EL DORADO, Ark.–(BUSINESS WIRE)–Murphy Oil Corporation (NYSE: MUR) today announced its preliminary financial and operating results for the first quarter ended March 31, 2017, including net income of $58 million, or $0.34 per diluted share.
Operating and financial highlights for the first quarter 2017 include:
- Produced volumes of 169 Mboepd, on track to achieve full year production guidance
- Spent $215 million on capital expenditures, in line with planned annual capital budget of $890 million for full year 2017
- Reduced selling and general expenses by approximately 17 percent year-over-year, excluding severance expense in the prior year
- Closed the divestiture of Canadian heavy oil asset generating a $132 million pre-tax gain
- Executed planned quarterly Kaybob Duvernay appraisal program by drilling five wells, including the longest lateral to date of 9,500 feet, and brought three wells online
FIRST QUARTER 2017 FINANCIAL RESULTS
Murphy recorded net income of $58 million, or $0.34 per diluted share, for the first quarter 2017. The company reported an adjusted loss, which excludes both the results of discontinued operations and certain other items that affect comparability of results between periods, of $10 million, or $0.06 per diluted share. The most significant reconciling items affecting the adjusted loss were a $96 million after-tax gain on the sale of Seal properties in Canada, an after-tax gain of $26 million for mark-to-market of open crude oil hedge contracts and a $55 million deferred tax expense related to undistributed foreign earnings. The tax expense is the result of the company determining that first quarter earnings from its subsidiaries operating in Canada, Malaysia and other Southeast Asia areas will not be considered reinvested into local operations and are expected to be repatriated to the U.S. in future periods. Details for first quarter results can be found in the attached schedules.
Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations totaled $436 million, or $29.52 per barrel of oil equivalent (boe) sold. Earnings before interest, taxes, depreciation, amortization and exploration expenses (EBITDAX) totaled $464 million, or $31.47 per boe sold. Both EBITDA and EBITDAX include a $132 million pre-tax gain on the sale of Seal heavy oil properties. Production in the first quarter 2017 averaged 169 thousand barrels of oil equivalent per day (Mboepd).
“Murphy had strong first quarter results as we exceeded production guidance with high uptime performance across all our assets. Our production is outstanding considering that we brought online fewer wells than planned in our Eagle Ford Shale asset, as our base production and new wells during the quarter both exceeded our expectations. I continue to be pleased with the significant free cash flow generated by our offshore business. We also addressed the tax status regarding future foreign earnings repatriation, which will allow for additional cash management flexibility across our company,” stated Roger W. Jenkins, President and Chief Executive Officer.
As of March 31, 2017, the company had $2.8 billion of outstanding fixed rate notes and $1.1 billion in cash and liquid invested securities. The long term, fixed-rate notes, excluding the current maturity, have a weighted average maturity of 9.8 years and a weighted average coupon of 5.6 percent. There were no borrowings on the senior credit facilities at quarter end.
REGIONAL OPERATIONS SUMMARY
North American Onshore
The North American onshore business produced over 85 Mboepd in the first quarter with 51 percent liquids. First quarter 2017 operating expenses were $6.51 per boe, a 12 percent decrease from full year 2016.
Eagle Ford Shale – Production in the quarter averaged 46 Mboepd, comprised of 88 percent liquids. During the quarter, the company brought 13 wells online utilizing high sand concentration fracs, which were comprised of six Lower Eagle Ford Shale wells, four Upper Eagle Ford Shale wells and three Austin Chalk wells. The six Lower Eagle Ford Shale wells achieved an average IP 30-day rate over 1,300 barrels of oil equivalent per day (boepd), the four Upper Eagle Ford Shale wells achieved an average IP 30-day rate over 1,200 boepd and two wells on the same pad in the Austin Chalk achieved an average IP 30-day rate over 1,100 boepd. For the remainder of 2017, the company expects to bring almost 60 wells online, of which 19 will be in the second quarter, with full year production averaging approximately 50 Mboepd.
