MUR
MUR
Hold 2026-03-29
Model
DCF
Price at Report
$42.12
Base IV
$30.00
Bear IV
$3.39
Bull IV
$65.66
Entry Zone: 4-28 · Sell Above: 56
Bore Family Office
Valuation Report — Murphy Oil Corporation (MUR) • March 29, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 9.75% • Current Price: $42.12
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Murphy Oil Corporation (NYSE: MUR) is a mid-cap independent exploration and production (E&P) company headquartered in El Dorado, AR, with operations primarily in the Gulf of Mexico, the Eagle Ford Shale (Texas), and the Kaybob Duvernay formation in Canada. In FY2025, Murphy produced 188,682 BOE/day — a 2.4% increase over 2024 — with production roughly 80% oil-weighted from its deepwater and unconventional assets.
Murphy is executing a high-capital reinvestment phase (2024–2026) with capex of ~$1B/year to grow Gulf of Mexico deepwater production and develop the Montney and Duvernay in Canada. This elevated capex depresses near-term FCF significantly. The company also has international exposure in Vietnam and Côte d'Ivoire, which add diversification but also execution risk.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Gulf of Mexico (Offshore US) | $1,210M | 45% | +3.0% | — | Deepwater oil fields; ~68 MBOEPD; 80% oil; highest margin assets; King's Quay FPSO |
| Eagle Ford Shale (Texas) | $592M | 22% | -2.0% | — | Onshore light oil; ~57 MBOEPD; mature, low-decline wells; capital-efficient |
| Canada (Montney/Duvernay) | $538M | 20% | +5.0% | — | Gas-weighted (Montney); oil-weighted (Duvernay); significant growth potential; high current capex |
| International (Vietnam/Côte d'Ivoire) | $350M | 13% | +1.0% | — | Deepwater offshore; minority interest in Vietnam; Côte d'Ivoire FID expected |
| Blended Growth Rate | — | 100% | +2.0% | — | Weighted avg across segments |
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 5.5% | <8% weak |
| FCF Margin | 8.4% | 5–10% adequate |
| Debt / EBITDA | 7.3x | >4x elevated |
| Revenue Trend | Declining 3yr | 3-year directional trend |
| FCF Margin Trend | Contracting | Directional margin trajectory |
| Analyst Revisions | Downward revisions | Last 90 days consensus direction |
⚠️ Elevated value trap risk — verify thesis before acting
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $2,801 | $4,220 | $3,449 | $3,019 | $2,690 |
| Rev YoY Growth | — | +50.7% | -18.3% | -12.5% | -10.9% |
| Gross Margin | 72.6% | 73.4% | 67.8% | 60.6% | 62.7% |
| EBITDA ($M) | $281 | $1,587 | $1,042 | $603 | $301 |
| EBITDA Margin | 10.0% | 37.6% | 30.2% | 20.0% | 11.2% |
| Operating Income ($M) | $281 | $1,587 | $1,042 | $603 | $301 |
| Operating Margin | 10.0% | 37.6% | 30.2% | 20.0% | 11.2% |
| Net Income ($M) | $-74 | $965 | $662 | $407 | $104 |
| Net Margin | -2.6% | 22.9% | 19.2% | 13.5% | 3.9% |
| EPS (diluted) | $-0.48 | $6.14 | $4.22 | $2.70 | $0.72 |
| Free Cash Flow ($M) | $754 | $1,195 | $683 | $829 | $227 |
| Annual DPS | $0.500 | $0.830 | $1.100 | $1.200 | $1.300 |
| Total Debt ($M) | $3,367 | $2,786 | $2,089 | $2,066 | $2,202 |
📈 DCF Scenarios
$3
🔴 Bear
$30
📊 Base
$66
🚀 Bull
$42.12
Current Price
$34
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | WACC | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | -10.0% | -2.0% | 1.0% | 9.75% | $3 | ▼92.0% |
| 📊 Base | 2.0% | 1.5% | 2.0% | 9.75% | $30 | ▼28.8% |
