Very pleased to welcome Roger Jenkins, President and CEO of Murphy Oil, is our next speaker. That, Murphy is a diversified E&P, with nearly half of the production in offshore, a third on onshore Canada, and then the rest in the U.S., Eagle Ford. In addition to development, there's also an exploration story, which, I'm sure, Roger will get into as well. So look forward to the presentation, and then we'll have Q&A at the end. Thank you.
Thank you, Betty. Great to be here today at Barclays in New York. It's always a pleasure to get going here in the fall with new investors and talking about our business. We're very happy about how our business is running. We had a great year, and see the rest of the year outstanding for us as well. Of course, you have a cautionary statement here, is popular in all these type presentations. Agenda today, talk about the company at the glance at the highest level, talk about the priorities that we've had for the last couple of years, some talk on our portfolio and our exploration business that Betty highlighted, and looking ahead in our, in our business. Murphy, quite simply, is a E&P company.
We produce in three main areas: onshore Canada, onshore United States, and the Eagle Ford Shale, and we're a significant player in the offshore Gulf of Mexico. In the Q2, we made 184,000 barrels a day, guiding much higher than that this quarter, even with hurricanes, which is quite positive for us. We have around 700 million barrels of reserves and a very unique exploration portfolio for a company of our size. Also, thousands of locations with low drilling per year, and we have a long way to go. We're not a degrading onshore location company. We're a company that's having business in the oil business and moving forward as we go into the future. Why our company? We're a sustainable company in two different ways. We're multi-basin and conventional and unconventional.
We also have a very big high ground on Carbon Intensity, top quartile Carbon Intensity, and we feel these two things, being Carbon Intensity focused and longevity focused in conventional/unconventional, is a key advantage for us. We have a high potential exploration portfolio that I mentioned, make free cash flow in every asset that we have. We have a 60-year record and beyond of returning cash to shareholders, so dividends been paid my entire life. And we, of course, have a multi-decade founding family on our board and significant ownership at our board around those last two bullets to make sure our company is around for a very long time, very profitable, doing all the right things for our investors. Very proud of our sustainability efforts over the last few years. Had a very detailed report just filed in August, around the time of our earnings call.
Numerous positives and advantages here for our company. We're now rated by Rystad as number one in ESG performance, looking at the 2021 data. Our 2022 data was simply better than 2021, so very, very well positioned in this matter here today. Our priorities for the last couple of years have been the same. We did add an additional priority this year. That is to delever our balance sheet, execute, meaning putting the wells on at the rate they're supposed to make, at the time they're supposed to make it, big projects all online at a proper time to allow the delevering and also explore throughout the world. And then an added strategic effort this year is to return. Return would be ever increasing our dividend, ever increasing our buybacks, and a return to our sh- very valuable shareholders.
On the delever side, we have a goal of $500 million debt pay down this year, will be accomplished in the second half of the year. That's at $75 oil, but a much higher gas price. So we still have this as a target. I feel we can get close to this target. And we're in 2.0 of our Murphy capital allocation framework, which has been out for over a year and, executing on that, and, also doing some divestiture of some non-core assets to help along the way in this framework as well. All of our wells onshore are performing well and on time, especially offshore as well. We did have a new, approval of a field development plan in Vietnam that we're quite proud of, and, moving forward with that.
In exploration, we added a new focus here in Côte d'Ivoire, which I'll talk about in a minute, and a key well in the Gulf of Mexico, in a real hot area of the Gulf, around recent lease sales and new data acquisition, a well called Oso, in the middle of that, and I'm proud of that effort too. This is a real key slide, and our slide deck today is a true differentiator of our company. I talked about some differentiating factors already. We have a high ground on carbon intensity for sure, number one rated on ESG performance, but we're a returner, and this is a ten-year look back at our company in return to shareholders through buybacks and dividends, over $3 billion. Significant level above every other $10 billion market cap.
