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Item 2. Management’s Discussion and Analysis

2025-08-06 compared with 2025-05-07 · 41 added, 2 removed, 39 unchanged (52% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

The oil and natural gas industry is impacted by global commodity pricing and as a result the prices for the Company’s primary products are often volatile and are affected by the levels of supply and demand for energy.

As discussed in the “ Results of Operations ” section discussing revenues, on page 33 , lower average crude oil and higher natural gas pricing during the second quarter of 2025 compared to the same period in 2024 directly impacted the Company’s product sales revenue.

As of close on August 4, 2025, forward price curves for existing forward contracts for the remainder of 2025 and 2026 are shown in the following table.

WTI ($/BBL) 65.03 62.87

NYMEX ($/MMBTU) 3.36 3.92

AECO (US$ Equivalent/MCF) 1.45 2.23

In late June 2025, Shell Canada Energy announced its first cargo of liquefied natural gas (LNG) shipped from the Kitimat facility in British Columbia.

Increases in export levels of Canadian liquefied natural gas would impact our natural gas-weighted Canadian business.

In April 2025, the U.S.

government announced a baseline tariff of 10% on products imported from all countries and an additional individualized reciprocal tariff on the countries with which the United States has the largest trade deficits.

Increased tariffs by the United States have led and may continue to lead to the imposition of retaliatory tariffs by foreign jurisdictions.

Additionally, the U.S.

government has announced and rescinded multiple tariffs on several foreign jurisdictions, which has increased uncertainty regarding the ultimate effect of the tariffs on economic conditions.

Current uncertainties about tariffs and their effects on trading relationships may affect costs for and availability of goods and services used in E&P operations or contribute to inflation in the countries in which we operate.

Although we are continuing to monitor the economic effects of such announcements, as well as opportunities to mitigate their related impacts, costs and other effects associated with the tariffs remain uncertain.

We cannot predict what impact economic factors (including, but not limited to, inflation, global conflicts, trade policies, tariffs, other trade restrictions, and possible economic recession) may have on future commodity pricing and future costs for goods and services in the E&P operations.

Lower prices or higher costs, should they occur, will result in lower profits and operating cash flows and could result in material future impairment charges.

For the third quarter of 2025, production is expected to average between 185.0 and 193.0 thousand barrels of oil equivalents per day, excluding noncontrolling interest.

The Company’s capital expenditures for 2025 are expected to be between $1,135 million and $1,285 million, excluding noncontrolling interest.

This includes net acquisition capital of $104 million for the BW Pioneer FPSO in the Gulf of America, and excludes $23.0 million for the purchase of additional working interests in Eagle Ford Shale acreage primarily operated by Murphy.

The Cello #1 (Mississippi Canyon 385) and Banjo #1 (Mississippi Canyon 385) exploration wells in the Gulf of America will be drilled in the third and fourth quarters of 2025.

The Company remains on schedule to commence a three-well exploration program in Côte d’Ivoire in the fourth quarter of 2025.

We will also begin drilling an appraisal well at our recent Hai Su Vang-1X (Golden Sea Lion), Block 15/2-17 oil discovery well in the third quarter, with results expected in the fourth quarter.

In addition, we continue field development activities in Vietnam at Lac Da Vang (Golden Camel), Block 15-1/05, with scheduled first oil anticipated in the fourth quarter of 2026.

Capital and other expenditures are routinely reviewed and planned capital expenditures may be adjusted to reflect differences between budgeted and forecast cash flow during the year.

Capital expenditures may also be affected by asset purchases or sales, which often are not anticipated at the time a budget is prepared.

The Company will primarily fund its capital program in 2025 using operating cash flow and available cash.

If oil and/or natural gas prices weaken, actual cash flow generated from operations could be reduced such that capital spending reductions are required and/or additional borrowings under available credit facilities might be required during the year to maintain funding of the Company’s ongoing development projects.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Outlook (Continued)

As of May 5, 2025, the Company has entered into forward fixed price delivery contracts to manage risk associated with certain future oil and natural gas sales prices as follows:

The Company plans to utilize any surplus cash (not planned to be used by operations, investing activities, dividends or payment to noncontrolling interests) in accordance with the Company’s capital allocation plan designed to allow for additional shareholder returns and debt reduction.

Details of the plan can be found in the “Capital Allocation” section of the Company’s Form 8-K filed on May 7, 2025.

Based on current market conditions and our planned exploration and appraisal program, the Company is currently more likely to use available adjusted Free Cash Flow for share repurchases than bond repayment.

Subsequent to the balance sheet date, on July 4, 2025, the current U.S.

Administration signed into law the OBBBA legislation, which includes a broad range of tax reform provisions affecting corporations.

The OBBBA, among other changes, permanently reinstates the "bonus" depreciation provisions that allow for the immediate expensing of 100% of the cost of certain qualified property acquired and placed in service after January 19, 2025, permanently reinstates the elective immediate expensing of domestic research and experimental expenditures paid or incurred in tax years beginning after December 31, 2024 (with a special transition rule that allows accelerated deduction of the remaining unamortized balance of capitalized domestic research and experimental expenditures), and permanently relaxes the limitation on the deductibility of business interest effective for tax years beginning after December 31, 2024.

The OBBBA also modifies certain international tax provisions effective for tax years beginning after December 31, 2025.

The Company is currently evaluating the impact of these tax law changes and will recognize the income tax effects in the consolidated financial statements beginning in the period in which the OBBBA was signed into law.

On August 8, 2024, the Company’s Board of Directors authorized a share repurchase program whereby the Company can repurchase up to $1,100 million of the Company’s common stock, of which $550 million remains available to repurchase as of June 30, 2025.

The Company continues to monitor the impact of commodity prices on its financial position and is currently in compliance with the covenants related to the senior unsecured RCF (see Note E ).

As of August 4, 2025, the Company has entered into forward fixed price delivery contracts to manage risk associated with certain future oil and natural gas sales prices as follows:

Price/MCF Remaining Period

8 unchanged sentences

United States Natural Gas Fixed price derivative swap 60 $3.74 10/1/2025 12/31/2025

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Forward-Looking Statements

26 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis