, Preliminary Year-End 2023 Reserves, 2024 Capital Expenditure and Production Guidance
Accomplished 2023 Debt Reduction Goal of $500 Million,
Repurchased $150 Million of Shares in Accordance With Capital Allocation Framework,
Increased Dividend 9 Percent Annualized in 2024,
Achieved 139 Percent Total Reserve Replacement Ratio
With Preliminary Proved Reserves of 724 MMBOE
HOUSTON–(BUSINESS WIRE)–Murphy Oil Corporation (NYSE: MUR) today announced its financial and operating results for the fourth quarter ended December 31, 2023, including net income attributable to Murphy of $116 million, or $0.75 net income per diluted share. Excluding discontinued operations and other items affecting comparability between periods, adjusted net income attributable to Murphy was $140 million, or $0.90 adjusted net income per diluted share.
For full year 2023, the company recorded net income attributable to Murphy of $662 million, or $4.22 net income per diluted share. Murphy reported adjusted net income, which excludes both the results of discontinued operations and other items affecting comparability between periods, of $709 million, or $4.52 adjusted net income per diluted share.
Unless otherwise noted, the financial and operating highlights and metrics discussed in this commentary exclude noncontrolling interest (NCI). 1
Highlights for the fourth quarter include:
- Produced 185 thousand barrels of oil equivalent per day (MBOEPD), with 94 thousand barrels of oil per day (MBOPD), or 51 percent oil volumes
- Retired $250 million of senior notes due 2027, 2028 and 2029 through a tender offer
- Repurchased $75 million, or 1.7 million shares, at an average price of $43.42 per share
- Named apparent high bidder on eight exploration blocks in the Gulf of Mexico Federal Lease Sale 261
- Acquired 8 percent working interest in the non-operated Zephyrus discovery in the Gulf of Mexico for $13 million after closing adjustments
- Resumed operations at the non-operated Terra Nova field in offshore Canada with production expected to ramp up through first quarter 2024
Highlights for full year 2023 include:
- Achieved $500 million debt reduction goal for 2023, resulting in $1.7 billion of total debt reduction and $84 million in annual interest expense savings since year-end 2020
- Repurchased $150 million of shares with $450 million remaining under the share repurchase authorization
- Increased quarterly cash dividend by 10 percent to $0.275 per share, or $1.10 per share annualized
- Drilled a discovery at the Longclaw #1 operated exploration well in Green Canyon 433 in the Gulf of Mexico
- Sanctioned the Lac Da Vang field development project in Vietnam
- Enhanced exploration portfolio with signing production sharing contracts for five blocks in Côte d’Ivoire
- Produced 186 MBOEPD with 98 MBOPD, or 52 percent oil volumes
- Realized 139 percent total reserve replacement with nearly 11-year reserve life and 724 million barrels of oil equivalent (MMBOE) preliminary total proved reserves at year-end 2023
- Ranked in top quartile of ISS Governance QualityScore in 2023
Subsequent to the fourth quarter:
- Announced an additional 9 percent increase of the quarterly cash dividend to $0.30 per share, or $1.20 per share annualized for 2024
“We had a strong year of production and excellent execution, generating ample free cash flow to advance our capital allocation framework. This allowed us to return $150 million to shareholders through buybacks and retire $500 million of debt, resulting in a nearly 60 percent decrease in debt since year-end 2020,” said Roger W. Jenkins, President and Chief Executive Officer. “Our ongoing financial stewardship has given us momentum going into 2024, beginning with an increase to our longstanding dividend and restoring it to its 2016 level.”
FOURTH QUARTER 2023 RESULTS
The company recorded net income attributable to Murphy of $116 million, or $0.75 net income per diluted share, for the fourth quarter 2023. Adjusted net income, which excludes both the results of discontinued operations and certain other items that affect comparability of results between periods, was $140 million, or $0.90 per diluted share for the same period. Adjustments to net income totaled $28 million before tax. Details for fourth quarter results and an adjusted net income reconciliation can be found in the attached schedules.
Earnings before interest, taxes, depreciation and amortization (EBITDA) attributable to Murphy were $375 million. Earnings before interest, tax, depreciation, amortization and exploration expenses (EBITDAX) attributable to Murphy were $457 million. Adjusted EBITDA attributable to Murphy was $414 million. Adjusted EBITDAX attributable to Murphy was $496 million. Reconciliations for fourth quarter EBITDA, EBITDAX, adjusted EBITDA and adjusted EBITDAX can be found in the attached schedules.
