Murphy Oil Corporation Q1 FY2026 earnings call

Market Environment

• Ongoing geopolitical developments in Middle East contributed to energy market volatility, but Murphy has no direct exposure. View flexibility as competitive advantage and remains unhedged.

Financial Performance

• Generated cash flow of $429 million and adjusted net income of $47 million, with average realized oil price $72 per barrel. Cash flow supported by higher oil prices late in the quarter.

Activity and Capital

• Maintaining capital guidance range of $1.2 billion to $1.3 billion, driven by market fundamentals and long-term strategy. Engaged with partners on their plans for new activity.

Operations

• Teams delivered robust execution, production above guidance, with onshore Eagleford and offshore Gulf of America outperforming. Eagleford benefited from 15 new wells and longer laterals; offshore from high facility uptime and efficient maintenance.

Exploration and Appraisal

• Making progress in Quo De Bois with Buol Exploration Well drilling ongoing; in Vietnam, finishing HSV-3X appraisal well and moving to HSV 4X, with wells to define field potential.

In the first quarter, Murphy delivered a strong quarter. Cash flow was $429 million and adjusted net income was $47 million, including $67 million of exploration expense. Average realized oil price for the quarter was $72 per barrel. Production was above the high end of guidance, with onshore Eagleford exceeding expectations by nearly 3,000 barrels of oil equivalent per day due to 15 new wells, and offshore Gulf of America outperforming by about 3,000 barrels of oil equivalent per day driven by high facility uptime and efficient maintenance. Revenue contribution % not explicitly stated in absolute terms but production performance across onshore and offshore is highlighted.

Capital Guidance

• Maintaining capital guidance range of $1.2 billion to $1.3 billion, driven by market fundamentals and long-term strategy.

Production Forecast

• Uncertainty around 2027 production as there are choices to make regarding trade-offs in exploration and development, with significant production additions expected from Chinook but clarity not yet there for 2027 production forecast.

Commodity Price Uncertainty

• Geopolitical developments in Middle East cause volatility in energy markets, affecting realized pricing. Uncertainty makes it challenging to predict future performance.

Exploration Risks

• Wells in Cote d'Ivoire were unsuccessful, incurring exploration expense. Drilling in Quo De Bois and other areas has uncertainties regarding results and timing.

Development Plan Hurdles

• In Cote d'Ivoire, gas pricing arrangement with government not agreed upon, delaying field development plan sanctioning. Uncertainties in gas pricing impact economic viability of projects.

Q: Aaron Jayaram with JPMorgan asked about the geologic concept for the Bubal well and development options in Vietnam.

A: Eric responded on the geologic concept of the Bubal well and discussed development options in Vietnam like FSO paired with platforms or FPSO concepts.

Q: Carlos Escalante with Wolf Research inquired about reinvestment rate framework, development plan in Cote d'Ivoire.

A: Eric talked about reinvestment rate choices and development plan hurdles in Cote d'Ivoire regarding gas pricing and field development.

Q: Chris Baker with Evercore ISI asked about opportunity in Cameroon and share buybacks.

A: Eric discussed Cameroon opportunity and share buyback approach being opportunistic based on share price and oil price outlook.

Q: Greta Drefke with Goldman Sachs asked about Gulf-specific crude pricing and exploration blocks in Gulf of America.

A: Tom and Eric provided insights on Gulf-specific crude pricing lags and exploration blocks in Gulf of America.

Q: Lel Mariani with Roth Capital followed up on Bubal well and exploration priorities.

A: Eric gave updates on Bubal well drilling and exploration priorities with focus on emerging basins for testing large opportunities with low well cost.

Q: Philip Junkworth with BMO Capital Markets asked about Eagleford performance and Gulf of America exploration blocks.

A: Eric and Chris Larino talked about Eagleford performance drivers and Gulf of America exploration blocks' attraction.

Q: TM Resvan with KeyBank Capital Markets asked about oil prices in Vietnam and CapEx cadence.

A: Eric provided context on oil prices in Vietnam and confidence in sticking to CapEx budget with caveats on potential Bootball well impact.

Q: Josh Silverstein with UBS asked about Vietnam LDT exploration prospect and new country entry strategies.

A: Eric discussed Vietnam LDT prospect and new country entry strategies focusing on emerging basins with low well cost testing of large opportunities.

Q: Charles Meade with Johnson Rice asked about Chinook and Petrobras assets.

A: Eric provided details on Chinook reservoir and prep right for Petrobras assets