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Murphy Oil’s Reserves Processes and Policies
All estimates of reserves are made in compliance with SEC Rule 4-10 of Regulation S-X, which states that “proved oil and natural gas reserves are those quantities of oil and natural gas which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible — from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations.” Proved reserves estimates will generally be revised only as additional geologic or engineering data become available or as economic conditions change. Moreover, estimates of proved reserves may be revised as a result of future operations, effects of regulation by governmental agencies or geopolitical or economic risks. Therefore, the proved reserves included in this report are estimates only and should not be construed as being exact quantities, and if recovered, could be more or less than the estimated amounts.
Murphy has established both internal and external controls for estimating proved reserves that follow the guidelines set forth by the SEC for oil and gas reporting. Crude oil, natural gas and NGLs reserve estimates are developed or reviewed by Qualified Reserves Estimators (QREs). QREs are technical professionals embedded within the asset teams. QRE qualification generally requires a minimum of five years of practical experience in petroleum engineering or petroleum production geology, with at least three years of such experience being in the estimation and evaluation of reserves, and either a bachelors or advanced degree in petroleum engineering, geology or other discipline of engineering or physical science from a college or university of recognized stature, or the equivalent thereof from an appropriate government authority or professional organization. Larger business units of the Company also employ Regional Reserves Coordinators who coordinate and provide oversight of the reserve submissions to senior management and the Corporate Reserves group. Murphy provides annual training to all Company reserves estimators to ensure SEC requirements associated with reserves estimation and Form 10-K reporting are fulfilled.
Proved reserves are consolidated and reported through the Corporate Reserves group. Murphy’s General Manager Corporate Reserves (Reserves General Manager) leads the Corporate Reserves group that also includes Corporate Reserve engineers and support staff, all of which are independent of the Company’s oil and natural gas operational management and technical personnel. The Reserves General Manager joined Murphy in 2020 and has more than 34 years of industry experience. He has a Bachelor of Science in Mechanical Engineering and is also a licensed Professional Engineer in the State of Texas. The Reserves General Manager reports to the Executive Vice President and Chief Financial Officer and makes annual presentations to the Board about the Company’s reserves. The Reserves General Manager and the Corporate Reserve engineers review and discuss reserves estimates directly with the Company’s technical staff in order to make every effort to comply with the rules and regulations of the SEC.
The Reserves General Manager coordinates and oversees the third-party audits which are performed annually. In 2025, third party audits were conducted for proved reserves covering 95.8% of total proved reserves. All audits conducted during this period were within the established +/- 10.0% tolerance.
Ryder Scott Company (“Ryder Scott”) performed audits for certain reserve estimates of Murphy’s U.S. fields as of December 31, 2025. The Ryder Scott summary reports are filed as exhibits to this Annual Report on Form 10-K. The team lead for Ryder Scott has over 23 years of industry experience, joining Ryder Scott over 20 years ago. He is a registered Professional Engineer in the State of Texas.
McDaniel & Associates (“McDaniel”) performed audits for certain reserve estimates of our onshore Canadian fields as of December 31, 2025. The McDaniel summary report is filed as an exhibit to this Annual Report on Form 10-K. The team lead for McDaniel has over 18 years of experience in the estimation and evaluation of reserves with McDaniel. He is a registered Professional Engineer with the Association of Professional Engineers and Geoscientists of Alberta.
Netherland, Sewell & Associates, Inc. (“NSAI”) performed audits for certain reserve estimates of our Gulf of America fields as of December 31, 2025. The NSAI summary report is filed as an exhibit to this Annual Report on Form 10-K. The team lead for NSAI has over 22 years of industry experience, joining NSAI over 16 years ago.
GLJ Ltd. (“GLJ”) performed audits for certain reserve estimates of our offshore Canadian fields as of December 31, 2025. The GLJ summary report is filed as an exhibit to this Annual Report on Form 10-K. The team lead for GLJ has over 22 years of experience in the estimation and evaluation of reserves with GLJ. He is a registered Professional Engineer with the Association of Professional Engineers and Geoscientists of Alberta.
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To ensure accuracy and security of reported reserves, the proved reserves estimates are coordinated in industry-standard software with access controls for approved users. In addition, Murphy complies with internal controls concerning the various business processes related to reserves.
More information regarding Murphy’s estimated quantities of proved reserves of crude oil, natural gas and NGLs for the last three years are presented by geographic area on pages 113 through 120 of this Form 10-K report. Murphy currently has no oil and natural gas reserves from non-traditional sources. Murphy has not filed and is not required to file any estimates of its total proved oil or natural gas reserves on a recurring basis with any federal or foreign governmental regulatory authority or agency other than the SEC. Annually, Murphy reports gross reserves of properties operated in the U.S. to the U.S. Department of Energy; such reserves are derived from the same data from which estimated proved reserves of such properties are determined.
