2Q 2018 Earnings Exhibit 991





Exhibit 99.1

MURPHY OIL CORPORATION ANNOUNCES SECOND QUARTER 2018 RESULTS

Successful Exploration Well at Samurai-2

EL DORADO, Arkansas, August 8, 2018 – Murphy Oil Corporation (NYSE: MUR) today announced its financial and operating results for the second quarter ended June 30, 2018, including net income of $46 million, or $0.26 per diluted share.  

Financial highlights for the second quarter include:

·

Generated adjusted income of $63 million, or $0.36 per diluted share

·

Achieved annualized year-to-date EBITDA to average capital employed of 20 percent

·

Returned 13 percent of operating cash flow to shareholders through dividend

·

Preserved balance sheet strength with 30 percent net debt to total capital employed ratio

·

Maintained approximately $2.0 billion of liquidity

Operating highlights for the second quarter include:

·

Produced 171,000 BOEPD, exceeding the high end of production guidance, with 59 percent liquids

·

Increased mid-point of annual production guidance by 1,000 BOEPD to 169,500 BOEPD

·

Successfully delineated existing pay zones in the Samurai Field with the Samurai-2 well and drilled additional successful zones in the exploration portion of the well

·

Increased Kaybob Duvernay production by 108 percent, year-over-year 

·

Achieved average IP30 rates of 1,750 BOEPD at a Karnes 10-well pad in the Eagle Ford Shale, with seven of the wells producing at company-record peak rates

·

Negotiated operatorship and increased working interest to 40 percent in Vietnam Block 15-1/05, which includes the previously discovered LDV Field



1


 

SECOND QUARTER 2018 RESULTS

Murphy recorded net income of $46 million, or $0.26 per diluted share, for the second quarter 2018. 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 $63 million, or $0.36 per diluted share. The adjusted income excludes an unrealized mark-to-market after-tax loss on crude oil derivative contracts of $10 million and an after-tax loss on foreign exchange of $7 million. Details for second quarter results can be found in the attached schedules.

Earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $365 million, or $23.50 per barrel of oil equivalent (BOE) sold. Earnings before interest, taxes, depreciation, amortization and exploration expenses (EBITDAX) totaled $384 million, or $24.74 per BOE sold. Details for second quarter EBITDA and EBITDAX reconciliation can be found in the attached schedules.

In the second quarter 2018, the company produced 171,000 barrels of oil equivalent per day (BOEPD). Production exceeded the high end of guidance primarily driven by the outperformance of the high-margin Front Runner, Clipper, Thunder Hawk and Kodiak Fields in the Gulf of Mexico. In onshore Canada, new wells in the Kaybob Duvernay Field and less planned downtime at Tupper Montney also contributed to production exceeding guidance.

“We continue to implement our 2018 plan, with annual production guidance being increased for the second consecutive quarter. Our high-margin offshore fields continue to lead the way in production performance. By successfully executing our operating and financial goals, we are able to deliver cash to our shareholders through our competitive dividend yield and generate significant cash returns on our invested capital,” stated Roger W. Jenkins, President and Chief Executive Officer.

FINANCIAL POSITION

As of June 30, 2018, the company had $2.8 billion of outstanding long-term, fixed-rate notes while maintaining approximately $2.0 billion of liquidity. The fixed-rate notes have a weighted average maturity of 8.3 years and a weighted average coupon of 5.5 percent. The next senior note maturity for the company is in 2022. There were no borrowings on the $1.1 billion unsecured senior credit facility at quarter end.

2


 

REGIONAL OPERATIONS SUMMARY                                                        

North American Onshore

The North American onshore business produced 95 thousand barrels of oil equivalent per day (MBOEPD) in the second quarter, a ten percent increase year-over-year.

Eagle Ford Shale  – Production in the quarter averaged 44 MBOEPD, with 88 percent liquids. The company brought 26 operated wells online during the quarter, including ten wells in Karnes, ten in Catarina and six in Tilden. The 10-well pad in Karnes had an average initial gross production rate over 30 days (IP30 rate) of 1,750 BOEPD, with seven of the wells producing at the highest rates Murphy has achieved in this area. Murphy brought four more wells online in the second quarter than guided. The company expects to bring a total of 45 operated Eagle Ford Shale wells online during full year 2018, with nine in the third quarter.

Tupper Montney – Natural gas production in the quarter averaged 236 million cubic feet per day (MMCFD). During the quarter, the company brought five wells online with an average expected ultimate recovery of 18 billion cubic feet (BCF) per well.

The company entered into a long-term expansion agreement to increase the processing capabilities at third party plants in the Tupper Montney. The expansion project will enable Murphy to produce an additional 200 MMCFD by late 2020 and has additional reserve potential of over 400 BCF. Murphy has firm natural gas transportation service to match the increase in processing capacity. The project has an AECO break-even price1 of approximately C$1.75 per thousand cubic feet. The long-term expansion should allow flexible capital allocation that will ultimately lead to additional free cash generation from the project for many decades.

Kaybob Duvernay – During the quarter, the company achieved record production averaging over 7,300 BOEPD with 63 percent liquids. Late in the second quarter, the company brought a four-well pad online in the Kaybob West development area, with an initial average rate approaching 800 BOEPD and 80 percent liquids. In the second half of 2018, the company plans to allocate an additional $50 million in the Kaybob Duvernay to drill, complete additional wells, and build infrastructure. The increase in capital will reduce the remaining drilling carry, which is expected to be completed by year end 2019.

