Good morning, ladies and gentlemen. Welcome to the Murphy Oil Corporation third quarter 2020 earnings conference call. If at any time during this call you need assistance, please press star zero for the operator. I would now like to turn the conference over to Kelly Whitley, our Vice President, Investor Relations and Communications. Please go ahead.
Thank you. Good morning, everyone, and thank you for joining us on our third quarter earnings call today. Joining us is Roger Jenkins, President and Chief Executive Officer, along with David Looney, Executive Vice President and Chief Financial Officer, and Eric Hambly, Executive Vice President, Operations. Please refer to the informational slides we've placed on the investor relations section of our website as you follow along our webcast today. Throughout today's call, production numbers, reserves, and financial amounts are adjusted to exclude non-controlling interest in the Gulf of Mexico. Please keep in mind that some of the comments made during this call will be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995.
As such, no assurance can be given that these events will occur or that the projections will be attained. A variety of factors exist that may cause actual results to differ. For further discussion of risk factors, see Murphy's 2019 annual report on Form 10-K on file with the SEC. Murphy takes no duty to publicly update or revise any forward-looking statements. I will now turn the call over to Roger.
Thank you, Kelly. Good morning, everyone, and thanks for listening to our call today. We continue to successfully execute our focus strategy, and Murphy remains steadfast with the goal of keeping a strong balance sheet through the commodity price cycles and plan to allocate free cash flow to reduce overall debt levels in an oil price recovery. Despite the record-breaking hurricane season this quarter, we still achieved free cash flow above our dividend. Our third quarter results were helped by the flexibility and strength of a multi-basin portfolio, as production from our oil-weighted offshore and onshore plays continue to see higher margins driven by lower cost structure. We know that to remain in business over the long term, we must operate in a conscientious manner, protecting and supporting not only our employees, but the areas in which we work.
As disclosed in our recent 2020 sustainability report, I'm proud to say we have proactively established a greenhouse gas emission intensity reduction target of 15%-20% by 2030. We're further advancing our diversity inclusion programs and practices. Our multi-basin portfolio provides additional risk reduction and flexibility. We remain committed to our focused exploration portfolio and our partners, as we see it, as the ability to deliver company-making resource upside to our shareholders. On to slide three. Looking back on the quarter, Murphy produced 153,000 bbl equivalents per day with 86,000 bbl of oil per day. Production was significantly impacted by historical Gulf of Mexico storm season, resulting in 12,000 bbl equivalents per day shut-in compared to our guidance of just under 5,000 bbl equivalent per day. This impact was partially offset with stronger performance in our onshore business.
We spent approximately $120 million of accrued CapEx in the quarter, including $19 million for the construction of the King's Quay floating facility. Our various oil pricing points traded closer to WTI in the quarter than usual, due again to the unique storm season. This led to a realized oil price of nearly $40 per barrel on par with WTI. Our realized natural gas price continues to improve at $1.78 per 1,000 cu ft in the U.S. Further, in the Tupper Montney, the AECO Henry Hub basis differentials have reduced and tightened due to improving market access from infrastructure build-outs and less capital spent in the region by our peers. We'll now turn over to discuss the financials with our CFO, David Looney.
Thank you, Roger, good morning. Slide four. Like our peers, ongoing low oil prices continued to affect our business, resulting in a net loss of $244 million, or - $1.59 per diluted share for the third quarter. Several non-cash charges impacted earnings for the quarter, including after-tax impairments of $146 million, primarily related to the Cascade and Chinook field in the Gulf of Mexico. Non-cash mark-to-market loss on crude oil derivatives and contingent consideration of $66 million, restructuring expenses and unutilized rig charges of $8 million. After backing out these items, Murphy had an adjusted net loss of $24 million, or - $0.15 per diluted share. Slide five. With oil prices off their record lows, our net cash provided by continuing operations improved to $209 million in the third quarter, including a cash outflow of $28 million due to a working capital increase.
