Murphy Oil Corporation · NYSE:MUR
Murphy Oil — Investor Presentation (February 2020)
59 slides from Murphy Oil's investor presentation, Feb 28, 2020
Slide 1: Investor Update
www.murphyoilcorp.com NYSE: MUR 0 March 2020 INVESTOR UPDATE MARCH 1, 2020 PRESIDENT & CHIEF EXECUTIVE OFFICER ROGER W. JENKINS
Slide 2: Cautionary Note to U.S. Investors
www.murphyoilcorp.com NYSE: MUR 1 March 2020 Cautionary Note to U . S . Investors – The United States Securities and Exchange Commission (SEC) requires oil and natural gas companies, in their filings with the SEC, to disclose proved reserves that a company has demonstrated by actual production or co
Slide 3: Agenda
www.murphyoilcorp.com NYSE: MUR 2 March 2020 Agenda 01 COMPANY UPDATE 02 ONSHORE PORTFOLIO UPDATE 03 OFFSHORE PORTFOLIO UPDATE 04 EXPLORATION UPDATE 05 LOOKING AHEAD
Slide 4: A History of Excellence: Murphy Overview
www.murphyoilcorp.com NYSE: MUR 3 March 2020 A History of Excellence • Long corporate history, IPO 1956 • Global offshore and North American onshore portfolio • Oil - weighted assets drive high margins • Exploration renaissance in focus areas • Consistent cash flows from long - term offshore assets
Slide 5: Murphy at a Glance
www.murphyoilcorp.com NYSE: MUR 4 March 2020 60% 7% 33% Crude oil NGL Natural gas 26% 29% 44% Eagle Ford Shale Canada Onshore NA Offshore 50% 7% 43% Crude oil NGL Natural gas 36% 38% 26% Eagle Ford Shale Canada Onshore NA Offshore Murphy at a Glance 2019 Proved Reserves FY 2019 Production 800 MMBOE
Slide 6: Accomplished Our 2019 Plan
www.murphyoilcorp.com NYSE: MUR 5 March 2020 Accomplished Our 2019 Plan PRODUCING Oil - Weighted Assets Produced 173 MBOEPD in FY 2019, ~60% oil Increased Gulf of Mexico production >200% from FY 2018 Increased Eagle Ford Shale production >23% from 4Q 2018 Accelerated oil - weighted growth in long -
Slide 7: Achieving Premium Oil-Weighted Realizations
www.murphyoilcorp.com NYSE: MUR 6 March 2020 Achieving Premium Oil - Weighted Realizations 94 % SOLD At Premium to $57.04 WTI 103,000 BBLS/Day SOLD FY 2019 > Eagle Ford Shale North America Offshore $ 32 /BOE $ 35 /BOE EBITDA/BOE FY 2019 FIELD - LEVEL Note: Production volumes, sales volumes, reserves
Slide 8: Maintaining High-Margin Reserves in 2019
www.murphyoilcorp.com NYSE: MUR 7 March 2020 • Sustaining 50% oil - weighted portfolio • Organic reserves replacement 172% • Increased proved developed reserves from 50% to 57% year - over - year • 3 - year average total F&D cost of $12.95/BOE • Reserve life index of 11.8 years Maintaining High - Ma
Slide 9: Disciplined and Flexible Strategy: Delivering Returns to Shareholders
www.murphyoilcorp.com NYSE: MUR 8 March 2020 Disciplined and Flexible Strategy • Returned >$660 MM cash in 2019 • $500 MM in share repurchases • Repurchased ~12% of shares outstanding • Generated free cash flow 1 in 2019 • No equity issuances • Delivered industry leading dividend yield • Continued f
Slide 10: Preserving Asset Value Through Commodity Price Cycles
