MURPHY OIL CORP MANAGEMENT REPORT (Form 10-Q)

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Summary

In the first quarter of 2022, crude oil and natural gas benchmark prices
increased when compared to the same period of 2021. Prices were higher in the
first quarter 2022 principally due to market concerns over supply shortfalls
stemming from lack of investment in the exploration and production sector,
ongoing demand recovery from COVID-19 and geopolitical uncertainty following the
Russian invasion of Ukraine.

On input costs, and similarly to the overall inflationary pressure observed in
the wider economy; the oil and gas industry, and hence the Company, is observing
higher costs for goods and services used in exploration and production. Murphy
continues to manage input costs through its dedicated procurement department
focused on managing supply chain and other costs.

For the three months ended March 31, 2022, West Texas Intermediate (WTI) crude
oil prices averaged approximately $94.29 per barrel (compared to $57.84 in the
first quarter of 2021 and $77.19 in the fourth quarter of 2021). The closing
price for WTI at the end of the first quarter of 2022 was
approximately $108.26 per barrel, reflecting a 74% increase from the first
quarter 2021 closing price and a 51% increase from the fourth quarter of 2021
closing price. The average price in April 2022 was $101.64 per barrel. As of
close on May 2, 2022, the NYMEX WTI forward curve price for the remainder of
2022 and 2023 were $99.44 and $86.38 per barrel, respectively.

For the three months ended March 31, 2022, the Company produced 150 thousand
barrels of oil equivalent per day (including noncontrolling interest) from
continuing operations. The Company invested $304.7 million in capital
expenditures (on a value of work done basis) in the three months ended March 31,
2022, (which included $22.3 million related to the deferral of the Cutthroat
exploration well in Brazil from 2021). The Company reported net loss from
continuing operations of $64.9 million for the three months ended March 31,
2022. This amount includes income attributable to noncontrolling interest of
$47.9 million and after-tax losses on unrealized mark to market revaluations on
commodity price derivative positions and contingent consideration of $148.9
million and $77.2 million, respectively.

For the three months ended March 31, 2021, the Company produced 165 thousand
barrels of oil equivalent per day (including noncontrolling interest) from
continuing operations. The Company invested $251.1 million in capital
expenditures (on a value of work done basis) for the three months ended
March 31, 2021, which included $17.2 million to fund the development of the
King's Quay floating production system (which was subsequently reimbursed by
Arclight). The Company reported net loss from continuing operations of $267.0
million for the three months ended March 31, 2021. This amount included income
attributable to noncontrolling interest of $20.6 million, after-tax impairment
charges of $128.0 million and after-tax losses on unrealized mark to market
revaluations on commodity price derivative positions and contingent
consideration of $121.3 million and $11.8 million, respectively.

In the first quarter of 2021, the Company's subsidiary "Murphy Exploration &
Production Company - USA" closed a transaction with ArcLight Capital Partners,
LLC (ArcLight) for the sale of Murphy's entire 50% interest in the King's Quay
FPS and associated export lateral pipelines. The transaction reimbursed Murphy
for its share of project costs from inception to closing with proceeds of $267.7
million.

On April 12, 2022, subsequent to quarter end, the Company announced that it has
achieved first oil from the Khaleesi, Mormont, Samurai field development project
in the deepwater Gulf of Mexico, as production has begun flowing through the
Murphy-operated King's Quay FPS.





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Contents

SECTION 2. MANAGEMENT REPORT (continued)

Summary (continued)

Operating results

Murphy’s income (loss) by business type is shown below.

                                                                                Income (Loss)
                                                        Three Months Ended March 31,
(Millions of dollars)                                                         2022            2021
Exploration and production                                              $        231.4        (12.2)
Corporate and other                                                             (296.3)      (254.8)
Loss from continuing operations                                                  (64.9)      (267.0)
Discontinued operations ¹                                                         (0.6)         0.2
Net loss including noncontrolling interest                              $   

(65.5) (266.8)


1 The Company has presented its former U.K. and U.S. refining and marketing and
Malaysian exploration and production operations as discontinued operations in
its consolidated financial statements.

exploration and production

Results of E&P continuing operations are presented by geographic segment below.

