Murphy Oil Cuts Losses in 2016, Boosts Capital Spending in Unconventional Production

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Researched by Industrial Info Resources (Sugar Land, Texas)--Murphy Oil Corporation (NYSE:MUR) (El Dorado, Arkansas) pared its losses in full-year 2016 to $276 million, a sharp improvement from 2015's $2.27 billion net loss, with executives stating that the oil & gas producer had survived "one of our industry's worst commodity price collapses." Industrial Info is tracking $1.85 billion in active projects involving Murphy.

An end-of-the-year uptick in crude-oil prices was among the factors that pulled Murphy's results closer to the surface. Roger Jenkins, the president and chief executive officer of Murphy, said in a press release that the company benefited from the sale of the non-core assets, notably the Montney and Syncrude operations in British Columbia and Alberta. Executives also attributed 2016's improvement to a 15% reduction in lease operating expenses and a 14% reduction in selling and general expenses.

Murphy expects capital expenditures for the full year to total $890 million, compared with $605 million (excluding acquisitions) in 2016. About 65% is attributed to onshore unconventional assets, mostly in Texas' Eagle Ford Shale and Canada's Kaybob Duvernay. Production for the full year is expected to be between 162 million and 168 million barrels of oil equivalent per day, with about 55% attributed to North American onshore unconventional production, compared with 2016's 176 million barrels of oil equivalent per day.

"Our focus in 2017 is three fold," Jenkins said. "First, allocating a majority of capital toward developing locations in the highest-return areas in our onshore portfolio. Second, investing in selective offshore projects that deliver top-quartile finding and development metrics. Third, covering all costs, including our dividend, within cash flow, which will maintain our solid balance sheet."

The liquids-rich Kaybob Duvernay shale play in west-central Alberta is close to one of Murphy's largest proposed projects: the $600 million Seal Central HCSS Bitumen Crude Oil Production Plant near Peace River, Alberta. The company hopes to construct 84 dual horizontal well pairs and a central processing facility with a capacity of 12,450 barrels per day (BBL/d) of bitumen. The project currently is in its permitting phase. For more information, including current schedules and contact information, see Industrial Info's project report.

"Our activity in the Kaybob Duvernay is primarily targeting appraisal areas that will allow for further development plans to be formulated and ultimately support onshore value-added production growth complementing our Eagle Ford Shale and Montney assets," Jenkins said in a press release.

Outside the Gulf Coast, Murphy's offshore oil production is focused on Malaysia, where Industrial Info is tracking $1.24 billion in proposed projects, including the $200 million Wangsa and the $180 million Sapih Offshore Natural Gas Production Platforms, each of which is designed for a capacity of 50 million standard cubic feet per day, and the $180 million Tiram Offshore Natural Gas Production Platform, which is designed for a capacity of 80 million standard cubic feet per day. All three are to be built in Serampang field, which is connected to a separate gas and condensate Platform in Golok Central Field through an existing pipeline. For more information, see Industrial Info's project reports on the Wangsa, Sapih and Tiram platforms.

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