Skip to content
    MUR
    Earnings call· Jun 2026(Q2 FY26)

    MURPHY OIL Q2 FY26 earnings call MUR

    Aug 6, 2026 Source

    Executive summary

    Murphy Oil Q2 FY26 — Bubale Discovery and Strategic Capital Allocation

    Murphy Oil reported a mixed quarter, highlighted by the significant Bubale discovery in Côte d'Ivoire, which promises long-term growth, alongside a reduced resource estimate for Hai Su Vang in Vietnam. The company is strategically increasing its 2026 capital expenditure to fund high-value organic growth opportunities, particularly in Bubale appraisal and Eagle Ford acceleration, while maintaining financial strength and shareholder returns.

    Highlights

    5

    • Bubale discovery in Côte d'Ivoire encountered oil in both Turonian and Cenomanian reservoirs, marking a significant exploration success.

    • Generated $110 million of free cash flow in Q2 FY26, demonstrating financial strength.

    • Q2 production averaged 169,000 boe/d, exceeding the midpoint of guidance.

    • Ended Q2 FY26 with approximately $2.5 billion of liquidity and maintained leverage below 1x.

    • Lac Da Vang and Chinook #8 projects remain on track for first oil/online in Q4 FY26.

    Concerns

    3

    • Hai Su Vang-4X was a dry hole, leading to a reduced resource estimate for the field to 200-300 million boe.

    • Increased the midpoint of the 2026 capital expenditure estimate from $1.25 billion to $1.55 billion.

    • The Bubale appraisal program is lengthy (18-24 months) and involves significant upfront capital ($190 million in 2026).

    Guidance & targets

    10
    CategoryTargetConfidence
    2026 Capital Expenditure
    $1.55 billion
    high materiality
    High
    Bubale Appraisal Program Duration
    18 to 24 months
    medium materiality
    High
    Hai Su Vang Final Investment Decision (FID)
    Q4 2027
    high materiality
    High
    Vietnam Peak Production Outlook
    30,000 to 50,000 barrels of oil equivalent per day
    high materiality
    Medium
    Eagle Ford Production Addition
    5,000 to 6,000 barrels of oil equivalent per day
    medium materiality
    High
    Full-year Free Cash Flow
    Positive
    high materiality
    High
    Chinook #8 First Production
    Q4
    medium materiality
    High
    Lac Da Vang First Oil
    Q4
    medium materiality
    High
    Lac Da Vang Net Production
    5,000 to 9,000 barrels a day
    medium materiality
    Medium
    Lac Da Vang Peak Production
    10,000 to 15,000 barrels a day
    medium materiality
    Medium

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Eagle Ford
    Increased investment of $70 million to accelerate activity, leveraging its flexibility and oil-weighted nature to generate near-term cash flow for offshore growth. Has shown increasingly strong well performance and strong free cash flow generation.
    Expected to add: 5,000 to 6,000 boe/d in 2027
    		————
    Vietnam
    Hai Su Vang-4X was a dry hole, leading to a reduced resource estimate, but still a material opportunity. Lac Da Vang on schedule for first oil in Q4 FY26, with pipeline, topsides, and FSO milestones complete. Long-term exploration aspirations in Block 15-1/05 and 15-2/17.
    Hai Su Vang resource estimate: 200 million to 300 million boe (revised)Peak production outlook: 30,000 to 50,000 boe/d (unchanged)Lac Da Vang net production (end 2027): 5,000 to 9,000 bbl/dLac Da Vang peak production (2028-2029): 10,000 to 15,000 bbl/d
    		————
    Côte d'Ivoire
    Bubale discovery encountered oil in Turonian and Cenomanian reservoirs. Bubale West-1X spud in July to appraise the Turonian reservoir, as the first of up to 5 potential appraisal wells. $190 million of increased 2026 CapEx allocated to Bubale.
    Bubale appraisal program duration: 18 to 24 months
    		————

    Operational metrics

    9
    Production volume
    169,000above midpoint of guidance
    Q2 FY26

    Led by stronger performance at Tupper Montney and continued outperformance in the Eagle Ford.

    Shareholder distributions (dividend)
    $50 million
    Q2 FY26

    Returned to shareholders through the dividend.

    Leverage
    below 1x
    Q2 FY26

    Maintained leverage below 1x.

    Liquidity
    $2.5 billion
    Q2 FY26

    Ended with approximately $2.5 billion of liquidity.

    Bubale West-1X dry hole cost estimate
    $90 millionup from $65 million
    Current

    Revised estimate incorporating learnings from Bubale-1X, which encountered slow drilling in shallow Turonian.

    Bubale-1X dry hole cost estimate (prior)
    $65 million
    Prior

    Estimated before drilling Bubale-1X.

    Chinook #8 total depth
    26,000
    Q2 FY26

    Reached total depth after drilling.

    Lac Da Trang North-1X pre-drill resource range
    40 million to 80 million
    Current

    Pre-drill mean to upward resource range for the well currently being drilled.

    Economic tieback threshold
    8 million to 10 million
    Current

    Required for an economic tieback in Vietnam.

    Industry KPIs

    2
    MetricValueDetails
    Basin level production volume169,000boe/d
    FCF shareholder distributions$110 million FCF; $50 million dividendUSD

    Deals & partnerships

    2
    MoroccoSigned a block agreement for exploration

    Will reprocess seismic there, with very little spending initially. Drilling likely 2028-2030.

