Murphy Oil Corporation · NYSE:MUR
Murphy Oil — Credit Suisse 21st Annual Energy Summit 2016
44 slides from Murphy Oil's conference presentation, Feb 24, 2016
Slide 1: Credit Suisse 21st Annual Energy Summit
1 CREDIT SUISSECREDIT SUISSE 2121STSTANNUAL ENERGY SUMMITANNUAL ENERGY SUMMIT FEBRUARY 24, 2016FEBRUARY 24, 2016 ROGER JENKINS PRESIDENT & CHIEF EXECUTIVE OFFICER
Slide 2: Cautionary Statement
2 MURPHY OIL CORPORATION www.murphyoilcorp.com NYSE: MUR Cautionary Statement Cautionary Note to U.S. Investors –The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves. We may use cert
Slide 3: Agenda
3 MURPHY OIL CORPORATION www.murphyoilcorp.com NYSE: MUR Agenda Business Update Progressing the Portfolio Takeaways
Slide 4: Murphy Overview
4 Murphy Overview 35% 34% 3% 6% 22% 2015 Proved Reserves EFS Canada Onshore Canada Offshore GOM Malaysia 28% 31% 41% Canada Malaysia United States 61% 25% 9% 5% Oil Natural Gas Oil-Indexed Gas NGL Balanced Reserve Portfolio •Onshore North American Shale and Offshore Reserves •Outstanding Reserve Rep
Slide 5: Business Update
5 Business Update Financial •Spent $2.19 BN Capital Expenditures, ~5% Under 2015 Budget •Reduced LOE $/boeby 17% Y-O-Y •Reduced G&A by 16% Y-O-Y Reserve Replacement •Total Organic Replacement 154% •Total Replacement 123% Portfolio •Monetization of Canadian Midstream Assets •Signed Agreement to Acqui
Slide 6: Revised 2016 Capex to $580 MM
6 35% 7% 5% 11% 15% 3% 4% 20% EFS Montney Seal/Syncrude GOM/E Canada Sarawak Block K Block H Other 2016 Total Capex, $580 Million Revised 2016 Guidance NA Onshore 47% Offshore 53% 2016 Revised Capex to $580 MM •30% Reduction from Jan 2016 Guidance •73% Reduction from 2015 •76% Allocated to Developme
Slide 7: Continued Cost Focus
7 Continued Cost Focus 10.14 8.25 14.61 11.04 9.21 5 7 9 11 13 15 4Q 14 4Q 15 2013 2014 2015 Lease Operating Expense* $/boe 37% Reduction 19% Reduction Focusing on Cost Reductions •Reduced LOE by 19% Q-O-Q •Reduced LOE by over 17% Y-O-Y •EFS 4Q 15 LOE of $8.46/boe * Excludes both Syncrudeand Severan
Slide 8: 2015 – An Outstanding Year in Corporate Reserves
8 35% 19% 15% 10% 21% EFS Resource (Other) Syncrude/Heavy Conventional Deepwater Proved Reserves YE 2015 774 MMboe 2015 –An Outstanding Year in Corporate Reserves •Total Replacement 123% •R/P Increased to 10.2 years •10thConsecutive Year >100% •5 Year Reserve Life Increase of ~25% •5 Year AvgReplace
Slide 9: Global Offshore
GLOBAL OFFSHORE
Slide 10: Malaysia
10 Malaysia Sarawak •SK Gas –Reached Record Gross Production Volumes of 272 MMcfdin 2015 •South AcisDevelopment Drilling –Positive Results Kakap-Gumusut •Production Exceeding Forecast Block H FLNG •De-Risked with Drilling of 2 Wells Brunei •CA-2 KeratauSuccess •Working Field Development Plan
Slide 11: South Acis Field – Drilling Results
11 South Acis Field –Drilling Results •Completed 3rdPhase of Program •Deeper Oil-water Contacts and More Net Pay •Potential Near-field Exploration Well to Test Far Eastern Faults Blocks 25 41 46 51 0 15 30 45 60 Sanction (2012) Post 1st Drilling(2013) Post 2nd Drilling(2015) Post 3rd Drilling(2016)
Slide 12: Offshore Vietnam
12 Offshore Vietnam CA-1 CA-2 K SK 314A H 144 145 11-2/11 13/03 Vietnam Cambodia Thailand Laos Sarawak Sabah Brunei Indonesia Malaysia Philippines Indonesia SK 2C 0 250 Miles Ruby / Topaz Blk. 130 MMBOE Rang Dong Blk. 260 MMBOE Bach Ho / RongBlk. 1,900 MMBOE TeGiacTrang Blk. 320 MMBOE Lac Da Vang Bl
Slide 13: Gulf of Mexico
13 Gulf of Mexico •Dalmatian South #2 –70% W.I. (Operator) •Expanding Dalmatian Infrastructure •Spud 3Q 15; 1stOil Dec 2015 •Producing 4,000 bopd •Kodiak –29% W.I. (Non-Op.) •Tieback to Devil’s Tower •First Well Drilled & Completed to Plan •First Oil Expected in Coming Days
Slide 14: North America Onshore
NORTH AMERICA ONSHORE
Slide 15: Onshore Canada - Montney
15 Onshore Canada -Montney image001 100 t 150 t 50 t •22 New Wells Online in 2015 •Future Growth of 1000+ Potential Locations •AECO Hedges •2016: 59 MMcfd@ $C 3.19/mcf(AECO) •Midstream Monetization –1Q 16 Expected Close •New Completions Adding Upside •EURs 10 -15 BCF •Moved to 180T/frac(late 2015 an
