Analyst Note| Dave Meats, CFA |
We are reducing our fair value estimate to $21 per share from $23, after taking a second look at Murphy's second-quarter financial and operating results. The decrease was mainly driven by lowering our projected activity rate for Murphy in the Eagle Ford shale. The firm has paused development in the play until the end of the year to conserve capital during this period of weak commodity prices. We had previously modeled a rebound to 6-8 rigs after 2021, and have now tapered this estimate to 5 rigs.