announced, on June 1, 2019 Murphy closed the Gulf of Mexico acquisition from LLOG Exploration Offshore, L.L.C. and LLOG Bluewater Holdings, L.L.C., (LLOG) for net cash consideration of $1.2 billion, after closingadjustments. The acquired assets are fully owned by Murphy and not part of MP Gulf of Mexico, LLC (MP GOM), the entity which owns all of Murphy’s legacy producing Gulf of Mexico assets. The contribution from the LLOG assets in the above volume was limited to one month only and averaged approximately 8,800 BOEPD over the quarter, exceeding guidance by over 1,200 BOEPD.

In the second quarter, Murphy successfully drilled and completed the Dalmatian #2 well (Desoto Canyon 4) with first oil expected in the fourth quarter and additional wells were brought online at the non-operated Lucius field. Third quarter Gulf of Mexico activity includes the tie-in of the new Dalmatian well to existing infrastructure and completion of the previously drilled Nearly Headless Nick well (Mississippi Canyon 387), which will tie back to the Delta House facility, with  first oil expected in the fourth quarter. Additionally, the company plans to initiate a workover at the Chinook #5 well (Walker Ridge 425) and expects to bring the well online in first quarter 2020.

In support of longer-term development, the company has sanctioned three additional Gulf of Mexico projects:

  • King’s Quay floating production system (FPS) facility to receive and process up to 80 MBOPD of production anchored by the Khaleesi/Mormont and Samurai developments.
  • Khaleesi/Mormont Field Development, with seven subsea wells, of which four were previously drilled, and infrastructure tie-back to King’s Quay.
  • Samurai Field Development, with four subsea wells and tie-back to King’s Quay.

“Our planned execution on our new Gulf of Mexico revitalized asset base continues. These projects have outstanding returns offering high-margin production and a free cash flow runway going forward. We and a partner have sanctioned a new midstream FPS asset, King’s Quay, to anchor our two developments. This new FPS asset could be easily monetized, and we are currently evaluating all our options. We forecast first production from the FPS along with our two new fields in mid-2022. Initial production from these assets is expected to exceed 30,000 BOEPD net at first oil,” stated Jenkins.

Southeast Asia – Brunei production was approximately 448 BOEPD for the quarter. Beginning in the third quarter, these assets will be classified as “held for sale” for financial reporting purposes.

EXPLORATION

Mexico Exploration – During the second quarter, Murphy entered an agreement to acquire a proportionate share of Ophir’s interest in Block 5 for approximately $15 million, resulting in 40 percent working interest, with Petronas and Wintershall DEA each increasing their ownership to 30 percent. This transaction remains subject to regulatory approval. Murphy has also initiated seismic reprocessing of both the Cholula Area and the western subsalt portion of the block.

Gulf of Mexico Exploration – Subsequent to the end of the second quarter, Murphy drilled a successful well at Hoffe Park #2 (Mississippi Canyon 122) with a 60 percent working interest for a total net cost of approximately $20 million. Murphy encountered oil in multiple zones and is completing the evaluation of the well.

COMMODITY HEDGE POSITIONS

The company employs derivative commodity instruments to manage certain risks associated with commodity prices and to underpin capital spending associated with certain assets. Subsequent to quarter end, Murphy entered into additional 2019 and 2020 WTI based fixed price derivative swaps. Details for the current hedge positions can be found in the attached schedules.

2019 CAPITAL EXPENDITURE AND PRODUCTION GUIDANCE

Following the closing of significant Gulf of Mexico and Malaysia transactions, Murphy’s planned 2019 capital program is now estimated to be in the range of $1.35 to $1.45 billion. The range includes $140 million of additional capital that is expected to be allocated toward the recently acquired Gulf of Mexico assets.

“It is important to note that the mid-point of our modified capex range is within our original guidance for 2019, even after all the significant portfolio changes we have completed. We plan to spend approximately $140 million on our newly acquired Gulf of Mexico assets, offsetting the previously allocated capital of $105 million in 2019 for our discontinued operations in Malaysia,” stated Jenkins.

Full year production is expected to be in the range of 174 to 178 MBOEPD, excluding noncontrolling interest. For the third quarter, Murphy estimates total production of 192 to 196 MBOEPD, comprised of 66 percent liquids.

“Murphy is positioned to achieve free cash flow growth over the long-term as we focus on investing in meaningful, high-returning, multi-year projects in the Gulf of Mexico. This coincides with our Eagle Ford Shale growth plans, as our team strategically and prudently allocates capital,” stated Jenkins.

The operated onshore well cadence for the year is updated to include the advanced drilling schedule, which moved Eagle Ford and Kabob Duvernay wells into the second quarter from the third quarter, as well as three wells in Simonette coming back online in the third quarter after the third-party midstream specification constraint prevented the wells from flowing to sales in the first half of the year.

