MUR – Base Case iCDS 191bps, Negative Case iCDS 286bps, 2029 7.050% Bond YTW of 7.332%, iYTW of 5.898%, Ba2 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need
May 2, 2025
- Credit markets are overstating MUR’s credit risk with a YTW of 7.332% and a CDS of 298bps relative to an Intrinsic YTW of 5.898% and an Intrinsic CDS of 191bps Furthermore, Moody’s is overstating MUR’s fundamental credit risk with its speculative Ba2 credit rating four notches below Valens’ IG4+ (Baa1) credit rating.
- Incentives Dictate Behavior™ analysis highlights positive signals for credit holders. MUR’s compensation metrics should generally drive management to focus on improving margins and asset utilization, which could lead to Uniform ROA expansion and increased cash flows available for obligations going forward. Moreover, most management members are material owners of MUR equity relative to their average annual compensation, indicating they are well-aligned with shareholders for long-term value creation. Furthermore, management members have low change-in-control compensation, which implies that they may not be incentivized to pursue a takeover or accept a sale of the company.
- Earnings Call Forensics™ of the firm’s Q1 2024 (01/30/2025) earnings call highlights that management is confident they will maintain steady rig operation and get a barrel production range consistent with last years.
