Q2 2023 Murphy Oil Corporation Earnings Call
Hello, and good morning, ladies and gentlemen, and welcome to the Murphy all corporations second quarter 2023 earnings conference call and webcast.
Following the presentation, we will conduct a question and answer session.
If at any time during this call you need assistance. Please press star zero for the operator.
Don't like to turn the conference over to Kelly, Whitley, Vice President Investor Relations and communication Kelly. Please go ahead.
Thank you operator, good morning, everyone and thank you for joining us on our second quarter earnings call today, joining us is Roger Jenkins, President and Chief Executive Officer, along with Tom Morello Executive Vice President and Chief Financial Officer, and Eric Hambly Executive Vice President operations. Please refer to the information of slides replacement.
The Investor Relations section of our website as you follow along with our webcast today.
Today's call production numbers reserves and financial amounts are adjusted to X clues noncontrolling interested in the Gulf of Mexico.
Slide too please keep in mind that some of the comments made during this call will be considered forward looking statements as defined in the private securities litigation with format of 1995 S. Such no assurance as can be given that these events will occur or is that the projections will be attained a variety of factors exist that may cause the <unk>.
<unk> results to differ for further discussion of risk factor seed Murphy's 2022 annual report on Form 10-K on file with the SEC Murphy takes no duty to publicly update or revise any forward looking statements I will now turn the call over to Roger Jenkins Roger. Thank you Kelly good morning, everyone and thank you for <unk>.
To our call today return to slide three Murphy continues to deliver strong value proposition or ongoing execution excellent ensures that we remain a long term sustainable company.
Recently expanded with their new country and three <unk>.
We continue to generate strong cash flow, we've been able to more than double a longstanding debate then from 2021 as well as significantly reduce desk over the last 24 months.
On the slide for our state of priorities of Delever execute explore and return remain our focus is <unk> through 2023.
Excellent shape to advance Murphy two point over capital allocation framework with a targeted debt reduction go with 500 million in the second half of the year as well as stock buybacks goal is Murphy 2.0 will be enhanced or using proceeds from our non-core asset divestiture in Canada.
We continue to execute our priorities operationally as production sees the upper into production range due to strong well performance in the second quarter or the second coordinate row. Rather in addition to our highest oil production rate in two years. The team brought online a total of 27 operated onshore wells across the Eagle for J O.
<unk> me and the second quarter at or head of plan and also completed Gulf of Mexico facility maintenance ahead of schedule. Additionally, I'm pleased that we received government approval for the locked debating field development plan in Vietnam This quarter.
Guarding our exploration strategy in the second quarter, we initiated a new country <unk>. We're also progressing plans to resume drooling when the Murphy operated osso exploration well in the Gulf of Mexico late in the third quarter.
Consistent operational performance and decreasing capex for the rest of the year free cash flow generate will support our strategy to return funds to shareholders through our capital application framework.
On the slide five strong quarter for us in the second quarter, we had 184000 equivalent to per day exceeded got it by over 6000 barrels equivalent from a better than expected well performance plus 1400 barrels equivalent per day from lower realized tupper montney royalty rates all <unk>.
Duction of 99000 barrels equivalent today, which was some 5000 barrels per day above guidance grew by 10% over the second quarter of 2022, reflecting production beats and are all waited <unk> in Gulf of Mexico assets.
We were lost $73.54 per barrel for all while we are realized NGL price was $19 per barrel and that gas for Murphy was $1.92 per thousand cubic feet for the quarter.
I'll turn the call over to R. C a photon <unk>.
Update on our financials and sustainability efforts.
Thank you Roger and good morning, everyone.
Slide six.
Net income in the second quarter told ninth total $98 million or 62 cents per diluted share.
Putting after tax adjustments adjusted net income was $124 million or 79 cents per diluted share.
These amounts were impacted by $116 million of exploration expense during the quarter, including Noncontrolling interest.
This was primarily comprised of $54 million net to Murphy and dry hole costs for the Chinook number seven exploration well.
