Q4 2023 Murphy Oil Corp Earnings Call
Rachel Perfect: [music].
Good morning, ladies and gentlemen, and welcome to the Murphy Oil Corporation.
2023 earnings conference call and webcast.
But any time during this call you require immediate assistance.
As far as there are no party operator.
I'd now like to turn the conference over to Kelly Whitley, Vice President Investor Relations and Communications. Please go ahead.
Okay.
Kelly L. Whitley: Good morning, everyone and thank you for joining us on our fourth quarter earnings call today, joining me as Roger Jenkins, President and Chief Executive Officer, along with Tom Morale is executive Vice President and Chief Financial Officer, and Eric Hambly Executive Vice President operations. Please refer to the informational slides, we have placed on the Investor Relations sex.
Kelly L. Whitley: <unk> of our website as you follow along with our webcast today throughout today's call production numbers reserves and financial amounts are adjusted to exclude Noncontrolling interest in the Gulf of Mexico. Please.
Kelly L. Whitley: Please keep in mind that some of the comments made during this call will be considered forward looking statements as defined in the private Securities Litigation Reform Act of 1995.
Kelly L. Whitley: As such no assurances can be given that these events will occur or that the projections will be attained.
Alrighty of factors exist that may cause actual results to differ.
For further discussion of risk factors see Murphy's 2022 annual report on 10-K on filed with the SEC Murphy takes no duty to publicly update or revise any forward looking statements I will now turn the call over to Roger Jenkins.
Roger W. Jenkins: Thank you Kelly good morning, everyone and thanks for listening to our call today.
Roger W. Jenkins: We turn to slide two I'd like to highlight Mercury's ongoing focus.
Roger W. Jenkins: On our priority is to Delever execute explore and return throughout 2023 was another strong year of production and excellent execution, we achieved our $500 million debt reduction goal for the year and have reduced debt by $1 $7 billion. Since the end of 2020, we produced 186000.
Roger W. Jenkins: Equivalents per day for the year with 52% oil volumes during the fourth quarter, we began procure equipment for the locked vein field development in Vietnam and production resumed at the non operated Terra Nova field offshore Canada.
Roger W. Jenkins: With well scheduled to ramp up production through the first quarter this year and the Gulf of Mexico, We acquired an 8% working interest in the zephyrus discovery for $13 million in the fourth quarter for the year, we achieved 139% reserve replacement with preliminary total reserves of 724 million barrels equivalent.
Roger W. Jenkins: And approximately an 11 year reserve life and exploration, we were named apparent high bidder and eight exploration blocks in the Gulf of Mexico Federal lease sale 261 held last fall. We also continue preparing for our 2024 planned exploration wells in the Gulf and Vietnam are advancing seismic reprocessing projects in the.
Roger W. Jenkins: Gulf of Mexico, and Cote d'ivoire.
Roger W. Jenkins: Due to significantly reducing debt prior to 2023, we're able to reach Murphy to point out of our capital allocation framework last year, representing a debt level between one and $1 $8 billion I'm pleased to say that we executed additional share repurchases totaling $75 million or one 7 million shares at an average price of four.
Roger W. Jenkins: The $3 42 per share in the fourth quarter for full year 2023.
Roger W. Jenkins: We repurchased three 4 million shares.
Roger W. Jenkins: $450 million at an average price of $43 96 per share.
Roger W. Jenkins: As a result, we have $450 million remaining under our share repurchase authorization at year end I am pleased to return.
Roger W. Jenkins: I'm pleased to return to the share buyback mode.
Roger W. Jenkins: Purchased $1 $8 billion of stock in the last 10 years, we announced earlier today at 9% quarterly dividend increase to $1 20 per share annualized back to our level of 2016, and I look forward to targeting Murphy III porno as we continuing to.
Roger W. Jenkins: Delivering shareholder returns and reducing debt levels.
Roger W. Jenkins: Slide three murphys production averaged 185000 equivalents per day in the fourth quarter 94000 barrels of oil per day for the year production of 186000 equivalents with 98000 oil per day for the quarter, we realized over $79 a barrel four representing a slight premium to diabetes. This is on a net back.
Murphy III: <unk> as well as nearly 21 per barrel for Ngls and $2 12 per thousand cubic feet for Nat gas.
Murphy III: Led Murphy generating 788 million of total revenue in the quarter over the full year, we realized over $77 per barrel for oil and generated $3 $2 billion in revenue excluding NCI.
Murphy III: On slide four great year and reserves.
Murphy III: Eliminate proved reserves totaled 724 million barrels equivalent representing 139% reserve replacement ratio from year end 'twenty. Two this increase is due in part to additional 13 million barrels equivalent.
Murphy III: Reserves for the <unk> field in Vietnam, as well as a co natural gas price changes total proved reserves in 2023 were 57% proven and 41% liquids weighted and we have a proved reserve life is 11 years overall improved fruit. Please.
Murphy III: Please excuse me pleased to say we've maintained our proved reserves since 2020 with an average annual capex of approximately $1 billion, excluding noncontrolling interest and including acquisitions must also consider consider their strong reserve outcome is based on oil price was $15 per barrel lower.
Murphy III: In 2022.
Murphy III: Further our reserves, excluding syncrude are 27% higher than a decade ago. When we became an independent E&P company I will now turn the call over to our CFO, Tom morale to update us on our financial results, Tom Thanks, Roger and good morning, everyone.
Tom morale: Turning to slide five in the fourth quarter Murphy reported $116 billion of net income or <unk> 75 cents per diluted share.
Tom morale: $140 million of adjusted net income or <unk> 19 per diluted share.
Due to another strong operational quarter, we achieved $414 million of adjusted EBITDA with $219 million of accrued capex, excluding noncontrolling interest and acquisition related Capex.
Tom morale: <unk> continued to return cash to shareholders in the fourth quarter by repurchasing $75 million of common stock at an average price of $43 42 per share.
Murphy III: For the year, we achieved $709 million of adjusted net income and $2 $1 billion of adjusted EBITDAX.
Murphy III: Capex totaled $1 billion, excluding noncontrolling interest and acquisition related Capex.
Murphy III: Further our 2023 G&A expense was the lowest in more than 20 years.
Murphy III: On slide six.
Murphy III: As we discussed is as of December 31, 2023, we had $1 3 billion of senior notes outstanding and $1 $1 billion of liquidity and our next senior note maturity isn't until December 2027.
Murphy III: Since year end, 2020, and including our 300 million dollar debt reduction goal for 2024, we will have reduced our total debt by 66% by year end 2024.
Murphy III: 2020 through 2023 this resulted in about <unk>.
Murphy III: And about an $84 million reduction in annual interest expense on long term debt.
Murphy III: I'm pleased to say that during this time and more recently in alignment with our capital allocation framework, we have been able to increase our quarterly dividend and returned to our 2016 level of $1 20 per share annualized.
