Why Murphy Oil Shares Are Down Despite Dividend Boost

Murphy Oil Corp MUR shares are trading lower after it reported fourth-quarter adjusted EPS of $0.90, lower than $1.10 a year ago, missing the consensus of $0.99.

Revenues of $844.2 million missed the consensus of $856.0 million. Production averaged 185 MBOEPD (up from 174 MBOEPD a year ago), comprising oil volumes of 94 MBOPD in the quarter.  

Production was in-line with guidance, with slightly lower Gulf of Mexico and Eagle Ford Shale production partly offset by lower realized royalty rates in the Tupper Montney asset.

Adjusted earnings before interest, tax, depreciation, amortization, and exploration expenses (EBITDAX) stood at $496 million, down from $504 million a year ago. 

Accrued capital expenditures for fourth quarter stood at $219 million, excluding NCI and acquisition-related CAPEX. Cash and equivalents stood at $317 million, and total debt of $1.3 billion at the end of 2023.

Dividend: The company increased a quarterly cash dividend by 10% to $0.275 per share in the fourth quarter, or $1.10 annually.

Subsequent to quarter end, the company disclosed an additional 9% increase in the quarterly cash dividend to $0.30 per share, or $1.20 per share annualized for 2024. The dividend is payable on March 4, 2024, to stockholders of record as of February 20, 2024.

FY24 Outlook: Murphy expects total net production of 180 to 188 MBOEPD and capital expenditure of $920 million to $1.02 billion.

Q1 FY24 Outlook: The company expects net production of 163 to 171 MBOEPD, with 89 MBOPD of oil volumes.

Roger W. Jenkins, President and Chief Executive Officer, said, “We had a strong year of production and excellent execution, generating ample free cash flow to advance our capital allocation framework. This allowed us to return $150 million to shareholders through buybacks and retire $500 million of debt, resulting in a nearly 60 percent decrease in debt since year-end 2020.”

“Our ongoing financial stewardship has given us momentum going into 2024, beginning with an increase to our longstanding dividend and restoring it to its 2016 level.”

Price Action: MUR shares are trading lower by 2.55% at $37.43 on the last check Thursday.