Murphy Oil Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
May 2, 2024

There are 9 speakers on the call.

Operator

Good morning, ladies and gentlemen, and welcome to the First Quarter 2024 Earnings Conference Call and Webcast. I would now like to turn the conference over to Kelly Whitley, Vice President of Investor Relations and Communications. Please go ahead.

Speaker 1

Thank you, Jona. Good morning, everyone, and thank you for joining us on our Q1 earnings call today. Joining us is Roger Jenkins, Chief Executive Officer along with Eric Hambly, President and Chief Operating Officer and Tom Morales, Executive Vice President and Chief Financial Officer. Please refer to the informational slides we placed on the Investor Relations section of our website as you follow along with our webcast today. Throughout today's call, production numbers, reserves and financial amounts are adjusted to exclude non controlling interest in the Gulf of Mexico.

Speaker 1

Slide 2. 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 2023 Annual Report on Form 10 ks on file with the SEC.

Speaker 1

Murphy takes no duty to publicly update or revise any forward looking statements. I will now turn the call over to Roger.

Speaker 2

Thank you, Kelly. Good morning, everyone, and thanks for listening to our call today. As you turn to Slide 3, I'd like to reiterate our corporate priorities of delever, execute, explore and return. We remain firmly on track for achieving our $300,000,000 debt reduction goal in 2024 leading to $1,000,000,000 of total long term bond debt outstanding at the year end 2024. In the Q1 of 'twenty four, we exceeded production guidance in the Eagle Ford Shale and Tupper Montney with total production of 170,000 barrels equivalent per day at the high end of our guidance range.

Speaker 2

Murphy's Gulf of Mexico workover program is ongoing. In addition, I'm pleased to report that the Mooremont No. 2 subsea well is back online in the Q1 after equipment repair. We're continuing to progress our well delivery programs. And in the Q2, we will have a new well at Khaleesi and 23 new operated wells all to come online.

Speaker 2

In exploration, our operating partner is currently drilling the Cotillo exploration well in the Gulf of Mexico and we will move to the Orange exploration well immediately following. In the Q1, Murphy was awarded 6 deepwater blocks from the Gulf of Mexico Federal Lease Sale 261. We're also progressing our exploration plans in Vietnam as we've contracted a rig to spud our exploration program in the beginning of Q3. We're pleased to continue a hallmark of consistent returns to our shareholders through buybacks and long standing dividend. We've repurchased $50,000,000 of stock in the Q1 at an average price of $39.25 a share.

Speaker 2

Additionally, as announced in January, we increased our quarterly dividend to $0.30 per share or $1.20 per share annualized and our Board maintained this level in April which is back to a 2016 annual level. Our capital allocation focus has been primarily focused on debt reduction since 2020. Between August 2020 August 2022, we reduced total debt by $730,000,000 Since announcing the framework in August of 'twenty two, we've consistently executed a combination of debt reduction, share repurchases and dividend increases. And since total year 2020, we've reduced debt by $1,700,000,000 repurchased a total of $200,000,000 of stock or 4,700,000 shares at an average price of $42.68 a share and raised our quarterly dividend 140%. In the Q1 of 2024 specifically, we generate sufficient adjusted cash flow to allow us to purchase $50,000,000 of stock and capitalize on stock price dislocation to oil prices.

Speaker 2

For 2024, we're solidly on track to achieve our $300,000,000 debt reduction goal and reach Murphy 3.0 of our capital allocation framework, especially with current oil prices. Looking forward to reaching this next step and further increasing shareholder returns to 50% of adjusted free cash flow later this year. Slide 5. Murphy produced at the high end of guidance at 170,000 barrels equivalent in the Q1 of 'twenty four with 89,000 barrels of oil per day. We achieved a slight premium to WTI as we realized $78 per barrel and our realized NGL price was $23 a barrel and nat gas was $2.12 per 1,000 cubic feet.

Speaker 2

Overall, we generated $746,000,000 of revenue in the quarter, excluding our non controlling interest. I'll now turn the call over to our Executive Vice President and Chief Financial Officer, Tom Morales for an update on our financial results. Tom?

Speaker 3

Thank you, Roger, and good morning, everyone. Slide 5. In the Q1, Murphy reported $90,000,000 of net income or $0.59 per diluted share and $131,000,000 of adjusted net income or $0.85 per diluted share. We achieved $405,000,000 of adjusted EBITDA due to a combination of strong production and realized prices with $264,000,000 of accrued CapEx excluding non controlling interest. Overall, as Roger mentioned previously, we had an outstanding quarter in returns to shareholders as we repurchased $50,000,000 of stock, paid a higher dividend and increased our cash balance.

