Murphy Oil Corporation · NYSE:MUR
Murphy Oil — Barclays CEO Energy-Power Conference 2018
47 slides from Murphy Oil's conference presentation, Sep 5, 2018
Slide 1: Barclays CEO Energy-Power Conference
BARCLAYS CEO ENERGY-POWER CONFERENCE SEPTEMBER 6, 2018 ROGER W. JENKINS PRESIDENT & CHIEF EXECUTIVE OFFICER MURPHY OIL CORPORATION
Slide 2: Cautionary Statement & Investor Relations Contacts
Cautionary Statement & Investor Relations Contacts 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
Slide 3: Agenda
Agenda 01 COMPANY UPDATE 02 PORTFOLIO REVIEW 03 EXPLORATION REVIEW 04 TAKEAWAYS MURPHY OIL CORPORATION www.murphyoilcorp.com NYSE: MUR 3
Slide 4: Murphy At A Glance
Murphy At A Glance •Long Corporate History, IPO 1956 •Global Offshore & North American Onshore Portfolio •Diverse Portfolio Drives High Margins •Exploration Renaissance with Recent Success •Consistent Cash Flows from Long-Term Offshore Assets •Growing Unconventional Assets in North American Onshore
Slide 5: Enriching Shareholders with Long-Term Dividend Policy
Enriching Shareholders with Long-Term Dividend Policy •Returned $4.3 BN to Shareholders, Since 1961 •Returned > $2.5 BN to Shareholders in Last 10 Years •Sustained High Dividend Yield Without Diluting Shareholders Dividend + Buyback Payout % of Adj CFO*, 2015 –0% 10% 20% 30% 40% 50% MUR 2018E Source
Slide 6: Updating Production & CAPEX Guidance
Updating Production & CAPEX Guidance FY 18 Production Guidance 168.5 –170.5 MBOEPD, 59% Liquids 3Q 18 Guidance 166.5 –168.5 MBOEPD, 59% Liquids •Planned 3Q 18 Downtime, -7.4 MBOEPD •Annual Non-Operated Offshore Canada •Capital Project Execution in Malaysia •Increased Onshore Production, +3.9 MBOEPD
Slide 7: Delivering Our 2018 Plan
Delivering Our 2018 Plan Driving Robust Production from Diversified Assets •2Q 18 Total Production 171 MBOEPD, 59% Liquids –Exceeding Guidance •2Q 18 Offshore Production 76 MBOEPD, 72% Liquids •2Q 18 Onshore Production 95 MBOEPD, 48% Liquids Aligning Financial Priorities & Shareholder Value •2Q 18 A
Slide 8: Executing Our Strategy in 2Q 2018
Executing Our Strategy in 2Q 2018 Develop DIFFERENTIATED PERSPECTIVES In Underexplored Basins & Plays .Returned to Offshore Exploration at Bottom of Cycle with Successful Delineation & Discovery at Samurai-2 in Gulf of Mexico .Exploration Plan Approval for Mexico Deepwater Block 5 Continue to be a P
Slide 9: Driving High Cash Margins With a Diversified Portfolio
Driving High Cash Margins With a Diversified Portfolio 2Q 2018 Sales Basis Price 22% 33% 4% 10% 31% Brent/MCO* LLS* WTI Oil-Indexed Gas Other 171 MBOEPD 53% Oil 41% Natural Gas 6% NGL *MCO = Malaysian Crude Oil, See Definitions in Appendix *LLS = Light Louisiana Sweet, See Definitions in Appendix Pr
Slide 10: Generating Robust EBITDA
Generating Robust EBITDA Allocating 70% of Capital to High EBITDA Assets •Eagle Ford Shale •Kikeh DTU Gas Lift •Dalmatian Subsea Pump •Samurai Success Evaluation Realized Prices & Volumes Sold, 1H 2018 Eagle Ford Shale $38/BOE Malaysia $36/BOE 1H 2018 EBITDA North America Offshore $39/BOE 0 10 20 30
Slide 11: Portfolio Review
PORTFOLIO REVIEW eT ae
Slide 12: Low-Cost North America Onshore Assets
Low-Cost North America Onshore Assets Eagle Ford Shale •~125,000 Net Acres, ~905 Wells Online* •~2,000 Remaining Locations** •Premium LLS Pricing •“Big Data” Focus Kaybob Duvernay •~140,000 Net Acres, ~70Wells Online* •~1,100 Remaining Locations** •Successfully Lowering Cost While Delineating the Pl
Slide 13: Producing Consistent Results in the Eagle Ford Shale
