Q2 2026 Murphy Oil Corp Earnings Call

August 6, 2026

Operator 3: 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 one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I will now turn it over to Atif Riaz, Vice President, Investor Relations & Treasurer.

Operator: 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 one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I will now turn it over to Atif Riaz, Vice President, Investor Relations & Treasurer.

Speaker #1: After the presentation, there will be a question and answer session. If you would like to ask a question during this time, simply press * followed by the number 1 on your telephone keypad.

Speaker #1: If you would like to withdraw your question, press *1 again. Thank you. I will now turn it over to Atif Riaz, Vice President of Investor Relations and Treasurer.

Speaker #2: 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 Morales, Executive Vice President and CFO; and Chris Laurino, Senior Vice President of Operations.

Atif Riaz: Thank you, Fern. Good morning, and welcome to our Q2 2026 earnings conference call. Joining me today are Eric Hambly, President and CEO, Tom Mireles, Executive Vice President and CFO, and Chris Lorino, Senior Vice President of Operations. Yesterday after market close, we issued our Q2 earnings release, a slide presentation, and a stockholder update. These documents can be found on Murphy's website, and we will reference them today throughout our call. As a reminder, today's call contains forward-looking statements as defined under US securities laws. No assurances can be given that these events will occur or that the projections will be attained. A variety of factors exist that may cause actual results to differ. For further discussion of risk factors, please refer to our most recent annual report filed with the SEC.

Speaker #2: Yesterday aftermarket closed, we issued our second quarter earnings release, a slight presentation, and a stockholder update. These documents can be found on MURPHY's website, and we will reference them today throughout our call.

Speaker #2: As a reminder, today's call contains forward-looking statements as defined under U.S. Securities Laws. No assurances can be given that these events will occur or that the projections will be attained.

Speaker #2: A variety of factors exist that may cause actual results to differ. For further discussion of risk factors, please refer to our most recent annual report filed with the SEC.

Speaker #2: Murphy takes no duty to publicly update or revise any forward-looking statements, except as required by law. Throughout today's call, production numbers, reserves, and financial amounts are adjusted to exclude non-controlling interest in the Gulf of Mexico.

Atif Riaz: Murphy takes no duty to publicly update or revise any forward-looking statements except as required by law. Throughout today's call, production numbers, reserves, and financial amounts are adjusted to exclude non-controlling interest in the Gulf of Mexico. I will now turn the call over to Eric for opening remarks.

Speaker #2: I will now turn the call over to Eric for opening remarks.

Speaker #3: Thank you, Atif, and thanks to everyone for joining us. We released detailed earnings materials yesterday, so I will keep my comments focused this morning.

Eric Hambly: Thank you, Atif, and thanks to everyone for joining us. We released detailed earnings materials yesterday, so I will keep my comments focused this morning. I want to spend most of my time on the key developments in the quarter, including what we learned through our exploration and appraisal program, how those learnings are shaping our capital allocation, and why we believe these investments strengthen Murphy's long-term outlook. The most important development this quarter was the Bubal discovery in Cote d'Ivoire. Just as important as the result itself is the disciplined exploration process that led us here. We entered Cote d'Ivoire with a clear thesis and a 3-well exploration strategy, and although the first 2 wells were non-commercial, we've remained confident in Bubal's prospectivity and continued to execute the plan. That patience and technical conviction paid off as the well encountered oil in both the Turonian and Cenomanian reservoirs.

Speaker #3: I want to spend most of my time on the key developments in the quarter, including what we learned through our exploration and appraisal program.

Speaker #3: How those learnings are shaping our capital allocation, and why we believe these investments strengthen MURPHY's long-term outlook. The most important development this quarter was the Bhubal discovery in Côte d'Ivoire.

Speaker #3: Just as important as the result itself is the disciplined exploration process that led us here. We entered Côte d'Ivoire with a clear thesis and a three-well exploration strategy, and although the first two wells were non-commercial, we've remained confident in Bhubal's prospectivity and continue to execute the plan.

Speaker #3: That patience and technical conviction paid off, as the well encountered oil in both the Tyronian and Senimanian reservoirs. Now, we want to be very clear about where we are in the process.

Eric Hambly: Now, we want to be very clear about where we are in the process. While Bubal has the potential to become a significant growth driver for Murphy, there is still important appraisal work ahead. The next step is to understand the scale, quality, continuity, and economics of the resource. That work is now underway with the Bubal West-1X, which we spud in July to begin appraisal of the Turonian Reservoir. It is the first of up to 5 potential appraisal wells. I emphasize potential because this will be a staged, data-driven process over the next 18 to 24 months, with each well determining the scope and direction of the remaining appraisal program. An 18 to 24-month appraisal program may sound lengthy, but this is how we protect value.

Speaker #3: While Bhubal has the potential to become a significant growth driver for MURPHY, there are still important appraisal work ahead. The next step is to understand the scale, quality, continuity, and economics of the resource.

Speaker #3: That work is now underway with the Bhubal West 1X, which we spud in July to begin appraisal of the Tyronian reservoir. It is the first of up to five potential appraisal wells.

Speaker #3: I emphasize potential because this will be a staged data-driven process over the next 18 to 24 months, with each well determining the scope and direction of the remaining appraisal program.

Speaker #3: In 18 to 24-month appraisal program may sound lengthy, but this is how we protect value. In our business, value can be destroyed long before a development well is ever drilled.

Eric Hambly: In our business, value can be destroyed long before a development well is ever drilled by misunderstanding the resource, overbuilding the project, or committing capital too early. Appraisal helps us avoid those mistakes by giving us the technical confidence to right-size the development and make disciplined capital decisions. Hai Su Vang in Vietnam exemplifies the importance of that discipline. Hai Su Vang-4X was a dry hole, and based on the new data, we have reduced our resource estimate. There is no sugarcoating it. This is not the outcome we were hoping for. However, the appraisal program gave us critical insights, allowing us to now calibrate the field development plan before we commit significant capital in the coming years. Following the Hai Su Vang resource estimate revision, I want to emphasize two important points.

Speaker #3: By misunderstanding the resource, overbuilding the project, or committing capital too early, appraisal helps us avoid those mistakes by giving us the technical confidence to rightsize the development and make disciplined capital decisions.

Speaker #3: Hai Su Bong in Vietnam exemplifies the importance of that discipline. Hai Su Bong 4X was a dry hole, and based on the new data, we have reduced our resource estimate, there is no sugarcoating it.

Speaker #3: This is not the outcome we were hoping for. However, the appraisal program gave us critical insights allowing us to now calibrate the field development plan before we commit significant capital in the coming years.

Speaker #3: Following the Hai Su Bong resource estimate revision, I want to emphasize two important points. First, even at the revised estimate, Hai Su Bong remains a material, 200 to 300 million barrel oil-equivalent opportunity.

Eric Hambly: First, even at the revised estimate, Hai Su Vang remains a material 200 to 300 million barrel oil equivalent opportunity, approximately 2 to 3 times the size of Lac Da Vang. Second, our Vietnam peak production outlook of 30,000 to 50,000 barrels of oil equivalent per day remains unchanged. We may come closer to the lower end based just on what we know today, but the final outcome will depend on what additional tieback opportunities we identify as we move forward. The key takeaway is that we now have greater clarity around our opportunity set, with many compelling projects competing for capital. That brings me to our revised capital program and how we're thinking about investments going forward. We're increasing the midpoint of our 2026 CapEx estimate from $1.25 billion to $1.55 billion. This is not about chasing activity or reacting to price.

Speaker #3: Approximately 2 to 3 times the size of Lac de Van. And second, our Vietnam peak production outlook of 30,000 to 50,000 barrels of oil-equivalent per day remains unchanged.

Speaker #3: We may come closer to the lower end based just on what we know today, but the final outcome will depend on what additional tieback opportunities we identify as we move forward.

Speaker #3: The key takeaway is that we now have greater clarity around our opportunity set, with many compelling projects competing for capital. That brings me to our revised capital program and how we're thinking about investments going forward.

Speaker #3: We're increasing the midpoint of our 2026 capital expenditure estimate from 1.25 billion to 1.55 billion dollars. This is not about chasing activity or reacting to price.

Speaker #3: It's a deliberate decision to fund specific, high-value opportunities now in front of us, with almost all of the increase supporting MURPHY's organic growth. Roughly 190 million dollars relates to Bhubal, including 100 million dollars of incremental spend on the discovery well and 90 million dollars for the first appraisal well.

Eric Hambly: It's a deliberate decision to fund specific high-value opportunities now in front of us with almost all of the increase supporting Murphy's organic growth. Roughly $190 million relates to Bubal, including $100 million of incremental spend on the discovery well, and $90 million for the first appraisal well. Another $70 million is going into the Eagle Ford, which is expected to add approximately 5,000 to 6,000 barrels oil equivalent per day in 2027. I want to take a minute to talk about the Eagle Ford decision because it highlights the key role this asset plays in our portfolio. As our offshore opportunity set expands, we can fund part of that growth through near-term, high-return production and cash flow. Eagle Ford is one of our best assets to do that. It is flexible, well-weighted, and capable of efficiently translating capital into production.