Crude oil and NGLs production and sales, and natural gas sales by geographic area with weighted average sales prices for each of the three years ended December 31, 2025 are starts on page 35 of this Form 10-K report.
Production expenses for the last three years in U.S. dollars per equivalent barrel are discussed beginning on page 38 of this Form 10-K report.
Supplemental disclosures relating to oil and natural gas producing activities are reported on pages 111 through 126 of this Form 10-K report.
Acreage and Well Count
At December 31, 2025, Murphy held leases, concessions, contracts or permits on developed and undeveloped acreage as shown by geographic area in the following table. “Gross” acres are those in which all or part of the working interest is owned by Murphy. “Net” acres are the portions of the gross acres attributable to Murphy’s interest.
Developed Undeveloped Total
Area (Thousands of acres )
Gross Net Gross Net Gross Net
United States Onshore 109 97 21 20 130 117
Offshore
55 25 501 268 556 293
Total United States 164 122 522 288 686 410
Canada Onshore 141 114 165 130 306 244
Offshore 102 11 28 1 130 12
Total Canada 243 125 193 131 436 256
Brunei 2 — — — 2 —
Brazil — — 960 811 960 811
Côte d’Ivoire — — 1,421 1,270 1,421 1,270
Vietnam — — 7,324 4,571 7,324 4,571
Totals 409 247 10,420 7,071 10,829 7,318
Certain undeveloped acreage held by the Company will expire in the next three years.
Scheduled expirations in 2026 include 4,267 thousand net acres in Vietnam, 558 thousand net acres in Côte d’Ivoire and 28 thousand net acres in U.S. Offshore. The Company plans to seek extensions for the expiring acres in Vietnam.
Acreage currently scheduled to expire in 2027 includes 12 thousand net acres in U.S. Offshore.
Scheduled expirations in 2028 include 774 thousand net acres in Brazil, 712 thousand net acres in Côte d’Ivoire, 255 thousand net acres in Vietnam, 7 thousand net acres in U.S. Offshore and 2 thousand net acres in Canada Onshore.
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As used in the three tables that follow, “gross” wells are the total wells in which all or part of the working interest is owned by Murphy, and “net” wells are the total of the Company’s fractional working interests in gross wells expressed as the equivalent number of wholly-owned wells. An “exploratory” well is drilled to find and produce crude oil or natural gas in an unproved area and includes delineation wells which target a new reservoir in a field known to be productive or to extend a known reservoir beyond the proved area. A “development” well is drilled within the proved area of an oil or natural gas reservoir to the depth of a stratigraphic horizon known to be productive.
The following table shows the number of oil and natural gas wells producing or capable of producing at December 31, 2025.
Oil Wells Natural Gas Wells
Gross Net Gross Net
United States
Onshore 1,251 1,008 30 5
Offshore
83 37 12 5
Total United States 1,334 1,045 42 10
Canada Onshore 18 13 369 352
Offshore 50 5 — —
Total Canada 68 18 369 352
Totals 1,402 1,063 411 362
Murphy’s net wells drilled and completed in the last three years are shown in the following table.
United States Canada Other Totals
Productive Dry Productive Dry Productive Dry Productive Dry
2025
Exploration — — — — 0.8 0.9 0.8 0.9
Development 33.3 — 13.0 — — — 46.3 —
2024
Exploration 0.3 0.8 — — — — 0.3 0.8
Development 23.9 — 15.3 — — — 39.2 —
2023
Exploration — 1.3 — — — — — 1.3
Development 34.1 — 15.1 — — — 49.2 —
Murphy’s drilling wells in progress at December 31, 2025 are shown in the following table. The year-end well count includes wells awaiting various completion operations.
Exploration Development Total
Gross Net Gross Net Gross Net
United States
Onshore — — 25.0 18.3 25.0 18.3
Offshore
2.0 1.0 1.0 0.1 3.0 1.1
Canada Onshore — — 4.0 2.8 4.0 2.8
Offshore — — 1.0 0.1 1.0 0.1
Other
1.0 0.4 1.0 0.4 2.0 0.8
Totals 3.0 1.4 32.0 21.7 35.0 23.1
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Sustainability
Environment and Climate Change
We understand that our industry, and the use of our products, create emissions – which raise climate change concerns. At the same time, access to affordable and reliable energy is essential to improving the world’s quality of life and the functioning of the global economy. We believe that as the energy economy transitions, oil and natural gas will continue to play a vital role in the long-term energy mix.
We are committed to reducing our Scope 1 and 2 GHG emissions and are focused on understanding and mitigating our climate change risks. To guide our climate change strategy, Murphy has adopted a climate change position, and we are setting meaningful emissions reduction goals for our operated assets. The Company has established a Scope 1 and 2 GHG emissions intensity reduction target of 15% to 20% by 2030 from our 2019 level, excluding our discontinued and divested Malaysia operations. In addition, we have endorsed the goal of eliminating routine flaring by 2030, under the current World Bank definition of routine flaring.