Fourth quarter production averaged 185 MBOEPD and included 51 percent oil volumes, or 94 MBOPD. Production for the quarter was in-line with guidance, with slightly lower Gulf of Mexico and Eagle Ford Shale production partially offset by lower realized royalty rates in the Tupper Montney asset.
Accrued capital expenditures (CAPEX) for fourth quarter 2023 totaled $219 million, excluding NCI and acquisition-related CAPEX. Details for fourth quarter production and CAPEX can be found in the attached schedules.
FULL YEAR 2023 RESULTS
The company recorded net income attributable to Murphy of $662 million, or $4.22 net income per diluted share, for full year 2023. Adjusted net income, which excludes both the results of discontinued operations and certain other items that affect comparability of results between periods, was $709 million, or $4.52 per diluted share for the same period. Adjustments to net income were primarily attributable to a $17 million write-off of a previously suspended exploration well and $17 million of asset retirement obligation losses, with the remainder totaling $18 million before tax. Details for full year 2023 results and an adjusted net income reconciliation can be found in the attached schedules.
EBITDA attributable to Murphy was $1.8 billion. EBITDAX attributable to Murphy was $2.0 billion. Adjusted EBITDA attributable to Murphy was $1.9 billion. Adjusted EBITDAX attributable to Murphy was $2.1 billion. Reconciliations for full year 2023 EBITDA, EBITDAX, adjusted EBITDA and adjusted EBITDAX can be found in the attached schedules.
Production for full year 2023 averaged 186 MBOEPD and included 52 percent oil volumes, or 98 MBOPD. Accrued CAPEX for full year 2023 totaled $1,008 million, excluding NCI and $60 million of acquisition-related CAPEX. Details for full year 2023 production and CAPEX can be found in the attached schedules.
CAPITAL ALLOCATION FRAMEWORK
Murphy had approximately $1.1 billion of liquidity on December 31, 2023, with no borrowings on the $800 million senior unsecured credit facility and $317 million of cash and cash equivalents, inclusive of NCI.
In 2023, Murphy executed $500 million of debt reduction transactions through the redemption of the remaining $250 million of senior notes due 2025, as well as the aggregate tender offer of $250 million of senior notes due 2027, 2028 and 2029.
At the end of the fourth quarter, Murphy’s total debt was reduced to $1.3 billion, and consisted of long-term, fixed-rate notes with a weighted average maturity of 8.1 years and a weighted average coupon of 6.2 percent.
During the fourth quarter, Murphy repurchased $75 million, or 1.7 million shares, at an average price of $43.42 per share. This brings the 2023 total share repurchases to $150 million, or 3.4 million shares, at an average price of $43.96 per share, reflecting a 2 percent total reduction in share count for the year. As of year-end 2023, Murphy had $450 million remaining under the share repurchase authorization and 152.7 million shares outstanding.
“I am pleased our ongoing debt reduction efforts are enhancing our balance sheet and extending our debt maturity profile, with the next tranche of senior notes not due until December 2027,” said Jenkins. “Since announcing our capital allocation framework in August 2022, we have reduced long-term debt by approximately $950 million, repurchased $150 million of shares and increased the quarterly dividend by 20 percent. This is an incredible accomplishment and reflects Murphy’s steady commitment to enhance shareholder value.”
YEAR-END 2023 PROVED RESERVES
After producing 68 MMBOE for the year, Murphy’s preliminary year-end 2023 proved reserves were 724 MMBOE, consisting of 36 percent oil and 41 percent liquids. Total reserve replacement was 139 percent in 2023.
The company maintained a consistent reserve life of nearly 11 years with 57 percent proved developed reserves.
|
2023 Proved Reserves – Preliminary * |
||||
|
Category |
Net Oil (MMBBL) |
Net NGLs (MMBBL) |
Net Gas (BCF) |
Net Equiv. (MMBOE) |
|
Proved Developed (PD) |
175 |
25 |
1,275 |
413 |
|
Proved Undeveloped (PUD) |
87 |
12 |
1,276 |
311 |
|
Total Proved |
262 |
37 |
2,551 |
724 |
|
* Proved reserves exclude NCI and are based on preliminary year-end 2023 third-party audited volumes using SEC pricing. |
||||
OPERATIONS SUMMARY
Onshore
In the fourth quarter of 2023, the onshore business produced approximately 100 MBOEPD, which included 30 percent liquids volumes.