When combined with property additions and dry hole costs of $134 million, including $23 million for King's Quay, we had positive free cash flow of $74 million in the quarter. Excluding the working capital change, we would have achieved free cash flow of $102 million. Following our budget changes and cost-cutting measures taken earlier this year, we have maintained strong liquidity of $1.6 billion, including $220 million of cash as of September 30th. Our G&A expenses continue to trend in the right direction, and we remain on track for achieving approximately $100 million in total G&A reductions between 2019 and 2020. Lastly, Murphy has taken additional action to protect its future cash flow with additional 2021 crude oil hedges, as well as fixed price forward sales contracts for a portion of our Tupper Montney production through 2024. Slide six.
Liquidity is a key tenet of our business, and we have maintained a strong balance sheet with $1.4 billion available under our $1.6 billion senior unsecured credit facility, as well as $220 million of cash and equivalents as of quarter end. Murphy remains focused on reducing our total debt level with excess cash flow, including our next maturity in mid-2022. This will give the company even further resilience in commodity price cycles. As stated last quarter, our goal remains to have at year-end, nearly the same level of liquidity as we did at the beginning of the year. With that, I will turn it back over to Roger.
Thank you, David. On slide eight, Murphy has a long history of protecting our environment, employees, and all of our stakeholders, achieved in part through our strong corporate governance processes. We continue to achieve low spill and recordable incident metrics, while also reducing our environmental impact with flaring reductions and increased water recycling. We've also expanded our internal diversity inclusion practices and programs and maintain a program to aid impacted employees in times of need through our disaster relief foundation, which is taking place in now as we're impacted by hurricanes, our employees on the Gulf Coast. Our operations team has made ongoing efforts to reduce our environmental impact while lowering costs through the changes such as electrification of our frac fleet and opening a remote operating center for managing all onshore Canadian operations.
Overall, these small changes add up to a larger, longer impact by reducing downtime and costs and improving the efficiency of our field employees. Additionally, we utilize bi-fuel hydraulic frac spreads for all well completions in Canada this year, which resulted in considerable CO2 emissions reductions. On slide nine. We recently released our 2020 sustainability report, which features expanded disclosures and metrics, and more closely aligns to various reporting frameworks, including TCFD and SASB. A key highlight of our goal is reducing greenhouse gas emissions intensity by 15%-20% by 2030 from 2019 levels. This report also outlines diversity disclosures, workforce development, and employee engagement programs. Murphy Oil's also expanded our HSE board committee to include the oversight of corporate responsibility. We formed an ESG executive management committee and created a new director of sustainability role. We will continue to evolve and advance our sustainability efforts. On slide 11.
Like most peers, Murphy's taken deliberate actions to have a sustainable business in the new energy landscape. Prior to COVID, we streamlined our portfolio to high margin, oil-weighted assets through accretive deals. We refinanced certain bonds last year and are maintaining our liquidity with manageable debt structure. Post-COVID, we continue streamlining and reducing costs with adjustments in capital and dividends. We maintain operations in multiple basins with focused exploration opportunities in certain countries outside the United States, providing us with portfolio diversification for long-term resilience. Slide 13, looking at our Eagle Ford Shale business. The asset produced near 35,000 bbl equivalent a day in the quarter, which is ahead of our guidance. We continue to see improvements in our base well performance and have established low decline rates. We're utilizing our remote operation center and operating model to lower downtime in wells and facilities while optimizing artificial lift performance.
Production from the wells brought online prior to 2019 delivered over 20,000 BOE a day in this quarter, demonstrating less than 14% decline over the prior 12-month period. We anticipate 2021 base decline of just 22% for our Eagle Ford asset. This is a significant improvement in base decline for the Eagle Ford. On Slide 14. Murphy produced 13,000 BOE per day in the Kaybob in the quarter with four wells online. This asset continues to show strong well performance with tightening differentials and is achieving higher cash flow metrics. Our team's done a tremendous job improving the efficiencies across our onshore business. Our new remote operating center in Fox Creek, Canada, manages all onshore Canada production activity and well performance, which will enable us to reduce downtime and costs through more expedient repairs. Slide 15.
