Murphy Oil Corporation ($MUR)

Hello. My name is Sarah, and I will be your conference operator today. [Operator Instructions] I will now turn it over to Atif Riaz, Vice President of Investor Relations and Treasurer.

Thank you, operator. Good morning, and welcome to Murphy's 3-part Educational Webinar series. This series has been designed to highlight the company's exploration and development strategy with a specific focus on our growing Vietnam business. Today's webinar will feature prepared remarks by members of Murphy's senior leadership team, followed by a live question-and-answer session. A copy of the presentation for today's webinar is posted on the Investor Relations section of Murphy's website. As a reminder, our webinars may contain forward-looking statements as defined under U.S. securities laws. 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, please refer to our most recent annual report filed with the SEC. Murphy takes no duty to publicly update or revise any forward-looking statements, except as required by law. Throughout today's webinar, production numbers, reserves and financial amounts are adjusted to exclude noncontrolling interest in the Gulf of America. I will now turn the call over to Eric Hambly, our President and Chief Executive Officer.

Good morning, and welcome to the second session of our webinar series. Today, we will provide an in-depth overview of our business in Vietnam. I'm excited to discuss our plans there as we anticipate that Vietnam will play an increasingly important role in our portfolio. Before we begin, here's a quick overview of where we are in our webinar series. Our first webinar last week covered Murphy's strategic approach to exploration and how it delivers real value when combined with our strong development expertise. Hopefully, you walked away from that webinar with a better understanding of our unique value proposition and distinct position within the industry. Looking ahead, in the final webinar on March 24, we will cover the history and fundamentals of production sharing contracts, review their structure and build an example PSC model together. Today, we will start by exploring what makes Vietnam compelling from both an energy and economic standpoint, highlighting its rapid economic growth and rising long-term energy needs. Next, we will examine the Cuu Long Basin and its long-standing role at the heart of Vietnam's oil production. We will then review Murphy's assets in the Cuu Long Basin, discussing our blocks, discoveries to date and how these discoveries will contribute to a strong lasting business presence. Finally, we will present Murphy's strategy and future plans in Vietnam, demonstrating how our expertise, favorable geology, solid economics and cooperative partnerships position us to create enduring value in the country. To kick off today's webinar, we want to start with a story of how Murphy entered Vietnam, and that story begins in Sarawak, Malaysia. Murphy originally acquired two blocks in Sarawak that had previously been held by a super major. Early on, we discovered and quickly developed the West Patricia oil field. The cash flow from West Patricia became the engine that funded further exploration, including our Kikeh discovery. From there, our team delivered a series of discoveries. We first found the gas field shown in red on this map. Later, our exploration team asked a simple question. Could the prior operator small gas discoveries, which have been drilled near the crest of the structures actually beat gas caps of underlying oil reservoirs. That hypothesis proved correct. We drilled, we found oil, and we went on to discover several oil fields shown in green here. This became a showcase of Murphy's technical creativity and disciplined execution, taking what was assessed as a marginal set of assets by a peer and unlocking meaningful additional value. As we were making successful hydrocarbon discoveries in Malaysia, Petrovietnam, the national oil company of Vietnam, took notice. They recognized our success and ability to deliver on both exploration and development and invited us directly to explore in the Cuu Long Basin. That invitation is just one example of Murphy's strong international reputation, which has opened the doors for us across the globe. It's the reason Murphy entered Vietnam in 2012 and ultimately, the reason we're able to pursue the material opportunity set we'll be talking about today. So the key takeaway here is that our position in Vietnam wasn't luck. It was earned. It was the result of strong execution, value delivery and the reputation built through our success in Malaysia. Later in the presentation today, you'll hear more about how our success in Malaysia is analogous to what we plan to achieve in Vietnam. I'll now pass the conversation to Chris Olson.

