Murphy Oil Corporation 2012 Annual Shareholders Presentation

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Murphy Oil Corporation 2012 Annual Shareholders Presentation

  1. 1. Annual Meeting of Shareholders El Dorado, Arkansas May 9, 2012M U R P H Y O I L C O R P O R AT I O N
  2. 2. A Growing Value Business David M. Wood President and Chief Executive Officer May 9, 2012MURPHY OIL CORPORATION 2
  3. 3. Agenda  External Environment  Murphy Portfolio  Upstream  Downstream  ConclusionsMURPHY OIL CORPORATION 3
  4. 4. Growing Population Needs Energy World Population World Gross Domestic ProductMillions Billions 2005 US $10,000 180,000 Annual Percentage Change 2010-2035 9,000 OECD: 0.42% Non-OECD: 0.91% 160,000 8,000 140,000 7,000 120,000 6,000 100,000 5,000 Growth: 4.6% 80,000 4,000 60,000 3,000 2,000 40,000 Growth: 2.3% 1,000 20,000 0 0 2010 2015 2020 2025 2030 2035 2010 2015 2020 2025 2030 2035 OECD Non-OECD OECD Non-OECD Source: EIA – International Energy Outlook 2011MURPHY OIL CORPORATION 4
  5. 5. World Energy Use by Fuel Type Quadrillion btu 900 History Projection 800 Renewables 700 Nuclear 600 500 27% Coal 400 28% 300 Natural Gas 200 52% 55% 100 Liquids 0 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 Source: EIA – International Energy Outlook 2011MURPHY OIL CORPORATION 5
  6. 6. Global Crude Oil Supply/Demand World Liquids Consumption World Liquids Production MMBOEPD Oil Price ($/bbl) MMBOEPD 120 240 120 100 200 100 80 160 80 Non-OPEC 60 120 60 40 80 40 OPEC 20 40 20 0 0 0 2010 2015 2020 2025 2030 2035 2010 2015 2020 2025 2030 2035 Transportation OECD China OPEC Non-OPEC India Other Non-OECD Oil Price Source: EIA – Annual Energy Outlook 2012 Early ReleaseMURPHY OIL CORPORATION 6
  7. 7. Global LNG OutlookBCFPD Global LNG Supply/Demand BCFPD LNG Demand in Asia60 6050 50 Probable40 40 Under Construction30 30 S. Korea20 20 Operational Capacity Japan10 10 India China - - 2011 2013 2015 2017 2019 2021 2023 2025 2011 2013 2015 2017 2019 2021 2023 2025 Source: Wood MackenzieMURPHY OIL CORPORATION 7
  8. 8. Historical Prices  Global demand continues to drives oil prices  Gas remains a regional game $/bbl  US over-supplied with gas price de-linked to oil $/mmbtu 150 25.00 Brent Brent WTI 120 20.00 HH Asian LNG 90 WTI 15.00 60 10.00 Asian LNG 30 5.00 Henry Hub 0 - 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012MURPHY OIL CORPORATION 8
  9. 9. Historical Commodity Prices WTI Oil Prices & Gold Prices U.S. Dollar Index $/bbl or $/10oz 200 150 WTI, $/bbl Gold, $/10oz 120 150 USD Index (Jan 1997 = 100) 90 100 60 50 30 0 0 1985 1990 1995 2000 2005 2010 Source: EIA, Federal ReserveMURPHY OIL CORPORATION 9
  10. 10. US Transportation  VMT have declined 140 billion miles from 2007 to 2011  Gasoline consumption declined 6% over same period  Fleet efficiency improving Billion miles mmbpd 2,800 10 Light Duty Vehicle Miles Travelled 2,750 9.5 2,700 9 2,650 8.5 2,600 Motor Gasoline Consumed 8 2,550 2,500 7.5 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: AEO 2012 ; STEO 2012 - EIAMURPHY OIL CORPORATION 10
  11. 11. US Retail Prices v. WTI $/barrel $/gallon 4.50 180 4.00 160 3.50 140 3.00 120 2.50 100 80 2.00 60 1.50 40 1.00 20 0.50 0 0.00 WTI US Retail Gasoline Sources: EIAMURPHY OIL CORPORATION 11