Our Tupper Montney wells produced 235 million per day in the quarter and continue to generate positive free cash for the year. Since our last earnings call, Murphy has added fixed price forward sale contracts in AECO and at the Malin Hub through 2024, locking in further price protection. As stated earlier, we have seen improving basis differentials and higher prices coupled with higher EURs and strong execution ability. Slide 17 in the Gulf. Murphy produced 59,000 bbl equivalent per day in the Gulf of Mexico this quarter, which is negatively impacted by record-breaking storm downtime of 12,000 bbl equivalent per day. It's also a cause of delay in achieving first oil at Calliope, which is now scheduled to produce in the second quarter of 2021. The non-operated Kodiak and Lucius wells remain on schedule, with Kodiak executing later this year.
Lucius drilling is ongoing with strong results in the first well of the program. On slide 18, on our long-term projects. Our Khaleesi, Mormont, and Samurai projects and non-operated St. Malo Waterflood development remain on schedule. Construction of King's Quay floating production system has advanced and is approximately 77% complete with mid 2022 remaining as a target for first oil. At this time, we've submitted all permits for the Khaleesi, Mormont, and Samurai projects. We're excited to launch the drilling campaign in second quarter 2021, and take the next step toward first oil. Two rigs are presently drilling at the St. Malo Waterflood project, and the first producer well has shown results to plan. In exploration, on slide 20, we continue to progress our various exploration projects as we maintain optionality across our diversified portfolio.
This quarter, our operating partner spud the Highgarden well in the Gulf of Mexico, and has encountered delays in drilling due to the significant storm season. Our Vietnam plans move forward with partners signing the joint operating agreement on Block 15-2. We remain excited for the opportunities ahead with more than 900 million bbl of oil equivalent of net risk resources across our exploration portfolio. On 22, on our future plans. For the fourth quarter, we anticipate production in the range of 146,000- 154,000 equivalents per day. Guidance is impacted by two factors, actual storm downtime earlier this quarter of 8,000 bbl equivalents per day, and a planned downtime of some 6,000 equivalents per day as well. We maintain our full year 2020 capital expenditure guidance of $680 million-$720 million, and note that $649 million has been spent through the third quarter.
We're on track to reduce full year G&A expenses by $100 million in 2020, and improve our liquidity position by paying down our revolving balance. We maintain a deep-rooted safety culture at Murphy, leading to strong HSE performance throughout 2020, including safety protocols established early in the year to protect our employees and contractors from COVID-19. Murphy's made significant progress on our long-term Gulf of Mexico projects this year. At this time, all permits submitted for approval in advance of our campaign launching next year. Our onshore team is preparing to launch our 2021 Eagle Ford drilling program. As previously stated, we plan to maintain a flatter production profile of the 150,000- 160,000 bbl equivalents range, with CapEx in line with 2020 spending for 2021. Our focus remains on cash flow CapEx parity after dividend, with debt reduction and a price recovery.
As noted in our 2020 sustainability report, we're even more focused on having sustainable and transparent operations, including our proactive goal of reducing greenhouse gas emissions intensity. We will continue to allocate capital to our unique exploration program. In closing, I'd like to thank our talented group of employees for innovation and dedication this year in light of all the challenges we've faced. I'd like to turn the call over back to the operator for our question period, and I appreciate you this morning. Thank you.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Okay, your first question comes from Duncan Macintosh from Johnson Rice. Duncan, please go ahead.
Yes. My first question would be on 2021, and kind of nothing's changed versus what you messaged on the second quarter, but what are some of the things that you all could do that might put you more towards the higher or the lower end of that 150-160?
Well, really, we feel real good about that. We're working toward that. I think our main focus is to stay with that range and get our CapEx in a way where we can have recovery prices and have more free cash flow and debt. Really not that interested in moving it up and down. The assets that we have today, clearly for this quarter, with the guidance that we have, you could put on top of that the production we have already lost for this significant hurricane season. We have a pretty robust set of production going into the year, and then we're really looking at executing that and then not really wanting to do any levers to move it up or down.
I feel good about hitting that target. You have to keep in mind, too, we have almost $300 million set aside for capital for Khaleesi, Mormont, Samurai, and St. Malo. The production that we have and the CapEx we have for cash flow CapEx parity to pay our dividend and stay in our liquidity, is our main focus rather than production increases at this time, Duncan.