                                                                Income (Loss)
                                        Three Months Ended March 31,
(Millions of dollars)                                         2022            2021
Exploration and production
United States                                           $        252.9        119.0
Canada                                                            22.7       (124.3)
Other                                                            (44.2)        (6.9)
Total                                                   $        231.4        (12.2)



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Contents

SECTION 2. MANAGEMENT REPORT (continued)

Operating results (continued)

Other key performance indicators

The Company uses other operational performance and income metrics to review
operational performance. The table below presents Earnings before interest,
taxes, depreciation and amortization (EBITDA) and adjusted EBITDA. Management
uses EBITDA and adjusted EBITDA internally to evaluate the Company's operational
performance and trends between periods and relative to its industry competitors.
EBITDA and adjusted EBITDA are non-GAAP financial measures and should not be
considered a substitute for Net income (loss) or Cash provided by operating
activities as determined in accordance with accounting principles generally
accepted in the United States of America. Also presented below is adjusted
EBITDA per barrel of oil equivalent sold, a non-GAAP financial metric.
Management uses EBITDA per barrel of oil equivalent sold to evaluate the
Company's profitability of one barrel of oil equivalent sold in the period.

                                                                           

Three months completed

                                                                               March 31,
(Millions of dollars, except per barrel of oil equivalents sold)                     2022                2021
Net loss attributable to Murphy (GAAP)                                           $  (113.3)               (287.4)
Income tax benefit                                                                   (17.0)                (88.2)
Interest expense, net                                                                 37.3                  88.1
Depreciation, depletion and amortization expense ¹                                   156.6                 188.3
EBITDA attributable to Murphy (Non-GAAP)                                              63.6                 (99.2)
Mark-to-market loss on derivative instruments                                        188.5                 153.5
Mark-to-market loss on contingent consideration                                       98.1                  14.9
Accretion of asset retirement obligations ¹                                           10.5                  10.5
Discontinued operations loss (income)                                                  0.6                  (0.2)
Impairment of assets ¹                                                                   -                 171.3
Unutilized rig charges                                                                   -                   2.8
Foreign exchange (gain) loss                                                             -                   1.3

Adjusted EBITDA attributable to Murphy (Non-GAAP)                                $   361.3                 254.9

Total barrels of oil equivalent sold from continuing operations attributable to Murphy (thousands of barrels)

                                       12,565                13,670

Adjusted EBITDA per barrel of oil equivalents sold                               $   28.75                 18.65


1 Depreciation, depletion, and amortization expense, impairment of assets and
accretion of asset retirement obligations used in the computation of Adjusted
EBITDA exclude the portion attributable to the non-controlling interest.



















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Contents

SECTION 2. MANAGEMENT REPORT (continued)

Operating results (continued)

OIL AND GAS OPERATING RESULTS – THREE MONTHS ENDED MARCH 31, 2022 AND 2021

                                                     United
(Millions of dollars)                               States 1             Canada               Other                Total
Three Months Ended March 31, 2022
Oil and gas sales and other operating revenues     $  707.4               129.3                    -               836.7
Sales of purchased natural gas                            -                36.8                    -                36.8
Lease operating expenses                               99.9                36.9                    -               136.8
Severance and ad valorem taxes                         14.2                 0.4                    -                14.6
Transportation, gathering and processing               29.2                17.7                    -                46.9
Costs of purchased natural gas                            -                33.7                    -                33.7
Depreciation, depletion and amortization              126.5                34.2                  0.1               160.8
Accretion of asset retirement obligations               9.4                 2.5                    -                11.9

Exploration expenses
Dry holes and previously suspended exploration
costs                                                     -                   -                 32.8                32.8
Geological and geophysical                              2.6                   -                  0.2                 2.8
Other exploration                                       1.5                 0.1                  6.1                 7.7
                                                        4.1                 0.1                 39.1                43.3
Undeveloped lease amortization                          2.4                 0.1                  1.8                 4.3
Total exploration expenses                              6.5                 0.2                 40.9                47.6
Selling and general expenses                            8.3                 5.1                  2.4                15.8
Other                                                 102.8                 5.1                  0.4               108.3
Results of operations before taxes                    310.6                30.3                (43.8)              297.1
Income tax provisions (benefits)                       57.7                 7.6                  0.4                65.7
Results of operations (excluding Corporate
segment)                                           $  252.9                22.7                (44.2)              231.4

Three months ended March 31, 2021
Oil and gas sales and other operating revenues     $  490.3               104.0                    -               594.3

Lease operating expenses                              116.1                30.8                  0.3               147.2
Severance and ad valorem taxes                          8.9                 0.3                    -                 9.2
Transportation, gathering and processing               28.5                14.4                    -                42.9

