MURPHY OIL CORP
For the period ended May 8, 2024. Filed Mar 21, 2024.
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May 8, 2024 · Filed Mar 21, 2024
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
| ☐ | Preliminary Proxy Statement |
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| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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| ☒ | Definitive Proxy Statement |
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| ☐ | Definitive Additional Materials |
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| ☐ | Soliciting Material Pursuant to §240.14a-12 |
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(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
| ☒ | No fee required. |
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| ☐ | Fee paid previously with preliminary materials |
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| ☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Notice of Annual Meeting of Stockholders
Date: Wednesday, May 8, 2024 Time: 10:00 a.m. Central Daylight Time / 11:00 a.m. Eastern Daylight Time Virtual Location: http://www.virtualshareholdermeeting.com/MUR2024
The 2024 Annual Meeting of Stockholders of Murphy Oil Corporation, a Delaware corporation, will be held on Wednesday, May 8, 2024, at 10:00 a.m. CDT, in a virtual-only format via live webcast at http://www.virtualshareholdermeeting.com/MUR2024. The Proxy Statement is first sent to stockholders on or about March 21, 2024.
Matters to be voted on:
| 1 | Election of Directors; |
| 2 | Advisory vote to approve executive compensation; |
| 3 | Approval of the action of the Audit Committee of the Board of Directors in appointing KPMG LLP as the Company’s independent registered public accounting firm for 2024; and |
| 4 | Such other business as may properly come before the meeting. |
Record date:
Only stockholders of record at the close of business on March 11, 2024, the record date fixed by the Board of Directors of the Company, will be entitled to notice of and to vote at the meeting or any postponement or adjournment thereof. A list of all stockholders entitled to vote will be on file at the office of the Company, 9805 Katy Freeway, G-200, Houston, Texas 77024, at least ten days before the meeting.
Your vote is very important to us and to our business:
Prior to the meeting, you may submit your vote and proxy by telephone, mobile device, the internet, or, if you received your materials by mail, you can sign and return your proxy card. Instructions on how to vote can be found on page 50.
E. Ted Botner
Executive Vice President, General Counsel and Corporate Secretary
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 8, 2024:
We have elected to take advantage of the U.S. Securities and Exchange Commission (the “SEC”) rules that allow us to furnish proxy materials to the Company’s stockholders via the internet. These rules allow us to provide information that the Company’s stockholders need while lowering the costs and accelerating the speed of delivery and reducing the environmental impact of the Annual Meeting. This Proxy Statement, along with the Company’s Annual Report to Stockholders, which includes the Company’s Form 10-K report for the year ended December 31, 2023, are available via the internet at www.proxydocs.com/MUR.
2024 PROXY STATEMENTi
Our Social and Environmental Sustainability
Our People
Competitive compensation and benefits along with an inclusive work environment help us to attract and retain talented people, the real strength of our Company.
A summary of employee benefits, which may vary by country, is listed below:
| · | Medical, dental, and vision care coverage |
| · | Birth/Adoption leave for mothers and fathers |
| · | Expanded mental health network of providers and coverage for behavioral health |
| · | Health Savings/Flexible Spending Accounts |
| · | 401(k) Savings Plan with Company match |
| · | Defined-Benefit Pension Plan for all eligible employees |
| · | Life and AD&D Insurance Benefits |
| · | Employee Assistance Program |
| · | Employee Educational Assistance |
| · | Employee Gift Matching (as outlined in the Compensation Discussion and Analysis) |
Each year we review our benefits package and enhance it, when appropriate. For example, in 2023, we added more fund choices to the 401(k) Savings Plan, along with providing numerous financial wellness education sessions. We have been recognized by the Greater Houston Partnership as a “Best Place for Working Parents” from 2022 to 2024, and named one of “America’s Most Responsible Companies 2024” by Newsweek.
We continue to build upon our diversity, equity and inclusion efforts focusing on (i) building strategic recruiting relationships, (ii) training and development opportunities, (iii) exploring partnerships with minority and women-owned businesses, (iv) employee engagement, and (v) participation in events hosted by external organizations. We have expanded our diversity disclosures in our Sustainability Report and have published our annual Equal Employment Opportunity(EEO-1) filings on our website.