3


 

“Since taking over operatorship of this asset two years ago, our Kaybob Duvernay team has done an outstanding job reducing costs while steadily increasing production. Over the past 24 months, production grew almost six-fold to over 7,300 BOEPD, and we are well on our way to a fourth quarter exit rate that exceeds 11,000 BOEPD. Simultaneously, our drilling and completion costs in the Kaybob Duvernay have been reduced by 30 percent to a second quarter average of $6.5 million per well. This includes a Murphy pacesetter well of $5.9 million, which is industry-leading for the play,” stated Jenkins.

Global Offshore

The offshore business produced over 76 MBOEPD for the second quarter, with 72 percent liquids. 

Malaysia & Brunei – Production in the quarter averaged 49 MBOEPD, with 62 percent liquids. Block K and Sarawak averaged nearly 30 thousand barrels of liquids per day, while Sarawak natural gas production averaged 105 MMCFD. Work continues at the Kikeh gas lift and the Block H FLNG projects, which are both being executed on time and on budget.

North America  Production in the quarter for the Gulf of Mexico and offshore Canada averaged 27 MBOEPD, with 91 percent liquids.

EXPLORATION

Gulf of Mexico Exploration – During the second quarter, Murphy spud the Samurai-2 appraisal well (Green Canyon 432-2), which was drilled to a depth of just over 32,000 feet. The well encountered more than 150 feet of total pay, primarily from two zones that were originally found in the Samurai-1 exploration well. To date, the company has discovered resources exceeding its mean pre-drill expectation of 75 million barrels of oil equivalent. Murphy also discovered oil pay in additional zones that were not tested in Samurai-1. Murphy and its partner are evaluating options to sidetrack the well into the adjacent block that Murphy also operates with a 50 percent working interest. The potential sidetrack is expected to further delineate the discovery. 

“I am thrilled to report the commercial pay success in the Samurai-2 well, which is the first well drilled under our new, focused exploration strategy. We have encountered multiple high-quality, oil-bearing reservoirs, which will generate meaningful value as we move into development. I look forward to continued evaluation of the successful Samurai-2 well during the third quarter,” stated Jenkins.

Mexico Exploration – During the second quarter, Murphy received approval from the Comisión Nacional de Hidrocarburos (CNH) for the Deepwater Block 5 Exploration Plan. The approval is a key step in the process towards spudding the first exploration well on the block late in 2018. 

4


 

Vietnam Exploration – Murphy secured all approvals of the farm-in terms for the Block 15-01/05 in the Cuu Long Basin, including assuming operatorship of the block at a 40 percent working interest. Murphy also progressed planning for the LDT-1X exploration well that is expected to spud in the fourth quarter.

PRODUCTION AND CAPITAL EXPENDITURE GUIDANCE

Production for the third quarter 2018 is estimated to be in the range of 166,500 to 168,500 BOEPD. Third quarter guidance is below second quarter production primarily due to the annual turn-arounds at the non-operated offshore Canada fields and execution of capital projects in Malaysia. The temporary production loss of approximately 7,400 BOEPD in these areas is partially offset by increased production of approximately 3,900 BOEPD in North American onshore assets.

The company is increasing estimated full year 2018 production guidance to be in the range of 168,500 to 170,500 BOEPD. The mid-point for full year production guidance represents a 1,000 BOEPD increase from the previous annual guidance range. The increase is supported by year-over-year production growth of eight percent in Murphy’s North American onshore assets.

Full year capital expenditure guidance is being increased by six percent from $1.114 billion to $1.179 billion. Approximately $55 million of the additional capital is being allocated to Onshore Canada, primarily in the Kaybob Duvernay to drill eight and bring four additional wells online and build the required facilities and road work for future wells. The remainder is being allocated to further evaluate the successful Samurai-2 appraisal well. Details for production can be found in the attached schedules.

CONFERENCE CALL AND WEBCAST SCHEDULED FOR AUGUST 9, 2018

Murphy will host a conference call to discuss second quarter 2018 financial and operating results on Thursday, August 9, 2018, at 11:00 a.m. ET. The call can be accessed either via the Internet through the Investor Relations section of Murphy Oil’s website at http://ir.murphyoilcorp.com or via the telephone by dialing toll free 1-888-886-7786, reservation number 37250021.

FINANCIAL DATA

Summary financial data and operating statistics for second quarter 2018, with comparisons to the same period from the previous year, are contained in the following schedules. Additionally, a schedule indicating the impacts of items affecting comparability of results between periods and schedules comparing EBITDA and EBITDAX between periods are included with these schedules as well as guidance for the third quarter and full year 2018.

1Break-even natural gas price to achieve a 10 percent rate of return.

5


 

ABOUT MURPHY OIL CORPORATION

Murphy Oil Corporation is a global independent oil and natural gas exploration and production company. The company’s diverse resource base includes offshore production in Southeast Asia, Canada and Gulf of Mexico, as well as North America onshore plays in the Eagle Ford Shale, Kaybob Duvernay and Montney. Additional information can be found on the company’s website at http://www.murphyoilcorp.com.

