Murphy Oil announced that it has revised its capital spending plans for 2020 given current market conditions and recent commodity price volatility. The company’s revised 2020 budget is approximately $950 million. The reduction of approximately $500 million equates to a nearly 35% revision from the midpoint of the previously announced corporate budget of $1.4 billion to $1.5 billion. The company 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 long-standing dividend,” Roger Jenkins, President and Chief Executive Officer, said. “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.”
The revised plan will be achieved through the following:
- 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.
“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,” Mr 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.”