Murphy recognizes that emissions are only one element of our total environmental footprint. Protecting natural resources is also an important factor in our overall sustainability efforts. See our 2025 Sustainability Report, located on the Company’s website, for details, which is not incorporated by reference hereto.
Further, we are subject to various international, foreign, national, state, provincial and local environmental, health and safety laws and regulations, including related to the generation, storage, handling, use, disposal and remediation of petroleum products, wastewater and hazardous materials; the emission and discharge of such materials to the environment, including GHG emissions; wildlife, habitat and water protection; the placement, operation and decommissioning of production equipment; and the health and safety of our employees, contractors and communities where our operations are located.
U.S. Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). CERCLA and similar state statutes impose joint and several liabilities, without regard to fault or legality of the conduct, on current and past owners or operators of a site where a release occurred and anyone who disposed or arranged for the disposal of a hazardous substance released at the site. Although CERCLA generally exempts “petroleum” from regulation, in the course of our operations, we may and could generate wastes that may fall within CERCLA’s definition of hazardous substances and may have disposed of these wastes at disposal sites owned and operated by others.
Water discharges. The U.S. Clean Water Act and analogous state laws impose restrictions and strict controls with respect to the discharge of pollutants, including spills and leaks of produced water and other oil and natural gas wastes, into regulated waters. The U.S. Oil Pollution Act (OPA) imposes certain duties and liabilities on the owner or operator of a facility, vessel or pipeline that is a source of or that poses the substantial threat of an oil discharge, or the lessee or permittee of the area in which a discharging offshore facility is located. OPA assigns joint and several liability, without regard to fault, to each liable party for oil removal costs and a variety of public and private damages. OPA also requires owners and operators of offshore oil production facilities to establish and maintain evidence of financial responsibility to cover costs that could be incurred in responding to an oil spill.
U.S. Bureau of Ocean Energy Management (BOEM) and the U.S. Bureau of Safety and Environmental Enforcement (BSEE) requirements. BOEM and BSEE have regulations applicable to lessees in federal waters that impose various safety, permitting and certification requirements applicable to exploration, development and production activities in the Gulf of America and also require lessees to have substantial U.S. assets and net worth or post bonds or other acceptable financial assurance that the regulatory obligations will be met. These include, in the Gulf of America, well design, well control, casing, cementing, real-time monitoring and subsea containment, among other items. Under applicable requirements, BOEM evaluates the financial strength and reliability of lessees and operators active on the U.S. Outer Continental Shelf, including the Gulf of America. If the BOEM determines that a company does not have the financial ability to meet its decommissioning and other obligations, that company will be required to post additional financial security as assurance.
Air emissions and climate change. The U.S. Clean Air Act and comparable state laws and regulations govern emissions of various air pollutants through the issuance of permits and other authorization requirements. Since 2009, the U.S. Environmental Protection Agency (EPA) has been monitoring and regulating GHG emissions,
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including carbon dioxide and methane, from certain sources in the oil and natural gas sector due to their association with climate change. In addition, international climate efforts have resulted in commitments from many countries to reduce GHG emissions and have called for parties to eliminate certain fossil fuel subsidies and pursue further action on non-carbon dioxide GHGs.
Murphy is currently required to report GHG emissions from its U.S. operations in the Gulf of America and onshore in South Texas and from its onshore Canadian business in British Columbia and Alberta. In Canada, Murphy is subject to GHG regulations and resultant carbon pricing programs specific to the jurisdiction of operation. Any limitations or further regulation of GHGs, such as a cap and trade system, technology mandate, emissions tax, or expanded reporting requirements, could cause the Company to restrict operations, curtail demand for hydrocarbons generally, and/or cause costs to increase. Examples of cost increases include costs to operate and maintain facilities, install pollution emission controls and administer and manage emissions trading programs.
On March 8, 2024, the EPA published its final rules imposing new and stricter requirements for methane monitoring, reporting, and emissions control at certain oil and natural gas facilities. Further, the EPA amended its GHG Reporting Rule on May 14, 2024 to modify certain calculation methodologies, changes to the general reporting structure, and the EPA’s treatment of advanced measurement technologies. Ultimately, both new rules will impact how much reporters owe under the new methane waste emissions charge (WEC) established under the Inflation Reduction Act (IRA) in 2022 and finalized in November 2024.
In January 2025, however, President Trump signed a series of executive orders that call upon the EPA to reassess the endangerment finding for GHGs under the Clean Air Act, direct federal executive departments and agencies to freeze rules that have not taken effect, to identify and exercise emergency authorities to facilitate conventional energy production, transportation, and refining, and mandate a review of existing regulations that may burden domestic energy development.
As part of this shift, the Administration moved to halt the implementation of the WEC citing concerns about statutory authority, economic impacts on domestic energy production, and the need for further evaluation of methane measurement methodologies. This action resulted in the EPA withdrawal of WEC's supporting guidance, paused enforcement preparations, and announced its intent to reconsider the rule. In May 2025, the agency issued a final rule formally removing the WEC from the Code of Federal Regulations. The One Big Beautiful Bill Act (OBBBA) passed in July 2025 postponed the implementation of the WEC to 2034.