Climate Change
We understand that our industry, and the use of our products, create emissions – which raise climate change concerns. At the same time, access to affordable, reliable, secure energy is essential to improving the world’s quality of life and the functioning of the global economy. We believe that as the energy economy transitions under the Paris Agreement, oil and natural gas will continue to play a vital role in the long-term energy mix.
We are committed to reducing our greenhouse gas (GHG) emissions and focused on understanding and mitigating climate change risks. The Board of Directors actively oversees climate-related risks and opportunities, as well as the executive team in its assessment, agenda-setting and strategic initiatives. Established processes for performance and risk assessments are in place and are informed by experts from within and outside the organization, as well as by the executive team.
We are committed to communicating with transparency and reporting annually in our Sustainability Report in line with the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-related Financial Disclosures (TCFD) guidelines.
In 2023, the Company continued to make significant strides in our sustainability efforts:
| · | We achieved our lowest GHG emissions intensity since becoming an independent exploration and production company in 2013, and are on track to achieve 15-20% reduction by 2030 (from 2019 baseline) |
| · | We are on track to achieve zero routine flaring by 2030 |
| · | We achieved our lowest methane emissions intensity |
| · | We continued to secure third-party assurance of our Scope 1 and 2 GHG emissions, and to report our estimated Scope 3, Category 11 – Use of Sold Products emissions |
| · | We continued to publish our TCFD climate-related scenario analysis, including a net zero emissions by 2050 scenario |
| · | We achieved our second highest water recycling ratio in Company history |
Note: Unless otherwise specified, the information provided is at the total enterprise level, for assets under our operational control and for calendar year 2023
ii MURPHY OIL CORPORATION
Health, Safety & Environment
Charles H. Murphy, Jr. was a forerunner in the environmental awareness movement. His efforts helped lead to new standards and practices for the oil and natural gas industry and we strive to do the same today.
| · | We established a Health, Safety and Environmental Committee of the Board of Directors in 1993 |
| · | Our worldwide Health, Safety and Environment Management System applies to every Murphy employee, contractor and partner |
| · | Safety metrics, including both employees and contractors, have been included in annual incentive plan performance metrics since 2008 |
| · | Environmental metrics have been included in annual incentive plan performance metrics since 2016 |
| · | We are a founding member of the API Environmental Partnership, launched in 2017, which is focused on reducing methane emissions |
| · | We strive to achieve top-quartile safety performance as measured against our peers. In 2023, we had zero work-related fatalities |
We monitor environmental performance and strive for continual improvement:
| · | Continuing to de-risk our assets through implementation of our detailed Asset Integrity Management Programs |
| · | Continuing to eliminate natural gas pneumatic instruments |
| · | Upgrading central processing facilities to add electric motor driven tank Vapor Recovery Units (VRUs) to eliminate continuous tank flaring |
| · | Adding natural gas pipeline infrastructure to legacy and future Murphy onshore developments to eliminate flaring and venting |
| · | Continuing to internally report GHG and methane emissions performance metrics monthly to increase visibility to operations and management |
Our Communities
Working with Communities
| · | We communicate with community stakeholders to understand issues applicable to our operations and to mitigate potential risks |
| · | Opportunities to support local communities through: |
| - | Prioritization of local suppliers |
| - | Threshold investment targets for local content |
| - | Specifications for local companies or workers |
| - | Commitments to social investment programs |
| · | We actively seek to understand and respond to community feedback, concerns or grievances |
Committed to the Dignity and Rights of All People
| · | We have enacted a Human Rights Policy, Indigenous Rights Policy and Supplier Code of Conduct |
Investing in Our Communities
| · | Long time commitment with the El Dorado Promise Scholarship Program – through a $50 million commitment from the Company, more than 3,500 El Dorado, Arkansas students have received scholarships to 181 colleges and universities in 40 states |
| · | Numerous corporate citizenship programs, with Murphy employees enthusiastically volunteering their time and generously donating to their communities. In 2023, our employees’ exceptional voluntary contributions were honored with the United States President’s Volunteer Service Award by the Houston Food Bank for the second consecutive year. Additionally, the Spring Branch Independent School District in Houston recognized our commitment with their esteemed Good Neighbor Award |
| · | Also, in 2023, Murphy donated approximately $200,000 through its gift matching program for employees and non-employee directors. Over the last 20 years, Murphy and its employees contributed more than $15 million to benefit the United Way organization |
2024 PROXY STATEMENTiii
Our 2023 Financial and Operational Highlights
Murphy closed another year of strong production and excellent execution in 2023 with the priorities of Delever, Execute, Explore, Return remaining at the forefront. By achieving our $500 million debt reduction goal for the year, we have fortified our balance sheet by reducing total debt by $1.7 billion since 2020. This has provided further strength to our longstanding quarterly dividend, which was increased in early 2024 to the 2016 level of $1.20 per share annualized, as well as initiating share repurchases in 2023 with $150 million, or 3.4 million, shares repurchased.