Also, only three companies in this group did not issue equity during this period. As a matter of fact, we've never issued equity since we went public in the 1950s. So this is not even close. We're the provider here. We're the Conoco of this space, and I'm very, very proud of our situation here. And some companies that are advancing returns also were restructured during this period. So this is a key thing about our company, and with our ownership and with our board being the same over a 10-year basis, we will want to do this again and again. And we feel that our assets are positioned to execute on this same 10-year period again or more. This is the details of our capital allocation framework.
As we pay down debt, we're returning some—our Adjusted Free Cash Flow to shareholders via dividends and buybacks, primarily buybacks. We're setting up our dividend policy on a yearly basis. We're in the middle, if you will, today. We have $1.8 billion of debt, and until we get to $1 billion, we'll be returning 75% to debt reduction of our balance sheet and 25% through primarily buybacks, because our dividend levels were set earlier in the year. Next year, at this time, hopefully being Murphy 3.0... and returning 50% of our free cash flow adjusted to our shareholders. Very serious about this framework and one of the key attributes of running our company today.
In our portfolio, very proud of our long-standing Eagle Ford, a place where we kind of keep our production between 30,000 and 35,000. We made 35,000 in the Q2, doing very well in the Q3 as well. We work across three areas, Karnes, Tilden, Catarina. We're oil weighted here in the oil window of the Eagle Ford. Moved into Tilden this year. We're at a place we haven't drilled in a while, with some new fracturing techniques. Had an incredible year here, some significant outperformance to prior years, and are doing very, very well in the Eagle Ford. Tupper Montney, a dry gas position we have in British Columbia. Been in this position for about 12 years, made about $340 million in the Q2, making more than that this quarter.
Some of the highest IP wells we've ever had in this space. Again, unique and new fracture designs, both in Eagle Ford and Montney, taking shape here, and there's some record wells here and doing extremely well in our Tupper Montney business. Recently, on our last earnings call around August 5, we announced a sale. So if you look at this picture, how to think about the Duvernay for us is the upper right-hand corner is a heavily delineated, oil-weighted system, with over 70% dry oil here. The bottom left would be a gassier area, some of which was non-op to Murphy. So we made a move out of this area that we would not probably drill till 2040, at a very, very nice price that we're quite proud of, and we're progressing closing that, anticipate closing that within a couple of weeks.
So diversified out of something, then we take those proceeds, move into a new acreage position in Côte d'Ivoire, a new field development plan approval process in Vietnam, and still have some cash to help alleviate the shortage of gas prices in, in our company to execute our plan of return. Still ample locations here. You can picture this Duvernay oil-weighted areas taking the place of the Eagle Ford over time, as we allocate capital between our two oil-weighted assets in Eagle Ford and Duvernay, and with the Montney continuing on at its pace as a dry gas play in North America. Doing really well offshore. Make a lot of free cash, a lot of money in the Gulf. Top five operator there. Made up about 87,000 in the Q2, making more than that this quarter, even with hurricane assumptions here.
Rig on Dalmatian, getting ready to flow that well, in about a month or two. Mona Lisa follows that operation, doing extremely well. Significant non-op business also at Murphy. Terra Nova is a big project that today would have incredible high oil prices, being hooked up there by Suncor, making good progress there, and look to flow that at the end of the year. So doing extremely well across all three of our major assets. Last quarter was a quarter of outperformance, anticipating that again this quarter as well. Vietnam is a place we've been in business for a very long time. We were sought after by the government of Vietnam to enter this area. This is in the Cuu Long Basin, which is the basin of oil production by Vietnam, discovered by Mobil before the Vietnam War.
We came into this area around 2016. We were a very big player in Malaysia, very near this area, and we were known in there, not only as a deepwater player, but a very significant and very, really good shallow water operator, too. We built a nice oil business. This is an area that we farmed into Total. This has been late and giving the approval of PetroVietnam. Now, PetroVietnam has come forward with the approval of executing this Lac Da Vang or LDV field. We're doing our work to sanction that with our board later this year, hopefully, and be moving forward here.
