Murphy Oil (MUR) 8 Aug 24 2024 Q2 Earnings call transcript

The Murphy Oil Corporation held its second quarter 2024 earnings call, highlighting the company's achievements and future plans. The call was led by Roger Jenkins, CEO, with contributions from Eric Hambly, President and COO, and Tom Mireles, CFO. The company reported a strong quarter with a focus on capital allocation, exploration, and operational efficiency.

Capital Allocation and Shareholder Returns

Murphy Oil Corporation has been actively working on its capital allocation framework, aiming to achieve a $1 billion long-term debt goal. The company has been repurchasing shares in the open market and has announced a revision to its capital allocation framework, increasing the minimum percentage of adjusted free cash flow allocated to shareholder returns. This change is part of Murphy 3.0, which will see a minimum of 50% of adjusted free cash flow being allocated to share buybacks. Additionally, the company's Board of Directors has increased the share repurchase authorization by $500 million.

Operational Performance

The company's operational performance was impressive, with a focus on increasing production and operational efficiency. In the Eagle Ford Shale, Murphy Oil produced 28,000 barrels of oil equivalent per day, exceeding guidance by 1,700 barrels of oil equivalent per day. In the Tupper Montney, the company achieved a record high peak gross production rate of 496 million cubic feet per day, exceeding guidance by nearly 20 million cubic feet per day. The company's focus on operational improvements, including completion cost reductions and drilling diesel cost reductions, has led to a significant increase in operational efficiency.

Exploration and Development

Murphy Oil is actively exploring new opportunities, with a focus on Vietnam. The company recently completed its Gulf of Mexico exploration program and has announced a discovery at the non-operated Ocotillo 1 well. The company is also preparing to spud the Hai Su Vang exploration well in Block 15 and 2017 and expects to award the remaining major contracts by year-end 2024. These efforts are part of the company's long-term development plans in Vietnam.

Financial Performance

Murphy Oil reported a net income of $128 million in the second quarter, with an adjusted net income of $124 million. The company generated $396 million of adjusted EBITDA, with $292 million of accrued CapEx. The company's balance sheet remains strong, with $1.1 billion of available liquidity as of June 30, 2024.

Future Outlook

Looking ahead, Murphy Oil is forecasting total production of $181.5 million to 18,500 barrels of oil equivalent per day in the third quarter of 2024, with a focus on maintaining its capital allocation framework and exploring new opportunities. The company's commitment to shareholder returns and operational efficiency, combined with its exploration and development efforts, position it well for future growth.

In conclusion, Murphy Oil Corporation's second quarter 2024 earnings call highlighted the company's strong operational performance, focus on capital allocation, and commitment to shareholder returns. The company's exploration and development efforts, particularly in Vietnam, offer significant growth opportunities. With a strong balance sheet and a clear focus on operational efficiency, Murphy Oil is well-positioned for the future.