MUR - Earnings call transcript Q4 2018

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Operator

Good morning, ladies and gentlemen. And welcome to the Murphy Oil Corporation Fourth Quarter 2018 Earnings Conference Call and Webcast. At this time, all lines are in a listen-only mode.

Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to Kelly Whitley, Vice President, Investor Relations and Communications. ahead. go Please

Kelly Whitley

and Good informational reserves Throughout follow Gulf us amounts Jessica. statements website and With this Litigation And you the with Please section Executive forward-looking in as thank are considered and numbers, Relations Vice Act Good Financial webcast Investor of call, we Chief our you during XXXX. non-controlling morning, of the comments have will fourth as joining some the Securities Officer. Officer; Chief and keep on Jenkins, to financial today. our Reform Looney, of quarter for today. adjusted Executive in today’s Roger defined President the exclude along Please to morning, refer mind President in are that be everyone. Private David slides earnings call of me made production on our interest Mexico. call placed the

these projections As will exists such, no events to of cause be A that that will differ. or may factors actual occur variety assurances can results attained. be given that the

For file further Murphy over the factors, discussion forward-looking any no annual Murphy’s will or Roger turn statements. to takes update to revise with duty publicly SEC. Jenkins. XX-K Form I of report on call XXXX now risk on see the

Roger Jenkins

Oil. is today. you, year Thank listening for both for Kelly. Good morning, an excellent XXXX Murphy and you our call everyone. to Thank financially operationally

full was the with high and We XX% in equivalent realizations to flow. our assets liquids. results and barrels strong fourth liquids as equivalent quarter production production generate XX% XXX,XXX our commitment illustrate XXX,XXX portfolio margin barrels produced offshore at Our oil-weighted from continue year to diversified and onshore cash

per quarter, enhanced of on recorded income immediate of generated annual highest MP $X.XX We and we share. earnings share million net In impact profitability, $XXX an fourth four the of $XXX and we in net annual the are production income or That’s million per and our over seeing $X.XX reserves. oil-weighted or transaction years. GOM the basis

us flow return of enabled disciplined cash to XX% shareholders. annual allocation operating our Our capital to

generated the and to and now cycles, $XX.X Dalmatian to EBITDA Vietname, we St. of the Our footprint cost while In lateral project solution execute subsea Malaysia. achieved of Shale project the to in maintaining we on growing of plans offshore EBITDA our increasing our of operating in distance In of cash shale team decrease Mexico XX% American our in measured foot assets, access longest cost business, cost weighted $XX face we transaction strategy. another successful an in with energy employed our Declaration a sanction. we assets in delivered per Long just review the set multi-phase Gulf the expense XX%. in our the demonstrate oilfield installation national step its our their we growth Block where cost working uplifts. year-over-year. PetroVietnam per Gulf in exploration in the we The and within pump the for the quarter the Gulf continued interest reporting of XX-XXarea almost mind XXX% with Malo continue five, we begin We our to Cuu annual successfully with four, service simultaneously to starting portfolio a and cost found in in offshore the closely diversified lease our our oil of toward keep projects work projects LDV company in execute drilling BOE in innovative operatorship gas that $X.XX onshore Samurai will Malaysia negotiate -- over barrel Mexico, inflation. by Kaybob with in American of Commerciality XXXX field, the the North record foot lift Slide region interest applying the the production installed offshore returned than be low new fourth to was maintained record-breaking completed while per In as just that by XX% offshore while of equivalent. MP we spending per notable as average Through or times deepwater X.X transformational success Slide barrel. Eagle the ability future our success let’s field. and production. We per onshore such in GOM. We on you XXXX on interest world. our over locations project, oil-weighted flow less breakeven non-controlling to XX% subsidiary, I Duvernay are world-class Ford per need in executed at capital over barrel including North over received increase

to For unless we quarter, fourth onshore. production net Murphy the produced discussion and In XX% noted. we interest purposes, will and XX% the equivalent fourth non-controlling quarter otherwise attributable highlight was only amount and the XXX,XXX offshore exclude

especially team’s page XXXX. proved Our work I replace the our in six, am proud reserves reserves of valuable to slide net

Simultaneously, index reserves proved barrels finding and million to years. oil we cost lowered $XX.XX XX and maintained increased over crude and XXX of XXXX, increase BOE reserves our life equivalent, by reserve increased to a Our development our a importantly, XX% most from per XX%. organic

to our now you. for Thank average Financial Officer, lowered I turn Looney comments. F&D over call We David will cost by XX% his have our XXXX. the Chief three-year since

David Looney

results per compared diluted the or in $X.XX of of quarter fourth the million loss per is a Thank year. last fourth you, Roger. $XXX of included $XXX share share net quarter of Consolidated XXXX to $X.XX income which in diluted million,