Speaker 3

In total, we returned over 60% of our free cash flow, all while supporting a front end loaded CapEx plan with approximately 60% of spending in the first half of twenty twenty four. Slide 6. Murphy maintained strong liquidity in the Q1 with $1,100,000,000 as of March 31, including more than $300,000,000 in cash and equivalents. I'm pleased that during the quarter we received positive outlook from both Moody's and Fitch revised from stable outlooks previously with the corporate ratings affirmed at BA II and BB plus At quarter end, we had $1,300,000,000 of senior notes outstanding with a long dated weighted average maturity of nearly 8 years. We remain on track for further debt reduction this year and I look forward to reaching Murphy 3.0 with total debt of $1,000,000,000 before year end.

Speaker 3

Slide 7. At Murphy, we seek to continually minimize our impact on the environment, whether that's using natural gas rather than diesel to fuel our onshore operations or utilizing recycled water for our well completions. We also support the communities in which we work, like the city of Uvalde in South Texas or here in Houston. Because of this service, we have been presented with awards such as the United States President's Volunteer Service Award from the Houston Food Bank, and I look forward to Murphy developing further initiatives to enhance our positive impact. With that, I will turn it over to Eric Hambly, our President and Chief Operating Officer to discuss our operational updates.

Speaker 4

Thank you, Tom. Slide 10. Our Eagle Ford Shale wells performed above expectations in the Q1, achieving total production of 29,000 barrels of oil equivalent per day with 86 percent liquids volumes. Our operating partner brought online 4 Tilden wells during the quarter, while Murphy progressed our 20 well operated drilling program for the year as planned. We are on track to bring 7 operated Catarina wells online in the 2nd quarter, plus an additional 4 non operated Tilden wells.

Speaker 4

Slide 11. In the Tupper Montney, Murphy produced 348,000,000 cubic feet per day and progressed our 2024 well delivery program with 13 wells that are either now producing or will be online in the near term. This will complete our plans for the year. We are excited to announce that Murphy has joined the Rockies LNG partnership, which may create future LNG opportunities for our Tupper Montney acreage as projects in the area near completion. This partnership is comprised of Western Canadian natural gas producers driving LNG export optionality and we are eager to be a part of it.

Speaker 4

Murphy maintains a strong price diversification strategy mitigating against AECO price exposure. For the Q1, we sold approximately half of our natural gas volumes at the Chicago, Don, Malin, Emerson, Henry Hub and Ventura price points. Slide 12. Our Kaibab Duvernay asset produced 4,000 barrels of oil equivalent per day with 68% liquids in the Q1 of 2024. We progressed our development program for the year and have 3 operated wells coming online in the Q2 as planned.

Speaker 4

Slide 13. Our Gulf of Mexico assets produced 73,000 barrels of oil equivalent per day with 82% oil volumes. This production was impacted by approximately 13,000 barrels of oil equivalent per day of planned downtime events during the quarter. Murphy is advancing our development program for the year and we look forward to bringing online the sizable Khaleesi No. 4 well in the Q2 as we found approximately 200 feet of net pay when drilling.

Speaker 4

We're also progressing the drilling of a new well at our Ormont field, which is scheduled to come online in the Q3. Additionally, our operating partners brought online wells at the St. Malo and Lucius fields during the quarter. In offshore Canada, we produced 6,000 barrels of oil equivalent per day in the Q1 according to plan. Slide 14.

Speaker 4

During the Q1, we completed the zone changes on the Marmalade No. 1 and No. 2 wells as planned as well as the subsea equipment repair at Marmont number 2. Murphy also initiated work on the Niedermeier number 1 well workover with the plan now updated to drilling a sidetrack well, which will delay the online date to the Q3 of 2024. Our workover expenses, which are included in our lease operating expenses, totaled $50,000,000 for the Q1 with $65,000,000 forecast for the Q2.

Speaker 4

This figure includes the cost of the Niedermeier sidetrack well. Additional work is planned later this year at the Dalmatian No. 2 well for the subsurface safety valve repair as well as the non operated Kodiak No. 3 well stimulation and zone addition. Slide 15.

Speaker 4

In Vietnam, we have been progressing our plans for our Lac Du Vong field development project, including advancing award of major contracts this year. We look forward to begin drilling our development wells in 2025 and remain on schedule for achieving 1st oil in late 2026. Slide 17. In the Gulf of Mexico, we're excited to begin our 2024 exploration program. Our operating partner is currently drilling the Ocotillo exploration well.