FORWARD-LOOKING STATEMENTS

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally identified through the inclusion of words such as “aim”, “anticipate”, “believe”, “drive”, “estimate”, “expect”, “expressed confidence”, “forecast”, “future”, “goal”, “guidance”, “intend”, “may”, “objective”, “outlook”, “plan”, “position”, “potential”, “project”, “seek”, “should”, “strategy”, “target”, “will” or variations of such words and other similar expressions. These statements, which express management’s current views concerning future events or results, are subject to inherent risks and uncertainties. Factors that could cause one or more of these future events or results not to occur as implied by any forward-looking statement include, but are not limited to, increased volatility or deterioration in the level of crude oil and natural gas prices, deterioration in the success rate of our exploration programs or in our ability to maintain production rates and replace reserves, reduced customer demand for our products due to environmental, regulatory, technological or other reasons, adverse foreign exchange movements, political and regulatory instability in the markets where we do business, natural hazards impacting our operations, any other deterioration in our business, markets or prospects, any failure to obtain necessary regulatory approvals, any inability to service or refinance our outstanding debt or to access debt markets at acceptable prices, and adverse developments in the U.S. or global capital markets, credit markets or economies in general. For further discussion of factors that could cause one or more of these future events or results not to occur as implied by any forward-looking statement, see “Risk Factors” in our most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (SEC) and any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K that we file, available from the SEC’s website and from Murphy Oil Corporation’s website at http://ir.murphyoilcorp.com. Murphy Oil Corporation undertakes no duty to publicly update or revise any forward-looking statements.

6


 

NON-GAAP FINANCIAL MEASURES

This news release contains certain non-GAAP financial measures that management believes are good tools for internal use and the investment community in evaluating Murphy Oil Corporation’s overall financial performance. These non-GAAP financial measures are broadly used to value and compare companies in the crude oil and natural gas industry, although not all companies define these measures in the same way. In addition, these non-GAAP financial measures are not a substitute for financial measures prepared in accordance with GAAP, and should therefore be considered only as supplemental to such GAAP financial measures. Please see the attached schedules for reconciliations of the differences between the non-GAAP financial measures used in this news release and the most directly comparable GAAP financial measures.

Investor Contacts:

Kelly Whitley, kelly_whitley@murphyoilcorp.com, 281-675-9107

Amy Garbowicz, amy_garbowicz@murphyoilcorp.com, 281-675-9201

Emily McElroy, emily_mcelroy@murphyoilcorp.com, 870-864-6324

7


 



MURPHY OIL CORPORATION

SUMMARIZED CONSOLIDATED STATEMENTS OF OPERATIONS  (unaudited)

(Thousands of dollars, except per share amounts)







 

 

 

 

 

 

 

 



 

Three Months Ended

 

Six Months Ended



 

June 30,

 

June 30,



 

2018

 

2017 1

 

2018

 

2017 1



 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

     Revenue from sales to customers

$

655,150 

 

477,560 

 

1,262,104 

 

986,595 

     (Loss) gain on crude contracts

 

(37,624)

 

26,861 

 

(67,126)

 

63,938 

     Gain on sale of assets and other income

 

668 

 

3,858 

 

8,821 

 

134,386 

Total revenues

 

618,194 

 

508,279 

 

1,203,799 

 

1,184,919 



 

 

 

 

 

 

 

 

Costs and expenses

 

 

 

 

 

 

 

 

     Lease operating expenses

 

136,589 

 

111,179 

 

273,085 

 

233,321 

     Severance and ad valorem taxes

 

12,876 

 

10,742 

 

25,033 

 

21,955 

     Exploration expenses, including undeveloped

       lease amortization

 

19,145 

 

20,201 

 

48,073 

 

48,864 

     Selling and general expenses

 

57,800 

 

52,809 

 

109,217 

 

102,774 

     Depreciation, depletion and amortization

 

237,997 

 

234,992 

 

468,730 

 

471,146 

     Accretion of asset retirement obligations

 

11,028 

 

10,428 

 

20,942 

 

20,984 

     Other expense (benefit)

 

659 

 

6,377 

 

(10,389)

 

8,534 

Total costs and expenses

 

476,094 

 

446,728 

 

934,691 

 

907,578 

Operating income from continuing operations

 

142,100 

 

61,551 

 

269,108 

 

277,341 



 

 

 

 

 

 

 

 

Other income (loss)

 

 

 

 

 

 

 

 

     Interest and other income (loss)

 

(15,051)

 

(38,305)

 

33 

 

(54,616)

     Interest expense, net

 

(44,723)

 

(45,145)

 

(89,772)

 

(89,742)

Total other loss

 

(59,774)

 

(83,450)

 

(89,739)

 

(144,358)



 

 

 

 

 

 

 

 

Income (loss) from continuing operations before income taxes

 

82,326 

 

(21,899)

 

179,369 

 

132,983 

Income tax expense (benefit)

 

36,410 

 

(4,545)

 

(35,237)

 

92,842 

Income (loss) from continuing operations

 

45,916 

 

(17,354)

 

214,606 

 

40,141 

Income (loss) from discontinued operations, net of income taxes

 

(398)

 

(217)

 

(835)

 

752 



 

 

 

 

 

 

 

 

NET INCOME (LOSS)

$

45,518 

 

(17,571)

 

213,771 

 

40,893 



 

 

 

 

 

 

 

 

INCOME (LOSS) PER COMMON SHARE – BASIC

 

 

 

 

 

 

 

 

     Continuing operations

$

0.26 

 

(0.10)

 

1.25 

 

0.23 

     Discontinued operations

 

 -

 

 -

 

(0.01)

 

0.01 

         Net Income (Loss)