This debt reduction was accomplished through the successful execution of Murphy’s onshore well delivery program during the year, as well as steady operational achievements of above-forecast production offshore. Also in 2023, we extended our portfolio longevity with the sanctioning of the Lac Da Vang field development project in Vietnam. As a result of the team’s efforts, Murphy achieved total reserve replacement of 139% for the year.
Reviewing our exploration portfolio, Murphy was awarded five exploration blocks in the March 2023 Gulf of Mexico federal lease sale and named apparent high bidder on eight exploration blocks in the December 2023 federal lease sale. The Company also acquired working interests in thenon-operated Zephyrus discovery in the Gulf of Mexico, as well as signed production sharing contracts on five exploration blocks in Côte d’Ivoire, including one block that holds a previous operator’s discovery. Murphy’s plans in 2024 include drilling exploration wells in the Gulf of Mexico and Vietnam, as well as advancing seismic reprocessing projects in the Gulf of Mexico and Côte d’Ivoire.
With our 2024 debt reduction goal of $300 million, we are on track to reach Murphy 3.0 of the capital allocation framework byyear-end, with up to 50% of adjusted free cash flow 1 allocated to the balance sheet and the remaining 50% of adjusted free cash flow 1 allocated to shareholder returns. Shareholder returns remain at the forefront, and ongoing debt reduction has substantially improved the Company’s resiliency in this cyclical commodity business. Pairing balance sheet strength and operational excellence with a strong safety culture and an ongoing focus on protecting the environment, Murphy is positioned for long-term stability and success.
Highlights for 2023:
Delever
| · | Utilized proceeds from non-core divestiture to progress capital allocation framework |
| · | Achieved $500 MM debt reduction goal through senior notes redemption and partial tender |
| · | Advanced Murphy 2.0 of capital allocation framework with $1.7 BN of total debt reduction since year-end 2020 |
Execute
| · | Produced 186 MBOEPD with 98 MBOPD, or 52 percent, oil volumes |
| · | Initiated procurement for Lac Da Vang field development project in Vietnam with first oil forecast in 2026 |
| · | Acquired 8 percent working interest in the non-operated Zephyrus discovery in the Gulf of Mexico for $13 MM after closing adjustments |
| · | Achieved 139% total reserve replacement with 724 MMBOE proved reserves and ~11-year reserve life |
Explore
| · | Initiated new exploration focus area in Côte d’Ivoire |
| · | Drilled a discovery at operated Longclaw #1 exploration well in Gulf of Mexico |
| · | Awarded five exploration blocks in Gulf of Mexico Federal Lease Sale 259 and named apparent high bidder on eight exploration blocks in Gulf of Mexico Federal Lease Sale 261 |
Return
| · | Progressed Murphy 2.0 of capital allocation framework, with 75% of adjusted FCF1 allocated to debt reduction and 25% allocated to shareholder returns |
| · | Repurchased $150 MM, or 3.4 MM shares, at an average price of $43.96 / share in FY 2023 |
| 1 | Adjusted free cash flow is calculated as net cash provided by continuing operations activities before noncash working capital changes, less property additions and dry hole costs, acquisition of oil and natural gas properties, cash dividends paid, distributions to noncontrolling interest and other contractual payments |
iv MURPHY OIL CORPORATION
Financial
$1.7 BN Approximate net cash provided by continuing operations activities (including noncontrolling interest) $782 MM of free cash flow2,3, with the majority used to repay long-term debt, fund accretive acquisitions, increase longstanding dividend and repurchase shares
Operations
186,000 barrels of oil equivalent per day produced with ~98 thousand barrels of oil per day 724 MM barrels of oil equivalent of proved reserves, with 139% total reserve replacement and a reserve life index of approximately 11 years
Onshore
Eagle Ford Shale
| · | Continued realizing strong performance with wells producing at or above forecast |
Tupper Montney
| · | Continued realizing strong well performance with modifications to flowback, facility and wellhead equipment, and procedures |
| · | Achieved some of highest 30-day initial production (IP30) rates in Company history |
Exploration
Côte d’Ivoire
| · | Signed production sharing contracts for five exploration blocks |
| · | Includes undeveloped Paon discovery |
Offshore
U.S. Gulf of Mexico
| · | Maintained high uptime across operated assets with safe operations and strong environmental performance |
Offshore Canada