| 🚀 Bull | 8.0% | 4.0% | 2.5% | 9.75% | $66 | ▲55.9% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: -10.0% | Stage 2: -2.0% | Terminal: 1.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $0.32B | $0.29B | $0.29B |
| Year 2 ✦ | Stage 1 | $0.26B | $0.22B | $0.51B |
| Year 3 ✦ | Stage 1 | $0.24B | $0.18B | $0.69B |
| Year 4 ✦ | Stage 1 | $0.22B | $0.15B | $0.84B |
| Year 5 ✦ | Stage 1 | $0.21B | $0.13B | $0.97B |
| Year 6 | Stage 2 | $0.21B | $0.12B | $1.09B |
| Year 7 | Stage 2 | $0.20B | $0.11B | $1.20B |
| Year 8 | Stage 2 | $0.20B | $0.09B | $1.29B |
| Year 9 | Stage 2 | $0.19B | $0.08B | $1.37B |
| Year 10 | Stage 2 | $0.19B | $0.07B | $1.45B |
| Terminal | — | TV=$2.2B | PV(TV)=$0.9B (37% of EV) | EV=$2.3B |
| Intrinsic Value | — | — | EV $2.3B − Net Debt → Equity / Shares | $3 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (9.75%) to get its present value. After Year 10, FCF grows at the terminal rate (1.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $2.2B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $0.9B). Enterprise Value = PV of FCFs ($1.4B) + PV of TV ($0.9B) = $2.3B. Subtracting net debt gives equity value of $0.5B, divided by shares outstanding = $3 per share.
Base Scenario
Stage 1: 2.0% | Stage 2: 1.5% | Terminal: 2.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $0.45B | $0.41B | $0.41B |
| Year 2 ✦ | Stage 1 | $0.47B | $0.39B | $0.80B |
| Year 3 ✦ | Stage 1 | $0.49B | $0.37B | $1.17B |
| Year 4 ✦ | Stage 1 | $0.51B | $0.35B | $1.52B |
| Year 5 ✦ | Stage 1 | $0.53B | $0.33B | $1.86B |
| Year 6 | Stage 2 | $0.54B | $0.31B | $2.16B |
| Year 7 | Stage 2 | $0.55B | $0.28B | $2.45B |
| Year 8 | Stage 2 | $0.55B | $0.26B | $2.71B |
| Year 9 | Stage 2 | $0.56B | $0.24B | $2.95B |
| Year 10 | Stage 2 | $0.57B | $0.23B | $3.18B |
| Terminal | — | TV=$7.5B | PV(TV)=$3.0B (48% of EV) | EV=$6.1B |
| Intrinsic Value | — | — | EV $6.1B − Net Debt → Equity / Shares | $30 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (9.75%) to get its present value. After Year 10, FCF grows at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $7.5B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $3.0B). Enterprise Value = PV of FCFs ($3.2B) + PV of TV ($3.0B) = $6.1B. Subtracting net debt gives equity value of $4.3B, divided by shares outstanding = $30 per share.
✦ Year-by-year analyst consensus FCF estimates (Base scenario)
Bull Scenario
Stage 1: 8.0% | Stage 2: 4.0% | Terminal: 2.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $0.60B | $0.55B | $0.55B |
| Year 2 ✦ | Stage 1 | $0.70B | $0.58B | $1.13B |
| Year 3 ✦ | Stage 1 | $0.78B | $0.59B | $1.72B |
| Year 4 ✦ | Stage 1 | $0.84B | $0.58B | $2.30B |
| Year 5 ✦ | Stage 1 | $0.89B | $0.56B | $2.86B |
| Year 6 | Stage 2 | $0.93B | $0.53B | $3.39B |
| Year 7 | Stage 2 | $0.96B | $0.50B | $3.89B |
| Year 8 | Stage 2 | $1.00B | $0.48B | $4.36B |
| Year 9 | Stage 2 | $1.04B | $0.45B | $4.81B |
| Year 10 | Stage 2 | $1.08B | $0.43B | $5.24B |
| Terminal | — | TV=$15.3B | PV(TV)=$6.0B (54% of EV) | EV=$11.3B |
| Intrinsic Value | — | — | EV $11.3B − Net Debt → Equity / Shares | $66 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (9.75%) to get its present value. After Year 10, FCF grows at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $15.3B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $6.0B). Enterprise Value = PV of FCFs ($5.2B) + PV of TV ($6.0B) = $11.3B. Subtracting net debt gives equity value of $9.5B, divided by shares outstanding = $66 per share.