  12. 12. Global Retail Prices UK $/gal Gasoline Cost $3.71 Fuel Taxes $5.00 US $/gal Retail Price $8.71 China $/gal Gasoline Cost $3.29 Gasoline Cost $5.39 Fuel Taxes $0.50 Fuel Taxes $0.60 Retail Price $3.79 Retail Price $5.99 $/gal Gasoline Prices US v. China 8.00 China US 6.00 4.00 2.00 0.00Sources: EIA, ReutersMURPHY OIL CORPORATION 12
  13. 13. Observations for 2012  What has not changed:  Oil, Natural Gas and Coal – the key energy supplies  OPEC role  Non OECD demand key driver  Climate debate  US $ as world currency  Europe  What has changed:  Global LNG  N America gas  US Energy PolicyMURPHY OIL CORPORATION 13
  14. 14. UPSTREAMMURPHY OIL CORPORATION 14
  15. 15. Upstream  Global Footprint  Produce in 5 countries; explore in 10 countries  Oil weighted production (73 %); exploration focus (75%)  Value gas – sought  Making the hard call on N Am dry gas – choke back  Expansion in Malaysia gas 300 Capital 2012 – 2015 Production - MBOEPD 250 37% US Ongoing 200 Projects Canada 26% 150 New 100 Projects Base M’sia 50 17% - Exploration Oil & 2012 2013 2014 2015 20% Oil Indexed: 73% 77% 81% 80%MURPHY OIL CORPORATION 15
  16. 16. Oil Weighted Long Range Plan 300 260 250 250 193 200 200 Oil-Indexed SK Gas NA Dry Gas MBOEPD 150 80% Oil-Weighted 100 73% Oil-Weighted 50 Oil - 2012 2013 2014 2015MURPHY OIL CORPORATION 16
  17. 17. Montney – Quality Gas Resource  Facilities- On Time- On Budget R21 R20 R19 R18 R17 R16 R15 R14 R13 T79  First Quartile Well Costs British Columbia Alberta T78 Groundbirch Tupper West  Opex = $ 0.65/MCF T77  DD&A = $2.50/MCF T76 Brassey Tupper T75  EUR = 4.0 BCF/ Well Murphy Acreage T74 – 156,000 Acres Sundown  Total Resource = T730 Miles 6 1,700 - 3,500 Bcf X AECO PriceMURPHY OIL CORPORATION 17
  18. 18. Eagle Ford – Premier Resource KARNES  216,000 Net Acres N TILDEN  60 % Oil  61 Producing Wells  10 Drilling Rigs  13 Facilities  2 Dedicated Frac Crews  42 MMBOE Booked TILDEN NUECES CATARINA Murphy Acreage Murphy Gas Well Oil Murphy Oil Well Oil Condensate 0 10 mi Drilled GasMURPHY OIL CORPORATION 18
  19. 19. EFS Production 12 2012 Production Mix 11 Production 50 6% Net MBOEPD 10 40 30 13% 9 20 10 8Net MBOEPD 0 7 2011 2012 2013 2014 2015 81% 6 5 Oil Associated Gas Dry Gas 4 3  2012 Guidance: 2 15,450 BOEPD 1 0  December Rate: 25,275 BOEPDMURPHY OIL CORPORATION 19
  20. 20. EFS Oil & Gas Marketing Current EFS Net Back Prices (4/27/12) KARNES Oil $/Bbl Rich Gas $/Mcf Karnes 113.49 5.55 Tilden 115.33 5.55 Catarina 116.04 5.25CATARINA TILDEN Valero Energy Transfer Pipeline Harbor Island Crude Oil Pipeline Barge Terminal Crude Oil Trucks Crude Oil Truck Station NUECES Gas Pipeline Refinery Flint Hills Murphy Acreage 0 10 miMURPHY OIL CORPORATION 20
  21. 21. Eagle Ford Summary  $2.0 Billion Business, High Production – MBOEPD Returns 50 Other 40  EURs Increasing Catarina 30  D&C Costs Improving 20 Tilden 10  Moving from 10 to 12 Rigs Karnes -  Early Days for Technology 2012 2013 2014 2015 Oil: 81% 86% 86% 86%  275 MMBOE Resource  Significant Downspacing PotentialMURPHY OIL CORPORATION 21
  22. 22. Canada Seal Lake Murphy 100% Lands Polymer Murphy 50% W.I. Lands Thermal  70 HZ Wells in 2012 Successful Strat Wells CSS Pilot VSD Pilot  Increase Production by 20% CADOTTE NORTH to 8,500 BOPD  Successful Polymer Pilot CLIFFDALE  Successful 16 Well Strat EAST WEST CENTRAL Program SOUTH  Cyclic Steam Pilot- Q4 2012  Vertical Steam Pilot – Q3 SOUTH 2013 HARMONMURPHY OIL CORPORATION 22