$XX million, and number profit quarter share an lastly, an two, from mark-to-market last million $XX income income derivative crude a select of in of this or $XX per year. impairment year the a quarter one, quarter million adjusted profit was net diluted items, million. varies $XX income gain after-tax fourth versus adjusted The of Midland contracts tax number in of in of following $X.XX due adjustments Our comparable on the the our impact unrealized properties million, $XX of the of the to oil

Another that of like came accrued capital. $XX amounted guidance. really was billion CapEx $XX At debt million year $X.XX XXXX, $X.XX approximately full which to our total below below XXXX XX% know the guidance. Again, highlight in full leases billion that to capital while billion, of total is December our CapEx our for would amounted million year I capital, XX% debt including of XX, net $X.X total to accrued or

and the for the of rating indication Fitch transaction, Moody’s Gulf snapshot longstanding million. of new way the agency to When approximately GAAP of facility. presented cash We measure to then path the of always with from flow, step down to equivalents our Starting usage, with drew keeping cover a $XXX slide yearend. is of did we cash year credit to and increased strength a statement million $XXX a were closed of investment facility the segment a our operations. operations total our BB+. in we unsecured flow cash Murphy obligations, billion $XXX we a credit more with quarter, million various we Cash cash these transaction paid the revolving appear $X.X our enough Mexico new senior During it our been BAX closed quarter, at In on normal has upgrades. $XXX Also covenants their cash our GOM on on hallmark. of reviewing a dividend and within by than facility full in favorable not and and cash MP million Ratings consideration XXXX provided CapEx business generate received to cash financial goal rating we the might our such view grade. the impact increased clear as as back living and previous which upgrades eight another out

for month the that quite in our to dollars, be fourth one million December dividends was number should it $XX due we that late for effect this inclusion that excess amount. cash occurred offshore GOM approximately the December of generated revenues of and the first had approximately We However, after had Absent the by crude a of pointed of capital businesses in of month year. the flow MP which in similar liftings which $XXX a aberration fact and of cash and our increase unique flow quarter working lowering primarily time. out

to the however, indicates, you close combine million cash chart actually $XXX resulted MP transaction. shortfall the of outflow working of the capital approximately a in GOM used million. $XX negative million with the As change this When about $XX

always working can free You and flow statement. cash deliver remain that’s remain to on Roger reduction the continue on it always a transaction our to as $XXX will I as cash with With to to cash track million to reflected to to that, investors. capital but quarter on the turn changes, but we the operation. company’s Truly our the unique easily see track flow we back review continue learn,

Roger Jenkins

of will of technology the especially believe below The On barrel plans Gulf first and in This XXX%. $XX lease million assets value is operator as a operations. example to barrel. quarterly expertise. transitioned Murphy to the our grows, of sidetrack assets mainly XX,XXX in of the appraisal currently asset has cash by regrew assets. flow long-term new portfolio deepwater operating providing our from this Gulf implemented later barrels the oil an addition Mexico a slide complements achieve of our free leverages Gulf production equivalent XX, we disclose and of Gulf the development GOM with pre-FEED our reserves XX comp sets which as XXX% we quarter. another and to and our approximately continued In the Cascade goal expense MP slide we can that has per able our of project new perform on Also, with year. increase delivered to Chinook apart operating execution add gained well to streamline was use Unique by prior the improve XX, Mexico Samurai-X industry are Dalmatian in increased completed

continue Our generate free assets flow. cash Malaysia to

now next Gas complete a Lift with subsea focus project. on gas the field-wide Our is lift Kikeh DTU Project

declaration The the abandoned. The well the plugged execution. cost the below interest On commerciality operated exploration encountered fourth it’s drilled the to XX% we for non-commercial development XX% AFE to $XX which hookup in Murphy expected major and million. to commissioning. is team approval well, with the installed. drilled Field net hydrocarbons place on in working XX, was of production project rather of In many Cake quarter and the and King of Our Block project of final track in the an XXXX H achieved. vessel LNG with received FLNG The for on first is vessel mid-XXXX all also -- schedule our construction Vietnam, quarter received floating milestones verbal a for modules remains away expected remains for first at LDV sail and quantities in slide Murphy process start which

are This first near or exploration wells. on enable key wells of forward cost equivalent for to quarter over spud $XX three barrels An the potential. million touch XXXX resource to will looking us net million. XXX to We our plan we exploration mean of update expect net

and offshore weeks. we Mexico approvals of we should First next prospect, well the on spud and the in few Cholula all need in received the

well Vietnam, the in XX-XX/XX the in our Canyon plan expect spud Secondly, quarter. Gulf the spud we [indiscernible] as in to we quarter to first XXX the prospect in In of the third Mexico, LDT wells well. Mississippi in

per is all the flat Eagle average containing Ford quarter, in bought service we IPXX plan cost Ford the to Eagle cost a wells inflation. eight has to lower equivalent holding slide according for job gross. wells spite are done fourth good barrels completion cost XX, Shale, team in during discussing rage our Shale of The Catarina. online drilling the eight to in XXX day Moving Eagle Ford