$

0.26 

 

(0.10)

 

1.24 

 

0.24 



 

 

 

 

 

 

 

 

INCOME (LOSS) PER COMMON SHARE – DILUTED

 

 

 

 

 

 

 

 

     Continuing operations

$

0.26 

 

(0.10)

 

1.23 

 

0.23 

     Discontinued operations

 

 -

 

 -

 

(0.01)

 

0.01 

         Net Income (Loss)

$

0.26 

 

(0.10)

 

1.22 

 

0.24 



 

 

 

 

 

 

 

 

Cash dividends per Common share

 

0.25 

 

0.25 

 

0.50 

 

0.50 



 

 

 

 

 

 

 

 

Average Common shares outstanding (thousands)

 

 

 

 

 

 

 

 

     Basic

 

173,043 

 

172,558 

 

172,907 

 

172,482 

     Diluted

 

173,983 

 

172,558 

 

174,927 

 

173,017 


1 Reclassified to conform to current presentation.

8


 

MURPHY OIL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(Thousands of dollars)





 

 

 

 

 

 

 

 

 



 

Three Months Ended

 

Six Months Ended

 



 

June 30,

 

June 30,

 



 

2018

 

2017

 

2018

 

2017

 

Operating Activities

 

 

 

 

 

 

 

 

 

Net income (loss)

$

45,518 

 

(17,571)

 

213,771 

 

40,893 

 

Adjustments to reconcile net income (loss) to net cash provided by continuing operations activities:

 

 

 

 

 

 

 

 

 

Loss (Income) from discontinued operations

 

398 

 

217 

 

835 

 

(752)

 

Depreciation, depletion and amortization

 

237,997 

 

234,992 

 

468,730 

 

471,146 

 

Dry hole costs (credits)

 

(2)

 

(1,000)

 

(11)

 

1,904 

 

Amortization of undeveloped leases

 

9,606 

 

10,349 

 

22,774 

 

20,306 

 

Accretion of asset retirement obligations

 

11,028 

 

10,428 

 

20,942 

 

20,984 

 

Deferred income tax (benefit) charge

 

(10,569)

 

(25,403)

 

(156,489)

 

33,130 

 

Pretax (gain) loss from disposition of assets

 

(221)

 

1,334 

 

118 

 

(130,648)

 

Net decrease in noncash operating working capital

 

43,886 

 

(837)

 

85,440 

 

42,581 

 

Other operating activities, net

 

8,384 

 

73,440 

 

(31,564)

 

91,918 

 

Net cash provided by continuing operations activities

 

346,025 

 

285,949 

 

624,546 

 

591,462 

 



 

 

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

 

 

 

Property additions and dry hole costs

 

(341,243)

 

(220,023)

 

(615,144)

 

(431,654)

 

Proceeds from sales of property, plant and equipment

 

363 

 

206 

 

623 

 

64,303 

 

Purchases of investment securities 1

 

– 

 

– 

 

– 

 

(212,661)

 

Proceeds from maturity of investment securities 1

 

– 

 

170,983 

 

– 

 

284,193 

 

Net cash required by investing activities

 

(340,880)

 

(48,834)

 

(614,521)

 

(295,819)

 



 

 

 

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

 

 

 

 

Capital lease obligation payments

 

(2,244)

 

(2,323)

 

(4,648)

 

(11,983)

 

Withholding tax on stock-based incentive awards

 

(280)

 

(1,273)

 

(6,922)

 

(7,081)

 

Cash dividends paid

 

(43,259)

 

(43,142)

 

(86,517)

 

(86,278)

 

Net cash required by financing activities

 

(45,783)

 

(46,738)

 

(98,087)

 

(105,342)

 



 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

3,331 

 

(7,743)

 

24,382 

 

(4,611)

 

Net increase (decrease) in cash and cash equivalents

 

(37,307)

 

182,634 

 

(63,680)

 

185,690 

 

Cash and cash equivalents at beginning of period

 

938,615 

 

875,853 

 

964,988 

 

872,797 

 

Cash and cash equivalents at end of period

$

901,308 

 

1,058,487 

 

901,308 

 

1,058,487 

 


1    Investments are Canadian government securities with maturities greater than 90 days at the date of acquisition. 

9


 

MURPHY OIL CORPORATION

SCHEDULE OF ADJUSTED INCOME (LOSS)

(unaudited)

(Millions of dollars, except per share amounts)







 

 

 

 

 

 

 

 



 

Three Months Ended

 

Six Months Ended



 

June 30,

 

June 30,



 

2018

 

2017

 

2018

 

2017

Net income (loss)

$

45.5 

 

(17.6)

 

213.8 

 

40.9 

Discontinued operations loss (income)

 

0.4 

 

0.2 

 

0.8 

 

(0.8)

Income (loss) from continuing operations

 

45.9 

 

(17.4)

 

214.6 

 

40.1 

Adjustments:

 

 

 

 

 

 

 

 

Mark-to-market (gain) loss on crude oil derivative contracts

 

10.1 

 

(14.7)

 

21.4 

 

(40.7)

Foreign exchange losses (gains)

 

7.1 

 

31.1 

 

(4.8)

 

42.7 

Impact of tax reform

 

– 

 

– 

 

(120.0)

 

– 

Seal insurance proceeds

 

– 

 

– 

 

(8.2)

 

– 

Deferred tax on undistributed foreign earnings

 

– 

 