Speaker #3: Another 70 million dollars is going into the Eagleford, which is expected to add approximately 5,000 to 6,000 barrels of oil-equivalent per day in 2027.

Speaker #3: I want to take a minute to talk about the Eagleford decision. Because it highlights the key role this asset plays in our portfolio. As our offshore opportunity set expands, we can fund part of that growth through near-term high-return production and cash flow.

Speaker #3: Eagleford is one of our best assets to do that. It is flexible, oil-weighted, and capable of efficiently translating capital into production. Going forward, we expect the Eagleford to become an increasingly important source of cash flow and financial flexibility across the business.

Eric Hambly: Going forward, we expect the Eagle Ford to become an increasingly important source of cash flow and financial flexibility across the business. This is the strength of our multi-basin portfolio in action, not a change in capital discipline. Our ability to fund growth through our base business while maintaining financial strength was evident this quarter. We generated $110 million of free cash flow, returned $50 million to shareholders through the dividend, maintained leverage below 1x, and ended with approximately $2.5 billion of liquidity. Even with the revised capital program, at current commodity prices, we expect to generate positive free cash flow for the full year. Operationally, Q2 production averaged 169,000 barrels of oil equivalent per day above the midpoint of our guidance, led by stronger performance at Tupper Montney and continued outperformance in the Eagle Ford.

Speaker #3: This is the strength of our multi-basin portfolio in action, not a change in capital discipline. Our ability to fund growth through our base business while maintaining financial strength was evident this quarter.

Speaker #3: We generated 110 million dollars of free cash flow, returned 50 million dollars to shareholders through the dividend, maintained leverage below one time, and ended with approximately 2.5 billion dollars of liquidity.

Speaker #3: Even with the revised capital program at current commodity prices, we expect to generate positive free cash flow for the full year. Operationally, second quarter production averaged 169,000 barrels of oil-equivalent per day, above the midpoint of our guidance, led by stronger performance at Tupper Motney and continued outperformance in the Eagleford.

Speaker #3: In the Gulf of America, Chinook number 8 is now through drilling after reaching a total depth of 26,000 feet and remains on track to come online in the fourth quarter.

Eric Hambly: In the Gulf of Mexico, Chinook number 8 is now through drilling after reaching a total depth of 26,000 feet and remains on track to come online in Q4. Lac Da Vang is also on schedule for first oil in Q4, with the pipeline, topsides, and FSO milestones now complete. As we look ahead, years of capital discipline and technical rigor are beginning to translate into a portfolio with multiple exciting pathways to growth. This is the Murphy Model in action. Identify the opportunity, test it with discipline, develop it safely and efficiently, and fund it through resilient cash flow and financial strength. This full-cycle capability and track record across geographies, asset types, and development stages sets Murphy apart and positions us to convert the opportunity ahead into lasting shareholder value. With that, we are ready to take your questions.

Speaker #3: Lac de Van is also on schedule for first oil in the fourth quarter, with the pipeline top sides and FSO milestones now complete. As we look ahead, years of capital discipline and technical rigor are beginning to translate into a portfolio with multiple exciting pathways to growth.

Speaker #3: This is the MURPHY model in action. Identify the opportunity, test it with discipline, develop it safely and efficiently, and fund it through resilient cash flow and financial strength.

Speaker #3: This full-cycle capability and track record across geographies, asset types, and development stages sets MURPHY apart and positions us to convert the opportunity ahead into lasting shareholder value.

Speaker #3: With that, we are ready to take your questions.

Speaker #1: We will now begin the question-and-answer session. At this time, I would like to remind everyone in order to ask a question, press star then the number 1 on your telephone keypad.

Operator 3: We will now begin the question-and-answer session. At this time, I would like to remind everyone, in order to ask a question, press star, then the number 1 on your telephone keypad. Please stand by while we compile the Q&A roster. The first question is from the line of Arun Jayaram with J.P. Morgan Securities. Your line is open. Please go ahead.

Operator: We will now begin the question-and-answer session. At this time, I would like to remind everyone, in order to ask a question, press star, then the number 1 on your telephone keypad. Please stand by while we compile the Q&A roster. The first question is from the line of Arun Jayaram with J.P. Morgan Securities. Your line is open. Please go ahead.

Speaker #1: Please stand by while we compile the Q&A roster. The first question is from the line of Aaron Jayaram with JPMorgan Securities. Your line is open.

Speaker #1: Please go ahead.

Speaker #2: Eric, good morning. Appreciate the comments and the shareholder letter. Exploration, as is investing, can be humbling. But did want to maybe get your thoughts on next steps at HSV.

Arun Jayaram: Eric, good morning. Appreciate the comments in the shareholder letter. Exploration, as is investing, can be humbling. Did want to maybe get your thoughts on next steps at HSV. What needs to happen in terms of kind of moving to that FID decision in 2027? Can you give us a little bit of an update on how you are thinking about kind of the development options for HSV?

Speaker #2: What needs to happen in terms of kind of moving to that FID decision in 2027? And can you give us a little bit of an update on how you are thinking about kind of the development options for HSV?

Speaker #3: Arun, thanks for that. Great question. Obviously, we're disappointed that the forest well was a dry hole. But I will say that we're still very excited about what is a very significant development for us.

Eric Hambly: Arun, thanks for that. Great question. Obviously, we're disappointed that the Forrest well was a dry hole, but I will say that we're still very excited about what is a very significant development for us. 200 to 300 million barrel field in shallow water will have very attractive economics. I would've loved for it to be larger. We now have a lot of confidence in the size of the resource and gaining increasing knowledge about how we're going to develop the field in terms of the well count, well spacing, and the type of facility concept is something we'll be evolving over the coming year or so. We're 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.

Speaker #3: 200 to 300 million barrel field in shallow water will have very attractive economics. I would have loved for it to be larger. We now have a lot of confidence in the size of the resource and gaining increasing knowledge about how we're going to develop the field in terms of the well count, well spacing, and the type of facility concept is something we'll be evolving over the coming year or so.

Speaker #3: We're 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 de Van project.

Speaker #3: Those are things that we will assess as we plan a development of the field over the coming 12 months or so. We are going to work closely with our partners on a series of approvals required to achieve an approved field development in Vietnam.

Eric Hambly: Those are things that we will assess as we plan a development of the field over the coming 12 months or so. We're going to work closely with our partners on a series of approvals required to achieve an approved field development in Vietnam. After we do that, we will take the project to our board for a final investment decision. As we highlighted in our letter, we're targeting that in Q4 2027, and I think we're well on track to do that. Really happy with this significant discovery that'll help us build a really material business in Vietnam.

Speaker #3: And after we do that, we will take the project to our board for a final investment decision as we highlighted in our letter, we're targeting that in the fourth quarter of 2027.

Speaker #3: And I think we're well on track to do that. I'm really happy with this significant discovery that will help us build a really material business in Vietnam.

Speaker #3: And yeah, I think we're going to create a lot of value for our shareholders, and I don't think we're getting a lot of recognition for that value creation today.

Eric Hambly: Yeah, I think we're going to create a lot of value for our shareholders, and I don't think we're getting a lot of recognition of that value creation today, and we're happy to demonstrate our ability to continue to execute developing projects 40% faster than the industry.

Speaker #3: And we're happy to demonstrate our ability to continue to execute developing projects 40% faster than the industry.

Speaker #2: Great. Great. And maybe my follow-up, you've spun now Bhubal West in July looks like you'll be appraising the Tyronian. Maybe just give us a sense of what your concept is for this appraisal well and what will be the governor of the next the development or the appraisal program, which could include up to five wells.

Arun Jayaram: Great. Maybe my follow-up, you've spud now Bubal West in July. Looks like you'll be appraising the Turonian. Maybe just give us a sense of what your concept is for this appraisal well, and what will be the governor of the appraisal program, which could include up to five wells?

Speaker #3: Yeah, thanks for that. As we featured before, we drilled the discovery well in a position where the Tyronian and the Senimanian cross. There was one location where we could test both reservoirs.

Eric Hambly: Yeah, thanks for that. As we've featured before, we drilled the discovery well in a position where the Turonian and the Cenomanian cross. There was one location where we could test both reservoirs. We were fortunate to be able to find oil in both Turonian and Cenomanian, that leaves us with a need to understand the lateral extent of the field, the variability in reservoir quality and thickness across two different reservoir intervals, also, importantly, learn how much of those structures are oil-filled. The next well that we'll move to, Bubal West-1X, is moving down-dip in the Turonian. The main objective of the well is to test for continuity and variability of reservoir sands, also hopefully determine to prove a deeper oil level than is proven at the base of the Bubal 1X well.