We also have a discovery nearby, and then two exploration opportunities now that we have the field development plan approved, that would offer us low risk and bolt-on opportunities for exploration here to build a very nice, very accretive business for us. In the exploration business, also recently signed on some new acreage in Côte d'Ivoire, a place we've been looking at for several years. It's a very unique, unique, advantaged asset that we added to the company, and has a mixture of three different types of plays: a rift play, shallow water in the 102 block. Then in Block 531, it's a lookalike prospect to the very well-known Eni Baleine that just flowed this week. A very significant discovery in Côte d'Ivoire over the last couple of years.
In Block 103 is a project called Paon, which was discovered by Tullow and ultimately delineated by Anadarko back in 2016. This fell away and was not executed upon by those two parties. The government of Côte d'Ivoire would like Murphy to supply field development plan for this project. That's how, why we're sought after by them to come here, 'cause that's our competitive advantage, is executing offshore. In Block 709, numerous prospects, very similar to those seen in Guyana, the neighboring acreage. Very nice add-on for us, very low cost entry, and a place where we can do what we do, which is deepwater development. So again, two developments and two exploration focus areas coming out of this recent change in our portfolio, that's quite advantaged and we're quite proud of.
In exploration in the Gulf of Mexico, of course, they saw all of our blocks, a very significant player there. We have several facilities there that we operate. We had a successful well called Longclaw, which is in the shadows of King's Quay, which holds three producing fields that we operate. It's a very nice discovery that will flow in the next few years, drilling a major well called Oso, a very large opportunity in a very hot area of the Gulf around new seismic leasing. A lot of activity here by super majors. They'll be subject to a lease sale here in a couple of weeks, and there's a lot of lease action in the last lease sale.
So proud to be in the middle of that with a good prospect, drilling with our partner, Anadarko there, rather, Oxy, and, moving forward there, and very happy about it. As we look ahead in our business here, this is our guidance. Maintaining that guidance today, of course, very positive. We're not to have a hurricane in the Gulf. Of course, we're still subject to that risk, and we have an associated amount of production for that. Increased our guidance the last quarter. I have a CapEx guidance here, feel good about that, and also our 2023 guidance was slightly increased as well. And our CapEx was raised to the higher end of our guidance on our last call, due to some of the new opportunities that we have.
But we're counterbalancing that with the sale of the assets in Canada, and, very real, real good about the plan we have and how we're executing. A real part of our uniqueness of our company is we have ample locations to go for a very, very long time. So we have all these locations in Montney, upward of 1,000 locations, that break even at $1.50 gas. I think this would benchmark very well in North America and be some of the best break even of all, all gas. We have a changing, you know, ever-moving royalty system there, but it starts off very low. So every day in BC, we're starting off at 5% royalty, while our gas peers in the United States are starting at 25%. So it's a big advantage as to return and very nice business.
Eagle Ford and Duvernay are oil-weighted areas now, post this sale that we just announced. You can see hundreds and hundreds of locations here with 10% rate of return below $50. So 55 years of inventory here, 12 years in Eagle Ford, a $40 or less breakeven, and on top of an exploration business, an offshore Gulf business, and a returner of capital. You're seeing the come forward, the advantages that our company provides to our investors. Offshore developments too, we name each one of those, just like a well in the onshore. We feel we have 25 projects, break even below $35. This can keep our production flat for several years in our offshore business. The gray area or Southeast Asia will be moving into the plan with Vietnam.
Again, very, very ample locations of work to do. They contain capital spending, returning a lot of free cash flow to shareholders through buybacks, is a unique story of our company. This is our long-term strategy. We'll be readjusting this plan in January, which would be typical to us, but overall, the features of the plan remain. Trying to pay down $500 million of debt, that I said that earlier this year, gonna get real close to that. Real low reinvesting rates across all of our business. Maintaining production slightly below 200 near term, above 200,000 future, with a pretty much leading CAGR there. Very solid offshore business and locations to remain it. Trying to keep our average capital where we are now in the $900 range. Working hard to do that. It's hard with the opportunities that we have.