www.murphyoilcorp.com NYSE: MUR 9 March 2020 Preserving Asset Value Through Commodity Price Cycles 0% 10% 20% 30% 40% 50% PE WPX PXD EOG MUR CLR MRO FANG OXY CPE COP COG CXO DVN HES NBL XEC OVV SM APA CNX OAS MTDR RRC SWN WLL CHK Source: FactSet, company filings as of 2/28/2020 $0 $1,000 $2,000 $3,0
Slide 11: Targeting Investment Grade Credit Metrics
www.murphyoilcorp.com NYSE: MUR 10 March 2020 Targeting Investment Grade Credit Metrics 3.5 3.3 3.1 2.7 2.7 2.6 2.4 2.1 2.0 2.0 1.9 1.6 1.6 1.5 1.5 1.4 1.4 1.1 1.1 0.9 0.5 0.4 0.4 0 1 2 3 4 5 CCC / Caa3 CHK BBB / Baa3 OXY BB- / B2 WLL B+ / B2 OAS BBB / Baa3 NBL B+ / B2 CPE BB- / B2 SM BBB / Ba1 OVV
Slide 12: Aligning with Investment Grade E&P Metrics
www.murphyoilcorp.com NYSE: MUR 11 March 2020 Aligning with Investment Grade E&P Metrics Source: FactSet, company filings as of 2/27/2020 CPE CHK WLL OAS NBL SM OVV APA MTDR HES CLR FANG MUR MRO WPX PE CXO XEC DVN $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 $16.0 $18.0 $20.0 0.00 0.50 1.00 1.50 2.00
Slide 13: Focusing on Balance Sheet Strength
www.murphyoilcorp.com NYSE: MUR 12 March 2020 Maintained Strong Cash Position Through Extensive Portfolio Transformation • Completed >$2 BN in acquisitions without increasing debt or issuing equity • Zero balance on credit facility at year - end 2019 • No near - term debt maturities Returned >$660 M
Slide 14: Effective Governance Supports Long-Term Financial Strength
www.murphyoilcorp.com NYSE: MUR 13 March 2020 Effective Governance Supports Long - Term Financial Strength Long - term industry, operating and HSE expertise Separate CEO and Chairman 12 out of 13 directors are independent Board of Directors elected with average vote of 99% over past 5 years Health,
Slide 15: Mitigating Risk Through Sustainable Environmental Operations
www.murphyoilcorp.com NYSE: MUR 14 March 2020 Mitigating Risk Through Sustainable Environmental Operations 0.36 average TRIR over past 5 years (vs 4 - year average of 0.38 for US E&P companies*) Eagle Ford Shale well work 5.5 years lost time incident free Gulf of Mexico 7.5 years lost time incident
Slide 16: Onshore Portfolio Update
www.murphyoilcorp.com NYSE: MUR 15 March 2020 Onshore Portfolio Update
Slide 17: Concentrated Onshore Assets with Multi-Year Inventories
www.murphyoilcorp.com NYSE: MUR 16 March 2020 Concentrated Onshore Assets with Multi - Year Inventories Eagle Ford Shale 45 MBOEPD FY 2019, 76% oil, 89% liquids ~1,030 total producing wells online Kaybob Duvernay 12 MBOEPD at FY 2019, 51% oil, 61% liquids ~80 total producing wells online Tupper Mont
Slide 18: Significant Running Room in the Eagle Ford Shale
www.murphyoilcorp.com NYSE: MUR 17 March 2020 Area Net Acres Reservoir Inter - Well Spacing (ft) Gross Remaining Wells* Karnes 10,918 Lower EFS 300 99 Upper EFS 700 155 Austin Chalk 700 102 Tilden 64,737 Lower EFS 500 354 Upper EFS 500 140 Austin Chalk 600 100 Catarina 47,653 Lower EFS 450 272 Upper
Slide 19: Eagle Ford Shale FY 2020 and 1Q 2020 Plan
www.murphyoilcorp.com NYSE: MUR 18 March 2020 CATARINA TILDEN KARNES 2020 Capital Budget $680 MM • 97 operated wells • 59 non - operated wells online 1Q 2020 Plan • 14 wells online • 4 Karnes – 2 Lower EFS, 2 Upper EFS • 10 Catarina – 8 Lower EFS, 2 Upper EFS Eagle Ford Shale FY 2020 and 1Q 2020 Pla