Speaker 4

Immediately following this well, the rig will shift to drill the nearby Orange exploration well. These 2 Miocene prospects are located near existing infrastructure and could be brought online quickly if either is a discovery. Also in the Q1, we expanded our portfolio and were awarded 6 deepwater blocks from the Gulf of Mexico Federal Lease Sale 261. Slide 18. We're continuing preparations for our Vietnam exploration program later this year and are excited to have contracted a rig, which is currently drilling in country.

Speaker 4

Murphy will first spud the Hai Sivong exploration well in Block 15-two 17 in the Q3 and target a mean to upward gross resource potential of 170,000,000 to 430,000,000 barrels of oil equivalent. The rig will then move to drill the Lottehong exploration well in Block 15105 targeting a mean to upward gross resource potential of 65,000,000 to 135,000,000 barrels of oil equivalent. We look forward to seeing the results of these wells as they provide the potential to create a more sizable business in Vietnam. Slide 19. Our seismic reprocessing work continues to progress for our acreage in Cote d'Ivoire and we are pleased at the multiple opportunities available across exploration play types.

Speaker 4

Importantly, ENI recently announced positive results from its Marine 1 exploration well on the Kalau discovery nearby. Murphy is excited at this news and I note that our block CI 502 in particular is very near this discovery. In general, our Cote d'Ivoire acreage position is now bookended by 2 significant E and I discoveries. We will continue to progress our analysis of the data as it comes in with the final seismic data due by year end 2024. And with that, I will turn it back to Roger.

Speaker 2

Thank you, Eric. On Slide 21, for Q2 'twenty four, we forecast total production of 176,000 to 184,000 equivalents per day with 93,000 barrels of oil during that period. This range is impacted by 2,000 barrels of oil equivalent today of offshore non op unplanned maintenance primarily related to a 3rd party downstream facility, 12.50 barrels equivalent per day of the Eagle Ford Shale downtime as we have offset frac impacts and a significant downtime of 11,700 barrels equivalent per day at Tupper Montney for plant maintenance that's ongoing. Murphy plans to spend approximately $325,000,000 of accrued CapEx in the 2nd quarter. For full year 'twenty four, we're maintaining our production guidance of 180,000 to 188,000 equivalents per day with 52% or 95,000 barrels a day of oil.

Speaker 2

This guidance is supported by stronger on well performance and better results at non operated offshore fields. We're also maintaining our CapEx range at $920,000,000 to $1,020,000,000 excluding NCI. These ranges will support us achieving our 2024 debt reduction goal of $300,000,000 thereby allowing us to reach Murphy 3.0 and enhance our shareholder returns. On Slide 22, effective at year end, our long term strategy remains unchanged since we first disclosed the refreshed projections following last year's opportunities captured in Vietnam and Cote D'ivoire to support our new opportunities and long term oil production growth. We'll continue to support and grow our returns to shareholders during this time.

Speaker 2

In particular, we'll be executing Murphy 3.0 of our framework after reaching our debt reduction goal this year. Longer term, we plan to reinvest approximately 45% of operating cash flow, enabling us to achieve average production of approximately 210,000 to 220,000 equivalents per day and as always over 50% oil weighting. Murphy will continue generating ample free cash flow to allocate towards further shareholder returns, accretive investments as well as supporting exploration success. Additionally, as part of this plan, we remain committed to achieving metrics that are consistent with investment grade rating. And I'm pleased with the rating agency outlook improvements achieved this spring that Tom just spoke of.

Speaker 2

On Slide 23, I'm glad to have a solid Q1 behind us as we continue to execute our plans for the remainder of the year. A long history of consistently return to shareholders will expand as we reach Murphy 3.0 later this year. We're already ahead of the game with share repurchase in the Q1. I view our 'twenty four debt reduction goal as a given and look forward to buying back more stock to enhance shareholder value. Additionally, we have exploration upside with drilling 2 wells in the Gulf of Mexico and 2 wells in Vietnam.

Speaker 2

Our future is bright, especially consider our long runway of Gulf of Mexico projects as well as significant future locations across our North American onshore business and our exploration upside. As we approach annual meeting season, we often benchmark our peer group on 2023 10 ks data. When doing so, we found that Murphy is rated 1 or 2 in many categories, a few of those, free cash flow for production, the per debt adjusted share growth production per debt adjusted share growth, lowest reinvestment rates, debt reduction, total debt, debt due 24% to 26%, debt to EBITDA, total cash return per shareholder change year over year and lastly G and A for EBITDAX. Solid company, solid plan, diverse portfolio, exploration upside, locations sustainable, a long history of shareholder returns. That's Murphy Oil Corporation.

