Murphy Oil (NYSE:MUR) has an extensive portfolio of exploration prospects in inventory and hopes to continue the company's historical success in converting these prospects into productive status.

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

Exploration History
Murphy Oil has a successful track record in exploring new oil and gas properties and has reported nine discoveries over the last three years across its portfolio, yielding a 39% success rate. On a long-term basis, Woods Mackenzie, an oil and gas consulting firm, ranks Murphy Oil in the top quartile of energy companies from 2001 to 2010 on value creation per dollar invested in the exploration business.

SEE: Oil And Gas Industry Primer

Exploration Program
Murphy Oil hopes to drill as many as 30 exploration wells by the end of 2013, after drilling only a handful in 2011. This ramp up in exploration will occur across the globe, and includes prospects in the Gulf of Mexico, Africa, Malaysia, Iraq and Australia.

The company's strategy in exploration is to target crude oil prospects and natural gas that can be scaled up to be economic through liquefied natural gas (LNG) projects.

Murphy Oil has already drilled successful exploration wells in 2012, finding resources in Brunei and Malaysia.

In Malaysia, Murphy Oil reported two discoveries on Block H, a prolific oil and gas area that has total natural gas resources between 1.5 and 2 Tcf. Murphy Oil has been active for years in Malaysia and is a core area for the company. Murphy Oil reported revenues of $564 million from Malaysia in the first quarter of 2012, with $301 million spent during the quarter on exploration and development activities.

Talisman Energy (NYSE:TLM) is also involved in Malaysia and reported production of 35,700 barrels of oil equivalent per day (BOE/D) in 2011 from its properties there.

Royal Dutch Shell (OTCBB:RYDAF) found oil and gas in Malaysia at the Malikai oil field located in offshore Block G. The company is partnering with ConocoPhillips (NYSE:COP) on this field and expects production to start up at this field in 2014.

SEE: Fueling Futures In The Energy Market

Murphy Oil also found oil and gas resources on block CA-1, located offshore Brunei. The Julong East 1 was the company's first discovery in Brunei and Murphy Oil is looking to drill an appraisal well here in 2013. The company is also currently drilling the Jagus East well on block CA-1 and expects to have results in 2012.

Gulf of Mexico
Another major target for Murphy Oil is the Gulf of Mexico, where the company plans between two and four exploration wells in 2012 and 2013. The company is targeting various Miocene prospects, including Dalmatian South, which is very similar to their 2010 Dalmatian North discovery.

West Africa
Murphy Oil plans to drill between two and five wells in West Africa in 2012 and 2013, with a focus on offshore areas in Congo and Cameroon. The company is targeting various cretaceous carbonate formations in these areas.

The balance of Murphy Oil's exploration program for 2012 includes wells activity in Iraq (two to four wells), Indonesia (two wells) and Australia (one to three wells).

SEE: An Evaluation Of Emerging Markets

The Bottom Line
After a slight pause in 2011, Murphy Oil is poised to aggressively ramp up its oil and gas exploration program in 2012 and 2013. The company hopes to harvest success here to help generate long-term production growth for the company later in the decade.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Stock Analysis

    Net Neutrality: Pros and Cons

    The fight over net neutrality has become an amazing spectacle. But at its core, it's yet another skirmish in cable television's war to remain relevant.
  2. Savings

    Do Natural Gas Prices Always Follow Oil Trends?

    Prices for oil and natural gas are highly correlated. But investors should be aware of different factors affecting the prices of these commodities.
  3. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  4. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  5. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  6. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  7. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  8. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  9. Professionals

    What to do During a Market Correction

    The market has what? Here's what you should consider rather than panicking.
  10. Mutual Funds & ETFs

    ETF Analysis: Vanguard Mid-Cap Value

    Take an in-depth look at the Vanguard Mid-Cap Value ETF, one of the largest and most popular mid-cap funds in the U.S. equity space.
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  3. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  4. Benchmark Crude Oil

    Benchmark crude oil is crude oil that serves as a pricing reference, ...
  5. PT (Perseroan Terbatas)

    An acronym for Perseroan Terbatas, which is Limited Liability ...
  6. Ltd. (Limited)

    An abbreviation of "limited," Ltd. is a suffix that ...
  1. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  2. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  3. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  4. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  5. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
  6. What happens to the shares of stock purchased in a tender offer?

    The shares of stock purchased in a tender offer become the property of the purchaser. From that point forward, the purchaser, ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!