Depreciation, depletion and amortization              149.6                44.8                  0.5               194.9
Accretion of asset retirement obligations               9.0                 1.5                    -                10.5
Impairment of assets                                      -               171.3                    -               171.3
Exploration expenses
Dry holes and previously suspended exploration
costs                                                   0.7                   -                    -                 0.7
Geological and geophysical                              0.6                   -                  0.2                 0.8
Other exploration                                       0.6                   -                  5.0                 5.6
                                                        1.9                   -                  5.2                 7.1
Undeveloped lease amortization                          2.3                 0.1                  2.2                 4.6
Total exploration expenses                              4.2                 0.1                  7.4                11.7
Selling and general expenses                            5.5                 4.1                  1.4                11.0
Other                                                  21.5                 3.1                 (3.5)               21.1
Results of operations before taxes                    147.0              (166.4)                (6.1)              (25.5)
Income tax provisions (benefits)                       28.0               (42.1)                 0.8               (13.3)
Results of operations (excluding Corporate
segment)                                           $  119.0              (124.3)                (6.9)              (12.2)


1 Includes results attributable to a non-controlling interest in MP GOM.

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Contents

SECTION 2. MANAGEMENT REPORT (continued)

Operating results (continued)

Exploration and Production

First quarter 2022 vs. 2021

All amounts include the amount attributable to a non-controlling interest in MP GOM, unless otherwise indicated.

United States E&P operations reported earnings of $252.9 million in the first
quarter of 2022 compared to earnings of $119.0 million in the first quarter of
2021. Results were $133.9 million favorable in the 2022 period compared to the
2021 period, driven by higher revenues ($217.1 million), lower DD&A ($23.1
million), lower lease operating expenses (LOE: $16.2 million), partially offset
by higher income tax expense ($29.7 million) and higher other operating expense
($81.3 million). Higher revenues are primarily attributable to higher realized
prices (oil and condensate, natural gas and NGLs) in 2022 compared to 2021,
offset by lower oil sales and production volumes driven primarily by a focused
effort to reduce capital expenditures to prioritize corporate debt reduction.
Lower DD&A is a result of lower production volumes and lower rates driven by
positive reserve revisions. Lower lease operating expenses were primarily due to
higher GOM workover costs in the prior year at St. Malo. Higher income tax
expense is a result of higher pre-tax income principally due to higher oil price
and lower DD&A and LOE. Higher other operating expense is primarily due to an
unfavorable mark to market revaluation on contingent consideration ($98.1
million; as a result of higher commodity prices) from prior GOM acquisitions.

Canadian E&P operations reported earnings of $22.7 million in the first quarter
of 2022 compared to a loss of $124.3 million in the first quarter of
2021. Results were $147.0 million favorable compared to the 2021 period. Prior
year results included an impairment charge ($171.3 million) recorded in the
first quarter of 2021 following notice from the operator of asset abandonment at
Terra Nova at the time of the assessment, and prior to the sanctioning of an
asset life extension project in the third quarter of 2021. The current year
results also include higher revenue from production ($25.3 million) and lower
DD&A ($10.6 million) offset by higher income tax expense ($49.7 million), lease
operating expenses ($6.1 million) and transportation, gathering and processing
expenses ($3.3 million). Higher revenue is primarily attributable to higher oil
prices at Hibernia and Kaybob Duvernay and higher natural gas prices and volumes
at Tupper Montney. Lower DD&A is primarily due to lower production volumes at
Kaybob Duvernay following reduced capital expenditures throughout 2020 and 2021.
Higher income tax expense is a result of higher pre-tax income principally due
to higher revenue and no repeat of the impairment charge. Higher lease operating
expenses and transportation, gathering and processing costs are due to higher
gas processing and downstream transportation rates and capacity. Higher capacity
is expected to be utilized by growth at Tupper Montney in the future.

Other international E&P operations reported a loss of $44.2 million in the first
quarter of 2022 compared to a loss of $6.9 million in the prior year. Results
were $37.3 million unfavorable compared to the 2021 period primarily due to the
Cutthroat-1 exploration well in block SEAL-M-428 in the Sergipe-Alagoas Basin
offshore Brazil being expensed because no hydrocarbons were discovered.