Speaker 2

As always, I want to thank our outstanding employees for their consistent effort and determination to help us reach all of our goals. With that, that's the end of our prepared remarks today and we look forward to our question.

Operator

Your first question comes from the line of Neal Dingmann from Tarras Securities. Your line is open.

Speaker 5

Good morning, Roger. My first question just on shareholder return. You sort of hit on this, Roger, I just want to go over. Specifically, could you or Tom remind me what bonds, if any, you're able to repay early? And then more I guess more importantly, once you get under that $1,000,000,000 to Murphy 3.0, besides just stepping up the shareholder return, could we see more exploration work or what else can we see because obviously your debt at that time will be well under control.

Speaker 5

So I'm just wondering besides stepping up the shareholder return, is there something else we would see with that incremental free cash flow?

Speaker 2

Thank you for that question, Neil. It's a big key part of our strategy. I'm going to give you a big high level picture and let Tom talk about the specific bonds. We need to think about this framework as a yearly matter. We easily can forecast as you and all of your peers are that we'll easily get rid of this $300,000,000 of debt.

Speaker 2

There's nuances to calling the debt at different opportunities. We also have an internal target in our plans of how much stock we can buy. Nobody wants to buy back stock more than me, and we see the debt as a given. So we're already ahead of the game on the stock. We have an eyeball as to how much stock we want to buy and I would see that going along if the debt goes into the Q3, that's still something we'll be able to do as we go along the way if you follow me on that.

Speaker 2

So our strategy is that as far as long term, we want to keep our plans, we keep our low growth plans. We do not see changes to that plan at any time that I just reiterated, and we want to continue to buyback this stock while it's undervalued. And as you know by yourself and many of your peers, we'll be ranked number 1 in cash flow through 26 available to our market cap And that's going to make us have a really big advantage and we're not really into changing that right now. So I'll let Tom talk about the specific notes.

Speaker 3

All right. Thanks, Roger. Yes, Neil, we got a little over $300,000,000 to go to reach Murphy 3.0 and we've got more plenty available in our 2027 notes. Those are callable today and the balance is around $440,000,000 of 2027 notes. And then our 2028 notes will be callable in July of this year.

Speaker 2

Now you asked about once we

Speaker 3

get to Murphy 3.0 and we go into this 50% to shareholders, 50% to the balance sheet. The way we kind of think about that is Murphy 2.0 was about more of a defensive move, making sure we got our balance sheet in a robust shape. Murphy 3.0 gives us a chance to be positioned for more of an offensive move, whether it's dry powder or more opportunities to return to shareholders either through buybacks or even dividends.

Speaker 6

Thanks, Tom. And then

Speaker 5

that completely answers it. And just secondly, Roger, maybe high level on valuation. Just continued it's hard not to notice that you all trade below some other companies that have materially less production. I'm just wondering your opinion. Do you think the market is just still not appreciating the stable offshore production of you all?

Speaker 5

I mean, I look at your inventory, I look at the production, especially not just the onshore, but the offshore development activity and continue to be sort of surprised just the discount. I just would love to hear your opinion on why this discount that I can't piece together.

Speaker 2

Thanks for that question, Neil. Really love that question. This is my 12th year doing this. It used to make me real upset about those matters. But today, we're just looking to buy back stock and we're going to buy back stock until we do better.

Speaker 2

We have our balance sheet in order to do so. It just rattled off in a long list of positives about our company is solid. Can't be a can't have those attributes without running a good solid company. I believe it must be the market cap of our company would be similar to all shale and all shale doesn't have a work over. All shale is a perfectly organized drilling game plan.

Speaker 2

If we were all shale, I can tell you exactly the production by quarter. It's almost better to have the same product CapEx every quarter. But if you look at the free cash flow and the uniqueness of our company and the deals that we've done and the M and A and all the opportunities we have is because we're in the oil business, we're in different aspects of the business, and we now have ourself in a situation where growth has slowed, buying back stock is in vogue, but we're going to have the best balance sheet and buying stock and be patient and get into doing that especially in 2025 and we'll go with the valuation from there.

Speaker 5

Makes sense. Well said. Thank you, Roger.

