Murphy Oil Corporation Announces First Quarter 2020 Operating and Financial Results

Source Press Release
Company Murphy Oil Corporation 
Tags Montney, Eagle Ford, Duvernay, Unconventional Resources, Hedging, Capital Spending, Guidance, Strategy - Corporate, Financial & Operating Data
Date May 06, 2020

Murphy Oil Corporation (NYSE: MUR) today announced its financial and operating results for the first quarter ended March 31, 2020, including a net loss attributable to Murphy of $416 million, or $2.71 net loss per diluted share. Adjusted net loss, which excludes discontinued operations and other one-off items, was $46 million, or $0.30 per diluted share.

Unless otherwise noted, the financial and operating highlights and metrics discussed in this commentary exclude noncontrolling interest. 1

Significant items include:

  • Delivered first quarter production of 186 thousand barrels of oil equivalent per day (MBOEPD), comprised of more than 110 thousand barrels of oil per day (MBOPD) and 66 percent liquids
  • Received $42 million of cash crude oil hedge settlements for the quarter and recorded a $358 million non-cash mark-to-market gain on crude oil contracts
  • Reduced cash flow volatility by entering into additional crude oil hedges of 20 MBOPD for May and June 2020 at an average price of $26.45 per barrel. Overall for full year 2020, Murphy will have an average of 48 MBOPD hedged at an average price of $54.35 per barrel
  • Recorded $968 million non-cash impairment charge due to low commodity prices in first quarter 2020
  • Lowered planned capital expenditures further to a midpoint of $740 million, representing approximately a 50 percent reduction from the original 2020 capital budget
  • Announced the closure of corporate headquarters in El Dorado, Arkansas and office in Calgary, Alberta
  • Targeted $30 to $40 million reduction in operating expenses and approximately $50 million in cash G&A and related expenses in 2020
  • Decreased quarterly dividend by 50 percent to $0.50 per share annualized

FIRST QUARTER 2020 FINANCIAL RESULTS

The company recorded a net loss, attributable to Murphy, of $416 million, or $2.71 net loss per diluted share, for the first quarter 2020. Adjusted net loss, which excludes both the results of discontinued operations and certain other items that affect comparability of results between periods, was $46 million, or $0.30 per diluted share for the same period. The adjusted loss from continuing operations excludes the following after-tax items: a $693 million non-cash impairment of certain Gulf of Mexico and other foreign properties, a $283 million mark-to-market non-cash gain on crude oil derivatives and a $47 million mark-to-market non-cash gain on liabilities associated with future contingent consideration. Details for first quarter results can be found in the attached schedules.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations attributable to Murphy was $287 million, or nearly $17 per barrel of oil equivalent (BOE) sold. Adjusted earnings before interest, tax, depreciation, amortization and exploration expenses (EBITDAX) from continuing operations attributable to Murphy was $307 million, or nearly $18 per BOE sold. Details for first quarter adjusted EBITDA and EBITDAX reconciliations can be found in the attached schedules.

First quarter production averaged 186 thousand barrels of oil equivalent per day (MBOEPD) with 59 percent oil and 66 percent liquids. Details for first quarter production can be found in the attached schedules.

PROTECTING THE COMPANY’S STRONG FINANCIAL POSITION

At the end of first quarter 2020, Murphy had outstanding debt of $2.8 billion in long-term, fixed-rate notes and $170 million drawn under its $1.6 billion senior unsecured credit facility. The fixed-rate notes had a weighted average maturity of 7.5 years and a weighted average coupon of 5.8 percent.

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

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

COMMODITY HEDGE POSITIONS MITIGATE CASH FLOW VOLATILITY

The company employs derivative commodity instruments to manage certain risks associated with commodity price volatility and underpin capital spending associated with certain assets. For full year 2020, Murphy will have an average of 48 thousand barrels of oil per day (MBOPD) hedged at an average price of $54.35 per barrel. Since fourth quarter 2019, Murphy has executed additional WTI fixed price swaps to hedge an additional 20 MBOPD for May and June 2020 at an average price of $26.45 per barrel, resulting in a total 65 MBOPD of volumes hedged for the months of May and June 2020 at an average price of $47.20 per barrel. For the month of April 2020, as well as July through December 2020, the company has 45 MBOPD of volumes hedged at an average price of $56.42 per barrel.

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

Details for the current hedge positions can be found in the attached schedules.