As well as a 17 million dollar right off of the previously suspended ciulla exploration, well and $10 million and seismic costs for the coat Dubord new country entry.
Murphy strong operational performance generated cash from operations, including non control the interest of $470 million.
After accounting for net property additions and acquisitions, we had justin cash flow of $121 million.
This amount reflects $28 million in total contingent consideration payments made during the second quarter 25 million of which was related to the one year anniversary of first oil at King's key.
All of our obligations have now been fulfilled related to the two Gulf of Mexico acquisitions, and 2018 and 2019.
Slide seven.
I'm pleased to say our fifth annual sustainability report was just released which includes enhanced disclosures surrounding our actions towards reducing emissions intensity improving water recycling continued strong governance oversight and ongoing focused to positively impact the communities around us.
Of note in 2022, we recorded our lowest emissions intensity for greenhouse gas.
<unk> and flaring says 2013.
We have also achieved our highest water recycling ratio in company history across our onshore assets.
Lastly.
We have received a number of awards and recognitions for our dedicated service to the communities as we continuously strive to make it better.
With that I will turn it over to Eric Ambler, Our executive Vice President operations to discuss our operational update.
You taught me a good morning, everyone slide nine and the Eagle shale Murphy produce 35000 barrels of oil equivalent per day in the second quarter with 89 per cent liquids waiting a total of 17 operated wells were brought online as planned across Caterina until then and we have seen them outperform expectations do are optimized complete.
And design of.
Of the two Tilden pads that began producing in the quarter four wells are outperforming their predrill forecasts by 100 per cent with the other four wells producing in line with forecast overall. These eight Tilden wells have an average I P. 30 of 1200 barrels of oil equivalent per day with 85 per cent oil.
For the third quarter, we plan to bring online seven operated wells and Caterina until then and two Nonoperated wells until then.
<unk> 10.
That amount seven were originally planned for the third quarter, but were brought online early we applied our learnings from our Eagle for sale completions design and the top of Montney. This quarter on the most recent seven wells and through activities such as real time, Frank optimization, we have seen incredible results. These wells are achieving some of the highest IP 30 right.
And mortgage history with all seven wells, averaging approximately 17 million cubic feet per day, even more encouraging to wells have achieved a new Murphy IP 30 record of more than 21 million cubic feet per day.
We look forward to applying these learnings on the remaining well in 2023 and as we plan for our 2024 drilling program slight.
<unk> 11, we were excited to announce today that we have signed the purchase and sale agreement to sell a non-core portion of our onshore Canadian assets to a private company under the terms of the agreement the buyer will pay Murphy 150 million Canadian dollars at closing and an all cash transaction subject to customer at closing adjustments.
And conditions. The transaction has a march 1st 2023 effective date, and we anticipate closing will occur in the third quarter of 2023.
The assets to be divested include the Saxon and Simon at areas of K, Bob do Renee, where Murphy holds a 70% working interest as operator as well as Murphy's, 30% working interest and placid Montney assets operated by Athabasca Oil Corporation.
Also included are batteries pipelines and the assumption of related processing and marketing contracts.
The combined assets currently produce 1700 barrels of oil equivalent per day, that's Murphy.
Just a 39 per cent oils net proved reserves, where 5.3 million barrels of oil equivalent as of December 31st 2022. Also included are 250, gross drooling locations or 138 net locations across the two areas.
After closing Murphy will have approximately 488 gross drilling locations with an average 75 per cent oil waiting remaining and it came up do Renee all of which are operated with a 70 per cent working interest we will have no remaining position and the placid money slight.
Slide 13, we continue to see outstanding performance from our offshore wells, particularly at Lucy <unk> and samurai.
Combined our offshore assets produce 86000 barrels of oil equivalent per day in the second quarter with 80 per cent oil waiting in production three per cent above guidance looking to our tieback projects in the third quarter, we will focus on completing the Murphy operated Dalmatian number one well before moving to spud Tomorrow, Milan number three development well late in the quarter additional.