5.8 

 

– 

 

60.4 

Tax benefits on investments in foreign areas

 

– 

 

(21.1)

 

– 

 

(32.9)

Gain on sale of assets

 

– 

 

– 

 

– 

 

(96.0)

Oil Insurance Limited dividends

 

– 

 

(2.8)

 

– 

 

(2.8)

Total adjustments after taxes

 

17.2 

 

(1.7)

 

(111.6)

 

(69.3)

Adjusted income (loss)

$

63.1 

 

(19.1)

 

103.0 

 

(29.2)



 

 

 

 

 

 

 

 

Adjusted income (loss) per diluted share

$

0.36 

 

(0.11)

 

0.59 

 

(0.17)



Non-GAAP Financial Measures

Presented above is a reconciliation of Net income(loss) to Adjusted income  (loss).  Adjusted income  (loss) excludes certain items that management believes affect the comparability of results between periods.  Management believes this is important information to provide because it is used by management to evaluate the Company's operational performance and trends between periods and relative to its industry competitors.  Management also believes this information may be useful to investors and analysts to gain a better understanding of the Company's financial results.  Adjusted income (loss) is a non-GAAP financial measure and should not be considered a substitute for Net income (loss) as determined in accordance with accounting principles generally accepted in the United States of America.



Note:Amounts shown above as reconciling items between Net income (loss) and Adjusted income  (loss) are presented net of applicable income taxes based on the estimated statutory rate in the applicable tax jurisdiction.  The pretax and income tax impacts for adjustments shown above are as follows by area of operations.







 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended

 

Six Months Ended



 

June 30, 2018

 

June 30, 2018



 

Pretax

 

Tax

 

Net

 

Pretax

 

Tax

 

Net

Exploration & Production:

 

 

 

 

 

 

 

 

 

 

 

 

  Canada

 

 –

 

 –

 

 –

 

(11.3)

 

3.1 

 

(8.2)

  Other International

 

 –

 

 –

 

 –

 

 –

 

 –

 

 –

Total E&P

 

 –

 

 –

 

 –

 

(11.3)

 

3.1 

 

(8.2)

Corporate 1:

 

24.7 

 

(7.5)

 

17.2 

 

22.5 

 

(125.9)

 

(103.4)

Total adjustments

$

24.7 

 

(7.5)

 

17.2 

 

11.2 

 

(122.8)

 

(111.6)



1 In 2018, the Company reported realized and unrealized gains and losses on crude oil contracts in the Corporate segment to reflect how segments are currently evaluated, how resources are allocated and how risk is managed by the Company.  The 2017 amounts have been reclassified from the Exploration and Production business for comparable disclosure.

10


 



MURPHY OIL CORPORATION

SCHEDULE OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION

AND AMORTIZATION (EBITDA) AND EXPLORATION EXPENSES (EBITDAX)

(unaudited)

(Millions of dollars, except per barrel of oil equivalents sold)









 

 

 

 

 

 

 

 



 

Three Months Ended

 

Six Months Ended



 

June 30,

 

June 30,



 

2018

 

2017

 

2018

 

2017

Net income (loss) (GAAP)

$

45.5 

 

(17.6)

 

213.8 

 

40.9 

Discontinued operations loss (income)

 

0.4 

 

0.2 

 

0.8 

 

(0.8)

Income tax expense (benefit)

 

36.4 

 

(4.5)

 

(35.2)

 

92.8 

Interest expense, net

 

44.7 

 

45.1 

 

89.8 

 

89.7 

Depreciation, depletion and amortization expense

 

238.0 

 

235.0 

 

468.7 

 

471.1 

EBITDA (Non-GAAP) 1

$

365.0 

 

258.2 

 

737.9 

 

693.7 



 

 

 

 

 

 

 

 

Exploration expenses

 

19.2 

 

20.2 

 

48.1 

 

48.9 

EBITDAX (Non-GAAP) 1

$

384.2 

 

278.4 

 

786.0 

 

742.6 



 

 

 

 

 

 

 

 

Total barrels of oil equivalents sold (thousands of barrels)

 

15,532.0 

 

14,578.5 

 

30,575.8 

 

29,335.9 



 

 

 

 

 

 

 

 

EBITDA per barrel of oil equivalents sold

$

23.50 

 

17.71 

 

24.13 

 

23.65 



 

 

 

 

 

 

 

 

EBITDAX per barrel of oil equivalents sold

$

24.74 

 

19.10 

 

25.71 

 

25.31 



1 Certain pretax items that increase (decrease) EBITDA and EBITDAX above include:







 

 

 

 

 

 

 

 



Three Months Ended

 

Six Months Ended



 

June 30,

 

June 30,



 

2018

 

2017

 

2018

 

2017

Gain (loss) on foreign exchange 2

$

(12.2)

 

(35.9)

 

4.4 

 

(49.2)

Mark-to-market gain (loss) on crude oil derivative contracts

 

(12.7)

 

22.6 

 

(27.1)

 

62.6 

Gain (loss) on sale of assets 3

 

0.2 

 

(1.3)

 

(0.1)

 

130.6 

Accretion of asset retirement obligations

 

(11.0)

 

(10.4)

 

(20.9)

 

(21.0)



$

(35.7)

 

(25.0)

 

(43.7)

 

123.0 



2 Gain (loss) on foreign exchange principally relates to the revaluation of Malaysian Ringgit monetary assets and liabilities. In 2017 foreign exchange also includes revaluation of intercompany loans (settled in the first quarter of 2018).

