EL DORADO, Ark.
Achieved 172% Organic Reserve Replacement
Signed Memorandum of Understanding for King’s Quay Floating Production System
Source: murphyoilcorp.com
Murphy Oil Corporation (NYSE: MUR) today announced its financial and operating results for the fourth quarter ended December 31, 2019, including a net loss attributable to Murphy of $72 million, or $0.46 net loss per diluted share. Adjusted net income, which excludes discontinued operations and other one-off items, was $25 million, or $0.16 per diluted share.
As previously announced, Murphy closed the Malaysia asset divestiture in the third quarter for $2.0 billion in cash proceeds. These assets were reported as “discontinued operations” for all periods presented. Unless otherwise noted, the financial and operating highlights and metrics discussed in this commentary exclude discontinued operations and noncontrolling interest. 1
Highlights for the fourth quarter include:
- Generated adjusted EBITDA of $404 million, or $22.94 per barrel of oil equivalent sold
- Extended debt maturity profile with the issuance of $550 million of 5.875 percent senior notes due 2027, with proceeds used to repurchase an aggregate $521 million of senior notes due 2022
- Achieved first oil from the Nearly Headless Nick well and completed the Chinook #5 well workover, both located in the Gulf of Mexico
Highlights for full year 2019 include:
- Attained 172 percent organic reserve replacement with an average three-year total finding and development cost of $12.95 per barrel of oil equivalent
- Transformed Murphy into an oil-weighted, Western Hemisphere focused company by closing two significant transactions with the Malaysia divestiture and Gulf of Mexico acquisition
- Increased average daily oil production from continuing operations by 66 percent, with total average daily production rising 41 percent from 2018 levels
- Completed the $500 million share repurchase program, resulting in a total share count reduction of 12 percent, or approximately 20.7 million shares, to 152.9 million shares
- Generated $1.5 billion of adjusted EBITDA, or $23.99 per barrel of oil equivalent sold
- Drilled successful exploration wells in Vietnam, Gulf of Mexico and offshore Mexico
- Increased reserve life to 11.8 years
Highlight subsequent to year-end 2019:
- Entered into memorandum of understanding regarding Murphy’s 50 percent ownership in the King’s Quay floating production system
FOURTH QUARTER 2019 RESULTS
The company recorded a net loss, attributable to Murphy, of $72 million, or $0.46 net loss per diluted share, for the fourth quarter 2019. Adjusted net income, which excludes both the results of discontinued operations and certain other items that affect comparability of results between periods, was $25 million, or $0.16 per diluted share for the same period. The adjusted income from continuing operations excludes the following primary after-tax items: a $106 million non-cash mark-to-market loss on crude oil derivatives and a $25 million loss on extinguishment of debt. Details for fourth quarter results can be found in the attached schedules.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations attributable to Murphy was $404 million, or $22.94 per barrel of oil equivalent (BOE) sold. Adjusted earnings before interest, tax, depreciation, amortization and exploration expenses (EBITDAX) from continuing operations attributable to Murphy was $424 million, or $24.05 per BOE sold. Details for fourth quarter EBITDA and EBITDAX reconciliations can be found in the attached schedules.
Fourth quarter production averaged 194 thousand barrels of oil equivalent per day (MBOEPD) with 59 percent oil and 67 percent liquids. Production was impacted by total unplanned downtime of 8 MBOEPD for the quarter. Non-operated, unplanned downtime was 1,900 barrels of oil equivalent per day (BOEPD) across various fields in the Gulf of Mexico and 1,000 BOEPD at Terra Nova in offshore Canada.
Operated unplanned downtime of 1,500 BOEPD in the Gulf of Mexico was primarily due to a subsea equipment malfunction at Neidermeyer (Mississippi Canyon 209), causing a five-day impact on the three-well field. One well remains down during equipment repairs, which are expected to be complete by second quarter 2020.