Eagle Ford Shale – Fourth quarter production averaged 31 MBOEPD with 71 percent oil volumes and 86 percent liquids volumes. Three non-operated wells were brought online in Tilden during the quarter as planned.
Tupper Montney – Natural gas production averaged 386 million cubic feet per day (MMCFD) in the fourth quarter, with no new wells brought online.
Kaybob Duvernay – During the fourth quarter, production averaged 4 MBOEPD with 69 percent liquids volumes.
Offshore
Excluding NCI, in the fourth quarter of 2023, the offshore business produced approximately 84 MBOEPD, which included 82 percent oil.
Gulf of Mexico – Production averaged approximately 81 MBOEPD, consisting of 81 percent oil during the fourth quarter. As planned, Murphy brought online the Dalmatian #1 (Desoto Canyon 90) well and drilled and completed the Marmalard #3 (Mississippi Canyon 255) well during the quarter.
Canada – In the fourth quarter, production averaged nearly 4 MBOEPD, consisting of 100 percent oil. The asset life extension project was completed for the non-operated Terra Nova floating, production, storage and offloading vessel, and production from the field resumed during the quarter with volumes expected to ramp up over the coming months.
EXPLORATION
Gulf of Mexico – During the quarter, Murphy concluded drilling the Oso #1 (Atwater Valley 138) exploration well. The well encountered non-commercial hydrocarbons and has been plugged and abandoned. Approximately $62 million of the net well cost before tax was expensed in the fourth quarter. Murphy, as operator, holds a 33.34 percent working interest in the well.
2024 CAPITAL EXPENDITURE AND PRODUCTION GUIDANCE
The 2024 CAPEX plan is expected to be in the range of $920 million to $1.02 billion. Full year 2024 production is expected to be in the range of 180 to 188 MBOEPD, consisting of approximately 96 MBOPD oil and 106 MBOEPD liquids volumes, equating to 52 percent oil and 58 percent liquids volumes, respectively. This forecast includes approximately 2 MBOEPD of assumed annualized Gulf of Mexico storm downtime and accounts for the 2023 divestiture of 1.5 MBOEPD from non-core onshore Canada assets.
Production for first quarter 2024 is estimated to be in the range of 163 to 171 MBOEPD with 89 MBOPD, or 53 percent, oil volumes. This range is impacted by 13 MBOEPD of total Gulf of Mexico downtime, as well as 2 MBOEPD of onshore downtime. Gulf of Mexico downtime in the first quarter includes 6 MBOEPD associated with wells currently offline that are scheduled for workovers and will return to production in the first half of this year. Also included is 5 MBOEPD for planned facility and downstream maintenance, as well as 2 MBOEPD of downtime to repair damaged subsea equipment in the Mormont field. Both production and CAPEX guidance ranges exclude Gulf of Mexico NCI.
|
2024 CAPEX by Quarter ($ MMs) |
||||
|
1Q 2024E |
2Q 2024E |
3Q 2024E |
4Q 2024E |
FY 2024E |
|
$285 |
$265 |
$270 |
$150 |
$970 |
Accrual CAPEX, based on midpoint of guidance range and excluding NCI.
The table below illustrates the capital allocation by area.
|
2024 Capital Expenditure Guidance |
||
|
Area |
Total CAPEX $ MMs |
Percent of Total CAPEX |
|
Onshore |
|
|
|
Eagle Ford Shale |
$320 |
33 |
|
Kaybob Duvernay / Tupper Montney |
$130 |
13 |
|
Offshore |
|
|
|
Gulf of Mexico |
$300 |
31 |
|
Hibernia / Terra Nova |
$25 |
3 |
|
Other Offshore |
$45 |
5 |
|
Exploration |
|
|
|
Exploration |
$120 |
12 |
|
Other |
|
|
|
Other |
$30 |
3 |
Onshore
Approximately $320 million of Murphy’s 2024 CAPEX is allocated to the Eagle Ford Shale, with approximately $240 million designated to drill 30 and bring online 19 operated wells, as well as drill 23 and bring online 18 non-operated wells. The remaining $80 million will support field development.
Murphy plans to spend $130 million of its 2024 CAPEX in Canada onshore. Approximately $65 million is allocated to the Tupper Montney to drill 9 and bring online 13 operated wells, with $35 million allocated to the Kaybob Duvernay to drill 4 and bring online 3 operated wells. The remaining $30 million will support field development in both areas.