| · | Completed the non-operated Terra Nova floating production storage and offloading vessel (FPSO) asset life extension project, with wells returning to production in late 2023 |
Vietnam
| · | Sanctioned the Lac Da Vang field development project, with first oil forecast in 2026 |
| 2 | Free cash flow is calculated as net cash provided by continuing operations activities (including noncontrolling interest) and before noncash working capital changes, less property additions and dry hole costs |
| 3 | See Annex for reconciliations of non-GAAP financial measures to their most closely comparable GAAP metric |
2024 PROXY STATEMENTv
Note: Unless otherwise noted, the financial and operating highlights and metrics discussed above exclude noncontrolling interest, thereby representing only the amounts attributable to Murphy
Forward-Looking Statements and Risks
This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally identified through the inclusion of words such as “aim,” “anticipate,” “believe,” “drive,” “estimate,” “expect,” “expressed confidence,” “forecast,” “future,” “goal,” “guidance,” “intend,” “may,” “objective,” “outlook,” “plan,” “position,” “potential,” “project,” “seek,” “should,” “strategy,” “target,” “will” or variations of such words and other similar expressions. These statements, which express management’s current views concerning future events, results and plans, are subject to inherent risks, uncertainties and assumptions (many of which are beyond our control) and are not guarantees of performance. In particular, statements, express or implied, concerning the Company’s future operating results or activities and returns or the Company’s ability and decisions to replace or increase reserves, increase production, generate returns and rates of return, replace or increase drilling locations, reduce or otherwise control operating costs and expenditures, generate cash flows, pay down or refinance indebtedness, achieve, reach or otherwise meet initiatives, plans, goals, ambitions or targets with respect to emissions, safety matters or other ESG (environmental/social/governance) matters, make capital expenditures or pay and/or increase dividends or make share repurchases and other capital allocation decisions are forward-looking statements. Factors that could cause one or more of these future events, results or plans not to occur as implied by any forward-looking statement, which consequently could cause actual results or activities to differ materially from the expectations expressed or implied by such forward-looking statements, include, but are not limited to: macro conditions in the oil and gas industry, including supply/demand levels, actions taken by major oil exporters and the resulting impacts on commodity prices; geopolitical concerns; increased volatility or deterioration in the success rate of our exploration programs or in our ability to maintain production rates and replace reserves; reduced customer demand for our products due to environmental, regulatory, technological or other reasons; adverse foreign exchange movements; political and regulatory instability in the markets where we do business; the impact on our operations or market of health pandemics such as COVID-19 and related government responses; other natural hazards impacting our operations or markets; any other deterioration in our business, markets or prospects; any failure to obtain necessary regulatory approvals; any inability to service or refinance our outstanding debt or to access debt markets at acceptable prices; or adverse developments in the U.S. or global capital markets, credit markets, banking system or economies in general, including inflation. For further discussion of factors that could cause one or more of these future events or results not to occur as implied by any forward-looking statement, see Item 1A. Risk Factors in our most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) and any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K that we file, available from the SEC’s website and from Murphy Oil Corporation’s website at http://ir.murphyoilcorp.com. Investors and others should note that we may announce material information using SEC filings, press releases, public conference calls, webcasts and the investors page of our website. We may use these channels to distribute material information about the Company; therefore, we encourage investors, the media, business partners and others interested in the Company to review the information we post on our website. The information on our website is not part of, and is not incorporated into, this report. Murphy Oil Corporation undertakes no duty to publicly update or revise any forward-looking statements.
vi MURPHY OIL CORPORATION
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.