MUR Q4 2025: Vietnam Discovery Adds 429 Feet of Net Oil Pay, Reshaping Growth Trajectory
Murphy Oil’s Q4 delivered standout exploration success in Vietnam, with appraisal results at Hai Su Vong uncovering 429 feet of net oil pay, marking a substantial resource upgrade. Despite a lower 2026 production outlook and commodity price headwinds, management is prioritizing long-cycle investments and disciplined capital allocation, positioning for organic growth into the next decade. The company’s expanding global portfolio and measured approach to capital flexibility signal a deliberate pivot toward future value creation over near-term volume maximization.
Summary
- Vietnam Discovery Upside: Hai Su Vong appraisal results point to a resource far above initial expectations.
- Capital Discipline Maintained: 2026 spending is targeted, with flexibility to cut 10% if needed.
- Long-Term Growth Focus: Portfolio expansion in Asia and Africa sets up multi-decade organic growth.
Performance Analysis
Murphy Oil’s Q4 and full-year 2025 outperformed production guidance, driven by strong uptime at offshore assets and standout onshore well results. Lease operating expenses were reduced by 20% year-over-year, and capital expenditures landed below guidance, with efficiency gains in Eagleford Shale, Murphy’s U.S. shale oil business. The company’s exploration success rate reached 80% for the year, highlighted by the Hai Su Vong (Golden Sea Lion) appraisal in Vietnam, which revealed 429 feet of net oil pay, well above the initial midpoint estimate of 170 million barrels of oil equivalent.
Despite these operational wins, 2026 production is guided down to 171,000 barrels of oil equivalent per day, primarily due to lower Tupper Montney natural gas volumes, a Canadian gas asset, as higher prices triggered increased royalties. The cash flow impact is expected to be muted. Notably, Eagleford Shale production will remain flat with 25% less capital, underscoring efficiency improvements. The company’s balance sheet remains robust, with over $2 billion in liquidity and a low leverage ratio.
- Exploration Success Rate: 80% in 2025, with major upside from Vietnam and Gulf of America discoveries.
- Capital Flexibility: Management can flex down 2026 capital by 10%, and up to 30-40% in a prolonged downturn.
- Reserve Replacement: 103% proved reserve replacement, maintaining a decade-long track record of stable reserves.
Murphy’s operational discipline and exploration-led growth have set the stage for a pivot toward high-impact, long-cycle projects, notably in Vietnam and the Gulf of America, while maintaining cost control and capital flexibility in a volatile commodity environment.
Executive Commentary
"Our exploration results in Vietnam will help us build a business that, by the early 2030s, will surpass the scale of our current Eagleford shale operations. This outcome exemplifies the long-term organic value creation capability that makes us unique."
Eric Hambly, President & CEO
"We have the flexibility to adjust if necessary to protect our balance sheet. If we see an extended period of low commodity prices, we're ready to tighten the purse strings and pull back on capital spending."
Eric Hambly, President & CEO
Strategic Positioning
1. Vietnam as a Growth Engine
The Hai Su Vong (Golden Sea Lion) appraisal has redefined Murphy’s long-term production profile. With 429 feet of net oil pay and no oil-water contact found, the resource potential is now “significantly above” the initial 170 million barrel estimate. Management expects this asset, alongside the Loch de Vong (Golden Camel) development, to become Murphy’s largest business by the early 2030s, targeting 30,000 to 50,000 barrels per day net production. The phased development plan and further appraisal drilling in 2026 will clarify the ultimate scale.
2. Capital Allocation and Flexibility
Murphy is intentionally constraining 2026 capital spending, focusing on projects with robust economics across oil price scenarios. Core investments include the Golden Camel project, appraisal at Golden Sea Lion, Gulf of America development (Chinook), and select exploration in Cote d’Ivoire. Management retains flexibility to reduce 2026 capital by 10%, and up to 40% in 2027 if needed, with onshore programs front-loaded and offshore rig schedules adaptable.
3. Expanding Global Portfolio
Murphy’s recent entry into offshore Morocco and acquisition of seven new Gulf of America blocks further diversify its exploration pipeline. The Morocco position offers low entry cost and attractive fiscal terms, with seismic reprocessing underway. Gulf of America acreage is oriented toward exploration and tiebacks, providing optionality for future growth as Tier 1 U.S. shale inventories decline industry-wide.
