Good day, ladies and gentlemen, and welcome to the Third Quarter 2017 Murphy Oil Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. As a reminder, this conference is being recorded. I would now like to turn the call over to Ms. Kelly Whitley, Vice President, Investor Relations and Communications.

Good morning, everyone, and thank you for joining us on our call today. With me are Roger Jenkins, President and Chief Executive Officer; and John Eckart, Executive Vice President and Chief Financial Officer. Please refer to the informational slides we have placed on the Investor Relations section of our website as you follow along with our webcast today. John will begin by providing highlights of third quarter financial results, followed by Roger with operational highlights from the quarter and outlook, 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 defined in the Private Securities Litigation Reform Act of 1995. As such, no assurances can be given that these events will occur or that the projections will be attained. A variety of factors exist that may cause actual results to differ. For further discussion of risk factors, see Murphy's 2016 Annual Report on Form 10-K on file with the SEC. Murphy takes no duty to publicly update or revise any forward-looking statements. I now turn the call over to John for his comments.

Thank you, Kelly, and good morning, everyone. Our consolidated results in the third quarter of 2017 were a loss of $66 million which equates to $0.38 per diluted share. That compares to a net loss of $16 million or $0.09 per diluted share in the same quarter one year ago. Our adjusted loss, which adjust our GAAP numbers for various items that affect comparability of results between periods, was a loss of $6 million or $0.03 per share in the third quarter 2017. Our schedule of adjusted loss is included as part of our earnings release and amounts in this schedule are reported on an after-tax basis. Our balance sheet continues to show low leverage with ample liquidity and manageable debt maturities. At September 30, 2017, our total debt was $2.9 billion or 37% of total capital employed, while net debt was 28% of capital employed and amounted to $1.9 billion. At the end of the third quarter, we had no outstanding borrowings under our $1.1 billion revolving credit facility, and our cash and cash equivalent balances totaled $1 billion. During the quarter, we issued an 8-year $550 million note with a 5.75% coupon rate. The net proceeds from the offering of the 2025 note were used to redeem the company's $550 million notes that were scheduled to mature originally in December of this year. Following the redemption of these notes, Murphy's next note matures in 2022. In order to underpin our cash flow, we hedge a portion of our oil and forward sale a part of our Canadian natural gas production. As of October 31, we had 22,000 barrels per day hedged at $50.41 per barrel for the fourth quarter 2017, as well as 7,000 barrels per day hedged at $51.92 per barrel for 2018. As for natural gas, we had 124 million cubic feet per day forward sold at AECO at CAD 2.97 per Mcf for the balance of this year, as well as 59 million cubic feet per day at AECO, CAD 2.81 per Mcf for 2018 through 2020. We have also contracted for 20 million cubic feet per day at Chicago's City Gate at a $3.51 per Mcf for the period from November 2017 to March 2018. That concludes my comments. Roger will now present a review of the company's operations.

Thank you, John, and good morning, everyone, and thanks for calling in today. In the third quarter, we produced 154,000 barrel equivalents at 60% liquids. Our onshore business provided 55% of our production, offshore provided 45% of the production; and offshore generated $156 million of free cash flow in the quarter. We're able to maintain $1 billion of cash and cash equivalents on our balance sheet this quarter. More importantly, we've been able to maintain this level of cash for four consecutive quarters, all while funding our capital program and paying a consistent dividend to shareholders. We've been able to do this at modest oil prices, as Dated Brent has averaged approximately $51 for the last four quarters. Our diverse oil-weighted asset base provides a competitive margin with premium pricing with third quarter adjusted EBITDAX of near $23 per boe. We continue to drive down our operating costs by creating sustainable efficiencies, achieving a decade-low quarterly LOE of $7.58 per barrel. During the quarter, we took measured steps to enhance our portfolio through new, low-cost onshore and offshore entries that are aligned with our strategy. In the onshore, we announced a strategic entry into Midland Basin. This low-cost entry will increase our oil-weighted future location count of low breakeven wells and allows for capital allocation flexibility. We've accumulated approximately 31,000 net acres via organic leasing in prior quarters and successful bids in the recent lease sale. We've also announced entry into Sergipe-Alagoas Basin, offshore Brazil with our co-venturers ExxonMobil and QGEP. In the Gulf of Mexico, we acquired the Clipper field, which has two wells that flow to our Front Runner facility. Looking more at the quarter in detail, our third quarter production was negatively affected by approximately 5,100 barrel equivalents per day by the following temporary factors. Eagle Ford…

The first question comes from the line of Ben Wyatt with Stephens. Your line is now open.

Hey, good morning, guys.

Good morning, Ben.

