Murphy Sur Abandons Offshore Exploration in Mexico

Editor's note: The article has been updated to correct imprecisions regarding Murphy Oil's drilling activities in Mexico in 2023.

Murphy Oil has fully relinquished an offshore exploration contract in Tabasco, Mexico, after the unsuccessful drilling of the Tulum-1 well. CNH's governing body initiated the early termination process upon Murphy Sur's notification of total and irrevocable renunciation to the CNH-R01-L04-A5.CS/2016 contract on Jan. 26, 2024.

The contract, operating under a licensing modality, covered an exploration area located approximately 120km offshore from the coast of Tabasco, spanning approximately 2,573km2. The effective date of relinquishment is set for April 26, 2024. Murphy Oil Corp. cited the non-discovery of commercial hydrocarbons during the drilling of the Tulum-1 exploration well, leading to its plugging and abandonment. Despite evaluating results, the company determined that further investment in the block was not viable, prompting the decision to return it.

CNH's 2Q23 drilling notification report revealed that private oil companies operating in deep waters failed to achieve expected results. This, coupled with the energy policy of President Andrés Manuel López Obrador, has deterred some investors from replicating successes seen in the US Gulf of Mexico.

This year, Murphy has earmarked capital expenditures (CAPEX) ranging from US$920 million to US$1.02 billion for its global operations. Approximately US$300 million will be allocated to Gulf of Mexico development drilling and field development endeavors, encompassing both operated and non-operated subsea tiebacks, along with progressing the non-operated St. Malo waterflood project to start operations later in 2024. US$120 million is budgeted for exploration in 2024, which includes plans for two exploration wells in Vietnam and an additional two in the Gulf of Mexico.

The company expects 1Q24 downtime equivalent to 6MMboe/d linked to offline wells which are anticipated to resume production by mid-year. An additional 5MMboe/d are tied to planned facility and downstream maintenance, while 2MMboe/d is due to downtime required to repair damaged subsea equipment in the Mormont Field.