Murphy Oil Corp. said Thursday (March 12) it will revise its capital spending plans for 2020 given current market conditions and recent commodity price volatility.
El Dorado-based Murphy Oil said it would reduce its exploration spending by $500 million to $950 million, roughly a 35% decrease. The move comes as Russia, Saudi Arabia and other oil producing nations have decided to keep production levels at a higher-than-expected pace. Those decisions have dropped crude oil prices to multi-year lows.
Murphy Oil said it will release further details of its revised plan on a later date.
“Under current conditions, we believe this capital reduction program allows for financial flexibility and preservation of our longstanding dividend. As always, we will not sacrifice safety in our efforts to reduce costs across all our assets, as it remains a core value within Murphy,” said Roger Jenkins, President and CEO.
The revised plan will be achieved through the following, the company said:
- Delaying certain US Gulf of Mexico projects and development wells;
- Postponing spud timing of two operated exploration wells;
- Releasing operated rigs and frac crews in the Eagle Ford Shale, with no operated activity planned for the second half of 2020; and
- Deferring well completions in the Tupper Montney.
Murphy Oil has been on a mission for more than a year to divest its Asian and African exploration properties and focus solely on western hemisphere assets, particularly in the Gulf of Mexico and Canada.
“We have persevered through multiple commodity price cycles in our 70 years of corporate history, and want to provide reassurance that we are focused on a strategy that protects the business, the balance sheet and our liquidity, while maintaining optionality for additional adjustments given the unstable environment,” Jenkins said.
“Murphy has an ample liquidity position as of year-end 2019 between its undrawn $1.6 billion senior unsecured credit facility due November 2023 plus cash on hand, along with other sources of liquidity arising in the normal course of business. Further, we have no debt maturities until June 2022,” he added.
Murphy Oil shares (NYSE: MUR) were trading lower under $7 a share in pre-market activity. The company’s stock has traded between a low of $7.41 and a high of $31.13 during the past 52 weeks.