REDUCING CAPTIAL EXPENDITURES AND IMPROVING COST STRUCTURE

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

In addition to lowering capital expenditures, the company continues to prudently and dynamically manage all expenses. Currently, Murphy is focusing on improving its operating cost structure and cash position, and is targeting $30 million to $40 million in reductions across operating expenses, along with approximately $50 million in lower cash G&A and related expenses in 2020. This includes the previously announced closing of two offices and meaningful executive salary and board compensation reductions. Further, we announced in April a 50 percent dividend reduction to $0.50 per share on an annualized basis.

REGIONAL OPERATIONS SUMMARY

North American Onshore

The North American onshore business produced approximately 95 MBOEPD in the first quarter.

Eagle Ford Shale – Production averaged 42 MBOEPD with 74 percent oil volumes in the first quarter. Murphy executed its first quarter wells as planned and brought online 10 Catarina wells and four Karnes wells with an average drilling and completion cost of $4.8 million per well. The company also participated in drilling 32 non-operated Karnes wells, with five completions planned for second quarter 2020 and the remainder deferred until 2021.

Tupper Montney – Natural gas production averaged 246 MMCFD for the quarter. For the first quarter, the company drilled four of the five planned wells, with all well completions delayed until 2021.

Kaybob Duvernay – First quarter production averaged 10 MBOEPD. Murphy brought online 11 wells during the quarter with strong gross 30-day initial production (IP30) rates averaging above 900 barrels of oil equivalent per day (BOEPD) and average liquids content of more than 80 percent. Drilling and completions costs continue to decrease, with the best well year-to-date at less than $6 million. With first quarter activity, the capital carry obligation with its partner is now complete.

Placid Montney – Produced 2 MBOEPD in the first quarter through Murphy’s non-operated position. As planned, four wells were brought online in the quarter.

Global Offshore

The offshore business produced 91 MBOEPD for the first quarter, comprised of 79 percent oil. This excludes production from discontinued operations and noncontrolling interest. Gulf of Mexico production in the quarter averaged 86 MBOEPD, consisting of 78 percent oil. Canada offshore production averaged 5 MBOEPD, comprised of 100 percent oil.

Gulf of Mexico – The A4 (Green Canyon 338) well is the first in the Front Runner rig program and came online in the first quarter. Murphy is evaluating near-field exploitation opportunities, as it encountered more than 250 feet of net pay in the well. The well has outperformed expectations with a gross peak rate of approximately 7 MBOEPD. Also during the quarter, Murphy completed the Neidermeyer Field (Mississippi Canyon 209) subsea repair.

Construction of the King’s Quay floating production system (FPS) continues to progress. Transaction documentation with ArcLight Capital Partners, LLC and other parties is moving forward, and Murphy expects to close the transaction in second quarter 2020.

Canada Offshore – As previously announced, non-operated Terra Nova is expected to remain offline for the year.

Southeast Asia – Brunei production was approximately 340 BOEPD for the quarter. These assets are classified as “held for sale” for financial reporting purposes.

EXPLORATION

Gulf of Mexico – Murphy is on track to spud the Mt. Ouray well (Green Canyon 767) in second quarter 2020 at an expected net cost of approximately $7 million. EnVen Energy Ventures, LLC as operator and a managed entity of Ridgewood Energy Company each hold 40 percent working interest, with Murphy owning the remaining 20 percent.

2020 PRODUCTION AND CAPITAL EXPENDITURE OUTLOOK

For the month of April 2020, production averaged approximately 179 MBOEPD, while approximately 7 MBOEPD was not produced due to curtailments and shut-ins primarily onshore. The company anticipates approximately 40 MBOEPD of production shut-ins and curtailments for the month of May, with the majority planned from offshore wells. These decisions are made each month based on current pricing, and therefore June production curtailments are unknown at this time. Given current market volatility and the potential for additional curtailments in the coming months, the company cannot accurately guide production for the full second quarter. Additionally, the company’s previous full year 2020 guidance should no longer be relied upon.

“Given the current industry turmoil, including shut-ins and curtailments across the sector, it is difficult to accurately forecast production volumes. However, if we assume NYMEX strip oil prices occur, we are confident that the combination of the King’s Quay transaction proceeds, hedge realizations, and lower CAPEX, operating and G&A costs will allow us to exit 2020 with a strong liquidity position. This enables us to methodically continue our cost reduction plans over the course of this year and next, so that we are better positioned to weather a possible long-term low commodity price environment,” commented Jenkins.

The table below illustrates the capital allocation by area.