2019 Operated Onshore Wells Online 
    1Q 2019A    2Q 2019A    3Q 2019E    4Q 2019E    2019 TotalE 
Eagle Ford Shale    13    35    25    18    91 
Kaybob Duvernay            10 
Tupper Montney           

Details for third quarter and full year guidance can be found in the attached schedules.

CONFERENCE CALL AND WEBCAST SCHEDULED FOR AUGUST 8, 2019

Murphy will host a conference call to discuss second quarter 2019 financial and operating results on Thursday, August 8, 2019, at 10:00 a.m. ET. 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 toll free 1-888-886-7786, reservation number 89637238.

FINANCIAL DATA

Summary financial data and operating statistics for second quarter 2019, 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, as well as a reconciliation of adjusted net income, EBITDA and EBITDAX between periods and guidance for the third quarter 2019, are also included.

1With the close of the previously announced Gulf of Mexico transaction in the fourth quarter 2018, and 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 will 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, will exclude the NCI, thereby representing only the amounts attributable to Murphy.

2Transaction reserves are based on external third party engineering estimates by Ryder Scott Petroleum Consultants as of January 1, 2019, using strip prices in effect on April 12, 2019.

MURPHY OIL CORPORATION SUMMARIZED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) 
       
(Thousands of dollars, except per share amounts)  Three Months Ended 
June 30, 
  Six Months Ended 
June 30, 2019 
  2019    2018 1    2019    2018 1 
Revenues               
Revenue from sales to customers  646,114      426,767      1,236,664      823,096   
Gain (loss) on crude contracts  57,916      (37,624    57,916      (67,126 
Gain on sale of assets and other income  5,019      437      5,473      8,400   
Total revenues  709,049      389,580      1,300,053      764,370   
Costs and expenses               
Lease operating expenses  137,132      81,236      268,828      170,069   
Severance and ad valorem taxes  13,072      12,876      23,169      25,033   
Exploration expenses, including undeveloped lease amortization  30,674      18,889      63,212      47,627   
Selling and general expenses  57,532      56,295      120,892      104,391   
Depreciation, depletion and amortization  264,302      190,751      493,708      373,494   
Accretion of asset retirement obligations  9,897      6,396      19,237      12,768   
Other expense (benefit)  25,437      658      55,442      (10,387 
Total costs and expenses  538,046      367,101      1,044,488      722,995   
Operating income from continuing operations  171,003      22,479      255,565      41,375   
Other income (loss)               
Interest and other income (loss)  (8,968    (717    (13,716    3,870   
Interest expense, net  (54,096    (44,325    (100,165    (88,866 
Total other loss  (63,064    (45,042    (113,881    (84,996 
Income (loss) from continuing operations before income taxes  107,939      (22,563    141,684      (43,621 
Income tax expense (benefit)  9,115      2,622      19,937      (109,017 
Income (loss) from continuing operations  98,824      (25,185    121,747      65,396   
Income from discontinued operations, net of income taxes  24,418      70,704      74,264      148,376   
Net income including noncontrolling interest  123,242      45,519      196,011      213,772   
Less: Net income attributable to noncontrolling interest  30,970      —      63,557      —   
NET INCOME ATTRIBUTABLE TO MURPHY  92,272      45,519      132,454      213,772   
               
INCOME (LOSS) PER COMMON SHARE – BASIC               
Continuing operations  0.40      (0.14    0.34      0.38   
Discontinued operations  0.15      0.41      0.44      0.86   
Net Income  0.55      0.27      0.78      1.24   
               
INCOME (LOSS) PER COMMON SHARE – DILUTED               
Continuing operations  0.40      (0.15    0.34      0.37   
Discontinued operations  0.14      0.40      0.43      0.85   
Net Income  0.54      0.25      0.77      1.22   
Cash dividends per Common share  0.25      0.25      0.50      0.50   
Average Common shares outstanding (thousands)               
Basic  168,538      173,043      170,556      172,908   
Diluted  169,272      173,983      171,433      174,927   
1 Reclassified to conform to current presentation. 
MURPHY OIL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) 
       