The table below details the 2024 onshore well delivery plan by quarter.
|
2024 Onshore Wells Online |
|||||
|
|
1Q 2024 |
2Q 2024 |
3Q 2024 |
4Q 2024 |
2024 Total |
|
Eagle Ford Shale |
– |
7 |
12 |
– |
19 |
|
Kaybob Duvernay |
– |
3 |
– |
– |
3 |
|
Tupper Montney |
– |
13 |
– |
– |
13 |
|
Non-Op Eagle Ford Shale |
4 |
– |
4 |
10 |
18 |
|
|
|
|
|
|
|
Note: All well counts are shown gross. Eagle Ford Shale non-operated working interest averages 41 percent.
Offshore
Murphy plans to spend approximately $300 million of its 2024 CAPEX in the Gulf of Mexico for development drilling and field development projects. This plan includes operated and non-operated subsea tiebacks throughout the year, as well as advancing the non-operated St. Malo waterflood project ahead of its startup in 2024.
Murphy has allocated approximately $25 million of CAPEX to Canada offshore in 2024, with the majority designated for non-operated Hibernia development drilling.
Approximately $45 million of CAPEX has been allocated to other offshore development in 2024, primarily for initial Lac Da Vang field development activities in Vietnam.
Exploration
The company has allocated $120 million to its 2024 exploration program, which includes drilling two exploration wells in Vietnam and two exploration wells in the Gulf of Mexico.
Other
Other capital of approximately $30 million, or 3 percent of CAPEX, consists of capitalized interest costs and corporate CAPEX.
“We are positioned for another great year at Murphy as we continue to Delever, Execute, Explore, Return. With our consistent capital discipline, I look forward to reaching our long-term debt goal of $1.0 billion while continuing to reward shareholders through dividend increases and share repurchases,” said Jenkins.
Detailed guidance for the first quarter and full year 2024 is contained in the attached schedules.
FIXED PRICE FORWARD SALES CONTRACTS
Murphy maintains fixed price forward sales contracts in Canada to lessen its dependence on variable AECO prices. These contracts are for physical delivery of natural gas volumes at a fixed price, with no mark-to-market income adjustments. Details for the current fixed price contracts can be found in the attached schedules.
CONFERENCE CALL AND WEBCAST SCHEDULED FOR JANUARY 25, 2024
Murphy will host a conference call to discuss fourth quarter 2023 financial and operating results on Thursday, January 25, 2024, at 9:00 a.m. EST. The call can be accessed either via the Internet through the events calendar on the Murphy Oil Corporation Investor Relations website at http://ir.murphyoilcorp.com or via telephone by dialing toll free 1-888-886-7786, reservation number 98175352. For additional information, please refer to the Fourth Quarter 2023 Earnings Presentation available under the News and Events section of the Investor Relations website.
FINANCIAL DATA
Summary financial data and operating statistics for fourth quarter 2023, with comparisons to the same period from the previous year, are contained in the attached schedules. Additionally, a schedule indicating the impacts of items affecting comparability of results between periods, a reconciliation of EBITDA, EBITDAX, adjusted EBITDA and adjusted EBITDAX between periods, as well as guidance for the first quarter and full year 2024, are also included.
1In accordance with GAAP, Murphy reports the 100 percent interest, including a 20 percent noncontrolling interest (NCI), in its subsidiary, MP Gulf of Mexico, LLC (MP GOM). The GAAP financials include the NCI portion of revenue, costs, assets and liabilities and cash flows. Unless otherwise noted, the financial and operating highlights and metrics discussed in this news release, but not the accompanying schedules, exclude the NCI, thereby representing only the amounts attributable to Murphy.
CAPITAL ALLOCATION FRAMEWORK
This news release contains references to the company’s capital allocation framework and adjusted free cash flow. As previously disclosed, the capital allocation framework defines Murphy 1.0 as when long-term debt exceeds $1.8 billion. At such time, adjusted free cash flow is allocated to long-term debt reduction while the company continues to support the quarterly dividend. The company reaches Murphy 2.0 when long-term debt is between $1.0 billion and $1.8 billion. At such time, approximately 75 percent of adjusted free cash flow is allocated to debt reduction, with the remaining 25 percent distributed to shareholders through share buybacks and potential dividend increases. When long-term debt is at or below $1.0 billion, the company is in Murphy 3.0 and begins allocating 50 percent of adjusted free cash flow to the balance sheet, with a minimum of 50 percent of adjusted free cash flow allocated to share buybacks and potential dividend increases.