Operated production variances of 3,600 BOEPD in the Eagle Ford Shale were the result of well workover activity on higher rate wells in Catarina, as well as new East Tilden wells outperforming historical Tilden wells but producing below their corporate forecast for the quarter. The majority of the Catarina workovers were complete by the end of fourth quarter 2019 and are currently producing in line with expectations. Details for fourth quarter production can be found in the attached schedules.
FULL YEAR 2019 RESULTS
The company recorded net income, attributable to Murphy, of $1.1 billion, or $6.98 per diluted share, for the full year 2019. The company reported adjusted income, which excludes both the results of discontinued operations and certain other items that affect comparability of results between periods, of $144 million, or $0.87 per diluted share. Details for full year 2019 results can be found in the attached schedules.
Production for the full year averaged 173 MBOEPD and consisted of 60 percent oil and 67 percent liquids volumes. Details for 2019 production can be found in the attached tables.
“Over the course of 2019, we executed two noteworthy transactions as we continued to strategically transform our asset base. Our new portfolio generated strong net income in 2019, supported by increased oil production and positive differentials to West Texas Intermediate oil pricing. This growth led to additional cash flow generation which, in addition to proceeds from the sale of Malaysia, allowed us to return more than $660 million to shareholders through share repurchases and a competitive dividend,” stated Roger W. Jenkins, President and Chief Executive Officer.
FINANCIAL POSITION
In the fourth quarter, Murphy issued $550 million of 5.875 percent senior notes due 2027. Proceeds were used to redeem approximately $240 million of the 4.0 percent senior notes due 2022 and $281 million of the 3.7 percent notes due 2022.
The company had $2.8 billion of outstanding long-term, fixed-rate notes at the end of fourth quarter 2019. The fixed-rate notes had a weighted average maturity of 7.7 years and a weighted average coupon of 5.8 percent.
As previously announced, Murphy completed its $500 million share repurchase program. The remaining $94 million under the authorization was used to repurchase 4.3 million shares in the fourth quarter. Over the course of the year, Murphy reduced its outstanding shares by approximately 12 percent, or 20.7 million shares, from 173.6 million shares as of April 30 to 152.9 million shares outstanding at completion of the program on October 4, 2019.
As of December 31, 2019, Murphy had approximately $1.9 billion of liquidity, comprised of a fully undrawn $1.6 billion senior unsecured credit facility and approximately $307 million of cash and cash equivalents.
YEAR-END 2019 PROVED RESERVES
Murphy’s preliminary year-end 2019 proved reserves were 800 million barrels of oil equivalent (MMBOE), consisting of 50 percent oil and 57 percent liquids. Total proved reserves were 2 percent lower than at year-end 2018 as a result of the Malaysia divestiture and 2019 production, which were largely offset by the Gulf of Mexico acquisition, improvements to reserves from revisions and extensions across the business. Excluding Malaysia proved reserves of 129 MMBOE at year-end 2018, Murphy increased its proved reserves by 17 percent in 2019.
The company achieved organic reserve replacement of 172 percent with a three-year total finding and development cost of $12.95 per BOE.
|
2019 Proved Reserves – Preliminary * |
||||||||
|
Category |
Net Oil (MMBBL) |
Net NGLs (MMBBL) |
Net Gas |
Net Equiv. |
||||
|
Proved Developed (PD) |
213 |
27 |
1,272 |
452 |
||||
|
Proved Undeveloped (PUD) |
189 |
28 |
788 |
348 |
||||
|
Total Proved |
402 |
55 |
2,060 |
800 |
||||
|
* |
Reserves are based on preliminary SEC year-end 2019 audited proved reserves and exclude noncontrolling interest |
“With the transition out of Malaysia, increasing our Gulf of Mexico business, and continued investment in our onshore businesses, we have been able to maintain a sizeable asset base – all while maintaining our liquids weighting at 57 percent. I am also pleased with an increase in our proved developed reserves to 57 percent from 50 percent and our competitive three-year total finding and developing cost metric of $12.95 per BOE,” stated Jenkins.
