Murphy Oil Corp. (MUR) PT Lowered to $25 at JPMorgan

JPMorgan analyst Arun Jayaram lowered the price target on Murphy Oil Corp. (NYSE: MUR) to $25.00 (from $27.00) while maintaining a Neutral rating.

The analyst comments "JPM View: One of the key big picture takeaways from 1Q25 earnings season was a potential tipping point for U.S. shale output as geologic headwinds begin to outweigh the benefits from efficiency gains as highlighted in FANG’s provocative shareholder letter. In other words, there are signs that U.S. shale output may have peaked, particularly in a sub-$70 per bbl world. The maturation of U.S. shale plays actually plays to MUR’s hand longer-term as the company embarks on its resource expansion strategy that is starting to bear fruit. On the call, CEO Hambly noted the company’s intention to test several offshore prospects with unrisked resource potential ~5x their current offshore proven reserve base. The challenge for the stock has been an uneven execution pattern in the field, which has unfortunately continued as the company lowered the bar on its full-year volume expectations on the back of project slippage in the GoA. In January, MUR announced a potential world class shallow water oil discovery at the Hai Su Vang exploration well (see link) and added to that success with another discovery at the Lac Da Hang (Pink Camel) well this quarter, which encountered 106 ft of oil pay in a deeper reservoir. This prospect would be natural tieback to the LDV field given its proximity (3 miles SW of the LDV field). The well tested at 2.5 MBo/d vs. the facility constrained 10 MBo/d test rate at the Hai Su Vang well, reflecting the lower thickness of the pay in the reservoir (HSV encountered 370 ft of net oil pay from two reservoirs). That said, management noted typical flow rates of 1.0 to 1.5 MBoe/d in the basin. The company estimates a resource range of 30 to 60 MMBoe vs. the pre-drill estimate of 65 to 135 MMBoe. The company’s plans to begin development drilling at the LDV field in 2Q25, with an appraisal well scheduled at HSV in 3Q25. In Côte d'Ivoire, MUR is progressing its exploration efforts with a three-well program set to begin in late 2025 with the Civette well on Block 502, which is near recent industry success."

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