Murphy III: And since year end 2014, Murphy has repurchased $24 8 million shares or 14% of the shares outstanding at that time.
Murphy III: While we are pleased me back to our 2016 level on the dividend investors are also advantaged by our balance sheet. Our net debt has improved 50% since 2016 and its the lowest since before 2012.
Murphy III: Slide seven.
Murphy III: As we first introduced a little over a year ago, our capital allocation framework defines three debt thresholds and corresponding shareholder return allocations.
Murphy III: We're currently in Murphy to point out with $1 $3 billion of total debt.
Murphy III: <unk> $300 million of debt reduction this year to reach Mercury three point of view.
Murphy III: At that time shareholder returns will increase to a minimum of 50% of adjusted free cash flow.
Murphy III: Slide eight.
Murphy III: At Murphy, we remain mindful of taking actions that benefit all stakeholders and we are proud of our ongoing environmental and community stewardship achievements.
Murphy III: This is a focus at all levels of the organization and metrics such as greenhouse gas emissions intensity safety as Bill performance are all included in our annual goals.
Murphy III: I am proud of what we continue to accomplish at Murphy and highlight that these efforts are recognized repeatedly with top quartile rankings by third parties.
Murphy III: All of our improvements can be found in our sustainability report, which is available on our website.
Murphy III: And with that I'll turn it back over to Roger. Thank you, Tom Let's look now to the quarter results and our onshore assets, we produced and combined 100000 barrels equivalent per day with 30% liquids weighting in quarter, four and Eagle Ford Shale, we produced 31000 equivalents per day with 86% liquids, we brought on three non operated wells.
Roger W. Jenkins: Until then as all we had for the quarter.
Roger W. Jenkins: No wells were brought online in our onshore assets as well in Tupper Montney, we produced 386 million cubic feet per day in the fourth quarter and initiated drilling a 10, well pad with two rigs.
Roger W. Jenkins: Hey, Bob Duvernay, we produced 4000 equivalents per day for the quarter, including 69% liquids.
Murphy III: Turning to offshore in the quarter Murphy produced approximately 84000 equivalents per day, and our offshore business at 82% oil in the Gulf of Mexico production totaled 81000 equivalents per day, we brought online the operated Dalmatian number one well in the quarter as well is drilled completed and recently brought online the <unk> three well also do.
Murphy III: During the quarter, we acquired an 8% working interest in a non operated zephyrs discovery for approximately $13 million after closing adjustments.
Murphy III: Canada produced 4000 equivalents per day, the non operated Terra Nova <unk> named operations during the quarter.
Murphy III: Actions expected to ramp up this quarter in 2024.
Murphy III: Looking at exploration as previously announced we expanded exploration portfolio in 2023 of the addition of five key blocks in Cote d'ivoire, and mcgann seismic reprocessing I'm excited for the opportunities in these blocks, including advancing the field development plans for the undeveloped pond discovery.
Murphy III: Vietnam, The Murphy Board sanction the <unk> field development project in the fourth quarter or two exploration wells planned in 2024 provide upside to this development, particularly as one well is very near the platform facility.
Murphy III: Lastly in the Gulf of Mexico, we were named apparent bidder on eight blocks and lakes latest federal lease sale. These locations will provide near field exploration opportunities close to existing assets now dig in to our capital and production plans for the year.
Murphy III: On slide 13 on the capital side. Our plan is structures that we can continue generating sufficient free cash flow to advance our capital allocation framework, we forecast a capex range not hearing 20 million to 1.02 billion with nearly 60% of the spending in the first six months of the year overall 80.
Murphy III: 5% of our capital plans designated for development work with 80% of this supporting operated activity as.
Murphy III: As we target Murphy III porno with our $300 million debt reduction goal in 'twenty four I'm pleased we were able to announce this morning, a 9% increase in our quarterly dividend to $1 20 per share annualized.
Murphy III: Also targeting share repurchase equal to 25% of adjusted cash flow for the year.
Murphy III: And we believe these goals can be accomplished at a minimum oil price of $70 a barrel.
Murphy III: On the production side for 'twenty for our forecast for the first quarter production range is 163 to 171000 barrels a day, including 53% oil.
Murphy III: This range is impacted by 13000 barrels equivalent per day of total Gulf of Mexico downtown as well as 2000 barrels oil equivalent per day of onshore.
Murphy III: Downtime, including the golf downtime of 6000.
Murphy III: Per day associated the wells currently offline that are scheduled for Workovers and well return to production in the first half of the year also included 5000 barrels per day for plant facility in downstream maintenance as well as 2000 barrels equivalent per day of downtime to repair damage subsea equipment and the more months field.
Murphy III: In the Gulf of Mexico.
Murphy III: For the full year 2024, we forecast production range of 180 to 188000 per day, including 52% oil volumes. This forecast includes approximately 2000 barrels equivalent per day of assume annualized.
Murphy III: Gulf of Mexico Storm downtime accounts for 2023 divestiture of some 500 barrels equivalent per day and non core Canadian asset sales.
Murphy III: Consistent with several years, our annual plan focuses on maximizing free cash flow, which has led to a first half weighted capital program. As a result, as a result, we have seen material production growth from the first quarter to the fourth quarter each year and 'twenty 'twenty four is forecast to have a similar trajectory with production.
Murphy III: Rising to nearly 200000 equivalents per day in the fourth quarter, which would be our fourth year in a row of higher fourth quarter production.
Murphy III: Now for more details on the individual assets I'll turn it over to Eric our EVP of operations Eric.
Eric: Thank you Roger and good morning, everyone Slide 15, our 2024 capital budget of $320 million for the Eagle Ford Shale supports a program of bringing online 19 operated wells primarily in <unk> as well as 18 gross non operated Tilden wells. Additionally, we plan.
To drill 11 operated Karnes wells, which are scheduled for completion in early 2025 with ongoing utilization of our optimized completion design. We forecast 2020 for production of 30000 barrels of oil equivalent per day with 71% oil volumes.
Eric: We recently contracted a new high spec drilling rig from Patterson UTI drilling company LLC, while only one well has been drilled so far we are extremely pleased with the results and hope to see advanced drilling efficiencies throughout the year.
Slide 16, turning to Tupper Montney, our 2024 capital plan of $90 million includes bringing online 13 operated wells all scheduled for the second quarter. We are drilling in this area today in our 85% complete on our first 10, well pad, we forecast production average production of <unk>.
Murphy III: 370 million cubic feet per day in 2024 with this plan and look forward to continuing our real time, Frac optimization, which has helped us achieve some of our highest IP 30 rates in company history in recent years slide 17 in.
Murphy III: And K, Bob Duvernay, we have a $40 million capital plan for 2024 to support bringing online three operated wells in the second quarter as well as initiating drilling a four well pad late in the year overall, we forecast average production of 4000 barrels of oil equivalent per day with 67% liquids volumes in two.
