Market Overview

Murphy Oil Corporation Announces Fourth Quarter and Full Year 2018 Financial and Operating Results, 2019 Capital Investment Program

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Increased Proved Reserves by 17% with 166% Organic Reserve
Replacement

Murphy Oil Corporation (NYSE:MUR) today announced its financial and
operating results for the fourth quarter ended December 31, 2018,
including net income attributable to Murphy, which excludes
noncontrolling interest, of $103 million, or $0.59 per diluted share.
Net income including noncontrolling interest was $112 million.

With the close of the previously announced Gulf of Mexico transaction in
the fourth quarter 2018, and in accordance with GAAP, Murphy reports the
100 percent interest, including a 20 percent noncontrolling interest
(NCI), in its new subsidiary, MP Gulf of Mexico, LLC (MP GOM). The GAAP
financials will include the NCI portion of revenue, costs, assets and
liabilities and cash flows. Unless otherwise noted, the financial and
operating highlights and metrics discussed in this news release, but not
the accompanying schedules, will exclude the NCI, thereby representing
only the amounts attributable to Murphy.

Highlights for the fourth quarter include:

  • Produced 176 thousand barrels of oil equivalent per day, in line with
    guidance
  • Closed accretive, deep water, oil-weighted Gulf of Mexico transaction,
    which included the addition of over 70 million barrels of oil
    equivalent of proved reserves
  • Realized EBITDA of over $25 per barrel of oil equivalent sold
  • Received credit rating upgrades from Moody's and Fitch Ratings
  • Closed $1.6 billion senior unsecured revolving credit facility, with
    more favorable covenants

Highlights for the full year 2018 include:

  • Increased proved reserves by 17 percent to 816 million barrels oil
    equivalent, with 57 percent liquids-weighting
  • Achieved 166 percent organic reserve replacement with a finding and
    development cost of $10.92 per barrel of oil equivalent
  • Maintained reserve life index in excess of 10 years
  • Produced 171 thousand barrels of oil equivalent per day, a 4 percent
    increase from prior year
  • Increased production in the Kaybob Duvernay to over 8,500 barrels of
    oil equivalent per day, more than double the prior year
  • Registered annualized EBITDA to average capital employed of 21 percent
  • Returned 14 percent of operating cash flow to shareholders through
    long-standing dividend policy
  • Preserved balance sheet strength with approximately 37 percent net
    debt to total capital

FOURTH QUARTER 2018 RESULTS

The company recorded net income, attributable to Murphy, of $103
million, or $0.59 per diluted share, for the fourth quarter 2018. The
company reported adjusted income attributable to Murphy, which excludes
both the results of discontinued operations and certain other items that
affect comparability of results between periods, of $54 million, or
$0.31 per diluted share. The adjusted income excludes the following
after-tax items: a gain of $30 million associated with tax impacts, an
unrealized mark-to-market gain on crude oil derivative contracts of $28
million and a $16 million impairment on select Midland properties.
Details for fourth quarter results can be found in the attached
schedules.

Earnings before interest, taxes, depreciation and amortization (EBITDA)
attributable to Murphy, totaled $421 million, or $25.67 per barrel of
oil equivalent (BOE) sold. Earnings before interest, taxes,
depreciation, amortization and exploration expenses (EBITDAX)
attributable to Murphy, totaled $456 million, or $27.74 per BOE sold.
Details for fourth quarter EBITDA and EBITDAX reconciliation can be
found in the attached schedules.

Production in the fourth quarter averaged 176 thousand barrels of oil
equivalent per day (MBOEPD), which was in line with guidance. Details
for fourth quarter production can be found in the attached schedules.

FULL YEAR 2018 RESULTS

The company recorded a net income, attributable to Murphy, of $411
million, or $2.36 per diluted share, for the full year 2018. The company
reported adjusted income, which excludes both the results of
discontinued operations and certain other items that affect
comparability of results between periods, of $219 million, or $1.26 per
diluted share. Details for full year 2018 results can be found in the
attached schedules.

Production for the full year averaged 171 MBOEPD, which was in line with
guidance. Details for 2018 production can be found in the attached
tables.