Slide 20: Eagle Ford Shale: Undeveloped Acreage Relative to Peers
www.murphyoilcorp.com NYSE: MUR 19 March 2020 Undeveloped Acreage Relative to Peers • Over 250 Lower Eagle Ford Shale locations remaining • Murphy wells account for <7% of drilled locations • ~75% of production is crude oil Lowest Drilling Costs Across Acreage • <$100 / ft average over last 3 years
Slide 21: Kaybob Duvernay: Scalable Asset for Future Growth
www.murphyoilcorp.com NYSE: MUR 20 March 2020 Oil - Weighted Production from Low Cost Assets • Approaching completion of retention drilling • Optimizing development plan and lateral lengths • Continuing outperformance with high - rate wells • Achieving <$6.5 MM per well drilling and completions cost
Slide 22: Kaybob Duvernay FY 2020 and 1Q 2020 Plan
www.murphyoilcorp.com NYSE: MUR 21 March 2020 Kaybob Duvernay FY 2020 and 1Q 2020 Plan 2020 Capital Budget $125 MM • 16 operated wells online • Carry fulfilled in 1Q 2020 1Q 2020 Plan • 17 wells online • 13 operated Kaybob Duvernay wells • 4 non - operated Placid Montney wells 0 2 4 6 8 10 12 14 16
Slide 23: Tupper Montney FY 2020 Plan
www.murphyoilcorp.com NYSE: MUR 22 March 2020 2020 Capital Budget $35 MM • 5 operated wells online • Maintaining asset for optionality in low - carbon environment • Achieving cash flow neutrality at ~C$1.60/MCF 2020 Plan • 5 wells online 2Q 2020 Successful AECO Price Mitigation • Realized FY19 C$2.1
Slide 24: Offshore Portfolio Update
www.murphyoilcorp.com NYSE: MUR 23 March 2020 Offshore Portfolio Update
Slide 25: Gulf of Mexico Free Cash Flow Generating Assets
www.murphyoilcorp.com NYSE: MUR 24 March 2020 Gulf of Mexico Free Cash Flow Generating Assets Gulf of Mexico Assets Murphy Assets Offshore Platform FPSO GC WR EW KC GB MC DC LU AT LL HE VK DD Lucius Cascade/Chinook Cascade St. Malo Chinook Samurai Khaleesi/Mormont Habanero Front Runner Powerball Our
Slide 26: Gulf of Mexico Multi-Year Project Execution Update
www.murphyoilcorp.com NYSE: MUR 25 March 2020 Tieback & Workover Projects • Multiple projects to sustain long - term production • Timely execution of project schedule • Platform and workover rigs currently on location Major Project Update Khaleesi / Mormont • FEED engineering work complete • Subsea
Slide 27: Gulf of Mexico Sustaining Production Through Short-Cycle Projects
www.murphyoilcorp.com NYSE: MUR 26 March 2020 Gulf of Mexico Sustaining Production Through Short - Cycle Projects Delivering Free Cash Flow with Efficient Capital Spending • Producing 86 MBOEPD in 2020 • $440 MM CAPEX in 2020 • Generating ~$1 BN in operating cash flow Executing 2020 Gulf of Mexico P
Slide 28: Exploration Update
www.murphyoilcorp.com NYSE: MUR 27 March 2020 Exploration Update
Slide 29: Exploration Strategy Overview
www.murphyoilcorp.com NYSE: MUR 28 March 2020 Focused & Meaningful • Four primary exploration areas • 3 to 5 exploration wells per year • ~$100 MM/year Reduced Risk • Proven oil provinces • Targeting appropriate working interest • Leveraging strategic partnerships Strategic Themes • Consistent US Gu