<unk> thousand 24.
Murphy III: Slide 18 are.
Murphy III: Our total 2020 for offshore capital plan of $370 million supports bringing online operated and non operated tie back wells in the Gulf of Mexico as well as the progressing of the non operated St. Malo Waterflood project the locked up on field development project in Vietnam, and the PON field development plan in court of law.
Murphy III: Through 2024, we will bring four operated subsea tieback wells online with the first being <unk>, three which came online earlier. This month. Additionally, seven non operated wells are forecast to begin production. This year combined we forecast average production of 88000 barrels of oil equivalent per day for 2020 for slide <unk>.
Murphy III: <unk>.
Murphy III: As disclosed in our last quarter call, we experienced mechanical issues at two operated Gulf of Mexico fields. In 2023, we have a rig currently on location at Niedermeyer and the Workover is expected to be complete in the second quarter of 2024 for the Dalmatian subsea safety valve repair we anticipate completing this repair in the middle of 2024.
Murphy III: We also have zone changes planned at two operated <unk> wells in the first quarter of 2024. Additionally earlier this year, we experienced an issue with subsea equipment and are more month field, and we'll be making that repair in the first quarter of 2024.
Murphy III: The non operated Lucius number nine well Workover has been completed and the well is forecast to return to production. Shortly Additionally, the previously disclosed non operated Kodiak three well stimulation and zone edition is scheduled for mid 2024.
Murphy III: Slide 20.
As announced last quarter, our board sanctioned the lock the <unk> field development project in block 15, 105 in Vietnam, we have allocated approximately $40 million of Capex for the project in 2024 to support facilities construction to ensure capital efficiency. The field will be developed in phases through 2029, reaching first oil in 2026.
Murphy III: Overall Murphy is targeting 100 million barrels of oil equivalent estimated gross recoverable resources and we booked preliminary net proved reserves of 13 million barrels of oil equivalent at year end 2023, we forecast the field will achieve gross production of 30 to 40000 barrels of oil equivalent per day or 10 to 15000 barrels.
Murphy III: Oil equivalent per day net to Murphy.
Murphy III: The field is 96% oil and we will receive a premium to Brent oil pricing and with that I will turn it back to Roger.
Roger: Thank you Eric.
Eric: Exploration are totaled 24 exploration plan of $120 million supports the drilling of two Gulf of Mexico and to Vietnam exploration Wells, which combined target approximately 120 million barrels equivalent net mean unresponsive resource basis. Additionally, this plant funds related exploration call.
Roger: It's an ongoing geological and geophysical work in the Gulf of Mexico participating in to Oxy operated wells, which are forecast to spud in the second quarter of 'twenty for both of these opportunities are located near infrastructure.
Roger: In Vietnam and in addition to locked Vanke field development, which song going we're planning to drill two exploration wells in 'twenty, four and I look forward to the upside possibilities decent material near field exploration prospects provide the rig has now been secured to drill both wells beginning with HSV exploration well in block <unk>.
Murphy III: <unk> dash too, which will spud in the third quarter of 24 and target a main upward gross resource potential of 170 to 430 million barrels equivalent.
Murphy III: We anticipate the LDH exploration drill exploration well in block 15, one well spud in the fourth quarter of 'twenty for this.
Murphy III: This well is just to the southwest of our locked Bang field development and will target a main upward gross resource potential of 65 to 135 million equivalent.
Murphy III: All of these two exciting prospects and further advantaged by infrastructure provided by that are nearby.
Murphy III: The bank field.
Murphy III: <unk> 23 in Cote d'ivoire.
Murphy III: We're excited about the initial work completed on our newest country entry, including initiating SaaS in reprocessing and looking forward to advancing opportunities across our five significant box.
Murphy III: As well in 24 will continue reviewing commerciality and field develop complex concepts. So the pond discovery in block C 103, which praised with multiple wells by previous operator as part of the agreement on the block we are committed to to submitting to the government a viable field development plan by the end of 2025.
Murphy III: Clearly demonstrated in 'twenty, one 'twenty, two and 'twenty three Murphy has done a tremendous job in reducing debt.
Murphy III: We have built a strong safe balance sheet for the company and resulted in a 0.7 times debt to trailing 12 month EBITDA based on third quarter results.
Murphy III: We've been able to accomplish this delevering of our assets and generate significant free cash flow as highlighted by our peer leading 13% cash flow yield and $23 barrel.
Murphy III: Of all equivalent metric I am proud that Murphy is a leader in these attributes and with reaching our 1 billion debt target later, this year, which ties to one times EBITDA at a mid forty's pricing, we will be able to continue our effort to return cash to our shareholders with a much safer balance sheet and.
Murphy III: Safer than our peers with no bonds to be refinanced in our business until late 2027.
Murphy III: As we look to slide 26, and maintaining a very similar long term plan to what was disclosed a year ago.
Murphy III: As we now incorporate the L. D V field development as well as higher exploration spending all of which supports long term oil production growth overall, we forecast to achieve our 1 billion debt target in 'twenty four with no additional debt maturities until 'twenty seven and we accomplished this in part by reinvesting approximately 50.
Murphy III: Percent of our operating cash flow in our business.
Murphy III: Our average annual capital spend of $1 1 billion will support a 5% CAGR through 2026, increasing protection up to an average of 195000 equivalents per day. The approximately 95000 of oil equivalents per day produced in our offshore business.
Through 2026 remain focused on achieving first oil in Vietnam with key exploration wells planned in the Gulf Vietnam in Cote d'ivoire, and conducting additional geophysical studies overall, our payout to shareholders will increase during this time.
Murphy III: We reached three point over our capital allocation framework.
Murphy III: Longer term, we plan to reinvest approximately 45% of our cash flows achieving an average production level of 210 to 220000 equivalents per day with more than a 50% oil weighting, we're forecasting generating ample free cash flow to allocate toward additional debt reductions further shareholder returns and accretive investments.
Murphy III: As well as supporting any exploration success. Additionally, as part of this plan, we remain committed to achieving metrics that are consistent with an investment grade company issues plan has higher production levels, and 27 and beyond with significantly higher offshore production in those years compared to last and further we did law.
Murphy III: Our gas price in this.
Murphy III: Plan, which you can be seen in the footnote of the slide.
Murphy III: As we wrap things up here on slide 27, as we look back we had a great year on safety and protecting our people and we continue achieving new company lows every year on emissions intensity, we made strides in executing our capital allocation framework and achieved our decade low debt level on a net basis, we continued to reap the benefits of an <unk>.
Murphy III: All weighted high margin asset base and we grew our proved reserves. This team is excited to advance our field development project in Vietnam. We began the procurement process last year, we look forward to potential upside in the area with our upcoming exploration wells I'm also expanded with also expand our exploration portfolio with it.
