Murphy Oil Analyst Meeting Overview

By Eric Fox | May 17, 2011 AAA

Murphy Oil (NYSE:MUR), an oil and gas production company with properties worldwide, plans to increase oil and gas production by 50% within four years as the company exploits its large inventory of domestic and international development opportunities. Here we take a look at the company's first quarter, and what investors might expect from the company going forward. (For background info on investing in this sector, check out Oil And Gas Industry Primer.)

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Production Growth at Murphy Oil
Murphy Oil reported production of 182,152 barrels of oil equivalent (BOE) per day in the first quarter of 2011, with approximately 62% of this production composed of oil, condensate and other liquids.

Murphy Oil expects full-year 2011 production of 200,000 BOE per day and has set a goal of reaching 300,000 BOE per day in 2015. The company hopes to achieve this goal through a combination of sanctioned and unsanctioned projects in the United States, Canada, Europe and Asia.

On a yearly basis, the company expects the following yearly progression on production growth.

Year BOE per Day
2011 200,000
2012 223,000
2013 255,000
2014 288,000
2015 300,000

North America
Murphy Oil depends on the successful development of various properties in North America to achieve its production goals.

In the onshore area of the United States, the company is developing a large acreage position in the Eagle Ford Shale and is looking to reach 45,000 BOE per day by 2015. The company has four project areas spread across various parts of the play.

Other companies involved in the Eagle Ford Shale include Forest Oil (NYSE:FST), which has 109,000 net acres under lease. The company plans to add a third rig here in July 2011.

In Canada, Murphy Oil has the Tupper and Tupper West project areas where the company is developing the Montney formation. The company entered this natural gas play in British Columbia in 2007 and is producing 200 million cubic feet per day from its wells here.

Murphy Oil is planning to sanction Phase 2 of Tupper West in the final quarter of 2011. The company also has future project areas into the Montney including Groundbirch, Brassey and the Sundown areas.

EnCana (NYSE:ECA) is also active in developing the Montney formation in Canada. In February 2011, the company signed a joint venture agreement with PetroChina Company Limited (NYSE:PTR), which agreed to pay C$5.4 billion for a 50% share of EnCana's natural gas assets in British Columbia and Alberta.

In addition, Murphy Oil is working on the Seal Lake heavy oil project in Alberta, where it has current production of 7,500 BOE per day. The company is looking to further increase production through an enhanced oil recovery (EOR) program involving polymer and steam flooding.

Murphy Oil's International Projects
Murphy Oil also has a leading position in Malaysia with the Sabah and Sarawak projects and expects production from Malaysia to reach approximately 66,000 BOE per day by 2015.

Murphy Oil's Exploration Plans
Murphy Oil might even grow production greater than the 300,000 BOE per day as this guidance does not include success from the various exploration prospects that the company has. The company plans 30 exploration wells in 2011 and 2012 and has targeted Kurdistan, Australia, Congo, Malaysia and the Gulf of Mexico.

The Bottom Line
Murphy Oil is looking at the onshore area of North America along with offshore Malaysia to grow its production 50% by 2015. The company has a large inventory to choose from to get there. (Read more about investing in oil in Understanding Oil Industry Terminology.)

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