(Thousands of dollars)  Three Months Ended 
June 30, 
  Six Months Ended 
June 30, 
  2019    2018 1    2019    2018 1 
Operating Activities               
Net income including noncontrolling interest  123,242      45,519      196,011      213,772   
Adjustments to reconcile net income to net cash provided by continuing operations activities:               
(Income) loss from discontinued operations  (24,418    (70,704    (74,264    (148,376 
Depreciation, depletion and amortization  264,302      190,751      493,708      373,494   
Previously suspended exploration costs (credits)  (350    (3    12,901      (8 
Amortization of undeveloped leases  7,105      9,606      15,150      22,774   
Accretion of asset retirement obligations  9,897      6,396      19,237      12,768   
Deferred income tax charge (benefit)  2,412      (937    18,001      (148,653 
Pretax (gain) loss from sale of assets  —      (221    (12    118   
Mark to market and revaluation of contingent consideration  15,360      —      28,890      —   
Mark to market of crude contracts  (50,831    12,738      (50,831    27,088   
Long-term non-cash compensation  22,367      14,953      44,755      29,010   
Net (increase) decrease in noncash operating working capital  93,139      26,051      (5,366    22,498   
Other operating activities, net  (23,991    (13,355    (42,749    (72,804 
Net cash provided by continuing operations activities  438,234      220,794      655,431      331,681   
Investing Activities               
Acquisition of oil and gas properties  (1,226,261    —      (1,226,261    —   
Property additions and dry hole costs  (374,831    (318,183    (645,169    (565,237 
Proceeds from sales of property, plant and equipment  16,816      361      16,816      621   
Net cash required by investing activities  (1,584,276    (317,822    (1,854,614    (564,616 
Financing Activities               
Borrowings on revolving credit facility  1,075,000      —      1,075,000      —   
Proceeds from term loan  500,000      —      500,000      —   
Repurchase of common stock  (299,924    —      (299,924    —   
Capital lease obligation payments  (175    —      (335    —   
Withholding tax on stock-based incentive awards  —      (280    (6,991    (6,922 
Distribution to noncontrolling interest  (50,339    —      (68,776    —   
Cash dividends paid  (42,105    (43,259    (85,503    (86,517 
Net cash provided (required) by financing activities  1,182,457      (43,539    1,113,471      (93,439 
Cash Flows from Discontinued Operations 2               
Operating activities  (1,197    123,463      122,272      290,849   
Investing activities  (23,360    (23,062    (49,798    (49,910 
Financing activities  (2,367    (2,243    (4,914    (4,648 
Net cash provided by discontinued operations  (26,924    98,158      67,560      236,291   
Cash transferred from discontinued operations to continuing operations  2,485      92,602      48,565      464,258   
Effect of exchange rate changes on cash and cash equivalents  863      3,331      3,268      24,382   
Net increase (decrease) in cash and cash equivalents  39,763      (44,634    (33,879    162,266   
Cash and cash equivalents at beginning of period  286,281      837,333      359,923      630,433   
Cash and cash equivalents at end of period  326,044      792,699      326,044      792,699   
1 Reclassified to current presentation. 2 Cash flows from discontinued operations are not part of the cash flow reconciliation. 
MURPHY OIL CORPORATION SCHEDULE OF ADJUSTED INCOME (LOSS) (unaudited) 
       
(Millions of dollars, except per share amounts)  Three Months Ended 
June 30, 
  Six Months Ended 
June 30, 
  2019    2018    2019    2018 
Net income attributable to Murphy (GAAP)  92.3      45.5      132.5      213.8   
Discontinued operations loss (income)  (24.4    (70.7    (74.3    (148.4 
Income (loss) from continuing operations  67.9      (25.2    58.2      65.4   
Adjustments:               
Mark-to-market (gain) loss on crude oil derivative contracts  (40.2    10.1      (40.2    21.4   
Mark-to-market (gain) loss on contingent consideration  12.1      —      22.8      —   
Business development transaction costs  6.2      —      16.0      —   
Impact of tax reform  (13.0    —      (13.0    (120.0 
Write-off of previously suspended exploration wells  —      —      13.2      —   
Foreign exchange losses (gains)  2.7      7.1      5.1      (4.8 
Seal insurance proceeds  —      —      —      (8.2 
Total adjustments after taxes  (32.2    17.2      3.9      (111.6 
Adjusted income (loss) from continuing operations attributable to Murphy  35.7      (8.0    62.1      (46.2 
               
Adjusted income (loss) from continuing operations per average diluted share  0.21      (0.05    0.36      (0.26 

Non-GAAP Financial Measures

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

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

(Millions of dollars)  Three Months Ended June 30, 2019    Six Months Ended June 30, 2019 
  Pretax    Tax    Net    Pretax    Tax    Net 
Exploration & Production:                       
United States  21.7      (4.6    17.1      47.7      (10.0    37.7   
Canada  —      (13.0    (13.0    —      (13.0    (13.0 
Other International  —      —      —      13.2      —      13.2   
Total E&P  21.7      (17.6    4.1      60.9      (23.0    37.9   
Corporate:  (46.3    10.0      (36.3    (43.8    9.8      (34.0 
Total adjustments  (24.6    (7.6    (32.2    17.1      (13.2    3.9   
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 
June 30, 
  Six Months Ended 
June 30, 
  2019    2018    2019    2018 
Net income attributable to Murphy (GAAP)  92.3      45.5      132.5      213.8   
Discontinued operations loss (income)  (24.4    (70.7    (74.3    (148.4 
Income tax expense (benefit)  9.1      2.6      19.9      (109.0 
Interest expense, net  54.1      44.3      100.2      88.9   
Depreciation, depletion and amortization expense 1  246.0      190.8      458.1      373.5   
EBITDA attributable to Murphy (Non-GAAP)  377.1      212.5      636.4      418.8   
Mark-to-market (gain) loss on crude oil derivative contracts  (50.8    (12.7    (50.8    (27.1 
Mark-to-market (gain) loss on contingent consideration  15.4      —      28.9      —   
Business development transaction costs  7.8      —      20.3      —   
Accretion of asset retirement obligations  9.9      6.4      19.2      12.8   
Write-off of previously suspended exploration wells  —      —      13.2      —   
Foreign exchange losses (gains)  3.0      (12.2    5.6      4.4   
Seal insurance proceeds  —      —      —      (8.2 
Adjusted EBITDA attributable to Murphy (Non-GAAP)  362.4      194.0      672.8      400.7   
               