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 7.7% | $43 | $46 | $49 | $54 | $59 |
| 8.3% | $38 | $40 | $43 | $46 | $50 |
| 8.8% | $35 | $37 | $39 | $41 | $44 |
| 9.2% | $32 | $34 | $36 | $38 | $40 |
| 9.8% | $29 | $30 | $32 | $34 | $36 |
| 10.3% | $27 | $28 | $29 | $30 | $32 |
| 10.7% | $25 | $26 | $27 | $28 | $30 |
| 11.3% | $23 | $23 | $24 | $25 | $27 |
| 11.8% | $21 | $22 | $22 | $23 | $24 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | P/E (Fwd) | EV/EBITDA | P/FCF | Div Yield | Note |
|---|---|---|---|---|---|
| Murphy Oil (MUR) | 52.9x | ~13x* | ~28x* | 3.3% | *Depressed FCF/EBITDA; normalizing 2027 |
| Coterra Energy (CTRA) | 18.5x | 6.5x | 14.0x | 3.5% | Permian/Marcellus E&P; lower leverage |
| Devon Energy (DVN) | 10.5x | 5.5x | 10.0x | 5.0% | Variable dividend; Permian-focused |
| Callon Petroleum (CPE) | 8.5x | 5.0x | 8.5x | 0.0% | Pure-play Permian; growth focus |
| Diamondback Energy (FANG) | 11.0x | 6.0x | 12.0x | 4.5% | Premium Permian E&P |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $1.400 |
| Current Yield | 3.32% |
| Consecutive Growth Years | 4 |
| 1-yr DPS CAGR | +8.2% |
| 3-yr DPS CAGR | +18.5% |
| 5-yr DPS CAGR | +23.0% |
| 10-yr DPS CAGR | — |
| Payout Ratio (DPS/EPS) | 183.0% ⚠️ |
| FCF Payout Ratio | 45.0% |
| Sustainability Verdict | Watch |
MUR's $1.40 dividend has grown 8%/yr but EPS payout ratio is 183% — the dividend is not covered by earnings at current oil prices. It is covered by operating cash flow (~$1.25B in 2025) after capex — but only on a normalized basis. If oil prices fall to $65/bbl, FCF/share drops below DPS quickly. Verdict: Watch — sustainable at $70+ WTI but at risk below $65. The 8%/yr dividend growth reflects commodity confidence, not earnings power stability.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $-0.48 | — | — | — | Actual |
| 2022 | $6.14 | — | — | — | Actual |
| 2023 | $4.22 | — | — | — | Actual |
| 2024 | $2.70 | — | — | — | Actual |
| 2025 | $0.72 | — | — | — | Actual |
| 2026 | $-0.14 | $0.80 | $2.74 | 19 | Estimate |
| 2027 | $0.87 | $2.19 | $4.04 | 18 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $2.8B | — | — | — | Actual |
| 2022 | $4.2B | — | — | — | Actual |
| 2023 | $3.4B | — | — | — | Actual |
| 2024 | $3.0B | — | — | — | Actual |
| 2025 | $2.7B | — | — | — | Actual |
| 2026 | $2.3B | $2.6B | $3.0B | 19 | Estimate |
| 2027 | $2.5B | $2.9B | $3.2B | 18 | Estimate |
(c) Individual Analyst Price Targets
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Charles Meade | Johnson Rice | Buy | $63 | +49.6% |
| Mark Lear | Piper Sandler | Buy | $41 | -2.7% |
| Nitin Kumar | Mizuho | Hold | $39 | -7.4% |
| Hanwen Chang | Wells Fargo | Hold | $38 | -9.8% |
| Betty Jiang | Barclays | Hold | $33 | -21.7% |
💡 Investment Thesis
- High-quality E&P assets but valuation looks stretched: MUR's deepwater Gulf of Mexico assets are Tier 1 production but are fully priced at $42 — analysts have a consensus PT of $33.64 (-20%), suggesting the market is pricing in recovery optimism that may not be warranted at current oil prices.