"2018 was a really good year for Murphy with our net income at the
highest level in four years. We continued to benefit from our diverse,
growing, oil-weighted portfolio that was able to continuously generate
high cash flow per barrel metrics. We demonstrated again that we are
proven deal-makers by successfully closing on an accretive oil-weighted
transaction that will further enhance our ability to generate cash flow.
Also, we remain committed to rewarding shareholders with cash returns
through our long-standing competitive dividend, while we keep investment
in our assets in line with our cash flows," stated Roger W. Jenkins,
President and Chief Executive Officer.

FINANCIAL POSITION

As of December 31, 2018, the company had $2.8 billion of outstanding
long-term, fixed-rate notes, $325 million of borrowings on the $1.6
billion unsecured senior credit facility, and approximately $387 million
in cash and cash equivalents, including noncontrolling interest, at
year-end. The fixed-rate notes had a weighted average maturity of 7.8
years and a weighted average coupon of 5.5 percent.

YEAR-END 2018 PROVED RESERVES

Murphy's preliminary year-end 2018 proved reserves were 816 million
barrels of oil equivalent (MMBOE), a 17 percent increase from 698 MMBOE
at year-end 2017. The change in year-over-year reserves is mainly
attributed to the acquisition of Gulf of Mexico reserves through the MP
GOM transaction as well as organic additions in both the Eagle Ford
Shale and Tupper Montney assets. Organic reserve replacement was 166
percent and one-year finding and development cost were $10.92 per BOE,
with a three-year cumulative finding and development cost of $10.62 per
BOE.

2018 Proved Reserves – Preliminary *
Category Net Liquid

(MMBBLS)

Net Gas
(BCF)
Net Equiv.
(MMBBLS)
Proved Developed Producing (PDP) 257 913 409
Proved Undeveloped (PUD) 203 1,220 407
Total Proved 460 2,133 816
* Reserve quantities represent amounts attributable to Murphy and
exclude noncontrolling interest

"Our team did an excellent job adding low-cost, high-value reserves in
2018. We were able to increase our proved reserves by 17 percent and
more importantly increase our oil reserves by 24 percent from 2017. We
continue to replace reserves with finding and development costs tracking
below $11 per BOE. We are especially pleased with the additional oil
reserves from our new Gulf of Mexico assets where the initial booking at
year-end was above our original estimated volumes," commented Jenkins.

REGIONAL OPERATIONS SUMMARY

North American Onshore

The North American onshore business produced over 93 MBOEPD in the
fourth quarter.

Eagle Ford Shale – Production in the quarter averaged over 40
MBOEPD, with 88 percent liquids. As planned, the company brought eight
operated wells online during the quarter, all in the Catarina area.

Tupper Montney – Natural gas production in the quarter averaged
over 230 million cubic feet per day (MMCFD), after allowing for over 6
MMCFD impacts related to third-party plant and pipeline restrictions.
During the fourth quarter, the company celebrated the asset's tenth
anniversary milestone, producing over 600 billion cubic feet (BCF) gross
since inception.

Kaybob Duvernay – During the quarter, the company achieved record
production averaging 11 MBOEPD with 59 percent liquids. Murphy has
increased production in this play for seven consecutive quarters. As
planned, the company brought five operated wells online: a four well pad
in Kaybob West and one well in Two Creeks. The four well pad in Kaybob
West performed in-line with pre-drill estimates, achieving average
initial gross production rates over 30 days (IP30 rate) of over 900
BOEPD per well, with 67 percent liquids. The Two Creeks well, drilled by
the previous operator at a less than optimal lateral length of 5,500
feet, was completed and brought online at initial gross production rates
of 600 barrels of oil (BOPD) with 87 percent liquids. Over the course of
2018 the company brought 27 wells online, which advanced the appraisal
of the play.

"We continue to be pleased with our North American unconventional
business. Our steadfast Tupper Montney asset continues to provide free
cash flow at current prices due to our market diversity and execution.
Success continues in the Kaybob Duvernay, with strong well performance
across the play, and promising early results in the Two Creeks area,
support our plan to retain the vast majority of our acreage. In Eagle
Ford Shale we jump-started our 2019 program and are currently running
four rigs and two frac spreads, adding profitable production growth in
the asset with additional capital allocation going forward," commented
Jenkins.

Global Offshore

The offshore business produced 83 MBOEPD for the fourth quarter, with 76
percent liquids.