Thanks, Eric. Before we delve into our business in Vietnam, I want to frame why Vietnam represents a compelling international growth opportunity for Murphy. Today, Vietnam is one of the fastest-growing economies globally with sustained GDP growth of 5% to 7% per year and a stated goal to become a high-income nation by 2045. That growth trajectory is translating directly into rising energy demand, while domestic supply, as you can see in the chart on the bottom right, has been steadily declining for more than a decade. Our strategy here is to help bridge the supply gap through production from the Cuu Long Basin, a basin that contains a proven petroleum system and delivers more than 80% of Vietnam's total oil output. The basin benefits from extensive established infrastructure and a low-cost operating environment, which supports attractive project economics. Taken together, Vietnam and specifically the Cuu Long Basin offers Murphy scale running room in advantaged blocks that remain underdeveloped relative to the basin's proven potential. Now let's take a closer look at Vietnam's energy landscape and why it's structurally attractive for Murphy. First, Vietnam is a growing economy, and there's strong recognition by the government that foreign participation is critical to meeting Vietnam's long-term energy goals. Second, Vietnam's economy relies heavily on fossil fuels for power generation with more than half the country's electricity coming from fossil fuels. As we mentioned previously, and as you can see on the chart to the right, domestic oil production has been declining for more than a decade, while consumption has increased. Today, Vietnam has become increasingly reliant on oil imports, already importing over 200,000 barrels of oil per day. Despite this decline in production, as a country, Vietnam has meaningful remaining potential with approximately 6 billion barrels of crude reserves and around 38 trillion cubic feet of proven gas reserves. Unlocking these resources, however, requires new investment, and that's where Murphy's operating model fits exceptionally well with Vietnam. The takeaway here is pretty simple. Vietnam is a growing economy with rising energy needs, declining domestic production and an appetite for foreign energy investment to help fill the gap. Murphy offers Vietnam a productive partnership to explore for and develop new hydrocarbon resources to support their economic goals. With the market fundamentals clearly pointing to a runway of opportunity, it's natural to question Vietnam's investment climate and whether Vietnam is a stable and reliable place to invest. Vietnam has implemented major business and investment reforms over the past several years, which have been highly effective in drawing global capital. Today, foreign investment accounts for more than half of the country's GDP, and the country is especially supportive of investments in the energy sector. We are seeing and realizing the value of this support firsthand. Several key factors consistently draw investor interest. First, a stable political system with a governing structure that has been in place for more than 50 years; second, a strong economy with sustained economic growth; third, a skilled workforce and competitive labor costs; and finally, an expanding network of trade agreements and legal reforms that enhance transparency and market access. Vietnam's economic growth ranks among the top 10% globally and foreign direct investment has trended up over the last 20-plus years. Additionally, over the last several years, Vietnam has entered into trade agreements and strategic partnerships that improve Vietnam's global integration. Altogether, these factors build a strong foundation of fiscal stability and investment security. And for Murphy, these characteristics serve as the cornerstone for confident long-term investment. Now let's talk about fiscal terms because this is an area where people often make assumptions and are influenced by perception and not reality. When investors hear that Vietnam's government take is around 70%, the immediate reaction is often, man, that sounds high. The fiscal regimes don't exist in a vacuum. They're fundamentally a risk-reward relationship that can balance and enhance Murphy's portfolio. Government take is designed to balance risk. Lower government take typically applies to higher-risk environments like deepwater, frontier and unproven basins. Higher government take typically indicates lower risk like proven and mature basins, shallow water or areas with extensive data and existing infrastructure. Vietnam fits squarely in the second category. The Cuu Long Basin is a mature, proven prolific oil-prone basin with decades of production history. So the government take here isn't a penalty, but rather a reflection of the fact that investors are operating in one of the lowest risk oily basins in Southeast Asia. Looking at the chart to the right, Vietnam's terms are well within the range of global comparables for different fiscal regimes, including PSCs and tax royalty structures. In other words, Vietnam is neither unusually punitive nor unusually generous and is appropriately calibrated for the risk profile of the basin. What drives real value in Vietnam is the quality of the rock and the quality of the projects that we're developing. A proven basin with a high chance of success, stacked pay zones, fast cycle times and existing infrastructure creates economics that outperform lower government take basins with poor subsurface characteristics. So rather than focusing solely on the top line government take number, the right question to ask is, what is the risk-adjusted return? And in Vietnam, that combination is attractive. We plan to dive deeper into this during the next webinar in our series. As discussed during the first webinar, for Murphy, everything starts with the big picture and regional work informs our access strategies. When most people think about hydrocarbon occurrence and phase in Southeast Asia, they think about natural gas. The Cuu Long Basin, however, contains one of the most prolific oil-prone source rocks in Southeast Asia, having yielded approximately 5 billion barrels of oil equivalent reserves from 57 discovered fields. The basin is strongly liquids weighted with roughly 75% of recoverable volumes being oil and liquids, which is a key differentiator relative to the gas dominated basins in the region. Thinking regionally, this was key as Murphy contemplated access over a decade ago. Geologically, Murphy's acreage is optimally positioned. Blocks 15-1/05 and 15-2/17 sit within the core of this oil-prone source basin where hydrocarbon source rocks are heated and transformed from organic material into oil. With that, their proximity to these mature source rocks facilitates hydrocarbon migration and the efficient filling of large structures. The basin is incredibly rich and nearly every porous and permeable layer from the pre-cretaceous basement through the Miocene sees oil accumulations or oil shows. With a runway of exploration opportunities that remain to be tested, this materially reduces comparative exploration risk in our exploration portfolio. I will now turn it over to Frank to talk more in depth about our Vietnam business.

