Murphy Plans to Spend $866 Million in 2002
Murphy Oil Corporation announces a capital program of $866 million for 2002, essentially level with spending during 2001. Approximately 70% of the capital budget will be allocated to upstream operations. Murphy's exploration expenditures are expected to be $204 million and include continued funding of its deepwater Gulf of Mexico drilling program, natural gas exploration in Western Canada and commencement of drilling on Block K, located in deepwater Malaysia off the coast of Sabah. Murphy's development expenditures are expected to be $400 million and represent an increase of 19% over 2001 levels. Driving the increase in development expenditures are deepwater Gulf of Mexico projects at Front Runner (Green Canyon Blocks 338/339), Medusa (Mississippi Canyon Blocks 538/582) and Habanero (Garden Banks Block 341), and the Phase III expansion of the Company's 5% owned Syncrude operation. Production increases expected from these projects will begin with Medusa, to be placed onstream during the fourth quarter of 2002, which at peak will net Murphy 25,000 barrels a day of oil equivalent. Habanero is slated to begin producing mid-2003, with Front Runner estimated to start up in early 2004 and Syncrude to initiate periodic increases that continue through 2007.
Capital expenditures for refining, marketing and transportation operations are budgeted to be $259 million in 2002, an increase of more than 50% over 2001 levels. The primary use of funds is two-fold: the ongoing expansion and build out of the Murphy USA program with Wal-Mart and continued progress of a clean fuels project at the Company's refinery in Meraux, Louisiana. Approximately 382 Murphy USA stations are expected to be in operation at year end 2001, with an additional 100 new builds scheduled for 2002. The clean fuels project at Meraux will allow the refinery to meet future standards for ultra-low sulfur gasoline and distillate upon completion in mid-2003. In conjunction with this upgrade, the refinery's present crude processing capacity will be expanded by 25,000 barrels a day.
Claiborne Deming, Murphy's President and Chief Executive Officer, commented, "Murphy has a full schedule of impact development projects set to dramatically increase our production. On the exploration side, we have a full portfolio of first-rate drillable prospects in the deepwater Gulf of Mexico, particularly in the Front Runner area, where we have the opportunity to make additional discoveries on our eleven adjoining blocks. Also during 2002, we will test up to four prospects offshore Malaysia on Block K, where 3D seismic processing is firming up our many leads on this previously undrilled deepwater block. On the downstream side, our Murphy USA affiliation with Wal-Mart is unmatched in the retail industry, and we will continue to increase our low-cost, high-volume network at a rapid pace. In spite of the pullback in oil and natural gas prices, Murphy is proceeding with all these projects, as we have the balance sheet capacity to continue to harness growth and value in our company, even in a less robust pricing environment."