Slide 30: 2020 Exploration Plan: Focusing on Core Growth Areas
www.murphyoilcorp.com NYSE: MUR 29 March 2020 Targeting >500 MMBOE in Annual Program • $100 MM 2020 CAPEX Mt. Ouray, US Gulf of Mexico • Murphy 20% WI, non - operated • Green Canyon 767 • Expected spud 2Q 2020 Cholula Appraisal, Offshore Mexico • Murphy 40% WI, operator • Targeting 3Q - 4Q 2020 spud
Slide 31: Looking Ahead
www.murphyoilcorp.com NYSE: MUR 30 March 2020 Looking Ahead
Slide 32: 2020 Plan Flexibility
www.murphyoilcorp.com NYSE: MUR 31 March 2020 2020 Plan Flexibility Preparing Company for Near - Term Price Declines 72% 4% 22% 2% CAPEX by Production Year 2020 Production 2021 Production 2022+ Production Other $ 1.4 - $ 1.5 BN CAPEX FY 2020 181 - 193 MBOEPD Production 1Q 2020 190 - 202 MBOEPD Produ
Slide 33: Overview of Long Range Strategic Plan 2020-2024
www.murphyoilcorp.com NYSE: MUR 32 March 2020 Overview of Long Range Strategic Plan 2020 – 2024 Positioning Company for Long - Term Value Creation Generates ~$1.4 BN in Free Cash Flow Over 5 Years After Dividend Delivering Consistent Oil - Weighted Production • Maintain ~60% oil - weighting from 202
Slide 34: Positioning Company for Long-Term Value Creation
www.murphyoilcorp.com NYSE: MUR 33 March 2020 FOCUSING On shareholder priorities RAMPING High value Eagle Ford Shale production TRANSFORMING Portfolio by adding oil - weighted, high - margin assets Positioning Company for Long - Term Value Creation OFFERING Investors exploration upside EXECUTING Sho
Slide 35: March 2020 PRESIDENT & CHIEF EXECUTIVE OFFICER ROGER W. JENKINS
www.murphyoilcorp.com NYSE: MUR 34 March 2020 INVESTOR UPDATE MARCH 1, 2020 PRESIDENT & CHIEF EXECUTIVE OFFICER ROGER W. JENKINS
Slide 36: Appendix
www.murphyoilcorp.com NYSE: MUR 35 March 2020 Appendix
Slide 37: Non-GAAP Financial Measure Definitions & Reconciliations
www.murphyoilcorp.com NYSE: MUR 36 March 2020 The following list of Non - GAAP financial measure definitions and related reconciliations is intended to satisfy the requirements of Regulation G of the Securities Exchange Act of 1934, as amended. This information is historical in nature. Murphy undert
Slide 38: Adjusted Earnings
www.murphyoilcorp.com NYSE: MUR 37 March 2020 ADJUSTED EARNINGS Murphy defines Adjusted Earnings as net income attributable to Murphy 1 adjusted to exclude discontinued operations and certain other items that affect comparability between periods. Adjusted Earnings is used by management to evaluate t
Slide 39: EBITDA and EBITDAX
www.murphyoilcorp.com NYSE: MUR 38 March 2020 EBITDA and EBITDAX Murphy defines EBITDA as net income attributable to Murphy 1 before interest, taxes, depreciation and amortization (DD&A). Murphy defines EBITDAX as net income attributable to Murphy before interest, taxes, depreciation and amortizatio
Slide 40: Adjusted EBITDA
www.murphyoilcorp.com NYSE: MUR 39 March 2020 ADJUSTED EBITDA Murphy defines Adjusted EBITDA as income from continuing operations attributable to Murphy 1 before interest, taxes, depreciation and amortization (DD&A), impairment expense, foreign exchange gains and losses, mark - to - market loss on c
