Q2 2026 Murphy Oil Corp Earnings Call Transcript
Key Points
- Murphy Oil Corp (MUR) announced the Bubal discovery in Cote d'Ivoire, encountering oil in both Turonian and Centimanian reservoirs, with potential to become a significant growth driver.
- The company increased its 2026 capital expenditure midpoint to $1.55 billion, with nearly all of the increase supporting organic growth, including $190 million for Bubal appraisal and $70 million for Eagle Ford acceleration.
- Murphy Oil Corp (MUR) generated $110 million of free cash flow in Q2 2026, returned $50 million to shareholders via dividends, and maintained leverage below 1x with approximately $2.5 billion in liquidity.
- Second-quarter production averaged 169,000 barrels of oil equivalent per day, above the midpoint of guidance, driven by strong performance in Tupper Montney and Eagle Ford.
- The company expects to generate positive free cash flow for the full year 2026 even with the revised capital program, and the Eagle Ford acceleration is expected to add 5,000-6,000 barrels of oil equivalent per day in 2027.
- Murphy Oil Corp (MUR) maintains a strong balance sheet and capital allocation framework, prioritizing investments, dividends, and balance sheet strength, with flexibility to adjust spending as needed.
- Murphy Oil Corp (MUR) reported that the Hai Su Vong 4X well in Vietnam was a dry hole, leading to a reduction in the resource estimate for the Hai Su Vong field.
- The company's exploration program in Cote d'Ivoire faced setbacks, with the first two wells being non-commercial before the Bubal discovery, highlighting the inherent risks in exploration.
- The revised capital program increases 2026 capital expenditure midpoint from $1.25 billion to $1.55 billion, which may pressure near-term free cash flow and could lead to periods of negative free cash flow.
- Murphy Oil Corp (MUR) faces uncertainty in 2027 capital spending, with a potentially higher CapEx range driven by Bubal appraisal results, which could be materially higher than recent levels.
- The Hai Su Vong resource estimate revision may impact the company's Vietnam growth outlook, with peak production potentially closer to the lower end of the 30,000-50,000 barrels of oil equivalent per day range.
- The company's exploration and appraisal activities in West Africa (Morocco, Cameroon, Mauritania) are in early stages, with potential for higher capital requirements later in the decade, though not yet a near-term concern.
Good morning. My name is Fern and I will be your conference operator today. All lines have been placed on mute to prevent any background noise. After the presentation, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad.
If you would like to withdraw your question, press star 1 again. Thank you. I will now turn it over to Atif Riaz, Vice President of Investor Relations and Treasurer.
Thank you, Fern. Good morning and welcome to our second quarter 2026 earnings conference call. Joining me today are Eric Hambly, President and CEO Tom Marelles, Executive Vice President and CFO and Chris Lorino, Senior Vice President of Operations.
Yesterday, after market close, we issued our second-quarter earnings release, slide presentation, and a stockholder update. These documents can be found on Murphy's website, and we will reference them today throughout our call.
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