- Capital reinvestment cycle compresses near-term FCF: FY2025 FCF was only $227M on $1.02B capex — cash yield of ~3.7% on market cap at current prices is inadequate for an E&P at this stage of reinvestment. FCF should recover in 2027 as the capex cycle winds down.
- Dividend growing but EPS payout >183%: Current DPS $1.40 (+8%) is completely uncovered by earnings ($0.72 in 2025) — paid entirely from cash flow and reserves. This is sustainable only at higher oil prices.
- Oil price leverage is a double-edged sword: At $75/bbl WTI MUR generates adequate returns; at $65/bbl (current macro headwinds) FCF falls sharply. Analyst consensus pricing implies ~$70/bbl long-term.
- Buyback program offsets dilution: MUR has repurchased $326M (2024) and $113M (2025) in stock — a 5.7% buyback yield in 2024, reducing share count by 4.6% YoY, but this may not be sustainable at lower oil prices.
⚖️ DCF Verdict: Hold — Murphy Oil Corporation (MUR)
Current price: $42.12 | Analyst Avg PT: $33.64
$3
🔴 Bear
$30
📊 Base
$66
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$28 | Begin position |
| Tier 2 — Add | ≤$17 | Add on weakness |
| Tier 3 — Full | ≤$4 | Full allocation |
| Sell Alert | ≥$56 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
Initiate at Reduce / Hold. At $42, MUR trades significantly above analyst consensus PT of $33.64 (-20% downside). Our DCF model produces a Base IV of ~$28–35 at normalized oil prices and current capital structure, confirming the stock appears overvalued relative to fundamentals.
MUR's high-capex phase suppresses near-term FCF, EPS is minimal ($0.72 in 2025), and the company pays a dividend uncovered by earnings. The stock likely needs a catalyst (oil price spike, capex completion, production growth confirmation) to sustain current levels. Do not initiate a new position above $38; look for re-entry if oil corrects below $65/bbl and the stock trades to $28–32 where FCF yield becomes attractive.
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| FCF Base Normalization | FY2025 FCF = $227M on $1.02B capex. Normalized FCF = $480M assuming capex stabilizes at $750M as growth projects complete. Operating CF FY2025 was $1.25B — strong underlying operations. |
| WACC = 9.75% | CAPM: Rf=4.35% + β=1.30×ERP=5.5% = 11.5% Ke. Kd=4.94% (post-tax). Market cap $6.1B, Total debt $2.2B → WACC=9.75%. High WACC appropriate for leveraged E&P with commodity price sensitivity. |
| Sanity Check | Base IV ~$29–35 vs. analyst consensus PT $33.64 — within ±20% threshold. ✅ Confirms stock appears overvalued at $42.12 current price. |
| Oil Price Sensitivity | Every $5/bbl change in WTI changes MUR's annual EBITDA by ~$100–150M. At $75/bbl the model works; at $65/bbl the bear case materializes quickly. |
| Capital Cycle | MUR is mid-cycle in a $3–4B total capex program (2024–2027) to grow Gulf of Mexico and Canada. FCF will be depressed through 2026 then should inflect materially higher. The investment thesis depends on this capex-to-FCF conversion. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.