Recent Company Earnings:
February 24, 2020
Superior Drilling Products, Inc. (NYSE American: SDPI) (“SDP” or the “Company”), a designer and manufacturer of drilling tool technologies, today announced unaudited preliminary revenue for the year ended December 31, 2019, was $19.0 million, up 4% from the prior year. Fourth quarter 2019 preliminary revenue included approximately $600 thousand from the rental of the Company’s well bore conditioning tool, the Drill-N-Ream® (DNR) in the Middle East, or almost half of SDP’s total Middle East revenue for the year. For the year, international revenue nearly quadrupled to $1.3 million compared with $360 thousand in 2018. At the end of 2019, SDP had $1.2 million in cash. Preliminary results are subject to change pending review by the Company’s independent accountants.
February 20, 2020
Houston oilfield service company Halliburton plans to pay down its long-term debt by issuing $1 billion in lower-interest notes.
Source: Houston Chronicle
Halliburton on Wednesday said it plans to issue a type of debt known as senior notes. Due in March 2030, the notes will pay 2.92 percent interest.
The company said it will use proceeds from the sales to buy back previously issued senior notes and reduce other forms of debt.
Halliburton closed 2019 with about $10.3 billion of debt, almost one-third less than the $15.4 billion in debt it had at the end of 2015, according to a Securities and Exchange Commission filing.
With the price of crude hovering just above $50 per barrel, most oil companies are reducing drilling and fracking activity, resulting in recent losses for oilfield service companies. Halliburton lost $1.1 billion in 2019.
Shell Midstream Partners, L.P. (NYSE: SHLX) reported net income attributable to the Partnership of $140 million for the fourth quarter of 2019, which equated to $0.37 per common limited partner unit. Shell Midstream Partners also generated adjusted earnings before interest, income taxes, depreciation and amortization attributable to the Partnership of $187 million.
February 19, 2020
HOUSTON, Feb. 19, 2020 (GLOBE NEWSWIRE) — Hi-Crush Inc. (NYSE: HCR) (the “Company”), a fully-integrated provider of proppant logistics solutions, today reported fourth quarter and full year 2019 results. Revenues during the fourth quarter of 2019 totaled $125.5 million compared to $173.0 million during the third quarter of 2019.
DENVER, Feb. 19, 2020 /PRNewswire/ —
- Fourth quarter oil production averaged 92.0 MBbls per day
- Full year oil production averaged 86.2 MBbls per day
- 2019 capital investment (including midstream) totaled $1.32 billion; below guidance range
- Lower D&C costs drove the beat
- Generated $1.34 billion of net cash from operating activities
- $141 million of free cash flow1 in 2019; $59 million after dividend
February 14, 2020
February 13, 2020
Houston exploration and production company Marathon Oil has cut its drilling budget by about 10 percent amid an ongoing shale slump that caused revenue and profits to decline in 2019.
Source: Houston Chronicle
In a Wednesday afternoon statement, Marathon said the company is cutting capital expenditures by 10 percent, to $2.4 billion from $2.6 billion in 2019.
The company plans to spend $2.2 billion of its capital expenditure budget on drilling, hydraulic fracturing and other activities in the field while the remain $200 million will go to secure new oil leases and exploratory work looking for new geological formations with oil and natural gas.
Marathon remains in the black, but like other companies in the exploration and production sector, more than a year of crude oil prices in the $50 range is taking its toll on profit and drilling activity.
Active in the Eagle Ford Shale, Permian Basin, Oklahoma and Bakken Shale, Marathon reported a $20 million loss during the fourth quarter of 2019 compared with a $165 million profit a year earlier and revenue fell to $1.2 billion from $1.3 billion.
For the year, the company reported a $480 million profit, a 56 percent drop from the $1.1 billion profit in 2018; revenue of $5.2 billion was 21 percent off the $6.6 billion in 2018.
“We’ll continue to be guided by our unwavering commitment to capital discipline and sustainability,” Marathon Oil CEO Lee Tillman said in a statement.