Murphy III: Additional blocks in Cote d'ivoire, we have a solid foundation to move forward.
Murphy III: We'll continue building on our strong safety culture and target additional emissions intensity improvements shareholder returns remain at the forefront in our debt reduction has only strengthened our balance sheet and it made us more resistant so sick cyclical commodity prices our business large multi basin portfolio generates peer.
Murphy III: Leading cash flow metrics with further support our shareholder returns, while providing future optionality from our operations Lastly, we'll look forward to maintain our exploration capabilities to augment our portfolio and a measured approach.
Closing as always I. Thank our incredible employees for their continued dedication hard work supporting our company. That's the end of our prepared remarks today, we're at standby for our calls when we have a long list of calls here today. So here we go.
Murphy III: Thank you.
Murphy III: Ladies and gentlemen, we will now begin please go ahead.
Murphy III: Thank you ladies and gentlemen, we will now begin the question and answer session.
Murphy III: We have a question. Please question star follow up with one on you touched on filing.
Murphy III: <unk> Telecom technology northwest.
Murphy III: Questions will be taken in the order received.
Murphy III: Should you wish to cancel your request. Please press the star followed by the team.
Murphy III: We are using a speaker phone please lift the handset before pressing any case.
Arun Jayaram: Your first question is from Arun <unk> from Jpmorgan. Please ask your question.
Arun Jayaram: Yes, good morning, Roger and team.
Roger: Roger I wanted to get I was wondering if you could shed some more light on your.
Arun Jayaram: 2025, and 2026 kind of outlook.
Roger: You've outlined a $1.1 billion average Capex program from 2024 to 26 and help us understand what type of spending projects.
Roger: You'll see in 2025, and 26, which will impact that the capex trajectory as well as.
Roger: How does how do you see.
Roger: Spending.
Arun Jayaram: Trending and the LTV development looks like about $40 million this year, but up but obviously, you're probably going to rise as you get closer to first oil.
Murphy III: The first on the question. Thanks for that we do have a plan. This year, we consider to be fairly consistent with latest prices and plans were going to be like a $1 billion one.
Arun Jayaram: $1 billion Capex company in those years and if you look at our Capex from 'twenty three 'twenty four it's very similar that's suspected remained so we have an ample list of Gulf of Mexico.
Arun Jayaram: Two P projects, we call them the less we have over two years or three years of rig work. There if we want it and we'll be keeping our eagle Ford shale in that same level and reaching out to the field are planned in the montney.
Arun Jayaram: The the LTV project is not super expensive for Murphy, probably around $300 million total and it'll be spread over three or four years very nicely there'll be no big slugs of Capex, there and I would consider the capex in.
Arun Jayaram: Vietnam to go to go up in 'twenty, five 'twenty six almost doubling our slightly more and pullback in some of our non op projects as St. Malo gets going Terra Nova finally finishes their work and that we get higher production Montney to go forward.
Murphy III: This plan is a very robust plan and what's more robust about it in the past as we have found more offshore projects to do with Vietnam. We have a much more much bigger offshore business. If you compare player plan to plan our offshore production. Some 10000 barrels a day higher than 27, our total production and 28.
Murphy III: It's much higher than it was in the final plan and our oil productions, five or 6000 barrels a day and 28 compared to last year's plan. So this is a really good plan, we're going to accumulate between five and $6 billion of free cash flow from 24 to 28 with the assets we own today.
Murphy III: And we'll be able to return massive amounts to our shareholders through buybacks and have very large dividend levels, because it will be purchasing so much stock and we're extremely well positioned with this plan, it's very much a consistent plan with inflation and things happening in <unk>.
Murphy III: <unk> a plan like you do every year and it's a really good shape room.
Roger: Great. Thanks Roger.
Roger: And I just had a follow up I was wondering if you could give us an update on the life extension.
How that went that Terra Nova just kind of the ramp.
Roger: You expect maybe some details on how you expect that ramp to play out kind of net.
Roger: Net to you.
Roger: So super pleased with that execution that I'll, let Eric cover it for you. Thanks Roger.
Eric: That's a great question turnover as we highlighted before.
Eric: Life extension project was completed at the end of.
Eric: Created constitute completed sorry in the middle of last quarter fourth quarter of 'twenty, three and we produced about 1000 Napa <unk> average in the quarter, we expect that the production will ramp up here pretty soon after they complete sort of the final stages of additional compressor compressor commissioning and in the first.
Roger: We expect it to come up to around 4000 barrels a day and then on an average basis, because it's ramping through the quarter and then for the last three quarters of the year, we expect production to be in the range or be around $5 5000 Boe per day net to Murphy.
Murphy III: Great. Thanks, a lot gentlemen.
Murphy III: Thank you Brian appreciate your call.
Brian Smith: Thank you.
Brian Smith: The next question is from Neal Dingmann from <unk> Securities. Please ask your question.
Neal Dingmann: Hi, Good morning, all thanks for the time, Brian for you Eric could you just talk a little more on color on slide 18, I really think the ups.
Neal Dingmann: Slide from your Gulf.
Eric: Obviously, the Gulf offshore development seems to be quite material and I'm just wondering.
Neal Dingmann: Is it 300 kind of a change that you talked about 370, I guess to be exact is that for just the first three projects Barbellate, let's say more bonds or maybe just talk about.
Eric: The timing behind that.
Eric: Online in here.
Eric: Did you give a little more color on this.
Eric: Looks like sizable.
Eric: Thanks, Neill theyre spending across all of it and I'll, let Eric give you more detail yeah sure. So one of the things we're trying to highlight here is where we're spending money. This year. Obviously, if you look at the slide you see production coming online from new wells in across the year in the marble arch Khaleesi Marmol fields. We are also high.
Eric: Lighting that we're spending money in other fields, and it's basically long lead equipment.
Eric: That we're spending on in 2004 that will contribute to new volumes and new wells coming online in 'twenty, five 'twenty, six et cetera, and if we wanted to we could make a table like this that would go on up to 2028, but we didn't do that so as Roger highlighted a few minutes ago, we expect relatively stable spending in our overall offshore business.
Eric: With all of these really.
Eric: Awesome investment opportunities, we have to continue to bring in more wells and do workovers et cetera in our offshore business and maintain those offshore volumes flat for.
Eric: The next several years with just the known stuff, we have without an exploration success anywhere.
Yes further on that Neil when we have our board meeting and we project. Our projects. These are well in excess of harm percent rate of return later on in this slide deck, we talk about Workovers, which are unfortunate some of these wells.
Had some mechanical problems after fixed the payout and these wells are three or four months. So everything we do offshore 150, <unk> hundred 7200% rate of return so.
Neal Dingmann: Near infrastructure and unlike onshore they're spending on things without necessarily drilling we have to buy long lead equipment items production equipment drilling equipment casing their spending on things.