In September 2025, the EPA proposed a rollback of the Greenhouse Gas Reporting Program (GHGRP). The proposal would eliminate reporting requirements for most source categories after reporting year 2024 and postpone Subpart W reporting for petroleum and natural gas systems until 2034. If finalized, this would significantly reduce federal GHG data collection and delay methane reporting for nearly a decade. Together, the repeal of the WEC regulations, the postponement of the WEC to 2034 and the proposed rollback of the GHGRP create substantial uncertainty for the future of overall federal methane regulation. The future of both will depend on the EPA’s rulemaking process, potential litigation, and possible congressional involvement.
Endangered and threatened species. The U.S. Endangered Species Act was established to protect endangered and threatened species. If a species is listed as threatened or endangered, restrictions may be imposed on activities adversely affecting that species’ habitat. Similar protections are offered to migratory birds, under the Migratory Bird Treaty Act, and marine mammals under the Marine Mammal Protection Act.
As noted above, Murphy is subject to various laws and regulatory regimes governing similar matters in other jurisdictions in which it operates. More specifically, Murphy’s operations in Canada are subject to and conducted under Canadian laws and regulations that address many of the same environmental, health and safety issues as those in the U.S., including, without limitation, pollution and contamination, air quality and emissions, water discharges and other health and safety concerns.
Further, on February 12, 2026, the EPA announced the repeal of its 2009 “Endangerment Finding” under the Clean Air Act, which found that GHGs endanger the public health and welfare of current and future generations and emissions of GHGs from motor vehicles contribute to GHG pollution. The repeal calls into question EPA’s authority to regulate GHGs, as well as EPA’s prior scientific assessment of climate change risks. Litigation regarding the repeal is anticipated and it is unclear how the repeal will impact EPA’s regulation of GHG emissions going forward.
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Health and Safety
Murphy’s commitment to safety is strong, and so are our actions to protect our workforce and communities. Our employees are our most valuable asset. Murphy strives to achieve incident-free operations through continuous improvement processes managed by the Company’s Health, Safety, Environment (HSE) Management System, which engages all personnel, contractors and partners associated with Murphy operations and facilities and provides a consistent method for integrating HSE concepts into our procedures and programs. We work hard to build a culture of safety across our organization, with regular training, exercise drills and key targeted safety initiatives.
Safety . The Company is subject to the requirements of the U.S. Occupational Safety and Health Act (OSHA) and comparable foreign and state laws that regulate the protection of the health and safety of workers. In addition, the OSHA hazard communication standard requires that certain information regarding hazardous materials used or produced in Murphy’s operations be maintained and provided to employees, state and local government authorities and citizens. In Canada, the Company is subject to Federal Occupational Health and Safety Legislation, the provincially-administered Occupational Health and Safety Act (Alberta), the Workers Compensation Act (British Columbia) and the Workplace Hazardous Materials Information System.
Environmental, Social and Governance (ESG) Disclosure
Our annual sustainability report is informed by internationally recognized ESG reporting frameworks and standards, including Sustainability Accounting Standards Board, Task Force on Climate-related Financial Disclosures (TCFD), Global Reporting Initiative, Ipieca and American Petroleum Institute.
As this is an area of continual improvement across our industry, we strive to update our disclosures in line with operating developments and with emerging best practice ESG reporting standards. In 2025, we published our seventh annual sustainability report, located on the Company’s website, which is not incorporated by reference hereto.
Human Capital Management
At Murphy, we believe in providing energy that empowers people, and that is what our 813 employees do every day. As of December 31, 2025, we had 542 office-based employees and 271 field employees, all of whom are guided by our mission, vision, values and behaviors. Together with the Executive Leadership Team, the Senior Vice President, Human Resources, Administration and Communications, who reports directly to our President and Chief Executive Officer, is responsible for developing and executing our human capital management strategy. This includes the attraction, recruitment, development and engagement of talent to deliver on our strategy, the design of employee compensation, health and welfare benefits, and talent programs. We focus on the following factors in order to implement and develop our human capital strategy:
• Employee Compensation Programs
• Employee Performance and Feedback
• Talent Development and Training
• Health and Welfare Benefits
• Employee Engagement
The Board receives related updates from the Senior Vice President, Human Resources, Administration and Communications on a regular basis including the review of compensation, benefits, succession and talent development.
Employee Compensation Programs
Our purpose, to provide energy that empowers people, includes tying a portion of our employees’ pay to performance in a variety of ways, including incentive compensation and performance-based bonus programs, while maintaining the best interest of stockholders. We benchmark for market practices and regularly review our compensation and hiring acceptance rates against the market to ensure competitiveness to attract and retain the best talent. We believe our current practices align our employees’ compensation with the interests of our stockholders and support our focus on cash flow generation, capital return and environmental stewardship. To
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enhance employee understanding of their total remuneration package extended by Murphy, we introduced Total Reward Statements for employees in the U.S., Canada and Vietnam. For further details on the Company’s compensation framework, please see the Compensation Discussion and Analysis section of the forthcoming Proxy Statement relating to the Annual Meeting of Stockholders on May 13, 2026.
