Murphy Oil Corp. Barclays 40th Annual Energy-Power Conference

Yeah. Thanks, Betty, and thanks for having us here. Happy to be here. I think in some ways what the company is facing today is very similar to what we had in 2006, but I also think there's some significant differences. Maybe I'll kind of talk through that. I joined the company in September of 2006, so almost exactly 20 years ago. My anniversary is coming up. It's been a great ride. It's been a fun company to work for. We've done a lot of things around the world and I think created a lot of value for our shareholders. When I joined the company, it was right at a time when there was significant deepwater GoA success. A lot of success exploring in an early phase of Miocene and Plio-Pleistocene activity in the early kind of deepwater exploration in the Gulf.

Murphy had a number of fields that they had discovered and had just brought online or bringing online, Front Runner, Medusa, Thunder Hawk, there are others. An early, very successful push into deepwater for Murphy, primarily as an operator in the Gulf, and then a big emerging business in Malaysia. Sarawak business was producing its first field in 2006. Kikeh had been discovered, was under development. Kikeh started producing in 2007, and kind of ramped up when oil price really rose quite high. The Sarawak business in Malaysia was being explored, and we had a lot of success. I would characterize the company when I joined it as a tremendous offshore explorer with a great track record in deepwater Gulf and a Malaysia business that was probably a generational success, like really, really tremendous, great success.

Then if you look at what the rest of the company, there wasn't too much happening. We had a little bit of an onshore Canada business, which was primarily a heavy oil business, Syncrude ownership, and also a heavy oil assets. And those were okay. They were just kind of okay. If you then look at what we did in the decade following 2006, so for my first 10 years with the company, we executed and developed basically everything we found in Malaysia. Tremendous success, built a big business, and ended up selling that ultimately, later on. But in that decade, what we also did was build a significant onshore business, primarily organically and primarily the Montney and the Eagle Ford. We got into the Montney in 2006, and we got into the Eagle Ford 2009, 2010, mostly through leasing.

A few small acquisitions, but really built it through leasing. We went from a tremendous success exploring offshore. In the next decade, we had what I would characterize as less than ideal success offshore. We had tremendous ongoing success in Malaysia, but basically everywhere outside of Malaysia, we weren't that successful. We were disappointing ourselves in our pace and our success exploring. In the Gulf of America, we made almost no discoveries. I think two discoveries in the decade that followed. In West Africa, we drilled a lot of dry holes. We had what I would characterize as a less than perfectly focused exploration program, which was driven more by access to opportunities where we had large well commitments.

When you get into blocks that you haven't yet shot or reprocessed seismic, and you have well commitments, you end up drilling a lot of dry holes, and that's what we had going on. But while we had no success exploring outside of Malaysia, we had a lot of success building an onshore business. That's what makes us a little bit different now, is that we have significantly more optionality in our portfolio. We've had recent success exploring and then developing in Vietnam with our first field to come online in the fourth quarter this year, Lac Da Vang, Golden Camel. Recent success exploring in Côte d'Ivoire. And those are things that are happening in a company with a significantly more flexible portfolio, which I think helps us. We have a strong balance sheet. We had a very strong balance sheet when Malaysia was ramping up.

We're back to that after a period of time where it wasn't as strong, and very well-positioned to capitalize on success with an emerging Vietnam business. And what we think from Côte d'Ivoire early on looks very promising.

Yeah, it's a great question. I think when we look at our business, the onshore business has an ability to basically be relatively stable, relatively flat, spending similar capital program that we have over the last, say, 5 to 7 years. The Vietnam business, we've been investing in it to get our first field online and exploring and appraising. Pretty soon, when our production starts to ramp in Lac Da Vang, we think our Vietnam business will effectively self-fund. Future development of Hai Su Vang likely happens within or similar to the cash flows that we generate within Vietnam. It won't be an additional heavy call on capital. The big obvious thing we have happening in the near term is understanding how large the Bubale discovery is.

We're at a point where we believe we've made a commercial discovery, but we need to appraise it to confirm that, and also to find out just how big is it and how do we optimally develop it. That's going to be the biggest call on our near-term capital. Priorities for us are maintaining the scale of our cash flow-generating assets by reinvesting in them. That would be our producing assets. Next priority for us would be likely our dividend. After that, we'd be looking at share repurchase, and all of those things we'd be doing in the context of trying to protect our balance sheet. So we want to be very disciplined about where we're spending money, how much money are we spending.

We got our balance sheet in a great spot, which positions us well to invest in finding out what Bubale looks like, finding out what the other prospects on the block look like, before we commit to what would likely be even larger development, which would be development CapEx.

We have a portfolio that allows us to think about how we monetize a development if we get to that point. We have a possibility of bringing in a partner, farming down some of our ownership. We have ability of using our strong balance sheet and liquidity. We have a possibility of selling pieces of our onshore assets or other. We will be thinking about those things as we learn more, as our understanding of Côte d'Ivoire position evolves over the next 18 to 24 months. We will be thinking about how do we create the most value for our shareholders. Right now, we do not really know how that will happen. We want to find out what we have first, what the requirement of capital will be, and then we will come up with an optimized plan to create value for shareholders.

We do have a long history of investing at high ownership, like our Malaysia business, where we had really great success. We developed those fields at 80% and 85% working interest. We are at 90% and 85% in Côte d'Ivoire now. In Vietnam, we are at 40%, so we already have built-in partners. I think we have a pretty exciting opportunity set in front of us with a lot of optionality. It is not like we have the one thing to do, and it either happens or does not happen. Our core business has been generating strong cash flows, delivering great returns. We have paid a dividend since 1961. We have a really great position to be pursuing the optionality in front of us, and I think it is an exciting time to be an owner of Murphy.