On issues of global warming and climate change, Murphy shares the concerns of our shareholders, employees and community. As a company, we recognize that our planet is experiencing a period of global warming. Nine of the last 10 years have been the warmest since modern records began in 1861. The year 2005 was the warmest year on record, according to NASA’s Goddard Institute, and while the data is incomplete, the year 2006 appears to have sustained this trend.

While there is no disputing this warming trend, it is important to consider the facts. The complexity of our planet’s climate system makes it difficult to understand past and future consequences of greenhouse gas increases. Certain limits in climate knowledge are well known—for example describing behavior of clouds, hydrology, sea ice and ocean circulation—and continued research is necessary. In addition, climate observations display significant natural variability that cannot be explained with existing models and knowledge. In recent and ancient geological past, for example, climate has been both warmer and cooler than today for reasons that are not yet understood. The need to advance our knowledge notwithstanding, it is incumbent upon all of us to do what is possible to mitigate the potential impact of greenhouse gases (GHG) on our environment.

With this in mind, Murphy has initiated a series of actions designed to produce a measured and verifiable reduction of greenhouse gas emissions on a per-barrel basis. We began by conducting and establishing a verifiable, third party estimate (Trinity Consulting - Sangea methodology) of our current, or baseline greenhouse gas emissions. With a baseline established, Murphy is now in the process of evaluating a number of cost-effective initiatives designed to reduce our greenhouse gas emissions. As these initiatives are implemented, we will monitor our progress through annual emission surveys, once again using verifiable third party estimates.

While our program is clearly nascent, we believe with the advent of new technologies and programs such as carbon sequestration, various offsets and trading mechanisms, and reduced flaring, it may be possible for Murphy to reach its ultimate goal of reducing greenhouse gas emissions on an absolute basi despite growth in both our upstream and downstream operations. This will benefit not just our shareholders, but our community and world at large.