Employee Performance and Feedback
We are committed to efforts to enhance our employees’ professional growth and development through feedback that utilizes our internal performance management system (Murphy Performance Management - MPM). The purpose of the MPM process is to show our commitment to the development of all employees and to better align rewards with Company and individual performance. The goals of the MPM process are the following:
• Drive performance that aligns with the Company’s mission, vision, values and behaviors;
• Develop employee capabilities through effective feedback and coaching; and
• Maintain a process that is consistent throughout the organization to measure employee performance that is tied to the Company’s and stockholders’ interests.
All employees’ performance is evaluated at least annually through self-assessments that are reviewed in discussions with supervisors. Employees’ performance is evaluated on various key performance indicators set annually, including contributions toward executing our Company’s goals and business strategy and behaviors that support our mission, vision, values.
Talent Development and Training
Employees are able to participate in continuous training and development, with the goal of equipping them for success and providing increased opportunities for growth. Through our digital platform, My Murphy Learning, employees have access to LinkedIn Learning with more than 10,000 courses, Continuing Education Unit credit and certification opportunities, and access to expert instructors. We also administer mandatory compliance training for our employees through My Murphy Learning with 100% utilization. Finally, we provide a tuition reimbursement program for those who choose to acquire additional knowledge to increase their effectiveness in their present position or to prepare for career advancement.
To enhance employees’ commitment to and understanding of the Company’s Scorecard, we introduced a training course entitled, Understanding Your Annual Incentive Plan , which covers all metrics in our scorecard. This training opportunity, in particular, enhanced the business acumen of our employee base, as well as brought renewed focus to how we measure success.
We strive to empower our leadership with programs that offer career advancement for experienced and emerging leaders. In 2025, approximately 135 leaders participated in programs, from top-rated institutions, addressing focus areas such as strategic agility, decision making, building high-performing teams and enhancing trust. Furthermore, we implemented a Business Functions Career Map to enhance the development of about 100 business professionals in our Controllers, Global Planning and Performance, Tax, Treasury and related functions.
We encourage employee engagement and solicit feedback through internal surveys, focus groups and town hall meetings to gain insight into workplace experiences. Employees are provided opportunities to raise suggestions and collaborate with leadership to improve programs and increase their alignment with Murphy’s mission, vision, values and behaviors.
To monitor the effectiveness of our human capital investment and development programs, we track voluntary turnover. This data is shared on a regular basis with our Executive Leadership Team, who use it, in addition to other pertinent data, to develop our human capital strategy. In 2025, our voluntary employee turnover rate, including retirements, was 4%.
Health and Welfare Benefits
We believe that doing our part to aid in maintaining the health and welfare of our employees is a critical element of Murphy’s success. As such, we provide our employees and their families with a comprehensive set of subsidized benefits that are competitive and aligned with Murphy’s mission, vision, values and behaviors. We also believe that the well-being of our employees is enhanced when they can give back to their local
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communities or charities through programs like the Company Matching Gift Program, the “Impact – Murphy Makes a Difference” Program, or on their own with a Company match for donations.
Finally, we offer an Employee Assistance Program that provides confidential assistance to employees and their immediate family members for mental and physical well-being, as well as legal and financial issues. We also maintain an Ethics Hotline that is available to all our employees to report, anonymously if desired, any matter of concern. Communications to the hotline, which is facilitated by an independent third party, are routed to appropriate functions, Human Resources, Law or Compliance, for investigation and resolution.
Employee Engagement
At Murphy, we strive for excellence in our people and our work. We believe that having employees who reflect a broad range of backgrounds, experiences and perspectives contributes to a more productive, engaged workforce and a more enriching environment for everyone. This belief underlies Murphy’s commitment to fostering an inclusive workplace where the most talented want to work and where our employees understand our culture of belonging. In furtherance of that commitment, Murphy, through its policies and its actions, requires strict compliance with all anti-harassment and anti-discrimination laws and does not tolerate harassment or discrimination of any kind based on any protected characteristic.
Finally, we support interest-based groups such as sports and charity volunteering in our communities.
Website Access to SEC Reports
Murphy Oil’s internet address is http://www.murphyoilcorp.com. The information contained on the Company’s Website is not part of, or incorporated into, this report on Form 10-K.
The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available on Murphy’s Website, free of charge, as soon as reasonably practicable after such reports are filed with, or furnished to, the SEC. You may also access these reports at the SEC’s Website at http://www.sec.gov.