foot foot increase Our per we decreased completion per laterals while drilling drill. year-over-year, cost our was while flat, lateral XX%

asset lower in $X.XX outstanding key metric now we proud our sand-per-foot performance cash million quite flow Slide some work generated continue all over during are inflation, execution performance as oil expand of challenging this of for of Ford as XXXX team. and asset. again improvement, with Shale to able by of backdrop especially free Tupper from seen but costs cost are XX, per we the our the even cash deliver over XXXX, We this over driven and just continued by we all increases Eagle completion free This overall those to process, $XXX cost XXXX procurement a Mcf That’s approaching in operating flow low were continue generate course costs continues XXXX, of. to timeframe. of

feel the we we in AYCO continues the Montney quarter. year, steadily two of we first continue very CADX.XX is exception realized early encouraging increasing creeks to off we hedges that year the which Slide in price the Kaybob Canadian. XX,XXX quarter is time Our have complete. Duvernay natural fourth to this the spot strong with acre. marketing mitigate area an team leading production exceeding play The with over quarter over the per results. exposure gas in Mcf of XX% have appraisal AYCO the Slide per our topline of completing of production price XX, well our finished performance just the we In of course and to to wells sales for off XXXX liquids. equivalent Tupper XX, was ongoing barrels XX% fourth the Duvernay the At XXXX, day

of and This fourth into the per year some four five where Slide slide value team the moving executed low to operating plan. XX expenses quarter. before in Calgary. in last like results quarter, XXXX as outstanding down early to back the is of pads IPXX come slide we production continue our have our in development I’d XX, we mode of the all-time we outstanding cumulative to to lease outstanding are On step and with our move this Our and we over an volumes. creation in rates barrel showing from full fourth years. illustrating way, XX, the have work in trend we well $X.XX as clearly achieved

to after all footprint working worldwide and fewer basins in focus greatly are Prior XXXX much have oil Today, in we reduced countries We were far focused. we our five and than gas. fewer explored XX natural in we global exploration. oil

we changes. expenses made lowered Operationally, exploration our have have We back to office during XX% significant time. this

producing heavy sands American oil areas, in in have North streamlining a focus divested still unconventional Louisiana three big which United program have and exploration Canada going where XX-year very robust in led has history. player recent We of only and Malaysia, we a our to become Canada, South the and States, lower oil, The seen and increased and has cost Alaska, forward. success

look Our billion lost that day. long of competitive ability seen you operational focus, per range Slide our annual success have planning shareholder of as negotiate assets of own value. advantage production we $X.XX in never and XXX,XXX in full offshore deals history of XX, we share our our and add our execution to accretive CapEx the being range a XXXX to billion to year $X.XX the equivalent to day are to per and be in equivalent XXX,XXX

coming approximately by growth from all GOM. MP last production growing are XX% CapEx We year with and oil. Both the and from exclude production interest production non-controlling

capital of production the set this growth year, and for our production production future capital XXXX really long-term XX% XX% is with foundation expenditure drive for two at in will is our growth. Our future years XX%

shifting First the we development, from barrels last budget, XX% will year. per prices. be our will be barrels day drilling quarter and This XXX,XXX we capital CapEx our to production allocation. the equivalent paying In year, range have to XXX,XXX expect overall in day. to of capital of XX in commodity on while field our attention equivalent Slide XXXX, per priorities

Kaybob land moved retention mode appraisal have into post success. We Duvernay

the proud right And be we to ability direction of exploration. and The by and Canada XX%, while companies with I the through Gulf allocation generate the We feel in modest capital one cash XX% reducing our positioning Canada generating budget value In plays, on we offshore increasing in strategic by step XX% returning the true about turn, have especially have creation. continued in are increasing Ford production our shareholders shareholder profitability altered free Eagle for company reserve am flow long-term create our our and will the added the and capital right XXXX, that increased is shift growth. our XX%. capital oil-weighted Shale a namely Slide of cash main capital high-margin today. by to focus the we in to select exploration. unique to upside on allocation focus oil-weighted onshore taking spending

to We are and generate high-margin our allocating assets. to capital oil-weighted assets our growth profitable

New go the Thank years. dedication. last strategy. I our and the to XXrd to work lines They all you driver ranking behind you. hard key shareholder who percentile and XXXX As start your Year, world for want we dedicated to in we At over all return three point, total are continue usual thank over our with now. Thank the employees of our our look deliver I’d the in and like up all questions the for will and Murphy that on format our that open goals

Operator

Energy. Ryan Your Please from go Thank Todd Simmons comes you. [Operator of Instructions] question first ahead.