Malaysia & Brunei – Production in the quarter averaged 46
MBOEPD, with 63 percent liquids. Block K and Sarawak averaged 28
thousand barrels of liquids per day, while Sarawak natural gas
production averaged over 99 MMCFD.

Vietnam – Early in 2019, Murphy received the Declaration of
Commerciality for the LDV field and expects to move forward with
sanction later this year.

North America Production in the quarter for the Gulf of
Mexico averaged 32 MBOEPD, with 92 percent liquids. Canada offshore
averaged 5 MBOEPD.

As previously announced in fourth quarter 2018 Murphy closed a Gulf of
Mexico transaction with Petrobras America Inc., a subsidiary of
Petrobras, for a net, after closing adjustments, cash consideration of
$795 million and a 20 percent NCI in MP GOM. The bolt-on transaction
provides oil-weighted production and reserves with areas that have
additional upside, while utilizing the company's proven deep-water
execution expertise. The contribution from MP GOM in the above volume
was limited to one-month only, and was negatively impacted by a well in
the Chinook field experiencing a mechanical malfunction, resulting in a
daily loss of 4,400 BOEPD net. This well is expected to be worked over
in late 2019.

Also in the quarter, the Dalmatian subsea pump was installed. Currently,
the pump is delivering gross incremental production of over 10,000
BOEPD, an increase of 250 percent from prior quarter production, with 96
percent uptime.

EXPLORATION

Gulf of Mexico Exploration – During the fourth quarter, Murphy
drilled the King Cake exploration well (Atwater Valley 23) which
encountered non-commercial quantities of hydrocarbons and was
subsequently plugged and abandoned. The well, which Murphy operated at a
35 percent working interest, cost $16 million net, pre-tax, which is
included in the company's fourth quarter dry hole expense.

Mexico Exploration – During the fourth quarter, Murphy secured
its drilling permit from the Comisión Nacional de Hidrocarburos ("CNH")
for the Cholula exploration well and expects to spud the well in the
first quarter of 2019.

Vietnam Exploration – Murphy expects to spud the LDT-1X well, in
Block 15-01/05 in the Cuu Long Basin, during the first quarter of 2019.

2019 CAPITAL EXPENDITURE AND PRODUCTION GUIDANCE

Murphy is planning 2019 capital expenditures to be in the range of $1.25
to $1.45 billion with full year 2019 production to be in the range of
202 to 210 MBOEPD. Production for the first quarter 2019 is estimated to
be in the range of 198 to 202 MBOEPD. Both production and CAPEX guidance
ranges exclude Gulf of Mexico noncontrolling interest (NCI). The 2019
plan reflects the company's ongoing commitment of keeping spending in
line with cash flows while simultaneously returning cash to shareholders.

The table below illustrates the capital allocation by area.

2019 Capital Expenditure Guidance
Area        

Percent of Total
CAPEX

U.S. Onshore         43
Canada Onshore 20
North America Offshore 19
SE Asia 9
Exploration 8
Other 1

For 2019, Murphy is allocating $878 million of capital, or 63 percent,
to its North America onshore assets, in comparison to $780 million, or
66 percent in 2018.

In the Eagle Ford Shale, Murphy will spend approximately $600 million in
2019, a 40 percent increase from 2018. The Eagle Ford Shale capital
includes approximately $470 million for drilling and completing wells
and $130 million for field development and nine non-operated wells. The
2019 plan includes 90 operated wells being brought online which are
expected to be equally distributed across the company's acreage. This is
over an 80 percent increase in operated wells online compared to 2018.

The company is allocating $280 million to Canada onshore in the Kaybob
Duvernay, Tupper Montney and Placid Montney. In the Kaybob Duvernay,
Murphy is allocating $200 million, which is 25 percent lower than in
2018. The Kaybob Duvernay capital allocation will focus only on lease
retention across the play. The Kaybob Duvernay, Tupper Montney and
Placid Montney will deliver 12, 8, and 7 wells online respectively.

2019 Operated Onshore Wells Online
      1Q 2019       2Q 2019       3Q 2019       4Q 2019       2019 Total
Eagle Ford Shale     14       31       25       20       90
Kaybob Duvernay 4 6
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