Total barrels of oil equivalents sold from continuing operations attributable to Murphy (thousands of barrels)  14,268.9      11,019.0      27,766.0      21,550.7   
               
EBITDA per barrel of oil equivalents sold  26.43      19.28      22.92      19.43   
Adjusted EBITDA per barrel of oil equivalents sold  25.40      17.61      24.23      18.59   

Non-GAAP Financial Measures

Presented above is a reconciliation of Net 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 income (loss) or Cash provided by operating activities as determined in accordance with accounting principles generally accepted in the United States of America.

Presented above is EBITDA per barrel of oil equivalent sold and adjusted EBITDA per barrel of oil equivalent sold. Management believes EBITDA per barrel of oil equivalent sold and adjusted EBITDA per barrel of oil equivalent sold are important information because they are used by management to evaluate the Company’s profitability of one barrel of oil equivalent sold in that period. EBITDA per barrel of oil equivalent sold and adjusted EBITDA per barrel of oil equivalent sold are non-GAAP financial metrics.

1 Depreciation, depletion, and amortization expense used in the computation of EBITDA excludes the portion attributable to the non-controlling interest.

MURPHY OIL CORPORATION SCHEDULE OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION AND EXPLORATION (EBITDAX) (unaudited) 
       
(Millions of dollars, except per barrel of oil equivalents sold)  Three Months Ended 
June 30, 
  Six Months Ended 
June 30, 
  2019    2018    2019    2018 
Net income attributable to Murphy (GAAP)  92.3      45.5      132.5      213.8   
Discontinued operations loss (income)  (24.4    (70.7    (74.3    (148.4 
Income tax expense (benefit)  9.1      2.6      19.9      (109.0 
Interest expense, net  54.1      44.3      100.2      88.9   
Depreciation, depletion and amortization expense 1  246.0      190.8      458.1      373.5   
EBITDA attributable to Murphy (Non-GAAP)  377.1      212.5      636.4      418.8   
Exploration expenses  30.7      18.9      63.2      47.6   
EBITDAX attributable to Murphy (Non-GAAP)  407.8      231.4      699.6      466.4   
Mark-to-market (gain) loss on crude oil derivative contracts  (50.8    (12.7    (50.8    (27.1 
Mark-to-market (gain) loss on contingent consideration  15.4      —      28.9      —   
Business development transaction costs  7.8      —      20.3      —   
Accretion of asset retirement obligations  9.9      6.4      19.2      12.8   
Foreign exchange losses (gains)  3.0      (12.2    5.6      4.4   
Seal insurance proceeds  —      —      —      (8.2 
Adjusted EBITDAX attributable to Murphy (Non-GAAP)  393.1      212.9      722.8      448.3   
               
Total barrels of oil equivalents sold from continuing operations attributable to Murphy (thousands of barrels)  14,268.9      11,019.0      27,766.0      21,550.7   
               
EBITDAX per barrel of oil equivalents sold  28.58      21.00      25.20      21.64   
Adjusted EBITDAX per barrel of oil equivalents sold  27.55      19.32      26.03      20.80   

Non-GAAP Financial Measures

Presented above is a reconciliation of Net 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 income (loss) or Cash provided by operating activities as determined in accordance with accounting principles generally accepted in the United States of America.

Presented above is EBITDAX per barrel of oil equivalent sold and adjusted EBITDAX per barrel of oil equivalent sold. Management believes EBITDAX per barrel of oil equivalent sold and adjusted EBITDAX per barrel of oil equivalent sold are important information because they are used by management to evaluate the Company’s profitability of one barrel of oil equivalent sold in that period. EBITDAX per barrel of oil equivalent sold and adjusted EBITDAX per barrel of oil equivalent sold are non-GAAP financial metrics.

1 Depreciation, depletion, and amortization expense used in the computation of EBITDA excludes the portion attributable to the non-controlling interest.