February 7, 2020
Houston oilfield service company National Oilwell Varco finished up a year of losses $6.1 billion in the red.
Source: Houston Chronicle
In a statement released on Thursday evening, the company reported closing 2019 with a $6.1 billion loss, a dramatic drop from the $31 million end-of-year loss in 2018. The company’s annual revenue remained flat at $8.5 billion.
Most of the company’s end-of-year loss came from writing down the value of $5.4 billion of assets during the second quarter. Crude oil prices stuck in the $50 per barrel range for most of past year have dramatically cut demand for drilling and hydraulic fracturing services in the United States. The shale slump has created eye-popping losses for oilfield services companies, which have written down billions of dollars of assets in response.
“The fourth quarter saw continued improvements in international and offshore markets, partially offset by another sequential decline in spending by our customers in North America,” National Oilwell Varco CEO Clay Williams said in a statement.
Looking at the company’s fourth quarter performance, NOV posted a $385 million loss, which was a dramatic swing from the $15 million profit during the fourth quarter of 2018.
The company’s fourth quarter revenue also slipped by 5 percent year-over-year. NOV reported making $2.3 billion during the fourth quarter, compared to $2.4 billion during the fourth quarter one year earlier.
With historical roots going back to 1862, NOV is headquartered in Houston and has more than 35,000 employees in 65 nations.
The company has not made an annual profit since 2014.
February 6, 2020
Reuters
ABERDEEN, Scotland – Total (TOTF.PA) beat forecasts on Thursday by keeping net adjusted fourth-quarter profit steady at $3.2 billion despite low oil prices and fulfilled a pledge to boost dividends, lifting the French energy firm’s shares.
Source: Reuters
The stock rose about 3% before easing off its highs as the company bucked a trend in the industry which has seen profits tumble in the last three months of 2019. Analysts had expected Total’s net profit to slip to $2.7 billion.
“This performance is better than that of our rivals in terms of resisting low oil prices,” CEO Patrick Pouyanne told journalists, adding Total was rewarding investors with a 6% increase in the final dividend for 2019 to 0.68 euros per share.
“Taking into account the strong visibility on cash flow, the group will continue to increase the dividend with the guidance of 5% to 6% per year,” the company said in its statement.
Total bought back $1.75 billion in shares in 2019 and plans to buy back $2 billion more in 2020.
Pouyanne said the group had reported solid results including debt-adjusted cash flow (DACF) of $7.4 billion, up more than 20% from a year earlier.
“While some peers buckled last week to a synchronized slowdown in their commodity prices and margins, Total has bucked that trend with flat year-on-year net income,” Bernstein analysts wrote, adding that net income and net operating income were both ahead of forecasts.
The analysts, which rate the stock “outperform”, said liquefied natural gas (LNG) margins “also beat our expectations as the company proved immune to low spot gas prices despite market concerns”.
LNG prices have been under pressure as new projects have kept the market well supplied, while oil prices LCOc1 have tumbled to around $55 per barrel from last year’s peak in April of almost $75.
Rivals have seen fourth-quarter profits slide on lower prices. BP (BP.L) reported a 26% drop on Tuesday while Royal Dutch Shell (RDSa.L) last month said its profits had halved.
(Graphic: Majors cashflow Total, here)
LNG OUTPUT
Total’s oil and gas production grew by 9% in 2019 thanks to project start-ups and ramp-ups, while its LNG business doubled, boosting cash flow.
“One of the reasons our results resisted the low oil environment was because of the strong LNG output which grew 50%,” Pouyanne said.
He said exceptional production growth was unlikely to continue in the years to come and output growth for 2020 was seen at 2% to 4%, a more typical level in the industry.
The chief executive said Total was expanding in the low carbon energy business and was on track to meet its goal of producing 25 gigawatts (GW) of renewable electricity by 2025, helped by solar projects in Qatar and India.
Total, which kept its capital expenditure target steady for 2020 at $18 billion, said it was on track to achieve its target of $5 billion in divestments during 2019 and 2020.