2020 Revised $740 Million
Capital Expenditure Guidance 
Area    Percent of
Total CAPEX 
US Onshore    27 
Gulf of Mexico    43 
Canada Onshore    16 
Exploration   
Canada Offshore   
Other    3  

Approximately $70 million is remaining after first quarter 2020 for Eagle Ford Shale spending to bring online 11 operated and five non-operated wells. For the second quarter through fourth quarter 2020, less than $20 million of spending remains for Canada onshore to bring five operated wells and six non-operated wells online.

2020 Revised Onshore Wells Online 
  1Q 2020    2Q 2020    3Q 2020    4Q 2020    2020 Total   
Eagle Ford Shale  14    11        25   
Kaybob Duvernay  11          16   
Tupper Montney           
Non-Op Eagle Ford Shale           
Non-Op Placid Montney          10   

Note: Non-operated wells are shown gross. Eagle Ford Shale non-operated working interest averages seven percent.

Murphy has reduced its capital allocation to approximately $335 million for its offshore assets, with 94 percent planned for the Gulf of Mexico and the remaining six percent for Canada offshore. Revisions from the original plan include adjusting the three-well rig program at Front Runner to two wells with the third well deferred to a later date, no longer drilling or completing certain operated wells and non-operated projects, and shifting timing of other plans. Expenditures for the St. Malo waterflood and the Khaleesi / Mormont and Samurai projects are still planned for 2020. Canada offshore spending remains budgeted for development drilling.

Murphy has adjusted its 2020 exploration plans to a one-well non-operated program, deferring the two exploration wells in offshore Mexico to 2021. The revised budget is approximately $60 million, with $40 million remaining for 2020. Other capital of approximately $25 million supports corporate activities and Eastern Hemisphere field development expenditures.

RESPONSE TO COVID-19

The effects of COVID-19 have been dramatic and vast, impacting everything from the overall economy and global oil demand to personal interactions. Murphy is grateful to all the healthcare workers, first responders and volunteers fighting the virus on the front lines, and to its field employees and contractors who continue to operate safely.

Murphy quickly recognized the growing concern of COVID-19 overseas and initiated its Incident Management Team in the first quarter 2020. The team began monitoring the situation and establishing a strategy for the safety and wellbeing of its worldwide employees, while various departments collaborated in preparation for a possibly prolonged work-at-home scenario. In conjunction with government officials and health organizations advising citizens to stay at home in North America, the executive-level Crisis Management Team was activated, and all Murphy office employees began working remotely. Concurrently, the company implemented additional protocols across its field operations to ensure the safety of employees, contractors and the communities in which it works.

“We’re continually focused on the safety and health of our employees, partners and the communities in which we work, in addition to maintaining safe operations while ensuring business continuity. With gratitude, I would like to commend everyone for being flexible, supporting each other and showing resilience during this challenging time. Thank you as well to our incident and crisis teams for their outstanding planning and execution that has kept our employees and contractors safe, and to other internal groups for ensuring a smooth and stable transition for office employees to work remotely,” said Jenkins.

CONFERENCE CALL AND WEBCAST SCHEDULED FOR MAY 7, 2020

Murphy will host a conference call to discuss first quarter 2020 financial and operating results on Thursday, May 7, 2020, at 9:00 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 toll free 1-888-886-7786, reservation number 21823514.

FINANCIAL DATA

Summary financial data and operating statistics for first quarter 2020, with comparisons to the same period from the previous year, are contained in the following schedules. Additionally, a schedule indicating the impacts of items affecting comparability of results between periods, a reconciliation of EBITDA and EBITDAX between periods, as well as guidance for the second quarter 2020, 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 include the NCI, thereby representing only the amounts attributable to Murphy.

MURPHY OIL CORPORATION 
SUMMARIZED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) 
 