Item 1A. RISK FACTORS
The Company faces risks in the normal course of business and through global, regional and local events that could have an adverse impact on its reputation, operations, and financial performance. The Board exercises oversight of the Company’s enterprise risk management program, which includes strategic, operational, cybersecurity and financial matters, as well as compliance and legal risks. The Board receives updates annually on the risk management processes.
The following are some important factors that could cause the Company’s actual results to differ materially from those projected in any forward-looking statements. If any of the events or circumstances described in any of the following risk factors occurs, our business, results of operations and/or financial condition could be materially and adversely affected, and our actual results may differ materially from those contemplated in any forward-looking statements we make in any public disclosures.
Price Risk Factors
Volatility in the global prices of oil and natural gas can significantly affect the Company’s operating results, cash flows and financial condition.
Among the most significant variable factors impacting the Company’s results of operations are the sales prices for the hydrocarbons that it produces. Many of the factors influencing prices of oil and natural gas are beyond our control. These factors include:
• worldwide and domestic supplies of, and demand for oil and natural gas;
• the ability of the members of the Organization of the Petroleum Exporting Countries (OPEC) and certain non-OPEC members, for example, Russia, to agree to maintain or adjust production levels;
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• the production levels of non-OPEC countries, including, among others, production levels in the North American shale plays;
• political instability or armed conflict in oil and natural gas producing regions, such as the Russia-Ukraine and Israeli-Palestinian conflicts and political instability in Venezuela and Iran;
• the level of drilling, completion and production activities by other E&P companies, and variability therein, in response to market conditions;
• changes in weather patterns and climate, including those that may result from climate change;
• natural disasters such as hurricanes and tornadoes, including those that may result from climate change;
• the price, availability and the demand for and of alternative and competing forms of energy, such as nuclear, hydroelectric, wind or solar;
• the effect of conservation efforts and focus on climate-change;
• technological advances, such as artificial intelligence (AI) and data center development, affecting energy consumption and energy supply;
• increased activism against, or change in public sentiment for, oil and natural gas exploration, development, and production activities and considerations including climate change and the transition to a lower carbon economy;
• the occurrence or threat of epidemics or pandemics, such as the outbreak of COVID-19, or any government response to such occurrence or threat which may lower the demand for hydrocarbon fuels;
• domestic and foreign governmental regulations, taxes and other actions, including tariffs, economic sanctions and further legislation requiring, subsidizing or providing tax benefits for the use or generation of alternative energy sources and fuels; and
• general economic conditions worldwide, including inflationary conditions and related governmental policies and interventions.
West Texas Intermediate (WTI) crude oil prices averaged $64.81 per barrel in 2025, compared to $75.72 in 2024 and $77.62 in 2023. Certain U.S. and Canadian crude oils are priced from oil indices other than WTI, and these indices are influenced by different supply and demand forces than those that affect WTI prices. The most common crude oil indices used to price the Company’s crude include Mars, WTI Houston Magellan East Houston, Heavy Louisiana Sweet and Brent.
The average New York Mercantile Exchange (NYMEX) natural gas sales price was $3.54 per million British Thermal Units (MMBTU) in 2025, compared to $2.24 in 2024 and $2.53 in 2023. The Company also has exposure to the Canadian benchmark natural gas price, Alberta Energy Company (AECO), which averaged C$1.68 per thousand cubic feet (MCF) in 2025, compared to C$1.46 in 2024 and C$2.64 in 2023. The Company has entered into certain forward fixed price contracts as detailed in the “ Outlook ” section beginning on page 52 and spot contracts providing exposure to other market prices at specific sales points such as Malin (Oregon, U.S.) and Dawn (Ontario, Canada).
Lower prices, should they occur, will materially and adversely affect our results of operations, cash flows and financial condition. Lower oil and natural gas prices could result from, among other things, increased exports from producers in Venezuela, Russia or the Middle East following resolution of conflicts or political instability in such regions. Lower oil and natural gas prices could reduce the amount of oil and natural gas that the Company can economically produce, resulting in a reduction in the proved oil and natural gas reserves we could recognize, which could impact the recoverability and carrying value of our assets. The Company cannot predict how changes in the sales prices of oil and natural gas will affect the results of operations in future periods.
Lower oil and natural gas prices adversely affect the Company in several ways:
• Lower sales value for the Company’s oil and natural gas production reduces cash flows and net income.
• Lower cash flows may cause the Company to reduce its capital expenditure program, thereby potentially restricting its ability to grow production and add proved reserves.
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• Lower oil and natural gas prices could lead to impairment charges in future periods, therefore reducing net income.
• Reductions in oil and natural gas prices could lead to reductions in the Company’s proved reserves in future years. Low prices could make a portion of the Company’s proved reserves uneconomic, which in turn could lead to the removal of certain of the Company’s year-end reported proved oil reserves in future periods. These reserve reductions could be significant.
• Lower oil and natural gas prices could lead to an inability to access, renew, or replace credit facilities, and could also impair access to other sources of funding as these mature, potentially negatively impacting our liquidity.