Neal Dingmann: Associated with all of these developments. This is some of the best investment you can ever Bacon the oilfield today.
Neal Dingmann: Neal once that you have to look at and they want to have a look at slide 39 in our in our presentation, where we try to highlight the depth of our offshore inventory, we don't disclose every single well by itself, but we do attempt to show you how strong and resilient. They are so the majority of our offshore identified projects breakeven below 35.
Neal Dingmann: Dollars a barrel so super robust Super strong high return there well identified these are known things in our portfolio that we're planning to bring forward over the next several years.
Brian Smith: I'm glad you brought you all Brian made return it's certainly notable and then just a quick follow up on your onshore.
Brian Smith: It seems like I think in the press release, you suggested about a quarter of the Eagle Ford would be on field development.
Brian Smith: That normal and could you just talk about what that will be direct imports.
Brian Smith: Yes.
Neal Dingmann: Yes, we use that term field development Neil to account things that are mostly associated with just bringing on new wells, but theyre not specifically the drilling and completion cost. So if we have to build a pipeline to connect new pad to an existing facility or if an existing facility requires some kind of.
Neal Dingmann: Upgrade to handle the new volume so generally its just surface equipment that we're upgrading is also we continue to make improvements in our greenhouse gas and methane emissions and we're spending a little bit of money there to drive those improvements in our Eagle Ford business. So its mostly just bringing on new wells the surface equipment related to it but a few other enhancements that improve our <unk>.
Neal Dingmann: Operations, and lower our downtime and help us with our free cash flows.
Neal Dingmann: Thank you.
Neal Dingmann: Sure.
Neal Dingmann: Thank you.
Speaker Change: Next question is from O'neil Mariani from Roth MTM. Please ask your question.
Speaker Change: Good morning, Lee I, just wanted to hey, good morning.
Speaker Change: I wanted to quickly follow up on the Gulf of Mexico.
Kind of briefly mentioned this Roger but.
Speaker Change: I don't know if im looking at this right, but it seems like maybe there's been kind of a I.
Speaker Change: I don't know an unusually high number of sort of well failures that are required.
Speaker Change: <unk> just wanted to get a sense. If you guys are attributing that to.
Brian Smith: Anything in particular out there maybe this is just kind of a recent bad streak of lock in just in the Gulf was hoping you could also maybe talk about M&A and I guess, we've seen you don't asset trade lately.
Brian Smith: Perhaps there'll be others coming out of the Gulf.
Brian Smith: Thanks Leo.
Brian Smith: You said it right. It's bad luck, it's nothing to do with anything these are not related.
Brian Smith: There is a safety valve instrument and Dalmatian. This has been a occurrence that happened in the Gulf to various operators through the years you test the safety valve from a regulatory basis and about won't open back up for different kinds of reasons. Then we had to go do some studies about the metallurgy of the type of equipment, we need there's very little equipment on the ground by.
Brian Smith: These large service equipment companies today, you have to procure things procure rig you can get rigs in the Gulf to do work, we've been able to do it is not that tight we're able to do it and then the well and need EMR is a complex deep.
Pressure well that had a communication it looks like between the two being to the casing. We bought this well we didn't complete this well.
Brian Smith: Ben the way, we would have designed the well we can say that and we need to go fix the well and we have a rig there today to fix it.
Brian Smith: These things are unrelated and what's really happening to us here in this first quarter is some work that needs to be done that we had to procure and get the equipment to do with large downtown for example, they are lifting up the famous sub sea water injection equipment at St Malo, which is a big deal for one of the greatest fields in the Gulf on the highest margin.
Brian Smith: In the Gulf that has to be shut in and picked up Delta House has some equipment that's being installed by another operator. So we have a lot of planned downtime that came in on top of some one off workover, leading to a low first quarter and we haven't put a well online in the onshore in quite a while that's the way we run our business to have.
Brian Smith: It's incredible low kept free cash flow yield incredible leading net debt debt to EBITDA no bonds to be refinance still 27, the only energy company in that situation. So all of that set up to provide all that safety for our shareholders and we're returning money to shareholders. So to wrap all this up with some poor luck things happened with some downtime.
Arun Jayaram: As to M&A. Thanks for asking that question, we are company that prods ourself and very successful M&A over $8 billion of M&A in the decade here.
Neal Dingmann: Credible team a senior team and we have a proprietary process.
Arun Jayaram: To look at things on a certain basis.
Brian Smith: The recent large deal it's something that didn't fit the criteria of us we've known about the deal for a long time and I think if you back up to 30000 feet. Whats. The difference is is the debt debt to EBITDA level of the outcome of that deal versus a striving to be one times debt to EBITDA at $45 oil not one.
Brian Smith: <unk> net debt EBITDA, the EBITDA at $75 oil. So we're in a different total world. We have all the assets, we need and we're striving to protect our shareholders for large returns and cycle pricing and with this incredible balance sheet. So that's kind of how we think it's so for for us to do M&A.
Brian Smith: It's a certain criteria of the age of the assets and the returns that we like that fit in with our framework.
Brian Smith: And we have.
Brian Smith: That's how we judge that and.
Brian Smith: That's the answer on that there are plenty of opportunities we look at them all the time and we're very proud of our screening in our process that we have that's led to great success on M&A front here one of our one of our best things that we do actually so thank you Leo for supporting Us and calling in today.
Roger: Yes. Thank you I appreciate that Roger here, maybe just a quick follow up on the Eagle Ford here. So it seems like you guys are somewhat electing to turn in line.
Roger: Quite a bit fewer operated wells and 24 versus what you did in 'twenty three and it seems like that's really kind of leading to production ticking lower can you maybe just kind of talk through that a little bit I know you are bringing on a slug of wells kind of early in 'twenty, five, but just little surprised kind of maybe see some of the timing, but a lot fewer turn in lines. This year.
Eric: Yeah. Thanks, Leo This is Eric I'll, just give you a little bit of my thoughts on that.
Eric: Ford, we are expecting 30000 barrels a day in 2024 down about 3000 barrels a day from 2023, and we're pulling back our capital program Theyre, just a little bit some of that is driven by just the timing.
Eric: The timing around when we're bringing on the wells, we're bringing on the average new well a little bit later this year than before.
Eric: Capital decisions, we made in 'twenty three had us entering the year without any wells to complete early so we're drilling wells in Eagle Ford before we could complete them and then we're happy that we're able to within our overall framework direct some capital investment to Vietnam for future long term oil growth there.
Eric: With.
Eric: Not changing our total capital level, but displace a little bit of Eagle Ford spending for Vietnam spending and set us up for a nice long plateau out there in Vietnam and I expect in 2025, you probably see a little bit higher level, our exit rate in Eagle Ford at the end of 'twenty four ought to be quite a bit higher than we saw.
