On Tuesday, JPMorgan (NYSE:JPM) adjusted its outlook for Murphy Oil Corp . (NYSE: MUR), increasing the shares target to $53.00 from the previous $52.00 while maintaining an Overweight rating on the stock.
The firm anticipates a strong operational quarter for Murphy Oil, citing positive execution in the field. Despite this, they expect a slight miss on EBITDAX due to updated commodity prices and higher workover expenses in the Gulf of Mexico (GoM).
The company's second-quarter EBITDAX is projected at $429 million, slightly below the street estimate of $446 million, with earnings per share (EPS) and cash flow per share (CFPS) forecasts at $0.66 and $2.59, respectively. These figures are compared to street estimates of $0.78 for EPS and $2.77 for CFPS.
The forecasts are based on second-quarter oil volumes of 93 thousand barrels of oil per day (MBo/d) and total volumes of 180 thousand barrels of oil equivalent per day (MBoe/d), with a capital expenditure of $326 million.
Murphy Oil is expected to experience an increase in operating expenses, primarily due to heightened workover activity in the GoM. Lease operating expenses (LOE) are predicted to rise to $251 million in the second quarter from $234 million in the first quarter, before decreasing in subsequent quarters.
The company has reported encouraging production trends from its onshore operations, with 7 wells initiated in the Eagle Ford (NYSE:F) and 13 in the Tupper Montney during the quarter.
As a result, oil production volumes are expected to rise sequentially throughout the year, reaching 93 MBo/d in the second quarter, 98 MBo/d in the third quarter, and 99 MBo/d in the fourth quarter.
For the full year 2024, Murphy Oil is expected to achieve 183 MBoe/d in total volumes and 95 MBo/d in oil volumes, with a planned capital expenditure of $975 million.
The updated model estimates a pre-dividend free cash flow (FCF) of $660 million for 2024, which translates to a 13% FCF yield. The company is anticipated to return $431 million to shareholders through dividends and buybacks.
Additionally, Murphy Oil is set to provide further details on its Miocene discovery at the OXY operated Ocotillo prospect and is gearing up for its two-well exploration campaign in Vietnam.
The company has scheduled to drill the Hai Su Vang (HSV) well at the end of the third quarter and the Lac Da Hong (LDH) well in the fourth quarter of 2024. The slight increase in the price target reflects the recent uptick in commodity prices.
In other recent news, Murphy Oil Corporation (NYSE:MUR) reported strong financial performance in its first quarter 2024 earnings call, with its total production reaching 170,000 barrels equivalent per day, surpassing its guidance.
The company's revenue for the quarter stood at $746 million, and it increased its quarterly dividend to shareholders. These are significant developments for the company.
Meanwhile, the approaching Tropical Storm Beryl could potentially disrupt operations for several oil companies. Shell (LON:SHEL) Plc has already evacuated workers from its Perdido and Whale platforms, while Gibson Energy (TSX:GEI) continues to operate its large oil terminal in Corpus Christi, prepared for additional measures depending on the storm's progression. Chevron Corp (NYSE:CVX) and Murphy Oil Corp are also monitoring the situation closely.
These events underscore the importance of weather-related considerations in the oil industry and the financial health of companies like Murphy Oil Corporation, which has demonstrated resilience in its operations and financial management. These are recent developments that investors should take note of.
InvestingPro Insights
Murphy Oil Corp. (NYSE: MUR) shows a promising blend of stability and growth potential according to recent metrics and analysis. With a Price/Earnings (P/E) Ratio of 11.73, which is adjusted to 11.06 for the last twelve months as of Q1 2024, the company presents an attractive valuation in the market. Furthermore, the company boasts a high Gross Profit Margin of 75.59% for the same period, signaling efficient operations and strong pricing power.
InvestingPro Tips highlight that Murphy Oil has maintained dividend payments for 54 consecutive years, reflecting a long-standing commitment to shareholder returns. Additionally, analysts have taken a positive stance on the company, with four analysts revising their earnings upwards for the upcoming period. This optimism is supported by the fact that Murphy Oil has been profitable over the last twelve months and is expected to continue this trend.
Investors looking to delve deeper into Murphy Oil's performance and future outlook can find additional insights and tips on InvestingPro. There are a total of 9 InvestingPro Tips available, which can provide a more comprehensive analysis to help make informed investment decisions. For those interested in accessing these insights, use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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