    Three Months Ended
March 31, 
(Thousands of dollars, except per share amounts)    2020    2019 
Revenues and other income         
Revenue from sales to customers    600,558      629,354   
Gain on crude contracts    400,672      —   
Gain on sale of assets and other income    2,498      1,192   
Total revenues and other income    1,003,728      630,546   
Costs and expenses         
Lease operating expenses    209,148      131,696   
Severance and ad valorem taxes    9,422      10,097   
Transportation, gathering and processing    44,367      39,542   
Exploration expenses, including undeveloped lease amortization    20,126      32,538   
Selling and general expenses    36,772      63,360   
Depreciation, depletion and amortization    306,102      229,406   
Accretion of asset retirement obligations    9,966      9,340   
Impairment of assets    967,530      —   
Other (benefit) expense    (45,188    30,005   
Total costs and expenses    1,558,245      545,984   
Operating (loss) income from continuing operations    (554,517    84,562   
Other income (loss)         
Interest and other income (loss)    241      (4,748 
Interest expense, net    (41,097    (46,069 
Total other loss    (40,856    (50,817 
(Loss) income from continuing operations before income taxes    (595,373    33,745   
Income tax (benefit) expense    (91,533    10,822   
(Loss) income from continuing operations    (503,840    22,923   
(Loss) income from discontinued operations, net of income taxes    (4,862    49,846   
Net (loss) income including noncontrolling interest    (508,702    72,769   
Less: Net (loss) income attributable to noncontrolling interest    (92,598    32,587   
NET (LOSS) INCOME ATTRIBUTABLE TO MURPHY    (416,104    40,182   
         
(LOSS) INCOME PER COMMON SHARE – BASIC         
Continuing operations    (2.68    (0.06 
Discontinued operations    (0.03    0.29   
Net (loss) income    (2.71    0.23   
         
(LOSS) INCOME PER COMMON SHARE – DILUTED         
Continuing operations    (2.68    (0.06 
Discontinued operations    (0.03    0.29   
Net (loss) income    (2.71    0.23   
Cash dividends per Common share    0.25      0.25   
Average Common shares outstanding (thousands)         
Basic    153,313      173,341   
Diluted    153,313      174,491   

MURPHY OIL CORPORATION 
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) 
 
    Three Months Ended
March 31, 
(Thousands of dollars)    2020    2019 
Operating Activities         
Net (loss) income including noncontrolling interest    (508,702    72,769   
Adjustments to reconcile net (loss) income to net cash provided by continuing operations activities:         
Loss (income) from discontinued operations    4,862      (49,846 
Depreciation, depletion and amortization    306,102      229,406   
Previously suspended exploration costs    97      13,251   
Amortization of undeveloped leases    7,478      8,045   
Accretion of asset retirement obligations    9,966      9,340   
Impairment of assets    967,530      —   
Deferred income tax (benefit) charge    (81,373    15,589   
Mark to market (gain) loss on contingent consideration    (59,151    13,530   
Mark to market (gain) loss of crude contracts    (358,302    —   
Long-term non-cash compensation    9,805      22,388   
Net decrease (increase) in noncash operating working capital    107,827      (98,505 
Other operating activities, net    (13,482    (18,770 
Net cash provided by continuing operations activities    392,657      217,197   
Investing Activities         
Property additions and dry hole costs    (354,834    (270,338 
Property additions for King's Quay FPS    (21,296    —   
Net cash required by investing activities    (376,130    (270,338 
Financing Activities         
Borrowings on revolving credit facility    170,000      —   
Debt issuance, net of cost    (613    —   
Early retirement of debt    (3,570    —   
Capital lease obligation payments    (168    (160 
Withholding tax on stock-based incentive awards    (7,094    (6,991 
Distributions to noncontrolling interest    (32,399    (18,437 
Cash dividends paid    (38,392    (43,398 
Net cash provided (required) by financing activities    87,764      (68,986 
Cash Flows from Discontinued Operations 1         
Operating activities    (1,202    123,469   
Investing activities    4,494      (26,438 
Financing activities    —      (2,547 
Net cash provided by discontinued operations    3,292      94,484   
Cash transferred from discontinued operations to continuing operations    —      46,080   
Effect of exchange rate changes on cash and cash equivalents    (3,298    2,405   
Net increase (decrease) in cash and cash equivalents    100,993      (73,642 
Cash and cash equivalents at beginning of period    306,760      359,923   
Cash and cash equivalents at end of period    407,753      286,281   
             
1 Net cash provided by discontinued operations is not part of the cash flow reconciliation. 

MURPHY OIL CORPORATION 
SCHEDULE OF ADJUSTED INCOME (LOSS) 
(unaudited) 
 
    Three Months Ended
March 31, 
(Millions of dollars, except per share amounts)    2020    2019 
Net (loss) income attributable to Murphy (GAAP)    (416.1    40.2   
Discontinued operations loss (income)    4.9      (49.8 
(Loss) income from continuing operations    (411.2    (9.6 
Adjustments (after tax):         
Impairment of assets    692.7      —   
Mark-to-market (gain) loss on crude oil derivative contracts    (283.1    —   
Mark-to-market (gain) loss on contingent consideration    (46.7    10.7   
Foreign exchange (gains) losses    (4.0    2.4   
Inventory loss    3.8      —   
Unutilized rig charges    2.8      —   
Business development transaction costs    —      9.8   
Write-off of previously suspended exploration wells    —      13.2   
Total adjustments after taxes    365.5      36.1   
Adjusted (loss) income from continuing operations attributable to Murphy    (45.7    26.5   
         