Okay. Thank you very much. Since I know it'll get asked anyway, on King's Quay and the sell-down process, any update there? Are things still progressing or I know the slot has been taken out, so just kind of how you all are thinking about that now.
I'm going to talk about that, and thanks for asking that, and get that over with here. On King's Quay, really, I made a mistake that I rarely, if ever, make in business development. We've done a lot of business development here at this company, and that's commenting on a closing timing of a business, and making this the way that's negotiated. I'm not going to be doing that further. I will say that it is progressing. King's Quay continued to progress. There was an email on my phone before walking in here, but naturally, I'm focused on this meeting at this time. King's Quay is a very valuable midstream asset for our company. It's an asset that's completely almost de-risked. It's been built through COVID and Korea, which was no easy task by our team.
It's built through significant typhoon season that hit that project as well twice, and is now 80% complete. King's Quay is going to sit on top of a very valuable field at Khaleesi, Mormont, that's been previously drilled, that we purchased. Its value has not diminished at all with this closing delay. Where we are, there's two groups involved with this closing, an owners group and a producing group. All right. With our owners group, we made a clear directional path forward there, and we're now working with our producing group toward closing. Pleased with the work and progress. It's a good de-risked asset, and we're progressing in selling it, but I'm just not getting involved with the date of all that here, Duncan, to be honest with you.
Yes, sir. All right. Well, I appreciate it. Thank you all.
No problem. Thank you for asking.
Your next question comes from Neal Dingmann from Truist Securities. Neal, please go ahead.
Morning, Roger. Could you give detail, I don't know, Roger, if you can say too much on this, just on that Green Canyon 895.
Sorry, I'm having trouble. Hang on. I'm having a little trouble. Talk just a little bit slower for me here.
Sure. I just was wondering on Green Canyon 895.
Okay.
Been storms and such. Anything you could talk on timing, etc , on it?
No. This is a rig operated by another partner. It's an experienced partner that we know well. They've had downtime with the rig due to pulling the riser and various things that happens in typical offshore exploration in the Gulf this time of year. We're in the middle of recovering from the last storm and getting set up back on the rig to know where we're going forward. We progressed the well, drilled through salt, and made a lot of significant progress. It's really held up for hurricane reasons, primarily right now, as would be the case with almost any rig operation conducted this quarter in the Gulf.
Just for a follow-up, was wondering on Canadian production. Nice increase in the third quarter, I think about 6%. Canadian, I should say, onshore production. Could you give comments on there? Do you think that could continue in that regard? Anything you could talk about the onshore Canada?
Well, our Canadian operations are going extremely well. We also have to keep in mind that sometimes it kind of glosses by all the significant events that's happened in this company. Like we closed our office there. We're working it now in Houston. You see in my comments today that we set up this remote operating center. To continue with these incredible results is really outstanding considering what all we've done on the G&A side and the office moving. These assets, Duvernay Shale, is performing extremely well right now and gives us a lot of flexibility on all kinds of things in our company for the future. The wells are performing better this year than we thought. We're hitting above guidance in the asset.
The pricing there has gotten just below, at times, of the Eagle Ford due to a lot of weird differentials going on in the Gulf Coast and a lack of capital being spent in Canada in general. These assets doing well. Also Montney doing extremely well on decline rates. We mentioned in our script today all this focus with these operating centers on this small amounts of downtime improvement, but big significant improvement in Eagle Ford to improve the base. Eric and his team with limited capital are spending a lot of time focusing on base production. As I mentioned, the Eagle Ford has very low base decline, lower than we've ever had. Tupper is no different, and Duvernay's just a smaller asset, but it makes 13,000 bbl a day at prices just below the Eagle Ford.