Eric: In 2023 due to the timing of the new well delivery and you ought to see US as we've said for several years now manage Eagle Ford in the 30 to 35000 barrel a day range with pretty consistent capex.
Eric: We'll just make a highlight that we are we are really excited about this new rig we picked up it's just fly and through the first lateral and happy to see that and hopefully we can see additional operational improvements and capital efficiencies there as we progress through the year.
Eric: Thank you that's very thorough I appreciate it.
Eric: Yes.
Eric: Okay.
Eric: Yeah.
Keith: Thanks Keith.
Keith: Our next question is from Paul Cheng from Scotia Bank. Please ask your question.
Paul Y. Cheng: Hey, good morning, Paul.
Paul Y. Cheng: Two quick one maybe.
Paul Y. Cheng: The first one is for Tom.
Paul Y. Cheng: Just maybe remind us on the cash payout when you calculate.
Paul Y. Cheng: Your estimate for the full year and then <unk>.
Tom: Do you have quarter by quarter.
Tom: The second question.
Tom: I was looking at.
Tom: Your last quarter presentation.
Tom: Looking for 2023 to 2025 is about 900 million and now did you say 2024 to 2020 611.
Tom: Obviously thats one yet.
Tom: But I don't think that we may make the difference.
Tom: Youll production.
Tom: How long is largely about the same so and you just mentioned that macmahon is really meant to you is only about 300, so yes, Matt.
Tom: And the other area that we should be aware of why that the increase in budget.
Tom: Okay. Thanks, Thanks, Paul I'll talk about the first one on the on how we are executing our framework, which we're really pretty excited about how we've moved into 2.0 and we're more than halfway through it. We do think about this in terms of hitting our annual targets here for our.
Paul: Our debt target so quarter by quarter as we disclosed our Capex was front loaded so we're not going to we will see more of our adjusted free cash flow towards the back end of the year.
Paul: But we do monitor it quarter by quarter to see if theres, an opportunity to do something to execute part of our framework, but really it is something that we're looking at on an annual basis to make sure. We try to stay in line with our commitment to return.
Paul: Returns to shareholders.
Tom: So Tom if I could.
Tom: You're correct in the immuno stat, you in any particular quarter.
Tom: You may.
Tom: I think more or less than 25%.
Tom: That is correct.
Tom: Indicate that would suggest to me.
Tom: That's right, yes, youll see some you may see some fluctuations there.
Tom: And try to hit that annual number for us.
Neal Dingmann: We're not afraid Paul to buy stock when our revolver, if we get separated from the group or the <unk>.
Neal Dingmann: <unk> here because our company is very solid company with incredible cash returns, let me take a stab at the <unk> <unk> LLP long range plans, what we call. It. Thanks for that question Fair question.
Brian Smith: On the Capex side, yes, it's higher.
Brian Smith: During this period.
Brian Smith: Last year.
Brian Smith: We didn't have enough for exploration and to improve our exploration business, we need to build a portfolio that allows us a mixture of lower risk and high risk throughout the year and also lower risk and high risk as to cost. These big 33000 foot wells in the Gulf for very expensive in other parts of the world. They are much less expensive and.
Brian Smith: On the risk side, we have a much lower risk exploration portfolio. This year. So we've added over $40 million a year. During this three year period for exploration.
Brian Smith: On the cash flow side, we've lowered our gas prices in the plan that's footnoted and we're also executing a $300 million project in Vietnam, and that's just a re look at the costs and if you look at production, let's just be honest <unk> was supposed to be up and running last March it's not and then you have to start off now and ramp that up St Malo.
Neal Dingmann: <unk> field district drilled an incredible production well there the oil in place at St. Malo containers to increase probably one of the top assets in the world, but the projects very late so the Capex has been spent that production has been delayed there just now putting on the water injection equipment. So when you add all this up you have a similar production result, but very very.
Brian Smith: Same on oil.
Brian Smith: Similar on the oil side to last year and more spending, but our 27 28 29 is more robust and better than it was and that leading to still a large amount of free cash flow approaching our yesterday market cap in fact and so.
Arun Jayaram: There we have it on that Paul but just every year. The plan gets better things happened things change in phasing we deal with a lot of non op big projects like Terra, Nova and St Malo, and Lucius with Occidental and things change, we added up and put it back together, but at the end of the day production is an outcome and we're focusing on free.
Cash flow and returning to shareholders and we have an outstanding ability to have free cash flow very similar last year's plans. So we focus on that not the little engine out some small variances in production that is the outcome for us.
Arun Jayaram: <unk>.
Arun Jayaram: So my Treasurer, telling me that yesterday great line. So that's what we're doing on that Paul.
Arun Jayaram: Thank you.
Arun Jayaram: No. Thank you appreciate all years. Thank you.
Arun Jayaram: Yes.
Arun Jayaram: Thank you. Your next question is from Charles Meade from Johnson Rice. Please ask your question.
Arun Jayaram: Morning, Charles Good morning, Roger to you and your team. Thank you.
Charles Meade: Roger I wanted to ask.
Charles Meade: Thanks for giving us that 300 million debt reduction target for <unk> 24 in.
Roger: We can do that math that will that will get you.
Roger: Murphy III pointed out but.
Murphy III: You you could start on that today with just the cash on your balance sheet. So can you can you give us some insight into how youre thinking about the timing of that.
Brian Smith: <unk> 300 billion in debt reduction.
Brian Smith: It'll be later this year and throughout the year, but I'll, let Tom walk you through that Charles a little bit here.
Yes, Charles Thanks for that question as Roger said, we'll be.
Charles Meade: Planning to utilize more of our adjusted free cash flow towards the second half of the year, we do have.
Charles Meade: A little over $300 million of cash coming into the year. That's that's a balance that we try to hold just to manage our business some of our operational needs in our in our international and domestic activities. So we'd like to try to keep that cash balance around $303 50.
Charles Meade: For those needs.
Brian Smith: As you May notice may have noticed coming into 2023 last year, we had.
Brian Smith: A little over $400 million of cash and we did use some of that.
Brian Smith: Towards our framework as we got into the year.
Brian Smith: But as I mentioned in the.
Brian Smith: To Paul's question, we try to manage this on an annual basis. This framework.
Brian Smith: And I think we'll see more of that happening.
Brian Smith: For the second half of the year.
Brian Smith: That is helpful. Tom Thank you.
Brian Smith: And then Roger I wanted to ask you about these.
Brian Smith: Two Gulf of Mexico prospects that you added a warranty.
Brian Smith: I didn't I don't remember the other Switala epitope.
Brian Smith: Yes.
Brian Smith: If I'm doing that if im doing the math right it looks to me.
Brian Smith: You mentioned, the $140 million net meaning after taking away the.
Brian Smith: Vietnam.
<unk> it looks like these these two Gulf of Mexico prospects are in the range of $20 million to $30 million gross.