  23. 23. Well Pad Producer Seal Polymer Update Injector  Injection Started Oct 2010  Response July 2011600 Start of Polymer Injection  Incremental Production -500400 Targeted range of response 380 BOPD from 4 Wells300200  Commercial Polymer100 Project 0  Phase 1: Q2 2012 Mar-11 Apr-11 Mar-12 Sep-11 Jan-11 Feb-11 Jun-11 Jul-11 Aug-11 Jan-12 Feb-12 Oct-10 Nov-10 Dec-10 May-11 Oct-11 Nov-11 Dec-11  Phase 2: Q4 2012 Pilot Oil Production - BOPDMURPHY OIL CORPORATION 23
  24. 24. Seal Resources 5,850 STOIIP MMSTB Polymer / Thermal Type of Recovery Primary Polymer Thermal Total TBD 2,555 500-700 1,000-1300 1,295 – 1,795 5,850 Identified STOIIP MMSTB MMSTB MMSTB MMSTB MMSTB 200-300 45-75 190-370 50-450 485-1195 EUR Range MMSTB MMSTB MMSTB MMSTB MMSTB 210 45 110 365 YE11 Resource MMSTB MMSTB MMSTB MMSTB  Reserve Group Focus- Resource Increased by 105%  Current Proven Reserves: 20 MMBOE  Focus on Polymer and Thermal EORMURPHY OIL CORPORATION 24
  25. 25. Southern Alberta - New Play  150,000 Acres  Low Entry Costs Testing  Current Focus Kanai - 3 Forks 350 BOPD IP Cum Prod:  2012 Plan 24,000 BBLs  Lower Costs  Enhanced Fracs  Longer LateralsMURPHY OIL CORPORATION 25
  26. 26. Muskwa - New Area Murphy Lands Murphy Well  Targeting the Muskwa Competitor Well Shale  Equivalent to Duvernay Fm  Total Acres to Date: 168,000  Low Entry Cost  Murphy 4-1-109 Well  IP = 150 BOPD  Put Well on Pump  Evaluation 4 - 1 – 109 Well 0 Miles 6MURPHY OIL CORPORATION 26
  27. 27. International and OffshoreMURPHY OIL CORPORATION 27
  28. 28. International/Offshore – Pillar for Growth Production – MBOEPD 175  $1.7 Billion Spend Per 150 Other Year 125 GoM 100 Srwk  Malaysia – Attractive for 75 Continued Investment 50 Sabah 25 -  Back to Work in GOM 2012 2013 2014 2015 Oil & Oil Indexed: 89% 90 % 92% 90%  Malaysia FLNG – Capital 2012 – 2015 Significant New Project 33% 40% Exploration New Projects Base 27%MURPHY OIL CORPORATION 28
  29. 29. Sarawak Oil Projects Moving Forward 30 Future Fields 25 Existing  Utilizes Existing InfrastructureNet MBOPD 20 15 10  Progressing on 5 Schedule 0 2003 2006 2009 2012 2015 2018 2021 2024 2027 Sanctioned Oil Projects Resource Levels Net First Oil Status MMBOE Serendah & Patricia 25 Q2 2013 Construction and Drilling South Acis 23 Q3 2013 Construction Permas & Endau 12 Q4 2013 FEED Work MURPHY OIL CORPORATION 29
  30. 30. Long Term Oil Indexed Growth Malaysia FLNG Block H Gross Risked Resources: ~2,200 BCF 300 250 Discovered Drill Ready Prospects Leads Discovered 910 BCF 635 BCF 260 BCF 425 BCF 200MMCFD 150 100 Murphy Net Entitlement = ~1,150 BCF 50 0 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040  De-Risked by Recent Exploration Success  Sanction 2013  Award FEED Q3 2012  First Gas Planned 2016/17MURPHY OIL CORPORATION 30
  31. 31. Dalmatian Development  3 Well Subsea Development to Petronius Dalmatian Gross, MBOEPD  55 MMBOE Recoverable Resource2015  40% Oil Mix105  Robust Economics0 2015 2017 2019 2021 2023 2025 2027 2029  Path Forward  DOCD Approval June 2012  Project Sanction June 2012  Completions Mid 2013  First Oil Q1 2015MURPHY OIL CORPORATION 31
  32. 32. Medusa Subsea Development  Murphy 60% W.I.  Existing Completions Exceeding Expectations  3 Well Subsea Development  16-27 MMBOE Recoverable  Spud 1st Well Q2 2013 Net MBOEPD  1st Oil Q2 20151816141210 8 6 4 2 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027MURPHY OIL CORPORATION 32