Adjusted (loss) income from continuing operations per average diluted share    (0.30    0.15   

Non-GAAP Financial Measures

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

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

(Millions of dollars)    Three Months Ended March 31,
2020 
    Pretax    Tax    Net 
Exploration & Production:             
United States    775.8      (162.9    612.9   
Other International    39.7      —      39.7   
Total E&P    815.5      (162.9    652.6   
Corporate:    (363.0    75.9      (287.1 
Total adjustments    452.5      (87.0    365.5   

MURPHY OIL CORPORATION 
SCHEDULE OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION 
AND AMORTIZATION (EBITDA) 
(unaudited) 
 
    Three Months Ended
March 31, 
(Millions of dollars, except per barrel of oil equivalents sold)    2020    2019 
Net (loss) income attributable to Murphy (GAAP)    (416.1    40.2   
Income tax (benefit) expense    (91.5    10.8   
Interest expense, net    41.1      46.1   
Depreciation, depletion and amortization expense ⊃;    286.2      212.1   
EBITDA attributable to Murphy (Non-GAAP)    (180.3    309.2   
Impairment of assets ⊃;    866.4      —   
Mark-to-market (gain) loss on crude oil derivative contracts    (358.3    —   
Mark-to-market (gain) loss on contingent consideration    (59.2    13.5   
Accretion of asset retirement obligations    10.0      9.3   
Discontinued operations loss (income)    4.9      (49.8 
Inventory loss    4.8      —   
Foreign exchange (gains) losses    (4.7    2.6   
Unutilized rig charges    3.5      —   
Business development transaction costs    —      12.5   
Write-off of previously suspended exploration wells    —      13.2   
Adjusted EBITDA attributable to Murphy (Non-GAAP)    287.1      310.5   
         
Total barrels of oil equivalents sold from continuing operations attributable to Murphy (thousands of barrels)    17,071      13,497   
         
Adjusted EBITDA per barrel of oil equivalents sold    16.82      23.01   

Non-GAAP Financial Measures

Presented above is a reconciliation of Net (loss) income to Earnings before interest, taxes, depreciation and amortization (EBITDA) and adjusted EBITDA. Management believes EBITDA and adjusted EBITDA are important information to provide because they are used by management to evaluate the Company’s operational performance and trends between periods and relative to its industry competitors. Management also believes this information may be useful to investors and analysts to gain a better understanding of the Company’s financial results. EBITDA and adjusted EBITDA are non-GAAP financial measures and should not be considered a substitute for Net (loss) income or Cash provided by operating activities as determined in accordance with accounting principles generally accepted in the United States of America.

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

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

MURPHY OIL CORPORATION 
SCHEDULE OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION 
AND AMORTIZATION AND EXPLORATION (EBITDAX) 
(unaudited) 
 
    Three Months Ended
March 31, 
(Millions of dollars, except per barrel of oil equivalents sold)    2020    2019 
Net (loss) income attributable to Murphy (GAAP)    (416.1    40.2   
Income tax (benefit) expense    (91.5    10.8   
Interest expense, net    41.1      46.1   
Depreciation, depletion and amortization expense 1    286.2      212.1   
EBITDA attributable to Murphy (Non-GAAP)    (180.3    309.2   
Exploration expenses    20.1      32.5   
EBITDAX attributable to Murphy (Non-GAAP)    (160.2    341.7   
Impairment of assets ⊃;    866.4      —   
Mark-to-market (gain) loss on crude oil derivative contracts    (358.3    —   
Mark-to-market (gain) loss on contingent consideration    (59.2    13.5   
Accretion of asset retirement obligations    10.0      9.3   
Discontinued operations loss (income)    4.9      (49.8 
Inventory loss    4.8      —   
Foreign exchange (gains) losses    (4.7    2.6   
Unutilized rig charges    3.5      —   
Business development transaction costs    —      12.5   
Adjusted EBITDAX attributable to Murphy (Non-GAAP)    307.2      329.8   
         
Total barrels of oil equivalents sold from continuing operations attributable to Murphy (thousands of barrels)    17,071      13,497   
         