<unk> are operating partners continued to progress to St Malo, Waterflood, and Terra Nova projects July 14th.
Perfect recently received final approval on our field development plan for the lock the wrong field and walk 15, 105 can Vietnam. This is a discovered field with multiple penetrations and well tests and we estimate 80 to 100 million barrels of oil equivalent grocery source Murphy will continue to advance the field development plan ahead, a final projects sanctioning.
Later this year, we also look forward to additional future exploration within this block is there are multiple prospects that we find attractive and with that I will turn it back to Roger.
Thank you Eric.
<unk> 16, we recently expanded exploration focus by signing production sharing contracts to secure working interest is operator, and five exploration blocks for new country entry into Cote d'ivoire.
Will initially hold 85% to 90% working interest Petros <unk> holding the remaining working interest in each box it's.
It's important to note we have no well commitments in the initial two year exploration phase could you provide just the time to conduct proper geophysical studies over the blocks <unk> adjacent to Ghana.
Which is a large successful jubilee field as well as a sizeable 10 development in comparison on the eastern side of Cote d'ivoire is the discovery call baleen, which is operated by Ian I considered the largest discovery the country as well as one of the largest discoveries in industry in recent years.
<unk> west to our acreage and C 102 is a shallow water historic type opportunities.
And just to the south in block C. I 531, we have a look like structure to the Bay Lingfield operated by Ian I, which is a carpet and discovery, which is different type of opportunity for Murphy.
Yeah, I 103, we hold a longterm undeveloped discovery call upon which as appraise with multiple wells about previous operator as well as the agreement on the block we've committed to submitting a viable field development plan by the end of 2025 <unk>.
Lastly, and see 709, which is a large block with multiple geologic feature similar to Jubilee. Overall. This is a very exciting new entry for Murphy will look forward to the expiration opportunities highlight are unique operational abilities.
On slide 17, we've completed the <unk> number seven expiration well in the Gulf of Mexico during the quarter and countered noncommercial hydrocarbons Murphy plugged in the band well an expense $54 million net dry hall Holocaust in the quarter.
Late in the third quarter, we plan to resume drilling of the Murphy operated osso exploration well in Gulf of Mexico. After temporary suspending drooling earlier this year.
<unk> of 2900 barrels of oil equivalent per day.
Also in the third quarter, we forecast a crude capex of 215 million excluding acquisition related costs for the full year 23, we're raising our production got it 280 to 186000 barrels equivalent per day, which represents a 3500 barrel per day increase to the mid 0.4 Caspar do.
<unk> 53 per cent all in 59 per cent liquids in this range.
Additionally, we are tightening our crude capex guidance with a new range of 950 million to 1.025 billion. Excluding 45 <unk> acquisition related calls we remain confident in the living an 8% all volume growth and 10 per cent production growth over full your 22 with lower capital.
Spending.
On slide 20, <unk> Murphy is a multi tiered capital allocation framework that allows for additional shareholder returns beyond quarterly dividend, while advancing toward a longterm that target of $1 billion.
Our board is authorized an initial 300 million share repurchase program allying Murphy to repurchase shares through a variety of methods with no time limit as of today, we have not you execute execute any repurchases under this authorization.
Since we first announced the capital allocation framework, one year ago I'm pleased that we've determined additional 15 million annually to shareholders through the quarterly dividend increase.
0.275 cents per share those will pay down nearly $500 million of that I look forward to progressing Murphy 2.0, with the proceeds from the transaction, we announced today and further rewarding our long term shareholders in the quarters to come.
Slide 21, as we continue our strategy to deliberate execute explore in return remained focused on reducing debt with adjusted free cash flow approximately 40 per cent of operating cash flow is forecast to be invested annually through 2025.
We forecast maintaining an average 55 per cent all waiting with production averaged 195000 equivalents per day represented a combined annual growth rate of 8% through 2025.
I'll also supporting a targeted exploration program.
As part of this plan offshore production maintain an average of 90 to 100000 barrels equivalent per day.