Operator

Your next question comes from the line of Leo Mariani from ROTH MKM. Your line is open.

Speaker 7

I wanted to touch base on the Gulf of Mexico production here real quick. I heard some of these numbers right. I think you guys said you had 13,000 barrels a day equivalents of downtime in the Q1, 2,000 equivalents of downtime in the 2nd quarter. So I guess that's a +11000 barrel a day improvement in 2Q. But just kind of looking at guidance, looks like you're guiding up around 4,000 barrels a day.

Speaker 7

So just wanted to get a sense of the delta, is that just kind of natural declines there in the Gulf?

Speaker 2

I'll let Eric handle that for you, Leo, and thank you for that question.

Speaker 4

Yes, Leo, thanks very much. We have quite a bit going on with our Gulf of Mexico program this year. We've noted that we have a number of high rate wells that are not currently producing, in particular the Niedermeier well that we're doing a workover, which has now become a sidetrack. That's a high rate well, about 4,000 barrels a day that should come online early in Q3. And then in the middle of the year, we have work going on at our non op Kodiak and our operated Dalmatian to increase production there.

Speaker 4

So if you think about those just wells that have historically been producers for us that are coming online toward the middle of the year, you'll see a ramp. Along with that, we have our Khaleesi, Mormon program that will add volumes that will help offset declines. So as you march through the year, Gulf of Mexico production will increase and production in Gulf of Mexico in the Q1 was around 73,000 barrels a day and ought to be up 9,000, 10,011,000 barrels a day by the end of the year, end of the last quarter ought to be something like that increase. So offsetting decline with new production and restoring wells to production that have been offline temporarily.

Speaker 7

Okay. That was very helpful in terms of the explanation. And wanted to also have just kind of a similar line of questioning around the Eagle Ford. Looks like that production kicks down a little bit in the Q2. You guys cited some maintenance that's ongoing.

Speaker 7

But could you maybe just kind of discuss how the Eagle Ford production trajectory should play out as we roll into 3Q and 4Q?

Speaker 4

Yes. As you noted, we do have a little bit of downtime in the second quarter. That's primarily offset frac impact because we have an active completion program going in the second quarter. That program continues into the 3rd quarter. The bulk of our operated wells, which generate most of the new production in Eagle Ford come online in the Q3.

Speaker 4

So you ought to see production peak in Eagle Ford in the Q3 and be relatively similar in the 4th quarter.

Speaker 7

Okay. Thanks. For the

Speaker 4

full year, we're predicting a 30,000 barrels a day for the Eagle Ford.

Speaker 7

Okay. That's helpful. I appreciate it. Thanks.

Speaker 2

Thank you, Leo. Appreciate it.

Operator

Your next question comes from the line of Tim Rezvan from KeyBanc Capital Markets. Your line is open.

Speaker 2

Good morning, Tim. Good morning.

Speaker 8

Hi, Roger. Thanks for taking my question. I was hoping to dig in a little more on follow-up on the question on the Gulf of Mexico. The Niedermeier, obviously prolific well, 4,000 a day. You said the workover activity became a sidetrack.

Speaker 8

I was wondering if you could give a little more context on kind of what changed and if you expect that back at full capacity in early 3Q?

Speaker 2

Eric, to handle that for you, it's just oilfield there, Tim, this morning.

Speaker 4

Yes. So what happened with that well is, the workover that we had planned when we got on the well, we expected that the problem was a packer that was leaking. We confirmed in the early stages of our workover that that was indeed the problem. As we progress with the work to pull the packer and tubing, we were trying to isolate the lower completion from the upper completion. So basically the productive connection with the reservoir from the tubular goods in the top part of the well and we were having difficulty isolating the lower completion and decided that the best path forward to have the best success going forward with that well was instead of continue on that path of continuing to fight to get isolation of the lower completion that we would sidetrack the well, which would give us an opportunity to have a completely new completed well with a very short offset from the existing location.

Speaker 4

We have sidetracked that well. We like what we've seen so far. We're going to move forward with a completion that should be a brand new fresh completion, which has the best mechanical outcome and should provide the best production rate opportunity. So it should be reduced in line or better than the well that we're leaving behind.

Speaker 2

Okay. And one note on that, Tim, it's 4,000 net. These wells all these wells we have make 16,000 to 18,000 barrels a day gross. These are big wells. We happen to own 30 something percent of this one.

Speaker 2

So it makes way more than 4 a day. Sure.

Speaker 8

Yes. I get that. Okay. That's all I had. Thank you.