A lot of unique things going on in Canada around gas up there right now. I don't know if people are paying attention to this. It's quite on the outer realm. AECO's been very positive. There's been a lot of debottlenecking and things that were talked about a few years ago. Almost 1.5 Bcf of additional new gas supply availability in pipes by 2022. The supply in the country's declined 2 Bcf a day due to COVID investing. Gas demand in Canada is improving with the coal switching, some 5 Bcf a day. They're going to have LNG there in 2025. The diff to hub was very poor from 2016- 2019. Now that's all recovered, and it's very nice basis going forward due to all these pipes.
Canada is a sleeping place but has greatly improved and allows us a lot of flexibility in our diverse portfolio that we talk about all the time. If you in the game and you do different things, the game will come to you over time, and that's kind of where we are with that asset today.
Great details. Thanks, Roger.
Thank you.
Your next question comes from Gail Nicholson from Stephens. Gail, please go ahead.
Good morning, Roger. You guys have done a really nice job with LOE, both in the GOM as well as the Eagle Ford. Looking at the Eagle Ford, with the artificial lift optimization, the facility optimization that you guys are doing that lowers the base decline, does that also have a positive development potentially on LOE going forward?
I'm going to let Eric. Eric's taking all that glory, and I'm going to let him answer that question for you.
Yep, it's a great question. Obviously, the more we can get production from our base and continue to lower our operating costs, the stronger performance we have on free cash flow. I'm pretty happy with Eagle Ford having just over $8 of BOE OpEx in the third quarter. Our per BOE OpEx in Eagle Ford is of course dependent a fair bit on capital allocation going forward. We aren't giving a lot of focus on what 2021 looks like, but we are working very hard as an operations team to continue to maximize production and minimize spending, and I'm really happy with how my team's done on that.
Great.
Don't forget, Gail, that these overall OpEx levels for us this quarter are good with a bunch of the Gulf shut down. That's also hard to do on a per BOE basis. Very hard to do.
Yes, I was going to mention that. I was wondering if the $10 and change number per BOE is a good run rate to use in the Gulf going forward, or when we return to kind of a normalized rate, X downtime, if that will likely be better ex-workovers.
Ex-workovers, I think we're in really good shape on OpEx on Gulf. Doing really well there. Working on a bunch of plans to improve it.
Great. Roger, you guys have submitted all the permits for Khaleesi, Mormont, and Samurai. Can you just talk about what's the next piece of the puzzle? Is it approval or just the standpoint of any clarity on timing of that?
Well, there's a lot of as you can imagine, complexity around that with this. A lot of yakking, really, on the administration change. The BOEM are parts of the Department of the Interior and continue to operate through all administrations. We'd like to gain those approvals in January, as you would anticipate, before January 21. Working toward doing that. You have to get them in and submit them. They're quite a bear of documentation there that we have to go through. We've got that in and we own these assets. We have a right to these assets. If all this yakking and talking about differing things, it's really not known at this time, of course. We feel really good about our position.
We've gone through a lot of presidents in 70 years and a lot of different things. This administration that's coming in was also part of a triad attempt to stop drilling in Macondo. We very much understand what was called upon then. Have to keep in mind, these fields are already drilled, which is an advantage, where the completion is different than a drilling permit. Keep in mind that if what drilling is to be done is in known pressure regimes, which gets away of some of these issues put on us, post Macondo, by the prior administration.
All these things we're very aware of, we're very knowledgeable about, going through and working all of our options. Again, on all those things, Murphy always has another thing to go to. Outstanding Canadian assets, thousands of locations in the Eagle Ford, exploration out of the United States. Very rarely find this all in one ball there, one ball. That's our situation, Gail, as you know.
Wonderful. Then just from the standpoint of the 2022 notes, you guys have an undrawn credit facility, cash on hand, have the flexibility to adjust budgets to make sure you generate free cash in 2021. Just an update of thoughts on how you guys are thinking about those upcoming maturities?
Yeah, Gail, this is David Looney talking. Obviously, we have a total of $578 million coming due in 2022. It's about not quite evenly split between June and December. We obviously keep an eye on the bond markets, candidly, where the bond markets are today and where our paper is currently trading is certainly not anything that's attractive to us today. As we've seen over the last several years, there's a high correlation, I think, between where our bonds trade and what oil prices look like, etc . We don't have to do anything immediately, obviously. We still have in excess of a year and a half, 18 months, before that first maturity. We look at that.