Tupper Montney – Murphy averaged 207 million cubic feet per day (Mmcfd) of natural gas production in the quarter. There was one well drilled in the first quarter and four wells previously drilled that were completed early in the second quarter. Strong production results from these wells, in addition to wells completed in 2016, are yielding projected ultimate recoveries exceeding 17 billion cubic feet equivalent (Bcfe) per well. This exceeds the previously projected recovery range of 10 to 14 Bcfe per well. The exceptional well results continue to support the company’s new well designs of longer laterals that are approaching 10,000 feet, as well as higher sand concentration of up to 2,000 pounds per foot.
Kaybob Duvernay – Production for the quarter averaged almost 3 Mboepd, comprised of 53 percent liquids. During the quarter, five wells were drilled and three wells brought online including a two well pad in the condensate window and a one well pad in the oil window. All three wells are performing above or in line with pre-drill expectations. As the company continues executing on its appraisal plans in the second quarter, for the first-time Murphy is beginning to drill wells with optimal azimuth and lateral lengths exceeding 9,100 feet. For the remainder of 2017, the company expects to drill and bring online 11 wells, including five in the second quarter, two located in the oil window and three in the condensate window.
The offshore business produced 84 Mboepd for the first quarter with 73 percent liquids.
Malaysia – Block K and Sarawak averaged 38 thousand barrels of liquids per day, while Sarawak natural gas production averaged 117 Mmcfd during the first quarter.
North America – Gulf of Mexico and East Coast Canada averaged 25 Mboepd, comprised of 92 percent liquids, in the quarter.
PRODUCTION AND CAPITAL EXPENDITURE GUIDANCE
Production for the second quarter 2017 is estimated in the range of 160 to 164 Mboepd. Second quarter guidance includes the previously announced redetermination in the non-operated Kakap field, which reduces the company’s net production by approximately 2,900 boepd from the first quarter 2017. Also, in accordance with the Production Sharing Contracts in Malaysia, there is a planned cost recovery entitlement change for Sarawak natural gas and oil that will lower production by approximately 1,500 boepd in the second quarter as compared to the first quarter 2017. Other items affecting second quarter production, as compared to first quarter production, are planned downtime for Kikeh and Siakap North of 1,400 boepd as well as a 10-day plant turnaround in the Tupper Montney of 2,200 boepd.
Full year 2017 production is being reaffirmed in the range of 162 to 168 Mboepd. Full year capital expenditure guidance is being maintained at $890 million. Details for production can be found in the attached schedules.
“As we progress through the second quarter, we are experiencing a previously announced redetermination and an anticipated entitlement change associated with our Malaysian offshore business. Also in the second quarter, we will experience offshore planned maintenance and a brief shut-in at our Tupper Montney asset associated with a plant turnaround. Our full year production remains within the previously announced guidance range. Our base production in the Eagle Ford Shale continues to outperform expectations and, with a majority of this year’s wells being brought online in the second and third quarters, this will lead to a mid-year production increase. In our new Kaybob Duvernay asset, we are pleased with early results as our team systematically de-risks the play with five wells to be placed online in the second quarter,” Jenkins added.
CONFERENCE CALL AND WEBCAST SCHEDULED FOR MAY 3, 2017
Murphy will host a conference call to discuss first quarter 2017 financial and operating results on Thursday, May 4, 2017, at 11:00 a.m. EDT. The call can be accessed either via the Internet through the Investor Relations section of Murphy Oil’s website at http://ir.murphyoilcorp.com or via the telephone by dialing 1-877-795-3649. The telephone reservation number for the call is 7717232. Replays of the call will be available through the same address on the company’s website and a recording of the call will be available through May 18, 2017 by calling 1-888-203-1112 and referencing reservation number 7717232. A replay of the conference call will also be available on the Murphy website at http://ir.murphyoilcorp.com.
Summary financial data, operating statistics and a summary balance sheet for the first quarter 2017 with comparisons to the same period from the previous year are contained in the following schedules. Additionally, a schedule indicating the impacts of items affecting comparability of results between periods and schedules comparing EBITDA and EBITDAX between periods are included with these schedules as well as guidance for the second quarter.
ABOUT MURPHY OIL CORPORATION
Murphy Oil Corporation is a global independent oil and natural gas exploration and production company. The company’s diverse resource base includes offshore production in Southeast Asia, Canada and Gulf of Mexico, as well as North America onshore plays in the Eagle Ford Shale, Kaybob Duvernay and Montney. Additional information can be found on the company’s website at http://www.murphyoilcorp.com