  33. 33. 2012-13 Exploration Program Iraq 2-4 Wells GOM 2-4 Wells Malaysia 5-7 Wells Cameroon Brunei 1-2 Wells 2-5 Wells Congo 1-3 Wells  Technically Grounded, Value Driven Indonesia 2 Wells  Up to 30 Wells; Oil / LNG-Scale Gas Focus Australia  Leveraging Operational Expertise – Partner of Choice 1-3 Wells  Balance - Frontier & Lower Risk Proven Plays  5 Billion BOE Gross; 500 Million BOE Risked Net 2012- 2013 PortfolioMURPHY OIL CORPORATION 33
  34. 34. Exploration Program 2012 2013 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Block H Buluh-1MALAYSIA Block H/P Bunga Lili-1 Block H Block P JulongBRUNEI CA-1 East-1 Jagus East-1 CA-2 C. Dohuk & Linnava-1 GaliIRAQ Baranan Baranan-1CAMEROON Ntem MPNCONGO MPN/MPS MPN MPS WA-423-P Eupheme-1AUSTRALIA ACP/36 NTP/80 Bassett DeepINDONESIA Semai II Semai II DalmatianGOM Multiple South Exact Timing Discovery Rig ContractedWells Shown by Spud Date TBDMURPHY OIL CORPORATION 34
  35. 35. Reserves – Continue to Grow & Replace Total Proved – 534 MMBOE  65% Oil  65% North America Resource Play Deepwater  67% Developed 28% 27%  220% Replacement Conventional Syncrude 24% 17% 3.4 BBOE 3.3 BBOE 2.8 BBOE Heavy Oil Contingent (Unconventional) 4% Contingent (Conventional) Possible Probable Proved Reserves YE 2009 YE 2010 YE 2011MURPHY OIL CORPORATION 35
  36. 36. Low Risk Non-Proved Resource Total Non-Proved – 2.9 BBOE  75% Oil Weighted Seal Syncrude  54% Low Risk – Existing EFS Oil 12% 11% Development Areas & Assoc Gas Msia Oil 11% 15%  38% NA Onshore Oil North America Msia Gas 10% Dry Gas Other Oil 25% 3.4 BBOE Projects 3.3 BBOE 16% 2.8 BBOE Contingent (Unconventional) Contingent (Conventional) Possible Probable Proved Reserves YE 2009 YE 2010 YE 2011MURPHY OIL CORPORATION 36
  37. 37. DOWNSTREAMMURPHY OIL CORPORATION 37
  38. 38. RefiningMURPHY OIL CORPORATION 38
  39. 39. Ethanol Plants HANKINSON, ND  Running at 120+ mmgpy Rates  Best-in-Class Production  Increasing to 135+ mmgpy  Co-product Development  Advantaged by Corn Supply HEREFORD, TX  Running at 104+ mmgpy Rates  115+ mmgpy Target in 2013  Full 12 Months Operations  Advantaged by Local DemandMURPHY OIL CORPORATION 39
  40. 40. US MarketingMURPHY OIL CORPORATION 40
  41. 41. Murphy USA Overview Opened First Retail Store in 1996 Operating Sites 1,400 Operate 1,137 sites in 23 states 1,175* 1,200  998 Murphy USAs on Walmart Lots  139 Murphy Express Stores 1,000 Provide 3% of Total US Retail 800 Gasoline (5% in Mkt Area) 600 We serve ~1.6 Million Customers 400 Every Day 200 Historically Strong Growth Model 0  91% Fee-owned Real Estate  100% Company Operated *By End 2012MURPHY OIL CORPORATION 41
  42. 42. Murphy USA  Low Price, High Volume Fuel Seller  Low Cost Fuel Supplier  Low Cost Operator  Low Price Niche Merchandising  Relationship with #1 Retailer Walmart  Attractive BusinessMURPHY OIL CORPORATION 42
  43. 43. Murphy USA’s Model Crude Refineries/ Product SupplyOil Fields Marketing Secondary Pipeline/ Commodity & Primary Customer Vessel Terminal Distribution Markets Distribution / Trucking WholesaleMURPHY OIL CORPORATION Booz & Company March 2011 43
  44. 44. 2011 Gasoline Market Share 0% - 2% US Market Share ~3% 3% - 6% (5% Mkt Area) 7% - 14% TN OKMURPHY OIL CORPORATION Source: EIA, Internal Calculations 44