As you point out, we do have plenty of availability on the revolver, and if the bond market didn't come back to us, if you will, over the next 18 months to two years, that is an option. Obviously, we look at it, we watch it, and we try to be opportunistic.
Great. Thank you so much.
Thanks, Gail. Appreciate it.
Your next question comes from Roger Read from Wells Fargo. Roger, please go ahead.
Morning, Roger. How you doing?
Hey. Doing well, Roger. Good morning to you. Guess a couple things I'd like to make sure I understand a little better. You mentioned a couple different times, Eagle Ford shale well base declines have really, I don't know if we call them shallow out at 22%, certainly better than what we typically see. I'm just wondering what all is factored in there. Is that a larger base of truly mature wells that are declining slower or something you've done different in terms of choking back production early on, or a combination of factors?
Well, what we've really done is kind of right-sized this asset around 30,000 a day going forward at a really low maintenance charge to do that CapEx. That's really what we're doing, and I'll let Eric expand further than that for you, Roger.
Sure. We have a natural phenomenon with the shale oil wells that have a shallowing decline through time. If you look at our Eagle Ford this year and what our thoughts are in terms of the base performance next year, with a fairly limited capital allocation to Eagle Ford in 2020, we have less production from high decline rate. We've established, as we comment on our slide deck, a 20,000 bbl a day piece of our business from wells brought online prior to 2019 that has demonstrated very shallow declines, which of course, we expect to continue to shallow going forward.
Our focus on managing our base, on limiting downtime, on maximizing production, on increasing well performance through artificial lift optimization allows us to shallow out our decline even more than sort of the natural phenomenon. We've been happy to see that performance over the last 12 months or so and expect it to continue going forward as the wells naturally shallow up and decline as well.
Okay. Just kind of a, it is an all of the above process is really the right way to think about it.
That's correct.
Okay.
Everything you said.
All right. I don't know which one of you all wants to take this, but on the cash flow parity for dividend and CapEx, you had also a desire to pay down the debt that's out on the revolver. I'm just curious, where does the extra cash come from to pay down the revolver? Is this based on oil at $40 for parity, $45? You're going to move it around as oil prices move around? Just a little more help on that front, please.
As I said, not really getting into it today, Roger, I'm sure you can understand why, when we sell down this asset, it will take our revolver to zero, this midstream asset that we have, King's Quay. If not, that would stay on there in a low $40 world because we're cash flow CapEx parity with dividend the otherwise, then we would make another arrangement on selling that, if you will, if we need to or want to. We would still have very good liquidity even with that remaining, because the project is almost built. That's the issue there, Roger.
Okay. Appreciate it. Thanks, guys.
Thank you.
Your next question comes from Leo Mariani from KeyBanc. Leo, please go ahead.
Leo, good morning. How you doing?
Hey, morning here, guys. Just to follow up on that last comment you made there with respect to the King's Quay. You said that the project is 80% built at this point. I guess just in the event that this deal doesn't go through, what would be kind of the remaining King's Quay spend that you'd have to put in place in 2021? I'm getting a sense it's probably not a lot left here.
I would say that number's probably less than 100. In the 70 range. It's going very well. We have a team there on the ground today, and we're executing that well, and it's an asset that is valuable to be sold to someone. I'm not concerned of that. I'm not really negotiating that here anymore, Leo.
Yep, understood. Okay.
We have a lot of flexibility around it. You can see in our debt and our free cash flow, we almost made enough free cash flow this quarter for that. We're doing really well with our operations, really well with our G&A, really well with our LOE. Even through these storms, because of our diversity and our other assets outperforming, we're very well-positioned to take on what we need in these assets where we work, and of course, have plans to have any outcome involved with that if we need to.
Okay. Understood. I guess I just wanted to get a sense, I know you guys are talking about kind of restarting the Eagle Ford operating program next year. Is that something that's going to hit the ground running pretty early with a couple rigs in early 2021? What can you kind of tell us about the way you're looking at the tackling Eagle Ford?
