Under FASB guidance, exploratory well costs should continue to be capitalized when the well has found a sufficient quantity of reserves to justify its completion as a producing well and the Company is making sufficient progress assessing the reserves and the economic and operating viability of the project.

As of March 31, 2026, the Company had total capitalized drilling costs pending the determination of proved reserves of $266.8 million. The following table reflects the net changes in capitalized exploratory well costs during the three-month periods ended March 31, 2026 and 2025.


(Thousands of dollars)	2026		2025
Beginning balance at January 1	$	191,821	$	72,055
Additions pending the determination of proved reserves	84,599		24,790

Capitalized exploratory well costs charged to expense	(9,610)		—
Balance at March 31	$	266,810	$	96,845

Capital additions of $84.6 million, for the three months ended March 31, 2026, were mainly for exploration wells including the Bubale-1X (Block CI-709) well in Côte d’Ivoire; the Hai Su Vang-3X (Golden Sea Lion) well, Block 15-1/05 in Vietnam; and the Banjo #1 (Mississippi Canyon 385) and Cello #1 (Mississippi Canyon 385) wells in the Gulf of America. In the first quarter of 2026, Murphy announced the successful discoveries of the Banjo #1 and Cello #1 (Mississippi Canyon 385) exploration wells in the Gulf of America, which encountered 50 feet and 30 feet of net pay, respectively. In addition, the Company also announced a successful appraisal well Hai Su Vang-2X (Golden Sea Lion), Block 15-2/17, in the Cuu Long Basin, located approximately 40 miles offshore of Vietnam.

Capital additions of $24.8 million, for the three months ended March 31, 2025, were mainly for the Hai Su Vang-1X (Golden Sea Lion), Block 15-2/17; and Lac Da Hong-1X (Pink Camel), Block 15-1/05 exploration wells in Vietnam and long-lead equipment for the Cello #1 (Mississippi Canyon 385) and Banjo #1 (Mississippi Canyon 385) exploration wells in the Gulf of America.

In the first quarter of 2026, the Company also announced the results of two exploration wells in Côte d’Ivoire; the Civette-1X (Block CI-502) exploration well, which encountered non-commercial hydrocarbons, and the Caracal-1X (Block CI-102) exploration well, which was plugged and abandoned as a dry hole after encountering non-commercial hydrocarbon shows. Capitalized well costs charged to dry hole expense of $9.6 million, for the three months ended March 31, 2026, were primarily related to the Caracal-1X (Block CI-102) exploration well in Côte d’Ivoire. There were no capitalized well costs charged to dry hole expense for the three months ended March 31, 2025.

The preceding table excludes well costs of $57.5 million incurred and expensed directly to dry hole for the three months ended March 31, 2026. In 2026, these costs primarily related to the Caracal-1X (Block CI-102) and Civette-1X (Block CI-502) exploration wells in Côte d’Ivoire.

The following table provides an aging of capitalized exploration well costs based on the date the drilling operations were initiated for each individual project.


	March 31,
	2026			2025

(Thousands of dollars)	Amount		No. of Projects		Amount		No. of Projects
Aging of capitalized well costs:
Zero to one year	$	58,556	1		$	9,421	2
One to two years	71,906		2		65,160		3
Two to three years	113,934		3		—		—
Three years or more	22,414		3		22,264		3
	$	266,810	9		$	96,845	8

Of the $208.3 million of exploration well costs capitalized and classified as more than one year at March 31, 2026, $107.0 million was in Vietnam, $94.0 million was in the Gulf of America, $4.6 million was in Canada, and $2.7 million was in Brunei. In all geographical areas, either further appraisal or development drilling is planned and/or development studies/plans are in various stages of completion.

During the first quarter of 2025, Murphy purchased a floating production storage and offloading vessel (FPSO) from BW Offshore (UK) Limited for a gross purchase price of $125.0 million. The Pioneer FPSO remained on location, supporting operations at the Cascade field (Walker Ridge 206 and 250) and Chinook field (Walker Ridge 469 and 425) in the Gulf of America. BW Offshore (UK) Limited continues to provide operations and maintenance services under a five-year contract that began in 2025.