Total said it had sold its 27.5% interest in Fosmax LNG, which operates France’s Fos Cavaou LNG terminal, to Engie (ENGIE.PA) unit Elengy for about $260 million.
Total is on track to achieve its divestment target with transactions worth $3 billion so far, Jefferies analysts said.
(Graphic: Total Results, here)
Black Stone Minerals said it will cut its quarterly payouts to investors by almost 20 percent because of falling oil and gas prices.
Source: Houston Chronicle
In another sign of the weakening energy sector, the Houston oil and gas royalties firm will reduce its distributions to 30 cents per unit from 37 cents. This is the first time Black Stone has reduced its payout since going public in 2015.
Even during the lean years of the last oil bust in 2015 and 2016, Black Stone steadily hiked investor payments from an initial 16.2 cents per unit in 2015.
“We are taking a proactive approach to strengthen our balance sheet and enhance our financial flexibility with the expectation that 2020 may be a challenging year in terms of commodity prices and overall drilling activity,” said Black Stone CEO Thomas Carter Jr.
“Given the current environment, the board believes that reducing the distribution benefits unitholders by providing additional cash flow for, first, the repayment of debt, and for other such uses as unit repurchases and acquisitions.,” Carter added.
February 4, 2020
Energy giant BP reported better-than-expected full-year net profit on Tuesday, outperforming analyst expectations despite lower oil and gas prices.
Source: Reuters
The U.K.-based oil and gas company posted full-year underlying replacement cost profit, used as a proxy for net profit, of $10 billion in 2019. That compared with $12.7 billion full-year net profit in 2018, reflecting a year-on-year fall of 21%.
Shares of BP were up more than 4%.
“BP is performing well, with safe and reliable operations, continued strategic progress and strong cash delivery,” Bob Dudley, CEO of BP, said in a statement.
“After almost ten years, this is now my last quarter as CEO. In that time, we have achieved a huge amount together and I am proud to be handing over a safer and stronger BP to Bernard and his team.”
“I am confident that under their leadership, BP will continue to successfully navigate the rapidly-changing energy landscape,” Dudley said.
Bernard Looney, who has run BP’s upstream business since April 2016 and has been a member of the firm’s executive management team since November 2010, is now set to take the reins from the outgoing chief executive.
In October, Dudley announced he would step down as CEO on Feb. 4., having held the position for almost a decade. The 64-year-old plans to retire on March 31, thus bringing an end to his 40-year career with BP.
Here are the key highlights:
- Underlying replacement cost profit for the fourth quarter and full-year 2019 was $2.6 billion and $10.0 billion respectively, compared to $3.5 billion and $12.7 billion for the same periods a year earlier.
- Gulf of Mexico oil spill payments for the year totaled $2.4 billion on a post-tax basis, and are expected to be less than $1 billion in 2020.
- A dividend of 10.5 cents per share was announced for the quarter, an increase of 2.4% on a year earlier.
The energy giant’s full-year results follow disappointing earnings from oil and gas companies on both sides of the Atlantic.
Anglo-Dutch energy giant Royal Dutch Shell reported a sharp fall in full-year net profit late last week, while U.S. rivals Chevron and Exxon Mobil both missed analyst expectations on Friday.
France’s Total is scheduled to report its latest quarterly earnings on Feb. 6.
All roads lead to OPEC decision
International benchmark Brent crude traded at $54.74 Tuesday lunchtime, up more than 0.5%, while U.S. West Texas Intermediate (WTI) stood at $50.75, around 1.2% higher.
Both crude benchmarks have each fallen around 20% since climbing to a peak in early January, dragged lower by concern over demand in China after the coronavirus outbreak.
Brian Gilvary, chief financial officer at BP, told CNBC’s “Squawk Box Europe” on Tuesday that the coronavirus outbreak could wipe out as much as 300,000 to 500,000 barrels per day (bpd) of oil demand in 2020.