Business

First quarter 2022 vs 2021

Corporate activities, which include interest expense and income, foreign
exchange effects, realized and unrealized gains/losses on derivative instruments
(forward swaps and collars to hedge the price of oil sold) and corporate
overhead not allocated to Exploration and Production, reported a loss of $296.3
million in the first quarter of 2022 compared to a loss of $254.8 million in the
first quarter of 2021. The $41.5 million unfavorable variance is primarily due
to higher realized and unrealized losses on derivative instruments in 2022
compared to 2021 (2022: $320.8 million loss; 2021: $214.4 million loss),
partially offset by lower interest expense ($56.0 million) and higher tax
benefits ($7.8 million). Realized and unrealized losses on derivative
instruments are due to an increase in oil prices for current (realized) and
future (unrealized) periods whereby the swap contracts provide the Company with
a fixed price and the collar contracts provide for a minimum (floor) and a
maximum (ceiling) price. As of March 31, 2022, the average forward NYMEX WTI
price for the remainder of 2022 was $94.52 (versus swap contract fixed hedge
price of $44.88). Interest charges are lower in the first quarter of 2022
primarily due the prior year redemption premium ($34.2 million) incurred by the
Company upon the early retirement of the notes originally due June and December
2022, lower overall debt and higher capitalized interest on GOM capital
projects. Higher income tax benefit is a result of pre-tax losses driven by the
higher realized and unrealized losses on derivative instruments.


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Contents

SECTION 2. MANAGEMENT REPORT (continued)

Operating results (continued)

Production volumes and prices

First quarter 2022 vs 2021

Total hydrocarbon production from Exploration and Production averaged 149,854
barrels of oil equivalent per day in the first quarter of 2022, which
represented a 9% decrease from the 165,382 barrels per day produced in the first
quarter of 2021. The decrease in production is principally due to an ongoing
focused effort to reduce capital expenditures that began in 2020 to prioritize
corporate debt reduction.

Average crude oil and condensate production was 83,560 barrels per day in the
first quarter of 2022 compared to 97,475 barrels per day in the first quarter of
2021. The decrease of 13,915 barrels per day was principally due to lower Gulf
of Mexico production (9,110 barrels per day) due to the focused effort to reduce
capital expenditures and several planned downtime events including a facility
upgrade which lowered current production at Neidermeyer and Marmalard as well as
maintenance operations at Front Runner, Habanero and Chinook. Canada production
is lower (3,176 barrels per day) due to normal field decline at Kaybob coupled
with temporary operational issues at Hibernia. Eagle Ford Shale production is
lower (1,835 barrels per day) due to normal well decline and temporary
operational issues impacting production in the first quarter of 2022. On a
worldwide basis, the Company's crude oil and condensate prices averaged $95.17
per barrel in the first quarter of 2022 compared to $58.08 per barrel in the
2021 period, an increase of 64% year over year.

Total natural gas liquids (NGL) production was 9,342 barrels per day in the first quarter of 2022, compared to 9,845 barrels per day for the 2021 period.

the

average sales price for U.S. NGL was $40.76 per barrel in 2022 compared to
$22.68 per barrel in 2021. The average sales price for NGL in Canada was $55.02
per barrel in 2022 compared to $35.92 per barrel in 2021. NGL prices are higher
in Canada due to the higher value of the product at the Kaybob Duvernay and
Placid Montney assets.

Natural gas production volumes averaged 341.7 million cubic feet per day (MMCFD)
in the first quarter of 2022 compared to 348.4 MMCFD in 2021.  The decrease of
6.7 MMCFD was primarily the result of lower volumes in the Gulf of Mexico (16.6
MMCFD) partially offset by higher volumes at Eagle Ford Shale (5.3 MMCFD) and
Canada (4.6 MMCFD). The lower natural gas volumes in the Gulf of Mexico are
principally due to planned facility and maintenance downtime. Natural gas prices
for the total Company averaged $3.13 per thousand cubic feet (MCF) in the first
quarter of 2022, versus $2.56 per MCF average in the same period of 2021.
Average realized natural gas prices in the U.S. and Canada in the quarter were
$5.00 and $2.52, respectively. Average realized gas prices in Canada are lower
as a result of certain fixed price sales volume contracts.

Additional details on the results of oil and gas operations are presented in the tables on page 24.

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Contents

SECTION 2. MANAGEMENT REPORT (continued)

Operating results (continued)

The following table shows the hydrocarbons produced during the three-month periods ended March 31, 2022 and 2021.