And again, exploration wells to be drilled and to improve and allocate capital better into different projects, and have a long-term business here that's in very good shape with years and years and years and decades of drilling and opportunity ahead for us. This is our closing line here. We're a diverse, multi-basin, and I add conventional and unconventional player. Significant inventory of low breakeven wells, low cost exploration. You wouldn't believe the low cost entry in both Vietnam and Côte d'Ivoire. Very advantaged for us going forward. We're a company that's building and having more oil in the future, not drilling out of business here at Murphy. Operational excellence is our thing, especially offshore. A big competitive advantage for our company. And that we're building a durable return business to our shareholders here, that models extremely well out there.
So that's my presentation today, Betty, and we can go on from there.
We'll open up for Q&A, and we have 10, 15 minutes. Maybe I'll kick it off, and raise your hand if you have questions. Roger, I think the mix of conventional and unconventional asset really stood out for us as a differentiator. It feels like sentiment is shifting increasingly into looking beyond the U.S., I guess, how do you think about your value proposition and competitive advantage, given your asset base, your ability to generate free cash flow sustainably, and then the optionality that you create for investors?
Thanks for that question, Betty. A very good question. Internationally, really bring a calling card of incredible successful execution on time. If you take this development in Côte d'Ivoire called Paon, a super major probably wouldn't want to do Paon. And if they were, it would probably be longer and slower through their processes. So we're sought after by the government because they want to have a development there, or acting as if they do, of course, and we bring the ability to do that. We've also bring ability, things are important to us because of our size, and we're able to do super major things in a small independent concept. And we've done this many times, executed in Malaysia, Gulf of Mexico, you know, all over the world. So we bring that advantage.
And from a capital allocation perspective, we're trying to keep a lower CAGR and allocate capital between Tupper, Eagle Ford, and Gulf of Mexico and other offshore businesses. We'll be soon filling our plan in the Montney next year, which is $500 million gross, so capital will slow down in maintenance mode. We're trying to keep our Eagle Ford between 30 and 35 thousand to maximize free cash flow from that asset. Then our offshore businesses, when you're developing things with $10 CapEx per barrel, which is our goal, $10-$15, Vietnam is that, Paon will be that, all of our Gulf future business is that, that allows for a very money-making, pay-early payout business, and that we feel we can get payout in these offshore projects within 3 years, and that kicks off the free cash flow.
If you look in our financials, the offshore businesses make significant free cash flow after you count with the lumpy hurdles of capital. That's just the way that business is. So it kind of allows us, you know, three different ways to allocate capital. But keeping growth stagnant and onshore, if you will, allows the locations to last longer and to move the offshore faster to the left and allocate capital among the better offshore. That's really how we're running the business.
Um.
Hi, thank you. Two parts to this question. The Middle East has become a kind of tractor beam for oilfield service capital. Two parts to this question. I want it, one, do you think that that challenges your ability to get services middle part of the decade, later part of the decade at reasonable prices? And then second, do you have a fear that all this supply coming online from the Middle East will kind of create up the market again in the second half of the decade?
From the macro perspective, I feel real good about the discipline of shale in the United States, and I have only been to my presentation, but I'm sure most presentations were focused on return, which is a non-growth or low CAGR outset. That is the way companies are being executed in our peer group, in the E&P in the US. That bodes a lot of help in oil prices. We do see OPEC and Russia communicating and working together to help on the macro side. So all that would have to blow up, for that to take place, and we all know that they would prefer to have higher oil prices in that region. But when you're...
have 26 things to do offshore that break even at $35, and you have 1,000 things to do onshore that break even at $40, and you're fixing to have a fortress balance sheet or net debt to EBITDA 0.1. We feel we can execute better after this de-levering of our balance sheet and still return share. We model to still return to shareholders even at $50 oil. So I think we're positioning ourselves for that, if that were to occur. I'm not a believer in that occurring, but my ball in the fairways is framework and executing what we're doing here, and I think we're building a company that can handle that. On the service side, this my over 40 years of this, I've never had or can't get services in the Gulf of Mexico. I don't anticipate that.
It's a different type of business. It's all set up in Louisiana long term to work there. There's still significant Super Majors working in the Gulf of Mexico with big projects there, continuing to be a focus area of Super Majors and lease sales and major projects. Our big onshore position at Eagle Ford is in Texas. I feel we'll have services for our equipment. But I understand what you're saying around the Middle East, taking the service sector there. But I believe that the Eagle Ford Shale in Texas and the Gulf of Mexico would be amply supplied by service, and that's not on my worry list today.