Roger Jenkins

ahead. Ryan. from on, you. hear Go Go Good to

Ryan Todd

the Give you question. the you see actually with could start you finished there are How with you Duvernay the Maybe know morning. talk take cash out maintenance price more as the look about program. Duvernay, and you commodity CapEx appraisal flow? of question if what are allocate a on you [inaudible]. in forward, the Can and terms Good for Do understanding to myself doing? going Hey. of to is at CapEx Thanks in question Canada. there I delineation capital and need where would it asset you you

Roger Jenkins

Ford that when to industry we prices the goes take and Strictly, that do assets those our cash was pull Yes. you back oil really flow about the That being to that, the in keeping set improve in now tax about oil Canada. our to that the United continued do led at XXXX. we at of in acreage are of all non-issuing go cap in United It the there have time one the Duvernay when the we the people our equity some back not cut the that time. has and to greatly in collapse a situation in Duvernay and only in the -- the We transaction, -- what role than from and with MP States, the advantages cap that greatly and cash versus to in more for allocation. have down We commitments GOM our out to Eagle It’s this look of Eagle prices that allocation. much. commitment same and prices back is Ford States, flow were a too States United different we

examples slide are the you to haven’t in and the Duvernay and well can a We many really EUR. about bad happy the see very today wells drilled deck there leading of

this are Ford nice it’s Creeks all of have early of more back type of new excited area think a a good lower very We we very all Two can and Catarina where because And strings casing about we cost there. Eagle start. place leave we

So last year going is plans, long we moved go. felt our last we we us and for that were to working have that during project so And now. range

Some acreage into of let moving should development and mode. the we’d be go more be

really that, flow and that’s there We and your with Things into MP our transfer of Ryan. now is with the acreage. capital is our this development cash Ford mind CapEx are our it But a of what have if down going if to through change nearly that out years. that going keep from retention answers and then forward pull year the why question, we land Eagle This which we GOM allocation bit. about came changed quite change and to critical XX% mode that for all

Ryan Todd

your a That’s look we Thanks. follow-up, just portfolio. as Maybe helpful. It’s at great.

years. have active acquiring assets both the monetizing recent You in in been and

quite look few in additional and/or think to interesting the as cash how -- of generating and or you There current sales, and potential portfolio view you as assets, deal the undervalued been -- quite cash it like be interest you we excess the next it would the about rumors would disposals proceeds, Are additional years. you quite about few about fans happy are Malaysia. you consider a into have over think inventory? few acquisitions, the onshore got further have would mix, free the is a You further a with fire attractiveness acquire flow-generating assets Petrobras more

Roger Jenkins

that my for Well, major up transactions we of things things I quite comment on here. which time, that big we I But business we that of and mean, Ryan, you am a rarely have time on business show very Murphy not off have been we service. actually. shows aggressively looking on long development back do active nature. some new rumors development, get in out during move in of ourselves knowing as proud know, will

things a of about kind in fruit read it low-hanging We something I paper, portfolio lot happened. portfolio is the mean, of like. in time. the we at have You this our don’t really

very high after our look see we understand at by But are will well we reserves have there as very and company assets we used asset. our company our of sought We some that fit some our to and working we in and assets have external -- folks. very as probable and review

we through every So go day.

our do on the business a what in happen not can’t or think the we time focus acquisitions are of really game and key about proceeds real key but my company of We in that, will would is on or development, plan. rumored we comment type really

Ryan Todd

Sure. Roger. Thanks,

Roger Jenkins

Thank you.

Operator

question next Singer go from Sachs. of Goldman comes ahead. Please Brian Your

Roger Jenkins

How Good Brian? you doing? morning, you Brian. Are there? Hello,

Brian Singer

I talk Can reserves the what at Hi, in and of or Good mentioned more drove there. estimates mute assets I the Gulf new bug implications as original Oh! the Roger your that little either a for sorry. were to time higher production from you have your there? you release reserve of well. bookings about that any acquisition. the future Mexico a relative the bit press am morning.

Roger Jenkins

Malo there thought looking some reserve then our as key review that assets that that through and and team million some in the the and room it’s originally we review data work around of at other will come EUR the $XX assets especially at time of the of curve We all these also. into St. fruition the were and

do our year. XX% see by our every a third-party -- in are lot fields As obviously we of of you our XX-K,

reserves closer happy we booking need where going it We insinuated made and assets history. proud and process, are there, and a well have at doing and to with a very, And take overall pleased quite really look corporate we the close with very are reserves reserve quite of corporate they did on well our everything’s that, just tie We very the and additional that. Brian. of

Brian Singer

Great. the on Eagle versus case your investing to the just I Ford, then in on accelerating back decision in increase Eagle in accelerating drilling the And trade-off less, do for increase? How flow free Okay. question the Eagle you do having Ford. you think in in potentially sort Canada think versus the increase lesser between talked the Ryan’s giving more shareholders? and more Ford you decision at of XX% and even look to cash How greater or versus some about

