Murphy plans 25% capex ramp for 2025

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Murphy plans 25% capex ramp for 2025

The leaders of Murphy Oil Corp., Houston, are significantly increasing capital spending this year while they look to rectify operational issues that surfaced late last year. Murphy spent $965 million on capital projects in 2024, with $692 million of that figure allocated to projects in the United States. For 2025, president and chief executive officer […]

The leaders of Murphy Oil Corp., Houston, are significantly increasing capital spending this year while they look to rectify operational issues that surfaced late last year.

Murphy spent $965 million on capital projects in 2024, with $692 million of that figure allocated to projects in the United States. For 2025, president and chief executive officer Eric Hambly and his team expect total spending to be $1.135-1.285 billion, about 60% of which is allotted to the first 6 months of the year and 85% of which will go to development work. The midpoint of that spending forecast is an increase of 25% from last year but only 6% higher than 2023’s figure.

In terms of geographies, Murphy will devote the most capital to its Gulf of Mexico assets, which are in line to get $410 million. Other offshore projects in Vietnam and Côte d’Ivoire will be allocated about $115 million.

Onshore, executives are devoting $360 million to the Eagle Ford basin and $140 million to the Kaybob Duvernay/Tupper Montney region in Canada. Plans call for nearly 80% of those $500 million to help drill 72 wells (operated and non-operated) and bring online another 77 wells. The broad goal is to put up low-single-digit production growth from these assets.

On the exploration front, the Murphy team will start a three-well program in Côte d’Ivoire late this year and are planning a two-well effort in the Gulf of Mexico, among other things. Exploration spending for 2025 is forecast to total $145 million.

“We have an ambitious exploration program ahead of us over the next 18 months,” Hambly said in a statement that called attention to Murphy’s varied holdings. “This optionality across multiple play types in key basins provides significant resource upside for our offshore business […] Exploration will remain a key differentiator and value creator for our company for years to come.”

Murphy produced about 175,000 boe/d during the fourth quarter, a drop from 185,000 in late 2023. The decrease made for a “pretty rough” quarter, Hambly said, and was due in part to several unplanned downtimes at on- and offshore projects as well as lower-than-expected performance from an Eagle Ford project that used a new well completion design. Hambly told analysts on a Jan. 30 conference call that he expects those issues to be resolved by mid-year.

Murphy Q1 outlook, financials

Looking to the current quarter, Murphy executives are expecting total production to come in at 159,000-167,000 boe/d. For the year, their guidance is 174,500-182,500 boe/d. The company produced about 177,000 boe/d in all of 2024. Oil is expected to account for 51% of that output and executives expect oil output to grow by at least 10% from this quarter to the fourth quarter.

The fourth quarter’s production translated into adjusted net income of $51.0 million—versus $140 million in the last 3 months of 2023—on revenues of nearly $670 million compared with $835 million. Operating profits from continuing operations was $85.2 million versus $203 million, driven in part by weighted average price decreases of about 10%.

Shares of Murphy (Ticker: MUR) fell about 6% to roughly $27.40 on executives’ earnings report and outlook. Over the past 6 months, the stock has slid more than 30%, cutting the company’s market capitalization to $4 billion.

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