Speaker #3: We were fortunate to be able to find oil in both Tyronian and Senimanian. And that leaves us with a need to understand the lateral extent of the field, the variability in reservoir quality and thickness across two different reservoir intervals, and also importantly learn how much of the structures are oil-filled.

Speaker #3: So the next well that we're moved to, Bhubal West 1X, is moving down dip in the Tyronian. The main objective of the well is to test for continuity and variability of reservoir sands, s, and also hopefully determine to prove a deeper oil level than is proven at the base of the Bhubal 1X well.

Speaker #3: We're very intentionally targeting the well to give us high confidence that we have a resource in the Tyronian that is in line with or in excess of the volume we need to have a commercial development.

Eric Hambly: We're very intentionally targeting the well to give us high confidence that we have a resource in the Turonian that is in line with or in excess of the volume we need to have a commercial development. As we sit today, we think what we've found is a commercial, but we don't have high confidence because we have one penetration and two reservoirs, very large reservoirs to test, very large lateral extent. We're hoping this well gives us high confidence that we'll be able to move forward with the development as quickly as possible while we continue to assess and appraise the full size and value of the field.

Speaker #3: As we sit today, we think what we found is a commercial, but we don't have high confidence because we have one penetration in two reservoirs.

Speaker #3: Very large reservoirs to test. Very large lateral extent. And we're hoping this well gives us high confidence that we'll be able to then move forward with the development as quickly as possible while we continue to assess and appraise the full size and value of the field.

Speaker #2: Great. Thanks, Eric.

Arun Jayaram: Great. Thanks, Eric.

Speaker #1: Your next question. Is from the line of Neil Nash with Goldman Sachs. Your line is now open. Please go ahead.

Operator 3: Your next question-

Operator: Your next question-

Arun Jayaram: Thank you

Operator 3: is from the line of Neil Mehta with Goldman Sachs. Your line is now open. Please go ahead.

Operator: Is from the line of Neil Mehta with Goldman Sachs. Your line is now open. Please go ahead.

Speaker #4: Yeah. Eric, I want you to unpack a little bit of the decision to pull forward activity in the Eagle Fir you alluded to a little bit in your comments, but maybe you talk about why you thought this was the right environment and what kind of incremental returns you're going to get on the incremental capex associated with the $70 million acceleration.

Neil Mehta: Yeah. Eric, wanted you to unpack a little bit of the decision to pull forward activity in the Eagle Ford. You alluded to it a little bit in your comments, but maybe you talk about why you thought this was the right environment and what kind of incremental returns you're going to get on the incremental CapEx associated with the $70 million acceleration.

Speaker #3: Yeah, thanks for that. Before I get just into the Eagle Fir, I want to back up a bit and talk about how we've been thinking about our overall company business.

Eric Hambly: Yeah. Thanks for that. Before I get just into the Eagle Ford, I want to back up a bit and talk about how we've been thinking about our overall company business. What we've said over the last few years is we thought we could develop our base business, continue to develop that, and also our emerging and growing Vietnam business with a capital program that's sort of in a $1.2 to $1.3 billion range. That any additional spending to develop something like Bubal would likely be additive or largely additive. I would say where we sit today, that is still true.

Speaker #3: What we've said over the last few years is we thought we could develop our kind of base business, continue to develop that, and also our emerging and growing Vietnam business with a capital program that's sort of in a 1.2 to 1.3 billion range.

Speaker #3: And that any additional spending to develop something like Bhubal would likely be additive or largely additive. And I would say where we sit today, that is still true.

Speaker #3: So as we look forward and think we want to maintain our Canadian entrepreneur business effectively flat, maintain the scale of our Gulf of America business relatively flat through the rest of this decade, we look at additional need for capex for appraising and developing Bhubal and the place that we've found was most optimal to help provide part of that is through accelerating our Eagle Fir.

Eric Hambly: As we look forward and think we want to maintain our Canadian onshore business effectively flat, maintain the scale of our Gulf of Mexico business relatively flat through the rest of this decade, we look at an additional need for CapEx for appraising and developing Bubal, the place that we found was most optimal to help provide part of that is through accelerating our Eagle Ford. 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.

Speaker #3: If you look at our Eagle Fir 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.

Speaker #3: And so the reliability of it and the flexibility of it, we look at and say, this is a great place to invest a little bit more that will generate more free cash flow next year and likely through the end of the decade that will help us fund the appraisal of Bhubal and then as we move into additional volume growth out of Vietnam, we'll have even stronger cash flows.

Eric Hambly: The reliability of it and the flexibility of it, we look at it and say, "This is a great place to invest a little bit more that'll generate more free cash flow next year and likely through the end of the decade that'll help us fund the appraisal of Bubal. Then as we move into additional volume growth out of Vietnam, we'll have even stronger cash flows." It's the best place to find oily production, and we can do it scalably, and we've had very strong returns and increasing well performance from Eagle Ford, so it's kind of the go-to place to do it. I think you'll see us, as we highlighted in our materials, increase spending this year, which leads to increased free cash flow next year.

Speaker #3: So, it's the best place to find oily production, and we can do it scalably. We've had very strong returns and increasing well performance from Eagle Ford.

Speaker #3: So it's kind of the go-to place to do it. And I think you'll see us as we highlighted in our materials, increase spending this year, which leads to increased free cash flow next year.

Speaker #3: And while we haven't formulated a plan that we've released for 2028 through 2029, 2030, I think you'll see us increasingly lean into that if it allows us to continue to generate more free cash flow.

Eric Hambly: While we haven't formulated a plan that we've released for 2028 through 2029, 2030, I think you'll see us increasingly lean into that if it allows us to continue to generate more free cash flow. We're really about creating shareholder value. I think it's nice to be able to generate incremental oily production growth in the short run, but the primary reason is it's free cash flow generative and can help us fund what we think is an exciting opportunity in Cote d'Ivoire.

Speaker #3: So we're really about creating shareholder value. I think it's nice to be able to generate incremental oily production growth in the short run, but the primary reason is it's free cash flow generative and can help us fund what we think is an exciting opportunity in Côte d'Ivoire.

Speaker #4: Yeah, Eric, that's the follow-up. So the new capex plan is 1516 accrued capex for this year. Any advice on what we should put in as a placeholder for 2027?

Neil Mehta: Yeah. Eric, that's the follow-up. The new CapEx plan is $1,516 in accrued CapEx for this year. Any advice on what we should put in as a placeholder for 2027? I know there's a lot of moving pieces, but just any thoughts on the market there so we can calibrate accordingly?

Speaker #4: I know there's a lot of moving pieces, but just any thoughts on the market there so we can calibrate accordingly.

Speaker #3: Yeah, that's a fair question. We don't have a number to give you for next year's capex, but I'll talk just about how I think about it.

Eric Hambly: Yeah, that's a fair question. We don't have a number to give you for next year's CapEx, but I'll talk just about how I think about it. I think that you should expect us to increase slightly more in the Eagle Ford than in the past. With that alone, without any change to investing in Cote d'Ivoire, that would likely put our typical capital program toward the high end of our kind of previous 1.2 to 1.3 range, maybe slightly above. That's still something we're going to work on. Then spending on Bubal is likely additive to that. We'll probably see a higher CapEx in 2027 than you've seen from us recently. I don't know the number. Importantly, I want to kind of go back to the comment we made about the appraisal program.

Speaker #3: I think that you should expect us to increase slightly more in the Eagle Fir than in the past. With that alone, without any change to investing in Côte d'Ivoire, that would likely put our typical capital program toward the high end of our kind of previous 12 to 13 range, maybe slightly above.

Speaker #3: That's still something we're going to work on. And then spending on Bhubal is likely additive to that. So we'll probably see a higher capex in 2027 than you've seen from us recently.

Speaker #3: I don't know the number. And importantly, I want to kind of go back to the comment we made about the appraisal program. We're going to drill we're drilling a well of Bhubal West 1X now.

Eric Hambly: We're drilling a well at Bubal West-1X now. Depending on what we find, we may have no appraisal program or a limited appraisal program. We're going to learn from every well. Next year's capital spending will be materially driven by what we continue to find. If we keep finding more oil at Bubale, we'll likely keep spending. If we have less wells required to define the size, scope, and quality of Bubale, we'll spend less. There's a pretty big range around that. We're going to still work on that. The results from the Bubale West-1X well will probably materially shape our view of likely spending and spending ranges for 2027. I think I don't want to try to make you feel like we're likely to come in below $1.25 billion next year. It's going to be higher.

Speaker #3: Depending on what we find, we may have no appraisal program or a limited appraisal program. We're going to learn from every well and next year's capital spending will be materially driven by what we continue to find.