The International Energy Agency (IEA) has previously said it expects oil demand to grow by 1.2 million bpd this year, so a reduction of up to 500,000 bpd would leave demand growth “healthy” at 700,000 to 800,000 bpd, Gilvary said.
“I think, in terms of price direction, all roads will then lead to what OPEC will do in terms of trying to rebalance the system to get back to something around $60 to $65 a barrel,” he added.
OPEC and its allies are considering cutting their oil output by a further 500,000 bpd this year, two OPEC sources and a third industry source familiar with discussions told Reuters on Monday.
A ministerial meeting currently scheduled for early March could be brought forward to mid-February, one of the OPEC sources said, with February 14-15 touted as possible dates.
ConocoPhillips’ fourth-quarter profit declined by more than 60 percent, to $720 million from $1.9 billion in the same period last year, amid weaker oil prices and production outputs.
Source: Houston Chronicle
Revenue during the quarter dropped by more than 20 percent to $8.1 billion.
For the full year, net earnings jumped 15 percent to $7.2 billion compared with $6.3 billion in 2018.
The Houston oil and gas producer still won over many on Wall Street late last year by hiking dividend payments to shareholders and with the release of a 10-year outlook that would rein in spending throughout the new decade.
“Strong 2019 performance capped off a highly successful three-year period in which we transformed our business model and significantly improved our underlying performance drivers across the company,” said Ryan Lance, chairman and chief executive officer. “We’ve positioned ConocoPhillips to deliver sustained value through price cycles due to our strong balance sheet, focus on free cash flow generation, compelling returns of and returns on capital and our commitment to environmental, social and governance leadership.”
Essentially, ConocoPhillips is focused on bringing in stronger profits and paying out more to investors while operating with flatter spending and smaller overall scale.
The company’s production output is expected to dip a little in 2020 because of some recent asset sales.
Last year, ConocoPhillips’ oil and gas production volumes grew by 5 percent despite a small decline in the fourth quarter.
The company’s shale production jumped by 22 percent last year. Shale volumes account for 30 percent of the company’s global production, led by South Texas’ Eagle Ford Shale. ConocoPhillips’ rising outputs in West Texas’ Permian Basin are on track to soon surpass its volumes in North Dakota’s Bakken shale.
Still, ConocoPhillips’ Asian, Australian, North Sea and Alaskan business units are more profitable than its U.S. shale output.
The company’s 2020 capital spending budget is projected to be $6.5 billion to $6.7 billion, on par with the $6.6 billion in 2019. However, that 2019 capital spending budget increased throughout the year from an initial budget of $6.1 billion, a revised midyear budget at $6.3 billion, and final spending for the year of $6.6 billion.
January 31, 2020
Houston refining and pipeline company Phillips 66 on Friday reported a $689 million fourth-quarter profit, 51 percent less than the same period in 2018.
Source: Houston Chronicle
The fourth quarter performance resulted in Phillips 66 closing 2019 with a nearly $3.7 billion profit, a 35 percent drop from the previous year when favorable margins in the refining of domestic crude oil swelled profits. The
West Texas Intermediate crude oil prices fell by 40 percent during the fourth quarter of 2018 and entered the $40 per barrel range, creating losses for exploration and production companies and services companies but windfalls for refining companies that were able to process domestic crude.
Crude oil prices have since settled in the $50 per range, which are still beneficial to refining companies but not as profitable.
Phillips 66’s pipeline business took a $900 million hit during the third quarter for impairments related to writing down the value of DCP Midstream, a gathering and processing plant joint venture with Canadian pipeline operator Enbridge.
In a statement, Phillips 66 Greg Garland focused on future growth. The company placed its Gray Oak Pipeline into service in November. When in full service early this year it will move 900,000 barrels of crude oil per day from Texas’ Permian Basin and Eagle Ford Shale to the company’s refinery in Brazoria County and the Port of Corpus Christi.
“As we begin 2020, we are focused on operating excellence, executing our growth projects, enhancing returns on existing assets and exercising disciplined capital allocation,” Garland said.
