MUR - Valens Credit Report - 2022 12 20
Credit markets are materially overstating MUR's credit risk with a YTW of 6.440% and a CDS of 298bps, relative to an Intrinsic YTW of 4.880% and an Intrinsic CDS of 122bps. Furthermore, Moody's is overstating MUR's fundamental credit risk with its highly speculative Ba2 credit rating three notches below Valens' IG4+ (Baa1) credit rating.Incentives Dictate Behavior™ analysis highlights mostly positive signals for credit holders. MUR's compensation framework incentivizes management to improve all three value drivers: sales, margins, and asset utilization, which should drive Uniform ROA improvement and lead to increased cash flows available for servicing obligations going forward. Moreover, most management members are material owners of MUR equity relative to their average annual compensation, indicating that they are well-aligned with shareholders to pursue long-term value creation for the company.
Earnings Call Forensics™ of MUR's Q3 2022 (12/15/2022) call highlights that management is confident they will see strong performance and production from their offshore business in the near-term and that they will begin drilling at two operated wells in the fourth quarter. Moreover, they are confident Occidental has been a great partner in the Gulf of Mexico and that there has been positive progress made with Occidental at the Lucius well.
Murphy Oil is a holding company. Through its subsidiaries, the company is an oil and natural gas exploration and production company. The company explores for and produces crude oil, natural gas and natural gas liquids worldwide. The company's principal exploration and production activities are conducted in United States by wholly owned Murphy Exploration & Production Company - USA and its subsidiaries, in Canada by wholly-owned Murphy Oil Company Ltd. and its subsidiaries, and in Australia, Brazil, Brunei, Mexico and Vietnam by wholly-owned Murphy Exploration & Production Company - International and its subsidiaries. The company's hydrocarbon production is in United States, Canada and Brunei.
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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
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