Murphy has been active in Malaysia since 1999, and employs over 400 staff in-country. Murphy has majority interest and operates six separate production sharing contracts (PSCs), covering approximately 6.7 million gross acres. Murphy has an 85% interest in discoveries made in two shallow-water blocks, SK 309 and SK 311, offshore Sarawak. Oil production in 2011 at fields in Blocks SK 309/311 should exceed 5,000 barrels of oil per day (bopd). The Company has a gas sales contract for gross volumes up to 250 million cubic feet per day (mmcfd) from the Sarawak area with PETRONAS, the Malaysian state-owned oil company, and has prepared a multi-phase development plan for several natural gas discoveries on these blocks. Natural gas pricing is indexed to oil and LNG (Liquified Natural Gas) in the region.

The Company made a major discovery at the Kikeh (80%) field in deepwater Block K, offshore Sabah, in 2002 and brought first production on line in 2007, less than five years from initial discovery. Another important discovery was made at Kakap in 2004 and is being developed jointly with the Gumusut field, owned by others, with first production anticipated in 2013. Several additional discoveries have been made in Block K at other areas, including the Siakap North oil discovery in 2009. In February 2007, the Company signed a Kikeh field natural gas sales contract with PETRONAS that calls for gross sales volumes of up to 120 mmcfd through June 2012. Our goal is to maintain a flat production profile, net to Murphy, of 65 – 70,000 boepd from Block K through 2015.

The Company also holds a 60% interest in a PSC covering Block P and an 80% interest in deepwater Block H offshore Sabah. In early 2007, the Company announced a significant natural gas discovery at the Rotan well in Block H. In early 2008, the Company followed up Rotan with a discovery at Biris. In March 2008, the Company renewed the contract for Block H at a 60% interest while retaining 80% interest in the Rotan and Biris discoveries. In 2010, another natural gas discovery was made in Block H at Dolfin. Total gross acreage held at year-end 2010 by the Company in Block H was 1.99 million acres. In partnership with PETRONAS, Murphy is actively pursuing a development plan for these Block H gas discoveries, and is optimistic that a Floating LNG development could produce gas by 2014.

Murphy has a 75% interest in gas holding agreements for Kenarong and Pertang discoveries made in Block PM 311, located offshore Peninsular Malaysia. Development options are being studied for these discoveries.

Murphy continues to explore and appraise in Malaysia, is shooting additional 3D seismic in 2011, and plans to drill up to 3 exploration wells in 2012.