Producing Consistent Results in the Eagle Ford Shale Online Operated Well Delivery –45 Wells Online FY 2018 •26 Wells Online 2Q 18 vs Guide of 22 Wells •10-Well Pad in Karnes –Avg IP30 1,750 BOEPD •Co-Development of Lower & Upper Eagle Ford Shale Wells •Testing Lower Eagle Ford Shale Stagger Targets
Slide 14: Growing the Kaybob Duvernay
Growing the Kaybob Duvernay Operated Well Delivery •Current Plan –25 Drill + 25 Complete + 27 Online Location Pad Wells Window Online . A 01-12 1 Oil 1Q 2018 . B 15-16 2 Oil 1Q 2018 . C 12-29 2 Oil 1Q 2018 . D 16-03 3 Condensate 1Q 2018 . E 03-33 4 Oil 2Q 2018 . F 16-06 2 Oil 3Q 2018 . G 11-14 5 Con
Slide 15: Continuing Strong Execution in the Kaybob Duvernay
Continuing Strong Execution in the Kaybob Duvernay Substantial Production Growth •Increased Kaybob Production 35% from 1Q 18 to 2Q 18, 108% Y-O-Y •Drilled Longer Laterals, Nearly Doubled in Length •Continued to Optimize Completions •Switched from Rod Pumps to Gas Lift Significant Well Cost Reduction
Slide 16: Delivering Low Cost Production in Tupper Montney
Delivering Low Cost Production in Tupper Montney Operated Well Delivery •5 Wells Online 2Q 18, Avg EUR ~18 BCF Successful AECO Price Mitigation •AECO Daily Spot Down 43% vs MUR Realizations Down 16% (2Q 18 vs 1Q 18) •Realized Price 3Q 18 QTD US$1.65 [C$2.14*]/MMBTU vs Daily Spot QTD of US$0.87 [C$1.
Slide 17: Generating Free Cash Flow from Long-Term Project
Generating Free Cash Flow from Long-Term Project Long-Term Expansion Project Approved 2Q 18 •Additional 200 MMCFD, Online 2020 –Up to 500 MMCFD •Adds Estimated 400+ BCF Reserves •Break-Even ~C$1.75/MCF AECO (10% IRR) •Highly Economic, > 25% IRR •Flexible Capital Program •Leads to Net Income & Free C
Slide 18: Executing in Global Offshore
Executing in Global Offshore Malaysia Sabah –Kikeh •DTU Gas Lift Project 95% Complete, Online 3Q 18 Sarawak –South Acis •Mobilized Jack-Up Rig for 3-Well Infill Drilling Campaign Block H •FLNG Project on Track, Targeting First Production in 2020 Vietnam Block 15-01/05 •Received Full Approval to Incr
Slide 19: Exploration Review
EXPLORATION REVIEW eS ae
Slide 20: Returning to Global Exploration
Returning to Global Exploration New Exploration Team Focus •Target ~35% Working Interest •No 100% New Entry Blocks •Partner with Proven Explorers •> 30% Full Cycle Return at Mean Risked Volumes •F&D < $15 •Near Existing Discoveries/Fields •Better Data, Wide Azimuth (WAz) Seismic Exploration Focus Ar
Slide 21: Achieving Successful Exploration
Achieving Successful Exploration Gulf of Mexico Samurai Appraisal (GC432 #2) •Murphy 50% WI, Operator, BHP 50% WI •Spud 2Q 2018 •Well TD 32,080 ft •Encountered > 150 ft Total Pay •Delineated Existing Pay Zones from Samurai-1 •Hydrocarbons Discovered in New Pay Zones •Discovered Gross Resources > 75
Slide 22: Developing Gulf of Mexico Tie-Backs
Developing Gulf of Mexico Tie-Backs Development Summary •Tie-Back to Host Facility within 20 Miles •~18 Month to Complete Tie-Back •4 Wells/8 Completions •Development CAPEX $660 MM •Drilling & Completion $410 MM •Facilities $250 MM Economic Metrics •Gross F&D Cost $8.80/BOE •OPEX $10/BOE •IRR 35% to
Slide 23: Gaining Momentum in Strategic Exploration
Gaining Momentum in Strategic Exploration GOM King Cake Prospect (AT23 #1) •Murphy 31.5% WI, Operator •Expected Spud 3Q 18 •Gross Resource Potential –50 MMBOE (Mean) to 100 MMBOE (Upside) •Net Well Cost ~$22 MM Cuu Long Basin LDT Prospect (Block 15-1/05) •Murphy 40% WI, Operator •Expected Spud 4Q 18
Slide 24: Brazil Exploration Update
Brazil Exploration Update Renewed Exploration Portfolio with Low-Cost Entry & Long-Term Opportunities in 6 Blocks •Progressing 2018 Seismic Program Farm-In to QGEP’s Sergipe-Alagoas Blocks •Secured Blocks 351 & 428 •Murphy 20%, ExxonMobil 50% (Op), QGEP 30% •No Well Commitment Same Co-Venture Group
