Murphy Oil Corp. (MUR:NYSE) announced its Oso exploration well in the Gulf of Mexico was non-commercial, leading to an around US$30 million increase in 4Q 2023 exploration expense guidance, reported Roth MKM analyst Leo Mariani in a January 3 research note.
The increase will be from US$53 million to US$83 million.
Still, Mariani maintained a Buy rating on Murphy Oil with a US$53 price target based on a 3.1x multiple of 2024 discounted after-capital free cash flow.
This target implies an over 20% upside from the current US$43 share price.
"We rate Murphy Oil a Buy on its very high free cash flow yield, growing production in 2024, flattish y/y CapEx in 2024, and increasing returns of capital to shareholders over time," wrote Mariani. However, they expect a "slight negative reaction vs. peers" to the Oso disappointment.
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Disclosures for Roth MKM, Murphy Oil Corp., January 3, 2024
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Disclosures: The price target and rating history for Murphy Oil Corp. prior to February 1, 2023 reflect MKM’s published opinion prior to the acquisition of MKM Partners, LLC by Roth Capital Partners, LLC.
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