Murphy Oil (NYSE:MUR) said third-quarter production exceeded the high end of its guidance as the company brought two offshore projects online and advanced exploration and appraisal work in Vietnam and Côte d’Ivoire.
President and CEO Eric Hambly said the company generated $515 million in operating cash flow during the quarter, with contributions from the Eagle Ford, Gulf of America and Tupper Montney assets. Murphy did not provide a revised resource estimate for its closely watched Bubale discovery in Côte d’Ivoire, though Hambly said appraisal results have increased his confidence that the Turonian reservoir can support an economic development.
“We have quite a bit of confidence that we have de-risked through our appraisal program a volume that clears an economic development threshold,” Hambly said. “But I’m not really yet ready to describe a new range of resources.”
Bubale Appraisal Plans Take Shape
Murphy’s Bubale West-1X well confirmed oil in the Turonian reservoir down dip from the original discovery and encountered hydrocarbons in the deeper Albian reservoir, Hambly said. Pressure data suggest the Turonian reservoir is likely continuous between the two wells, which are about eight miles apart, although further work is needed to establish the extent and quality of the field.
Hambly said the West-1X well encountered both oil- and water-bearing Turonian sands. The water could represent an oil-water contact across the reservoir, but that remains unconfirmed. Murphy also found oil in the deeper Cenomanian and Albian reservoirs, which require further appraisal.
The CEO said preliminary screening suggests a standalone deepwater development using a floating production, storage and offloading vessel would require roughly more than 150 million barrels. He cautioned that the commercial threshold could change as Murphy learns more about reservoir quality and the number of wells needed.
Murphy expects to be better positioned to provide an updated resource range as it progresses appraisal over the next 18 to 24 months. Hambly said the company is seeking a rig and currently expects to start the next appraisal program in the second quarter of 2027, although the timing is not final.
Appraisal wells could cost approximately $80 million to $100 million per location, or about $110 million with an extensive evaluation program, Hambly said. He added that uncertainty over the number and scope of Bubale wells will be a major factor in Murphy’s 2027 capital budget.
For funding a potential development, Hambly said Murphy has not decided whether to retain its interest, farm down its Côte d’Ivoire position, take on temporary debt, sell assets or use a combination of those options.
Offshore Projects Begin Production
Chinook 8 came online through Murphy’s Pioneer facility on Sept. 22, followed five days later by first oil at Lạc Da Vang, the company’s first operated development in Vietnam. Hambly said Lạc Da Vang was completed on time and on budget, and that some recent cargoes sold at a premium of more than $10 per barrel to Dated Brent.
At $80 Brent, Hambly said Lạc Da Vang and Chinook are expected to generate approximately $1 billion in combined free cash flow over the next five years. He added that Lạc Da Vang provides infrastructure for potential nearby tiebacks.
Murphy expects Lạc Da Vang production net to the company to be approximately 3,000 to 5,000 barrels per day next year, with a 2027 exit rate of 7,000 to 12,000 barrels per day. Peak net production is expected to reach 10,000 to 15,000 barrels per day in 2028 or 2029, Hambly said.
He also said Murphy is on track to sanction its Hai Su Vang project in the fourth quarter of 2027. At the nearby Lạc Da Trang North discovery, the company currently considers a subsea tieback likely without an appraisal well, although future exploration results could influence the development plan.
Eagle Ford Spending Set to Rise
Murphy is preparing to increase Eagle Ford investment as part of what Hambly described as a multiyear production ramp. The company has added capital this year to resume drilling, allowing wells to be completed late this year and early next year.
While Murphy has not finalized its 2027 budget, Hambly said Eagle Ford capital could rise to around $500 million, compared with approximately $300 million annually over the past year or two. The company plans to provide its budget on its fourth-quarter earnings call in late January.
Hambly said Eagle Ford drilling and completion costs fell 26% year over year, aided by longer laterals and operational efficiencies. He expects companywide operating expenses of $10 to $12 per barrel of oil equivalent to remain a reasonable range for 2027.
On shareholder returns, Hambly said Murphy could repurchase shares if the price falls significantly below its conservative view of intrinsic value. He said the company would weigh buybacks against appraisal spending while protecting its balance sheet.
About Murphy Oil (NYSE:MUR)
Murphy Oil Corporation (NYSE:MUR) is an independent oil and natural gas exploration and production company. Its activities include identifying, acquiring, developing and producing crude oil, natural gas and natural gas liquids, with a focus on high-quality assets in North America.
The company’s operations are primarily located in the United States, including onshore assets in the Eagle Ford Shale of South Texas and offshore properties in the Gulf of Mexico. Murphy Oil has also historically maintained exploration and production interests in Canada and other international regions, although its current portfolio is concentrated in the United States.
Founded in 1950, Murphy Oil has evolved from a diversified energy company into a focused exploration and production business.