Adjusted EBITDAX per barrel of oil equivalents sold    17.99      24.44   

Non-GAAP Financial Measures

Presented above is a reconciliation of Net (loss) income to Earnings before interest, taxes, depreciation and amortization, and exploration expenses (EBITDAX) and adjusted EBITDAX. Management believes EBITDAX and adjusted EBITDAX are important information to provide because they are used by management to evaluate the Company’s operational performance and trends between periods and relative to its industry competitors. Management also believes this information may be useful to investors and analysts to gain a better understanding of the Company’s financial results. EBITDAX and adjusted EBITDAX are non-GAAP financial measures and should not be considered a substitute for Net (loss) income or Cash provided by operating activities as determined in accordance with accounting principles generally accepted in the United States of America.

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

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

MURPHY OIL CORPORATION 
FUNCTIONAL RESULTS OF OPERATIONS (unaudited) 
 
    Three Months Ended
March 31, 2020 
  Three Months Ended
March 31, 2019 
(Millions of dollars)    Revenues    Income
(Loss) 
  Revenues    Income
(Loss) 
Exploration and production                 
United States1    511.5      (696.0    500.8      116.2   
Canada    89.7      (6.9    126.8      7.5   
Other    1.8      (52.3    2.9      (28.3 
Total exploration and production    603.0      (755.2    630.5      95.4   
Corporate    400.7      251.4      —      (72.4 
Revenue/income from continuing operations    1,003.7      (503.8    630.5      23.0   
Discontinued operations, net of tax 2    —      (4.9    —      49.8   
Total revenues/net income (loss) including noncontrolling interest    1,003.7      (508.7    630.5      72.8   
Net income attributable to Murphy        (416.1        40.2   

Includes results attributable to a noncontrolling interest in MP Gulf of Mexico, LLC (MP GOM). 
Effective January 1, 2019, Malaysia was reported as discontinued operations. 

MURPHY OIL CORPORATION 
OIL AND GAS OPERATING RESULTS (unaudited) 
THREE MONTHS ENDED MARCH 31, 2020, AND 2019 
                 
(Millions of dollars)    United
States 1 
  Canada    Other    Total 
Three Months Ended March 31, 2020                 
Oil and gas sales and other operating revenues    511.5      89.7      1.8      603.0   
Lease operating expenses    178.2      30.6      0.3      209.1   
Severance and ad valorem taxes    9.1      0.3      —      9.4   
Transportation, gathering and processing    34.6      9.8      —      44.4   
Depreciation, depletion and amortization    247.5      52.0      0.5      300.0   
Accretion of asset retirement obligations    8.6      1.4      —      10.0   
Impairment of assets    927.8      —      39.7      967.5   
Exploration expenses                 
Dry holes and previously suspended exploration costs    0.1      —      —      0.1   
Geological and geophysical    1.3      —      3.7      5.0   
Other exploration    0.8      0.2      6.5      7.5   
    2.2      0.2      10.2      12.6   
Undeveloped lease amortization    5.1      0.2      2.2      7.5   
Total exploration expenses    7.3      0.4      12.4      20.1   
Selling and general expenses    3.7      4.4      1.6      9.7   
Other    (45.7    0.2      (1.2    (46.7 
Results of operations before taxes    (859.6    (9.4    (51.5    (920.5 
Income tax provisions (benefits)    (163.6    (2.5    0.8      (165.3 
Results of operations (excluding Corporate segment)    (696.0    (6.9    (52.3    (755.2 
                 
Three Months Ended March 31, 2019                 
Oil and gas sales and other operating revenues    500.8      126.8      2.9      630.5   
Lease operating expenses    92.4      39.0      0.3      131.7   
Severance and ad valorem taxes    9.8      0.3      —      10.1   
Transportation, gathering and processing    31.6      7.9      —      39.5   
Depreciation, depletion and amortization    163.9      59.5      1.0      224.4   
Accretion of asset retirement obligations    7.8      1.5      —      9.3   
Exploration expenses                 
Dry holes and previously suspended exploration costs    0.1      —      13.1      13.2   
Geological and geophysical    0.5      —      5.5      6.0   
Other exploration    1.2      0.1      4.0      5.3   
    1.8      0.1      22.6      24.5   
Undeveloped lease amortization    6.9      0.3      0.8      8.0   
Total exploration expenses    8.7      0.4      23.4      32.5   
Selling and general expenses    17.3      7.6      5.6      30.5   
Other    30.6      0.2      0.3      31.1   
Results of operations before taxes    138.7      10.4      (27.7    121.4   
Income tax provisions (benefits)    22.5      2.9      0.6      26.0   
Results of operations (excluding Corporate segment)    116.2      7.5      (28.3    95.4   
1 Includes results attributable to a noncontrolling interest in MP GOM. 