Thank you, Chris. We entered the Cuu Long Basin by acquiring working interest in the 15-1/05 and later entering the 15-2/17 block. At the time, there were two discoveries, Lac Da Nau or Brown Camel and Lac Da Vang or Golden Camel, which serve as springboards for future ideas and scale. Our first operated discovery was the Lac Da Trang or white Camel in 2019, which led to the development of the Hai Su Vang or Golden Sea Lion prospect. In 2023, we structured our activity around a hub-and-spoke model that maximizes capital efficiency and shorten cycle time, similar to what we achieved in our Sarawak business. What we mean by hub and spoke is that we have an anchor field that will serve as the hub in that it can support the investment to install processing and export infrastructure. Then future smaller discoveries can be tied back for lower capital. First, we sanctioned the Golden Camel development with a three-year time line to first oil. Second, we approved the 2024 exploration campaign to drill the Golden Sea Lion hub class prospect and the Pink Camel tieback prospect. The thought at the time was for the Golden Sea Lion prospect to become the anchor for the 15-2/17 block, while the Pink Camel prospect will be a tieback to the Golden Camel hub, providing optionality to maximize available facility capacity. Combined, this program set the basis to build a material oil-weighted growth platform with disciplined capital deployment and clear line of sight to production and cash flow growth. Fast forward to today, our exploration and appraisal record in our Cuu Long Basin blocks has a 100% success rate. The Golden Sea Lion has line of sight to be one of the largest discoveries in Southeast Asia and our Golden Camel development is on track for first oil by fourth quarter this year. Over the next few slides, we'll give you a deeper look into the opportunity set in both our Cuu Long Basin blocks. As combined, this will result in a material business for Murphy in Vietnam in the 2030s. Starting with the 15-1/05 block. The Golden Camel is a hub class development of Eocene-aged sandstones with 100 million barrels of gross recoverable resource that is a phased development plan designed to efficiently bring volumes online. We expect peak production in the range of 10,000 to 15,000 barrels of oil per day equivalent net to Murphy. On the map on the right, you can see the Golden Camel or Lac Da Vang field positioned alongside the Pink Camel, Brown Camel, White Camel and other key prospects within both the 15-1/05 and 15-2/17 blocks. In the future, Golden Camel will serve as a primary infrastructure hub to produce from these neighboring fields, lowering the economic threshold for these prospects and improve capital efficiencies. The Golden Camel is also Murphy's first development in Vietnam, where we are seeing strong execution from our project team. We remain on track to hit our milestones with the launch of our floating storage and offloading facility in the first quarter, topsize installation in third quarter and first oil in the fourth quarter of this year. The ability to have a hub class development with multiple low-cost tiebacks is a clear advantage of the Cuu Long Basin that we identify and are proud now to be part of this ecosystem. The basin has a strong supply chain that is aligned with our focus on safety, environmental protection and fast tracking time to first oil. The chart on the left shows gross unrisked resource potential across the broader area, highlighting how the Golden Camel integrates into a multi-asset, multiphase plan. When you look at the stacked reservoirs and the proximity of these fields, the strategic value of an anchor becomes clear. The infrastructure we put in place for the Golden Camel will ultimately enable lower cost, faster cycle tiebacks from surrounding discoveries that target different play types. The important takeaway here is that the Golden Camel isn't the only project in this block. It's the foundation of Murphy's long-term Vietnam business. It proves the business model, confirms a strong supply chain in the basin, reduces future capital intensity of prospects and it sets up a scalable development pathway across the block. For the last two years, we have received the best gift you can give an oil finder, a sample of clean oil. Our Golden Sea Lion discovery hits on a theme we highlighted in the first webinar. We find potential where others miss. Prospectivity on these blocks was identified for several decades, including a 10-year of operatorship by a super major. By leveraging learnings from the previous discovery in our position, we came up with a unique concept of a play that has not been largely tested in the Cuu Long Basin. We continue to be impressed with the quality of resource and materiality of the Golden Sea Lion discovery. Oligocene-aged sands with a projected gross recovery range of 170 million to 430 million barrels of oil equivalent with thick reservoir sections and large oil columns, they are hard to come by, especially in shallow water. True to our approach, we move fast to appraise with the goal of increasing the understanding of the field and start testing different development concepts. Today, we have many options to develop the Golden Sea Lion. Next major milestones are sanctioning the project by year-end 2027 with the goal of first oil in 2031. To get there, we have started to evaluate several concepts. I would like to provide a bookend of potential development concepts. One is leveraging a design similar to our Golden Camel. It's a project that we're executing well, understand the cost and what it takes to deliver. And the other is an FPSO redeployment. Each will have trade-offs when it comes to schedule, CapEx and execution risk. What you can expect is for us to tap into our proven track record of offshore development to accelerate the Golden Sea Lion to first oil. Lastly, once the Golden Sea Lion is online, it will be our second hub and platform for future oil growth. And similar to our Golden Camel, we have the opportunity to unlock exploration upside once our infrastructure is in place. At Murphy, we're excited to play a key role with our partners in Vietnam to help the country achieve its ambitions. Our Cuu Long Basin business is set up for success with our two hubs, Golden Camel and Golden Sea Lion. We have executed this formula once before, picked up blocks that were discovered by a super major, established a hub led by a discovered resource, created a lot of value for our shareholders and host nation. We are laser-focused on replicating this model again in Vietnam to build an oil-weighted business that can produce 30,000 to 50,000 barrels of oil equivalent per day, underpinned by successful exploration and our offshore development capabilities, positioning Murphy to be the preferred partner in the Cuu Long Basin. And with that, I'll hand it over to Eric for closing slides.