Tom are focused on maintaining sustainable business targeting investment grade metrics average annual production is forecast at approximately 210000 barrels equivalent per day with 53% all waiting.
Our ongoing reinvestment of approximately 40 per cent of operating cash flow was olson ample adjusted free cash flow generation, which we used upon further debt reductions in our capital location framework and enhance total shareholder returns and additional funding hybrid turning investment opportunities.
On slide 22, looking at the second half of the year with their capital programme declining upcoming proceeds from my own sure Canadian Diversed Your announced today and current oil prices were focused on <unk> or 500 million debt reduction go and enhancing shareholder returns to buybacks cause we advanced 2.0 of our capital allocation.
Asian framework.
We look to continue or high quality execution ability as a complete our onshore well delivery program for the year, while also improving base production declines and maintaining high uptime across our portfolio.
Ultimately, it's important to send everyone home at the end of the day more able to achieve this to a strong ongoing safety culture. We have one remaining operated exploration well in 2023 program.
Zoom osso drilling late in the third quarter Lastly, I'm proud of her two recent announcements of receiving the like the Vang field development plan approval and signing new Psc's in Cote d'ivoire, we have a long history of successfully executing projects, while delivering on our free cash flow conventional business and these opportunities you add through.
Longevity, both in the near term with Vietnam and longer with exploring and possible development plan and off the west Coast of Africa.
To close our call today, but thank an outstanding employees. This great quarter, we had in their ongoing dedication and Murphy. It takes every level of the organization to achieve the success and I <unk> I. Appreciate every one of you.
Now turn it back to the operator for our calls I appreciate you listen to our prepared remarks. This morning.
Thank you, Sir ladies and gentlemen.
The question and answer session. If you have a question. Please press the Star T followed by the number one on your Touchtone phone.
Well here I <unk> technology can you request, if you would like to cancel your request you may <unk>.
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The first question we have.
K.
It's going to be coming from <unk>.
Hey, good morning, Roger.
Yep go ahead <unk>.
Go ahead, sorry, let me just sorry, you wrote <unk> go ahead.
Alright. Thank you alright, <unk> I just wanted to you know first of all it was it was stronger free cash flow than we were expecting in two Q.
I was just trying to square away, you know where the the rest of the year. The calculation work. So is there still I think I did the math right, maybe 50 million of acquisitions for the international side, and then maybe 10 million for the Gulf of Mexico be fail and and I think all the contingency payments are gone, but is there any.
Other you know map in the background that we should be netting against our our free cashless and that's to determine you know the Murphy 2.0 framework.
Oh, Thanks for that question really good question I think the way to feel about showed that is today. We've announced that are are capital for the year is tightening range and then on top of that we have.
45 million of additional new business. If you have that were never in our plan such as achieving feel development Vietnam in <unk>, new blocks in Cote d'ivoire, which includes seismic another activity. So that'd be on top of the range of our Capex is the way to think about it. So you take what we spent today and have that remaining for.
The rest of the year of which about a third to a high for that money's been spent so far on the acquisition expenses and that's the way to think about the total cash flow for the year, we really don't break out the Cote d'ivoire in the Vietnam due to you know privacy around what we we have a real proud of the deals that we have so we're not breaking.
<unk>, but that's the way to think about our capital spending for the rest of the year.
Okay and does the does the Canadian divestiture count towards that calculation or just moved closer to kind of the Murphy you know 2.03 0.0 situations.
Oh, Thank you for that that's a really good point.
And and how we assume in this years, we're bringing that money and it's and see dollars would convert it to U S dollars transported home when needed and it too will be shared 70 525 through that and pay down debt and buy back and just come in if you think about it really what's happening here is if you take the aqua.
<unk> and add onto our new mid point, the Canadian proceeds easily handles at more back square in our debt reduction go and our debt pay down debt pay down go as well as buying back stock and we're very excited about that and lower capital spending the rest of the year. So it's it's in the framework if you will.
Is free cash flow to allow for the extra money spent on non planned new businesses in Africa in Vietnam, and so that's how are we thinking about it.
