Welcome to the Murphy Oil Corporation fourth quarter earnings conference call. During today’s presentation all parties will be in a listen only mode. Following the presentation the conference will be open for questions. (Operator Instructions) As a reminder the conference is being recorded on Thursday the 29th of January 2009. I’ll now turn the conference over to Mr. David Wood, President and Chief Executive Officer.

Joining me are Kevin Fitzgerald, Senior Vice President and Chief Financial Officer; John Eckart, Vice President and Controller; Mindy West, Vice President; and Dory Stiles, Manager of Investor Relations.

Welcome everyone and thanks for joining us. Today’s call will follow our usual format. Kevin will begin by providing a review of fourth quarter 2008 results. David will then follow with an operational update after which questions will be taken. Please keep in mind that some of the comments made during this call will be considered forward-looking statements. As such, no assurances can be given that these events will occur or that the projections will be obtained. A variety of factors exist that may cause actual results to differ. Many of these have been identified in Murphy’s January 1997 Form 8K filed with the SEC. With that being said I will now turn the call over to Kevin for his comments.

Net income in the fourth quarter of ’08 was $158.5 million, $0.83 per diluted share and this compares to net income in last year’s fourth quarter of $206.1 million or $1.07 per diluted share. For the full year of 2008 net income was $1.77 billion or $9.22 a diluted share compared to last year’s net income of $766.5 million or $4.01 per diluted share. There were no unusual items of significance in the 2008 quarter but there were a couple in the fourth quarter 2007 which included a $59.5 non-cash after tax inventory charge in the UK and a $33.9 million income tax benefit in Canada related to a federal tax rate reduction. Looking at income by segment, the E&P segment fourth quarter of ’08 net income was $95.9 million compared to $268.2 million last year. The lower earnings in the 2008 quarter were primarily attributable to lower oil and natural gas prices. Oil was down over $28 a barrel fortunately offset by higher crude oil sales volumes mostly attributable to Kikeh which came on stream in August of 2007 and continued to ramp up during 2008. Crude oil and gas liquid productions averaged over 129,000 barrels a day in the ’08 quarter compared to 113,300 barrels in ’07 primarily again, as a result of Kikeh. Natural gas volumes were 53 million cubic feet a day in the ’08 quarter compared to 71 million cubic feet a day last year with the reduction primarily due to Gulf of Mexico shut-ins or curtailments as a result of Hurricane damage to infrastructure downstream of our facilities. In the R&M segments fourth quarter of ’08 income was $140.5 million compared to a net loss in the fourth quarter of ’07 of $27.4 million. US marketing results in the 2008 quarter were significantly improved…

I’m very honored and humbled to take my new position. As you know, this is my inaugural earnings call. I’m also optimistic about the opportunities that lay before us even given the turmoil our industry and the world economy is in. I remind myself at times like this that ours has always been a business of historical ups and downs. I also want to assure you at the outset that while oil feel at announcement time, there is no connection between that and me. Being somewhat enthusiastic in these troubled times may seem a bit odd but let me tell you why I think Murphy Oil will do well in this environment and set itself for future promise. First, in the current illiquid capital market we are very well placed. Solid balance sheet, cash in hand, production growth profile locked in, solid and capable operating ability. Secondly, we are not a single focused business, diversity helps us in many ways at this time as you have seen our retail performed well in the fourth quarter. Our oil production largely outside the US was less price impacted by full domestic storage and our North American gas business is still embryonic but pose. I’ve seen several of these industry boom bust cycles during my 30 year career and it seems to me that the companies that did best coming out of these down cycles were patient and vigilant but moved swiftly when they saw a fitting opportunity. We intend to be like that now. In order to set ourselves up for this as Kevin mentioned, we intend to maintain parity between capital spending and cash flow in 2009. We will seek to trim costs throughout the organization, throttle back our exploration programs but still have some impact well exposure, pace our development…

(Operator Instructions) Your first question comes from Erik Mielke – BAS-ML. Erik Mielke – BAS-ML: My first question relates to Kikeh, can you give us an update on cost recovery given the lower prices that we’re seeing currently. Are you still expecting that to be in the first quarter of 2009?

Kikeh is going very well, I’m very pleased with the project. We were thinking it was going to recover by the end of last year but now depending on oil prices, first quarter, second quarter time frame. Erik Mielke – BAS-ML: A more strategic top down question on the outlook for natural gas in North America, you seem to be signaling an interest to expand in that area either organically or potentially through acquisitions. Can you talk a little bit about the outlook that underpins that view on the macro and what sort of prices you’re willing to factor in when you make investment decisions?

