Murphy Oil Announces 2003 Capital Program

Murphy Oil Corporation announces a capital program of $952 million for 2003, an increase of approximately 10% from 2002.

Over 75% of the capital budget will be allocated to upstream operations. Murphy's exploration expenditures are expected to be $248 million and include continued funding of its deepwater Gulf of Mexico drilling program, natural gas exploration in Western Canada and an extensive drilling program in deepwater Malaysia on Blocks K and H off the coast of Sabah. Murphy's development expenditures are expected to be $486 million and represent an increase of 27% over 2002 levels. Driving this increase are deepwater Gulf of Mexico projects at Front Runner (Green Canyon Blocks 338/339, 37.5%), Medusa (Mississippi Canyon Blocks 538/582, 60%) and Habanero (Garden Banks Block 341, 33.75%), the West Patricia development (85%) in shallow-water Malaysia, and the Phase III expansion of the Syncrude operation (5%). Production increases expected from these projects will begin with Medusa, to be placed onstream at mid-year 2003. Habanero is slated to begin producing in the third quarter of 2003, Front Runner is estimated to start up in the first half of 2004, and Syncrude will initiate periodic increases that continue through 2007.

Capital expenditures for refining and marketing operations are budgeted to be $216 million in 2003, a decrease of 8% over 2002 levels. The primary use of funds is two-fold: the continuing build out of the Murphy USA program at Wal-Mart stores and completion of a clean fuels project at the Company's refinery in Meraux, Louisiana. At year-end 2002, 506 Murphy USA stations were in operation in the U.S., with an additional 100 new builds scheduled for 2003. 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 crude processing capacity will be expanded by 25,000 barrels per day to 125,000 barrels per day.

Concurrent with 2003 capital spending plans, Murphy has implemented a hedging program that covers approximately 30% of 2003 worldwide production of oil and natural gas. Murphy has hedged 22,000 barrels a day of light crude and 10,000 barrels a day of heavy crude. Murphy has also hedged 24 million cubic feet a day of U.S. and Canadian natural gas production through swaps and 26 million cubic feet a day through costless collars. In all cases, Murphy pays the floating price for oil and natural gas swaps and receives a fixed price that averages as follows for the full year of 2003: light oil at $25.30 per WTI barrel; heavy oil at $16.74 per LLK barrel; and natural gas at $3.85 per thousand cubic feet. The costless collar contracts have an average floor price of` $3.33 per thousand cubic feet and an average ceiling price of $4.76 per thousand cubic feet.

Claiborne Deming, Murphy's President and Chief Executive Officer, commented, "This year's capital spending program is heavily weighted to high impact development projects like Medusa, Front Runner and Syncrude coupled with exploration `must spends' on Malaysia deepwater Blocks K and H, where a four-well program will commence in the second quarter to define the potential of these enormous, yet under explored blocks. A hedging program has been implemented in order to protect a portion of cash flow this year to fund our projects as we maintain our commitment to financial flexibility. As always, we will carefully monitor our capital spending program and resultant financial structure so we will be able to fully exploit all of our strong value creation opportunities."