Speaker #3: If we keep finding more oil at Bhubal, we'll likely keep spending. If we have less wells required to define the size, scope, and quality of Bhubal, then we'll spend less.

Speaker #3: And so there's a pretty big range around that. We're going to still work on that. The results from the Bhubal 1 West 1X well will probably materially shape our view of likely spending and spending ranges for 2027.

Speaker #3: But I think I don't want to try to make you feel like we're likely to come in below 1.25 billion next year. It's going to be higher.

Speaker #3: I don't know how much higher, but we're going to be disciplined, focused on creating shareholder value, and investing in things that are going to be very valuable for our company and our shareholders.

Eric Hambly: I don't know how much higher, we're going to be disciplined, focused on creating shareholder value, and investing in things that are going to be very valuable for our company and our shareholders.

Speaker #4: Perfect. Thank you, Eric.

Neil Mehta: Yes, sir. Thank you, Eric.

Speaker #1: Your next question is from the line of Carlos Escalante with Wolf Research. Your line is now open. Please go ahead.

Operator 3: Your next question is from the line of Carlos Escalante with Wolfe Research. Your line is now open. Please go ahead.

Operator: Your next question is from the line of Carlos Escalante with Wolfe Research. Your line is now open. Please go ahead.

Speaker #5: Hey, good morning, Eric and team. Thank you for the update today. I want to go back to HSV very quickly to clarify a few things.

Carlos Escalante: Hey, good morning, Eric and team. Thank you for the update today. I want to go back to Hai Su Vang very quickly to clarify a few things, and then move on from there. It looks like Hai Su Vang-4 was a dry hole, which in my view, it implies that you didn't find an oil water contact that's presumably more of dip. Just wondering what's stopping you from testing an additional well where you can find that threshold, and what gives you the confidence that you don't need to? Perhaps you can speak more broadly about what you found in Hai Su Vang-3 in terms of a discovery, pay or any kind of really property around the well and the discovery.

Speaker #5: And then move on from there. So it looks like HSV IV was a dry hole, which in my view implies that you didn't find an oil-water contact that's presumably more updip.

Speaker #5: So just wondering, what's stopping you from testing an additional well where you can find that threshold? And what gives you the confidence that you don't need to?

Speaker #5: And perhaps, if you can speak more broadly about what you found in HSV III in terms of a discovery pay, or any kind of property around the well and the discovery.

Eric Hambly: Yeah. Thanks, Carlos. I'm happy to provide more context there. Let me go back to where we were at the end of the 2X well. We drilled 1X, 2X. We had extremely encouraging results, strong DSTs. We had a view at the time that the field was likely toward the high end of our previously guided, which was a pre-drilled range of resource. We told everyone that because we wanted to inform and keep everyone appraised of how we were thinking about it. We said at the time we thought it was possible that the resource could be even larger. Importantly, we had drilled a fairly central area of the field, and we needed to test the northeast and southwest extensions of the field, which is what the purpose of the 3X and 4X wells was.

Speaker #3: Yeah, thanks, Carlos. I'm happy to provide more context there. Let me go back to where we were at the end of the 2X well.

Speaker #3: So we drilled 1X, 2X. We had extremely encouraging results, strong DSTs. We had a view at the time that the field was likely toward the high end of our previously guided, which was a pre-drill range of resource.

Speaker #3: And we told everyone that because we wanted to inform and keep everyone appraised of how we were thinking about it. And we said at the time we thought it was possible that the resource could be even larger.

Speaker #3: But importantly, we had drilled a fairly central area of the field and we needed to test the northeast and southwest extensions of the field.

Speaker #3: Which was what the purpose of the 3X and 4X wells was. So with the 3X, we were testing for lateral extension to the northeast, how continuous are the sands?

Eric Hambly: With the 3X, we were testing for lateral extension to the northeast. How continuous are the sands? Are they the same quality? We weren't really chasing a deeper oil water contact there. We were just chasing for continuity. With the 4X well, we were testing what we thought would be an expanded reservoir section with potentially a deeper oil water contact. What we found from the program from the 3X and the 4X, was that the reservoir thickness was not as extensive as we expected over the entire structure, which tightened up the resource estimate. With the 4X, we found the interval we were looking for, but the reservoir quality was low, so we didn't have any net pay. The story for 4X was not really about oil water contact. It was really about the extent of productive reservoir being limited.

Speaker #3: Are they the same quality? We weren't really chasing a deeper oil-water contact there. We were just chasing for continuity. And then with the 4X well, we were testing what we thought would be an expanded reservoir section with potentially a deeper oil-water contact.

Speaker #3: And what we found from the program, from from the 3X and the 4X, was that the reservoir thickness was not as extensive as we expected over the entire structure.

Speaker #3: Which tightened up the resource estimate. With the 4X, we found the interval we were looking for, but the reservoir quality was low. So we didn't have any net pay.

Speaker #3: So, the story for 4X was not really about oil-water contact. It was really about the extent of the productive reservoir being limited. Now that we have bounded the reservoir with these four wells, we have high confidence in a developable resource, and we're going to move forward with the field development plan.

Eric Hambly: Now that we have bounded the reservoir with these four wells, we have high confidence in a developable resource that we're going to move forward with the field development plan.

Speaker #5: Thank you. I appreciate that. So yeah, presumably a four-way closure. So you don't need to test the other bounds. And then my follow-up, and maybe a follow-up to Neil's question.

Carlos Escalante: Thank you. I appreciate that. Yeah, presumably a four-way closure, so you don't need to test the other bounds. Then my follow-up, and maybe a follow-up to Neil's question. For next year, again, very difficult for you to talk about, 2027, where we are today, but can you at least frame for us how you're thinking on what is senior to what in terms of the levers you can pull if you needed to have a more lean program, if you will, in 2027? Obviously, it sounds like you're going to prioritize the appraisal at Bubale if you find any kind of success. Wondering what it means for the broader onshore portfolio and maybe the Gulf of Mexico if you need to, again, be leaner on your 2027 program.

Speaker #5: For next year, again, very difficult for you to talk about 2027 where we are today. But can you at least frame for us how you're thinking on what is senior to what in terms of the levers you can pull if you needed to have a more lean program, if you will, in 2027?

Speaker #5: Obviously, it sounds like you're going to prioritize the appraisal at Bhubal if you find any kind of success. But wondering what it means for the broader onshore portfolio and maybe the Gulf of America if you need to, again, be leaner on your 2027 program.

Speaker #3: Yeah, I think what you'll see from us is investing in our Gulf of America business to try to maintain production relatively stable there. And in our Eagleford, likely incrementally more spending than historical.

Eric Hambly: Yeah. I think what you'll see from us is investing in our Gulf of Mexico business to try to maintain production relatively stable there. In our Eagle Ford, likely incrementally more spending than historical. In Canada onshore, stable investment, stable production. Vietnam, obviously, we're working through additional development drilling in our Lac Da Vang project. We won't have likely additional drilling in Hai Su Vang next year, so we're moving to engineering studies, which is not a lot of spending. Then in Côte d'Ivoire, what we spend will be driven by what we keep finding, as I mentioned before with Neil. That's really driving a significant uncertainty in our spending. As I said, we're going to learn from every appraisal well, and we'll decide what does that mean about the next well. There's a probably broad uncertainty.

Speaker #3: And in Canada, onshore, stable investment, stable production. Vietnam, obviously, we're working through additional development drilling in our Lac Da Vang project. We likely won't have additional drilling in Hai Su Vang next year.

Speaker #3: So we'll be moving to engineering studies, which is not a lot of spending. And then in Cote d'Ivoire, what we spend will be driven by what we keep finding as I mentioned before with Neil.

Speaker #3: And that's really driving significant uncertainty in our spending. But as I said, we're going to learn from every appraisal well, and we'll decide what that means for the next well.

Speaker #3: And so there's a probably broad uncertainty. If we needed to pull back spending for some reason, if oil prices went to be extremely low, we could change our plan practically any part of our business.

Eric Hambly: If we needed to pull back spending for some reason, if oil prices went to be extremely low, we could change our plan for practically any part of our business. We are fortunate in Vietnam and in Côte d'Ivoire that we operate, so we can control the pace of any spending. We believe it is valuable for shareholders to quickly appraise Bubale, determine if we have a commercial project definitively, and determine the extent of it so we can move on for field development planning. If we needed to, we could slow the pace of appraisal. We could go as low as zero appraisal wells in Bubale next year if we chose to. We have a lot of flexibility. We're going to continue to spend money where we think it's value-creating for shareholders and maintain flexibility to spend less if it's necessary.

Speaker #3: We are fortunate in Vietnam and in Cote d'Ivoire that we operate so we can control the pace of any spending. We believe it is valuable for shareholders to quickly appraise Bhubal determining if we have a commercial project definitively and determine the extent of it so we can move on for field development planning.