• Lower prices for oil and natural gas could cause the Company to lower its dividend because of lower cash flows.
See Note K for additional information on the derivative instruments used to manage certain risks related to commodity prices.
Murphy’s commodity price risk management may limit the Company’s ability to fully benefit from potential future price increases for oil and natural gas.
The Company, from time to time, enters into various contracts to protect its cash flows against lower oil and natural gas prices. To the extent that the Company enters into these contracts and in the event that prices for oil and natural gas increase in future periods, the Company may not fully benefit from the price improvement on all production. See Note K for additional information on the derivative instruments used to manage certain risks related to commodity prices.
Operational Risk Factors
Murphy operates in highly competitive environments which could adversely affect it in many ways, including its profitability, cash flows and its ability to grow.
Murphy operates in the oil and natural gas industry and experiences competition from other oil and natural gas companies, which include major integrated oil companies, independent producers of oil and natural gas, and state-owned foreign oil companies. Many of the major integrated and state-owned oil companies and some of the independent producers that compete with the Company have substantially greater resources than Murphy.
In addition, the oil industry as a whole competes with other industries in supplying energy requirements around the world. Within the industry, Murphy competes for, among other things, valuable acreage positions, exploration licenses, drilling equipment and talent.
Exploration drilling results can significantly affect the Company’s operating results.
The Company drills exploratory wells which subject its E&P operating results to exposure to dry hole expense, which has in the past, and may in the future, adversely affect our results of operations. The Company plans to continue assessing exploration activities as part of its overall strategy. In 2025, the Company participated in five exploration wells. The Lac Da Hong-1X (Pink Camel), Block 15-1/05 and the Hai Su Vang-2X (Golden Sea Lion), Block 15-2/17 exploration wells, in Vietnam, resulted in commercial discoveries, while the Civette-1X (Block CI-502) exploration well, in Côte d’Ivoire, did not encounter commercial hydrocarbons. Subsequent to year end, the Banjo #1 (Mississippi Canyon 385) and Cello #1 (Mississippi Canyon 385) exploration wells, in the Gulf of America, resulted in commercial discoveries. The Company’s 2026 exploration and appraisal program capital expenditures guidance of $320 million includes drilling three wells in Vietnam and two wells in Côte d’Ivoire. One of these exploration wells in Côte d’Ivoire, Caracal-1X (Block CI-102), was completed in February 2026, and will be plugged and abandoned as a dry hole after encountering non-commercial hydrocarbon shows.
If Murphy cannot replace its oil and natural gas reserves, it may not be able to sustain or grow its business.
Murphy continually depletes its oil and natural gas reserves as production occurs. To sustain and grow its business, the Company must successfully replace the oil and natural gas it produces with additional reserves. Therefore, it must create and maintain a portfolio of good prospects for future reserves additions and production. The Company must find, acquire or develop, and produce reserves at a competitive cost to be successful in the long-term. Murphy’s ability to operate profitably in the E&P business, therefore, is dependent
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on its ability to find (and/or acquire), develop and produce oil and natural gas reserves at costs that are less than the realized sales price for these products.
Murphy’s proved reserves are based on the professional judgment of its engineers and may be subject to revision.
Proved reserves of crude oil, natural gas and NGLs included in this report on pages 111 through 120 have been prepared according to the SEC guidelines by qualified company personnel or qualified independent engineers based on an unweighted average of oil and natural gas prices in effect at the beginning of each month of the respective year as well as other conditions and information available at the time the estimates were prepared. Estimation of reserves is a subjective process that involves professional judgment by engineers about volumes to be recovered in future periods from underground oil and natural gas reservoirs. Estimates of economically recoverable oil and natural gas reserves and future net cash flows depend upon a number of variable factors and assumptions, and consequently, different engineers could arrive at different estimates of reserves and future net cash flows based on the same available data and using industry accepted engineering practices and scientific methods. In 2025, 95.8% of the proved reserves were audited by third-party auditors.
Murphy’s actual future oil and natural gas production may vary substantially from its reported quantity of proved reserves due to a number of factors, including:
• Oil and natural gas prices which are materially different from prices used to compute proved reserves;
• Operating and/or capital costs which are materially different from those assumed to compute proved reserves;
• Future reservoir performance which is materially different from models used to compute proved reserves; and
• Governmental regulations or actions which materially impact operations of a field.
The Company’s proved undeveloped reserves represent significant portions of total proved reserves. As of December 31, 2025, and including noncontrolling interests, approximately 36% of the Company’s crude oil proved reserves, 41% of NGL proved reserves and 47% of natural gas proved reserves are undeveloped. The ability of the Company to reclassify these undeveloped proved reserves to the proved developed classification is generally dependent on the successful completion of one or more operations, which might include further development drilling, construction of facilities or pipelines and well workovers.