Slide 25: Australia Exploration Update
Australia Exploration Update Vulcan Basin •Murphy 40% –60% WI, Operator •Expected Spud 2019 & 2021 •Identifying Multiple Prospects, Up to 200 MMBOE Gross Recoverable Resource Potential •Evaluating 3D Seismic Data •No Well Commitment Ceduna Basin •Murphy 50% WI, Operator •Maturing 5 Leads with 300+ M
Slide 26: Positioning Company for Long-Term Value Creation
Positioning Company for Long-Term Value Creation Delivering the 2018 Plan Achieving Strong EBITDA Margins Returning to Successful Offshore Exploration Executing High-Return Offshore Projects Driving Costs Lower in North American Onshore Funding Operational Success in Kaybob Duvernay & Offshore Conti
Slide 27: Appendix
APPENDIX Ee a
Slide 28: Appendix
Appendix •Non-GAAP Reconciliation •Abbreviations •Guidance •Hedging Positions •2017 Overview & Reserves MURPHY OIL CORPORATION www.murphyoilcorp.com NYSE: MUR 28
Slide 29: Non-GAAP Financial Measure Definitions & Reconciliations
Non-GAAP Financial Measure Definitions & Reconciliations 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. Murp
Slide 30: Non-GAAP Reconciliation: Adjusted Earnings
Non-GAAP Reconciliation ADJUSTED EARNINGS Murphy defines Adjusted Earnings as net income adjusted to exclude discontinued operations and certain other items that affect comparability between periods. Adjusted Earnings is used by management to evaluate the company’s operational performance and trends
Slide 31: Non-GAAP Reconciliation: EBITDA and EBITDAX
Non-GAAP Reconciliation EBITDA and EBITDAX Murphy defines EBITDA as income from continuing operations before interest, taxes, depreciation and amortization (DD&A). Murphy defines EBITDAX as income from continuing operations before interest, taxes, depreciation and amortization (DD&A) and exploration
Slide 32: Non-GAAP Reconciliation: Adjusted EBITDAX
Non-GAAP Reconciliation ADJUSTED EBITDAX Murphy defines Adjusted EBITDAX as income from continuing operations before interest, taxes, depreciation and amortization (DD&A), exploration expense, impairment expense, foreign exchange gains and losses, mark-to-market loss on crude oil derivative contract
Slide 33: Abbreviations
Abbreviations BBL: barrels (equal to 42 US gallons) BCF: billions of cubic feet BCFE: billion cubic feet equivalent BN: billions BOE: barrels of oil equivalent (1 barrel of oil or 6000 cubic feet of natural gas) BOEPD: barrels of oil equivalent per day BOPD: barrels of oil per day CAGR: compound ann
Slide 34: Guidance – 3Q
Guidance –3Q 18 Guidance 3Q 3Q 2018 Liquids (BOPD) 3Q 2018 Gas (MCFD) 3Q Production: US –Eagle Ford Shale 41,775 31,650 Gulf of Mexico 15,625 14,100 Canada –Tupper Montney – 234,500 Kaybob Duvernay & Placid Montney 7,200 32,000 Offshore 5,000 – Malaysia –Sarawak 11,900 99,250 Block K/Brunei 16,800 3
Slide 35: 2018 Hedging Positions
2018 Hedging Positions Area Commodity Type Volumes (BOPD) Price (USD/BBL) Start Date End Date United States WTI Fixed Price Derivative Swap 21,000 $54.88 7/1/2018 12/31/2018 Area Commodity Type Volumes(MMCFD) Price (MCF) StartDate End Date Montney Natural Gas Fixed Price Forward Sales 59 C$2.81 7/1/
Slide 36: 2017 Asset Overview
2017 Asset Overview At December 31, 2017 Crude Oil NGLs Natural Gas Total Proved Developed Reserves: (Millionsof Barrels) (Billions of CubicFeet) (Millions of Barrels Equivalent) United States 126.3 23.3 127.7 170.9 Canada 21.9 1.0 547.0 114.1 Malaysia 37.3 0.3 144.6 61.7 Total Proved Developed Rese
Slide 37: Increasing Reserves & Lowering F&D Costs in 2017