In closing, Vietnam's growing economy offers a compelling investment opportunity. The need for energy is clear, the economic and political climates are favorable, and the country is welcoming foreign investment like ours to meet their energy demand. Murphy has already established a tangible foundation in country through our Lac Da Vang Golden Camel development and the Hai Su Vang Golden Sea Lion discovery. These projects provide a clear line of sight to building a material long-term business in Vietnam. Vietnam gives us the opportunity to replicate the success we achieved in Malaysia with attractive fiscal terms, strong local partnerships and our proven offshore expertise, we are on the path to turn this basin into Murphy's next engine of long-term shareholder value creation. As mentioned previously, our next webinar will focus on production sharing contracts or PSCs. We will start with an overview of PSCs, their purpose, their history and how they differ from other fiscal regimes such as the tax and royalty structure in the United States. Next, we will walk through the typical fiscal structure of a PSC, including how production and revenue flow between the contractor and the host government. And finally, probably the most exciting for this group will be a step-by-step walk-through of an illustrative PSC cash flow model. We hope this will help clarify how entitlement production is calculated, how cost recovery works and how profit oil is allocated across different phases of a project. Thank you again for joining us today. We look forward to seeing you for our final session on March 24. We will now take your questions.

At this time I will open the call for the question-and-answer session. [Operator Instructions] Your first question comes from Carlos Escalante with Wolfe Research. Carlos, perhaps your line is on mute. Okay. We will move to Leo Mariani with ROTH Capital Partners.

I wanted to focus on this chart on Page 13, which kind of shows the oil production potential for Golden Camel. And I was hoping just to try to get a little bit more color on that. I guess I see you have this kind of darker blue wedge of development. And I guess that really represents the first field sort of coming online, but correct me if I'm wrong. I wanted to kind of get a sense of a rough time line in terms of how you get from initial production, which I guess will be in the fourth quarter to kind of peak production. When do we sort of expect that? And then you've got this overlay of discovered upside. And presumably, that's the fields around it. So, Pink Camel and White Camel eventually being tied in. Just wanted to get a better understanding what that chart represents here.