That's a great way to think about it and then just to follow up on the Canadian fail is is that all that you guys are looking to fail with that opportunistic or you know is there any other parts of your maybe non-core positions that you're looking to let go.
You know we have a lot of assets, we have a <unk> a lot of very high quality onshore all weighted assets and also an incredible montney position you see from Erik's comment today, how great. The <unk> needs to do and with 21 million I'd be thirties as competes with any gas play in North America on the old sod, we all know that we.
How much per flowing barrel that is how much per acre. This how much locations. So it's an incredible offer that we needed to take because we still have 488 locations to go in and Canada and they're all waited at 70% all which is just slightly below the eagle for.
But the N G L. In that region is double the price of NGL in Texas. So we these wells are gonna be drilled in the 20 forties and we sell them for a really good price don't operate and wants to invest they're very happy about it but we're not for sale there, but as we have aging non-core locations and people want.
To really pay that for us, we'll take that money to transpose it into things such as think about <unk> or we'd have unreal cost entry into many blocks with new opportunities, including a very large opportunity we have a possible development Vietnam I mean, a development in <unk> in in Vietnam, We have a development and exploration.
So I have to move our business around and take long used onshore locations forward in cash invest into something where we have great competitive advantage in an offshore execution.
Okay, that's a great update Rodriguez.
Thank you.
And the next question.
Redfin with Keybanc your line of sight.
Good morning, everybody. Thank you for taking my question I was hoping to digging a little deeper on Vietnam. I was wondering if you could provide more specificity on the steps towards essential by year end and then if you could maybe get a bigger big picture overview, where you stand today. How you think this asset you know <unk>.
Possibly hit first production of 2025, and how we can expect a ramp just sort of updated thoughts based on the latest news. Thanks.
Thank you for that question, Tim and thanks for new coverage on Murphy and calling into our call. Today I appreciate that Vietnam has been around our business for a long time, we have through COVID-19 into our reduction in capital have some thing just been on the sidelines a bit.
The key change here is that petrol Vietnam, which is also our partner decided to approve our field development plan, which has been submitted for some time.
We see this as a 80 to 100 million barrel type opportunity, it's been well tested it's very well organized and plan. We have a detailed field development plan that we've had for awhile. So what's going on now is we would rebid all the services there such as drilling in <unk> in the building of the facilities and then.
Seek to check the economics of that again reaffirm that go to our board with that sometimes either in October December meetings damn, we would probably not have first all there to 26, we want to work the project into really light.
Mm 20th early twenty-five if you will so we can have.
Apple returns to our shareholders through our framework, which is a key key focus for us.
Goal is to make this into a 30 to 40000 barrels a day business net to Murphy.
In Vietnam, we should have the expiration lower risk opportunities in the field to do that and looking forward to executing on that.
Okay I I appreciate that context that that's helpful. And then if we could pick a follow up on the Murphy 2.0 framework you about 2025 notes call. Both par mid August and I know, there's some asset sales not sure the repatriation status of that but as you think about retiring debt.
How do you measure getting that retired.
As soon as possible you know versus waiting to call that a car because your 2027th 2028 <unk>.
Tim let Tom R. CFO handle that for you yeah sure. Thanks, Roger Thanks, Tim Yeah generally the way, we think about it we balance all those factors you know whether it's the maturity date or how the notes are trading.
And decide are we gonna go with calling or maybe you know open market or tendering.
We look at you know getting into 2.02nd half of this year. It's <unk> as you point out we've got those 25 those will be.
Able to call at par just later this month and so will probably focus on those initially.
But if you look at the overall goal of us getting to $1 billion. You know that's another $800 million of debt reduction in between the 27th the 25 and 27, that's that's about that amount that that's <unk>.
Today 25, as being close to call him at par soon so that's how we're thinking about it. So we think you know to get to our billion dollar target.
Okay I appreciate the responses. Thanks.
Thank you and the next question comes from.
With Morgan Stanley . Please proceed.
<unk>, Okay Roger.
