Murphy Oil announces 2003 capital spending budget

Murphy Oil raised its planned 2003 capital spending budget to $ 952 mm, up about 10 % from a year earlier. The energy company said more than 75 % of its 2003 capital budget will be allocated to upstream operations.
Murphy expects its exploration expenditures for the year to total $ 248 mm, for continued funding of its deepwater Gulf of Mexico drilling program, natural gas exploration in western Canada and a drilling program in deepwater Malaysia. Development expenses for 2003 should total $ 486 mm, up 27 % from a year earlier, driven by deepwater Gulf of Mexico projects, the West Patricia development in shallow-water Malaysia and the phase III expansion of the Syncrude operation.

Murphy said 2003 capital expenditures for refining and marketing operations are budgeted at $ 216 mm, down 8 % from 2002. The company will use these funds for continuing build-out of its Murphy USA program with Wal-Mart Stores and completion of a clean fuels project at its refinery in Meraux, Louisiana.
Murphy said 506 Murphy USA stations were in operation at the end of 2002, with an additional 100 new stations set for 2003. The clean fuels project at the Meraux refinery will allow the facility to meet future fuels standards, the company said, and will also expand the refinery's crude processing capacity by 25,000 bpd for 125,000 bpd.

Together with its 2003 capital spending plans, Murphy Oil said it implemented a hedging program that covers about 30 % of 2003 worldwide production of oil and natural gas. The company said it has hedged 22,000 bpd of light crude and 10,000 bpd of heavy crude. The company has also hedged 24 mm cfpd of US and Canadian natural gas production through swaps and 26 mm cfpd through costless dollars.
In all cases, Murphy said, it pays the floating price for oil and natural gas swaps and receives a fixed price that averages at $ 25.30 per WTI barrel of light oil, $ 16.74 per LLK barrel of heavy oil and $ 3.85 per thousand cf of natural gas. The costless $ contracts have an average floorprice of $ 3.33 per thousand cf and an average ceiling price of $ 4.76 per thousand cf.