Murphy Oil Corporation · NYSE:MUR
Murphy Oil — Investor Presentation (September 2019)
45 slides from Murphy Oil's investor presentation, Sep 20, 2019
Slide 1: Investor Update September 2019
www.murphyoilcorp.com NYSE: MUR 0 September 2019 INVESTOR UPDATE SEPTEMBER 2019 PRESIDENT & CHIEF EXECUTIVE OFFICER ROGER W. JENKINS
Slide 2: Cautionary Note to U.S. Investors
www.murphyoilcorp.com NYSE: MUR 1 September 2019 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 o
Slide 3: Agenda
www.murphyoilcorp.com NYSE: MUR 2 September 2019 Agenda 01 COMPANY UPDATE 02 ONSHORE PORTFOLIO UPDATE 03 OFFSHORE PORTFOLIO UPDATE 04 EXPLORATION UPDATE 05 LOOKING AHEAD
Slide 4: Murphy at a Glance
www.murphyoilcorp.com NYSE: MUR 3 September 2019 61% 5% 34% Crude oil NGL Natural gas 26% 29% 44% US Onshore Canada Onshore NA Offshore 54% 8% 38% Crude oil NGLs Natural gas 37% 36% 27% US Onshore Canada Onshore NA Offshore Exploration Office Production Murphy at a Glance * Based on internal estimat
Slide 5: Value-Adding Transformation
www.murphyoilcorp.com NYSE: MUR 4 September 2019 Value - Adding Transformation 2014 Sell - Down 30% Malaysia $2.0 BN 2016 Divested Syncrude $730 MM 2016 Divested Montney Midstream $412 MM 2017 Divested Heavy Oil $51 MM 2019 Divested Malaysia $2.127 BN 2014 – 2015 Repositioning Portfolio Post - Spin;
Slide 6: Sales Volumes & Differentials
www.murphyoilcorp.com NYSE: MUR 5 September 2019 MEH +$6.54/BBL LLS +$7.53/BBL Other Mars +$5.85/BBL Brent +$8.47/BBL 26% 21% 35% 13% 6% Sales Volumes & Differentials 2Q 2019 Total Company Differentials vs $59.82 WTI Achieving Premium Oil - Weighted Realizations Eagle Ford Shale North America Offsho
Slide 7: Eagle Ford Shale and Gulf of Mexico Deliver Strong Operating Cash Flows
www.murphyoilcorp.com NYSE: MUR 6 September 2019 Eagle Ford Shale and Gulf of Mexico Deliver Strong Operating Cash Flows $60.95 $58.84 $- $10 $20 $30 $40 $50 $60 $70 Eagle Ford Shale Gulf of Mexico Opex Operating margin Avg realized price NOTE: Operating margin calculated as price realizations less
Slide 8: Long History of Benefitting Shareholders
www.murphyoilcorp.com NYSE: MUR 7 September 2019 Long History of Benefitting Shareholders $4.4 Billion Returned to Shareholders In last 10 years > $1.6 Billion in Share Repurchases 2012 – 1H 2019 > $ 6.3 Billion Returned to Shareholders Since 1961 > $0 $200 $400 $600 $800 $1,000 97 98 99 00 01 02 03
Slide 9: Positioned for Investor Value Creation
www.murphyoilcorp.com NYSE: MUR 8 September 2019 Positioned for Investor Value Creation Note: Calculated based on Market Cap (9/17/2019, in $Millions) Divided by Total Proved Reserves (MMBOE, 12/31/18); Source: FactSet Peer Group: APA, CLR, CXO, DVN, ECA, FANG, HES, MRO, NBL, PE, PXD, WPX, XEC Note:
Slide 10: Executing Our 2019 Plan
www.murphyoilcorp.com NYSE: MUR 9 September 2019 Executing Our 2019 Plan PRODUCING Oil - Weighted Assets 159 MBOEPD, >60% Oil in 2Q 2019 >23% increase in Eagle Ford Shale from 1Q Lowered LOE/BOE to <$9 in 1H 2019 GENERATING High Margin Realizations 94% oil volumes sold at premium to WTI >$26 EBITDA/
Slide 11: Onshore Portfolio Update
www.murphyoilcorp.com NYSE: MUR 10 September 2019 Onshore Portfolio Update
Slide 12: Concentrated Onshore Assets with Repeatable Results
