Murphy Oil(US:MUR)2022-05-04 19:50Financial Data and Key Metrics Changes - For Q1 2022, Murphy reported a net loss of $113 million or $0.73 net loss per diluted share, with adjusted net income of $113 million or $0.73 adjusted net income per diluted share [16] - Cash from operations totaled $338 million, with positive adjusted cash flow of $93 million after accounting for net property additions and dry hole costs [17] - The company raised its CapEx guidance for 2022 to a range of $900 million to $950 million, up 7% from previous estimates [19] Business Line Data and Key Metrics Changes - In Q1 2022, Murphy produced an average of 141,000 barrels of oil equivalent per day, with 60% liquids content, exceeding guidance due to strong performance from oil-weighted assets [14] - In the Eagle Ford Shale, production was 30,000 barrels equivalent per day, with 85% liquids, slightly above plan [24] - The Tupper Montney produced 242 million cubic feet per day, with plans for 10 additional wells to come online [27] Market Data and Key Metrics Changes - The company recognized strong oil pricing in Q1 2022, with prices exceeding $95 per barrel for oil and $42 per barrel for NGL, leading to total revenue of $764 million [14] - The average production forecast for Q2 2022 is between 156,000 to 164,000 barrels equivalent per day, reflecting operational downtime [37] Company Strategy and Development Direction - Murphy's strategic priorities are focused on deleveraging, executing, and exploring, with a debt reduction target of $600 million to $650 million for 2022 [8] - The company aims to achieve investment-grade ratings through ongoing debt reduction and operational excellence [38] - Exploration efforts include advancing plans for drilling in Block 5 offshore Mexico and evaluating additional pay zones in existing fields [34][110] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving debt reduction goals and increasing shareholder returns through dividends and buybacks [7][40] - The company anticipates a significant increase in production and cash flow, which will support ongoing shareholder returns [41] - Management acknowledged the challenges posed by inflation but remains optimistic about maintaining operational efficiency and capital allocation [62] Other Important Information - Murphy achieved first oil from the King’s Quay floating production system ahead of schedule, with significant uptime reported [31] - The company has been recognized for its sustainability efforts, including reducing emissions and improving water recycling [23] Q&A Session All Questions and Answers Question: Thoughts on priorities for uses of free cash flow - Management emphasized debt reduction as a priority while also planning to increase dividends and consider M&A opportunities [48] Question: Update on Tupper Montney and permit situation - Management reported strong performance from Tupper Montney wells and ongoing discussions with regulatory bodies for future approvals [52][54] Question: Impact of inflation on CapEx for 2023 and 2024 - Management indicated a slight increase in CapEx guidance due to inflation, estimating an additional $40 million over the next three years [64] Question: Cash taxes and NOL impact - Management expects minimal cash taxes due to a significant NOL, with expectations to burn through it by 2024 if oil prices remain high [80] Question: Exploration portfolio and future plans - Management expressed enthusiasm for upcoming exploration opportunities, particularly in the Gulf of Mexico and offshore Mexico [90][94]