What keeps you up at night?
I won't disclose that here. I think the constant focus on every number of math in the framework, regulatory concerns from the United States, that's why we're moving to some other areas in case we need to do that. Continued picking by this administration a bit on our business in the ocean. Those are the factors I think of, but the company's doing extremely well, and now that we're focused on de-levering. When you get your balance sheet de-levered, you can survive a lot of things. But we're a, we're a company that can work in different places and move very, very quickly, and that really sets us apart in this type of fear factor space. So, like everything, I want our company to run well and execute on our framework. It's the main thing I think about.
But overall, positioning our company to handle things that would be on the worry list, and I feel that we're every day progressing toward that, quite frankly.
Your assets, that you have a portfolio of assets with different durations, right?
Yes. Well, mostly long and onshore. Yeah.
Yeah, and so they have different durations, they have different oil and gas sensitivities. And so if volatility stays relatively high, does higher volatility change your priorities because it, because the durations are different? How are you thinking about that? Or you think your priorities are what they are, or you think that when higher vol comes and you get a different profile, do you then change your priorities as your portfolio of durations and sensitivities now mixes again? How does that... How does the strategy change?
Right now, our focus does not change our priorities. When I wake up in the morning and Bloomberg oil is higher, I think of faster returns to shareholders with that, not more drilling, not more change in CapEx.
Yeah, the fall could go both ways, though, right? I mean-
Yeah, it possibly could, but if we position our balance sheet, it'd be better for the low side, and if oil prices go higher, we'll be positioned to return more to shareholders. So now with our cost structure, the F&D per barrel that we focus on, the OpEx that we have, the G&A costs that we have, the delevering of the balance sheet, we'll be prepared for severe volatility, probably better ever in company history.
I want to ask about your exploration budget. What is the right number of allocation for exploration? You already have a lot of projects at low breakeven. So, what makes what decides how aggressive you are on the exploration budget?
Probably never have our exploration budget more than 10% of what we do, but just keep in mind how super economic Samurai is, even compared to Eagle Ford, and what great NAV Vietnam project will provide. These offshore projects, if they're gone into right and the F&D is right, are enormous return, better than onshore. And so we have both and can execute both and maintain both businesses. So, if we target exploration, it will make a lot of money, it will always work out for you. And then you just move inside your offshore bucket of opportunities in and out, and you have the long-term onshore business to back that up when you don't have those opportunities.
In a higher price environment, would that 10% still stay?
Yes.
And then-
Possibly 12%, but not big earth-shattering change to that.
Yeah. And,
Cause we have too many projects to do right now.
Yeah, and as you alluded to earlier, the priority is still returning cash.
Yes, ma'am.
Yeah. Okay, great. Any other questions?
What would be your plan to operate? Sorry, what would be your plan to operate in, like, Vietnam or Côte d'Ivoire? Would you do that from Houston?
Côte d'Ivoire, probably Houston. Vietnam, that type of time zone, we'll have a small team there. We have a unique way, a proprietary way, that we execute projects. We have done this before. We also have a ability to gather up our Malaysian staff that we used, or consultants that we used to build our significant shallow water in Malaysia. They're ready to be hired again, and we have a way around how to execute this, some very experienced international people in our company. We never stopped offshore, never stopped with the ability, never let it go, and also very long-standing international experience. So really, it's not a difficult thing for us to execute, these projects.
Maybe a follow-up on international opportunities. Given your expertise, and not many companies seems to be looking at that-
Oh, there's a lot of competition where we got places, yeah.
Okay. Well, maybe just talk about the competition then. Do you... Are there places that you find interesting that's compelling that you're not in, or were there other opportunities?
Well, we can't, we can't afford in this plan to do a lot of that. We're also really trying to lean toward where we can operate in Houston, and not every jurisdiction's complementary to that. So operating in Houston is very critical, not changing our footprint, not adding offices, and working in better areas, not more areas, would be our focus.
Great. Okay.
Thank you.
Please join me in thanking.