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Analyzing Murphy Oil’s Production Mix and Realized Prices

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Murphy Oil’s production mix

As seen in the below chart, Murphy Oil’s (MUR) production mix was 60% crude oil, 35% natural gas, and 5% natural gas liquid for 3Q15. This means that MUR is tilted towards liquids, which forms almost 65% of its total production. Typically upstream companies with more liquids production have better operating margins.

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MUR’s production mix trend

In the last five years, MUR’s quarterly crude oil percentage in production mix oscillated between ~68% and ~55% crude oil with an average of ~61% crude oil. In 3Q15, crude oil’s percentage of the production mix fell by ~3% when compared with 3Q14.

MUR’s realized prices

MUR’s average worldwide realized crude oil price in 3Q15 was $46.20 per barrel, down ~48% from $89.36 per barrel in 3Q14.

For 3Q15, MUR’s North America average realized price for natural gas production fell 33% to $2.42 per thousand cubic feet compared to $3.63 per thousand cubic feet for the corresponding period in 2014. For 3Q15, MUR’s Sarawak, Malaysia average realized price for natural gas production fell 27% to $3.75 per thousand cubic feet compared to $5.11 per thousand cubic feet for the same period in 2014.

For 3Q15, MUR’s average realized price for natural gas liquids production in the US fell ~63% to $10.25 per barrel compared to $27.89 for the corresponding period in 2014.

MUR has experienced lower realized prices when compared with its peers like Pioneer Natural Resources (PXD). Why is MUR experiencing lower realized prices? We will answer that question in the next part.

Oil and gas producers

Other upstream companies from the S&P 500 (SPY) that have a similar production mix to Murphy Oil are Pioneer Natural Resources (PXD), EOG Resources (EOG), and Occidental Petroleum (OXY).

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