www.murphyoilcorp.com NYSE: MUR 11 September 2019 Concentrated Onshore Assets with Repeatable Results Eagle Ford Shale 44 MBOEPD at 2Q 2019, 74% oil, 88% liquids ~980 total producing wells online Kaybob Duvernay 9,300 BOEPD at 2Q 2019, 52% oil, 61% liquids ~80 total producing wells online Tupper Mon
Slide 13: Significant Running Room in the Eagle Ford Shale
www.murphyoilcorp.com NYSE: MUR 12 September 2019 Significant Running Room in the Eagle Ford Shale 0 1 2 3 4 5 2019E 2020E 2021E 2022E 2023E 0 50 100 150 200 Number of Rigs Wells Online Wells Online Rigs Per Year Long - Term Plan Well Cadence* * As of December 31, 2018 Area Net Acres Reservoir Inter
Slide 14: 2019 Well Delivery Plan: Eagle Ford Shale
www.murphyoilcorp.com NYSE: MUR 13 September 2019 2019 Well Delivery Plan • 91 wells online 2Q 2019 44 MBOEPD, 74% Oil, 88% Liquids • > 23% increase in volumes from 1Q 2019 • 35 wells online, 91% liquids • 23 Karnes – 14 Lower EFS, 3 Upper EFS, 6 Austin Chalk • 12 Tilden – Lower EFS 3Q 2019 • 25 wel
Slide 15: Increasing Returns From New Wells
www.murphyoilcorp.com NYSE: MUR 14 September 2019 Increasing Returns From New Wells • Improved well targeting • Optimized completion design • Applicable to >350 more locations Jambers Pad • 8 Lower EFS wells online 2Q 2019 • 6 wells with 9,100’ lateral (IP30 1,440 BOEPD) • 2 wells with 4,700’ latera
Slide 16: Kaybob Duvernay: Scalable Assets For Future Growth
www.murphyoilcorp.com NYSE: MUR 15 September 2019 Oil - Weighted Production from Low Cost Assets • Approaching completion of retention drilling • Optimizing development plan and lateral lengths • Continuing outperformance with high rate wells • Targeting $6.5 MM per well drilling and completions cos
Slide 17: Kaybob Duvernay Well Delivery Update
www.murphyoilcorp.com NYSE: MUR 16 September 2019 2019 Well Delivery Plan Complete • 10 wells online 2Q 2019 9,300 BOEPD, 61% liquids • > 25% increase in volumes from 2Q 2018 • 6 wells online • Closed cashless acreage swap • Acquired 20,000 gross acres in Kaybob East / Two Creeks in exchange for 5,8
Slide 18: New Two Creeks Wells Exceeding Expectations
www.murphyoilcorp.com NYSE: MUR 17 September 2019 0 5 10 15 20 25 30 35 40 45 50 0 10 20 30 40 50 60 70 16-29 Average Cum BOE 05-19 Average Cum BOE 400 EUR Curve Results From De - Risking Improve Returns • Increased oil content from appraisal wells • Improved completion design 16 - 29 Pad • Two well
Slide 19: Tupper Montney Update: Mitigating AECO Exposure
www.murphyoilcorp.com NYSE: MUR 18 September 2019 Mitigating AECO Exposure 2Q 2019 Tupper Montney Natural Gas Sales Tupper Montney Natural Gas Realizations 2Q 2019 $CAD/MCF 2019 Well Delivery Plan Complete • 8 wells online 2Q 2019 37 MBOEPD, 100% Natural Gas • 5 wells online • New wells trending in
Slide 20: Offshore Portfolio Update
www.murphyoilcorp.com NYSE: MUR 19 September 2019 Offshore Portfolio Update
Slide 21: Revitalized Portfolio: Gulf of Mexico Assets
www.murphyoilcorp.com NYSE: MUR 20 September 2019 Revitalized Portfolio • Top 5 Gulf of Mexico operator by production • Achieves high margin EBITDA/BOE • Generating ongoing synergies from acquisitions • Long runway for further development projects GC WR EW KC GB MC DC LU AT LL HE VK DD Gulf of Mexic
