Murphy Oil Corporation (MUR) Q4 2025 Earnings Call Transcript
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Overview
The earnings call reveals strong production performance and exploration progress, with optimistic guidance on future projects like Lac Da Vang and Hai Su Vang. Although there are some uncertainties in CapEx flexibility and reserve estimates, the overall sentiment is positive due to robust exploration strategies and high confidence in key developments. The Q&A section further supports this outlook, with management addressing concerns and maintaining optimism in future prospects. The absence of any negative critical factors and the overall positive tone suggest a positive stock price movement.
Key Financial Performance
Lease Operating Expenses Reduced by 20% year-over-year due to realized efficiency gains in the Eagle Ford Shale program.
Capital Expenditures Came in below guidance, partly due to efficiency gains in the Eagle Ford Shale program.
Net Production Decreased to 171,000 barrels of oil equivalents per day in 2026 from 182,000 barrels of oil equivalents per day in 2025, primarily due to Tupper Montney natural gas volumes and higher royalties.
Eagle Ford Shale Production Maintained flat with 25% less capital spend year-over-year.
Liquidity Over $2 billion, with a low leverage ratio.
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Operating Highlights
Exploration and appraisal results: Advanced 4 exploration and appraisal wells across 3 continents in Q4 2025. Successful appraisal at Hai Su Vang, Golden Sea Lion field in Vietnam with 429 feet of net oil pay, significantly above initial estimates. Oil discoveries in the Gulf of America and a dry hole in Côte d'Ivoire.
Vietnam operations: Exploration results in Vietnam suggest a significant new growth business, expected to surpass the scale of Eagle Ford Shale operations by the early 2030s.
Expansion into new regions: Entered offshore Morocco and acquired 7 new blocks in the Gulf of America. Pending bid results for another 7 blocks in the Gulf of America.
Production and cost management: 2026 net production expected to be 171,000 barrels of oil equivalents per day, down from 182,000 in 2025. Maintained Eagle Ford Shale production with 25% less capital spend. Lease operating expenses to remain in the $10-$12 per barrel range.
Financial discipline: Maintained a low leverage ratio and over $2 billion in liquidity. Ready to adjust capital spending if commodity prices remain low.
Long-term growth strategy: Focused on intentional strategic investments in development, exploration, and appraisal activities in the Gulf of America, Vietnam, and Côte d'Ivoire to enhance shareholder value in the mid- to long-term.
Exploration pipeline reinforcement: Proactively secured new blocks in diverse basins to sustain growth and provide optionality for the future.
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Risk or Challenges
Commodity Price Volatility: The company acknowledges the unpredictable market environment and softening commodity prices, which could impact revenue and profitability.
Production Decrease: Net production for 2026 is expected to be lower at 171,000 barrels of oil equivalents per day compared to 182,000 barrels in 2025, primarily due to reduced Tupper Montney natural gas volumes.
Exploration Risks: The company faces risks in exploration activities, as evidenced by the dry hole at Civette in Côte d'Ivoire, which highlights the uncertainty in exploration outcomes.
Regulatory and Competitive Pressures: The company is awaiting bid results for new blocks in the Gulf of America, which could be influenced by regulatory and competitive factors.
Operational Challenges: Maintaining flat Eagle Ford Shale production with 25% less capital spend could pose operational challenges.
Economic Uncertainty: The company is prepared to tighten capital spending if there is an extended period of low commodity prices, indicating concerns about economic uncertainties.
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Guidance & Outlook
2026 Net Production: Net production is projected to be lower at 171,000 barrels of oil equivalents per day compared to 182,000 barrels of oil equivalents per day in 2025. The decrease is primarily due to reduced Tupper Montney natural gas volumes, influenced by higher gas prices and royalties.
Eagle Ford Shale Production: Production will remain flat in 2026 despite a 25% reduction in capital spending.
Lease Operating Expenses: Lease operating expenses are expected to remain within the $10 to $12 per barrel range.
Exploration and Appraisal Activities: The company plans to conduct 2 appraisal wells in Vietnam's Hai Su Vang, Golden Sea Lion field, and 2 exploration wells in Côte d'Ivoire during the first half of 2026.
Exploration Portfolio Expansion: Murphy Oil has entered offshore Morocco and acquired 7 new blocks in the Gulf of America. Bid results are pending for another 7 blocks in the Gulf of America.
Vietnam Operations: Exploration results in Vietnam suggest a significant new growth business that could surpass the scale of current Eagle Ford Shale operations by the early 2030s.
Capital Spending Adjustments: The company is prepared to reduce capital spending if there is an extended period of low commodity prices.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What was the reason for the 12,000 barrels per day production rate at the Hai Su Vang-2X stem test?
A:The 12,000 barrels per day production rate was not constrained by facilities but was the natural productivity of the reservoir. The test program involved two separate flow tests, each producing around 6,000 barrels per day, and collectively confirmed the reservoir's ability to deliver 12,000 barrels per day.
Q:What portion of the 2026 CapEx is considered flexible?
A:The company has limited flexibility in its 2026 CapEx due to investments in key projects like Lac Da Vang development, Côte d'Ivoire exploration, Hai Su Vang appraisal, and the Chinook development well. However, there is some flexibility in the Gulf of America rig program and onshore Canada, with potential to reduce capital by 10% in 2026 and up to 30%-40% in 2027 if needed.
Q:What was the failure mechanism at Civette, and how does it impact the probability of success at Caracal and Bubale?
A:At Civette, oil pay was found in multiple reservoirs but not in commercial quantities. The failure does not impact the probability of success at Caracal and Bubale, as these prospects are independent and test different age reservoirs. The company remains optimistic about these prospects.