Roger Jenkins

Well, of one I one to year-after-year flow time of XX% leaders the thing, are returning we XX%. at in shareholders. cash mean

returning take I high ground you. during call all anyone over to period on I So the this cash shareholders assure

project and the very and that is, player and [ph] a positive, asset slightly production Eagle to delineation a we more in nice amount with are drive wells big in we Upper prices very in of it’s cost and our get will a expenses with we Corhn’s we quite six, uplift in seven get the big quarter, operating into doing be not doing a lot had thing it next asset well Shale flow very we we this with up stay years. these big there, And the But time, And lower are profitable when improvements, what to your wells strip this have Ford this good really cash our this a year. number are a the down, advantage U.S. probably few a be difficult at five, and setting of also delivery to and with doing actually very So, we go area. for below well good work tax very that in this consistent profitable up us. have need is we and to you way

there. this it and to a to are to capital good and really do if have have gotten Ryan have of what set got thing Duvernay situation and I America, a we getting this we too in breakeven So were And to that history this about level executing situation low build the one that’s into we team. back to reason of we a much got the talking to jumpstarting though have day another you we as up run that cost in North before we

the saw And and capital time. the Eagle at soon I my build profitable a that Ford that as and changed So that all reason, from is have could needed land back there, into reverted keep prices capital for as Ford. time that and advantaged Eagle that’s lower this back U.S. flow free business United business transition the whole it put pulling the us back -- MPGOM basis States is part into of the tax transaction for providing to that that cash and real at very a I of oil-weighted a

Brian Singer

been going result scale in Eagle would bringing flattened it be it’s of foot the -- that greater are Would last in couple that, it costs like the cost would That’s on drilling kind follow-up expect you XX. would left bring that down a that you Ford per as the or of up? costs with that mitigate the last the activity like bottom -- One at on looks slide the years. slide of lower of your

Roger Jenkins

I think cost. and for the well an some it’s us. do going -- mitigate. to very be to We starting working very It’s area is there’s Catarina have industry low

drilling for But lead some us would are Ford in competitors we long flattening and think also to I We massively I going are the to and for laterals drilled Eagle main execute are support thing to there in sure. for starting it by is to us we -- we and too. believe continue see completion. focus some the

how good for in there That’s We focusing our we data we have proud company operate big exception as time. are something model operated on new we remotely with quite really a a operating at of. of But and we driller. a focus field really this OpEx by are the very history driving our being are into

Brian Singer

you. Thank

Roger Jenkins

Thank you.

Operator

Generale. John Herrlin ahead. comes of question next Societe Your go Please from

John Herrlin

Hi, mentioned… Yeah. Roger. When you

Roger Jenkins

morning. John. Hi, Good

John Herrlin

Hello? Roger. sorry, am I

Roger Jenkins

ahead. Go Yeah.

John Herrlin

sorry. using that activity you am upon you do the in expand the sustained talked bit? of How entail? other type subsea could mentioned much a what you of that of Gulf. it about does When I you positive pump Dalmatian, return production do Okay. the and operations aspects little Can from kind get that and you

Roger Jenkins

That $XXX this subsea format as service pay mostly through it combo is they finance of very they willing well well We million know it’s provider and and more that project pump of Again, that on. were to do are kind and not very, MP very the of that unique. are transacted around we there, working some that the it to is went able works of project. on that assets GOM We capital. so sort Cameron upfront

might is I will a system multi-phase personally for that pressure could pumping or just time. adds are if we This and that dramatically. you have everything long It Some pumps after been the These reserves. change. something it repay lowers

I this don’t XX%. think field very reserves probably, the to It’s know I by compared Dalmatian exactly, doing were, small at increased transaction. about a

the will. umbilical issues big that one think looking the cord So, if about is of it around we it this at power you a over big And thing coming it’s Gulf I and I XX-mile in are feel the is Samurai.

have going distance are helpful in three of we and tieback it’s does make Brazil allows the this it at I pressure and deal the further at go lot long completed very reservoir, looking in longer looking I very to about can to is and things reservoir pure to its a positive places over to now think MR to down at reservoirs it’s really it what tiebacks we for and add the and are big GOM. that and And be We hemisphere. a be think bringing it piece other a

John Herrlin

is the little last can give me for us And you one King on Cake a Great. postmortem?