Slide 22: Gulf of Mexico 2Q 2019 Operations Update
www.murphyoilcorp.com NYSE: MUR 21 September 2019 2019E Production 85 MBOEPD, 90% Liquids • Closed Gulf of Mexico acquisition 2Q 2019 • Exceeded 2Q 2019 production guidance from new assets by 1,200 BOEPD and legacy assets by 1,600 BOEPD Dalmatian DC4 #2 Well • Well drilled and completed, online 4Q 2
Slide 23: Gulf of Mexico Short Cycle Capital Projects Deliver Accelerated Returns
www.murphyoilcorp.com NYSE: MUR 22 September 2019 0 10 20 30 40 50 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021 FY Dalmatian Cottonwood NHN SOB II Calliope Ourse 0 2 4 6 8 10 12 4Q 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Dalmatian Cottonwood Nearly Headless Nick Son of Bluto
Slide 24: Investing in Long Term High-Margin Projects
www.murphyoilcorp.com NYSE: MUR 23 September 2019 Khaleesi/Mormont • Gross resource ~165 MMBOE, 90% liquids • 7 development wells planned – 4 previously drilled • IRR > 30%, NPV > $300 MM Samurai • Gross resource ~60 MMBOE, 90% liquids • Potential upside ~15 MMBOE • 4 development wells planned • IRR
Slide 25: Gulf of Mexico Generating Long Term Free Cash Flow
www.murphyoilcorp.com NYSE: MUR 24 September 2019 Major Projects 2019 – 2023 Estimated Gulf of Mexico Production MBOEPD CAPEX from Major Projects include Samurai and Khaleesi / Mormont St. Malo Water Flood CAPEX includes $50 MM carry for Petrobras Americas Inc. Production volumes, sales volumes, res
Slide 26: Exploration Update
www.murphyoilcorp.com NYSE: MUR 25 September 2019 Exploration Update
Slide 27: Exploration Strategy Overview
www.murphyoilcorp.com NYSE: MUR 26 September 2019 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 U
Slide 28: Brazil Exploration Update
www.murphyoilcorp.com NYSE: MUR 27 September 2019 Sergipe - Alagoas Basin Overview • Murphy 20% (Non - Op), ExxonMobil 50% (Op), Enauta Energia S/A 30% • > 1.2 BN BOE reserves discovered inboard • Working interests in 6 blocks, ~1,100 M acres • Winning bid on 3 adjacent blocks, ~560 M acres • 3Q 201
Slide 29: Offshore Mexico Discovery at Cholula
www.murphyoilcorp.com NYSE: MUR 28 September 2019 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 • Planning additional exploration program in 2020 Cholula 1 - EXP Highlights • ~$12 MM net
Slide 30: Vietnam Cuu Long Basin Update
www.murphyoilcorp.com NYSE: MUR 29 September 2019 Cuu Long Basin Overview • Murphy 40% (Op), PVEP 35%, SKI 25% • > 400 MMBOE remaining resource potential on Block 15 - 1/05 Block 15 - 2/17 PSC • Resource potential adds value to core area • Adjacent to LDV field under development LDT - 1X Exploration
Slide 31: Looking Ahead
www.murphyoilcorp.com NYSE: MUR 30 September 2019 Looking Ahead
Slide 32: Executing Our Strategy in 2019
www.murphyoilcorp.com NYSE: MUR 31 September 2019 200 MBOEPD Production Rate by 4Q 2019 Executing Our Strategy in 2019 68 % Liquids - Weighted Production in 2H 2019 $ 300 Million Share Re - Purchase Completed by YE 2019 95 % Sales Volumes at Premium to WTI in 2H 2019 > Transforming the Company for L
Slide 33: Executing on Long-Term Plan
www.murphyoilcorp.com NYSE: MUR 32 September 2019 Canada Onshore Maintaining > 65% Liquids Production Weighting • Plan flexible to maintain cash flow / CAPEX parity including dividend US Onshore – Focusing on Oil - Weighted Growth Canada Onshore – Scalable Based on Market Conditions • Focused on lea