  45. 45. High Revenue Business $ Billion 18 16 14 12 10 8 6 4 2 0 Barnes & Nordstrom Starbucks Murphy USA Southwest Noble 2011MURPHY OIL CORPORATION Source: Company Reports 45
  46. 46. Fuel Volume vs. Publicly-Traded Peers 2011 Fuel Sales/Store/Month (000 Gallons) 300 250 200 150 100 50 0 Murphy Caseys Delek Couche Pantry Susser Sunoco Valero Tesoro Marathon USA TardMURPHY OIL CORPORATION Source: Company Reports 46
  47. 47. Low Operating Expenses 2011 Murphy USA vs. NACS Top Quartile Operating Expenses Per Store Month ($000) $60 $51.8 $50 $40 $30.2 $30 $26.7 $20 $12.6 $8.6 $8.5 $7.5 $10 $3.7 $3.6 $4.8 $2.0 $1.0 $1.0 $1.8 $0 Wages Maintenance Supplies Total Murphy USA NACsMURPHY OIL CORPORATION Source: NACs and Internal Data 47
  48. 48. 2011 Competitor CompsOperating statistics (LTM)# of Retail Locations 1,128 5,715 1,677 1,649 541Fuel Volumes (MM Gallons) 3,715 3,672 1,416 1,889 768Retail Fuel Volume/Store 3,333 894 858 1,157 1,430(000 Gallons)Average Fuel Margin (¢/Gallon) 15.6¢ 15.9¢ 15.9¢ 17.5¢ 16.5¢Merchandise Sales ($MM) $2,115 $6,343 $1,779 $1,779 $863Merchandise Sales/Store/Week ($000) $36 $21 $20 $21 $31EBITDA per Store ($000) $326 $131 $164 $133 $263Total EBITDA $363 $747 $275 $275 $142EBITDA Multiple (TEV/EBITDA) ?? 10.8x 8.9x 5.4x 5.5xReal Estate % Ownership 91% 30% 99% 26% 45%ROIC 13% 17% 10% 1% 6% Fuel 68% 26% 24% 30% 38% 74% 76% 70% Merchandise 32% 62%MURPHY OIL CORPORATION Source: Company Reports, Capital IQ 48
  49. 49. US Retail Merchandise Contribution Merchandise Sales Merchandise Margin Billion Per Year Million Per Year $2.2 $2.2 $300 $2.0 $270 $2.0 $259 $1.8 $1.8 $250 $1.6 $214 $1.3 $200 $1.4 $178 $1.2 $1.2 $152 $150 $1.0 $0.9 $120 $0.8 $100 $0.6 $0.4 $50 $0.2 $0.0 $0 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011 2011 included nonrecurring adjustment of $(8.4)MMMURPHY OIL CORPORATION 49
  50. 50. Connecting with our Customers  Murphy USA Mobile App  Re-launched in March – Expecting 250,000+ Downloads This Year  Provides Real-time Pricing and Location Information for Murphy USA & Competitors  Innovative GPS Technology to Match to In-station Merchandise & Fuel DiscountsMURPHY OIL CORPORATION 50
  51. 51. US Retail Financial Performance 2006-2011 Key Financial Indicators ($Millions) 2006 2007 2008 2009 2010 2011 Total Margin 454 511 812 535 707 849 Operating Expense 270 306 339 340 384 404 Admin and G&A 27 30 54 61 66 76 Total Operating Cost 297 336 393 401 450 480 Operating Income (Loss) 157 175 419 134 257 369 EBITDA 156 164 408 130 255 363 EBITDA per Site 0.17 0.17 0.41 0.13 0.24 0.33 After-tax Cash Flow 124 128 278 111 186 273MURPHY OIL CORPORATION 51
  52. 52. Growth Avenues  Walmart Cross Promotion & New Site Growth  Opportunities with Third parties  Growth Outside the Walmart PadMURPHY OIL CORPORATION 52
  53. 53. Murphy Value Platform  Global Upstream business  Operator – organization skills and excellence  Solid existing projects with new growth opportunities  Exploration – 12 +/- wells per year program  Oil weighting  Repositioning in Downstream  Sale of refineries  US Retail  Premium business – critical mass achieved Value created – more to comeMURPHY OIL CORPORATION 53
  54. 54. Annual Meeting of Shareholders El Dorado, Arkansas May 9, 2012M U R P H Y O I L C O R P O R AT I O N

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