Murphy Unveils Drilling Campaign, Sees Major Boost in '09 Development

MPS Block, Congo
(Click to Enlarge)

Yesterday, Jan. 29, Murphy Oil Corp. issued a fourth quarter earnings conference call. Kevin Fitzgerald and David Wood, Murphy's Chief Financial Officer and Chief Executive Officer, respectively, delivered an overview of the company's financial results and upcoming drilling program.

Murphy, citing an impact from lower oil and natural gas prices, reported net income of $95.9 million for its E&P segment, down from the previous year's earnings of $268.2 million.

Capital expenditures for 2008 totaled approximately $2.4 billion, with more than 82% --or nearly $1.9 billion -- spent in the E&P segment. Murphy tagged $480 million of its capex for exploration, with the remainder used to spur field development, specifically the Tupper, Kikeh, Sarawak gas, Thunder Hawk and Azurite projects. For 2009, Murphy has earmarked $1.8 billion -- 86% of the company's entire capex -- for its 2009 E&P budget.

Singling out exploration and development, the company plans to start-up production for several of its major projects. The Sarawak natural gas development in Malaysia; the Thuder Hawk Field, located in the Gulf of Mexico; and the Congolese Azurite project -- which will utilize the world's first drilling FPSO -- will all come on stream this year. Additionally, Murphy reported that the company is making headway offshore Australia at the Abalone Deep #1 well, which is being drilled by the Stena Clyde semisub.

Murphy noted that the company is planning a five-well drilling program for 2009. The company is encouraged by these potentially significant exploration wells, two of which will be spudded in the Gulf of Mexico. The first well, or Samurai prospect, will be located in Anadarko's Green Canyon Block 432 and is slated to commence drilling in the first quarter. The second GOM well will likely be drilled in De Soto Canyon near Murphy's Dalmation discovery. Murphy is also targeting oil and gas in Austral-Asia and will spud a deepwater well offshore Malaysia. Lastly, the company will spud two wells at its Azurite Field, located on the Mer Profonde Sud Block offshore the Rebublic of Congo.

Following a productive drilling and development campaign, Murphy expects full-year production for 2009 to top out at 180,000 barrels of oil equivalent.

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