Murphy Oil reaches FID in Gulf of Mexico deepwater

Murphy Oil has reached a Final Investment Decision (FID) regarding the King's Quay facility, Khaleesi/Mormont and Samurai developments in deepwater Gulf of Mexico.

Commenting, Mfon Usoro, Wood Mackenzie analyst said: “Murphy’s sanction of the trio of projects including the King’s Quay facility, Khaleesi/Mormont and Samurai shows that the Gulf of Mexico still offers attractive investment opportunities. The Gulf of Mexico has evolved since the downturn to shorter cycle projects and a leaner development approach which has led to lower breakevens and higher returns.”

Wood Mackenzie estimates a lead time for King’s Quay of five years from discovery to first oil. According to Usoro, this is exceptionally quick and is roughly half the average lead time of a greenfield development in deepwater Gulf of Mexico. Wood Mackenzie values Khaleesi/Mormont and Samurai at over US$2 billion (NPV 10) and each project has a development-cycle breakeven below US$35/bbl (PV 10, Brent).

“The FID of the King’s Quay facility is particularly significant because it is one of only three greenfield projects in deepwater Gulf of Mexico that have achieved FID since the downturn,” added Usoro. “With a new platform set to enter the Gulf of Mexico, it offers up opportunities to commercialize more small-scale subsea tie-backs with higher returns.”