Well, keep in mind, we have to meet with our Board and prove our budget in December. We still have to do that. I notice where people do their budgets almost a year ahead. Like, as soon as you do your budget, you do the next budget, which is quite a phenomenon we have going out there. We got to do that, but we have drills to do in Eagle Ford, probably 14, 15 of them. I see Eric nodding his head in the affirmative there.
We have drills to do and some drilling to do. We got plenty of wells to do with 1,000 locations there. Again, that asset's performing very well on the base. That asset's tuning in well at a flatter profile with low maintenance CapEx going forward, a lot of flexibility. Of course, like most operators, I would anticipate a front-end loading of operations in the year. I don't think we'll be uncommon in that regard.
Okay. I guess maybe just on Mexico, certainly, I think you guys have been talking about a couple wells next year at a minimum. Just trying to get a sense of where you are in that process. I know you've got some partners to negotiate with, but is that something we could potentially see start drilling first half of next year? Do you think it's more second half? What are you going to tell us about Mexico?
We're in the middle of our partners on the budgeting there. As you can imagine, that's things that you have to take in close regard these days with these type of prices. I would anticipate it late next year. We have two very nice, very large prospects there that are coming out of the multitude of options we have there. We're very excited about our Brazil wells and the budgeting of that with our partner, ExxonMobil. That will be about a second half spud as well. A nice second half year type of opportunity is there for us, Leo, in our diverse business that we have.
Okay. That's very helpful. I appreciate it.
No, thank you.
Ladies and gentlemen, as a reminder, should you have a question, please press star, followed by one. Your next question comes from Josh Silverstein from Wolfe Research. Josh, please go ahead.
Josh, good morning.
Good morning, guys. Just on the King's Quay transaction here. You highlighted the value of the project completion date. I'm just wondering, flipping this around, given how far along it is, would you actually consider keeping it at this point? It doesn't seem like you want to do that, but could that potentially be on the table?
Really trying not to negotiate it here, Josh. As I said, we can do that. We can afford to do that. We have all the ability to do that. We have decided to go down this road. We've progressed the road a long way and continuing to progress that. It's just a delay in the closing timing so far is really the issue. Putting out additional dates on that is not helping the matter at all, and continue to progress toward the original goal. We have ultimate flexibility to do anything we need here. The goal is still to do it, and as long as we're progressing, as I'm saying, then we're going to continue on with that until it no longer progresses, of course. That's not the case today.
Got you. Fair enough.
No problem.
I wasn't sure if this ever came up before. I think it was asked a couple of questions ago. As far as the volume guidance and spending for roughly kind of flattish, around $700 million year-over-year, what's the breakeven that you guys have on crude oil and gas price? I know there's a little bit of flexibility to shift capital around, but what was the-
Break even in what way, Josh?
Cash flow break even.
With dividend or with capital?
Post the dividend.
Oh, in low $40s. Very low $40s. Below $42.
Okay, thanks guys.
No problem. Appreciate your call.
Your next question comes from Arun Jayaram of JPMorgan. Please go ahead.
Arun, welcome in. Your last one today.
Hey, Roger. How are you, sir?
Doing great.
Yeah. Roger, I was wondering if you could give us, and again, I apologize, I'm dialing in a bit late. I was wondering if you could give us an update on the development program at Khaleesi, Mormont, and confidence in delivering on that. Is it first half? Is it 2022 production outlook?
First step, the facility, which is going very well. We are very experienced at building and constructing these things. That's another thing, we are in charge of that, an asset that we own. We're also the operator in building it. That's a big advantage, a hell of an advantage. Then it really becomes the wells that are drilled at Khaleesi, Mormont. Samurai will require some additional drilling. Khaleesi, Mormont is greatly de-risked by, I think, six How many well bore penetration is that? Seven well bore penetrations and six wells that are cased there. The wells are pay on log. We have the reserves third party. We need to get out there and do the completions.
It's real important to differentiate between completion and drilling permits if we want to have the concern about some of these political matters and things of that nature, which we're very astute about and knowledgeable of. It's an asset that's set up to perform, and go forward, and we have the rig contracted. That's also important in the permitting. That's become more specific through the years. Real pleased about just executing like we do all of our business, and we've executed many deep water, different kinds of wells and projects all over the world, and this one's in line. I'm very pleased with my team, and we're doing well.