Roger Jenkins

Yeah.

suspended of that’s a deal made forward is of in some It’s pay artifact out in start believe just course at to went things. the my the ahead for to a aspect amplitude of and and unique XX and were disappointing. the would region Middle gas two well those going the probably But are Of about going little do and opportunities. there. be and it focus beginning personnel small This the like more we and little we we up. oil We capital changes have that Samurai things Miocene did was going well are schedule didn’t about we years not where work pushed wells and from little as of to bit. some some But are was there Lower and are looked on longer. ago sands bit the taste due Miocene learned and we and could our and both feet the -- The not structure a one larger for type fund Hawk we drilling deeper around the I turn section in the some at of seismic about

Murphy’s of wells The well greatly ever today. money, Samurai in amount this that’s drilled I these reviewed like this exploration rigs I offshore by lot think water wells, you Gulf, go similar peers the in well $XX think, brand key two of thing in the that amplitude and nature, idea the to if million XX% and the Vietnam, for new are rigs value get have for small ultra-deep the a we the big TD a incredible. capital players we a my I can will them in business and of a are is Mexico what in rigs, drill with fastest the in working of These remarks of hell original had say of wildcat is really lot today Gulf today well. probably exploration the these drilling drilled on will John you and

it, their absolute get so are there to is we do falsehood and small that so didn’t opportunity Gulf an the rigs leave capital can big you and a idea the just a today rigs in is able these are have XXXX. for ability are rolling program. and this you only get what going false, improvements exploration we of can be much value a that and to for onshore compared of we of amount glad small really to That’s out and lot So internationally we why that are

John Herrlin

Roger. Thanks, Great.

Roger Jenkins

Thank you.

Operator

next Sankey Mizuho. from ahead. of Instructions] Your go Paul Please comes [Operator question

Paul Sankey

morning, Good Roger.

Roger Jenkins

well. you Hope Paul. morning, Good are

Paul Sankey

are Hope you Hi. for XXXX. Yeah. all the and well best

Roger Jenkins

you. Thank

Paul Sankey

you would and relative Thanks. you in wondering Would prices expectations spending more prices you to flow, feel be cash upside this, for sensitivity was to to you and oil interested been said could know what Roger, answered be spend it? spending this you if extent your and am planning the get which I will like you to I sure I be where oil expectations regarding but your with will CapEx the we year. have

Roger Jenkins

to of not difficult the a nickel, trying be above well cash we immediately as bit will at that plan know strip probably this revolver do to free it’s have do that do deliver. we Today, to balance that want every we question. a we will that Well, spend pay able off prices. all that are the We a on flow

as really we best do are to not We working can. that

the to best it’s than what on we to we think have this program have I with continue and have.

there. the One to in could we years get well haphazard our been have The Ford was Ford. and the in I ‘XX down Eagle Eagle see few bit up you more has a of struggling count things wanting in last that have slow capital the little with and been do

more we have be. off Now to it get asset there kicked like approach to this a big back needs streamlined

go-to to We of not There lot in we not Now that. are going with there. accomplish but this looking opportunities. be it am to to my what worked away, And are we very will But fix plan, do. able and those over. increasing opportunities around avoid were could about wells months have months on do trying I some equipment to the to that we doing Canada, the seven that XX failed unique all to happy be first, are GOM capital a -- are thing we calls the being nine components assets MP say

Paul Sankey

would is, equally your and you to to but how about morning you thank particular talked you. us. market just are there been anything the shifting also that have about follow-up and if crude share you’d to of realizations Brent, wondering exposures very Gulf relative Roger, with leverages this differentials And then prices historically, how levered some Understood. was you have the Mexico re-shifted was the I portfolio.

but… quite bit we might expect little as were as think a that I numbers weren’t surprised high the we

Roger Jenkins

one Yeah. the in That’s being surprises of few there.

about to this, what’s I Somehow happen going knew with these new assets.

asset Kakap incredible, you X. X around in OpEx Malaysia there. phenomenal big a the That’s deepwater, is in or take If Malo it a which is below $X field just has absolutely St.

we for we XX% rare Also is as have very a that low and compared is the that have are very have of and Petrobras issue big Gulf an loadings pipeline is into traded in large far to have tariff a These Louisiana. GAAP. all pretty shore not super they used this so we pricing, that and FPSO number the are on And crude in where we had OpEx. opportunities. mid-deepwater December, more been which are in they some to to we to So there. there’s There’s offloaded unique realized things go of Kakap time. our realize They to facilities this through weighting very those in a assets NCI and Mobil a offshore headed operating have that from and is our those are know to realization some good lines of also, pullback some a

we So, closer be the to to I WTI. think issue for is are going us

following and that the going the and in will be to also side. so we company transportation be decades we price Gulf I now, on than or we know, our should we prices, but realized closer have Gulf are you Eagle the is in now have in as are if in prices be a a our transportation realized Murphy, for OpEx as And where and look, regard, you are making little Our the lower the tradeoff. to Ford Gulf disclosed don’t WTI in Paul, better you

price in. the So the transportation realized has

I out, is and good. But be with don’t the OpEx think it’d with the I go the at it. quite delivering the if we on going to that’s world to of back along think Gulf end with that WTI what’s

Paul Sankey

Roger. much, very you Thank Understood.

Roger Jenkins

Yeah. Thank you.

Operator

Please comes question Muhammed from Ghulam of go next James. Your Raymond ahead.

