Independent Murphy Oil Corp. has increased its capital spending program 10% over last year’s budget, with plans to improve its upstream operations in the deepwater Gulf of Mexico (GOM) and overseas.

The El Dorado, AK-based company plans to spend $952 million this year, with $248 million for exploration of GOM projects, gas exploration in Western Canada and drilling offshore Malaysia. Development funds total $486 million, a 27% increase over 2002 levels, which is earmarked for deepwater GOM at Front Runner, Medusa and Habanero, as well as overseas. GOM’s Medusa is scheduled to come onstream by mid-year, while Habanero will begin producing in the third quarter. Front Runner is scheduled for the first half of 2004.

Concurrent with 2003 capital spending plans, Murphy has implemented a hedging program that covers approximately 30% of 2003 worldwide production of oil and natural gas. Murphy has hedged 22,000 bbl/d of light crude; 10,000 bbl/d of heavy crude. Murphy has also hedged 24 MMcf/d of U.S. and Canadian natural gas production through swaps and 26 MMcf/d through costless collars. In all cases, Murphy pays the floating price for oil and natural gas swaps and receives a fixed price that averages $3.85/Mcf for the gas. The costless collar contracts have an average floor price of` $3.33/Mcf and an average ceiling price of $4.76 per thousand cubic feet.

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