Slide 16: Onshore - Eagle Ford Shale
16 - 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 - 10 20 30 40 50 60 70 80 90 100 110 120 130 Cumulative Gross BOE Produced Days on Production Austin Chalk: JOG A1H Performance -Cum Gross BOE Lower EFS Type Curve Austin Chalk Type Curve JOG A1H Onshore -Eagle Ford Shale Running Room
Slide 17: Progressing the Portfolio
PROGRESSING THE PORTFOLIO
Slide 18: Montney Midstream Monetization
18 Montney Midstream Monetization •C$538 MM Divestiture of Montney Midstream Assets in British Columbia, Canada •100% Cash Proceeds •20 year Customary Fee Structure •Assets Include Natural Gas Processing Plants and Sales Pipelines for Tupper and Tupper West •Expected to Close First Quarter •Enbridge
Slide 19: Athabasca Oil Joint Venture Transaction
19 •C$475 MM Joint Venture Agreement in KaybobDuvernay and Liquids Rich Montney Area •C$250 MM Cash; C$225 MM Flexible Carry •Risked Recoverable Resource of 200 -350 MMboeNet 1.KaybobDuvernay •70% WI, Operatorship •230,000 Gross Acres (200,000 Currently Prospective) •6,900 boepdGross, 58% Liquids •A
Slide 20: Joint Venture Highlights
20 •Strategically Complements NA Onshore Unconventional Portfolio Utilizing In-House Expertise •Capital Flexibility in Volatile Price Environment •Up to Five Year Ability to Pay Carry Based on Pricing •Allocated Canadian Funds from Midstream Monetization to Joint Venture •Maintains Balance Sheet as
Slide 21: Kaybob Duvernay Overview
21 KaybobDuvernay Overview •Emerging as Premier Play •Gas Condensate Delivering High Liquid Yields •Early Stages of Light Oil Development •Analogous Results to EFS Light Oil •Results Continue to Improve •Increasing Well EURs •Optimizing Completion Techniques •Decreasing D&C Costs •Long Term Growth •
Slide 22: Comparative Rock Properties in Premier NA Shales
22 image001 Permian Duvernay Montney Eagle Ford Comparative Rock Properties in Premier NA Shales
Slide 23: Duvernay Condensate – Improving Performance By Completion Type
23 Duvernay Condensate –Improving Performance By Completion Type Cumulative, Mboe Time, months 1 2 ATH ATH Proppant (#/ft) 500 750 1000 1250 1500 1750 250 2250 Type Curve: 760 MBOE Type Curve: 1000 MBOE 2 1 ATH ATH •33,000 Gross Acres (Gas Condensate) DuvernayRights ATH ATH
Slide 24: Duvernay Light Oil – Improving Performance By Completion Type
24 Duvernay Light Oil –Improving Performance By Completion Type Cumulative, Mboe Time, months Type Curve: 400 MBOE Type Curve: 670 MBOE 1 2 ATH* ATH Proppant (#/ft) 500 750 1000 1250 1750 3250 ATH ATH DuvernayRights •67,000 Gross Acres (Light Oil) •110,000 Gross Acres (Black Oil) 2 1 ATH ATH *Well d
Slide 25: Liquids Rich Montney Overview
25 Liquids Rich Montney Overview •Montney Most Actively Drilled Canadian Play in 2015 •Significant Liquids Component (30%) •Results Continue to Improve Providing Upside to Economics •Increasing Well EURs Across the Play •Optimizing Completion Techniques •Decreasing D&C Costs •Long Term Growth •100 -
Slide 26: Drilling & Completions Recent Performance
26 MURPHY OIL CORPORATION www.murphyoilcorp.com NYSE: MUR Drilling & Completions Recent Performance •Early Stage of Learning Curve •Will Benefit from Experience in EFS and Montney •Industry Driving Well Costs Down as Play is Developed •Reduced Drilling Days •Efficiencies With Multi-Well Pads •Assume
Slide 27: Learning Curve Will Bring Costs Down
27 MURPHY OIL CORPORATION www.murphyoilcorp.com NYSE: MUR •Proven Track Record of Lowering Costs While Optimizing Drilling & Completion Techniques •Utilize Internal Expertise and Partner Success •Similar Well Design to Montney& EFS •DuvernayStill in Early Stages of Development •Light Oil Drilling We
Slide 28: Growing Heavy Oil and Diluent Demand
28 MURPHY OIL CORPORATION www.murphyoilcorp.com NYSE: MUR Growing Heavy Oil and Diluent Demand •2014 to 2018: >800 MbblpdGrowth Alberta Oil Sands Production •From Projects Currently Under Construction •2014 to 2018: Diluent Requirement Expected to Grow 200 Mbblpd •Imports Near Current Max of Pipelin
Slide 29: Existing Strategic Infrastructure
