A few months ago we noticed through our public data tool BOE Intel that Cygnet Energy was the buyer of Montney and Duvernay assets from Athabasca and Murphy Oil. The mineral rights transfer for only the Murphy part of the disposition is shown in purple in the BOE Intel map below (Figure 1), along with the remaining Crown mineral rights in yellow held by Murphy Oil.
Figure 1
The question is what is Murphy up to since this disposition? And does this small disposition represent a larger desire to sell off its Canadian assets, or was it simply a desire to refocus its asset base?
The company has two pretty clearly defined areas remaining in Canada after the sale; the northeast BC Montney and the Fox Creek/Kaybob Duvernay. In total, an aggregation of all wells licensed to the company indicates ~76 MBOE/d of “gross production” (not accounting for any working interest sharing agreements) remains in Canada.
Figure 2 – Murphy Oil gross licensed production – Canadian assets
The BC Montney represents the vast majority of the current production in Canada for Murphy. The gross licensed production for that area is close to 70 MBOE/d as of October public data. At least as far as the public data goes, the production appears to be predominantly natural gas, with minimal liquids content. The gross production profile for the wells licensed to Murphy in the BC Montney is pictured below in Figure 3 (hover over to see details).
Figure 3 – Murphy gross licensed production – BC Montney
The majority of the other non-Montney production comes from the company’s Duvernay assets in Alberta surrounding Kaybob. The gross licensed production for that area appears to be ~5,600 BOE/d as shown in the public domain, and is pictured in Figure 4 (hover over to see details). Keep in mind in Alberta condensate and NGLs are not often reported at the well level so some additional liquids volumes may be present.
Figure 4 – Murphy gross licensed production – Kaybob area Duvernay
While much of the company’s 2023 activity appeared to be focused on the Montney assets, there are some indications that Murphy may be looking towards increased Duvernay activity as we head towards 2024. Looking at spud activity in 2023, we saw that Murphy had 15 spuds, all of them in the northeast BC Montney at the company’s Sundown and Swan Lake assets. However, when looking at licences for future development, it is the opposite. All 32 of the company’s licences issued in 2023 are for Duvernay development in the Kaybob area. Those 32 licences have all been in the last 3 months and are pictured below in Figure 5.
Figure 5
What’s particularly interesting is that these are the first licences on these Duvernay assets for Murphy in over 4 years, since November 2019. Similarly, Murphy has not spud a Duvernay well since January 2020. Sometimes you will see a company boost production and show new well results before offering an asset up for sale. Is this the plan here or is this a genuine desire to allocate more capital to the Duvernay? Time will tell, but we did notice a surprising number of Duvernay wells on this month’s Top Well Report, which also featured Murphy with the most prolific natural gas well in Canada (coming from the BC Montney).
Speaking of the BC Montney results, Murphy’s asset base in northeast BC is surrounded by heavyweights Shell, Ovintiv, Tourmaline and ARC Resources in essentially what is one of the most prolific areas of the BC Montney. Pictured below in Figure 6 are the mineral rights (all – not just Montney) in the area, with only 100% lands given a colour, and coloured to just show the largest holders (smaller owners or shared mineral rights are in grey). There are some slight differences in this map and what Murphy shows in its corporate presentation in Figure 7, but both show a company with a core Montney position in the heart of the play. What Murphy chooses to do with this asset is unknown, but will certainly be an intriguing area to watch as LNG Canada gets closer to first gas at some point in the middle of this decade.
Figure 6 – All mineral rights – Click on the map to interact with it on Petro Ninja
Figure 7 – Northeast BC acreage as shown by Murphy Oil in its presentation
Source: Murphy Oil Corporation investor presentation