Murphy Oil outlines $1.1B to $1.3B 2026 capital program with exploration focus as production and cost efficiency rise

Earnings Call Insights: Murphy Oil Corporation (MUR) Q3 2025

MANAGEMENT VIEW

* CEO Eric Hambly began by noting, "we achieved total production of 200,000 barrels of oil equivalents per day and oil production of 94,000 barrels per day, underscoring the strength and potential of our assets." He highlighted that operating costs averaged $9.39 per BOE, which was 20% less than the prior quarter, and capital expenditures totaled $164 million, below guidance, citing both timing and improved capital efficiencies.
* Hambly described the progress on international development, stating, "our Lac Da Vang (Golden Camel) field development is progressing on track. And in fact, we started drilling our first development well earlier this week." He emphasized that the Hai Su Vang 2X Appraisal Well spud was in line with plan and that the Civette well in Côte d'Ivoire is on track to spud before year-end.
* Hambly explained, "our exploration teams are working very hard at exploring and appraising prospects across 3 continents, testing gross resource potential of over 1 billion barrels of oil equivalent." He stressed Murphy's international partnerships as a differentiator and signaled continued focus on exploration as a core strategy.
* CFO Tom Mireles commented on shareholder returns, stating, "we did in the first quarter start off with $100 million of share repurchases. But as Eric said, we're kind of keeping an eye on the price and oil price and likely not going to go too heavy on that in the remainder of the year."

OUTLOOK

* Hambly indicated that the company is "closely monitoring the commodity markets" and is confident that its "strong balance sheet and flexible multi-basin portfolio will allow us to manage near-term volatility while staying on track to achieve our long-term goals."
* He signaled that the 2026 capital program is expected to be in the $1.1 billion to $1.3 billion range, with offshore investments likely to remain a priority. Hambly noted, "with our active program exploring in Cote d'Ivoire, you might see a little more spending from us in exploration than this year or past years just by a little bit."
* Onshore capital allocation is anticipated to be slightly lower, while the offshore portfolio will include investments such as the Chinook 8 well, which is expected to come online in the second half of the year. Hambly stated, "overall, it would be reasonable to expect us to have a capital program next year of a similar scale as we've communicated in the past, which is a $1.1 billion to $1.3 billion range."

FINANCIAL RESULTS

* Murphy reported operating costs of $9.39 per BOE for the third quarter, a 20% decrease from the prior quarter, and capital expenditures of $164 million, both figures directly cited by management.
* Production reached 200,000 barrels of oil equivalent per day and 94,000 barrels per day of oil. These results exceeded the high end of production guidance for the second consecutive quarter, according to Hambly.
* The company is guiding fourth quarter operating expenses to increase to the $10 to $12 per barrel range, attributing this to expected lower production rather than increased costs. Hambly said, "the cost per barrel will likely creep up into that kind of range, which really is sort of a typical range for us on the long haul."

Q&A

* Arun Jayaram, JPMorgan: Asked about the Civette well in Côte d'Ivoire and program re-sequencing. Hambly explained the switch to Bubale for the third test, citing lower cost and risk with large resource potential.
* Neil Mehta, Goldman Sachs: Questioned the down cycle playbook and use of potential commodity weakness. Hambly said, "we do have significant flexibility in our capital program. We could run quite a bit smaller onshore program for sure." On 2026 CapEx, he indicated a likely increase in exploration and a slightly lower onshore program.
* Carlos Escalante, Wolfe Research: Asked about operational improvements in Eagle Ford and Montney. Hambly emphasized "seeing production rates...50% to 100% above what historical performance is" and highlighted durable capital efficiencies.
* Paul Cheng, Scotiabank: Inquired about the Vietnam appraisal well and development plans. Hambly said, "it's likely that we will have an additional appraisal well beyond the 2X, but it will be somewhat dependent on the results that we have." On impairment, he clarified it was due to high costs in a non-operated facility and not indicative of broader asset issues.
* Charles Meade, Johnson Rice: Asked about Eagle Ford production guidance and well decline. Hambly noted that guidance assumes typical decline but, "early decline performance...is either in line or shallower than our historical decline performance." Chris Lorino added, "this is the highest new well production that we've had since 2019."
* Leo Mariani, ROTH Capital: Queried low operating expenses and future guidance. Hambly attributed lower OpEx to reduced offshore workovers and durable cost reductions in Eagle Ford. Mariani also asked about Tupper Montney shut-ins, with Hambly explaining guidance reflects typical decline and higher anticipated royalties.
* Geoff Jay, Daniel Energy Partners: Followed up on potential smaller onshore program, which Hambly attributed to repeatable strong well performance rather than macro environment alone.

SENTIMENT ANALYSIS

* Analysts focused on exploration timing, capital allocation, operational improvements, and cost efficiency. The tone was slightly positive, with several congratulating management on operational turnaround and asking detailed follow-ups on strategic projects.
* Management’s responses were confident and detailed, with Hambly frequently referencing strong performance and capital discipline. He expressed ongoing confidence in the company's operational capabilities and flexibility, supported by direct statements such as "we are well positioned to capitalize on the opportunities ahead."
* Compared to the previous quarter, management tone remains confident and analytical, but with more emphasis on recent operational outperformance and cost improvements. Analyst tone shifted from cautious optimism to more constructive engagement as tangible results were discussed.

QUARTER-OVER-QUARTER COMPARISON

* Current quarter production exceeded guidance for the second consecutive time, compared to already strong results in Q2.
* Operating costs decreased further from Q2’s $11.80 per BOE to $9.39 per BOE, reflecting a sharper focus on efficiency.
* The capital program outlook remains in the $1.1 billion to $1.3 billion range, similar to prior guidance but with a signal of increased exploration spending in Côte d'Ivoire.
* Management's confidence increased, with repeated references to the durability of operational gains and capital flexibility.
* Analysts’ focus evolved from questions about derisking and execution to probing the sustainability of recent operational improvements and the implications for future capital deployment.

RISKS AND CONCERNS

* Management acknowledged the challenging macro environment and commodity price volatility, emphasizing ongoing vigilance and capital flexibility.
* The impairment in the Dalmatian field was specifically attributed to high costs at a non-operated facility, with Hambly clarifying, "there's no significant read-through to the currently producing assets or any other fields in the area."
* Analysts raised concerns about production decline rates, the sustainability of recent cost reductions, and future capital allocation, which management addressed with detailed examples and forward-looking plans.

FINAL TAKEAWAY

Murphy Oil’s third quarter saw strong operational execution, highlighted by record-low operating costs and production above guidance. Management maintained a confident outlook, pointing to ongoing international exploration milestones, a durable cost structure, and a capital program expected to remain in the $1.1 billion to $1.3 billion range for 2026. The company emphasized its flexibility to adapt spending to commodity prices and its focus on high-return offshore projects, while also acknowledging macroeconomic risks and cost discipline as central to its strategy moving forward.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/mur/earnings/transcripts]

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