3 Gain (loss) on sale of assets in the six months ended June 30, 2017 primarily consists of a pretax gain of $132.4 million related to the sale of the Seal heavy oil asset in Canada.



Non-GAAP Financial Measures

Presented above is a reconciliation of Net income (loss) to Earnings before interest, taxes, depreciation and amortization (EBITDA) and Earnings before interest, taxes, depreciation, amortization, and exploration expenses (EBITDAX).  Management believes EBITDA and EBITDAX are important information to provide because they are used by management to evaluate the Company's operational performance and trends between periods and relative to its industry competitors.  Management also believes this information may be useful to investors and analysts to gain a better understanding of the Company's financial results.  EBITDA and EBITDAX 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.    



Presented above is EBITDA per barrel of oil equivalents sold and EBITDAX per barrel of oil equivalents sold. Management believes EBITDA per barrel of oil equivalents sold and EBITDAX per barrel of oil equivalents sold are important information because they are used by management to evaluate the Company’s profitability of one barrel of oil equivalent sold in that period.   EBITDA per barrel of oil equivalent sold and EBITDAX per barrel of oil equivalent sold are non-GAAP financial metrics.

11


 



MURPHY OIL CORPORATION

FUNCTIONAL RESULTS OF OPERATIONS (unaudited)

(Millions of dollars)







 

 

 

 

 

 

 

 

 



Three Months Ended         June 30, 2018

 

 

Three Months Ended          June 30, 2017



 

Revenues

 

Income
(Loss)

 

 

Revenues

 

Income
(Loss)

Exploration and production

 

 

 

 

 

 

 

 

 

    United States 1

$

318.8 

 

72.6 

 

 

212.5 

 

(9.6)

    Canada

 

108.4 

 

9.7 

 

 

88.2 

 

5.2 

    Malaysia

 

228.6 

 

83.9 

 

 

176.5 

 

47.7 

    Other

 

– 

 

(15.0)

 

 

– 

 

7.2 

        Total exploration and production

 

655.8 

 

151.2 

 

 

477.2 

 

50.5 

Corporate 1

 

(37.6)

 

(105.3)

 

 

31.1 

 

(67.9)

Revenue/income from continuing operations

 

618.2 

 

45.9 

 

 

508.3 

 

(17.4)

Discontinued operations, net of tax

 

– 

 

(0.4)

 

 

– 

 

(0.2)

Total revenues/net income (loss)

$

618.2 

 

45.5 

 

 

508.3 

 

(17.6)



 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



Six Months Ended              June 30, 2018

 

 

Six Months Ended                      June 30, 2017



 

Revenues

 

Income
(Loss)

 

 

Revenues

 

Income
(Loss)

Exploration and production

 

 

 

 

 

 

 

 

 

    United States

$

596.9 

 

108.7 

 

 

436.7 

 

(10.6)

    Canada  2

 

226.7 

 

34.3 

 

 

306.1 

 

105.8 

    Malaysia

 

439.5 

 

154.3 

 

 

373.9 

 

106.3 

    Other

 

– 

 

(30.5)

 

 

– 

 

0.1 

        Total exploration and production

 

1,263.1 

 

266.8 

 

 

1,116.7 

 

201.6 

Corporate 3

 

(59.3)

 

(52.2)

 

 

68.2 

 

(161.5)

Revenue/income from continuing operations

 

1,203.8 

 

214.6 

 

 

1,184.9 

 

40.1 

Discontinued operations, net of tax

 

– 

 

(0.8)

 

 

– 

 

0.8 

Total revenues/net income

$

1,203.8 

 

213.8 

 

 

1,184.9 

 

40.9 



1 In 2018, the Company reported realized and unrealized gains and losses on crude oil contracts in the Corporate segment to reflect how segments are currently evaluated, how resources are allocated and how risk is managed by the Company.  The 2017 amounts have been reclassified from the U.S. Exploration and production business to reflect comparable disclosure.  Realized and unrealized gains (losses) of ($37.6) million and $26.9 million are included in the Corporate segment for the three months ended June 30, 2018 and 2017, respectively. Realized and unrealized gains (losses) of ($67.1) million and $63.9 million are included in the Corporate segment for the six months ended June 30, 2018 and 2017, respectively. Corporate segment loss for the three-month periods ended June 30, 2018 and 2017 included foreign exchange losses of $12.6 million and $35.6 million, respectively.  Corporate segment loss for the six-month periods ended June 30, 2018 and 2017 included foreign exchange gains of $2.8 million and $51.7 million, respectively.    

2  2017 revenue includes a pretax gain of $132.4 million ($96.0 million after-tax) related to the sale of the Seal heavy oil asset in Canada.

3 Income for the six-month period ended June 30, 2018 included a credit to income tax expense of $120.0 million related to an IRS interpretation of the Tax Cuts and Jobs Act.  