Q:What is the expected production potential of the Vietnam business compared to Eagle Ford?
A:The Vietnam business is expected to produce 30,000 to 50,000 BOE per day in the early 2030s, which could rival or exceed the current production of Eagle Ford. However, this depends on the phased development of Hai Su Vang and Lac Da Vang fields.
Q:What is the outlook for oil production in 2027?
A:The company expects modest oil production growth in 2027, with low single-digit growth compared to 2026. This is driven by the Chinook well coming online in late 2026 and the ramp-up of Vietnam's Lac Da Vang development.
Q:What is the confidence level and timeline for the Chinook development well?
A:The Chinook development well targets a known reservoir with low subsurface uncertainty. It is expected to come online in the second half of 2026, with production outcomes primarily dependent on timing and completion quality. The confidence level is high, with nearly zero risk.
Q:How does the royalty mechanism in the Tupper Montney work, and what is the expected change in 2026?
A:The royalty rate in Tupper Montney is a sliding scale based on realized gas prices. It is expected to increase from 4.6% in 2025 to 8.4% in 2026 due to higher gas prices. New wells have a fixed 5% royalty for the first few years.
Q:What is the plan for appraising the shallower secondary reservoir at Hai Su Vang?
A:The two remaining appraisal wells (Hai Su Vang-3X and 4X) will test both the primary and shallower secondary reservoirs. These wells aim to assess the lateral extent and resource potential of the secondary reservoir, which is expected to be commercially viable.
Q:What is the expected timeline for the Lac Da Vang development?
A:The Lac Da Vang development is a two-phase project. Initial production from the A platform will ramp up significantly in 2026-2027, with peak production expected in late 2027 or early 2028. The B platform will be installed in 2028-2029 to sustain production.
Q:When is first oil expected from Hai Su Vang, and what is the development timeline?
A:First oil from Hai Su Vang is expected in 2031, with a phased development approach. Peak production is anticipated by 2033, depending on the appraisal results and development plan.
Q:What are the plans for the Morocco exploration blocks?
A:The company plans to reprocess existing seismic data over the next few years to assess the prospectivity of the Morocco blocks. Expenditures will be low, around $5 million over three years, with no obligation wells in the near term.
Q:What is the base decline rate for Gulf of America (GOA) assets, and what is the long-term outlook?
A:The base decline rate for GOA assets is approximately 18% annually without new investments. The company expects to maintain or slightly grow GOA production through the end of the decade, with significant decline post-2029 unless new exploration opportunities are realized.
Q:What caused the year-over-year decline in proved developed reserves?
A:The decline in proved developed reserves was due to lumpiness in offshore projects moving between proved undeveloped and proved developed categories. For example, the Chinook 8 well is currently booked as proved undeveloped and will move to proved developed in 2026.
Q:What is the company's view on the Tupper Montney asset in light of rising valuations?
A:The Tupper Montney asset is viewed as a long-term resource with significant optionality. The company continuously evaluates its portfolio but currently sees no better opportunities to redeploy capital. The asset is capital-efficient and breaks even at low gas prices.
Q:Review of Unclear Management Responses
A:Management avoided providing specific production growth numbers for 2027, citing the lack of a finalized budget. They also refrained from giving updated resource estimates for the Hai Su Vang secondary reservoir and the Morocco exploration blocks, stating that more data and analysis are needed.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
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MUR Transcript
Murphy Oil Corporation (MUR) Q4 2025 Earnings Call Transcript
Positive1-29
The earnings call reveals strong production performance and exploration progress, with optimistic guidance on future projects like Lac Da Vang and Hai Su Vang. Although there are some uncertainties in CapEx flexibility and reserve estimates, the overall sentiment is positive due to robust exploration strategies and high confidence in key developments. The Q&A section further supports this outlook, with management addressing concerns and maintaining optimism in future prospects. The absence of any negative critical factors and the overall positive tone suggest a positive stock price movement.
Murphy Oil Corporation (MUR) Q3 2025 Earnings Call Transcript
Unknown11-7
The earnings call presents a mixed outlook. Strong operational improvements and strategic exploration plans are positive, but concerns about declining production in key areas and less aggressive share buybacks are negative. The Q&A reveals management's caution in providing specific guidance, which may unsettle investors. Overall, the sentiment is neutral, with no significant catalysts to drive the stock price in either direction.
Murphy Oil Corporation (MUR) Q2 2025 Earnings Call Transcript
Positive8-7
The earnings call highlights strong operational performance, including better-than-expected CapEx and lease operating expenses, significant cash cost savings, and robust well productivity. The company is focused on shareholder returns through buybacks and dividends, contributing positively to sentiment. The Q&A session reveals resolved operational challenges and promising exploration prospects, particularly in Côte d'Ivoire and Vietnam. Despite some uncertainties and lower-than-expected Canadian production, the overall sentiment is positive, with strong financial metrics and a strategic focus on high-impact exploration.
Murphy Oil Corporation (MUR) Q1 2025 Earnings Call Transcript
Positive5-8
The earnings call reveals strong financial health, production growth, and shareholder returns, with a strategic focus on exploration and debt reduction. The Q&A section highlights positive management sentiment towards exploration and production prospects, despite some uncertainties. The company's commitment to shareholder returns and production expansion, coupled with a positive revenue increase, suggests a positive stock price reaction. However, some concerns about market volatility and exploration risks slightly temper the outlook, resulting in a positive rather than strong positive sentiment.
MUR Slides
MUR Report
Frequently Asked Questions
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