Okay. Roger, my second question is just a little bit more, maybe color or clarification on Mexico and Brazil next year. Does the Mexico plan include the Cholula appraisal, or are you drilling some rank exploration wells? Then, you're saying that in Brazil, you could spud a well in the second half of 2021?
Yes, that's correct. We're not spudding it. Our operator, ExxonMobil is.
ExxonMobil, yep.
Yes. In Mexico, Cholula has an appraisal program approved by the government there. We do not have to execute on it. We have time, or we can drill a larger subsalt structure, which has been de-risked by some other wells in that region, and a much larger prospect, if you will, that we may lean toward. We're working with our partners now on the timing and what to choose between those two at this time. We at Murphy are leaning toward the larger opportunity over the Cholula appraisal at this time.
These are in your flattish CapEx guide, right? Or outlook, I should say. Not guide.
Yes. Oh, yeah. CapEx guide. Be clear on the CapEx. For next year, we're guiding a CapEx similar to this year. I think it's trending slightly lower than the midpoint of 2020 at this time. The 2022 CapEx would be similar. After that, it's much lower CapEx and significant free cash flow coming out of this business as the offshore projects come on. This idea that we'll have that CapEx forever, it really isn't our point we're trying to make in this long-term guidance. 2021 and 2022 are the higher CapEx levels by far, absent some incredible exploration success in our business.
Okay. I got one more, Roger, if I could sneak one more in. You did note that most of your debt maturities are in 2024 and beyond. My question is, you do have some 2022 maturities. You've got some time on those, but what is the general thoughts on addressing those? Do you issue new debt to term those out, or where's your head today in terms of those maturities?
While you were talking to Leo, Gail asked that question, and David answered it. Because you're a nice guy, Arun, we'll answer it for you again. David, tell him one more time.
Yeah, Arun. Obviously, we have like $260 million coming due in June 2022 and $320 million or so in December 2022. It's certainly on the front of our minds. As you know, we obviously watch the market on a regular basis. The bond market today for names such as us is not great. Obviously, there's been a lot of uncertainty around oil prices, political situation, et cetera. I think, we still want to see how that plays out. We watch it. We're always prepared to go if and when necessary, and if and when the market sort of moves in our favor. We feel like we do have that opportunity if we need to. We have about a year and a half now before that next maturity. We're watching it.
We look at it, frankly, if it doesn't ever become attractive to us over the next 18 months, we do have significant availability, obviously, on the revolver to do something of a temporary nature, if you will. As we get into a different environment, Roger mentioned, as you get out past 2022, particularly, our CapEx numbers decline in a big way. As such, it frees up a lot of cash flow to pay off some of these bonds if, in fact, we need to do it at that time. We look at it regularly, consistently, and feel like we have a full complement of opportunities to take advantage of.
I think it's important that the separation of the notes due in the middle of the year and end of the year in a post-COVID world, six months is a lifetime, Arun, as you know. I think that's also positive. It's not like it's due in the middle of the year. That's almost two years away.
Yeah.
Over two years away for the second note.
Yeah.
Which first can easily be placed in a revolver. The key for us is to keep our revolver empty. When you do that, you can get another one very easily. Also, keep in mind, Murphy, where we are. We have an unsecured revolver. We've never had a security of any type of revolving credit facility in our company history, nor an RBL. An enormous flexibility for Murphy on our liquidity and our revolving situation and our long-term positivity in the market around bonds and the deals that we've had in the past.
Got it. Roger, thanks for that. As a Longhorn, I guess that serves me right for getting on Leo's call first.
That's fine.
Thanks for your comments.
No problem, Arun. I'll talk to you soon. Appreciate your help.
Thanks.
There are no further questions from our phone lines. I would now like to turn the call back over to Roger Jenkins for any closing comments.
Appreciate everyone calling in today. We'll see you at our next call in late January. Thanks for everything. See you soon. Take care.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.