Muhammed Ghulam

taking the question, for Thanks guys.

we if to say, recent the XXXX So shouldn’t let’s any crude just the questions, highs, we following one confirm, in to, up expect back on were budget, right? bounced of see capital increase late

Roger Jenkins

doing I all that. to avoid will I can be

Muhammed Ghulam

Mexico you spudding Okay. question, understood. have And quarter, one first in I guys this mentioned the other a you prospect so quarter.

in are physical relationship of curious, I terms? seeing new you the in Given administration, changes any the terms or am Pemex the with

Roger Jenkins

that’s then world and of Mexico the anywhere on blocks. the Mexico wants is operating ocean we or are the block drilled go see of safety and lot permits I going we the than in administration Pemex different a in to a drilled have cetera, Pemex. and party think in et the and governing all there’s CNH where approves all and great there’s to no see a else there no and grew work it to And the forward pretty there we and with them size be permits happy I of an going for Well, ability, approval that XXX over -- Gulf wells to of and drill environmental pullback. which in quick. grants competitor that’s more It’s looking Mexico

here happy that systems, very am it’s we just and as all We prospects in closure of types drilling play by the reported happy very nearby that’s have a and well, sub-salt different far I about feature results concerned. have go-to-drill Mexico and other as a about folks

Muhammed Ghulam

Thank Okay. you. Understood.

Roger Jenkins

you. Thank

Operator

Please Cheng Your next of question comes Paul ahead. from Barclays. go

Paul Cheng

Hey, guys.

Roger Jenkins

How you morning, Good doing? Paul.

Paul Cheng

Good. Very you. good. Thank

will quick the had to already transcript. answered, a -- let late a Just here came on little know. I you just have apologize check question if bit me I I first, so

able you need increase barrel that day there be many also rig a you to in in that the For Eagle and based will sustain we to somewhere road Ford, close reach you CapEx, you should be you your a to couple resource? on down at long -- how and how do, will once get the per XX,XXX maybe sustain assume the program that with years that if able

Roger Jenkins

long have or disclosed We Paul, before. been to that way XXX some locations X,XXX go there, have

current So plan disclosing room. we got In plan, we a long plenty today. range run our of are years not of

various on working parts that. are we still see, you of As

to the business into has the the into Eagle to get and heading Our hundreds. into XXs ability hopefully the Ford is going XXs, it get

are on this to rigs three year running average. We probably be going an

the three out advantage, and have very year game that’s of at and strong global we get We even portfolio is prices oil-weighted five-rig again, into will build Houston tax operated pretty cost. in low with these idea, next to a four price today, then good building this our

why we proud -- opportunities. that’s So That’s a way Eagle Gulf the type that’s with are deal. our there. to has why opportunities, we of very got are we are go long that of continuing experimenting Technology, refrac Eagle of did kind we EOR improvements on change The Mexico the Ford. Ford

several going to there of continue XXk-plus, It’s valuable our a army the XX-plus to to on and solid asset do a for and have this a very for one are we years fight as we lot have war asset that. the the to things We doing and Gulf business us and with big business well. ability being

Paul Cheng

decline, compete we XX% year to the this And in say? Kakap well and should Duvernay next that intend many how year, I --

Roger Jenkins

Paul, that’s wells on, in quarter three in Hang it’s right two, well, I coming in four XX fourth one, six have here. quarter our believe and XX in quarter in quarter. on that two we the zero release, Paul, one second.

Paul Cheng

CapEx, field? the so trend on [inaudible] if this assume will And in the with new what this production this should we we that assume is be the

Roger Jenkins

for have around happen this you of be year we questions all it be may is the year also into ago. XX second the which half This believe from probably getting and allocation to and the and was between look around and at the range And then to I Duvernay increase as hurting if year been is there will combined delayed the to levels of going year their into capital XX at last Placid What’s capital perceived a has going partner production going are year X,XXX all range. is lot our land retained. our then of a it’s to into XX XXXX it’s this Placid going to production

gross that’s profitable EUR a to XX wells. the in that business be But deck it to and then page is wells LNG that have hundreds constraints and add Some the million that are to go We grow Paul’s invest are the we company these feel to we well. company. varying achieve things pool cost are temporary do it a lot a be due so going positive of in our play improvement day kinds is kind not do multi-things a into against to and all this driving of valuable to going of have to make quite $X.X pipeline we and results would has are XXX,XXX on beyond that breakeven till -- and to on and slide can way a But there to cost we we are of XX,XXX built and us low other though want and it’s you go absolutely our where of we XXX,XXX but on other can proud built our wells of price in those compared we Canada time. XXXX a inexpensive price XXs see living from and development at a to solid things. will assets what scratch as our positive and to big but low series the

service, to priced pipe U.S. now of tax of one into else is You today do are are Murphy our portfolio, acreage. able decent very allocate weighted the in rarely kind we are we protecting and the capital one now that, basket, all flavor and find that all advantage us eggs all to and of able something for is we eggs in one kind because again