MURPHY OIL CORPORATION FUNCTIONAL RESULTS OF OPERATIONS (unaudited) 
     
  Three Months Ended 
June 30, 2019 
Three Months Ended 
June 30, 2018 
(Millions of dollars)  Revenues  Income (Loss)  Revenues  Income (Loss) 
Exploration and production         
United States1  549.0    133.0    318.8    72.6   
Canada  94.8    (5.9  108.4    9.7   
Other  3.1    (3.4  —    (15.0 
Total exploration and production  646.9    123.7    427.2    67.3   
Corporate  62.1    (24.9  (37.6  (92.5 
Revenue/income from continuing operations  709.0    98.8    389.6    (25.2 
Discontinued operations, net of tax 2  —    24.4    —    70.7   
Total revenues/net income (loss)  709.0    123.2    389.6    45.5   
     
  Six Months Ended 
June 30, 2019 
Six Months Ended 
June 30, 2018 
(Millions of dollars)  Revenues  Income 
(Loss) 
Revenues  Income 
(Loss) 
Exploration and production         
United States1  1,018.2    249.2    596.9    108.7   
Canada  213.7    1.6    226.7    34.3   
Other  6.0    (31.7  —    (30.5 
Total exploration and production  1,237.9    219.1    823.6    112.5   
Corporate  62.2    (97.4  (59.2  (47.1 
Revenue/income from continuing operations  1,300.1    121.7    764.4    65.4   
Discontinued operations, net of tax 2  —    74.3    —    148.4   
Total revenues/net income (loss)  1,300.1    196.0    764.4    213.8   
1 2019 includes results attributable to a noncontrolling interest in MP Gulf of Mexico, LLC (MP GOM). 2 Malaysia is reported as discontinued operations effective January 1, 2019. 
MURPHY OIL CORPORATION OIL AND GAS OPERATING RESULTS (unaudited) THREE MONTHS ENDED JUNE 30, 2019, AND 2018 
         
(Millions of dollars)  United States 1  Canada  Other  Total 
Three Months Ended June 30, 2019         
Oil and gas sales and other operating revenues  549.0    94.8    3.1    646.9   
Lease operating expenses  99.7    36.9    0.6    137.2   
Severance and ad valorem taxes  12.8    0.3    —    13.1   
Depreciation, depletion and amortization  201.2    56.8    1.3    259.3   
Accretion of asset retirement obligations  8.4    1.5    —    9.9   
Exploration expenses         
Dry holes and previously suspended exploration costs  (0.2  —    —    (0.2 
Geological and geophysical  15.4    —    2.4    17.8   
Other exploration  2.8    0.1    3.1    6.0   
  18.0    0.1    5.5    23.6   
Undeveloped lease amortization  5.9    0.4    0.9    7.2   
Total exploration expenses  23.9    0.5    6.4    30.8   
Selling and general expenses  12.9    6.1    6.1    25.1   
Other  27.9    0.2    0.1    28.2   
Results of operations before taxes  162.2    (7.5  (11.4  143.3   
Income tax provisions (benefits)  29.2    (1.6  (8.0  19.6   
Results of operations (excluding corporate overhead and interest)  133.0    (5.9  (3.4  123.7   
         
Three Months Ended June 30, 2018         
Oil and gas sales and other operating revenues  318.8    108.4    —    427.2   
Lease operating expenses  52.0    29.2    —    81.2   
Severance and ad valorem taxes  12.7    0.2    —    12.9   
Depreciation, depletion and amortization  128.3    56.8    0.7    185.8   
Accretion of asset retirement obligations  4.5    1.9    —    6.4   
Exploration expenses         
Geological and geophysical  0.2    —    0.7    0.9   
Other exploration  2.4    —    5.9    8.3   
  2.6    —    6.6    9.2   
Undeveloped lease amortization  8.7    0.2    0.7    9.6   
Total exploration expenses  11.3    0.2    7.3    18.8   
Selling and general expenses  10.5    6.6    5.9    23.0   
Other  6.9    0.3    1.1    8.3   
Results of operations before taxes  92.6    13.2    (15.0  90.8   
Income tax provisions (benefits)  20.0    3.5    —    23.5   
Results of operations (excluding corporate overhead and interest)  72.6    9.7    (15.0  67.3   
1 2019 includes results attributable to a noncontrolling interest in MP GOM.                 
MURPHY OIL CORPORATION OIL AND GAS OPERATING RESULTS (unaudited) SIX MONTHS ENDED JUNE 30, 2019, AND 2018 
         
(Millions of dollars)  United States 1  Canada  Other  Total 
Six Months Ended June 30, 2019         
Oil and gas sales and other operating revenues  1,018.2    213.7    6.0    1,237.9   
Lease operating expenses  192.1    75.9    0.9    268.9   
Severance and ad valorem taxes  22.6    0.6    —    23.2   
Depreciation, depletion and amortization  365.1    116.3    2.3    483.7   
Accretion of asset retirement obligations  16.2    3.0    —    19.2   
Exploration expenses         
Dry holes and previously suspended exploration costs  (0.1  —    13.1    13.0   
Geological and geophysical  15.9    —    7.9    23.8   
Other exploration  4.0    0.2    7.1    11.3   
  19.8    0.2    28.1    48.1   
Undeveloped lease amortization  12.8    0.7    1.7    15.2   
Total exploration expenses  32.6    0.9    29.8    63.3   
Selling and general expenses  30.2    13.7    11.7    55.6   
Other  58.5    0.4    0.4    59.3   
Results of operations before taxes  300.9    2.9    (39.1  264.7   
Income tax provisions (benefits)  51.7    1.3    (7.4  45.6   
Results of operations (excluding corporate overhead and interest)  249.2    1.6    (31.7  219.1   
         