Increasing Reserves & Lowering F&D Costs in 2017 •Maintaining High-Margin, Oil-Weighted Portfolio •Organic Reserves Replacement 113% •Total Reserves Replacement 123% •1 Year F&D Costs of $13.09/BOE •3 Year Cumulative F&D Costs of $14.08/BOE •Reserve Life Index 11.7 Years, Increased from 10.7 2017 Pr
Slide 38: Maintaining Financial Discipline
Maintaining Financial Discipline $MM(Except per Share) 2Q 18 2Q 17 Continuing Operations Income(Loss) 46 (17) $/Diluted Share 0.26 (0.10) Adjusted Earnings Adjusted Earnings (Loss) 63 (19) $/Diluted Share 0.36 (0.11) Adjustments to 2Q 18 Earnings •Mark-to-Market Loss on Crude Oil Contracts $10 MM, A
Slide 39: Expecting Cash Flow, CAPEX & Dividend Parity for FY 2018
Expecting Cash Flow, CAPEX & Dividend Parity for FY 2018 1H 2018 Adversely Affected By: •$35 MM One-Time Withholding Tax Payment on Funds Repatriated from Canada •CAPEX Accrued in 2017 but Paid in 2018 Totaled $39 MM, Exceeding 2018 CAPEX Accrued but not Paid by $15 MM Results: •Net Result is June 3
Slide 40: Long-Term Strategy Drives Profitable Growth
Long-Term Strategy Drives Profitable Growth •Measured, Oil-Weighted Production Growth Within Cash Flow •Plan Returns Over $800 MM to Shareholders with Current Dividend Policy •Plan Delivers ~$500 MM Free Cash Flow, In Addition to Dividend •Doubling EBITDA by 2022 Value-Adding Production Growth 0 50
Slide 41: Credit Metrics vs E&P Peers – 2Q 2018
Credit Metrics vs E&P Peers –2Q 2018 2Q 2018 Net Debt / AdjEBITDAX (LTM) 2Q 2018 Net Debt / 2017 Proved Reserves* ($/BOE) 2Q 2018 Net Debt / Production($000/BOEPD) 2Q 2018 AdjEBITDAX / Production ($/BOE) Source: Bloomberg, Company Filings as of 6/30/18, *As of 12/31/17, NR = Not Rated, Moody’s Credi
Slide 42: Bloomberg Definitions
Bloomberg Definitions •Net Income/BOE = Net Income (Loss) as Reported / Total Annual Production •EBITDA= Loss from Continuing Operations -Interest & Other Income + Income Tax Expense (Benefit) + Interest Expense -Interest Capitalized + DD&A •EBITDA/BOE= EBITDA / Total Annual Production •ProductionNe
Slide 43: NA Onshore Running Room
NA Onshore Running Room Area Net Acres PDP Wells Reservoir RemainingWells Spacing(Acres) Inter-Well Spacing (ft) Total Well Count* NA Onshore Total 413,156 1,222 5,176 6,398 Eagle Ford Shale Karnes 10,918 274 LowerEFS Upper EFS Austin Chalk 60 158 107 40 80 140 350 700 700 599 Tilden 55,639 392 Lowe
Slide 44: Eagle Ford Shale – Peer Acreage
Eagle Ford Shale –Peer Acreage EOG EP Energy Murphy Pioneer Encana Marathon ConocoPhillips Lewis/BP Chesapeake Sanchez Carrizo OIL Pioneer CONDENSATE GAS MURPHY OIL CORPORATION www.murphyoilcorp.com NYSE: MUR 44
Slide 45: Kaybob Duvernay – Peer Acreage
Kaybob Duvernay –Peer Acreage Fox Creek SAXON KAYBOB WEST KAYBOB EAST ENCANA SHELL CHEVRON PARAMOUNT XTO REPSOL PLACID CENOVUS 6 Miles Volatile Oil Gas Condensate Wet Gas SIMONETTE DVRN Rights 70/30 MUR/ATH PARAMOUNT REPSOL XTO SHELL CHERVRON ENCANA CENOVUS OPEN CROWN – DVRN OTHER LEASED – DVRN JV A
Slide 46: Placid Montney – Peer Acreage
Placid Montney –Peer Acreage MONT Rights 70/30 MUR/ATH CEQUENCE CENOVUS CIOC CHEVRON CNRL DELPHI ENCANA OPEN CROWN – DVRN OTHER LEASED – DVRN PARAMOUNT RMP XTO Non-Operated Area Fox Creek SAXON KAYBOB WEST KAYBOB EAST ENCANA CHEVRON PARAMOUNT XTO DELPHI PLACID CENOVUS 6 Miles RMP CNRL CIOC Condensat
Slide 47: Tupper Montney – Peer Acreage
Tupper Montney –Peer Acreage Facilities Dry Gas Limit Liquids Rich Limit TCPL Pipeline Alliance Pipeline Murphy Pipelines Advantage Montney Crown Land Arc Montney Crown Land Birchcliff Montney Crow Land Encana Montney Crow Land Tourmaline Montney Crow Land Shell Montney Crown Land Other Competitor M
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