Paul Cheng

Good. I CapEx it. great. the maybe we that Montney? expect CapEx, in Montney, what’s missed That’s What’s that

Roger Jenkins

than year spend more are little to this We a going last year.

is CapEx $XX million. the I think

had on -- we of But If you think is is long-term There’s expected all D&C of $XX the and field to CapEx, XXXX working topper to or we be in to the water maintenance out lower million we $XX maintenance the perspective also and $XX flow there well. projection about point million it about free -- to as also on project Montney in big costs a are the on assets. that development. flat we our on from so more and really million only in need have cash is

Paul Cheng

some ago increase Right. maybe And talking I what feels, maybe year thought to Roger, was about but were I we and get want that -- a expand it.

your to are currently of trend the that get on you pool? the is backburner limitation just the put of that So infrastructure because going

Roger Jenkins

No.

glad are I We that asked -- you having question. am

people XXXXof [ph] XXX in in expansion to well of -- CapEx then XXXX approaches another we have of we XXX to with wealth is XXXX, going that a reserves now, and dollars XXXX the and the we current pay But plant -- plan in million Embridge thing. we this fees. drilling kind $XX right we recall start increase day our million for again if can can’t in Montney and the to thing about and we’d X We We all probably built company to the a But portfolios I in to a all drilled understand XXX participated were probably only in project the ever there. have avoid real recently, being their name. have an need Murphy and the flexibility and never our $XXX around

Montney low is XXXX owe some be as the and for improvement. we just allocation capital is of all the to small wait price amount can zone, fee a compared for slow-back look the an we out to we inflection what this need So very and we

a prices we drilling curve, all. will in of be drilling breakeven the wouldn’t As matter at forward they fact,

spin have that not the true the and and stop into enter that we idea entire high expand this of So need of things we for year how flexibility a do the is because to this capital the to those whatever negotiation we year, do to pipes have and have or and we field.

Paul Cheng

in those… And Okay.

Roger Jenkins

are how about that. That’s thinking we

Paul Cheng

of… exploration is to basis a your you with or any -- wells that kind is what, And target Gulf drill, of five on Thank six you. there expanded Mexico going be the program will on You forward going footprint, what finally forward? wells, expect

Roger Jenkins

year, million, exploration of our is million. $XXX expenses G&G but That’s that’s last this out everything. break mean, million, I around you around No. if year $XX $XXX

Our or other expenses $XX exploration and be would million personnel an it explorer cost of around what so. to be

probably do or million will run Mexico But million year. Gulf, four the as one it the where drill, run the this we like year, to entire stay to a get $XX wells. $XX rig to are we as if we team. rates five Gulf and For two well with the we as wells I’d they

Mexico. when get So Gulf I say to we drilling want and one to wells this in year are in Mexico the two one of

that at going lot a be be or will to would range every on in exploration goal. three depend the Mexico. year We It’s

Of acreage the large our XX of there, Gulf prospects block side. because course the acreage our probably the very is Mexico exact of Mexico on is on footprint U.S.

Paul. that, Gulf with Mexico at a can the see to three year to of of a under way like long thing, sort you XX% I’d cost current working per So in game well XX% interest go

Paul Cheng

just that see going that a you -- on do you clarification, finally expect high the WTI. And Mexico realization forward on

a what or based that on normal current are on on or based is the nice spread narrow level so WTI a the, $X $X. you however, So at maybe at more $X or

Roger Jenkins

in new today. to lot of WTI base transportation as some the is crudes of same know other a need are you as our describe that used differing the the game LLS [ph] there’s weighting WTI designed Gulf things at the in Venezuela forecast of realized terminology Their in less the a due U.S. day lot and Moores on and by GOM be the to Gulf the for Well that and sour bucks going the things our shut-ins and heavy due these Permian. we to built Murphy. netback the becoming But this some Coast realizations more MP as pipes traded, and screws our you today is for such would being gone know of today traders in to assets X every with and day above Gulf out

idea improve the and for sanction may issue I they a around under what be said. will while this Venezuela that So

or say based We heavier that WTI school the issues near know account that for I system. stores more much all realization when Mexico into needing doesn’t there’s Gulf of light that in old Venezuela. too So

in that’s plan. our volatility, So

today. are upgrading We that from

Paul Cheng

All right. Thank you.

Roger Jenkins

Thank Paul. you,

Operator

call are turn questions back to Roger me. Jenkins for our Excuse any the I phone no to would There remarks. over further closing line. from now like

Roger Jenkins

We today in calling appreciate dialogue. for everyone some it. with Thanks good

We now back and are work everyone heading day good thank a to and you. wish

Operator

that this thank you gentlemen, concludes participating for for today. and Ladies your call and ask We lines. your please you conference disconnect

Murphy Oil (MUR) 31 Jan 192018 Q4 Earnings call transcript