The discounted future net revenues from our proved reserves as reported on pages 124 and 125 should not be considered as the market value of the reserves attributable to our properties. As required by U.S. generally accepted accounting principles (GAAP), the estimated discounted future net revenues from our proved reserves are based on an unweighted average of the oil and natural gas prices in effect at the beginning of each month during the year. Actual future prices and costs may be materially higher or lower than those used in the reserves computations.
In addition, the 10% discount factor that is required to be used to calculate discounted future net revenues for reporting purposes under GAAP is not necessarily the most appropriate discount factor based on our cost of capital, the risks associated with our business and the risk associated with the industry in general.
Murphy is reliant on certain third party infrastructure to develop projects and operations.
The Company relies on the availability and capacity of infrastructure, such as transportation and processing facilities, and equipment that are often owned and operated by others. These third-party systems, facilities, and equipment may not always be available to the Company and, if available, may not be available at a price that is acceptable to the Company. The unavailability or high cost of such equipment or infrastructure could adversely affect our ability to establish and execute exploration and development plans within budget and on a timely basis, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Our inability to access appropriate equipment and infrastructure in a timely manner and on acceptable terms may hinder our access to oil and natural gas markets or delay our oil and natural gas production.
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Murphy is sometimes reliant on joint venture partners for operating assets, and/or funding development projects and operations.
Certain of the Company’s major oil and natural gas producing properties are operated by others. Therefore, Murphy does not fully control all activities at certain of its revenue generating properties. During 2025, approximately 19% of the Company’s total production was at fields operated by others, while at December 31, 2025, approximately 12% of the Company’s total proved reserves were at fields operated by others.
Some of Murphy’s development projects entail significant capital expenditures and have long development cycle times. As a result, the Company’s partners must be able to fund their share of investment costs through the development cycle, through cash flow from operations, external credit facilities, or other sources, including financing arrangements. Murphy’s partners are also susceptible to certain of the risk factors noted herein, including, but not limited to, commodity prices, fiscal regime changes, government project approval delays, regulatory changes, credit downgrades and regional conflict. If one or more of these factors negatively impacts a project operator’s or partners’ cash flows or ability to obtain adequate financing, or if an operator of our projects fails to adequately perform operations or fulfill its obligations under the applicable agreements, it could result in a delay or cancellation of a project, resulting in a reduction of the Company’s reserves and production, which negatively impacts the timing and receipt of planned cash flows and expected profitability.
Murphy’s business is subject to operational hazards, severe weather events, physical security risks and risks normally associated with the E&P of oil and natural gas, which could become more significant as a result of climate change.
The Company operates in a variety of locales, including urban, remote, and sometimes inhospitable, areas around the world. The occurrence of an event, including but not limited to acts of nature such as hurricanes, floods, earthquakes (and other forms of severe weather), mechanical equipment failures, industrial accidents, fires, explosions, acts of war, civil unrest, piracy and acts of terrorism could result in the loss of hydrocarbons and associated revenues, environmental pollution or contamination, personal injury (including death), and property damages for which the Company could be deemed to be liable and which could subject the Company to substantial fines and/or claims for punitive damages. This risk extends to actions and operational hazards of other operators in the industry, which may also impact the Company.
The location of many of Murphy’s key assets causes the Company to be vulnerable to severe weather, including hurricanes, tropical storms and extreme temperatures. Many of the Company’s offshore fields are in the Gulf of America, where hurricanes and tropical storms can lead to shutdowns and damages. The U.S. hurricane season runs from June through November. Moreover, scientists have predicted that increasing concentrations of GHG in the earth’s atmosphere may produce climate changes that increase significant weather events, such as increased frequency and severity of storms, droughts, floods and other climatic events. If such effects were to occur, our operations could be adversely affected. Although the Company maintains insurance for such risks, due to policy deductibles and possible coverage limits, weather-related risks to our operations are not fully insured. In addition, the physical effects of climate change may generally result in reduced availability of relevant insurance coverage on the market. For additional details on insurance, see “Risk Factors - General Risk Factors – Murphy’s insurance may not be adequate to offset costs associated with certain events, and there can be no assurance that insurance coverage will continue to be available in the future on terms that justify its purchase.”
In addition, certain customer and supplier assets, such as storage terminals, processing facilities, refineries and pipelines, are located in areas that may be prone to severe weather events, including hurricanes, winter storms, floods and major tropical storms, all of which may be exacerbated by climate change. Severe weather events that significantly affect facilities belonging to such customers or suppliers may reduce demand for our products and interrupt our ability to bring products to market and may therefore materially and adversely affect our results of operations, cash flows and financial condition, even if our own facilities escape significant damage.
Hydraulic fracturing operations subject the Company to operational risks inherent in the drilling and production of oil and natural gas.
The Company’s onshore North America oil and natural gas production is dependent on a technique known as hydraulic fracturing whereby water, sand and certain chemicals are injected into deep oil and natural gas bearing reservoirs in North America. This process occurs thousands of feet below the surface and creates fractures in the rock formation within the reservoir which enhances migration of oil and natural gas to the wellbore.
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