MURPHY OIL CORPORATION 
PRODUCTION-RELATED EXPENSES 
(unaudited) 
 
    Three Months Ended
March 31, 
(Dollars per barrel of oil equivalents sold)    2020    2019 
Continuing operations         
United States – Eagle Ford Shale         
Lease operating expense    10.47      12.92   
Severance and ad valorem taxes    2.42      3.03   
Depreciation, depletion and amortization (DD&A) expense    25.03      23.90   
         
United States – Gulf of Mexico         
Lease operating expense 1    15.03      8.11   
DD&A expense    16.58      14.39   
         
Canada – Onshore         
Lease operating expense    4.45      5.89   
Severance and ad valorem taxes    0.06      0.06   
DD&A expense    9.65      11.03   
         
Canada – Offshore         
Lease operating expense    19.53      17.43   
DD&A expense    12.09      13.70   
         
Total oil and gas continuing operations         
Lease operating expense 2    11.41      8.93   
Severance and ad valorem taxes    0.51      0.68   
DD&A expense    16.70      15.78   
         
Total oil and gas continuing operations – excluding noncontrolling interest         
Lease operating expense    11.05      9.01   
Severance and ad valorem taxes    0.55      0.75   
DD&A expense    16.76      15.54   

1   In 2020, lease operating expense (LOE) per barrel of oil equivalents (BOE) sold for the U.S. Gulf of Mexico excluding cost associated with a well workover at Cascade is $10.10. 
In 2020, LOE per BOE excluding cost associated with a well workover at Cascade is $8.61. 

MURPHY OIL CORPORATION 
OTHER FINANCIAL DATA 
(unaudited) 
 
    Three Months Ended
March 31, 
(Millions of dollars)    2020    2019 
Capital expenditures for continuing operations         
Exploration and production         
United States    245.4      205.5   
Canada    108.2      95.7   
Other    20.9      41.3   
Total    374.5      342.5   
         
Corporate    3.5      4.1   
Total capital expenditures - continuing operations 1    378.0      346.6   
         
Charged to exploration expenses 2         
United States    2.2      1.8   
Canada    0.2      0.1   
Other    10.2      22.6   
Total charged to exploration expenses - continuing operations    12.6      24.5   
         
Total capitalized    365.4      322.1   

1   Includes noncontrolling interest (NCI) capital expenditures of $10.3 million for the three months ended March 31, 2020. Also includes capital expenditures of $28.8 million for the three months ended March 31, 2020 associated with the Kings Quay project. 
Excludes amortization of undeveloped leases of $7.5 million and $8.0 million for the three months ended March 31, 2020 and 2019, respectively. 

MURPHY OIL CORPORATION 
CONSOLIDATED BALANCE SHEETS 
(unaudited) 
         
(Millions of dollars)    March 31,
2020 
  December 31,
2019 
ASSETS         
Current assets         
Cash and cash equivalents    407.8      306.8   
Accounts receivable    597.2      426.7   
Inventories    68.3      76.1   
Prepaid expenses    50.6      40.9   
Assets held for sale    88.4      123.9   
Total current assets    1,212.4      974.3   
Property, plant and equipment, at cost    8,956.3      9,969.7   
Operating lease assets    797.3      598.3   
Deferred income taxes    210.1      129.3   
Deferred charges and other assets    29.7      46.9   
Total assets    11,205.8      11,718.5   
LIABILITIES AND EQUITY         
Current liabilities         
Accounts payable    554.6      602.1   
Income taxes payable    19.4      19.0   
Other taxes payable    13.5      18.6   
Operating lease liabilities    109.5      92.3   
Other accrued liabilities    155.3      197.4   
Liabilities associated with assets held for sale    12.6      13.3   
Total current liabilities    864.8      942.8   
Long-term debt, including capital lease obligation    2,970.2      2,803.4   
Asset retirement obligations    825.5      825.8   
Deferred credits and other liabilities    550.7      613.4   
Non-current operating lease liabilities    702.8      521.3   
Deferred income taxes    193.6      207.2   
Total liabilities    6,107.5      5,913.9   
Equity         
Common Stock, par $1.00    195.1      195.1   
Capital in excess of par value    924.9      949.4   
Retained earnings    6,159.8      6,614.3   
Accumulated other comprehensive loss    (702.0    (574.2 
Treasury stock    (1,691.7    (1,717.2 
Murphy Shareholders' Equity    4,886.1      5,467.5   
Noncontrolling interest    212.2      337.2   
Total equity    5,098.3      5,804.6   
Total liabilities and equity    11,205.8      11,718.5   