So I wanted to ask on some of the exploration opportunities first and specifically Cote d'ivoire. So it seems like there. There's two parallel processes here one is the power on discovery and so many of the valve plan for that and the second would be the seismic acquisition and evaluation of that for the remaining blocks could you walk us through each of the.
So for the development plan, what you would need to see ultimately for development to proceed there and then similarly, the time out of the seismic acquisition and what you think about potentially drilling any exploration wells on on the other blocks there.
Thanks, so much damage that focus on that it's a very good opportunity for us to kind of <unk>.
This opportunity fits a real bill for us and <unk> need for more exploration exploration near success different play types. Then we have what is a real bread and butter is prior discovered resources of other operators are we turn those into very successful developments with our deep water ability.
It is a two pronged process on <expletive>, there's a discovery made that Anadarko a few years ago. There were ample Google Bowl. That's a word I just made up things you can look up about <expletive> and flow rates in different operators.
We're just getting our hands on that day to just barely getting our hands on it.
We believe that should work there, but it will require commercial terms.
Gas and ultimately leading to power generation the country, we won't be part of that process it'll depend on the gas commercial right, obviously, the country or ear wants us to have a feel a viable field development plan their words.
So for it to be viable they'll have to be a price that we can make the type returns that were needed with all the different aspects. We have in our company. So that's one process well put by you we have a team working on that or Kings ski team our development team under Eric managing that and then we have working the seismic cause a seismic has been <unk>.
Shot there's three D seismic owned by the government throughout all the area doesn't have to be shot from scratch there'll be <unk> modernization of that seismic through reprocessing that will be ongoing and a few months here will be receiving that data N and have ample time to make our decisions about drilling and we're really.
Sorry to have a look alike to the major field to our east there's a very nice prospect in 502, they're shallow water in 102 that would be similar to what we have.
Nam and were successful in shallow or Malaysia, and many prospects in 709, there's been oil and different things discovered ear. It's always good to get a new dataset look forward, but really liked this because we have a possible development with exploration there on the other side in Vietnam, we have expiration with the development and it will transposing older.
To be done Canada today to get into those two opportunities and go forward with a real expertise, which is off shore development.
Great. Thanks, Roger Apple detail and I wanted to shift over sticking with offshore but to the Gulf of Mexico, and we look at your plans here over the next few quarters you have a series of Tiebacks through the back half of this year in early 2024 kind of concluding with Saint Mallow and Lucius.
After that do you have further tieback opportunities for development opportunities that you're evaluating now for 2024 can you kind of put this all together for US do you think about the the cadence and outlook for production into next year and investment next year and the Gulf of Mexico.
I'll have Eric walk you through that Devon.
Okay. Thanks, Devon, it's always nice to talk about our plans here in the Gulf of Mexico. We as you may have noticed we've done a really tremendous job with our things key development with a clue see more month samurai fields. We have highlighted on previous calls and discussion that with the performance that we saw from the fee.
<unk> and the first year or so we were expecting that that field development would remain on a plateau production down around 30000 net b, we per day well into 2025 of recently, we've been producing those fields closer to 40000 that'd be we per day. If we continue to maintain those type of rates then.
The plateau period May shorten up just a bit so in conjunction with the normal type of development of that field, where monitoring they feel performance and then evaluating other opportunities for further development at this time, we're looking at potentially a number of future wells or zones change workovers in the clue see more amount samra I feel that.
It would extend that plateau, we haven't formed a budget yet for twenty-four, but we're evaluating those things and likely to have a well or two in that area show up.
As you pointed out we're getting onto the Dalmatian D. C 90 number one well here in this quarter third quarter and then we'll have a more melodic three well as you move into 2024 early will have some Lucius not operated wells come online and then the same all waterflood project the.
Remaining scope there is to complete two previously drilled injectors and install facilities related to water injection and should see water injection by late in 2024, which will support flattening and potentially increasing volumes from St. Malo for years to come so quite a bit going on there and as always we.