I wonder if thats, the if I'm doing the math right there and if you could just talk a little bit about.
Brian Smith: The timing of those prospects.
Brian Smith: What.
What they look like and what the.
Brian Smith: What the development time line would be if you could get on that success leg.
Brian Smith: I think they're a little bigger than that but they are in the <unk> range.
Story, there so long story, we just drilled this well also it's a disappointing well that we disclosed earlier.
Brian Smith: But our team is doing a great job, we have a great team, we have a new enhanced team here and people want to trade and be in our business. So when we drilled also.
Brian Smith: For people to come into that well Occidental close relationship with them Oxy.
Oxy: We were able to get into two of their prospects for them. Joining ours. We also have a very nice acreage position near Delta House recently did a large land trade where people want to come into our acreage and we build into a portfolio of other wells. So we're using our prospects to gain entry into other prospects, meaning people.
Oxy: Aleve our prospects are good as matter of fact, we're doing extremely well and trading in and out and building a really nice portfolio, Chris Olson, our exploration leader and our land team has done a great job at pulling all that together for US. These are.
Chris Olson: Again, I spoke to Paul Cheng a few minutes ago about the risk of the program and are on occasion, you end up with a higher risk program year to year I consider this year lower risk. These are amplitude type plays near one of Oxy is very successful fields can be tied back very closely to where they were these are would be near fuel type.
Chris Olson: <unk> totally different promote so totally different from other things that we drilled in the past. So this year, we have some lower risk lower cost not its deep and tough wells. If you will and some really nice wells in Vietnam that we've been on the sidelines in Vietnam for a long time until we made plans with our field development plan with that host government now the host government.
Charles Meade: Very interested in us moving forward thats going extremely well, so theyre smaller wells, they're lower risk that with a great partner they come from acreage situations that we put together and in Vietnam. We're back in an area. That's been on hold for us. So that's combo fast wrap up of what we got going on there Charles.
Charles Meade: That's helpful detail. Thank you Roger.
Thank you appreciate it.
Roger: Thank you.
Roger: Our next question is from Jim Razvan from Keybanc capital markets. Please ask your question.
Roger: Alright, good morning.
Timothy A. Rezvan: Well, thanks for taking my question.
Timothy A. Rezvan: To dig back into the Eagle Ford.
You have clear as a company our long term growth and income approach there is inherent variability.
Timothy A. Rezvan: The golf business, so I'm trying to understand why with the uplift in <unk>.
Timothy A. Rezvan: Productivity from new completions, why not run more of a continuous program.
Eagle Ford, it's hard to think that that wouldn't compete for capital, especially given the comments you've given.
Timothy A. Rezvan: The high spec rig, but just curious on that.
Timothy A. Rezvan: We focus on our offshore business typically first because these are infrastructures that need to be used in a pure return basis. The returns are better but on a risk basis, it's different and the outcomes. It's not quite as volatile as you say we've had three really strong years of work in the Gulf made enormous.
Timothy A. Rezvan: <unk> in billings and free cash flow and our golf business.
Timothy A. Rezvan: So we just want to hold it in here and use it later, if our golf business, our offshore business declines Thats, a big advantage, we were showing a plan to our board to produce past 2050 with assets that we own without any M&A or any exploration success. So we're a little different.
Timothy A. Rezvan: Animal there and we're trying to get our balance sheet in great shape, but I'll, let Eric give you a little better color than that on this choice of capital allocation, Yes, I think I think Roger you are right on.
Eric: Returns for offshore projects are typically higher than our Eagle Ford.
Eric: And we like our Eagle Ford, we have great returns, we have highlighted in our slides here, how many years of great inventory, we have and we.
Eric: We do really like the Optionality, we have to maintain the scale of our business in the oily scale of our business for many decades by investing in the Eagle Ford in the future, but Roger briefly touched on was that in the offshore space. It's common that if you do not pursue an opportunity the infrastructure, where you can take that new well.
Roger: Tie back to a facility the facility has a defined life.
Roger: And it won't be there forever and so you like the returns and you want to use it or lose it in the Eagle Ford that world is going to be waiting for us whenever we want it. So we like the flexibility that provides for us.
Chris Olson: One thing just to highlight that we have reduced our capital program in the Eagle Ford over the last few years and have generated strong free cash flows, which we've used to delever and return more money to shareholders, which we think is valued by our shareholders.
Roger: We have the Eagle Ford for long term and we have it when we need it we can change capital allocation on a dam here and 30 minutes. We can change cap allocation. So we're proud to have it are things have become more and more valuable and I. Thank all of our onshore assets from become more and more valuable with the scarcity of the peers.
Brian Smith: And that group that only do that business decline over the next decade. So it's very valuable assets in both Canada and the Eagle Ford.
Brian Smith: Okay I appreciate the color on that and as my follow up if I could pivot.
Chris Olson: To Vietnam.
Brian Smith: Youre allocating $40 million to the exploration wells this year.
Brian Smith: You did book, the 13 million barrels of Pud reserves.
Brian Smith: Can you talk about the assumptions behind those reserve bookings is that is that strictly based on that.
Brian Smith: Yes, I'm trying to understand kind of what the upside could be from the exploration wells.
Brian Smith: And how that impacted.
Brian Smith: The reserves booked and just.
Brian Smith: Kind of overview on how that.
Brian Smith: Either play there.
Brian Smith: Yes. Thanks for the question I'll, just give you a quick run through of our overall Vietnam businesses and how we think about it we really like this locked up long project that we're working on now just getting started we're going to spend $40 million net.
Brian Smith: Net to us on the Capex in development project for this year and as Roger highlighted earlier, they'll probably be somewhat close to double that in 'twenty five and 26 first oil in 2026, it's a nice development 10 to 15000 barrels net to us, but we would like to have a bigger business. That's more material there and we're fortunate to have.
Brian Smith: Excellent exploration prospects very close to our existing infrastructure that we're building out for <unk>.
Roger: We're spending.
Roger: A little bit less on exploration wells and then you mentioned that switched the development costs with exploration costs.
Roger: Our exploration well cost is kind of in the $30 million to $35 million net range and theyre very sizable very exciting prospects and this cooling basin, we haven't drilled a dry hole, it's very oily. It provides almost all the oil in Vietnam and there may be some development synergies one of the fields one of the prospects for drill.
Neal Dingmann: <unk> in the block Casino <unk> five is particularly close to our LTV development. So on success the ability to bring that field online faster than otherwise is an advantage from.
Neal Dingmann: Making money perspective from a free cash flow generated perspective, and then the prospect in the <unk> two is very sizable very material for us and could have the potential that our overall business in Vietnam could be at 30% to 40000, net BOE a day business, which would be a really great piece of business.
Neal Dingmann: For us there.
Neal Dingmann: Generate tremendous.