I think long term and this is a long term business and I take a long term view. I think in this down cycle for companies that are in a position as us getting in to the game out of cycle is ultimately going to be smart. I’m very pleased by what we see at Tupper and there you’re talking about operating costs of about $1 and DD&A of about $3. So, if we can get in to projects that look like that I think we’ll be well positioned so that’s the kind of thing that we’re looking for. Erik Mielke – BAS-ML: The final one for me is on the cap ex slow down where you guided that you’ve identified $100 million already and I think you said another $90 million of things you could cut. Can you talk a little bit about the type of cap ex that you’ll be cutting first and what you might be bringing on if prices turn out to be higher?

The capital that we’ve already cut is basically evenly split. The $100 million on the E&P side pretty evenly split between exploration and development. The other $80 million I alluded to about half of that would be in downstream, we’d just build fewer Wal-Marts, some of the smaller projects at the refineries, things like that. Then, it’s mostly some exploration expenses, that’s where your real discretion would be and you just have to take it from there. Of course, if prices rebound then some of these things could be put back in to place.

Your next question comes from Mark Gilman – The Benchmark Company. Mark Gilman – The Benchmark Company: I had a couple of questions, you mentioned that the Kikeh rates had bounced a little bit with the start up of gas. What’s that about, what’s caused that?

When we sanctioned Kikeh there were a couple of options that we looked at for dealing with disposal of the associated gas. There really isn’t any free gas in Kikeh at all so it was an associated gas issue. The decision that we arrived at with Petronas’ support was to basically sell the gas to them and they built a new or an expansion to a methanol plant. So, we have the ability today of moving gas around three ways we can flare it, we can inject it in to a single well or we can put it down a pipeline. When you’re dealing with three options you like on facilities like that to kind of get to steady state so the reason it has bounced around is because the demand for gas has varied going down the pipeline and so as we switch between the various options here that’s the real reason why it’s bounced around. We expect it to steady up here pretty shortly and have the full amount of gas going down the pipeline. Mark Gilman – The Benchmark Company: So David if I understand you correctly what you’re saying is because it’s associated gas if the off take and the demand fluctuates the oil production will do the same?

Well, not really. It does a little bit Mark. I think the issue is when we’re only delivering what we’re delivering now 75 million a day then we have to move the gas around on board the ship to be able to keep our oil rate up and that just causes switching things on switching things off and that’s just not very efficient. So, I think when we get up to the $120 million a day of gas, I think we’ll see all this trim out and that’s our [inaudible]. Mark Gilman – The Benchmark Company: Could you talk just a bit about some of the oil results that you’re seeing on the Tupper wells? Did I catch you correctly as characterizing DD&A at $3 and operating costs at $1 figures which seem a little higher than frankly I thought were expected to be the case up there?

Mark, I’m real pleased with what we’re seeing there. We’re active in two parts there. The Tupper Proper as we call it is the area where we’re developing. We initially had some well rates that weren’t as good as they are now and that just directs it to the learning curve that we’ve been on and then we’ve also been drilling some wells up in Tupper West mainly vertical wells and that’s where we found this extra [Doit] pay and we’ve seen much better Montney up there than we have in Tupper 1. The number I quoted there is where we are today and as you can appreciate when you start something new you’re on a learning curve. But, if I look at the subservice piece I would say that Tupper West which we have not sanctioned yet is going to end up being better than Tupper Proper so the numbers I quoted you are kind of for Tupper Proper which I’m sure we’re going to get better at but that’s where we are. Mark Gilman – The Benchmark Company: David, just one more for me if I could, it sounds from your review of the 2009 exploratory program that some key pieces, at least in terms of identifiable prospects and locations are still yet to be determined both in respect to the [Sabah Froth] as well as the Eastern Gulf. What are you looking at to do a little bit differently in terms of each of these two plays that would potentially lead us in the direction of seeing higher success rates?

We’re in one of these post mortems, you know the exploration business, as I mentioned is incredibly cyclical in success. We have not had success in both these areas to a level that we would like and certainly a level that I would like. So, we’re going back to take a look. If I look at the Eastern Gulf first, we found two discoveries but they were smaller than we would have liked so we’ve got to understand why. I think we know why, the real issues boil down to seal capacity and charge volumes, are the main issues. In the [Sabah Froth], we found things, I mean we just drilled this well in Block P and actually found about 100 bcf type number but clearly in deep water without an established infrastructure that’s going to be something that’s going to be a long way off. So, we’re understanding that the play is working but it’s not working to the volumes we expect so that’s the extra look that we’re taking.

Your next question comes from Paul Cheng – Barclays Capital. Paul Cheng – Barclays Capital: I think that you guys talked about what is the first quarter production outlook may be, do you have a rough number that you can share on the 2009 that may be different than the past now that some spending has been cut from the budget? I think previously you guys are looking for about 200,000 barrels a day for 2009, is that still the number or is it going to be lower?