MURPHY OIL CORPORATION 
PRODUCTION SUMMARY 
(unaudited) 
       
      Three Months Ended
March 31, 
Barrels per day unless otherwise noted    2020    2019 
Continuing operations           
Net crude oil and condensate         
United States  Onshore    31,033      25,880   
  Gulf of Mexico 1    78,730      61,048   
Canada  Onshore    6,833      6,457   
  Offshore    5,138      7,928   
Other      344      507   
Total net crude oil and condensate - continuing operations    122,078      101,820   
Net natural gas liquids           
United States  Onshore    5,585      5,301   
  Gulf of Mexico 1    6,670      2,760   
Canada  Onshore    1,401      1,093   
Total net natural gas liquids - continuing operations    13,656      9,154   
Net natural gas – thousands of cubic feet per day         
United States  Onshore    31,962      29,279   
  Gulf of Mexico 1    81,950      19,575   
Canada  Onshore    266,848      254,904   
Total net natural gas - continuing operations    380,760      303,758   
Total net hydrocarbons - continuing operations including NCI 2,3    199,194      161,600   
Noncontrolling interest           
Net crude oil and condensate – barrels per day    (12,020    (12,185 
Net natural gas liquids – barrels per day    (559    (554 
Net natural gas – thousands of cubic feet per day 2    (5,091    (3,895 
Total noncontrolling interest    (13,428    (13,388 
Total net hydrocarbons - continuing operations excluding NCI 2,3    185,767      148,212   
Discontinued operations           
Net crude oil and condensate – barrels per day    —      25,954   
Net natural gas liquids – barrels per day    —      744   
Net natural gas – thousands of cubic feet per day 2    —      101,592   
Total discontinued operations    —      43,630   
Total net hydrocarbons produced excluding NCI 2,3    185,767      191,842   

Includes net volumes attributable to a noncontrolling interest in MP GOM. 
Natural gas converted on an energy equivalent basis of 6:1. 
NCI – noncontrolling interest in MP GOM. 

MURPHY OIL CORPORATION 
PRICE SUMMARY 
(unaudited) 
       
      Three Months Ended
March 31, 
      2020    2019 
Weighted average Exploration and Production sales prices 1         
Continuing operations           
Crude oil and condensate – dollars per barrel           
United States  Onshore    46.46      57.82   
  Gulf of Mexico 2    47.07      59.63   
Canada 3  Onshore    37.61      49.80   
  Offshore    57.27      62.93   
Other      65.55      67.90   
Natural gas liquids – dollars per barrel           
United States  Onshore    10.79      17.19   
  Gulf of Mexico 2    8.28      21.30   
Canada 3  Onshore    15.96      35.19   
Natural gas – dollars per thousand cubic feet           
United States  Onshore    1.85      2.87   
  Gulf of Mexico 2    2.01      2.54   
Canada 3  Onshore    1.62      2.15   

Effective September 30, 2019, weighted average realized prices are reported excluding transportation, gathering and processing costs. Comparative periods are conformed to current presentation. 
Prices include the effect of noncontrolling interest share for MP GOM. 
U.S. dollar equivalent. 

MURPHY OIL CORPORATION 
COMMODITY HEDGE POSITIONS (unaudited) 
AS OF MAY 5, 2020 
                     
    Commodity    Type    Volumes
(Bbl/d) 
  Price
(USD/Bbl) 
  Remaining Period 
Area            Start Date    End Date 
United States    WTI ⊃;    Fixed price derivative swap    45,000      $56.42      4/1/2020    4/30/2020 
United States    WTI    Fixed price derivative swap    65,000      $47.20      5/1/2020    6/30/2020 
United States    WTI    Fixed price derivative swap    45,000      $56.42      7/1/2020    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    4/1/2020    12/31/2020 
Montney    Natural Gas    Fixed price forward sales at AECO    25      C$2.62    1/1/2021    12/31/2021 

Source: EvaluateEnergy® ©2020 EvaluateEnergy Ltd