                                                                                           Three Months Ended
                                                                                               March 31,
Barrels per day unless otherwise noted                                                                     2022                2021

Net crude oil and condensate
United States                                Onshore                                                      20,330               22,165
                                             Gulf of Mexico 1                                             55,253               64,363
Canada                                       Onshore                                                       4,380                6,288
                                             Offshore                                                      3,321                4,589
Other                                                                                                        276                   70
Total net crude oil and condensate - continuing operations                                                83,560               97,475
Net natural gas liquids
United States                                Onshore                                                       4,833                3,933
                                             Gulf of Mexico 1                                              3,526                4,679
Canada                                       Onshore                                                         983                1,233
Total net natural gas liquids - continuing operations                                                      9,342                9,845
Net natural gas - thousands of cubic feet per day
United States                                Onshore                                                      27,361               22,016
                                             Gulf of Mexico 1                                             56,058               72,658
Canada                                       Onshore                                                     258,291              253,697
Total net natural gas - continuing operations                                                            341,710              348,371
Total net hydrocarbons - continuing operations including NCI 2,3                                         149,854              165,382
Noncontrolling interest
Net crude oil and condensate - barrels per day                                                            (8,128)              (9,174)
Net natural gas liquids - barrels per day                                                                   (287)                (354)
  Net natural gas - thousands of cubic feet per day 2                                                     (2,590)              (4,159)
Total noncontrolling interest                                                                             (8,847)             (10,221)
Total net hydrocarbons - continuing operations excluding NCI 2,3                                         141,007              155,161


1 Includes net volumes attributable to a noncontrolling interest in MP Gulf of
Mexico, LLC (MP GOM).
2 Natural gas converted on an energy equivalent basis of 6:1
3 NCI - noncontrolling interest in MP GOM.






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Contents

SECTION 2. MANAGEMENT REPORT (continued)

Operating results (continued)

The following table shows the weighted average selling prices excluding the deduction of transportation costs and sales of purchased natural gas for the three-month periods ended March 31, 2022 and 2021.

                                                                                  Three Months
                                                                                     Ended
                                                                                   March 31,
                                                                                         2022               2021
Weighted average Exploration and Production sales prices
Continuing operations
Crude oil and condensate - dollars per barrel
United States                            Onshore                                      $ 93.87                57.41
                                         Gulf of Mexico 1                               95.02                58.78
Canada 2                                 Onshore                                        93.09                52.84
                                         Offshore                                      110.66                59.39

Natural gas liquids - dollars per barrel
United States                            Onshore                                        38.32                21.25
                                         Gulf of Mexico 1                               44.05                23.87
Canada 2                                 Onshore                                        55.02                35.92
Natural gas - dollars per thousand cubic feet
United States                            Onshore                                         4.61                 3.27
                                         Gulf of Mexico 1                                5.19                 3.39
Canada 2                                 Onshore                                         2.52                 2.26

1 Prices include the effect of non-controlling interests for MP GOM.
2 US dollars equivalent.

Financial condition

Cash flow from operating activities

Net cash provided by continuing operating activities was $338.3 million for the
first three months of 2022 compared to $237.8 million during the same period in
2021.  The increased cash from operating activities is primarily attributable to
higher revenue from production ($242.0 million), offset by the timing of working
capital settlements ($80.9 million; primarily higher revenue received in cash
following the end of the quarter) and higher realized losses on derivative
instruments ($71.4 million).

Cash required by investing activities

Net cash required by investing activities was $244.9 million for the first three
months of 2022 compared to net cash provided by investing activities of $9.7
million during the same period in 2021. The first quarter of 2021 included sales
proceeds for the King's Quay FPS of $268.0 million, which was sold to ArcLight
Capital Partners, LLC (ArcLight). Property additions and dry hole costs
(excluding King's Quay), which includes amounts expensed, were $244.9
million and $240.5 million in the first three months of 2022 and 2021,
respectively.

Total capital expenditures on an accrual basis were as follows:

                                     Three Months Ended
                                          March 31,
(Millions of dollars)                 2022               2021
Capital Expenditures
Exploration and production    $             299.4       247.3
Corporate                                     5.3         3.8
Total capital expenditures    $             304.7       251.1


A reconciliation of property additions and dry hole costs in the Consolidated
Statements of Cash Flows to total capital expenditures for continuing operations
follows.
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Contents

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