MUR - Murphy Oil moves up as KeyBanc starts at Buy on strengthening balance sheet

2023-07-11 12:59:26 ET

Murphy Oil ( NYSE: MUR ) +2.8% in Tuesday's trading as KeyBanc initiated coverage with an Overweight rating and $47 price target, citing a favorable view of the company's diversified production base, deleveraging plans and exploratory upside, particularly in the Gulf of Mexico.

KeyBanc's Tim Rezvan said he has been impressed by Murphy ( MUR ) management's "candid and quantitatively focused comments regarding deleveraging initiatives since 2020, as well as the unwavering commitment to executing on these goals."

Murphy's ( MUR ) balance sheet strengthening efforts will continue, as the company pivots to its "Murphy 2.0" cash return framework in this year's H2, with debt expected to fall below $1.8B, suggesting stock buybacks - a $300M unutilized program is in place - may be utilized as a second cash return lever in H2 2023 and FY 2024, Rezvan said.

Recent discoveries in the Gulf of Mexico, combined with modest activity increases in both the Eagle Ford shale and Tupper Montney, which currently are running at maintenance levels, "can underpin a robust manufacturing program and deliver the incremental production growth management expects to deliver as it grows over 200K boe/day in 2026-27," Rezvan wrote.

More on Murphy Oil:

• Financial and valuation comparison to sector peers
• Analysis: Murphy Oil: A Small But Solid Domestic E&P Company
• Stock price return: Down less than 1% YTD, up 36% in the past 12 months

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