Six Months Ended June 30, 2018         
Oil and gas sales and other operating revenues  596.9    226.7    —    823.6   
Lease operating expenses  110.5    59.5    —    170.0   
Severance and ad valorem taxes  24.5    0.5    —    25.0   
Depreciation, depletion and amortization  249.9    112.5    1.5    363.9   
Accretion of asset retirement obligations  8.9    3.9    —    12.8   
Exploration expenses         
Geological and geophysical  6.2    —    3.6    9.8   
Other exploration  3.6    0.1    11.3    15.0   
  9.8    0.1    14.9    24.8   
Undeveloped lease amortization  21.4    0.4    1.0    22.8   
Total exploration expenses  31.2    0.5    15.9    47.6   
Selling and general expenses  24.9    14.3    11.9    51.1   
Other  7.7    (11.4  1.0    (2.7 
Results of operations before taxes  139.3    46.9    (30.3  155.9   
Income tax provisions (benefits)  30.6    12.6    0.2    43.4   
Results of operations (excluding corporate overhead and interest)  108.7    34.3    (30.5  112.5   
1 2019 includes results attributable to a noncontrolling interest in MP GOM.                   
MURPHY OIL CORPORATION PRODUCTION-RELATED EXPENSES (unaudited) 
       
(Dollars per barrel of oil equivalents sold)  Three Months Ended 
June 30, 
  Six Months Ended 
June 30, 
  2019    2018    2019    2018 
Continuing operations               
United States – Eagle Ford Shale               
Lease operating expense  8.26      8.09      10.33      8.22   
Severance and ad valorem taxes  3.16      3.15      3.10      3.08   
Depreciation, depletion and amortization (DD&A) expense  23.56      24.50      23.71      24.67   
               
United States – Gulf of Mexico               
Lease operating expense  10.63      11.02      9.37      14.10   
DD&A expense  17.03      16.86      15.45      17.08   
               
Canada – Onshore               
Lease operating expense  6.15      4.92      6.02      4.88   
Severance and ad valorem taxes  0.07      0.03      0.07      0.06   
DD&A expense  10.87      10.55      10.95      10.36   
               
Canada – Offshore               
Lease operating expense  15.91      9.94      16.73      10.50   
DD&A expense  14.31      12.57      13.98      13.06   
               
Total oil and gas continuing operations               
Lease operating expense  8.93      7.37      8.93      7.89   
Severance and ad valorem taxes  0.85      1.17      0.77      1.16   
DD&A expense  17.21      17.31      16.40      17.33   
               
Total oil and gas continuing operations – excluding noncontrolling interest               
Lease operating expense  8.86      7.37      8.94      7.89   
Severance and ad valorem taxes  0.92      1.17      0.83      1.16   
DD&A expense  17.24      17.31      16.50      17.33   
MURPHY OIL CORPORATION OTHER FINANCIAL DATA (unaudited) 
(Millions of dollars)  Three Months Ended 
June 30, 
  Six Months Ended 
June 30, 
  2019    2018    2019    2018 
Capital expenditures for continuing operations               
Exploration and production               
United States 1  1,541.3      178.9      1,746.8      326.4   
Canada  60.0      83.3      155.7      202.3   
Other  23.1      8.0      64.4      17.7   
Total  1,624.4      270.2      1,966.9      546.4   
               
Corporate  3.1      5.1      5.6      7.9   
Total capital expenditures - continuing operations  1,627.5      275.3      1,972.5      554.3   
               
Charged to exploration expenses 2               
United States  18.0      2.6      19.8      9.8   
Canada  0.1      —      0.2      0.1   
Other  5.5      6.6      28.1      14.9   
Total charged to exploration expenses - continuing operations  23.6      9.2      48.1      24.8   
               
Total capitalized 3  1,603.9      266.1      1,924.4      529.5   
Memo: Capital expenditures on discontinued operations  38.0      25.1      59.6      44.0   
1 Includes $1,226.3 million for acquisition of exploration and production properties in the US Gulf of Mexico in the three-months and six-months ended June 30, 2019. 2 Excludes amortization of undeveloped leases of $7.2 million and $15.2 million for the three-month and six months ended June 30, 2019 and $9.6 million and $22.8 million for the three-month and six months ended June 30, 2018. 3 Includes noncontrolling interest capital expenditures of $10.1 million and $23.2 million for the three-month and six months ended June 30, 2019. 
MURPHY OIL CORPORATION CONDENSED BALANCE SHEETS (unaudited) 
(Millions of dollars)  June 30, 2019    December 31, 2018 1 
Assets       
Cash and cash equivalents  326.0      359.9   
Other current assets 2  2,425.8      520.0   
Property, plant and equipment – net  10,041.2      8,432.1   
Other long-term assets  742.9      1,740.6   
Total assets  13,535.9      11,052.6   
       