Paul, I think the last time and I guess it was in the third quarter conference call that we had talked about the production for 2009 being about 190 or so and we dropped it to 180 basically as a result of the Kikeh and Sarawak gas projects being delayed. The cuts that we’ve talked about so far really won’t affect production for ’09. Of course if prices stay low or get even lower, dip in to the $30s or something for some extended period of time, if you want to stay within cash flow you’d have to slow down some development projects say at Tupper or something like that. Naturally with Thunder Gawk and Azurite properties like that you’re not going to stop spending just as you’re about to start on production. That could then affect your production going out in to 2010 but we’re not there yet. Paul Cheng – Barclays Capital: Kevin, the 180,000 barrels per day is that a 70% probability, 80%, 50%? What kind of probability have you guys assigned to that.

That’s a pretty good number for us average for the year. We’re about 163,000 now for the first quarter and we’re looking to exit the year at 220,000 and so the 180,000 is the average for the year. Paul Cheng – Barclays Capital: No but then I guess the question is not just you guys but the industry has a tendency to maybe setting to optimistic of a target so I’m wondering in there what kind of [attrition] that you build in?

We try to be very realistic in putting things together as best we can. For instance, we have days built in for hurricane downtime. Now, if we have no hurricanes our production will be better than that. You look back at 2008 and up through August our Gulf of Mexico production was quite a bit higher than what we had been anticipating because we were going through the hurricane season with no affects and then all of a sudden Gustav and Ike come along and low and behold we get slammed. So, we build in some down time in to the numbers but maybe it’s not enough down time, maybe it’s too much. You’ve got to wait for the thing, it’s just the best shot, the most reasonable number with what we know today that we can come up with. Paul Cheng – Barclays Capital: Can you guys talk about I think the whole industry looking at the cost review, is headcount reduction a part of the plan on the table or you think that is off the table?

Paul, I think costs should come down in our overall business and we’ve seen already with some of our service providers that they’re willing to recognize the reality of the world. So, I’m looking to see costs in the 20% to 30% range through the course of the year. Of course, we’re going to push that real hard. The one thing we do here I think pretty well culturally is look at costs so that’s something that we’re going to do and wring the best we can out of our business. Paul Cheng – Barclays Capital: Right but headcount reduction will not be part of the plan I presume then?

One of the things that the industry has got to really be aware of is that we are a cyclical business. Over the years I’ve seen companies cut back and then only be very disappointed in a very short period of time. I think that’s one of the things that has to be looked at by everybody. Paul Cheng – Barclays Capital: On the R&M, Dave I’m wondering is your view on that business the same as [inaudible] or that you have a different view? Whether that should continue to be a part of your overall portfolio on a go forward basis?

Paul, it’s a great question and I think when you see the results for the fourth quarter where our downstream kind of bailed us out, it is nice to have. So, I kind of look at it that way. I think the retail piece going forward is a nice piece of business, I don’t think it will necessarily have the same performance as last year because last year was very concentrated but it has the opportunity to get to those same levels in the future perhaps. But, I don’t feel any great pressure here to make those kind of decisions. I’m the new guy here, I’m going to take a look at everything and see how everything that works it doesn’t matter whether it’s upstream or downstream. Paul Cheng – Barclays Capital: Kevin, you were talking about capital spending cuts, let’s say under the very, very worst situation if you have to cut to the bone, what is the absolute minimum you have to spend in 2009?

Oh probably $1.5 billion. Paul Cheng – Barclays Capital: So that is the ultimate minimum?

I would think so just by trying to get through the rest of the development projects and things of that nature. Paul Cheng – Barclays Capital: My final question, sorry to take up so much time, David when you’re looking at the exploration program you indicate results had not been as good as you hoped. So, when you look at that do you think that is a land position issue or that is a technology issue that you just don’t have the technology or is it a people issue?

Sometimes it can just be a luck issue Paul because such is the way the business goes. I think we have exceptionally talented people. I think we have for the most part taken good acreage or at least we think we pick good acreage. I some cases you make a discovery with the first well and in some cases you make it with a third well. So, I like our technical process but the bottom line is how good of results do you get? We’re identifying and finding hydrocarbon just not in the volumes that we expect. The whole idea of an exploration program on a risk basis is to return the types of volumes that you need and we just have not been doing that. Now, we’ve been quite good at bringing in third party funds to help us do that so we have been risk mitigating it but the bottom line is we haven’t been finding big enough reserves and that’s a thing we’re going to take a look at. Kevin mentioned the difference between last year and this year. We’re going down from $480 million of exploration last year to $300 million this year and we’re going to take a look at that program very closely and we’re going to take a look at what we’re going to do going forward.

Your next question comes from Gene Gillespie – Gillespie Consulting. Gene Gillespie – Gillespie Consulting: A couple of things David, one a follow up from a previous question and answer, what is the specific dollar amount of cost recovery pool in Block K? How much is left? I think at the end of the last call Mindy had indicated it was about $400 million.

