MURPHY OIL CORP Q3 FY2024 earnings call

Management Statement and Operational Highlights

• Reiterated corporate priorities: delever, execute, explore, return.
• Produced 185,000 barrels of oil equivalent per day in the third quarter.
• Repurchased $194 million of stock in the third quarter, with year-to-date repurchases totaling $300 million.
• Target to allocate at least 50% of adjusted free cash flow to shareholder returns, with year-to-date returning 110% of adjusted free cash flow to shareholders via buybacks.
• Progressed Gulf of Mexico well program, initiated construction of the Loc Duvang production platform in Vietnam, and began drilling exploration wells in Vietnam.
• Enhanced balance sheet through debt management, including extending debt maturity and entering a new $1.2 billion senior unsecured credit facility.

Segment Performance

• Eagle Ford Shale: Produced an average 32,000 barrels of oil equivalent per day in the third quarter, with 72% oil and 86% liquids volumes.
• Tupper Montney: Averaged 429 million net cubic feet per day in the third quarter, exceeding guidance by approximately 11 million cubic feet per day.
• Gulf of Mexico: Produced an average 67,000 barrels of oil equivalent per day in the third quarter, with 79% oil.
• Offshore Canada: Averaged 8,000 barrels of oil equivalent per day in the third quarter, 100% oil.
• Vietnam: Initiated construction of the Loc Duvang production platform in the fourth quarter and began drilling exploration wells.
• Cote d'Ivoire: Progressed seismic reprocessing and plans for an exploration program in late 2025, with a field development plan for the Pond discovery expected by year-end 2025.

Guidance

• Fourth Quarter 2024: Forecast production of 181,500 to 189,500 barrels of oil equivalent per day, including planned downtime. Accrued CapEx forecast at $203 million.
• Full-Year 2024: Tightened guidance to 180,000 to 182,000 barrels of oil equivalent per day, with accrued CapEx range $920 million to $1.02 billion.
• 2025: Ongoing evaluation of budget, commodity prices, and production plans, with a full update in January.

Risks

• Downtime at non-operated Terra Nova impacting production.
• Higher-than-expected workover expenses in 2024.
• Commodity price volatility affecting financial outcomes.
• Regulatory and political uncertainties in regions like the Gulf of Mexico, Vietnam, and Cote d'Ivoire.

Question and Answer

Q: Neal Dingmann with Truist Securities asked about 2025 plans and offshore spend under different oil price scenarios.

A: Eric Hambly responded that the plan is to have oil-weighted low CAGR growth with ~$1.1 billion average annual CapEx, and CapEx allocation would be evaluated as budget is finalized.

Q: Carlos Escalante with Wolfe Research inquired about consolidation opportunities and Terra Nova.

A: Eric Hambly stated Murphy is open to M&A in offshore with competitive advantage, and Terra Nova's low uptime is disappointing, with no plans to operate at 18% working interest.

Q: Leo Mariani at ROTH Capital asked about Eagle Ford production growth and workover expenses.

A: Roger Jenkins said Eagle Ford production may grow slightly in 2025 with more consistent rig scheduling, and 2024 workover expenses were an outlier.

Q: Unidentified Analyst at Goldman Sachs asked about Canadian onshore position and asset diversification.

A: Tom Mireles and Roger Jenkins discussed Canada's strategic importance, capital efficiency in Tupper Montney, and potential LNG Canada Phase 2 participation.

Q: Paul Cheng with Scotiabank questioned buyback rate and Gulf of Mexico workover.

A: Eric Hambly said buyback rate would be managed with board input, and Gulf of Mexico workover expenses were due to bad luck.

Q: Tim Rezvan with KeyBanc asked about Eagle Ford rig consistency and LNG Canada.

A: Roger Jenkins clarified more consistent rig scheduling in Eagle Ford, and Eric Hambly discussed LNG Canada Phase 2 and potential gas sales from Tupper Montney.

Q: Arun Jayaram inquired about Gulf of Mexico regulatory environment and Cote d'Ivoire project.

A: Roger Jenkins and Eric Hambly noted regulatory outlook improving, and Cote d'Ivoire project would be discrete from $1.1 billion CapEx guide.