Liabilities and Stockholders' Equity       
Current maturities of long-term debt  0.7      0.7   
Short-term loan payable  500.0      —   
Other current liabilities 2  1,702.1      845.4   
Long-term debt  4,185.9      3,109.3   
Other long-term liabilities  2,048.7      1,899.6   
Total equity 3,4  5,098.5      5,197.6   
Total liabilities and stockholders' equity  13,535.9      11,052.6   
1 Reclassified to conform to current presentation. 2 Includes $1,863.8 million and $772.8 million in 2019 in Other current assets and Other current liabilities, respectively, classified as held for sale and related to Malaysia. 3 Includes noncontrolling interest of $358.5 million and $368.3 million as of June 30, 2019 and December 31, 2018, respectively. 4 Number of shares of Common Stock, $1.00 par value, outstanding at June 30, 2019 was 162,250,593. 
MURPHY OIL CORPORATION PRODUCTION SUMMARY (unaudited) 
    Three Months Ended 
June 30, 
  Six Months Ended 
June 30, 
Barrels per day unless otherwise noted  2019    2018    2019    2018 
Continuing operations                 
Net crude oil and condensate               
United States  Onshore  33,145      31,936      29,532      31,630   
  Gulf of Mexico 1  61,062      15,365      61,055      14,113   
Canada  Onshore  5,943      5,254      6,199      4,809   
  Offshore  6,685      7,982      7,304      8,085   
Other    448      580      477      582   
Total net crude oil and condensate - continuing operations  107,283      61,117      104,567      59,219   
Net natural gas liquids                 
United States  Onshore  5,977      6,824      5,641      6,772   
  Gulf of Mexico 1  3,118      1,391      2,940      1,114   
Canada  Onshore  1,073      1,033      1,083      959   
Total net natural gas liquids - continuing operations  10,168      9,248      9,664      8,845   
Net natural gas – thousands of cubic feet per day               
United States  Onshore  32,209      32,679      30,752      31,894   
  Gulf of Mexico 1  39,029      14,284      29,356      13,548   
Canada  Onshore  249,367      264,748      252,120      263,036   
Total net natural gas - continuing operations  320,605      311,711      312,228      308,478   
Total net hydrocarbons - continuing operations including NCI 2,3  170,885      122,317      166,269      119,477   
Noncontrolling interest                 
Net crude oil and condensate – barrels per day  (11,160    —      (11,669    —   
Net natural gas liquids – barrels per day  (458    —      (506    —   
Net natural gas – thousands of cubic feet per day  (4,507    —      (4,203    —   
Total noncontrolling interest  (12,369    —      (12,876    —   
Total net hydrocarbons - continuing operations excluding NCI 2,3  158,516      122,317      153,394      119,477   
Discontinued operations                 
Net crude oil and condensate – barrels per day  21,556      28,950      23,744      30,084   
Net natural gas liquids – barrels per day  529      872      636      665   
Net natural gas – thousands of cubic feet per day 2  93,382      113,125      97,465      114,195   
Total discontinued operations  37,649      48,676      40,624      49,782   
Total net hydrocarbons produced excluding NCI 2,3  196,165      170,993      194,018      169,259   
1 2019 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. 
MURPHY OIL CORPORATION
SALES SUMMARY 
(unaudited) 
 
    Three Months Ended 
June 30, 
  Six Months Ended 
June 30, 
Barrels per day unless otherwise noted  2019    2018    2019    2018 
Continuing operations                 
Net crude oil and condensate               
United States  Onshore  33,145      31,936      29,532      31,630   
  Gulf of Mexico 1  58,842      15,365      61,053      14,113   
Canada  Onshore  5,943      5,254      6,199      4,809   
  Offshore  6,723      7,333      7,324      8,255   
Other    470      —      468      —   
Total net crude oil and condensate - continuing operations  105,123      59,888      104,576      58,807   
Net natural gas liquids               
United States  Onshore  5,977      6,824      5,641      6,772   
  Gulf of Mexico 1  3,118      1,391      2,940      1,114   
Canada  Onshore  1,073      1,033      1,083      959   
Total net natural gas liquids - continuing operations  10,168      9,248      9,664      8,845   
Net natural gas – thousands of cubic feet per day               
United States  Onshore  32,209      32,679      30,752      31,894   
  Gulf of Mexico 1  39,029      14,284      29,356      13,548   
Canada  Onshore  249,367      264,748      252,120      263,036   
Total net natural gas - continuing operations  320,605      311,711      312,228      308,478   
Total net hydrocarbons - continuing operations including NCI 2,3  168,725      121,088      166,278      119,065   
Noncontrolling interest                 
Net crude oil and condensate – barrels per day  (10,715    —      (11,669    —   
Net natural gas liquids – barrels per day  (458    —      (506    —   
Net natural gas – thousands of cubic feet per day 2  (4,507    —      (4,203    —   
Total noncontrolling interest  (11,924    —      (12,876    —   
Total net hydrocarbons - continuing operations excluding NCI 2,3  156,801      121,088      153,403      119,065   
                 
