What is the concept for the Bubale West-1X appraisal well, and what will govern the subsequent appraisal program?

Bubale West-1X is targeting the Turonian down-dip to test continuity, reservoir variability, and a deeper oil level. The results of each appraisal well will determine the scope and direction of the remaining program, which could include up to 5 wells. “The main objective of the well is to test for continuity and variability of reservoir sands and also hopefully determine to prove a deeper oil level than is proven at the base of the Bubale-1X well.”

Why accelerate activity in the Eagle Ford now, and what are the expected incremental returns on the $70 million CapEx?

The Eagle Ford acceleration is strategic to generate more near-term free cash flow to fund offshore growth, not driven by short-term oil prices. It's a flexible, oil-weighted asset with strong well performance and returns, capable of efficiently translating capital into production. “If you look at our Eagle Ford business, we've had increasingly strong well performance over the last few years, generating strong free cash flows even in periods of fairly low oil price in the past couple of years.”

What should be a placeholder for 2027 CapEx given the current moving pieces?

2027 CapEx is expected to be higher than recent years, likely above $1.25 billion, due to increased Eagle Ford spending and additive Bubale appraisal. The exact amount will depend significantly on Bubale West-1X results and subsequent appraisal needs. “I think that you should expect us to increase slightly more in the Eagle Ford than in the past... And then spending on Bubale is likely additive to that. So we'll probably see a higher CapEx in '27 than you've seen from us recently.”

MUR

Murphy Oil (MUR) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Energy· Aug 6, 2026

Source: earnings call transcript

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

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

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

Category	Target	Timeline	Confidence
2026 Capital Expenditure	$1.55 billion high materiality	FY26	High
Bubale Appraisal Program Duration	18 to 24 months medium materiality	Next 18-24 months	High
Hai Su Vang Final Investment Decision (FID)	Q4 2027 high materiality	Q4 · FY27	High
Vietnam Peak Production Outlook	30,000 to 50,000 barrels of oil equivalent per day high materiality	Peak production	Medium
Eagle Ford Production Addition	5,000 to 6,000 barrels of oil equivalent per day medium materiality	2027 · FY27	High
Full-year Free Cash Flow	Positive high materiality	FY26	High
Chinook #8 First Production	Q4 medium materiality	Q4 · FY26	High
Lac Da Vang First Oil	Q4 medium materiality	Q4 · FY26	High
Lac Da Vang Net Production	5,000 to 9,000 barrels a day medium materiality	End of 2027 · FY27	Medium
Lac Da Vang Peak Production	10,000 to 15,000 barrels a day medium materiality	Peak production (2028-2029)	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
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	—	—	—	—

Deals & partnerships

Morocco Signed a block agreement for exploration

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

Cameroon and Mauritania Hoping to finalize agreements for exploration

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

Capital programs

Bubale Appraisal Program underway

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 Acceleration underway

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

Hai Su Vang (HSV) resource estimate reduction Current

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 program Next 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 expenditure FY26

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 flow Near 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

Bubale West-1X appraisal results

Next quarter / H2 FY26

Current Well spud in July, drilling underway

Target Hydrocarbon 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.

Find out whether MUR delivers this. Inve re-checks your case every morning.

Q&A highlights

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 read 6 chapters

Detailed narrative

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.

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.