We continue to work through our portfolio with excellent subsurface working by our teams and try to identify any other opportunities. We may have in the Gulf of Mexico, and we're likely to see those continue to have tie back or new well opportunities 123 year for the receivable future, which is why we have communicated sort of law.
Long range view of maintaining our offshore oil volumes pretty steady out for the next five or six years.
Great. Thank you.
Thanks, Deb I appreciate the call.
The next question comes from Leah.
M K M. Your line is open.
<unk> good morning Leah.
Hey, Good morning, everyone was I wanted to drop out a little bit more on on sort of the the share buybacks here I guess that something you guys announced a while back as you've obviously pointed out you've got lower capex in the second half you know on the ear and production you know is is higher here. So.
You know yeah, you haven't done anything yet, but it sounds like maybe this is something that we should expect in the near future I would imagine that the blackout period on that might be over maybe as soon is tomorrow. So you guys kind of a parent <unk> started going to have to share buy back here given that we're kind of a month in the second half an ear.
Yes, we <unk>, we're very excited about doing that and you framed exactly what we're talking to our board about just this week and.
Our formula is working the Canadian proceeds closing will enhance it and get US back as we said a lot. This morning and I. Appreciate the calls from everyone. It's really a movement of some older locations forward and into Cote d'ivoire, with the development and into Vietnam with the development plus exploration.
We're very excited about returning to shareholders, we've been a major dividend <unk> player across our history doubled our dividend. The last couple of years and now we're ready to execute share buybacks. As we feel are sure was undervalued and they'll look forward to doing that throughout the year and there'll be open periods and Tom and his team are working on very.
<unk> ladies of executing buybacks receive it from peers, we'll be able to do it too and we look forward to doing it and really are setting up we have strong production of course on the highest got it all may we've had and I don't know when the highest third quarter production forecast, we've ever had with hurricane season, a long time.
Capital decreasing capital of decreasing significantly abandonments behind it's contingent payments behind us and we look forward to a real strong second half a year of rewarding shareholders at Murphy.
Okay. That's helpful. And then just wanted to turn to the exploration side here. So I guess, you're getting ready to spend a <unk> oh. So in the near future just wanted to get a sense that you guys have a kind of an estimate of you know how how long. It don't take once you kind of start <unk> is that a kind of a couple of months to decision and looking at <unk>.
24, and exploration you didn't mention two wells in Vietnam also she'll be expecting anything else next year and the expiration fries, maybe you know another well in the Gulf and I think I've heard you guys stay in the past it probably don't drink anything else in in Brazil, or Mexico, and and 24. So I just wanted to get a sense of what can be.
[noise] on the docket exploration wise in the next young 18 months here.
It's a two part answer I'll, let Eric handle the drilling his team he rent manages to drilling that to come here to talk about Oh, So Tom and I'll talk about the 24 plant.
Oh, thanks, very much Oh, so just to clarify we're not re drilling the well we're going back to drill the well with some enhanced equipment managed pressure drilling system, which will allow us to drill the bottom section of the well, but we are reusing.
Well, we've already drilled so I just wanted to clarify it's not not a complete <unk>. We're gonna start that work in in third quarter and we should have.
Complete that activity kind of by the middle of the fourth quarter.
Okay as the rest of our program Yeah, we're gonna be we're looking to drill two wells in Vietnam, We do not have a budget prepared do not have it approved by our board.
Likely to do that I would imagine we would drill a couple wells in the Gulf of Mexico, I'm not sure if they're working interested we have ample opportunities we have opportunities with some other partners and so would probably have.
That's kind of what we're thinking about that Leah. Thank you.
Okay now that that's helpful. So it sounds like probably not on the docket for Brazil, or Mexico in 24 no Sir.
Okay. Thank you.
Thank you.
The next question <unk>.
Please proceed.
Hey, Roger I wanted to get some thoughts or details on your technical team and what type of experience does your team have been working <unk> West Africa cut to one and maybe just give us some insights on on how the exploration team is situated here and murfin Houston.
