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Murphy Oil’s 4Q15 Operational Performance, Management Strategies

Nicholas Chapman - Author

Dec. 4 2020, Updated 10:53 a.m. ET

Murphy Oil’s 4Q15 operational performance

For 4Q15, Murphy Oil (MUR) reported worldwide total production of ~18.5 million boe (barrels of oil equivalent) or 200,753 boe per day, which is slightly better than its own guidance of ~18.3 million boe, or 199,000 boe per day.

MUR’s better-than-expected 4Q15 production results can be attributed to higher natural gas production from Montney in Western Canada and Sarawak in offshore Malaysia.

Sequentially, Murphy Oil’s 4Q15 production is lower by ~3.3% when compared with 3Q15. For 2015, MUR reported worldwide total production of 207,903 boe per day. This is within MUR’s 2015 guidance range of 205,000–209,000 boe per day, but it is still lower by ~8% when compared with 2014.

Within Eagle Ford Shale, MUR brought 20 wells online in 4Q15, bringing the total number of producing wells to 136 for 2015, which is according to its previous guidance.

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Other S&P 500 (SPY) upstream companies like Noble Energy (NBL) and Consol Energy (CNX) are expecting an ~4% and ~9% quarter-over-quarter increase in their 4Q15 total production, respectively. However, EOG Resources (EOG) is expected to report an ~1% quarter-over-quarter decline in its 4Q15 total production.

MUR’s costs reduction focus

In 2015, Murphy Oil (MUR) implemented key organizational initiatives, which includes lowering staffing levels by ~20%. MUR’s cost reduction focus resulted in ~16% year-over-year reduction in 2015 G&A (general and administrative) costs. According to its guidance, MUR’s management anticipated ~18% year-over-year reduction in its 2015 G&A costs.

For 4Q15, MUR reported LOE (lease operating expenses) of $9.90 per boe, which is according to the company’s guidance and ~18% lower when compared with 4Q14.

Murphy Oil’s divestitures

Along with its 4Q15 earnings, Murphy Oil (MUR) announced the divestiture of its Montney midstream assets located in Canada. The transaction includes the sale of existing infrastructure capable of processing up to 320 million cubic feet per day.

The total cash consideration to MUR upon closing of the transaction should be 538 million Canadian dollars. MUR plans to partially use the proceeds to fund its strategic Kaybob Duvernay and liquids Rich Montney lands joint venture in Canada.


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