4. Managing Legacy and Decline
The Gulf of America (GOA) portfolio faces an 18% base decline rate if not reinvested, with material post-2029 declines expected as current developments mature. However, new discoveries and ongoing exploration are intended to extend the production plateau. The Tupper Montney gas asset remains a source of long-term optionality, valued for its deep inventory and cash flow resilience across price cycles.
Key Considerations
Murphy’s Q4 call highlighted a deliberate shift toward long-cycle, organic growth and a disciplined approach to capital deployment. The company is leveraging recent exploration wins to reshape its future, while retaining operational agility in a volatile macro environment.
Key Considerations:
- Vietnam’s Resource Upside: Further appraisal wells in 2026 could meaningfully increase the resource estimate, with implications for long-term production and valuation.
- Capital Allocation Discipline: Management is prioritizing projects with high returns in any oil price, ensuring spending flexibility and balance sheet protection.
- Portfolio Diversification: New entries in Morocco and the Gulf of America expand Murphy’s global footprint and exploration optionality.
- Production Mix Evolution: The company is managing a transition from legacy Gulf of America and North American shale toward new international growth hubs.
- Reserve Stability: Consistent reserve replacement and a high proportion of proved developed reserves support long-term sustainability.
Risks
Commodity price volatility remains the primary risk, with management prepared to cut capital if low prices persist. Operational execution risk is elevated as Murphy undertakes complex offshore developments and appraisals in unfamiliar basins. Exploration and appraisal outcomes, particularly in Vietnam and Africa, will be critical to realizing the anticipated production growth and resource conversion. Regulatory and partner alignment, especially in new geographies, could introduce delays or cost overruns.
Forward Outlook
For Q1 2026, Murphy guided to:
- Net production of 171,000 barrels of oil equivalent per day, down from 182,000 in 2025
- Lease operating expenses in the $10 to $12 per barrel range
For full-year 2026, management maintained guidance:
- Flat Eagleford Shale production with 25% less capital
- Two Vietnam appraisal wells and two Cote d’Ivoire exploration wells in H1 2026
Management highlighted several factors that will shape the year:
- Production decline is concentrated in Tupper Montney gas due to higher royalties, muting cash flow impact
- Appraisal results in Vietnam and execution of key offshore projects (Chinook, Golden Camel) are pivotal for the 2027 and 2030s growth trajectory
Takeaways
Murphy Oil’s Q4 call signals a strategic inflection point, with the Vietnam discovery and global acreage expansion setting up a new era of organic growth. Operational discipline and capital flexibility provide downside protection, while the company’s willingness to invest through the cycle differentiates it from peers.
- Vietnam Resource Re-rating: The Hai Su Vong appraisal has the potential to transform Murphy’s long-term production and value proposition, pending further appraisal results.
- Capital Flexibility as a Hedge: Management’s ability to flex spending and prioritize projects with robust economics supports resilience in a volatile macro backdrop.
- Watch for Appraisal and Development Milestones: Investors should monitor Vietnam appraisal outcomes, Gulf of America project execution, and exploration progress in Morocco for further upside or risk signals.
Conclusion
Murphy Oil’s Q4 2025 results underscore a disciplined, exploration-led strategy, with the Vietnam discovery poised to become a cornerstone asset. The company’s global diversification and capital agility position it for sustainable growth, but execution on long-cycle projects will be the key determinant of future value.
Industry Read-Through
Murphy’s pivot toward long-cycle, international exploration highlights a broader industry trend: As North American shale inventory quality declines, operators are increasingly seeking resource renewal through global exploration and appraisal. The company’s disciplined capital approach and flexibility in spending underscore the importance of balance sheet strength in a volatile commodity environment. Murphy’s success in Vietnam and willingness to enter frontier basins like Morocco may prompt peers to revisit underexplored regions and reweight portfolios toward higher-impact, longer-horizon projects. The focus on resource conversion and reserve life extension is likely to become a sector-wide imperative as Tier 1 inventory becomes scarcer.