United States Exploration and Production Operations

Upstream remains the principal growth vehicle of the Murphy enterprise, and the deepwater Gulf of Mexico remains an integral component of Murphy’s upstream strategy. Murphy moved to the deepwater in 1996 and to date has three major discoveries on production (Habanero, Medusa and Front Runner) and a fourth now in development at Thunder Hawk.

Murphy’s first deepwater development, the Murphy-operated Medusa field (60% working interest) began producing in November of 2003. The field is located in Mississippi Canyon Blocks 538 and 582.

The Habanero field, located in Garden Banks Block 341 (33.75% working interest), also began producing in late 2003 as two wells in this field were tied into an existing host facility.

The Front Runner project, located in Green Canyon Blocks 338 and 339, incorporates the development of three fields, Front Runner, Front Runner South and Quatrain. Murphy has a 37.5% working interest in each of the three fields as is operator of the development which includes a Truss Spar type Floating Production System. The field was placed onstream in December 2004.

At the Murphy operated Thunder Hawk field (37.5%) located in Mississippi Canyon, Murphy and partners have sanctioned a development including a stand-alone semi-submersible floating production unit with an estimated capacity of 45,000 barrels a day with expandable capacity to 60,000 barrels a day with slight modifications. The facility will be installed in Mississippi Canyon Block 736 and will be leased based on a production handling agreement for an initial period of 5 years. The facility installation is scheduled for late 2008 in preparation for first oil in 2009.

Murphy continues to be an active explorer in deepwater Gulf of Mexico with an inventory of quality drillable prospects.