12


 

MURPHY OIL CORPORATION
OIL AND GAS OPERATING RESULTS (unaudited)
THREE MONTHS ENDED JUNE 30,  2018 AND 2017



 

 

 

 

 

 



 

 

 

 

 

 



 

 

 

 

 

 



 

United

 

 

 

 

(Millions of dollars)

 

States 1

Canada

Malaysia

Other

Total

Three Months Ended June 30, 2018

 

 

 

 

 

 

Oil and gas sales and other revenues

$

318.8  108.4  228.6 

– 

655.8 

Lease operating expenses

 

52.0  29.2  55.4 

– 

136.6 

Severance and ad valorem taxes

 

12.7  0.2 

– 

– 

12.9 

Depreciation, depletion and amortization

 

128.3  56.8  49.8  0.7  235.6 

Accretion of asset retirement obligations

 

4.5  1.9  4.6 

– 

11.0 

Exploration expenses

 

 

 

 

 

 

    Geological and geophysical

 

0.2 

– 

0.3  0.7  1.2 

    Other exploration

 

2.4 

– 

– 

5.9  8.3 



 

2.6 

– 

0.3  6.6  9.5 

    Undeveloped lease amortization

 

8.7  0.2 

– 

0.7  9.6 

        Total exploration expenses

 

11.3  0.2  0.3  7.3  19.1 

Selling and general expenses

 

10.5  6.6  2.0  5.9  25.0 

Other

 

6.9  0.3  (0.1) 1.1  8.2 

Results of operations before taxes

 

92.6  13.2  116.6  (15.0) 207.4 

Income tax provisions

 

20.0  3.5  32.7 

– 

56.2 

Results of operations (excluding
  corporate overhead and interest)

$

72.6  9.7  83.9  (15.0) 151.2 



 

 

 

 

 

 

Three Months Ended June 30, 2017

 

 

 

 

 

 

Oil and gas sales and other revenues

$

212.5  88.2  176.5 

– 

477.2 

Lease operating expenses

 

44.3  25.5  41.4 

– 

111.2 

Severance and ad valorem taxes

 

10.4  0.3 

– 

– 

10.7 

Depreciation, depletion and amortization

 

135.5  46.0  48.3  1.0  230.8 

Accretion of asset retirement obligations

 

4.2  1.9  4.3 

– 

10.4 

Exploration expenses

 

 

 

 

 

 

    Dry holes

 

(1.0)

– 

– 

– 

(1.0)

    Geological and geophysical

 

0.6 

– 

– 

0.1  0.7 

    Other exploration

 

2.0  0.1 

– 

8.1  10.2 



 

1.6  0.1 

– 

8.2  9.9 

    Undeveloped lease amortization

 

10.2  0.1 

– 

– 

10.3 

        Total exploration expenses

 

11.8  0.2 

– 

8.2  20.2 

Selling and general expenses

 

10.1  6.4  3.2  5.0  24.7 

Other

 

10.1  0.6  2.9 

– 

13.6 

Results of operations before taxes

 

(13.9) 7.3  76.4  (14.2) 55.6 

Income tax provisions (benefits)

 

(4.3) 2.1  28.7  (21.4) 5.1 

Results of operations (excluding
  corporate overhead and interest)

$

(9.6) 5.2  47.7  7.2  50.5 

1  In 2018, the Company reported realized and unrealized gains and losses on crude oil contracts in the Corporate segment to reflect how segments are currently evaluated, how resources are allocated and how risk is managed by the Company.  The 2017 amounts have been reclassified from the Exploration and Production business for comparable disclosure.



13


 



MURPHY OIL CORPORATION

OIL AND GAS OPERATING RESULTS (unaudited)

SIX MONTHS ENDED JUNE 30,  2018 AND 2017





 

 

 

 

 

 



 

 

 

 

 

 



 

 

 

 

 

 





 

 

 

 

 

 



 

 

 

 

 

 



 

United

 

 

 

 

(Millions of dollars)

 

States 1

Canada 2

Malaysia

Other

Total

Six Months Ended June 30, 2018

 

 

 

 

 

 

Oil and gas sales and other revenues

$

596.9  226.7  439.5 

– 

1,263.1 

Lease operating expenses

 

110.5  59.5  103.1 

– 

273.1 

Severance and ad valorem taxes

 

24.5  0.5 

– 

– 

25.0 

Depreciation, depletion and amortization

 

249.9  112.5  97.5  1.5  461.4 

Accretion of asset retirement obligations

 

8.9  3.9  8.1 

– 

20.9 

Exploration expenses

 

 

 

 

 

 

    Geological and geophysical

 

6.2 

– 

0.5  3.6  10.3 

    Other exploration

 

3.6  0.1 

– 

11.3  15.0 



 

9.8  0.1  0.5  14.9  25.3 

    Undeveloped lease amortization

 

21.4  0.4 

– 

1.0  22.8 

        Total exploration expenses

 

31.2  0.5  0.5  15.9  48.1 

Selling and general expenses

 

24.9  14.3  4.8  11.9  55.9 

Other

 

7.7  (11.4) (1.3) 1.0  (4.0)

Results of operations before taxes

 

139.3  46.9  226.8  (30.3) 382.7 

Income tax provisions (benefits)

 

30.6  12.6  72.5  0.2  115.9 

Results of operations (excluding
  corporate overhead and interest)

$

108.7  34.3  154.3  (30.5) 266.8 



 

 

 

 

 

 

Six Months Ended June 30, 2017

 

 

 

 

 

 

Oil and gas sales and other revenues

$

436.7  306.1  373.9 

– 

1,116.7 

Lease operating expenses

 

92.2  48.1  93.0 

– 

233.3 

Severance and ad valorem taxes

 

21.1  0.9 

– 

– 

22.0 

Depreciation, depletion and amortization

 

273.8  90.5  96.2  1.9  462.4 

Accretion of asset retirement obligations

 

