KEYFACT Energy
Murphy is planning 2020 capital expenditures (CAPEX) to be in the range of $1.4 to $1.5 billion with full year 2020 production to be in the range of 190 to 202 MBOEPD. Production for first quarter 2020 is estimated to be in the range of 181 to 193 MBOEPD, impacted by approximately 3 MBOEPD due to Terra Nova being offline. Both production and CAPEX guidance ranges exclude Gulf of Mexico noncontrolling interest (NCI). Murphy’s 2020 plan reflects management’s continued focus on spending within cash flows, generating excess funds such that the company returns cash to shareholders through the longstanding dividend.
For 2020, Murphy plans to spend $680 million in the Eagle Ford Shale, representing a 13 percent increase from 2019. This capital includes $515 million for drilling 91 and bringing online 97 operated wells, primarily in the company’s Karnes and Catarina acreage, as well as drilling 46 and bringing online 59 non-operated wells during the year in Karnes and Tilden. Murphy’s Eagle Ford Shale budget also includes $165 million for field development.
The company has also allocated $175 million to its Canada onshore business in the Kaybob Duvernay, Tupper Montney and Placid Montney, which is 38 percent lower than in 2019. Approximately $125 million is allocated to the Kaybob Duvernay, primarily for lease retention to bring online 16 operated wells, with $35 million allocated to the Tupper Montney to bring online five operated wells and $15 million allocated to Placid Montney to bring online 11 non-operated wells.
North American onshore production for 2020 is forecast to increase to approximately 105 MBOEPD. Annual average production in the Eagle Ford Shale is expected to grow to 50 MBOEPD, while the Kaybob Duvernay is planned to remain flat at 10 MBOEPD. Tupper Montney production is forecast at approximately 43 MBOEPD.
Murphy has allocated approximately $480 million, or 33 percent, of capital to its offshore assets, with 30 percent planned for the Gulf of Mexico and the remaining 3 percent for Canada offshore. Gulf of Mexico capital will be used for both development drilling and field development projects, including the three-well rig program at Front Runner, activities related to the Khaleesi / Mormont and Samurai developments, St. Malo waterflood, planned well workovers and various non-operated projects. The Cascade #4 well (Walker Ridge 250) workover is scheduled to be complete and placed online in the first half of 2020, as well as the Dalmatian 134 #2 well (Desoto Canyon 134). Canada offshore spending is budgeted for development drilling.
The company forecasts total 2020 offshore production volumes to average 91 MBOEPD, with Gulf of Mexico production of 86 MBOEPD. Canada offshore production is forecast at 4 MBOEPD with the assumption that non-operated Terra Nova remains offline throughout the year for drydock repairs and safety equipment updates, impacting Murphy by approximately 2 MBOEPD in 2020.
Approximately $100 million is allocated to a four-well exploration program in 2020, with 40 percent for drilling, 15 percent for geological and geophysical studies, and the remainder for lease amortization and other exploration costs. Other capital of approximately $20 million, or 1 percent of budget, supports corporate activities.