    Cameroon and MauritaniaHoping to finalize agreements for exploration

    Small initial spending on studies and seismic reprocessing. Drilling likely 2028-2030.

    Capital programs

    2
    Bubale Appraisal Programunderway
    Period spend: $190 million
    Start: Q3 FY26

    Benefit: Understanding resource scale, quality, continuity, and economics

    Includes $100 million for the discovery well and $90 million for the first appraisal well (Bubale West-1X). Staged, data-driven process with up to 5 potential appraisal wells.

    Eagle Ford Accelerationunderway
    Period spend: $70 million
    Start: Q4 FY26

    Benefit: Adds 5,000 to 6,000 boe/d in 2027, increased free cash flow

    Investment to resume drilling in October, including a pad in Karnes and a pad in Catarina, with wells coming online early 2027. Strategic to generate near-term cash flow.

    Risks & headwinds

    4
    Hai Su Vang (HSV) resource estimate reductionCurrent

    Reduced from previously higher estimate to 200 million to 300 million boe

    Mitigation: Proceeding with field development plan based on bounded reservoir; Vietnam peak production outlook unchanged.

    Lengthy and uncertain Bubale appraisal programNext 18-24 months

    18 to 24 months duration; up to 5 potential appraisal wells; $190 million incremental spend in 2026

    Mitigation: Staged, data-driven process to protect value and avoid overbuilding; flexibility to slow pace if needed.

    Increased 2026 capital expenditureFY26

    Midpoint increased from $1.25 billion to $1.55 billion

    Mitigation: Funding specific high-value organic growth opportunities; expected positive free cash flow for full year; maintaining strong balance sheet.

    Potential for periods of negative free cash flowNear to medium term

    Modest free cash flow expected; may be negative between now and first oil at HSV or Bubale

    Mitigation: Measured pace of investment; protecting balance sheet; maintaining dividend.

    What to watch in Q3 FY26

    5

    Bubale West-1X appraisal results

    Next quarter / H2 FY26
    CurrentWell spud in July, drilling underway
    TargetHydrocarbon encounter, reservoir continuity, deeper oil level

    Why it matters

    Results will materially shape 2027 capital spending and confidence in Bubale's commerciality and resource range.

    The results from the Bubale West-1X well will probably materially shape our view of likely spending and spending ranges for 2027.

    Q&A highlights

    8

    What are the next steps for HSV after the 4X dry hole, leading to the 2027 FID, and what development options are being considered?

    Despite the 4X dry hole, HSV remains a significant 200-300 million barrel opportunity. The company is assessing development options (FPSO vs. processing platform with FSO tie-back) and working with partners for approvals, targeting FID in Q4 2027.

    “We are looking at a number of options for the development. One option would be an FPSO. The other option would be a processing platform with a series of wellhead platforms tied to an FSO similar to our Lac Da Vang project.”

    asked by Arun Jayaram · answered by Eric Hambly

    2 min read6 chapters

    Detailed Narrative

    01

    Bubale Discovery and Appraisal Strategy

    Murphy Oil announced the Bubale discovery in Côte d'Ivoire, encountering oil in both Turonian and Cenomanian reservoirs. This success followed a disciplined 3-well exploration strategy. The company is now embarking on an 18-24 month staged appraisal program, starting with Bubale West-1X, to understand the resource's scale, quality, continuity, and economics, emphasizing value protection through data-driven decisions.

    02

    Hai Su Vang Resource Revision

    The Hai Su Vang-4X well in Vietnam was a dry hole, leading to a reduced resource estimate for the field to 200-300 million barrels of oil equivalent. Despite the revision, the field remains a material opportunity, and the company's Vietnam peak production outlook of 30,000-50,000 boe/d remains unchanged, though potentially closer to the lower end. FID is targeted for Q4 2027, with development options including FPSO or a processing platform with FSO tie-back.

    03

    Revised Capital Program and Eagle Ford Acceleration

    Murphy Oil increased its 2026 capital expenditure midpoint from $1.25 billion to $1.55 billion, primarily for organic growth. This includes $190 million for Bubale appraisal and $70 million for accelerating activity in the Eagle Ford. The Eagle Ford investment is strategic, leveraging its flexibility and oil-weighted production to generate near-term cash flow and financial flexibility to fund offshore growth.

    04

    Financial Strength and Capital Allocation

    The company generated $110 million in free cash flow, returned $50 million to shareholders via dividends, and maintained leverage below 1x, ending the quarter with $2.5 billion in liquidity. Management reiterated its capital allocation framework, prioritizing asset investment, dividends, balance sheet strength, and opportunistic share buybacks, emphasizing a disciplined approach to funding growth while protecting the balance sheet.

    05

    Vietnam Long-Term Exploration and Production

    With Lac Da Vang expected online in Q4 2026, the company anticipates net production of 5,000-9,000 bbl/d by the end of 2027, ramping to 10,000-15,000 bbl/d through 2028 and 2029. Murphy is drilling the Lac Da Trang North-1X well (40-80 million barrel potential) and plans further exploration in its Cuu Long blocks, aiming for a long production plateau and self-funding future exploration from Lac Da Vang revenues.

    06

    New Exploration Horizons

    Murphy is intentionally phasing📎 in new exploration opportunities in West Africa (Morocco, Cameroon, Mauritania) with low entry costs and small initial spending on studies and seismic reprocessing. Drilling activity in these new areas is projected for 2028-2030, following a detailed, data-driven prospect maturation process, aiming for repeatable success in frontier basins.

    AI-generated summary of the company’s earnings call. Not investment advice.