Leo, thanks for your question. What I'll do is do a little bit of framing and then I may have Frank come in with a little more detail. But I think the way that you interpret it is how we intended to communicate it. The dark blue development is the Lac Da Vang field, which as we've communicated previously, is a phased development. The initial production will come from Lac Da Vang A platform. And in 2028, we'll install a Lac Da Vang B platform and drill half the wells from each of the platforms. So what will happen over the course of the development at Lac Da Vang is that we will continue to add wells in a phased manner out through 2029. And then when we finish drilling those wells, we expect that it will begin to decline. What we're trying to show here on the plot is that the potential for the block is much more than just the Lac Da Vang Golden Camel field, but the discovered upside are those other fields that we have already drilled and identified hydrocarbons. In many cases, they may need some additional appraisal before we move them into a development funnel. But we have a pretty decent idea about the relative size of the resource. And from what we've found so far, they're really tieback scale opportunities, smaller than Lac Da Vang, but significantly large enough to be -- to continue to add to the resource from the block, which is what we're showing here. And then the last wedge on top is in the lightest color is the exploration potential, and that is targeting the prospects that we highlight with sort of lightly blue shaded polygons in the Block 15-1/05. To be clear, on Slide 13, we're talking just about the Block 15-1/05. And then on the following slide, we talk about the Block 15-2 potential. So my last comment I'll make, and I'll let Frank add any color, is that the success rate we've had so far in drilling in the Cuu Long is 100%. I don't imagine that we will get through all of our exploration program here at 100%, but it is a pretty strong track record, and it gives us some confidence that there's a very good chance we're going to keep finding oil in these prospects and allow us to continue to maximize the facilities we're developing for Lac Da Vang in a very capital-efficient way. So Frank, if you want to add any color.

Yes. Thanks, Eric. Yes, Leo, I think one thing that we highlighted in our prepared remarks is our hub-and-spoke model and the benefits of that. And what we've seen from where we run our internal economics is the minimum economic field size to make these tiebacks work is roughly 8 million to 10 million barrels. So it's a very low threshold. And we think the prospects here, the prospectivity around Lac Da Vang is above that. Each prospect ranging between 20 million to 30 million barrels that we will test appraisal test. So that's what gives us now that we have the infrastructure in place for the Golden Camel, we now can start exploring and opening up testing concept similar to what we're seeing in the Golden Sea Lion in order to maximize facility utilization of the investment that we made with the Golden Camel field.

Just a last comment for me. We're showing here a production profile that is not intended to be overly quantitative. It's really trying to be sort of relative scale of what we found versus what may be found in a sort of cartoon way. I wouldn't try to put this exact production profile in a model. I just -- it gives you a sense for a relative scale of what may be developed across the block.

That was super helpful, very thorough there. I want to jump over to Hai Su Vang at this point. I think you guys are doing two more appraisal wells here this year. Can you talk a little bit about the timing of those? Are they -- have they -- one of those spud yet? Are those more second half wells? And then I guess, maybe just talk about more what you hope to accomplish. You have the range of 170 to 430 MMBOE, which you already have. I think you've already indicated you're kind of at the higher end of the range at this point. And maybe just talk about what the goals on those two wells would be. Presumably that can expand that range above that. So maybe just provide some more color on that would be great.

Thanks, Leo. We are in the middle of our appraisal campaign. As you noted, we announced the results from the 2x well, which gave us a significant view of the resource that puts it towards the higher end of the initial communicated range. We still have a lot to learn about the field. So the 3x and 4x wells that we're working on now will help us assess the resource more comprehensively. The 3x well is drilling in the Northeast extension of the field in 15-1/05 Block, and the 4x well will be drilled in the Southwest part of the field. So when we're done, we'll have 4 penetrations in the reservoirs, and it will cover the bulk of the structure. And that information is important for us as we cover the bulk of the structure, we'll be able to update in a kind of comprehensive way what the resource range is for the reservoirs that we encounter. And so the 3x and 4x campaign is underway. I anticipate that we'll have results from those wells and an updated resource range somewhere around the middle of this year, maybe by the time we come up with all the new assessment of resource range, it might be in the August time frame. But that's what we have -- we expect to do going forward.

Okay. That was super helpful, Eric. And supposedly, if these wells are very successful, then this 430 number should move up over time if those wells are really solid, right?