Hey, Roger, if we can maybe start, first, with just kind of the Midland. How should we maybe think of kind of the activity in 2018? Is it just going to be kind of a move across the asset base, kind of delineate, similar to how you did this year in the Duvernay? I'm just trying to get a sense of maybe what that activity could look like next year?

I mean, it's real critical what we see in these two wells here in one part of the play .Of course, you look at our slide in our release today, we have two acreage positions. The one in the Northeast and one Southwest, that's the two big large accumulations. So we'll be bringing those wells on. Those would be very interesting to us. And the way to think about, Murphy is a $1 billion CapEx company, $1 billion to $1.2 billion over several years, with the onshore business achieving around 70% of the capital in the State of Texas today, probably of that $700 million, probably $400 million of capital. And we consider this an extension of our Eagle Ford business, driving that from Catarina, it's about a seven-hour drive, run by the same people, same type of execution. We're hoping to find a way to enhance more top-tier locations. Of course, we have 600 and more of these locations at $40 oil, and probably another 700 at $45 oil breakeven, if that's a way of tiering, which I think is appropriate. So it's about low-cost entry, finding new places to allocate capital if these wells were to work out or allocate more capital into some tiering in Eagle Ford to this area. And then, we can drill wells in the other portion of the play and see how it goes. And it's going to be probably into January, February, before we tie up just how much capital we have into this play. But it's that optionality of what we plan to spend in Eagle Ford, and we may allocate more capital here as we see fit.

Got it, got it. That's helpful. And then maybe just jumping down to the GOM. You guys previously talked about the Clipper. Just kind of curious, it feels like that could be some low-hanging fruit there to just – to bridge production. Just curious what about the opportunities look like there? And then if you could just give us a sense of maybe what these wells looks like when you purchase and then the uplift you guys are seeing at the, maybe put a little maintenance on it?

There are unique – as part of our strategy, we're in different places and we have our ear to the ground and work across spectrum in the Gulf for 60 years. We have wells that flow to our facilities. Some of those operators are looking possibly to exit or have some financial distress or they may need to exit. We're able to help them do that, and we have all of the data from the wells as it flows through our facility. So it allows us to take a look at wells, how they perform and assess the reserves of the well because we know the production levels from the well, we know the pressures from the well. When these opportunities arise, we execute on that and add to our production that flows into our operating facilities. I believe there will be more of these things to come, it's hard to quantify how many and when and how. But if you're in the game, you're able to pick up opportunities that pay out in six months and have 150% rate of return. And when people want to move their capital from some of these things to an onshore business, somewhere we may help them do that. And so we're always out for these things. We do operate, and have been a long-time operator of key facilities and allows us the unique ability to bring in wells that we understand into our situation, take on their abandonment liabilities in some cases. And for a small amount of cost, we can pick these wells up and make a lot of money.

Very good. Well, that's helpful. Appreciate the time guys. Have a good one.

Thanks.

And our next question comes from the line of Roger Read with Wells Fargo. Your line is now open.

Yeah. Good morning, Roger.

Hey, Roger.

And to everyone else there as well. For the last question kind of took what I was going to ask, which is, what are the returns on the tiebacks? So maybe if we could dig into that and think about the entry into Mexico, the exploration supporting in the short-term or the next couple of years, let's say, the tiebacks. When you look at your overall offshore, what kind of returns do you want to achieve in this environment, do you think are achievable in this environment? I'm going to say 150% is a one-off as opposed to the norm there.

I'm sorry, the 150%, what was that regarding?

You mentioned the 150% rate of return on the tieback.

That's a very unique situation where you're able to pick up something for sale and make an enormous return. It does show what our company can do and the uniqueness of our strategy and allows us to have those type returns. In the tieback game in the Gulf today, it's easy to achieve full cycle, 25% rate of returns at these prices quite easily. These things have – if you want to talk about things and, of course, oil prices have improved over the last couple of years, there's this big push about talking about breakeven prices for things to achieve 10% rate of return, I hope that we're beyond that now, but we're talking about in the low-30s here now, because the cost are incredible – incredibly low. So one regime cost going up, one regime cost going down, and so that's some solid business. And one thing I think is key to point out is the offshore business is a full cycle business by definition. It always has been. You lease, you drill the well, produce tieback, et cetera. And when I say these midlife, these mid-20% to 30% rates of return, they're automatically full cycle, and not high cycle, not without land, not with the long period of time. So I think it's good business, and the costs are very good, the opportunities are very good, and we're interested in participating in those, and we are.

