Date of Call: May 7, 2026

Guidance:

  • Capital guidance range for 2026 maintained at $1.2B-$1.3B.
  • Production guidance for Q2 2026 not explicitly provided in the transcript.
  • Expect 4,000 BOE/day net contribution from new assets (Banjo/Cello) in 2028, not 2027.
  • Targeting 10%-15% of capital program for exploration spending over the longer term.

Business Commentary:

Production and Financial Performance:

  • Murphy Oil Corporation delivered production above the high end of guidance, exceeding expectations by approximately 3,000 barrels of oil equivalent per day in both onshore and offshore operations.
  • The company generated $429 million in cash flow and reported an adjusted net income of $47 million, despite $67 million in exploration expenses from unsuccessful wells.
  • The strong performance was attributed to higher oil prices, particularly in March, and efficient operations across their portfolio.

Exploration and Development Activities:

  • Drilling continued on the Bubale exploration well in Côte d’Ivoire, with slower-than-expected progress due to hard rock in the Turonian section.
  • In Vietnam, operations are finishing on the HSV-3X appraisal well, with plans to move to the HSV-4X well to define the Hai Su Vang field’s potential.
  • The company is evaluating development options for the field, considering both FPSO and FSO concepts, with clarity expected in about a year.

Capital and Investment Strategy:

  • Murphy maintained its capital guidance range at $1.2 billion-$1.3 billion, focusing on market fundamentals and long-term strategy rather than short-term price movements.
  • The company is assessing new opportunities, including exploration in the Gulf of Mexico and Vietnam, while managing non-operated partner activities.
  • The strategic focus is on creating shareholder value through disciplined capital allocation and exploration.

Shareholder Returns and Dividend Policy:

  • Murphy remains committed to its dividend policy, initiated in 1961, and aims to be a consistent repurchaser of stock.
  • The company will approach share buybacks opportunistically, considering market conditions and oil price volatility, which may influence share price movements.
  • The strategic use of excess cash is balanced with maintaining financial flexibility and shareholder wealth concentration.

Sentiment Analysis:

Overall Tone: Positive

  • CEO stated 'Against the backdrop of significant commodity price volatility, Murphy delivered a strong quarter.' and 'We generated cash flow of $429 million and adjusted net income of $47 million.' Also noted 'Our production outperformance was driven roughly evenly by our onshore and offshore operations.' and 'This quarter was a real-world test of our strategy. In an environment defined by rapid price movement and elevated uncertainty, our focus remained unchanged. We executed with discipline, exceeded production expectations, and delivered solid financial results.'

Q&A:

  • Question from Arun Jayaram (JPMorgan): Could you comment on the overall geologic concept for the Côte d’Ivoire Bubale well and provide more color on drilling progress?
    Response: Drilling is currently in the Turonian section, slower than hoped due to hard rock, but the team is making steady progress and will provide an update once the well is complete and data is evaluated.

  • Question from Arun Jayaram (JPMorgan): What development options are you considering for the promising HSV field in Vietnam?
    Response: Evaluating two primary options: an FSO paired with platforms or an FPSO (new build or redeployed). A field development plan is expected in about a year after the appraisal program concludes.

  • Question from Carlos Escalante (Wolfe Research): Can you help calibrate the reinvestment rate into 2027 relative to 2026?
    Response: No 2027 budget yet, but production additions from Chinook #8 in 2026 and the ramping of the Lac Da Vang field in 2027 are expected to be significant. The trade-off between exploration and development spending in onshore assets is still being evaluated.

  • Question from Carlos Escalante (Wolfe Research): What is taking longer than expected with the Paon field development in Côte d’Ivoire, and is it still a standalone development?
    Response: The delay is due to unsuccessful negotiations with the Ivorian government on a gas pricing structure necessary for the project to be economically viable. The field development plan has been submitted, but sanctioning is not obligated. A discovery at Bubale could help add scale and potentially enable joint development.

  • Question from Chris Baker (Evercore ISI): Can you frame the opportunity in Cameroon and what next steps are expected?
    Response: Cameroon offers attractive geology, low-cost access, and the potential to test large resource prospects with relatively low-cost wells, aligning with the company's frontier exploration strategy.

  • Question from Chris Baker (Evercore ISI): How are you thinking about share buybacks and flexibility given the strong cash position?
    Response: Committed to a competitive dividend and opportunistic share repurchases, but will be patient and disciplined, watching share price movements which tend to correlate with oil prices, and may act if a better opportunity arises.

