• Achieved 2022 Debt Reduction Goal of $650 Million While Doubling Dividend,
• Grew Oil Volumes 29 Percent From First Quarter to Fourth Quarter 2022,
• Completed Khaleesi, Mormont, Samurai Field Development Project With Production Exceeding Expectations,
• Delivering 10 Percent Oil Production Growth With 2023 Capital Plan

Murphy Oil Corporation today announced its financial and operating results for the fourth quarter ended December 31, 2022, including net income attributable to Murphy of $199 million, or $1.26 net income per diluted share. Excluding discontinued operations and other items affecting comparability between periods, adjusted net income attributable to Murphy was $173 million, or $1.10 adjusted net income per diluted share.

For the full year 2022, the company recorded net income attributable to Murphy of $965 million, or $6.13 net income per diluted share. Murphy reported adjusted net income, which excludes both the results of discontinued operations and other items affecting comparability between periods, of $881 million, or $5.59 adjusted net income per diluted share.

Unless otherwise noted, the financial and operating highlights and metrics discussed in this commentary exclude noncontrolling interest (NCI). 1

Highlights for the fourth quarter include:

• Redeemed $200 million of 5.75 percent senior notes due 2025
• Completed the Khaleesi, Mormont, Samurai field development project with seven wells brought online

Highlights for full year 2022 include:

Generated net income of $965 million, with $2.2 billion of net cash provided by continuing operations
Produced 167 thousand barrels of oil equivalent per day (MBOEPD) with 29 percent growth in oil volumes from first quarter 2022 to fourth quarter 2022
Initiated production above expectations and ahead of schedule from the Khaleesi, Mormont, Samurai field development project
Acquired additional highly accretive working interests in non-operated Lucius and Kodiak fields for $129 million
Introduced and successfully implemented capital allocation framework, focusing on increasing shareholder returns tied to targeted debt reduction goals
Doubled the quarterly cash dividend since fourth quarter 2021 to $1.00 per share annualized
Completed Murphy 1.0 of capital allocation framework, reducing debt by 26 percent, or $650 million, to $1.82 billion at year-end 2022
Maintained reserve life of more than 11 years with total proved reserves of 697 million barrels of oil equivalent (MMBOE)
Continued environmental excellence with second year of zero recordable spills

Subsequent to the fourth quarter:

• Announced an additional 10 percent increase of quarterly cash dividend to $0.275 per share, or $1.10 per share annualized

“I am proud of all we accomplished at Murphy in 2022. Our meaningful progress and consistent execution were particularly evident in our offshore business, as we completed the initial phase of the Khaleesi, Mormont, Samurai field development project with production exceeding expectations throughout the year,” said Roger W. Jenkins, President and Chief Executive Officer. “Our disciplined spending, coupled with higher realized oil prices, enabled us to increase our long-standing dividend, achieve our debt reduction goal and position the company for the second phase of our capital allocation framework, Murphy 2.0. As we look ahead to 2023 and continue building on the momentum of 2022, we remain confident in our strong operational capabilities and financial positioning.”

FOURTH QUARTER 2022 RESULTS

The company recorded net income attributable to Murphy of $199 million, or $1.26 net income per diluted share, for the fourth quarter 2022. Adjusted net income, which excludes both the results of discontinued operations and certain other items that affect comparability of results between periods, was $173 million, or $1.10 adjusted net income per diluted share for the same period. Adjusted net income primarily includes the following after-tax increases of $60 million non-cash mark-to-market gain on derivative instruments and $16 million non-cash mark-to-market gain on contingent consideration, and after-tax losses of $24 million in asset retirement obligations and an $18 million write-off of previously suspended exploration wells. Details for fourth quarter results and an adjusted net income reconciliation can be found in the attached schedules.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) attributable to Murphy was $466 million. Adjusted earnings before interest, tax, depreciation, amortization and exploration expenses (EBITDAX) attributable to Murphy was $527 million. Details for fourth quarter EBITDA, EBITDAX, adjusted EBITDA and adjusted EBITDAX reconciliations can be found in the attached schedules.

Fourth quarter production averaged 173.6 MBOEPD and consisted of 56 percent oil volumes, or 97.0 thousand barrels of oil per day (MBOPD). Production in the quarter was impacted by 1.5 MBOEPD of primarily non-operated unplanned Gulf of Mexico downtime, 1.2 MBOEPD of winter weather impacts and 1.2 MBOEPD due to lower performance in the Tupper Montney. Details for fourth quarter production can be found in the attached schedules.

