Murphy Oil Corporation (NYSE:MUR) Q2 2023 Earnings Call Transcript - Page 7 of 8 - InvestingChannel

Murphy Oil Corporation (NYSE:MUR) Q2 2023 Earnings Call Transcript

So overall, great results. We still need to do a little work there to figure out how we can make every single Tilden well really great, but we’re really pleased with what we’re seeing. When you think about big picture, Murphy, what we’re trying to do, we don’t really respond reactively to certain results from limited number of wells in one quarter and change our capital allocation. What we’re trying to do with our Eagle Ford business is to maintain it flat in the 30,000 to 35,000 BOE per day net to Murphy range for the near term and use cash flow generated from the asset to follow our framework to delever, execute explorer and return value to shareholders through the form of share repurchases and dividend and debt reduction. And that’s what we’re kind of going to stick to as we work to come up with our 2024 budget, I would imagine a similar type of level of activity in Eagle Ford as we’ve had in the last couple of years.

Josh Silverstein: Great. Thank you guys.

Roger Jenkins: Appreciate the question. Thank you.

Operator: [Operator Instructions] The next question in the queue comes from Roger Read with Wells Fargo. Please proceed.

Eric Hambly: Good morning Roger. How you have been?

Roger Read: Very good, Eric. I hope everybody is doing well there. At least it was a good quarter.

Eric Hambly: Doing well. Yeah, very good.

Roger Read: Yes. I’d just like to maybe come back on kind of two things that have been hit. One, in terms of the debt pay down and making sure that you don’t overpay for early retirement. Is it safe to assume that you’ll build cash on the balance sheet in advance and that should be something we would anticipate. And I’m just thinking if commodity prices stay a little higher, we’re able to generate more free cash. Is that the right way to think about things?

Roger Jenkins: I’ll let Tom walk you through that, Rogers real close to that.

Tom Mireles: Yes, Roger, thanks for that. The way we’re thinking about it is we have this priority to hit our debt targets. And we have these annual targets. So how we execute it quarter — through the quarter will — may vary. But we are going to be focused on reducing that debt. And it will probably be more weighted towards the fourth quarter as we start building up more adjusted free cash flow. But we’ll try to get some done this quarter as well. And as we mentioned earlier, those 25 are trading at par here just in a few more weeks, and we’ll probably focus on taking those out. Between the debt and the share repurchase again, those are annual targets. And so we’ll try to do that as efficiently as possible. So how that weights within the quarter may vary a little bit. But that’s the thing that Roger and I will be focusing on with our Board is to try to do that as efficiently as possible.

A – Roger Jenkins: Yes. I want to add on to that, Roger, is what we really try to do is if we can catch some dislocation, like I think some of our peers are doing we’re monitoring the various ways we may do a little bit ahead of the repurchase in some quarter over another and have the year add out perfectly to the formula. And also of note right at the end of the year, the debt target of the 27 notes reduces — I mean the purchasing of price, it’s might be hard to execute that right at end of the year. We’re monitoring all that the math on interest expense to the call price, and Tom’s team is greatly focused on that. But what we’re really excited about to be in a position of lower CapEx number contingent payments, incredible production and higher oil prices those are all good things to solve. That’s a really good meeting to have of how we’re going to spend all our free cash flow, and that’s the meeting we’ve been looking for a year, we’re there today.

Roger Read: Okay. Thanks for that. And then I’m trying to think the right way to sum up this question. But — as we think about Murphy as an exploration company, and you mentioned in some areas, maybe a little more competition in trying to get to the right blocks, but there’s also some areas that not in that seem to be super high profile, I think in some parts of West Africa and South America. So as you’re looking at the areas that you’re focused on — do you get the feeling that the opportunities are there and not too competitive given that some others are maybe a little too focused on, like I said, the high-profile things that are going on. I was just wondering if you kind of think about how we progressed maybe over the last several quarters or last couple of years in terms of your opportunity to get the exploration blocks that you want?

A – Roger Jenkins: Thanks for your question, Roger. We’re active global explorer in the past, a lot more than we are now. We try to keep it into less countries. We try to work in places where we can primarily work here in Houston. So we have some criteria that we look at. We also like to have places where we can do some possible development work of prior discoveries. We’re not a super major in that regard and interested really in East Coast Canada. Wells are too expensive for us. There are some success offshore Namibia that’s gone for a long time and enormous expense on seismic and wells. That’s not really our focus. We’re very well known globally for our ability to execute and compete, if you will, with super majors occasionally, countries want a different type of a partner.

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