29 Existing Strategic Infrastructure Alberta 60mmcf/d 12,500bbls/d (50% WI) 150-180mmcf/d (50% WI) TCPL Alliance Pembina •Flexible Takeaway OptionsWith Future Growth Potential Gas Pipelines (Gross) Up to 180 Mmcf/d Battery Capacity (Gross) Oil 36,000 bb/d Gas 84 Mmcf/d, expandableto >130Mmcf/d Allia
Slide 30: US Unconventional Single Well Economics
30 US Unconventional Single Well Economics Based on January 19, 2016 forward pricing; escalated 2%/yronce 5 years forward curve ends. Fixed and Variable Well Cost Only –No Facility Costs No Planned Drilling in 2016 @ E, N & W. Tilden Current Athabasca Joint Venture Area Type Curve ROR Catarina KBS 2
Slide 31: Financial Outlook
31 FINANCIAL OUTLOOK
Slide 32: Murphy – Current Debt Maturity Profile
32 $0 $250 $500 $750 $1,000 $1,250 $1,500 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 >2046 Debt Balance $MM 10 YEAR 20YEAR 30 YEAR Murphy –Current Profile Source: MUFG; Bloomberg 3 YEAR 5Y
Slide 33: Managing the Balance Sheet
33 Managing the Balance Sheet •Reduced Capital to $580 MM, 73% from 2015 Including a 75%Reduction in the EFS •Securing Longer Tenor on Revolver •Dividend Review if Commodity Prices Remain at Current Levels •Non Core Asset Sales –Continue to Review Portfolio
Slide 34: Takeaways
34 Preserving the Balance Sheet Outstanding Year in Reserves Replacement Takeaways 1 2 3 4 Reducing Capital While Maintaining Production Focusing on NA Unconventional Resources 5 Balanced Production Between Onshore/Offshore
Slide 35: Appendix
35 APPENDIX
Slide 36: Appendix
36 Appendix •Non-GAAPReconciliation •Abbreviations •Guidance •HedgingPositions
Slide 37: Non-GAAP Financial Measure Definitions & Reconciliations
37 Non-GAAP Financial Measure Definitions & Reconciliations ThefollowinglistofNon-GAAPfinancialmeasuredefinitionsandrelatedreconciliationsisintendedtosatisfytherequirementsofRegulationGoftheSecuritiesExchangeActof1934,asamended.Thisinformationishistoricalinnature.Murphyundertakesnoobligationtopublic
Slide 38: Non-GAAP Reconciliation: Adjusted Earnings
38 Non-GAAP Reconciliation ADJUSTEDEARNINGS 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 tren
Slide 39: Non-GAAP Reconciliation: Adjusted Earnings
39 Non-GAAP Reconciliation ADJUSTEDEARNINGS $ Millions Twelve Months Ended –December 31, 2015 Twelve Months Ended –December 31, 2014 Net Income (loss) (2,270.8) 905.6 Discontinued operationsloss 15.0 119.4 Deepwater rig contract exit costs 183.3 - Deferred tax on distributed foreign earnings 188.5 -
Slide 40: Non-GAAP Reconciliation: EBITDA
40 Non-GAAP Reconciliation EBITDA Murphy defines EBITDA as income from continuing operations before income taxes, depreciation, depletion and amortization (DD&A), net interest expense, and impairment expense. Management believes that EBITDA provides useful information for assessing Murphy's financia
Slide 41: Non-GAAP Reconciliation: EBITDAX
41 Non-GAAP Reconciliation EBITDAX MurphydefinesEBITDAXasincomefromcontinuingoperationsbeforeincometaxes,explorationexpenses,depreciation,depletionandamortization(DD&A),netinterestexpense,andimpairmentexpense. ManagementbelievesthatEBITDAXprovidesusefulinformationforassessingMurphy'sfinancialconditi
Slide 42: Abbreviations
42 Abbreviations BBL: barrels (equal to 42 US gallons) BCF: billions of cubic feet 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 annual growth rate DD&A:depreciation
Slide 43: Guidance - 1Q 2016
43 Guidance -1Q 2016 Guidance 1Q 2016 1Q 2016 Liquids (bopd) 1Q 2016 Gas (mcfd) 1Q Production: 126,000 396,000 US -EagleFord Shale 49,000 34,000 Gulfof Mexico 16,000 26,000 Canada -Heavy 3,000 2,000 Montney - 203,500 Offshore 8,000 - Syncrude 13,000 - Malaysia –Sarawak 13,000 112,500 BlockK 24,000 1
Slide 44: 2016 Hedging Positions
44 2016 Hedging Positions Area Commodity Type Volumes (bbl/d) Price (USD/bbl) Start Date End Date United States WTI Fixed price derivative swap 20,000 $52.01 01/01/2016 12/31/2016 Area Commodity Type Volumes(MMcf/d) Price (CAD/mcf) StartDate End Date WesternCanada Natural Gas Fixedprice forward sale
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