Slide 41: Adjusted EBITDAX
www.murphyoilcorp.com NYSE: MUR 40 March 2020 ADJUSTED EBITDAX Murphy defines Adjusted EBITDAX as income from continuing operations attributable to Murphy 1 before interest, taxes, depreciation and amortization (DD&A), exploration expense, impairment expense, foreign exchange gains and losses, mark
Slide 42: Glossary of Terms
www.murphyoilcorp.com NYSE: MUR 41 March 2020 BBL: Barrels (equal to 42 US gallons) BCF: Billion cubic feet BCFE: Billion cubic feet equivalent BN: Billions BOE: Barrels of oil equivalent (1 barrel of oil or 6,000 cubic feet of natural gas) BOEPD: Barrels of oil equivalent per day BOPD: Barrels of o
Slide 43: 1Q 2020 Guidance
www.murphyoilcorp.com NYSE: MUR 42 March 2020 1Q 2020 Guidance Producing Asset Oil (BOPD) NGLs (BOPD) Gas (MCFD) Total (BOEPD) US – Eagle Ford Shale 32,100 5,400 30,400 42,600 – Gulf of Mexico excluding NCI 1 69,600 5,500 77,000 87,900 Canada – Tupper Montney – – 240,000 40,000 – Kaybob Duvernay and
Slide 44: Reserves Summary
www.murphyoilcorp.com NYSE: MUR 43 March 2020 As of December 31, 2019 Crude Oil NGLs Natural Gas Total Proved Developed (Millions of Barrels) (Billions of Cubic Feet) (Millions of Barrels Equivalent) United States 187.3 25.6 246.0 253.9 Canada 25.1 1.9 1,026.7 198.1 Other 1 0.8 0.0 0.0 0.8 Total Pro
Slide 45: 2020 Hedging Positions
www.murphyoilcorp.com NYSE: MUR 44 March 2020 2020 Hedging Positions United States Commodity Type Volumes (BBL/D) Price (BBL) Start Date End Date WTI Fixed Price Derivative Swap 45,000 $56.42 1/1/2020 12/31/2020 Montney, Canada Commodity Type Volumes (MMCF/D) Price (MCF) Start Date End Date Natural
Slide 46: Current Financial Position
www.murphyoilcorp.com NYSE: MUR 45 March 2020 0 500 1,000 1,500 2,000 Notes Undrawn RCF • $2.8 BN total debt, excluding capital leases • Total liquidity $1.9 BN • $307 MM of cash and cash equivalents • Undrawn $1.6 BN unsecured senior credit facility • 34% total debt to cap • 31% net debt to cap Cur
Slide 47: Employee and Community Investments Support Stable Operations
www.murphyoilcorp.com NYSE: MUR 46 March 2020 In the Community In the Workplace Employee and Community Investments Support Stable Operations Human Capital Initiatives • Reviewing pay equity annually across employee groups and the organization • Offering training and development through a variety of
Slide 48: Eagle Ford Shale Peer Acreage
www.murphyoilcorp.com NYSE: MUR 47 March 2020 Eagle Ford Shale Peer Acreage OIL CONDENSATE GAS EOG EP Energy Murphy Pioneer Ovintiv Marathon ConocoPhillips Lewis/BP Chesapeake Sanchez Callon
Slide 49: Eagle Ford Shale Murphy Spacing vs Peers
www.murphyoilcorp.com NYSE: MUR 48 March 2020 Eagle Ford Shale Murphy Spacing vs Peers 2 0 0 Miles Other Operators Murphy Karnes Typical Murphy Spacing LEFS ~250 - 500’ Tilden Typical Murphy Spacing LEFS ~350’ to 800’ SN Offset Spacing LEFS ~ 250’ to 300’ CHK Offset Spacing LEFS ~350’ to 1000’ CHK O
Slide 50: Kaybob Duvernay Peer Acreage
www.murphyoilcorp.com NYSE: MUR 49 March 2020 Kaybob Duvernay Peer Acreage Fox Creek SAXON KAYBOB WEST KAYBOB EAST OVINTIV SHELL CHEVRON PARAMOUNT XTO REPSOL PLACID CENOVUS 6 Miles KEYERA SIMONETTE SEMCAMS KAYBOB Paramount Chevron DVRN Rights 70/30 MUR/ATH Ovintiv Cenovus Shell XTO Repsol Other Leas