Adjusted free cash flow is defined as cash flow from operations before working capital change, less capital expenditures, distributions to NCI and projected payments, quarterly dividend and accretive acquisitions.
ABOUT MURPHY OIL CORPORATION
As an independent oil and natural gas exploration and production company, Murphy Oil Corporation believes in providing energy that empowers people by doing right always, staying with it and thinking beyond possible. Murphy challenges the norm, taps into its strong legacy and uses its foresight and financial discipline to deliver inspired energy solutions. Murphy sees a future where it is an industry leader who is positively impacting lives for the next 100 years and beyond. Additional information can be found on the company’s website at www.murphyoilcorp.com.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally identified through the inclusion of words such as “aim”, “anticipate”, “believe”, “drive”, “estimate”, “expect”, “expressed confidence”, “forecast”, “future”, “goal”, “guidance”, “intend”, “may”, “objective”, “outlook”, “plan”, “position”, “potential”, “project”, “seek”, “should”, “strategy”, “target”, “will” or variations of such words and other similar expressions. These statements, which express management’s current views concerning future events, results and plans, are subject to inherent risks, uncertainties and assumptions (many of which are beyond our control) and are not guarantees of performance. In particular, statements, express or implied, concerning the company’s future operating results or activities and returns or the company’s ability and decisions to replace or increase reserves, increase production, generate returns and rates of return, replace or increase drilling locations, reduce or otherwise control operating costs and expenditures, generate cash flows, pay down or refinance indebtedness, achieve, reach or otherwise meet initiatives, plans, goals, ambitions or targets with respect to emissions, safety matters or other ESG (environmental/social/governance) matters, make capital expenditures or pay and/or increase dividends or make share repurchases and other capital allocation decisions are forward-looking statements. Factors that could cause one or more of these future events, results or plans not to occur as implied by any forward-looking statement, which consequently could cause actual results or activities to differ materially from the expectations expressed or implied by such forward-looking statements, include, but are not limited to: macro conditions in the oil and gas industry, including supply/demand levels, actions taken by major oil exporters and the resulting impacts on commodity prices; geopolitical concerns; increased volatility or deterioration in the success rate of our exploration programs or in our ability to maintain production rates and replace reserves; reduced customer demand for our products due to environmental, regulatory, technological or other reasons; adverse foreign exchange movements; political and regulatory instability in the markets where we do business; the impact on our operations or market of health pandemics such as COVID-19 and related government responses; other natural hazards impacting our operations or markets; any other deterioration in our business, markets or prospects; any failure to obtain necessary regulatory approvals; any inability to service or refinance our outstanding debt or to access debt markets at acceptable prices; or adverse developments in the U.S. or global capital markets, credit markets, banking system or economies in general, including inflation. For further discussion of factors that could cause one or more of these future events or results not to occur as implied by any forward-looking statement, see “Risk Factors” in our most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) and any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K that we file, available from the SEC’s website and from Murphy Oil Corporation’s website at http://ir.murphyoilcorp.com. Investors and others should note that we may announce material information using SEC filings, press releases, public conference calls, webcasts and the investors page of our website. We may use these channels to distribute material information about the company; therefore, we encourage investors, the media, business partners and others interested in the company to review the information we post on our website. The information on our website is not part of, and is not incorporated into, this news release. Murphy Oil Corporation undertakes no duty to publicly update or revise any forward-looking statements.
NON-GAAP FINANCIAL MEASURES
This news release contains certain non-GAAP financial measures that management believes are useful tools for internal use and the investment community in evaluating Murphy Oil Corporation’s overall financial performance. These non-GAAP financial measures are broadly used to value and compare companies in the crude oil and natural gas industry. Not all companies define these measures in the same way. In addition, these non-GAAP financial measures are not a substitute for financial measures prepared in accordance with GAAP and should therefore be considered only as supplemental to such GAAP financial measures. Please see the attached schedules for reconciliations of the differences between the non-GAAP financial measures used in this news release and the most directly comparable GAAP financial measures.
Contacts
Investor Contacts:
InvestorRelations@murphyoilcorp.com
Kelly Whitley, 281-675-9107
Megan Larson, 281-675-9470