Okay, great. Thanks. And then moving to the Permian, a pretty good explanation, as usual, of what you're doing in the Eagle Ford and up in Canada. Thinking about 70% spinning off on the onshore out of the relatively stable CapEx number, what is the Permian spending coming at the expense of, or should I think of maybe $1.2 billion versus $1 billion, and so, okay, that's my improvement or that's my incremental dollar in 2018, maybe 2019?

Well, I mean, we have situations we've entered into our onshore business. We're going to have capital allocated to the Duvernay next year due to an agreement we have there, and the wells are all performing above with the curve there, and we want to invest capital there, and we are. It kind of backs into what we have in Eagle Ford. And of course, in Eagle Ford, we've done very well there at maintaining production there for a low level of CapEx for a couple of years, but there could be opportunities where eight wells or two pads of wells are drilled in an area to protect acreage, they may not be our top tier, and we want to move those eight wells into Permian. After we get these wells results, we're very pleased with nearby results after we started leasing. And you know we start leasing in mid-2016. And since all the issues with better clusters, better entry points, better core results, better sand proppant loading, different mesh on the sand, those results have gotten better and better. And so it will be a matter of testing that and then we'll move out of some acreage in Eagle Ford and put it into that area is how we're going to handle that at this time. Until we get further into our required completions – drilling and completion spend in the Duvernay, and we'll assess among these three plays in the next two years or so, what is the absolute best place to allocate all the capital, we're going to do very well when we do that.

Okay. And then changing gears. With a news of a potential corporate tax rate policy, and I know energy taxes are a lot different, a lot of other taxes, is there any expectation that there could be an impact on kind of the overall deferred tax here or any sort of a tax asset that might not have of value going forward in a lower corporate tax rate environment?

I'll let John answer that. Our phones are blowing up with text from our Arkansas delegation at the moment on this matter.

Hi. Good morning, Roger. This is John. And as you probably know, we do have deferred tax assets, net deferred tax assets in the United States. We have assets and liabilities. Overall, we have net deferred tax assets. So on day one, should the tax rates go down to 20%, let's say, you'd have an impact on our deferred tax asset that would have to be reduced for the incremental change in the tax rate. So that would impact us and it creates a lower future value of those deferred, net deferred tax assets in the United States. So we would have an impact there, but I think many of our peers would have similar impacts. And then, going forward, with prices continuing to be better, we would overtime pay, allegedly, as they have been talking about, lower tax cash taxes later on at lower tax rate.

Yeah. Well, I'm not going to hold my breath away for Congress to get something done. But always need to make sure we understand the parameters. All right. Thank you.

Thank you, Roger.

And our next question comes from the line of the Arun Jayaram with JPMorgan. Your line is now open.

Good morning, Arun. How are you doing?

Good morning, sir. First question, as you think about 2018, Roger, obviously, you announced the entry into the Permian and it sounds like capital allocation will depend on what you see in terms of your initial results, but are you ready yet to put out some preliminary thoughts on 2018 (29:45) production. You gave us a capital number of maybe something close to $1 billion or so. And thoughts around 2018 that you can provide at this time?

We really prefer to get into that on our call at the end of January. It's been the way we've done that. But, obviously, oil price is a little bit higher, production higher, CapEx a little bit higher, would be the best way to describe it.

All right. Fair enough. And my second question. In terms of the overall portfolio, clearly, Roger, you have a very diversified portfolio. By our count you're now in 10 to 11 different areas, perhaps the most amongst the independents that we look at. And you probably can guess my next question is, how do you think about this from a standpoint of given your size of efficiently allocating your capital and your resources? And thoughts about maybe tuning the portfolio to have maybe a fewer number of focus areas?

Well, that's been our game for a while for a long, long time. It's kind of a misnomer about our company in how that works. I mean, the Houston exploration office is running, the Mexico exploration, Brazilian exploration with one team and the Gulf of Mexico with one team, one floor personnel. So it makes no difference to us where the big stratigraphic plays are, upper Cretaceous or upper Miocene zones, we're able to manage that with our team there. Our exploration team head out of Kuala Lumpur, our other major office in our company runs on that side of the world without incredibly high cost and without much difficulty. And we are in offshore. So because of our diversity, number one, we make a lot of margin from our business. And because we're focused on cost, we make a lot of margin less cost here and have a real higher adjusted EBITDAX number when we're moving items like ForEx and tax issues and things of that nature. So we do very well on that. We do very well when things change around the world and able to pick up on Brent or LLS. And we do very well on differentials because we're in a diverse business, and we've been in the diverse business for a long time. The exploration entries you're talking about for Mexico and Brazil, let's add those together, over a three, four-year period, all seismic, all back costs, everything you can do to drill two prospects, an all-in cost of the equivalent of around nine Eagle Ford wells, we can go into this massive amount of resources that will be double on our share basis, double our current proven. So this is why we do this. We've been very, very successful in Malaysia doing this. Our offshore businesses are continuing to drive incredibly high full cycle returns, going back in its history. So we're remaining in that business. And our onshore business is a nice onshore business with very low LOE compared to others, a growing profile, doing all the right things with capital allocation, technology and efficiency. And we're going to remain at this area and adding on Brazil at 20% working interest run out of our Houston office with a major operator like ExxonMobil is not difficult to do.