Slide 51: Tupper Montney Peer Acreage
www.murphyoilcorp.com NYSE: MUR 50 March 2020 Tupper Montney Peer Acreage Arc Montney Crown Land Shell Montney Crown Land Advantage Montney Crown Land Other Competitor Montney Crown Land Open Crown - Montney Tourmaline Montney Crown Land Ovintiv Montney Crown Land Birchcliff Montney Crown Land Dry G
Slide 52: Placid Montney Peer Acreage
www.murphyoilcorp.com NYSE: MUR 51 March 2020 Placid Montney Peer Acreage Chevron Open Crown - Mont Hammerhead Other Leased - Mont Paramount Ovintiv Delphi CNRL XTO Non - Operated Area Tangle Creek Facility Battery Cequence MONT Rights 70/30 MUR/ATH Cenovus OVINTIV CHEVRON PARAMOUNT XTO DELPHI CENOV
Slide 53: Gulf of Mexico Producing Assets
www.murphyoilcorp.com NYSE: MUR 52 March 2020 PRODUCING ASSETS Asset Operator Murphy WI 1 Cascade Murphy 80% Chinook Murphy 80% Clipper Murphy 80% Cottonwood Murphy 80% Dalmatian Murphy 56% Front Runner Murphy 50% Habanero Shell 27% Kodiak Kosmos 48% Lucius Anadarko 9% Marmalard Murphy 27% Marmalard
Slide 54: Mt. Ouray Prospect Exploration Update
www.murphyoilcorp.com NYSE: MUR 53 March 2020 Mt. Ouray Overview • EnVen 40% (Op), Ridgewood / ILX 40%, Murphy 20% • Located within proven and producing basin • Upper Miocene amplitude • 3 - way structural trap • Expected spud 2Q 2020 Exploration Update Mt. Ouray Prospect – Green Canyon 767 US Gulf
Slide 55: Salina Basin, Mexico Exploration Update
www.murphyoilcorp.com NYSE: MUR 54 March 2020 Block 5 Overview • Murphy 40% (Op), Petronas 30%, Wintershall Dea 30% • 34 leads / prospects • Mean to upward gross resource potential • 800 MMBO – 2,000 MMBO Cholula - 2DEL Appraisal • Targeting 3Q - 4Q 2020 spud Batopilas Prospect • Focused on new sub
Slide 56: Sergipe-Alagoas Basin, Brazil Exploration Update
www.murphyoilcorp.com NYSE: MUR 55 March 2020 Asset Overview • ExxonMobil 50% (Op), Enauta Energia S.A. 30%, Murphy 20% • Hold WI in 9 blocks, spanning >1.6 MM acres • >2.8 BN BOE discovered in basin • >1.2 BN BOE in deepwater since 2007 • Material opportunities identified on Murphy blocks Continuin
Slide 57: Potiguar Basin, Brazil Exploration Update
www.murphyoilcorp.com NYSE: MUR 56 March 2020 Asset Overview • Wintershall Dea 70% (Op), Murphy 30% WI • Farm - in agreement to 3 blocks approved by regulator, final signing to occur in near term • Blocks POT - W - 857, POT - W - 863 and POT - W - 865 • Total ~774,000 gross acres • Proven oil basin
Slide 58: Cuu Long Basin, Vietnam Update
www.murphyoilcorp.com NYSE: MUR 57 March 2020 Asset Overview • Murphy 40% (Op), PVEP 35%, SKI 25% • >400 MMBOE remaining resource potential on blocks (15 - 1/05 and 15 - 2/17) Block 15 - 1/05 – Lac Da Vang (LDV) Field • Received Prime Minister approval for LDV field outline development plan • Commen
Slide 59: March 2020 PRESIDENT & CHIEF EXECUTIVE OFFICER ROGER W. JENKINS
www.murphyoilcorp.com NYSE: MUR 58 March 2020 INVESTOR UPDATE MARCH 1, 2020 PRESIDENT & CHIEF EXECUTIVE OFFICER ROGER W. JENKINS