Speaker #3: But if we needed to, we could slow the pace of appraisal; we could go as low as zero appraisal wells in Bhubal next year if we chose to.

Speaker #3: And so we have a lot of flexibility. We're going to continue to spend money where we think it's value, creating for shareholders. And maintain flexibility to spend less if it's necessary.

Speaker #5: Thank you, Eric. Appreciate it as always.

Carlos Escalante: Thank you, Eric. Appreciate it, as always.

Speaker #3: Thanks, Carlos.

Eric Hambly: Thanks, Carlos.

Speaker #2: Your next question is from the line of Philip Jaguer. With BMO, your line is now open. Please go ahead.

Operator 3: Your next question is from the line of Phillip Jungwirth with BMO. Your line is now open. Please go ahead.

Eric Hambly: Your next question is from the line of Phillip Jungwirth with BMO. Your line is now open. Please go ahead.

Speaker #4: Yeah, thanks. Good morning. Coming back to the Eagleford, which will be a larger part of the program, I know you've always had often chalk in the location count, but it has gotten more attention late across both the east and west portions of the play.

Phillip Jungwirth: Yeah, thanks. Good morning.

Eric Hambly: Good morning.

Phillip Jungwirth: Coming back to the Eagle Ford, which will be a larger part of the program. I know you've always had Austin Chalk in the location count, but it has gotten more attention late across both the east and west portions of the play. Was just hoping you could talk about how large a contributor the Chalk is to your go forward program, or is it largely lower Eagle Ford focus and still in just how you see the opportunity set here overall?

Speaker #4: I was just hoping you could talk about how large a contributor the chalk is to your program. Go forward program, or is it largely lower Eagleford focus and it's still in just how you see the opportunity set here overall?

Speaker #3: Sure. Our Eagle Ford inventory has a fairly limited amount of Austin Chalk. Our development programs in Karnes, over part of our Karnes position, will include an occasional one or two Austin Chalk wells in a 10- to 12-well pad that is mostly lower and upper Eagle Ford locations.

Eric Hambly: Sure. Our Eagle Ford inventory has fairly limited amount of Austin Chalk. Our development programs in Karnes, over part of our Karnes position will include an occasional one or two Austin Chalk wells in a 10 to 12 well pad that is mostly lower and upper Eagle Ford locations. We have been developing them. They're limited to part of our Karnes position in terms of what we're investing in near term. They're not a huge feature for us. We like them where the reservoir quality is good, so we co-develop them where it makes sense. I don't think it's a big driver for our program. It's not something that is really worth calling out or highlighting as unique. It's fairly limited, but where we do have them in part of our Karnes position, we really like them.

Speaker #3: So we have been developing them. They're limited to part of our carns position in terms of what we're investing in near term. And so they're not a huge feature for us.

Speaker #3: We like them where the reservoir quality is good. So we co-develop them where it makes sense. I don't think it's a big driver for our program.

Speaker #3: So, it's not something that is really worth calling out or highlighting as unique. It's fairly limited, but where we do have them in part of our Karnes position, we really like them.

Speaker #4: Okay, great. And then on the Bhubali West appraisal well, I was hoping you could kind of just speak to the confidence and the $90 million well cost.

Phillip Jungwirth: Okay, great. On the Bubal West appraisal well, was hoping you could kind of just speak to the confidence in the $90 million well cost. Maybe just break down the incremental costs from the first well and why you think these won't repeat, just to have confidence that as the play moves forward in the overall well cost and ultimate F&D.

Speaker #4: Or maybe just break down the incremental costs from the first well and why you think these won't repeat. Just kind of have confidence that as the play moves forward and the overall well cost and ultimate F&D?

Speaker #3: Sure. Before we drilled the Bhubal 1X well, we estimated that a dry hole cost for the well was $65 million. When we drilled the well, we encountered a section in the shallow Tyronian above the discovered Tyronian interval that was slow to drill.

Eric Hambly: Sure. Before we drilled the Bubal 1X well, we estimated that a dry hole cost for the well was $65 million. When we drilled the well, we encountered section in the shallow Turonian above the discovered Turonian interval that was slow to drill. We had fairly slow rate of penetration as we drilled it. It's slower than we had anticipated, and we've incorporated that learning into our dry hole cost estimate for the Bubal West 1X well. Instead of assuming it's $65 million, we're moving it to $90 million. If we encounter hydrocarbons in the West 1X well, we're likely to spend additional funds with formation evaluation, logging core, fluid samples, et cetera. That might push the well cost above $90 million, which is normal how we conduct our business.

Speaker #3: We had fairly slow rate of penetration as we drilled it. It's slower than we had anticipated. And we've incorporated that learning into our dry hole cost estimate for the Bhubal West 1X well.

Speaker #3: So instead of assuming a $65 million, we're moving it to $90 million. If we encounter hydrocarbons in the West 1X well, we're likely to spend additional funds with formation evaluation, logging, coring, fluid samples, etc.

Speaker #3: And that might push the well cost above $90 million. Which is normal how we conduct our business.

Speaker #4: Thank you.

Phillip Jungwirth: Thank you.

Speaker #3: Thank you.

Eric Hambly: Thank you.

Speaker #2: Your next question is from the line of Tim Rezvan. With KeyBank, your line is now open. Please go ahead.

Operator 3: Your next question is from the line of Tim Rezvan with KeyBanc. Your line is now open. Please go ahead.

Eric Hambly: Your next question is from the line of Tim Rezvan with KeyBanc. Your line is now open. Please go ahead.

Speaker #5: Okay, thank you. Good morning and I appreciate you taking our questions. I want to ask on Vietnam more broadly. You've now wrapped the HSV appraisal program.

Tim Rezvan: Thank you. Good morning. Appreciate you taking our questions. I want to ask on Vietnam more broadly. You've now wrapped the HSV appraisal program. You've talked about drilling LDT. I believe it's a 40 to 80 million barrel resource potential area. Given the large size of your position across several blocks, can you talk about longer term exploration aspirations in Vietnam, maybe 2027 and beyond, as you ultimately see this asset sort of self-funding future exploration once you get LDD online?

Speaker #5: You've talked about drilling LDT, I believe it's a 40 to 80 million barrel resource potential area. Given that the large size of your position across several blocks, can you talk about longer-term exploration aspirations in Vietnam?

Speaker #5: Maybe 2027 and beyond. And do you ultimately see this asset sort of self-funding future exploration once you get LDV online?

Speaker #3: Yeah, that's a really good question. We are drilling the Lac de Trang north 1X well now. And as you mentioned, it has a pre-drill, mean upward resource range of 40 to 80 million barrels, which is a nice prospect to drill.

Eric Hambly: Yeah, that's a really good question. We are drilling the Lac Da Trang North 1X well now, as you mentioned, it has a pre-drill meaned upward resource range of 40 to 80 million barrels, which is a nice prospect to drill. With success, it likely sets up a development as a tieback of Lac Da Trang North and Lac Da Trang to the infrastructure at Lac Da Vang. As Lac Da Vang comes online in Q4, we'll generate revenue. Over the course of a few years, we'll recover the costs of our historical investment in the block. That'd be all of our exploration costs in Block 15-1/05 and also our development costs of Lac Da Vang.

Speaker #3: And with success, it likely sets up a development as a tieback of Lac de Trang north and Lac de Trang to the infrastructure at Lac de Bong.

Speaker #3: As Lac de Bong comes online in the fourth quarter, we'll generate revenue. Over the course of a few years, we'll recover the costs of our historical investment in the block.

Speaker #3: That'd be all of our exploration costs in block 15105. And also our development costs of Lac de Bong. And then we'll be able to use the revenue from Lac de Bong to recover costs from the exploration that we're doing going forward.

Eric Hambly: Then, we'll be able to use the revenue from Lac Da Vang to recover costs from the exploration that we're doing going forward, what we're doing now and in future years. We have significant remaining prospectivity on both Block 15-1/05 and Block 15-2/17, we'll test those likely between now and the end of this decade and stage in a development with standalone developments where the resource size is large enough to be necessary or tiebacks to existing infrastructure in what are likely to be two key hubs, a Lac Da Vang and a Hai Su Vang hub in kind of a north and south position. We're really excited about the potential there. We have a pretty strong record of having successful exploration here. We keep finding oil, we need to find about eight to 10 million barrels for an economic tieback.

Speaker #3: What we're doing now and in future years. We have significant remaining prospectivity on both block 15105 and 15217. And we'll test those likely between now and the end of this decade.

Speaker #3: And stage in a development with standalone developments where the resource size is large enough to be necessary, or tiebacks to existing infrastructure in what are likely to be two key hubs of Lac de Bong and Hai Si Vong hub in kind of a north and south position.