  • Question from Greta Drefke (Goldman Sachs): Does Murphy have exposure to Gulf-specific crude pricing that has moved positively, and what is the lag on earnings impact?
    Response: No direct exposure to Middle East crude, but benefited from higher oil prices. Some U.S. Gulf crude differentials are improving (Brent plus $12 in March) and will start benefiting earnings from April onward, with a typical one-month lag.

  • Question from Greta Drefke (Goldman Sachs): How do the new Gulf of Mexico exploration blocks compete for capital relative to existing positions?
    Response: Blocks near existing infrastructure target high-probability, smaller opportunities, while blocks in emerging parts of the basin are for longer-term exploration. The 2027/2028 exploration program will balance both.

  • Question from Leo Mariani (ROTH Capital): What is causing the Bubale well to take longer than expected, and have you seen any shows in the Turonian zone?
    Response: Slower drilling due to hard rock in the Turonian section, no definitive results yet, and drilling is still ongoing. No conclusive results to share at this time.

  • Question from Leo Mariani (ROTH Capital): Should we expect Murphy to continue spending more on exploration than in past years?
    Response: Exploration spending in 2026 is higher than typical, but the longer-term target is 10%-15% of the capital program. The goal is to maintain a stack of international opportunities that can be tested with relatively low-cost wells.

  • Question from Leo Mariani (ROTH Capital): Is the rigorous capital return framework being abandoned in favor of a more opportunistic approach?
    Response: The framework remains fully in place, but execution timing will be more opportunistic due to extreme commodity price volatility, while still aiming to buy back stock, consider dividends, and manage net debt.

  • Question from Phillip Jungwirth (BMO Capital Markets): What has changed in the Eagle Ford program to drive better well results, and should the plateau be revisited?
    Response: Capital efficiency improvements, longer laterals, and optimized drilling/completions are driving performance. The 2026 production guide is 38,000 BOE/day; the decision to maintain that level or allow a decline will be made when formulating the 2027 budget.

  • Question from Phillip Jungwirth (BMO Capital Markets): What drew you to the Alaminos Canyon blocks in the Gulf of Mexico?
    Response: Pre-lease sale seismic data identified compelling opportunities. Further prospect evaluation is ongoing, with a potential well in the 2027 or 2028 exploration programs.

  • Question from Tim Rezvan (KeyBanc Capital Markets): What are you seeing for oil prices in Vietnam, and how could that look at first production?
    Response: Long-run expectation is Brent plus $2-$3, but current market disruption has led to higher differentials (Brent plus $12 in March). The timing and level of the geopolitical risk premium are uncertain.

  • Question from Tim Rezvan (KeyBanc Capital Markets): Are you confident in sticking to the front-end loaded CapEx cadence?
    Response: Very confident in delivering within the $1.2B-$1.3B range, given control over onshore and appraisal programs. Potential non-operated opportunities in Eagle Ford may not be significant, but a successful Bubale appraisal well could push to the high end or beyond.

  • Question from Josh Silverstein (UBS): Can you discuss the LDT exploration prospects in Vietnam and tie-back potential?
    Response: The LDT North prospect targets a similar-aged reservoir to the 2019 discovery, with a mean resource range of 40-80 MBOE. A discovery would likely be tied back to the Lac Da Vang development FSO.

  • Question from Josh Silverstein (UBS): How do strategies for new country entries (Cameroon, Morocco) compare to Gulf vs. established basins in terms of risk?
    Response: The goal is to find large opportunities with low well costs in emerging basins. International prospects (like Côte d’Ivoire) have a medium risk profile, while Morocco is considered frontier and highest risk. Gulf of Mexico prospects near infrastructure have the highest chance of success.

  • Question from Charles Meade (Johnson Rice): Can you speak at a high level about the Chinook development and follow-up opportunities?
    Response: The Chinook #8 well is a development well in a large, underdeveloped reservoir. It is expected to have a good financial outcome. There may be additional opportunities in the field, including another production well, contingent on the #8 well's results.

  • Question from Charles Meade (Johnson Rice): Is there still any chance to acquire Petrobras' NCI in the joint venture?
    Response: Yes, the company would love to acquire it at the right price and has a preferential right, but Petrobras is not actively marketing its stake currently.

Murphy Oil's Q1 2026 Earnings Call: Hai Su Vang FID Timing and Gulf Growth Outlook Don't Match