8.4  3.9  8.7 

– 

21.0 

Exploration expenses

 

 

 

 

 

 

    Dry holes

 

(1.3)

– 

3.2 

– 

1.9 

    Geological and geophysical

 

0.9  0.1 

– 

4.6  5.6 

    Other exploration

 

4.0  0.1 

– 

17.0  21.1 



 

3.6  0.2  3.2  21.6  28.6 

    Undeveloped lease amortization

 

19.0  1.3 

– 

– 

20.3 

        Total exploration expenses

 

22.6  1.5  3.2  21.6  48.9 

Selling and general expenses

 

25.6  13.6  5.5  9.9  54.6 

Other

 

7.3  0.6  8.0 

– 

15.9 

Results of operations before taxes

 

(14.3) 147.0  159.3  (33.4) 258.6 

Income tax provisions (benefits)

 

(3.7) 41.2  53.0  (33.5) 57.0 

Results of operations (excluding
  corporate overhead and interest)

$

(10.6) 105.8  106.3  0.1  201.6 

1  In 2018, the Company reported realized and unrealized gains and losses on crude oil contracts in the Corporate segment to reflect how segments are currently evaluated, how resources are allocated and how risk is managed by the Company.  The 2017 amounts have been reclassified from the Exploration and Production business for comparable disclosure.

2 2017 revenue includes a pretax gain of $132.4 million related to the sale of Seal heavy oil assets in Canada.

14


 

MURPHY OIL CORPORATION

PRODUCTION-RELATED EXPENSES

(unaudited)

(Dollars per barrel of oil equivalents sold)







 

 

 

 

 

 

 

 



Three Months Ended

 

Six Months Ended



June 30,

 

June 30,



 

2018

 

2017

 

2018

 

2017



 

 

 

 

 

 

 

 

United States – Eagle Ford Shale

 

 

 

 

 

 

 

 

     Lease operating expense

$

8.09 

 

7.95 

 

8.22 

 

7.92 

     Severance and ad valorem taxes

 

3.15 

 

2.49 

 

3.08 

 

2.53 

     Depreciation, depletion and amortization (DD&A) expense

 

24.50 

 

25.47 

 

24.67 

 

25.90 



 

 

 

 

 

 

 

 

United States – Gulf of Mexico

 

 

 

 

 

 

 

 

     Lease operating expense

$

11.02 

 

8.60 

 

14.10 

 

9.78 

     DD&A expense

 

16.86 

 

22.60 

 

17.08 

 

21.61 



 

 

 

 

 

 

 

 

Canada – Onshore

 

 

 

 

 

 

 

 

     Lease operating expense

$

4.92 

 

4.93 

 

4.88 

 

4.91 

     Severance and ad valorem taxes

 

0.03 

 

0.08 

 

0.06 

 

0.10 

     DD&A expense

 

10.55 

 

9.87 

 

10.36 

 

9.94 



 

 

 

 

 

 

 

 

Canada – Offshore

 

 

 

 

 

 

 

 

     Lease operating expense

$

9.94 

 

9.09 

 

10.50 

 

8.39 

     DD&A expense

 

12.57 

 

12.03 

 

13.06 

 

12.68 



 

 

 

 

 

 

 

 

Malaysia – Sarawak

 

 

 

 

 

 

 

 

     Lease operating expense

$

9.42 

 

4.85 

 

8.41 

 

5.59 

     DD&A expense

 

9.01 

 

8.02 

 

8.71 

 

7.90 



 

 

 

 

 

 

 

 

Malaysia – Block K

 

 

 

 

 

 

 

 

     Lease operating expense

$

17.32 

 

16.37 

 

16.73 

 

16.59 

     DD&A expense

 

14.61 

 

14.76 

 

14.51 

 

13.56 



 

 

 

 

 

 

 

 

Total oil and gas operations

 

 

 

 

 

 

 

 

     Lease operating expense

$

8.80 

 

7.63 

 

8.93 

 

7.95 

     Severance and ad valorem taxes

 

0.83 

 

0.74 

 

0.82 

 

0.75 

     DD&A expense

 

15.17 

 

15.82 

 

15.09 

 

15.77 



 

 

 

 

 

 

 

 



15


 

MURPHY OIL CORPORATION

OTHER FINANCIAL DATA

(unaudited)

(Millions of dollars)





 

 

 

 

 

 

 

 

 



 

Three Months Ended

 

Six Months Ended

 



 

June 30,

 

June 30,

 



 

2018

 

2017

 

2018

 

2017

 

Capital expenditures

 

 

 

 

 

 

 

 

 

     Exploration and production

 

 

 

 

 

 

 

 

 

         United States

$

178.9 

 

124.3 

 

326.4 

 

222.7 

 

         Canada

 

83.3 

 

47.8 

 

202.3 

 

136.0 

 

         Malaysia

 

25.4 

 

9.3 

 

44.5 

 

11.1 

 

         Other

 

8.0 

 

16.1 

 

17.7 

 

41.4 

 

              Total

 

295.6 

 

197.5 

 

590.9 

 

411.2 

 



 

 

 

 

 

 

 

 

 

     Corporate

 

5.1 

 

3.0 

 

10.2 

 

3.8 

 

              Total capital expenditures

 

300.7 

 

200.5 

 

601.1 

 

415.0 

 



 

 

 

 

 

 

 

 

 

     Charged to exploration expenses 1