Stock Upgrade: Murphy Oil's Production Estimates Higher Than Peers, According To Analyst

  • Truist Securities upgraded Murphy Oil Corporation MUR from Hold To Buy with a price target of $56, up from $49.
  • The analyst writes that Murphy is one of very few E&Ps it forecasts to have higher production and lower capital spending this year. 
  • Truist forecasts Murphy Oil to generate nearly 90 mboepd of offshore production this year, driven by its legacy positions and recent development/tieback projects.
  • The company continues to run an active offshore exploration program with ~$100 million set aside this year for a few projects.
  • 2023 FCF is expected to sequentially lower primarily due to weaker prices, which could rebound in 2024 to potentially higher than in 2021. 
  • FCF yield of nearly 25% is anticipated this year, with the potential for even higher next year. 
  • The analyst anticipates more steady results from MUR’s onshore production in 2023 versus 2022 and is most encouraged by Eagle Ford operations.
  • Data shows the most recent well performance is not only better than prior years but also higher than nearby operators on a per 1,000 ft. basis, such as Chesapeake Energy Corporation CHKTrinity (Private), and Mesquite (Private) among others.
  • Price Action: MUR shares are up 2.60% at $39.72 on the last check Tuesday.
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