Oh, Thanks room for that question you know we worked everywhere in the World. We had years ago <unk>, We had a development of very unique development and and Democrat Republican Congo, All of our executive team have worked internationally Murphy as an international player. This is <unk>.
Easier drilling then and Oh, so well much shallower much more simple execution, we've executed well sucked at you know throughout the world, we have a technical team, but when the drilling sad it's greatly experience internationally and then our development development as a development. This around the same water depth is king.
<unk> this isn't very anything difficult for us on the expiration saw naturally a major company like Anadarko is a very successful exploration company and a great company their personnel from Anadarko that work in different other offshore entities today, including Murphy, but we have a very experienced team both the expiration.
<unk> and of course executive management, and our development team that's very experience working internationally, Tom Air can I've lived and worked in traveling internationally our entire careers and so this is really just not really much to the execution for us a room, where greatly experience enabled execute globally.
Just about anything in the Ocean I can't think of the thing we can do in the ocean.
Great Roger had one housekeeping questions a good quarter for you guys. We did note that you'd tweaked your oil.
Growth year over year to eight per cent from 10 is that conservatism just wanting to get some thoughts on what put what drove that variance.
Well I'm not gonna be quote on conservatism I have my E V. P of operations today here with me only beat got US about 7000, a day this court I wouldn't say conservative.
I think what's going on here, it's kind of we're doing extremely well in our guidance is very strong for hurricane season.
We are a very big Gulf of Mexico player, we all know that.
Think of that as a positive we've had some operational matters dalmatian throughout the year.
We've also covered that up with some really incredible performances early in the call are mentioned are strong plateau right said King's key in Eagle for doing extremely well and so we've had some issues there and we're gonna need to get this well online to help that field produce better. If you will that's caused the loss we we.
We put on our own farewells early then plan and they're doing extremely well when they come on early and plan you're sort of overproduce at the end and then they declawed towards the end because we are front loaded capital company to have more returns for our shareholders with less capital gains year. We also being helped by great oil prices today.
So that's what's going on we have terra Nova basically hardly anything flow and so it's helpful to flow there.
Doing extremely well this month any kind of help on hurricane season are.
Dalmatians are great well, we drilled a year ago or teams already executing that well. So I think we can still get back to where we were but felt that this was the proper guidance today that'd be sort of a reckoning. If you will not production post hurricane season at our next quarter and the sale of the asset to we're making today get all that go.
<unk>, we're doing extremely well today credible high right at this time I am Super pleased with their team on that and I think it's just a little conservatism to what we have today, but we have ample ability to cover it up and get back to where we were last quarter I'm quite please have her head.
Great. Thanks Roger.
Oh, Thank you appreciate it.
Good morning, Roger to you in the in the <unk> team there.
Thanks Charles.
Roger there's been a lot of talk about service costs going up in the offshore and I think that's more or less or at.
We used to talk as that's happening worldwide. So <unk>.
How much how much service cost increases.
Air shall it closer to that Charles and let him walk and do that thanks Charles Charles.
We're in a pretty good position relative to offshore cost right now in the first half of this year, we were working a rig in the Gulf of Mexico that was at a rate significantly below market and the 300000 dollar per day type range. The market's probably in the 450 ish range per day, and we were fortunate enough to <unk>.
At a little bit below what is kind of current market right. So you have that going on which is really helping us not see inflation beyond what we'd expected well well into 2025. There was some other cost pressures as you can imagine an industry casing costs, sometimes moving up and down we monitor that pretty.
Carefully that's a big thing for us and other other related services to executing our program a pretty minor.
Look at the rig in the casing costs are driving most of the costs. So relative to a lot of people were feeling really good about our positioning on our costs off shore through 2024 beyond that will be exposed to market type of rates. So for our planned activities in 2025 for at least the last half of 25, we'll we'll have to see how the market's looking on <unk>.
<unk> Uhm kind.
Be exposed like everybody else what in the industry.
God that's helpful detail. Thank you and then if we could go back to the the also well Roger when I look at the I think you mean resource for that is it is 150 <unk> that strikes me as pretty big These days for a single well.