Speaker #3: So we're really excited about the potential there. We have a pretty strong record of having successful exploration here. We keep finding oil, and we need to find about 8 to 10 million barrels for an economic tieback.

Speaker #3: So if we can find 40 to 80, we'll be very happy. It'll be very value creating for us. And it'll allow us to maintain a long production plateau of our overall Vietnam business.

Eric Hambly: If we can find 40 to 80, we'll be very happy. It'll be very value-creating for us and allow us to maintain a long production plateau of our overall Vietnam business. We're creating a lot of value here with our shareholders, spending very little money to do it.

Speaker #3: So we're creating a lot of value here with our shareholders spending very little money to do it.

Speaker #5: Okay, that's good context. Thank you. As my follow-up, I just wanted to go back to the Eagleford. You're spending $70 million can you just talk is this like a spot rig that's going to come and drill a couple of pads over six months?

Tim Rezvan: Okay. That's good context. Thank you. As my follow-up, I just wanted to go back to the Eagle Ford. You're spending $70 million. Can you just talk, is this like a spot rig that's going to come and drill a couple pads over six months? Then as we think about that, should we be thinking over the medium term that maybe you're going to run this at a 40 to 45,000 barrel a day level? Just trying to contextualize the ramp you're anticipating. Thank you.

Speaker #5: And then as we think about that, should we be thinking over the medium term that maybe you're going to run this at a 40 to 45 thousand barrel a day level?

Speaker #5: Just trying to kind of contextualize the ramp you're anticipating. Thank you.

Speaker #3: Yeah, so where we sit today, we do not have a rig actively drilling at Eagle Ford. We completed our drilling program that we had originally contemplated and are working through the last of our completions and well onlines.

Eric Hambly: Yeah. Where we sit today, we do not have a rig actively drilling in Eagle Ford. We completed our drilling program that we had originally contemplated and are working through the last of our completions and well onlines. What we've decided to do is resume drilling, instead of resume drilling in January, to pull that forward, to begin in October. We'll drill a pad in Karnes and a pad in Catarina this year. We'll probably begin completing the Catarina pad at the end of the year, and we'll bring those new wells online early in 2027. I think what you'll see is that's just the beginning of an active program next year. I think your range of rates for Eagle Ford next year is reasonable.

Speaker #3: And what we've decided to do is resume drilling instead of resuming drilling in January, to pull that forward to begin in October. We'll drill a pad in carns and a pad in Catarina this year.

Speaker #3: We'll probably begin completing the Catarina pad at the end of the year. And we'll bring those new wells online early in 2027. And I think what you'll see is it's just the beginning of an active program next year.

Speaker #3: I think your range of rates for Eagleford next year is reasonable. I would assume we're a little toward the higher end of what you said than the lower end, but we still have to formulate exactly what our 2027 program is.

Eric Hambly: I would assume we're a little toward the higher end of what you said than the lower end, we still have to formulate exactly what our 2027 program is.

Speaker #5: Okay, thanks, Eric.

Tim Rezvan: Okay. Thanks, Eric.

Speaker #3: Thank you.

Eric Hambly: Thank you.

Speaker #2: Your next question is from the line of Josh Silverstein. With UBS, your line is now open. Please go ahead.

Operator 3: Your next question is from the line of Josh Silverstein with UBS. Your line is now open. Please go ahead.

Eric Hambly: Your next question is from the line of Josh Silverstein with UBS. Your line is now open. Please go ahead.

Speaker #6: Yeah, thanks. Good morning, guys. I wanted to see how we should be thinking about using the balance sheet and the shareholder return profile and this period of higher spending.

Josh Silverstein: Yeah, thanks. Good morning, guys. I wanted to see how we should be thinking about using the balance sheet and the shareholder return profile in this period of higher spending. Are you willing to use the balance sheet to support all these projects getting incremental capital? Then, as far as the shareholder return profile, is this really just limited to the base dividend going forward as you examine everything here? Thanks.

Speaker #6: Are you willing to use the balance sheet to support all these projects getting incremental capital? And then, as far as the shareholder return profile, is this really just limited to the base dividend going forward as you examine everything here?

Speaker #6: Thanks.

Speaker #3: That's a great question, Josh. The way I would frame it is we have not changed our capital allocation plan or framework at all. We still have the exact same priorities.

Eric Hambly: That's a great question, Josh. The way I would frame it is we have not changed our capital allocation plan or framework at all. We still have the exact same priorities. We plan to prioritize investing in our assets to maintain or grow the scale, pay a dividend, focus on balance sheet, and occasionally share buybacks when it makes sense. So we really have no change in that. Our plan, as we've been very clear about, is based on adjusted free cash flow, which is after our dividend and a few other things, including M&A. We will likely, going forward, have modest free cash flow. There may be periods between now and first oil at HSV or potentially, if we're so fortunate at the Val, that we have periods of time of negative free cash flow for the whole company.

Speaker #3: We plan to prioritize investing in our assets to maintain or grow the scale. Pay dividend, focus on balance sheet, and occasionally share buybacks when it makes sense.

Speaker #3: And so we really have no change in that. Our plan as we've been very clear about is based on adjusted free cash flow, which is after our dividend.

Speaker #3: And a few other things, including M&A, we will likely, going forward, have modest free cash flow. There may be periods between now and first oil in HSV, or potentially, if we're so fortunate at the ball, that we have periods of time with negative free cash flow for the whole company.

Speaker #3: We're going to be we're going to be measured in our pace and we're going to be very conscious of protecting our balance sheet. We're not afraid of using our liquidity and our balance sheet as necessary, but we're going to keep ourselves in a strong balance sheet position at all times.

Eric Hambly: We're going to be measured in our pace, and we're going to be very conscious of protecting our balance sheet. We're not afraid of using our liquidity and our balance sheet as necessary, but we're going to keep ourselves in a strong balance sheet position at all times. That's a priority for us. We will definitely be maintaining our dividend. That's core to us. We paid a dividend since 1961. We're going to continue to pay a dividend, I would imagine, going forward for the entire tenure of me being here. If we encounter situations where we think our share price is significantly out of whack with intrinsic value, then we'll be active in share buyback. I think that's the same story you've heard from us in the past. We're fortunate to have even more organic growth opportunities than we had a few years ago.

Speaker #3: That's a priority for us. So we will definitely be maintaining our dividend. That's core to us. We pay a dividend since 1961. We're going to continue to pay a dividend.

Speaker #3: I would imagine going forward for the entire tenure of me being here. And as if we encounter situations where we think our share prices significantly out of whack with intrinsic value, then we'll be active in share buyback.

Speaker #3: So I think that's the same story you've heard from us in the past. We're fortunate to have even more organic growth opportunities than we had a few years ago.

Speaker #3: It provides us more challenges in terms of how we choose to allocate capital, but we're in control of the pace as operator everywhere. And we're going to do what we think is best for shareholder value going forward.

Eric Hambly: It provides us more challenges in terms of how we choose to allocate capital, but we're in control of the pace as operator everywhere, and we're going to do what we think is best for shareholder value going forward. Again, not being afraid to use our balance sheet, but always with an eye toward protecting a strong balance sheet at all times.

Speaker #3: Again, not being afraid to use our balance sheet, but always with an eye toward protecting a strong balance sheet at all times.

Speaker #6: Got it. And then I just wanted to see what's potentially on the exploration horizon next year since you've got its new exploration opportunities across West and North Africa and how you would classify them relative to what you've done in Vietnam and Cote d'Ivoire.

Josh Silverstein: Got it. Just wanted to see what's potentially on the exploration horizon next year since you've got its new exploration opportunities across West and North Africa, and how you would classify them relative to what you've done in Vietnam and Côte d'Ivoire.

Speaker #3: Yeah, thanks for that. I think you'll see next year that we'll invest in the Gulf of America, in exploring, in one or two wells.

Eric Hambly: Thanks for that. I think you'll see 2025 that we'll invest in the Gulf of Mexico in exploring in 1 or 2 wells. You'll likely see us invest in Vietnam in our Cuu Long blocks, most likely in Block 15-1/05, the inventory that we were just talking about a few minutes ago. I don't expect, other than appraisal drilling in West Africa, we'll have more West Africa drilling activity. We're intentionally phasing in opportunities in West Africa. They're at different parts of our prospect maturation timeframe. We signed a block in Morocco recently. We're going to reprocess seismic there. That's very little spending. We're hoping to finalize agreements for Cameroon and Mauritania by the end of 2024, and 2025, spend small money with studies, maybe the beginnings of seismic reprocessing, small dollar spending.

Speaker #3: You'll likely see us invest in Vietnam in our Coulomb blocks, most likely in 15105. The inventory that we were just talking about a few minutes ago.

Speaker #3: And I don't expect other than appraisal drilling in West Africa, we'll have more West Africa drilling activity. We're intentionally phasing in opportunities in West Africa that have they're at different parts of our prospect maturation timeframe.

