Murphy Scales Back 2002 Budget

Murphy Oil is planning to reduce its 2002 capital expenditures budget by $100 million to $766 million. The company said it expects lower natural gas sales prices compared with previous price assumptions. Because of its weaker earnings expectations, Murphy Oil said it also sees an increase in long-term debt of about $300 million in 2002 to be used to fund a portion of its capital expenditures, according to the company's annual report filed Friday with the Securities and Exchange Commission.

The company said that its capital and other expenditures are under constant review and planned capital expenditures may be adjusted further to reflect changes in estimated cash flow for 2002. The original capital expenditure budget for 2002 was prepared during the fall of 2001 and provided for $604 million for exploration and production and $259 million for refining and marketing.

Murphy plans to spend 39% of the exploration and production budget in the U.S., including $139 million for developing deepwater projects in the Gulf of Mexico; 36% is allocated to Canada, including $41 million for light oil and natural gas development, $28 million for continued development of the Hibernia and Terra Nova oil fields, and $49 million for further expansion of synthetic oil operations; 6% is allocated to the U.K.; 5% is allocated to Ecuador; and 14% is allocated to other foreign operations, which is mainly Malaysia. The refining and marketing capital expenditures budget included $235 million in the U.S. and $12 million each in the U.K. and Canada. In 2001 the company spent $864.4 million on capital expenditures.