Murphy Oil(MUR) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a sequential increase in production to 190,000 barrels of oil equivalents per day, exceeding the high end of guidance due to strong new well productivity from Eagle Ford Shale and Tuppermani assets [7] - Second quarter capital expenditures (CapEx) were $251 million, and total company lease operating expenses (LOE) were $11.8 per barrel of oil equivalent, both better than quarterly guidance [8] - The company achieved over $700 million in cumulative cash cost savings since 2019 through a reduction in general and administrative expenses and bond interest expenses [9] Business Line Data and Key Metrics Changes - The Eagle Ford Shale showed exceptional performance with a 30% increase in oil production on a two-month cumulative basis compared to past activity [38] - The company completed 10 wells in the Eagle Ford Shale and a four-well pad in Kaybob Duvernay early in the third quarter [8] - The Gulf Of America workover program is nearing completion, with the last significant planned workover expected to be online in August [31] Market Data and Key Metrics Changes - The company is focused on maintaining a competitive cost structure, with expected operating expenses in the $10 to $12 per barrel range for 2025 [9][90] - The company has a long-term diversification strategy in place to support its Montney asset, which remains profitable even at low AECO prices [64] Company Strategy and Development Direction - The company is committed to high-impact exploration and appraisal activities across three continents, testing resource potentials ranging from 500 million to over 1 billion barrels of oil equivalent [10] - The acquisition of the Pioneer FPSO is expected to lower costs and enhance future development potential in the Chinook field [20] - The company plans to prioritize share repurchases over further debt reduction, given its proximity to the net debt target of $1 billion [34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the exploration and appraisal program, highlighting significant volumes being tested and the potential for substantial resource discoveries [15][16] - The company anticipates that the appraisal well in Vietnam will provide confidence in a larger resource base, potentially supporting a 30,000 to 50,000 barrel per day business by the 2030s [42] - Management acknowledged challenges in offshore Canada but remains focused on improving uptime and production performance [87] Other Important Information - The company has signed a rig contract for its Cote D'Ivoire program, which is expected to test significant resource potential [17] - The company is evaluating the impact of the new tax legislation on its future cash tax position, with potential benefits estimated at $40 million to $50 million in outer years [51][52] Q&A Session Summary Question: Can you detail the near-term exploration program? - Management highlighted excitement about the exploration and appraisal program, with significant volumes being tested and a focus on upcoming wells in the Gulf Of America and Vietnam [15][16] Question: What is the strategy around the Chinook development well? - The acquisition of the FPSO is expected to lower costs and enhance the economic viability of the Chinook field, with plans to drill a high-rate development well in 2026 [20][21] Question: How is the Gulf Of America production performing? - Management confirmed that operational challenges have been addressed, and production is expected to improve as workover activities are completed [30][31] Question: What is the company's perspective on return of capital? - Management indicated a preference for share repurchases over debt reduction, especially if oil prices decline [34] Question: Can you expand on the Vietnam appraisal well? - The appraisal well aims to test for continuity of the reservoir and potentially deeper oil, with expectations of significant resource potential [41][42] Question: What changes have been made in Karnes completions? - Adjustments in completion design, including stage spacing and proppant loading, have contributed to improved well performance [101]