Speaker #3: So we signed a block in Morocco recently. We're going to reprocess seismic there. That's very little spending. We're hoping to finalize agreements for Cameroon and Mauritania in by the end of this year and next year spend small money with studies maybe the beginnings of seismic reprocessing small dollar spending.

Speaker #3: Drilling in Cameroon, Mauritania, or Morocco is probably a 2028, 2029, 2030 thing, depending on what we find. We're going to follow our recipe of very detailed regional study, leading to detailed prospect maturation, and drill or not drill based on the merits of the prospects.

Eric Hambly: Drilling in Cameroon, Mauritania, or Morocco is probably a 2028, 2029, 2030 thing, depending on what we find. We're going to follow our recipe of very detailed regional study leading to detailed prospect maturation and drill or not drill based on the merits of the prospects. That takes some time, and as you saw, it led to some success here for us in Côte d'Ivoire. We think we're setting up for a repeatable business model of exploring in emerging or frontier basins and doing it with low entry costs, relatively low well cost, targeting large resource, and that's very value-creating if we can continue to have some success.

Speaker #3: That takes some time. And as you saw, it led to some success here for us in Cote d'Ivoire. So we think we're setting up for a repeatable business model of exploring in emerging unfrontier basins and doing it with low entry costs, relatively low well costs, targeting large resource and that's very value creating if we can continue to have some success.

Speaker #6: Got it. Thanks, Eric.

Josh Silverstein: Got it. Thanks, Eric.

Speaker #3: Thank you.

Eric Hambly: Thank you.

Speaker #2: Your next question is from the line of Leo Mariani. With Roth, your line is now open. Please go ahead.

Operator 3: Your next question is from the line of Leo Mariani with Roth. Your line is now open. Please go ahead.

Operator: Your next question is from the line of Leo Mariani with Roth. Your line is now open. Please go ahead.

Speaker #7: Yeah, hi. You spoke to this a bit earlier, but clearly you're making a decision to put more capital in the Eagle Ford to ramp it.

Leo Mariani: Yeah. Hi. You spoke to this a bit earlier, but clearly, you're making a decision to put more capital in the Eagle Ford to ramp it. Presumably that is probably more of a higher oil price type of decision. I would venture a guess that if oil is lower for whatever reason, then perhaps that asset does not see a real increase in free cash flow from putting more capital into it, which obviously will generate more production. Can you just provide any kind of thoughts around that? It just seems like obviously now with higher oil prices, that investment will generate incremental free cash flow in the next several years, but perhaps there's some kind of break-even where that starts to go away if oil is low enough.

Speaker #7: Presumably that is probably more of a higher oil price type of decision. I would venture a guess that if oil is lower for whatever reason, then perhaps that asset does not see real increase in free cash flow from putting more capital into it, which obviously will generate more production.

Speaker #7: Can you just provide any kind of thoughts around that? I mean, it just seems like obviously now with higher oil prices, that investment will generate incremental free cash flow in the next several years, but perhaps there's some kind of break-even where that starts to go away if oil is low enough.

Speaker #3: Yeah, Leo, our decision to invest more in Eagle Ford is not driven by near-term higher oil price. It's driven by ability to generate strong free cash flows with a significant range of oil prices.

Eric Hambly: Yeah, Leo, our decision to invest more in Eagle Ford is not driven by near-term higher oil price. It's driven by ability to generate strong free cash flows with a significant range of oil prices. If we saw oil price below $50 for a year, we would probably pare back our investment in a lot of places, including Eagle Ford. With even a significant range of oil prices in line with what we've seen over the last three years, we feel that Eagle Ford investment makes sense. We've generated strong free cash flow over the last few years doing it. We have increasingly strong well performance, and at even the modest oil prices, we'll be investing in it to generate strong free cash flows. We're not reacting to oil price.

Speaker #3: If we saw oil price below $50 for a year, we would probably pare back our investment in a lot of places, including Eagle Ford.

Speaker #3: But with even a significant range of oil prices, in line with what we've seen over the last three years, we feel that Eagle Ford investment makes sense.

Speaker #3: We've generated strong free cash flow over the last few years doing it. We've have increasingly strong well performance. And at even a modest oil prices, we'll be investing in it to generate strong free cash flows.

Speaker #3: So we're not reacting to oil price. We're saying we now have a strong portfolio of organic growth to invest in. And part of the way we can fund that is by generating more free cash flow from Eagle Ford by investing more in Eagle Ford.

Eric Hambly: We're saying we now have a strong portfolio of organic growth to invest in, part of the way we can fund that is by generating more free cash flow from Eagle Ford by investing more in Eagle Ford.

Speaker #7: Okay. Appreciate that. And then just on Vietnam, obviously you guys are going to have first oil here in the fourth quarter. Just looking at your guidance, you kind of expect a relatively small amount, but presumably that's going to ramp nicely in 2027.

Leo Mariani: Okay. Appreciate that. Then just on Vietnam, obviously, you guys are going to have first oil here, in Q4. Just looking at your guidance, you kind of expect a relatively small amount, but presumably that's going to ramp nicely in 2027. Can you just provide maybe a little color around kind of thoughts on that potential ramp on Vietnam oil next year?

Speaker #7: Can you just provide maybe a little color around kind of a thoughts on that potential ramp on Vietnam oil next year?

Speaker #3: Sure. As you mentioned, we'll have fairly limited contribution to production this year because of a fourth quarter online, first oil far locked along. We will continue to drill development wells through this year.

Eric Hambly: Sure. As you mentioned, we'll have fairly limited contribution to production this year because of a Q4 online first oil for Block II Vong. We will continue to drill development wells through this year and into next year. If you look out toward the end of 2027, Block II Vong net production is probably in the 5 to 9,000 barrels a day range. As we continue to drill the remaining development wells in our phase development program through 2028 and 2029, we'll ultimately ramp up to 10 to 15,000 barrels a day.

Speaker #3: And into next year, if you look out toward the end of 2027, lock the Vong net production is probably in the five to nine thousand barrel a day range.

Speaker #3: And as we continue to drill the remaining development wells in our phase development program through 28 and 29, we'll ultimately ramp up to 10 to 15 thousand barrels a day.

Speaker #7: Okay. So just to be clear, is that five to nine kind of like a 27 exit rate and then obviously it continues to ramp in 28 and 29?

Leo Mariani: Okay. Just to be clear, is that five to nine kind of like a 2027 exit rate, and then obviously it continues to ramp in 2028, 2029?

Speaker #3: That's exactly right.

Eric Hambly: That's exactly right.

Speaker #7: Okay. Helpful for sure. And then just last one for me, Eric. You talked about this a little bit, but you guys have really gotten into a number of new exploration plays recently, a lot of which are in Africa and you kind of rattled off sort of the plans which seem a little bit limited in terms of capital in the near term, but presumably those plays could require more capital as you get into 28, 29.

Leo Mariani: Okay. Helpful for sure. Then just last one for me, Eric. You talked about this a little bit, but you guys have really gotten into a number of new exploration plays recently. A lot of which are in Africa, and you kind of rattled off sort of the plans, which seem a little bit limited in terms of capital in the near term. Presumably those plays could require more capital as you get into 2028, 2029. I imagine there might be a shot clock on some of those to get some wells drilled eventually if you think prospects are maturing in the right way. Does this set up for just a lot higher capital later this decade in kind of the success case? Then just, if that's right, just thoughts on how you would kind of handle that, fund that.

Speaker #7: I imagine there might be a shot clock on some of those to get some wells drilled eventually if you think prospects are maturing in the right way.

Speaker #7: Does this set up for just a lot higher capital later this decade in kind of the success case and then just if that's right, just thoughts on how you would kind of handle that fund that?

Speaker #3: We have a characterize that, Leo, is if we are conducting our typical sort of assess the opportunities and drill an exploration well occasionally, then that would not materially push our capital higher.

Eric Hambly: The way I would characterize that, Leo, is if we are conducting our typical sort of assessed opportunities and drill an exploration well occasionally, then that would not materially push our capital higher. Obviously, Bubal is likely to push our capital higher with success. Exploring and drilling an occasional well is something that fits into our overall exploration program, kind of in line with what we've been spending. If we are fortunate to have a discovery in Morocco, Cameroon, Mauritania, then that would lead to additional appraisal drilling and then development drilling, which would be great. That's obviously a long way away, and as you know, exploration wells tend to be dry holes. I'm not too worried about it yet.

Speaker #3: Obviously, Bhubal is likely to push our capital higher with success. Exploring and drilling an occasional well is something that fits into our overall exploration program, kind of in line with what we've been spending.

Speaker #3: If we are fortunate to have a discovery, in Morocco, Cameroon, Mauritania, then that would lead to additional appraisal drilling and then development drilling, which would be great.