It’s a couple hundred million Gene. You’ve got to remember that Block K is 1PFC and we’re continuing to spend money on the cap development so as those funds get expended there they go in to that pool too. Gene Gillespie – Gillespie Consulting: Did I understand correctly that you expect by the end of the first quarter that that would be essentially liquidated? Obviously, it never fully goes away, you’ll still have cost recovery but it will be largely?

Gene, if I had a crystal ball and I could tell you oil prices I could better define it but it’s going to be that cusp between first to second quarter. Gene Gillespie – Gillespie Consulting: My second question, the fourth quarter Malaysia DD&A rate was $12 a barrel and I think that initially under the original project assumptions it was going to be somewhat lower than that, is that correct? And, do you continue to expect it to trend down now that Kikeh is at capacity?

Our mix of sales in the fourth quarter were highly skewed towards Kikeh which has a higher DD&A rate Gene than Sarawak does but on the average I’m showing a little bit less than what you’re saying but in that order of magnitude on Kikeh. Gene Gillespie – Gillespie Consulting: But that’s a good number going forward?

No. Overall, it’s going to go down as we add reserves. Gene Gillespie – Gillespie Consulting: That’s what I was getting to.

That’s based on the reserves that we’ve had booked and of course David already mentioned that we’ll be booking more reserves over time so that number will come down some. Gene Gillespie – Gillespie Consulting: Can you kind of speculate or share what a number might be, a more appropriate number for modeling purposes?

We’re getting you a number. By the way Gene, Kikeh’s doing well and we expect to book some more barrels this year and that will take us to about 100 million barrels booked.

It comes down a little bit but it stays relatively close to that $12 rate this year as we spend more money and bring on the Sarawak gas. Gene Gillespie – Gillespie Consulting: David now that you have substantial production experience with Kikeh and it is producing well and it’s been producing for a few months or a couple of months at design capacity, recognizing the big oil fields have a tendency to get bigger over time, is it too early to suggest that maybe this one will?

Gene, I’m real pleased with what I’ve seen below ground there. We’ve now drilled a fair number of wells, good well performance. We need to get this gas situation worked out so we can trim the field out. I’d like to see a little bit more production here. We produced about 35 million barrels I think as of the end of last month and I’m real happy with what we got. Gene Gillespie – Gillespie Consulting: One last thing, do you have a partner or are you continuing to market the northern block offshore Congo?

We’re still talking to folks. We don’t have a partner yet.

Your next question comes from Mark Gilman – The Benchmark Company. Mark Gilman – The Benchmark Company: Kevin, if I recall correctly, at the end of the last conference call you were talking about what I think you labeled kind of a quasi FIFO inventory affect that negatively impacted the UK downstream results. I would assume just given price behavior that that was a significant factor in the fourth quarter as well. Can you give me a rough idea what the negative impact was?

I don’t think we had a big impact in the fourth quarter because the guys did a real good job of getting all the inventories in to place and along with our LIFO targets so the overall impacts from LIFO were negligible. Mark Gilman – The Benchmark Company: No but I think what you had alluded to at the end of the third quarter was the fact that because of the short haul crude usage that the way the inventory system behaved was more akin to a FIFO system than necessarily LIFO even though nominally it is a LIFO system. Is my recollection inaccurate because of senility or some other factor?

No, I think there were some issues with the products inventory because I think part of the UK that’s on FIFO has to do with the products not so much on the crude with the short haul. Mark Gilman – The Benchmark Company: So basically the UK R&M number in the quarter of $10 million, that’s what it is, that’s clean?

Yes, I think it’s relatively clean. We’ll double check that to make sure but there’s nothing of any big magnitude in there. Mark Gilman – The Benchmark Company: One other one if I could, my math suggests that you are way over lifted as of the end of 2008. First of all is that accurate? And, if so do you expect to make it up this year going the other way?

Mark, you are correct at the end of 2008 we were over lifted. As you know about our guidance on the first quarter it’s about a 6,500 barrel under lift there so you’re starting to see that swing there. For 2008 we did have significant over lift in most of our positions including in Canada at Kikeh. I can get you that detail. Mark Gilman – The Benchmark Company: But should we assume that it will be substantially made up over the course of 2009? I mean it would take more than 6,500 barrel a day under lift in the first quarter. You’d have to be under lifting, at least based on my math, by roughly that amount each and every quarter.

That’s correct Mark. That’s a fair assumption.

Management there are no further questions at this time. Please continue with any closing comments.

I appreciate it and I look forward to the next quarterly call. Thanks a lot.

Ladies and gentlemen this does conclude the Murphy Oil Corporation fourth quarter earnings conference call. If you’d like to listen to a reply of today’s conference you can do so by dialing 1-800-405-2236 in put the access code 11124677. We’d like to thank you very much for your participation. You may now disconnect.