Great. If I can sneak in one more, Roger. One of the concerns in the marketplace is a bit around the weaker AECO prices. You commented in your release around being able to navigate that through some marketing agreements. Can you just maybe elaborate on that and maybe ability of the Tupper to compete in a lower gas price environment?

Well, number one, Tupper is one of the best assets and the company has some of the best go-forward economics. You can imagine, our high cycle economics on these wells is really only CAD 1.50 AECO and our full cycle is CAD 2, and we still just looking at even the spots of just a couple of weeks ago, which are much higher now, it's near to CAD 2.20. So continue to see real long-term AECO pricing above our prices we need and we believe, over time, and keep in mind we're going to be here for many, many, many decades producing gas here and we feel good about our diversification we have both through hedging and getting off these other markets to give us, again, what Murphy always has is not every egg in one basket, we have diversity in our marketing And if you look at a few days ago, on a USD basis, keep in mind, we speak of C AECO and occasionally on a USD basis, just keep it USD, the spot was around $1.70, yielding prices around $1.45 in Canada gets to then between Emerson Dawn, the Chicago and Milan, around $1.70 to $1.80. So we have five different place to market into plus our hedging, and that's how we're thinking about lowering our risk around different diversified areas. And I think it's evidenced by the fact that we had a real good quarter where AECO is incredibly volatile due to some TCPL shut-ins and various things that happen, we're really unscathed on that due to our long-term planning of our marketing team and focusing on the right things to make returns in our business.

Thanks a lot, sir.

Okay. Thank you. Our next question comes from the line of Muhammed Ghulam with Raymond James. Your line is now open. Muhammed Ghulam - Raymond James & Associates, Inc.: Good morning.

Hey, good morning to you, sir. Muhammed Ghulam - Raymond James & Associates, Inc.: Yeah. Thanks for taking my question. So after the Midland Basin announcement yesterday, are there any plans to increase acreage in the basin in the future? And would you guys consider expanding into the Delaware at the central platform in the future?

I guess you never say never; a year and a half ago, I didn't think I'll be here. So we're happy of what we have, we're happy with – again, we're always $2,000 an acre in the Eagle Ford, $2,000 an acre in Montney and Duvernay, and now, sub-$2,000 acres again, we go in with a different trade perspective, it's documented in our long-term strategy, take a look at these plays, can we improve what we see, we started leasing in there and happy of what we have there today. When – we actually worked a lot on knowledge by attending a lot of data rooms, do this for the last 30 years, but the incredible bid-ask spread was never appropriate and when you have Murphy have a differentiated view of how we can get in and prosper the way we like to work. We came up with this entry and executing on that. But today, we're now at – into the high $1 per foot entry into these plays that require probably $55 oil to breakeven, at least, on a full cycle basis. Muhammed Ghulam - Raymond James & Associates, Inc.: So moving down to South America. Similar question, any plans to participate in the A&P auctions that are planned over the next two years? Or any plans to pursue further farm-in agreements, like you had this quarter?

We will be looking to do so, but only at these working interests with the appropriate partners that have the appropriate experience and appropriate ability. One of our key co-venturers here was into the country in a very, very big way, in the last couple of months, massive on capital allocation into Brazil. If there's an opportunity at this working level with super-majors, we'd be doing that on an exploration basis. And we do look at discovered resource opportunities there, which we can add value due to our expertise in operating offshore. That is still our primary focus. However, that has gone slower in the Petrobras approval cycle than we desired. And then we have been focused on working with Petrobras on the very successful fields next to these blocks and it became an opportunity to farm-in to the blocks to tie very near, we're only 10 miles away from my five major fields discovered by Petrobras there, with very similar geological setting, pressures, depth, and oil sourcing. So decided to enter in there again because it's very inexpensive bang for the buck situation with a very successful partner group, and that's our focus, and that's why we executed on it. Muhammed Ghulam - Raymond James & Associates, Inc.: That's all for me. Thanks.

Thank you.

And I'm showing no further questions at this time. So with that, I'd like to turn the call back over to President and CEO, Mr. Roger Jenkins, for closing remarks.

Thanks, everyone, for calling in today. We'll see you in the new year and everyone take care, and thank you.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a wonderful day.