# DEAR FELLOW SHAREHOLDER

_Source: `DeepSeekOCR_Ardian_pruned_1k/energy-oil-gas-e-p/NYSE_MUR_2022/NYSE_MUR_2022.mmd` · pages 1-7_

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DEAR FELLOW SHAREHOLDER

Murphy had an outstanding year in 2022. We advanced our strategy of Delever, Execute, Explore, and added the priority of Return as we look to further enhance payouts to our shareholders through dividend increases, reaching the current level of \(1.10 per share on an annualized basis. While working to advance these four key priorities, we also remained focused on ensuring Murphy's long-term sustainability within the energy transition.

Murphy's ongoing sustainability efforts achieved excellent metrics in 2022, as we lowered emissions intensity five percent from 2021, as well as reduced our onshore flared volumes — both to the lowest level on company record. We have now achieved a second consecutive year of no recordable spills. Additionally, the team's efforts enabled us to recycle three million barrels of water, or 28 percent of total water use across our North America onshore assets.

## Delever

Murphy successfully achieved its \(650 million debt reduction goal in 2022, thereby accomplishing 40 percent, or \)1.2 billion, of total debt reduction since year-end 2020, and reaching its lowest debt level in more than a decade. Further, we held significant cash and cash equivalents of nearly $500 million at year-end 2022. Also, during the year, the company preserved its long-term liquidity by entering into a new $800 million senior unsecured credit facility, which was undrawn at year-end 2022.

For 2023, we are targeting $500 million of additional debt reduction, assuming $75 per barrel oil price. Upon completion of that goal, we forecast $1.3 billion of total debt at year-end.

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US Onshore: 35 MBOEPD
Offshore: 75 MBOEPD
Canada Onshore: 57 MBOEPD

"Our focused execution throughout the year led to a 29 percent increase in oil volumes from first quarter to fourth quarter 2022, primarily driven by completing the Khaleesi, Mormont, Samurai field development project."

2022 Proved Reserves by Area

![](images/2_1.jpg)

US Onshore: 174 MBOE
Offshore: 190 MBOE
Canada Onshore: 333 MBOE

## Execute

Our consistent emphasis on execution resulted in \(2.2 billion of net cash provided by continuing operations, including noncontrolling interest. This is a level not seen since 2014. Additionally, we generated approximately \)1.3 billion of free cash flow \( ^{1} \) , which enabled us to accomplish our delevering goals for the year. Specifically, Murphy produced 167 thousand barrels of oil equivalent per day — the highest level since 2019 — with 90 thousand barrels of oil per day in 2022.

Our focused execution throughout the year led to a 29 percent increase in oil volumes from first quarter to fourth quarter 2022, primarily driven by completing the Khaleesi, Mormont, Samurai field development project in the Gulf of Mexico, with seven wells brought online and all three fields producing above expectations.

This milestone project has been a significant feat from start to finish and reflects our competitive advantage in offshore execution capability, from building the Murphy-operated King's Quay floating production system overseas during COVID-19, to transporting it across the globe and achieving first oil in the Gulf of Mexico ahead of schedule. Since volumes began producing from the three fields, King's Quay has realized an industry-leading 97 percent uptime.

Our onshore well delivery program brought 50 operated wells online, with our revised completions method resulting in some of the highest per-foot initial production rates in company history. In the Eagle Ford Shale, these results translated into realizing full investment recovery in less than a year, while our Tupper Montney wells were forecast to average full investment recovery in less than six months. Additionally, the team targeted all aspects of the drilling, completion and production process as they managed base production declines and well optimization. For the year, Murphy achieved industry-leading well results, which was validated in a recent sell-side report on the Eagle Ford Shale.

Overall, we achieved total reserve replacement of 98 percent for 2022, with 697 million barrels of oil equivalent in proved reserves at year-end and a reserve life of more than 11 years. For 2022, our proved developed reserves increased slightly to 60 percent of the total, while the liquids-weighting rose to 47 percent.

## Explore

In addition to holding a large base of proved reserves, Murphy maintains a sizeable portfolio of exploration prospects across the Gulf of Mexico, offshore Mexico, Brazil and Vietnam.

We drilled a successful well at Samurai #5 after previously discovering additional pay zones in the Samurai field during the initial phase of development. The Samurai field was initially discovered by Murphy's exploration team, and this additional well allows us to build on the success of the field as it is one of the most promising economic opportunities I have seen in my career.

For 2023, we look forward to running an operated exploration campaign in the Gulf of Mexico with three wells.

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## Return

As we advanced our delevering efforts in 2022, Murphy became increasingly determined to support our longstanding shareholders, and added Return as the fourth pillar of our strategy. We enhanced our returns through doubling the dividend to \(1.00 per share on an annualized basis, with a recent increase in 2023 to \)1.10 per share annualized, representing the highest planned annualized rate since 2016. In promotion of this strategy, we announced the capital allocation framework in mid-2022, which established increasing shareholder returns tied to targeted debt reduction goals.

At year-end, our total debt level of \(1.8 billion positioned us to begin Murphy 2.0 in 2023, enabling us to allocate 25 percent of adjusted free cash flow \( ^{2} \)  to shareholders through share buybacks and potential dividend increases, with 75 percent allocated to further debt reduction. Once we reach a total debt level of \)1.0 billion, we will advance into Murphy 3.0, where the allocation changes: directing 50 percent to shareholders and 50 percent to the balance sheet.

## Making It Better

As disclosed in our 2022 Sustainability Report, Murphy was selected to participate in an environmental, social and governance (ESG) pilot program with our third-party contractor and supplier information management provider. This program is aimed at the assessment and documentation of ESG performance by Murphy and its contractor companies, including verification of certain data, and will enable us to provide further transparency on our ESG practices as we work to achieve our goals. Also in 2022, we published a Supplier Code of Conduct to better ensure alignment between Murphy and its suppliers, as well as our fourth annual Sustainability Report, which included expanded disclosures and metrics.

At the board level, effective in 2022, three board committees enhanced their charters to reflect continued oversight of ESG-related responsibilities. Additionally, the Compensation Committee incorporated a greenhouse gas emissions intensity performance metric to accompany the safety and spill rate metrics included in the ESG component of Murphy's Annual Incentive Plan.

## Remaining Committed

I appreciate our talented employees for all their hard work this past year. We could not have achieved our goals without their enduring attention on leaning into the challenges, particularly in accomplishing our major projects and production improvements. I would also like to thank our Board of Directors for their ongoing leadership as we continue to think beyond possible as an energy leader. We would like to extend a special thank you to Steve Cosse, Jay Collins and Neal Schmale, who will be retiring from the board in May. They have provided incredible input on a multitude of committees during their tenure, having joined in 2011, 2013 and 2004, respectively. On behalf of the Board of Directors and employees, we wish them all the best. Lastly, thank you to our longstanding stockholders for remaining supportive of Murphy Oil Corporation as we look to the future.

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