Speaker 2

Thank you, Tim.

Operator

Your next question comes from the line of Charles Meade from Johnson Rice. Your line is open.

Speaker 6

Good morning, Charles. Good morning, Roger. To you and the rest of the Murphy team there, my first question is on 2Q CapEx. The 325 dollars guide is, call it $60,000,000 higher than what I was looking for and I think what some other people were looking for. It looks like what you've already laid out that the big driver of that is really the U.

Speaker 6

S. Onshore completion pace drilling completion or I guess I should say North America onshore drilling completion pace. But also that there's a lot of work going on in the Gulf of Mexico. Are those the 2 big pieces or are there other drivers that are contributing to that what looks like high CapEx in 2Q?

Speaker 2

Thanks for that question, Charles. I'm going to just frame a little bit, let Eric get into the details. So we said all along over 60% of our CapEx in the 1st year and we're still within a percent of that. This is timing of various matters. Timing actually, we drill faster and completing faster in the onshore business and we have non op matters timing on the other.

Speaker 2

And I'll let Eric get into the detail after that. So, we feel that we're still in line. Everything is in line for our debt. Everything is in line with buyback stock. We just moved a few percent of the CapEx to the left.

Speaker 2

That's really no more than that. Eric could give you a detail of that.

Speaker 4

Yes. Thanks, Roger. As you noted, most of the change is driven by the timing of our onshore North America drilling completion program. That's over $30,000,000 of the change. So that's shifting from later in the year into the Q2.

Speaker 4

And then offshore about $15,000,000 of equipment subsea equipment related to our KhulusiMormont program. We moved some spending that we expected in the Q4 up into the Q2 as we pivoted during the time we had our Mormont number 2 subsea equipment issue. And then some seismic spend moved from the Q1 to Q2. You note that we had lower CapEx than our original guide in the Q1. So some of the spending we thought would happen for non D and C related activities including seismic and our Lok Dovong development spending moved from the Q1 of 2020 into the Q2 of 2024 and that's another $11,000,000 or so.

Speaker 4

So that describes most of the changes in the movement of CapEx really as Roger pointed out, where just phasing of spending and not overall spending is changing.

Speaker 6

Got it. That is helpful detail. And then Eric, I want to go back to a comment that you made about this. It seemed like you're pretty positive on this Khaleesi number 2 development well, I think it is. And I think you believe I heard you mentioned that there are over 200 feet of pay.

Speaker 6

And I wonder if you could give us 2 aspects of context and anything else you want to add. And first, how does that 200 feet or whatever you saw in this most reasonable, how does that compare to the initial well there? And then the second piece is, is that all in one zone? Or is that across a few different zones? And so we're going to have a I guess what I'm getting at, is this going to be a monster one zone completion?

Speaker 6

Or is this the more typical you have 60 feet in 3 different zones kind of thing?

Speaker 4

Yes. Thanks for that. I appreciate the opportunity to talk about it. This particular well, the Khaleesi-four well was targeting a reservoir that was not in our initial development of the field. As we develop the field, we identified some additional opportunities.

Speaker 4

This particular one is targeting a shallower reservoir in an up dip position and we so we penetrated this reservoir as we were going to deeper zones, which were the target of our main field development. This is sort of an additional set of volumes that we were able to develop after the initial development program and we're excited about it. It is in one zone. It's a very nice looking reservoir with high reservoir quality, should produce very well for us here as it comes online soon. So if you think about our overall Khulusi Mormont samurai development, we had an initial set of wells, which we've talked about how they'll do production wise.

Speaker 4

In the development, we have Khaleesi and the 2 Mormont wells that we're doing this year are similar. They're targeting zones that were not contemplated in initial development. They're additional volumes, which will allow us to extend the plateau of our total Khaleesi Mormont samurai development. So from that perspective, we're really excited. This development has been tremendous for us with very fast payout already happened and additional volumes going forward with plateau production out into 2025, 2026.

Speaker 6

Got it. That's great detail. Thank you.

Speaker 2

Thanks. Thanks, Charles. Appreciate it.

Operator

There are no further questions from our phone lines. I would now like to turn the call over to Roger Jenkins for any closing remarks.

Speaker 2

Appreciate everyone dialing in today. I had some good dialogue there with our business. We're very, very pleased with our business, looking forward to the rest of the year and beyond. Appreciate all the attendance today and we'll be seeing you soon. Check-in with our IR team if you have any further questions.

Speaker 2

Thank you all.

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