Murphy Oil (NYSE:MUR) highlighted a new discovery offshore Côte d’Ivoire, revised its 2026 capital program upward and outlined plans to accelerate activity in the Eagle Ford during its second-quarter 2026 earnings call.
President and CEO Eric Hambly said the company’s most significant development during the quarter was the Bubale discovery, where the discovery well encountered oil in both the Turonian and Cenomanian reservoirs. Murphy entered Côte d’Ivoire with a three-well exploration strategy, and the first two wells were non-commercial, Hambly said.
Bubale Appraisal to Proceed in Stages
Hambly said the Bubale West 1X well is designed to test reservoir continuity, thickness and quality down dip from the discovery well, while also seeking to establish a deeper oil level. A successful result would provide Murphy with greater confidence that the discovery supports a commercial development, although the total resource range would remain uncertain.
Murphy estimates the appraisal well will cost about $90 million, up from its prior $65 million dry-hole cost estimate for the discovery well. Hambly said drilling through a shallow Turonian section was slower than expected, and the company incorporated that learning into its estimate for the appraisal well. If hydrocarbons are encountered, formation evaluation, logging, core and fluid-sampling work could raise the final well cost above $90 million.
The company said future appraisal activity will be data-driven. Depending on results from Bubale West 1X, Murphy could pursue a broader appraisal campaign, a limited program or no additional appraisal wells next year. Hambly said Murphy controls the pace of spending because it operates its positions in Côte d’Ivoire and Vietnam.
Vietnam Resource Estimate Reduced, Development Planning Continues
Murphy also addressed results from the Hai Su Vang 4X appraisal well in Vietnam, which was a dry hole. The company reduced its resource estimate after the result, with Hambly saying the well found the targeted interval but encountered low reservoir quality and no net pay.
Despite the revision, Murphy continues to view Hai Su Vang as a material opportunity of 200 million to 300 million barrels of oil equivalent, which Hambly described as roughly two to three times the size of the Lac Da Vang project. The company maintained its Vietnam peak-production outlook of 30,000 to 50,000 barrels of oil equivalent per day, though Hambly said current information points toward the lower end of that range unless further tieback opportunities are identified.
Murphy is evaluating development concepts for Hai Su Vang, including a floating production, storage and offloading vessel or a processing platform linked to wellhead platforms and a floating storage and offloading unit, similar to Lac Da Vang. The company is targeting a final investment decision in the fourth quarter of 2027 after completing development planning and obtaining required partner approvals.
Lac Da Vang remains on schedule for first oil in the fourth quarter, according to Hambly, with pipeline, topsides and floating storage milestones completed. Murphy expects net production from the project to reach approximately 5,000 to 9,000 barrels per day by the end of 2027, eventually rising to 10,000 to 15,000 barrels per day as development drilling continues through 2028 and 2029.
In addition, Murphy is drilling the Lac Da Trang North 1X exploration well in Vietnam. Hambly said the prospect has a pre-drill resource range of 40 million to 80 million barrels and could be developed as a tieback if successful. He said the company expects to focus near-term Vietnamese exploration on Block 15-1/05, while activity in Block 15-2/17 may occur in 2028 or 2029 rather than 2027.
Capital Program Raised as Eagle Ford Activity Accelerates
Murphy raised the midpoint of its 2026 capital expenditure estimate to $1.55 billion from $1.25 billion. The increase includes roughly $190 million associated with Bubale, consisting of $100 million of incremental spending on the discovery well and $90 million for the first appraisal well.
The company also plans to direct an additional $70 million to the Eagle Ford, an investment expected to add about 5,000 to 6,000 barrels of oil equivalent per day in 2027. Murphy plans to restart Eagle Ford drilling in October rather than January, drilling one pad in Karnes and another in Catarina. The company expects to begin completing the Catarina pad near year-end and bring wells online early in 2027.
Hambly said Eagle Ford investment is intended to generate additional free cash flow to support the company’s offshore growth opportunities, rather than to respond to near-term oil prices. He said Murphy has seen improving well performance and strong free cash flow from the asset over recent years. The company’s Eagle Ford program is primarily focused on lower and upper Eagle Ford locations, with Austin Chalk wells included only selectively in portions of its Karnes acreage.
Murphy did not provide a formal 2027 capital budget. Hambly said spending next year will likely exceed $1.25 billion and could move toward the high end of, or slightly above, the company’s historical $1.2 billion to $1.3 billion capital range before considering potentially additive Bubale appraisal spending.
Production, Cash Flow and Balance Sheet
Second-quarter production averaged 169,000 barrels of oil equivalent per day, above the midpoint of Murphy’s guidance. Performance was led by Tupper Montney and continued outperformance in the Eagle Ford, Hambly said.
The company generated $110 million of free cash flow during the quarter, paid $50 million in dividends and ended the period with leverage below 1x and approximately $2.5 billion of liquidity. Murphy expects to generate positive free cash flow for the full year at current commodity prices, even with the revised capital program.
Hambly said the company’s capital-allocation priorities remain unchanged: invest in assets to maintain or grow scale, pay its dividend, protect the balance sheet and repurchase shares when management believes the stock trades materially below intrinsic value. He said Murphy may have periods of modest or negative companywide free cash flow before first oil from Hai Su Vang or potentially Bubale, but added that the company is prepared to use liquidity when necessary while maintaining a strong balance-sheet position.
Looking beyond its current programs, Murphy expects to explore one or two wells in the Gulf of Mexico next year and continue activity in Vietnam. The company said its recently added positions in Morocco, Cameroon and Mauritania are at earlier stages, with near-term work expected to center on studies and seismic reprocessing rather than drilling.
About Murphy Oil (NYSE:MUR)
Murphy Oil Corporation is an independent upstream oil and gas company engaged in the exploration, development and production of crude oil, natural gas and natural gas liquids. The company’s operations encompass conventional onshore and offshore reservoirs, with an emphasis on liquids-rich properties and deepwater assets. Through a combination of proprietary technologies and strategic joint ventures, Murphy Oil seeks to optimize recovery rates and manage its portfolio to balance long-term resource development with operational flexibility.
Murphy Oil’s exploration and production activities are geographically diversified.
