Murphy Oil greenlights Gulf of Mexico project trio

U.S.-based oil and gas company Murphy Oil has reached a Final Investment Decision (FID) for the King’s Quay facility, Khaleesi/Mormont, and Samurai developments located in the deepwater Gulf of Mexico.

In its quarterly report published on Thursday, Murphy said it had sanctioned three additional Gulf of Mexico projects in support of longer-term development.

The first one is King’s Quay floating production system (FPS) facility, which will receive and process up to 80 MBOPD of production anchored by the Khaleesi/Mormont and Samurai developments.

The second one is Khaleesi/Mormont Field Development, with seven subsea wells, of which four were previously drilled, and infrastructure tie-back to King’s Quay.

FInally, Murphy sanctioned the Samurai Field Development, with four subsea wells and planned tie-back to King’s Quay.

Roger W. Jenkins, President and Chief Executive Officer, said: “Our planned execution on our new Gulf of Mexico revitalized asset base continues. These projects have outstanding returns offering high-margin production and a free cash flow runway going forward.

“We and a partner have sanctioned a new midstream FPS asset, King’s Quay, to anchor our two developments. This new FPS asset could be easily monetized, and we are currently evaluating all our options. We forecast first production from the FPS along with our two new fields in mid-2022. Initial production from these assets is expected to exceed 30,000 BOEPD net at first oil.”

‘GoM still offers attractive investment opportunities’

Commenting on Murphy Oil’s FID, Mfon Usoro, Wood Mackenzie analyst, said: “Murphy’s sanction of the trio of projects including the King’s Quay facility, Khaleesi/Mormont and Samurai shows that the Gulf of Mexico still offers attractive investment opportunities. The Gulf of Mexico has evolved since the downturn to shorter cycle projects and a leaner development approach which has led to lower breakevens and higher returns.”

Wood Mackenzie estimates a lead time for King’s Quay of five years from discovery to first oil. According to Usoro, this is exceptionally quick and is roughly half the average lead time of a greenfield development in deepwater Gulf of Mexico.

Wood Mackenzie values Khaleesi/Mormont and Samurai at over $2 billion (NPV 10) and each project has a development-cycle breakeven below $35/bbl (PV 10, Brent).

“The FID of the King’s Quay facility is particularly significant because it is one of only three greenfield projects in deepwater Gulf of Mexico that have achieved FID since the downturn,” added Usoro.

“With a new platform set to enter the Gulf of Mexico, it offers up opportunities to commercialize more small-scale subsea tie-backs with higher returns.”

It is worth reminding that Murphy Oil in June closed the acquisition of LLOG’s deepwater U.S. Gulf of Mexico oil fields in a deal worth $1.37 billion.