Murphy Oil Corporation (MUR)

Interest coverage

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	969,994	1,096,764	1,458,646	1,792,660	1,425,308	1,397,724	864,568	336,639	142,200	-298,386	-751,451	-1,093,923	-1,273,000	-1,122,344	291,268	820,154	1,383,781	1,521,076	524,312	461,248
Interest expense (ttm)	US$ in thousands	112,400	123,352	130,808	142,337	150,759	159,503	168,988	170,977	221,800	222,922	221,179	216,403	169,400	199,082	198,830	214,328	219,300	192,379	191,658	181,887
Interest coverage		8.63	8.89	11.15	12.59	9.45	8.76	5.12	1.97	0.64	-1.34	-3.40	-5.06	-7.51	-5.64	1.46	3.83	6.31	7.91	2.74	2.54

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $969,994K ÷ $112,400K
= 8.63

Murphy Oil Corp.'s interest coverage ratio has fluctuated over the past eight quarters, ranging from a low of 3.55 in Q1 2022 to a high of 13.61 in Q1 2023. The interest coverage ratio measures the company's ability to meet its interest obligations using its earnings before interest and taxes (EBIT). A higher ratio indicates that the company is better able to cover its interest expenses.

In the last two quarters of 2023, the interest coverage ratio was relatively stable, with values of 9.59 and 9.70 in Q4 and Q3, respectively. This indicates that the company's earnings were able to cover its interest expenses nearly ten times over during these periods. The significant increase in Q2 and Q1 2023, with ratios of 11.65 and 13.61 respectively, suggests an improvement in the company's ability to service its debt.

However, looking back to Q2 and Q1 2022, the interest coverage ratio was lower, at 6.66 and 3.55, indicating a weaker ability to cover interest expenses. This could be a cause for concern as it suggests the company may have had difficulties meeting its debt obligations during those periods.

Overall, Murphy Oil Corp. should aim to maintain a healthy interest coverage ratio to ensure it can comfortably meet its interest payments and reduce the risk of financial distress.