Discontinued operations                 
Net crude oil and condensate – barrels per day  21,121      30,107      23,676      30,031   
Net natural gas liquids – barrels per day  498      632      580      798   
Net natural gas – thousands of cubic feet per day 2  93,382      113,125      97,465      114,195   
Total discontinued operations  37,183      49,593      40,500      49,862   
Total net hydrocarbons sold excluding NCI 2,3  193,984      170,681      193,903      168,927   
1 2019 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. 
MURPHY OIL CORPORATION
PRICE SUMMARY 
(unaudited) 
         
    Three Months Ended 
June 30, 
  Six Months Ended 
June 30, 
    2019    2018    2019    2018 
Weighted average Exploration and Production sales prices               
Continuing operations                 
Crude oil and condensate – dollars per barrel                 
United States  Onshore  63.72      68.14      60.95      66.24   
  Gulf of Mexico 1  62.41      68.11      58.84      65.81   
Canada 2  Onshore  48.94      59.45      47.97      57.12   
  Offshore  67.86      72.40      64.39      68.69   
Other    73.05      —      70.50      —   
Natural gas liquids – dollars per barrel                 
United States  Onshore  11.73      21.29      12.29      20.62   
  Gulf of Mexico 1  10.53      23.27      13.46      23.01   
Canada 2  Onshore  28.37      36.66      31.78      39.83   
Natural gas – dollars per thousand cubic feet                 
United States  Onshore  1.89      2.11      2.04      2.25   
  Gulf of Mexico 1  1.87      2.18      1.72      2.36   
Canada 2  Onshore  1.07      1.17      1.51      1.42   
Discontinued operations                 
Crude oil and condensate – dollars per barrel                     
Malaysia 3  Sarawak  78.25      69.72      70.32      67.13   
  Block K  65.79      67.20      65.56      65.20   
Natural gas liquids – dollars per barrel                 
Malaysia 3  Sarawak  40.81      69.61      47.42      70.57   
Natural gas – dollars per thousand cubic feet                 
Malaysia 3  Sarawak  2.57      3.86      3.60      3.62   
  Block K  0.24      0.25      0.24      0.24   
1 Prices include the effect of noncontrolling interest share for MP GOM. 
2 U.S. dollar equivalent. 
3 Prices are net of certain payments under the terms of the respective production sharing contracts. 
MURPHY OIL CORPORATION
COMMODITY HEDGE POSITIONS (unaudited) 
AS OF JULY 31, 2019 
                     
    Commodity    Type    Volumes 
(Bbl/d) 
  Price 
(USD/Bbl) 
  Remaining Period 
Area            Start Date    End Date 
United States    WTI    Fixed price derivative swap    20,000      $63.64    7/1/2019    7/31/2019 
United States    WTI    Fixed price derivative swap    23,000      $63.17    8/1/2019    12/31/2019 
United States    WTI    Fixed price derivative swap    24,000      $59.67    1/1/2020    12/31/2020 
            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    7/1/2019    12/31/2020 
MURPHY OIL CORPORATION
THIRD QUARTER 2019 GUIDANCE 
             
    Liquids BOPD    Gas MCFD    BOEPD 
Production – net           
U.S.  – Eagle Ford Shale  45,700      33,900      51,300   
  – Gulf of Mexico excluding NCI  67,300      69,400      78,900   
  – Gulf of Mexico including NCI 1  78,200      74,100      90,500   
Canada – Tupper Montney  —      267,400      44,600   
  – Kaybob Duvernay and Placid Montney  7,700      25,900      12,000   
  – Offshore  6,800      —      6,800   
Other  400      —      400   
             
Total net production (BOEPD) - excluding NCI  192,000 to 196,000 
Total net production (BOEPD) - including NCI 1  203,600 to 207,600 
             
Exploration expense ($ millions)  $31 
             
1 Includes noncontrolling interest of MP GOM of 10,900 BOPD liquids and 4,700 MCFD gas.         
             
FULL YEAR 2019 GUIDANCE           
Total net production (BOEPD) - excluding NCI      174,000 to 178,000     
Total net production (BOEPD) - including NCI2      186,600 to 190,600     
Capital expenditures – excluding NCI ($ billions) 3  $1.35 - $1.45 
   
2Includes noncontrolling interest of MP GOM of 12,600 BOEPD   
3Excludes noncontrolling interest of MP GOM of $48 MM and $20 MM for assets held for sale.         
Source: EvaluateEnergy® ©2020 EvaluateEnergy Ltd