FULL YEAR 2022 RESULTS

The company recorded net income attributable to Murphy of $965 million, or $6.13 net income per diluted share, for the full year 2022. The company reported adjusted net income, which excludes both the results of discontinued operations and certain other items that affect comparability of results between periods, of $881 million, or $5.59 adjusted net income per diluted share for the same period. Adjusted net income primarily includes the following after-tax increase of $170 million non-cash mark-to-market gain on derivative instruments, and after-tax decreases of $62 million non-cash mark-to-market loss on contingent consideration and $24 million asset retirement obligation losses. Details for full year 2022 results and an adjusted net income reconciliation can be found in the attached schedules.

Adjusted EBITDA attributable to Murphy was $2.1 billion. Adjusted EBITDAX attributable to Murphy was $2.2 billion.

Production for full year 2022 averaged 167.0 MBOEPD and consisted of 54 percent oil volumes, or 89.9 MBOPD, with 29 percent growth in oil volumes from first quarter 2022 to fourth quarter 2022. Accrued capital expenditures (CAPEX) for full year 2022 totaled $1,016 million, excluding NCI, acquisitions and acquisition-related CAPEX. Details for full year 2022 production and CAPEX can be found in the attached tables.

FINANCIAL POSITION

As previously announced, during the fourth quarter Murphy entered into a new $800 million senior unsecured credit facility. The credit facility matures in November 2027 and was undrawn as of December 31, 2022. During the quarter, Murphy also redeemed $200 million of 5.75 percent senior notes due 2025.

Murphy had approximately $1.2 billion of liquidity as of December 31, 2022, comprised of the $800 million credit facility and $492 million of cash and cash equivalents, inclusive of NCI. The company’s total debt was $1.82 billion as of December 31, 2022, and consisted of long-term, fixed-rate notes with a weighted average maturity of 7.7 years and a weighted average coupon of 6.2 percent.

In 2022, Murphy reduced total debt by 26 percent since year-end 2021, thereby achieving its $650 million debt reduction goal while lowering annual interest obligations by approximately $42 million. The company’s steady focus on delevering has reduced total debt by 40 percent or $1.2 billion since year-end 2020.

YEAR-END 2022 PROVED RESERVES

After producing 61 MMBOE for the year, Murphy’s preliminary year-end 2022 proved reserves were 697 MMBOE, consisting of 41 percent oil and 47 percent liquids. Total proved reserves were essentially flat from year-end 2021 with a total reserve replacement of 98 percent.

OPERATIONS SUMMARY

Onshore
In the fourth quarter of 2022, the onshore business produced approximately 87 MBOEPD, which included 36 percent liquids volumes. Onshore production increased 11 percent since first quarter 2022.

Eagle Ford Shale – Production averaged 32 MBOEPD with 70 percent oil volumes and 85 percent liquids volumes. Two non-operated wells were brought online in Karnes late in the fourth quarter.

Tupper Montney – Natural gas production averaged 288 million cubic feet per day (MMCFD) in the fourth quarter.

Kaybob Duvernay – Production averaged 5 MBOEPD with 72 percent liquids volumes during the fourth quarter.

Offshore
Excluding NCI, the offshore business produced just over 86 MBOEPD for the fourth quarter, which included 82 percent oil. Total offshore production excluding NCI increased nearly 40 percent since first quarter 2022.

Gulf of Mexico – Production averaged approximately 84 MBOEPD, consisting of 81 percent oil during the fourth quarter. Murphy brought online two operated wells in the Samurai field during the fourth quarter, thereby completing the initial phase of the Khaleesi, Mormont, Samurai field development project. The company continues to achieve an average 97 percent uptime at the Murphy-operated King’s Quay floating production system since production commenced in April 2022. Also during the fourth quarter, Murphy’s operating partner brought online the Lucius #10 (Keathley Canyon 919) well.

Canada – Production averaged nearly 3 MBOEPD in the fourth quarter, consisting of 100 percent oil. The asset life extension project is ongoing for the non-operated Terra Nova floating, production, storage and offloading vessel, which is anticipated to return to production in second quarter 2023.

EXPLORATION

Gulf of Mexico – During the fourth quarter, Murphy as operator spud the Oso-1 (Atwater Valley 138) exploration well, with drilling ongoing in the first quarter 2023. Additionally, in conjunction with a Gulf of Mexico lease expiration in the fourth quarter 2022, Murphy wrote off previously suspended exploration well costs of $18 million after tax.

Mexico – Murphy as operator concluded drilling the Tulum-1EXP exploration well in Block 5 in the Salina Basin. The well did not find commercial hydrocarbons. Murphy plugged and abandoned the well and the partnership is evaluating the results. The net well cost of $22 million was fully expensed in the fourth quarter.

KeyFacts Energy: Murphy Oil US country profile