Slide 34: Positioning Company for Long-Term Value Creation
www.murphyoilcorp.com NYSE: MUR 33 September 2019 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
Slide 35: Appendix
www.murphyoilcorp.com NYSE: MUR 34 September 2019 Appendix
Slide 36: Non-GAAP Financial Measure Definitions & Reconciliations
www.murphyoilcorp.com NYSE: MUR 35 September 2019 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 un
Slide 37: EBITDA and EBITDAX
www.murphyoilcorp.com NYSE: MUR 36 September 2019 EBITDA and EBITDAX Murphy defines EBITDA as income from continuing operations attributable to Murphy 1 before interest, taxes, depreciation and amortization (DD&A). Murphy defines EBITDAX as income from continuing operations attributable to Murphy be
Slide 38: Adjusted EBITDA
www.murphyoilcorp.com NYSE: MUR 37 September 2019 ADJUSTED EBITDA Murphy defines Adjusted EBITDA as income from continuing operations attributable to Murphy1 before interest, taxes, depreciat ion and amortization (DD&A), impairment expense, foreign exchange gains and losses, mark - to - market loss
Slide 39: Free Cash Flow
www.murphyoilcorp.com NYSE: MUR 38 September 2019 FREE CASH FLOW Murphy defines Free Cash Flow as net cash provided from continuing operations activities (as stated in the Consolidated State men ts of Cash Flows) reduced by capital expenditures and investments. Free Cash Flow is used by management t
Slide 40: Dividend + Buyback – Issuance Yield Annualized
www.murphyoilcorp.com NYSE: MUR 39 September 2019 DIVIDEND + BUYBACK – ISSUANCE YIELD ANNUALIZED Murphy defines Dividend + Buyback issuance yield annualized as the sum of ‘Cash dividends paid’ (as stated in the Consolidate d S tatements of Cash Flows) plus cash paid for ‘Repurchase of common stock’
Slide 41: Eagle Ford Shale Peer Acreage
www.murphyoilcorp.com NYSE: MUR 40 September 2019 Eagle Ford shale Peer Acreage OIL CONDENSATE GAS EOG EP Energy Murphy Pioneer Encana Marathon ConocoPhillips Lewis/BP Chesapeake Sanchez Carrizo
Slide 42: Eagle Ford Shale Murphy Spacing vs Peers
www.murphyoilcorp.com NYSE: MUR 41 September 2019 Eagle Ford Shale Murphy Spacing vs Peers Murphy BP Chesapeake Conoco Devon Encana EOG Equinor (Statoil) Inpex (Gulftex) Magnolia Marathon Pioneer Sanchez Catarina Typical Murphy Spacing LEFS ~300’ to 600’ Karnes Typical Murphy Spacing LEFS ~250 - 500
Slide 43: Kaybob Duvernay Peer Acreage
www.murphyoilcorp.com NYSE: MUR 42 September 2019 Kaybob Duvernay Peer Acreage Fox Creek SAXON KAYBOB WEST KAYBOB EAST ENCANA SHELL CHEVRON PARAMOUNT XTO REPSOL PLACID CENOVUS 6 Miles KEYERA SIMONETTE SEMCAMS KAYBOB
Slide 44: Tupper Montney Peer Acreage
www.murphyoilcorp.com NYSE: MUR 43 September 2019 Tupper Montney Peer Acreage 0 10 Miles Dawson Creek Other Competitor Montney Land Open Crown - Montney Murphy Montney Land
Slide 45: Placid Montney Peer Acreage
www.murphyoilcorp.com NYSE: MUR 44 September 2019 Placid Montney Peer Acreage ENCANA CHEVRON PARAMOUNT XTO DELPHI CENOVUS TANGLE CREEK CNRL HAMMERHEAD Fox Creek SAXON KAYBOB WEST KAYBOB EAST PLACID KEYERA SIMONETTE SEMCAMS KAYBOB 6 Miles Dry Gas Limit Condensate Limit TANGLE CREEK HAMMERHEAD MONT MO