Murphy Oil Corporation Q2 FY2025 earnings call

• Comprehensive execution across multi-basin portfolio: Delivered production above guidance with strong new well productivity in Eagle Ford Shale and Tupper Montney, and completed workovers in Gulf of America.
• On track with 2025 plan: CapEx at midpoint of annual range, full year production trending at midpoint, and expecting operating expenses $10 to $12 per barrel BOE in second half of 2025.
• Focus on cost structure: Since 2019, achieved over $700 million cumulative cash cost savings through reduction in G&A and bond interest expenses, with relentless focus on managing cost structure.
• Exploration and appraisal activity: Global exploration teams testing over 500 million to 1 billion barrels of oil equivalent in unrisked resource potential across 3 continents, with key catalysts for the company.

In the second quarter, Murphy Oil achieved a sequential increase in production to 190,000 barrels of oil equivalents per day, above the high end of guidance, driven by strong new well productivity from Eagle Ford Shale and Tupper Montney assets. In the Gulf of America, workovers like Samurai #3 and Khaleesi #2 were completed. Second quarter CapEx was $251 million, and total company lease operating expenses were $11.80 per barrel of oil equivalent, both better than quarterly guidance. The 2025 company-operated onshore well program was complete, with 10 wells in Eagle Ford Shale and a 4-well pad in Kaybob Duvernay brought online. Revenue contribution details weren't explicitly broken down by segment in absolute terms with percentage, but production and cost metrics were highlighted for key segments.

• CapEx is at the midpoint of the annual guidance range, and full year production is trending at the midpoint of the annual guidance range.
• Expect operating expenses in the $10 to $12 per barrel per BOE range during the second half of 2025.
• Continued relentless focus on managing cost structure, building on the over $700 million of cumulative cash cost savings since 2019.

• Operational challenges in Gulf of America workovers, though majority are behind us but potential proactive workovers could arise.
• Potential impact of AECO pricing on Montney program, though capital efficiency and diversification strategies mitigate some risks.
• Exploration risks with unproven resource potential in new areas like Côte d'Ivoire and Vietnam, with outcomes uncertain.

Q: Could you highlight the near-term exploration program?

A: In the third quarter, will spud Cello #1 well in Mississippi Canyon area; in Vietnam, plan to spud Hai Su Vang appraisal well in September; in fourth quarter, will spud first of 3 wells in Côte d'Ivoire.

Q: Talk about the strategy around the Chinook well?

A: Acquired FPSO was accretive, unlocking development potential; planning to drill a well in 2026 with ~15,000 barrels per day potential, with 86% working interest.

Q: Gulf of America production and workovers?

A: Production outperformed, workover activity almost done with Marmalard 3 well expected online in August, last significant planned workover activity.

Q: Perspective on return of capital?

A: Prioritizing share repurchase over debt paydown, with $200 million drawn on unsecured revolving credit facility.

Q: Eagle Ford Karnes County results?

A: Exceptional performance with 30% higher 2-month cumulative oil vs past, 59 Lower Eagle Ford infill wells with strong results, and adjustments to drilling, completion, and flowback showing positive outcomes.

Q: Tupper Montney well performance?

A: 10 wells averaging 19.2 MMcf/day, confident in future results despite plant capacity constraints, with completion design and flowback strategy contributing to performance.

Q: Côte d'Ivoire exploration vs Vietnam?

A: Civette prospect in Côte d'Ivoire has same play type as Eni's discovery, fiscal terms and 90% working interest make Côte d'Ivoire more significant than Vietnam currently.

Q: Côte d'Ivoire appraisal and development?

A: Near-term CapEx modest, development CapEx material if large discovery, operator flexibility allows control over appraisal and development pace.

Q: Offshore Canada volumes?

A: Lower-than-expected uptime at Terra Nova and Hibernia affecting production, wells strong when up but downtime disappointing.

Q: LOE sustainability?

A: $10 to $12 per barrel range sustainable, Eagle Ford cost structure reduced with $13 to $8 per BOE change, structural change in Eagle Ford cost structure.

Q: Karnes County completions?

A: Adjustments to stage spacing, perforation, proppant loading, and flowback strategy contributing to outperformance in Karnes County wells.