Speaker #3: That's obviously a long way away. And as you know, exploration wells tend to be dry holes. So I'm not too worried about it yet.

Speaker #3: I think we'll continue to expose ourselves to opportunities that are at various stages and not concerned about a strong draw for capital between now and the end of this decade and any of those new entries, but excited for the potential that they may help us continue to have opportunities develop and grow as we exit the 2030s and head into the 2040s.

Eric Hambly: I think we'll continue to expose ourselves to opportunities that are at various stages, and I'm not concerned about a strong draw for capital between now and the end of this decade at any of those new entries, but excited for the potential that they may help us continue to have opportunities to develop and grow as we exit the 2030s and head into the 2040s.

Leo Mariani: Okay. Thank you.

Speaker #7: you.

Speaker #2: As a reminder, if you would like to ask a question, press star one on your telephone keypad. Your next question is from the line of Charles Need with Johnson Rice.

Operator 3: As a reminder, if you would like to ask a question, press star one on your telephone keypad. Your next question is from the line of Charles Meade with Johnson Rice. Your line is now open. Please go ahead.

Operator: As a reminder, if you would like to ask a question, press star one on your telephone keypad. Your next question is from the line of Charles Meade with Johnson Rice. Your line is now open. Please go ahead.

Speaker #2: Your line is now open. Please go ahead.

Speaker #8: Yes. Good morning, Eric, to you and your whole team there. I'd like to go back to the excuse me, the appraisal effort at Bhubal and I apologize if I missed some of the earlier detail, but I think what I heard you say is that the Bhubal West is to it's a down dip Tyronian appraisal, but I guess I want to ask two things.

Charles Meade: Yes. Good morning, Eric, to you and your whole team there. I'd like to go back to the appraisal effort at Bubal, and I apologize if I missed some of the earlier detail, but I think what I heard you say is that the Bubal West is a down dip Turonian appraisal. I guess I want to ask two things. When, I guess, the design of the appraisal well and then the plans for the Cenomanian. For the design of the appraisal well, there's a lot of competing, I guess, priorities or competing ways that you design appraisal well. For eight miles out, is the dominant thing to test the extent of the structure, or are you perhaps instead looking for more reservoir development and more pay thickness? Then, how would you answer that same sort of question for the eventual Cenomanian appraisal test?

Speaker #8: When I guess the design of the appraisal well, and then the plans for the Senimanian—for the design of the appraisal well—is this, there's a lot of competing, I guess, priorities or competing ways that you design an appraisal well.

Speaker #8: Is this for eight miles out, is this just is the dominant thing to test the extent of the structure or are you really trying to or are you perhaps instead looking for more reservoir development and more pay thickness?

Speaker #8: And then how would you answer that same sort of question for the eventual Senimanian appraisal test?

Speaker #3: Okay. Thanks, Charles. So the West 1X well is designed to test Tyronian down dip. It is testing for variability of reservoir. So that would be reservoir thickness, reservoir quality, we're hoping to get confidence that where we drill it, the Tyronian at that location is connected to the Bhubal 1X location.

Eric Hambly: Okay, thanks, Charles. The West 1X well is designed to test Turonian down dip. It is testing for variability of reservoir, so that'd be reservoir thickness, reservoir quality. We're hoping to get confidence that where we drill it, the Turonian at that location is connected to the Bubal 1X location, and also hoping to demonstrate an oil water or an oil level deeper than the oil down to in the Bubal-1 well. It's doing multiple things. We think that location is important because with significant oil presence in that well, in the Bubal West-1X well, to be clear, that we'll have high confidence that we have a commercial development, but still significant uncertainty about the range of resource.

Speaker #3: And also hoping to demonstrate an oil water or an oil level deeper than the oil down to in the Bhubal 1 well. So it's doing multiple things.

Speaker #3: And we think that location is important because with significant oil presence in that well—in the Bhubal West 1X well, to be clear—we'll have high confidence that we have a commercial development, but still significant uncertainty about the range of resource.

Speaker #3: So, the location of the 1X well was drilled in a position where there was significant up-dip reservoir in the Cenomanian and the Turonian.

Eric Hambly: The location of the 1X well was drilled in a position where there was significant up dip reservoir in the Cenomanian and the Turonian, and potentially significant down dip potential in both. The reservoir in the Turonian and the reservoir in the Cenomanian, they cross. If you were looking at them from above, they cross like an X. We drilled the 1X well right where they cross. Like I said, potential up dip and down dip from that in both reservoirs. Ultimately, if we have success, we'll continue to identify and drill appraisal wells that will, over time, reduce uncertainty and give us high confidence in what we need to develop, how we need to develop it. This next well is really key for us to having high confidence in a commercial discovery.

Speaker #3: And potentially significant down dip potential in both. And the reservoir and the Tyronian and the reservoir in the Senimanian they cross. If you were looking at them from above, they crossed like an X.

Speaker #3: We drilled the 1X well right where they cross. So like I said, potential up dip and down dip from that in both reservoirs and ultimately if we have success, we'll continue to identify and drill appraisal wells that will over time reduce uncertainty and give us high confidence in what we need to develop, how we need to develop it.

Speaker #3: So this next well is really key for us to having high confidence in a commercial discovery.

Speaker #8: Got it. So it gives you some confidence at the low end, but on the upper end, it may still be more unbounded.

Charles Meade: Got it. It gets you with confidence over the low end, but with the upper end, maybe still more unbounded.

Speaker #3: Correct.

Eric Hambly: Correct.

Speaker #8: The going to Vietnam, and I appreciate your comments earlier about the base of that, if I understood right, that within the 4X, HSV 4X, you basically just didn't find reservoir quality rock.

Charles Meade: Going to Vietnam, I appreciate your comments earlier about the basis that, if I understood right, that within the 4X, H2S 4X, you basically just didn't find reservoir-quality rock. I'm curious, does that affect the prospectivity for some of these other blobs you have on your map in Block 15-2/17? I think they're labeled like Bo Vang and Hai Su Vang. Does this diminish your appetite to drill those somewhere down the line?

Speaker #8: I'm curious, does that affect the prospectivity for some of these other blobs you have on your map in block 15, 2, 17? I think they're labeled like Bozam and Haisu Hong.

Speaker #8: Does this diminish your appetite to drill those somewhere down the line?

Speaker #3: Those other prospects, we obviously will have learned a little bit from drilling Haisu Vong through various reservoirs, and we will incorporate that into our understanding of those.

Eric Hambly: Those other prospects, we obviously will have learned a little bit from drilling Hai Su Vang through various reservoirs. We will incorporate that into our understanding of those. I would say because of the diversity of different play types there and different reservoirs that those prospects are targeting, that we probably still have quite a bit of confidence that they make sense. Again, there's a little more work to do to plan an exploration program there. In Block 15-1/05, we have, I would say, very well characterized, and the learnings from Hai Su Vang don't significantly impact our prospectivity there. You'll see us focus on exploring in Block 15-1/05 in the next couple of years, with probably activity in Block 15-2/17, maybe in 2028, 2029, not in 2027.

Speaker #3: I would say because of the diversity of different play types there and different reservoirs that those prospects are targeting, that we probably still have quite a bit of confidence that they make sense.

Speaker #3: But again, there's a little more work to do to plan and exploration program there. In 15, 105, we have, I would say, a very well characterized and the learnings from HSV don't significantly impact our prospectivity there.

Speaker #3: So you'll see us focus on exploring in 15, 105 in the next couple of years with probably activity in 15, 2, 17, maybe in 28, 29, not in 27.

Speaker #8: Got it. Thank you for that detail.

Charles Meade: Got it. Thank you for that added detail.

Speaker #3: Thank you.

Eric Hambly: Thank you.

Speaker #2: There are no further questions at this time. I'll turn the call over to Mr. Hambly for closing remarks.

Operator 3: There are no further questions at this time. I'll turn the call over to Mr. Hambly for closing remarks.

Operator: There are no further questions at this time. I'll turn the call over to Mr. Hambly for closing remarks.

Speaker #3: Thank you. I'll close by thanking our employees for their commitment and execution. To our shareholders, we appreciate your continued trust and support. This concludes our call.

Eric Hambly: Thank you. I'll close by thanking our employees for their commitment and execution. To our shareholders, we appreciate your continued trust and support. This concludes our call.

Speaker #2: This concludes today's call. Thank you for attending. You may now disconnect.

Operator 3: This concludes today's call. Thank you for attending. You may now disconnect. This event has now concluded. Thank you for joining Murphy Oil Q2 2026 earnings. The line will disconnect automatically.

Operator: This concludes today's call. Thank you for attending. You may now disconnect. This event has now concluded. Thank you for joining Murphy Oil Q2 2026 earnings. The line will disconnect automatically.

Q2 2026 Murphy Oil Corp Earnings Call

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