Neal Dingmann: Tremendous amounts of free cash flow going forward. So we're super excited about it and.
Neal Dingmann: Look forward to giving an update on the results because Vietnam wells in the second half of 2024.
Neal Dingmann: Okay. Thank you very much.
Neal Dingmann: Thank you appreciate it.
Neal Dingmann: Thank you once again, ladies and gentleman should you have a question. Please press star one.
Neal Dingmann: Your next question is from Roger read from Wells Fargo. Please ask your question.
Roger D. Read: Yes good.
Roger D. Read: Good to hear from you.
Roger D. Read: Good to hear you all.
Roger D. Read: Getting us started here with E&P earnings season.
Roger D. Read: Just.
Roger D. Read: I think my question comes at you from kind of the capital allocation, there's been danced around a little bit but looking at it.
Roger D. Read: The fact, you are an exploration company, you've stuck with exploration through all the environments. You are even in the case I think what was it zephyrus.
Roger D. Read: Buying into an existing discovery. So you step back Roger you look at your options here.
Roger: Acquisition exploration buyback your shares how does all of that fit in when you're when you're doing the true valuation here like which one.
Roger: Whats your what looks the best which one.
Roger: How do you think about them competing over the course of say the next five years you look at it Youre long range program.
Roger: Thanks for that question Raj I appreciate that the.
Roger: The way, we think about it as Jeff to have some level of exploration spending. If you are an E&P company or if not you're just a P company.
Roger: So we.
Roger: We have raised that because you need to build a better portfolio for the long time sustained long term value of the company when I think of sustainability, we have all the attributes evolve.
Jeff: <unk> sustainability ranked top in ISS ranked number one every ranker lowest emissions incredible focus on all of that but to me sustainability is having that and an asset base. It last for decades as I mentioned on our prior call. Our board has seen our production forecast past 2050 with the assets that we own today, so we'd like.
Jeff: To augment those assets with more oil weighted exploration and have become a totally gas company because we have teams in Ts of gas in the Montney. So we feel that as a 10% level of capex, 8% to 10% level of Capex, we can build a long term lower risk exploration portfolio that doesn't.
Jeff: Doesn't have that evens out the risk profile for the year, which we just talked about here with the previous caller. So we have that our buyback of stock is very very good allocation of capital as well and we disclosed the framework that we're quite serious about and if you look at the actual data within one or 2% of that execution on our firm.
Sure.
Jeff: So.
Jeff: We measure all that through and focus on free cash flow. So what we want to build and what we have.
Jeff: Between now and 28 as I'm looking at all of the free cash flow every year from 24 to 29, and we make a $1 billion a year or more every year free cash flow. So we're doing that with the assets we own them, we can augment that with exploration last longer and longer and longer at that same old waiting and still have all of our onshore assets there to back us up to <unk>.
Jeff: Last for decades, and decades, we're not going out of business at Murphy, we're sustaining our company through the capital allocation process that we have and along the way we are going to be able to buy a lot of stock and one of the key advantages of Murphy because we've never issued equity since we went public in the fifties, we only have 154 million shares.
Brian Smith: We can buy.
Brian Smith: Five or 6% of the company every year.
Without any problem at all so just a different animal also all this business today about our incredible balance sheet and our our shareholders today of $1 20, a share dividend the same as 2016 with way less net debt. So we're protected not to lower our dividend anymore. That's what we wanted to do and we want to have the balance sheet and another cycle.
Murphy III: To pounce on M&A.
Murphy III: And that's how we look at it from an M&A perspective in the golf we did buy.
Murphy III: Very nice situation is getting better we believe on subsurface.
Murphy III: We occasionally look at prospects near our infrastructure, where we can then flow those barrels to us we don't have that deal done we'll need to compete but we're the top operator in the Gulf Haas uptime in the Gulf highest record in the Gulf people want to flow to us and that's an opportunity for us too.
Murphy III: An incredible high rate of return and people want us in their project.
Murphy III: Even though we're non op to help along the way with our expertise so things come to US we get to look at every deal and that we're extremely well positioned Roger being honest with you.
Murphy III: I appreciate that I'll leave it there given given a busy morning here. Thank you Roger.
Murphy III: Thank you I appreciate see soon.
Murphy III: Okay.
Murphy III: Thank you.
Murphy III: Next question is from Neil Mehta from Goldman Sachs. Please ask your question.
Neil Mehta: Yes, good morning, Roger I'll, just ask one because I know we're over time, which is just a problem Navy Neil Youre Goldman Sachs. She asked anything you want as long as you want.
Neil Mehta: Thank you Sir.
Neil Mehta: And it was great to have you in Miami.
Neil Mehta: Quick question for you is just the balance sheet, you've done a terrific job getting leverage down here.
Roger: You are one notch I believe below investment grade when you when you are having conversations with Moody's S&P and Fitch, what's their message about what.
Roger: What needs to be done to get you over the finish line to get to that investment grade I mean is that a priority is that important for you.
I think I'll, let Tom answer that the priority to me is when we meet with our board as we have a red light Green light yellow on everything that Moody's requires we focus on are we meeting investment grade criteria, that's our first step.
Tom: Focused on free cash flow everyday all day and I'll, let Tom talk to you about Moody's here he's expert on that thanks Roger.
Tom: Neel the way, we're thinking about it we really can't control how these rating agencies might change whats most important what's your priority.
Tom: <unk> been investment grade before we operate like an investment grade company in terms of our decision making.
Neil Mehta: We are getting back to our conservative balance sheet, which we've had a long history of of having a conservative balance sheet and so that's how we intend to operate.
Neal Dingmann: When we talk to them, we take a lot of their boxes.
Neal Dingmann: I think the.
Brian Smith: Theme that we're seeing in by some other operators and some other activity in the industry is around scale. We don't think that that's something that is going to push us into doing anything we think we're at the right size to execute.
Brian Smith: Most beneficial for our shareholders and so while we are one notch below it's not limiting our ability to execute our plan and we think we have ample access to capital to continue to provide the types of returns that our shareholders are expecting.
Brian Smith: Alright, guys. Thanks, so much.
Neil Mehta: Thank you Neil Thanks for hanging in to the end and we'll be seeing you soon appreciate it sir.
Neil Mehta: Okay. That's the end of our call today, we had a lot of robust calls for many of our long term analysts. We appreciate that we're first out in E&P today, we're glad to have it behind us and we wish all of our peers as well as they go through it going forward, we're very well positioned very safe balance sheet ever increasing dividend and focus on our shares.
Holders I'm very proud of the company very proud of my team.
Neil Mehta: Very proud of what we have going on here I appreciate everyone's folks. This morning, it's been a long call. Thanks, so much to say goodbye.
Neil Mehta: Thank you.
Neil Mehta: Ladies and gentlemen, the conference has now ended.
Neil Mehta: You all for joining you may all disconnect.