Murphy Oil(MUR) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Murphy generated $636 million in revenue for Q1 2025, with an average realized oil price of $72 per barrel, natural gas liquids price of nearly $26 per barrel, and natural gas price of $2.67 per 1,000 cubic feet [10][11] - The company produced 157,000 barrels of oil equivalent per day in Q1 2025, which included 78,500 barrels of oil per day [8][10] - Shareholder returns totaled $147 million in Q1 2025, comprising $100 million in share repurchases and $47 million in dividends [6][7] Business Line Data and Key Metrics Changes - Eagle Ford Shale produced 25,000 barrels of oil equivalent per day in Q1 2025, with 83% liquids [14] - Tupper Montney produced 340 million cubic feet per day in Q1 2025, with five wells brought online as planned [15] - Offshore assets produced a combined 71,000 barrels of oil equivalent per day in Q1 2025, with 83% oil [17] Market Data and Key Metrics Changes - The company experienced approximately 6,000 barrels of oil equivalent per day of production impacts due to non-operated unplanned downtime in the Gulf of America and production curtailments in offshore Canada [9] - The average realized oil price of $72 per barrel reflects market conditions impacting revenue generation [10] Company Strategy and Development Direction - Murphy remains focused on operational excellence, multi-basin portfolio expansion, and capital returns to shareholders, with a commitment to allocate a minimum of 50% of adjusted free cash flow to shareholder returns [5][7] - The company plans to drill two operated exploration wells in the Gulf of America in the second half of 2025, targeting lower-risk opportunities near existing infrastructure [19] - Murphy's exploration strategy includes significant international projects in Vietnam and Côte d'Ivoire, with a focus on high-impact growth opportunities [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in operational improvements and the ability to deliver production guidance for Q2 2025, anticipating production of 177,000 to 185,000 barrels of oil equivalent per day [22][53] - The company is monitoring oil price volatility and is prepared to adjust capital spending if prices remain low, while maintaining a disciplined approach to capital allocation [29][30] Other Important Information - Murphy achieved 1,000,000 work hours with no lost time injuries on the Loch Da Bong field development project [5][18] - The acquisition of the Pioneer floating production storage and offloading vessel for $104 million is expected to reduce annual net operating expenses by approximately $50 million [12][13] Q&A Session Summary Question: How does the company plan to manage capital allocation in a lower oil price environment? - Management indicated that they will maintain the 2025 capital plan while monitoring the oil price environment, with potential adjustments to spending if prices fall below $55 per barrel [29][30] Question: What is the impact of the recent discovery in Vietnam on the development plan? - The recent discovery is expected to be developed with a wellhead platform tied into the existing production facility, potentially accelerating development timelines [35][102] Question: What is the status of the Khaleesi II and Marmalade III workovers? - The Khaleesi II workover is addressing a failed safety valve, while the Marmalade III involves a more complex sidetrack and new completion [40][76] Question: How does the company view its OCTG exposure and procurement strategy? - Management noted that onshore well costs are expected to remain flat year-over-year, with some pressure on tubular goods anticipated in the second half of 2025 [44][45] Question: What are the expectations for production growth in 2025? - Management expressed confidence in achieving production guidance, with significant contributions expected from onshore wells coming online in the second half of the year [52][53] Question: How does the company plan to approach exploration in Côte d'Ivoire? - The company is excited about the exploration prospects in Côte d'Ivoire, with significant resource potential and favorable fiscal terms [94]