Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Murphy Oil Corp (MUR, Financial) produced 185,000 barrels of oil equivalent per day in the third quarter, meeting production targets.
- The company repurchased $194 million of stock in the third quarter, reducing its share count by 16% since the end of 2018.
- Murphy Oil Corp (MUR) achieved a realized oil price of nearly $76 per barrel, which is a premium to WTI.
- The company successfully extended its debt maturity profile through the issuance of senior notes due 2032.
- Murphy Oil Corp (MUR) initiated construction of the Loc Duvang production platform in Vietnam, marking progress in its field development project.
Negative Points
- Murphy Oil Corp (MUR) reported a net income of $139 million, which may not meet investor expectations.
- The company experienced significant downtime at the Terra Nova project, impacting production levels.
- Workover expenses were higher than usual, with $40 million forecasted for the fourth quarter.
- Murphy Oil Corp (MUR) faces challenges with the regulatory environment in the Gulf of Mexico, which could impact future operations.
- The company had to plug and abandon the Sebastian number 1 exploration well due to non-commercial hydrocarbons.
Q & A Highlights
Q: Can you speak to next year's plan, specifically regarding offshore spending in different oil price environments?
A: Eric Hambly, President and COO, stated that Murphy Oil aims for low CAGR growth while spending approximately $1.1 billion of CapEx annually. Production in 2025 is expected to be similar or slightly higher than 2024, with increased oil production. In a low-price scenario, CapEx allocation will be evaluated, with updates provided in January.
Q: Could you remind me of the cost and potential upside of the Vietnam wells compared to typical Gulf of Mexico wells?
A: Eric Hambly explained that the Vietnam exploration program targets significant prospects, with the Hai Su Hong prospect aiming for 170 million to over 400 million barrels of oil equivalent. The Lac Da Hong prospect targets 65 million to 135 million barrels. These wells have the potential to create a sizable business in Vietnam, producing 30,000 to 50,000 barrels per day by the end of the decade.
Q: How do you see your options for consolidation moving forward, given the volatility in exploration plays?
A: Roger Jenkins, CEO, emphasized Murphy's focus on maximizing free cash flow and executing their capital allocation framework. Murphy's diverse operations in various regions provide flexibility, and they are well-positioned to adapt to regulatory changes. Eric Hambly added that Murphy evaluates M&A opportunities, particularly in offshore areas, and is interested in growing their exploration portfolio.
Q: What role do you expect the Canadian onshore position to play in your portfolio over time?
A: Roger Jenkins highlighted Murphy's long-standing presence in Canada and their unique position in the Montney. The company sees potential in LNG exports from the West Coast and values their relationships with LNG Canada partners. Eric Hambly noted the capital efficiency of their Tupper Montney asset and the potential for future investment in the Duvernay Shale.
Q: What are the additional untapped levers that can further drive efficiencies in the Eagle Ford?
A: Eric Hambly mentioned that Murphy Oil's performance improvements are driven by operational efficiencies, such as optimized completions and reduced costs per lateral foot. The company consistently seeks opportunities to enhance efficiency and expects continued improvements in their operations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