I would not necessarily characterize that the resource range moves above. I think what we should do is get through our program and fully assess the field and what do we learn from every penetration in the reservoir. The aerial extent of what we've identified the oil down to so far is the size of Manhattan, and we have two small holes in the ground. And there's a lot of information to be learned about the field. I feel good about what we've communicated historically here is that our midpoint is probably towards the higher end of our initial range. It's possible that we could see resource that goes significantly above the 430 initial high point, which is what we communicated with our press release in January. I would hesitate to speculate on a number at this point. I think what we need to do is finish our appraisal campaign and have a really comprehensive updated view of the resource range. And so you won't see us in the next month or two speculating. We want to get through our program and then come up with a new range that we think is probably tighter than this, and we'll be happy to kind of move forward on the development plan with that basis.

Your next question comes from Arun Jayaram with JPMorgan.

My first question is on the LDV field. Eric, you've highlighted 100 million barrels equivalent of gross resource potential. I was wondering maybe you could help us understand what is the gross CapEx number for that development kind of today? And from a reserve booking standpoint, what is Murphy booked in terms of its reserve report from a proven reserve basis?

Thanks, Arun. I'll hit on the reserve booking, and then I'll have Frank talk about the CapEx. We made an initial proved reserve booking net to Murphy of about 13 million barrels. And we did that after we sanctioned the project in 2023. So it's been on the books for a little while now. And what will happen over time with proved bookings in these type of offshore fields, you start out, you get a little production performance and then over time, you add to the proved reserves. So the initial booking is a pretty conservative number. And I wouldn't take 13 million barrels compared to 100 million barrel total potential and say that reflects what we think our net ultimate potential is. It's really a fairly conservative initial booking. And then on the project spending, I'll let Frank give some details around that.

Yes. Yes, Arun. So on project spending, total project CapEx out there since we sanctioned is around $390 million net CapEx to us. And then this year, we're projected to spend around $100 million. And then through 2027 to 2029, the average will go down to about $50 million, which will be mostly spent on the second wellhead platform and the other half of the wells. to get drilling to be done with drilling all the way until 2029.

So, Arun, we're 40% working interest. So if you want a gross number, you could take the number that Frank said and net that up at 40%. So about $950 million. So about $10 a barrel.

Okay. Just to clarify a couple of numbers. The 13 million barrels of reserve booking, is that -- that's on a net basis?

It is.

Okay. Great. And then the $50 million of CapEx that Frank talked about, is that per annum or total between '27 and '29.

Per annum, on average.

Per annum. Okay. Got it. Got it. That's helpful. Just maybe a follow-up, Eric. We know that one of your partners in Vietnam is marketing, I believe, a 25% interest in the block. Do you have a ROFR on your position in Vietnam? And how would you and the Board evaluate potentially increasing your interest in what looks to be a really exciting growth opportunity for the company?

We do have a ROFR. And if we believe that our partner that is potentially transacting a sale has negotiated terms that we think are competitive for us, then we will exercise our ROFR most likely because we do see the potential here. It's significant. I will highlight that we don't know for sure if a transaction will happen. They have an active data room. They have been a little bit unclear about exactly what they may sell. We have heard that they are maybe selling only their interest in 15-1/05 and not 15-2/17, but I think they're marketing both and they're open to offers. So we'll see what happens. Obviously, we have a track record of not overpaying for things. So it will be interesting to see if they do reach a deal with a potential purchaser what the valuation will be and if it looks attractive to us to move in. But we do like the opportunity here. I would love to have more of it at the right price. We think the potential on the blocks is significant, which is what we're trying to highlight in our presentation today.

Your next question comes from Charles Meade with Johnson Rice.

I'd like to ask a question on Slide 8. And it's really if you could help paint a little bit more the picture for us for Vietnam as a host government. I think the term coming this Communist Party is a little -- it's off putting, but it seems like it maybe is more of a label than a kind of a substantive description. So you've laid out a good case here where the country is opening up to -- and making deals with Western countries, Western business interest. But can you give us a sense of what the history specific to the offshore has been? Has there ever been an expropriation or kind of a post facto change of PSC terms or anything that maybe was a historical concern, which you think is no longer a concern now?

That's a really good question. The environment in investing -- foreign investment in Vietnam is extremely stable. There is no history of any PSC terms changing or a block being expropriated. The oil business in Vietnam initially was established without foreign participation with the exception of the Soviet Union post the war. And they developed their own capability and a very healthy mature service sector. The investment in oil business there has just been tremendous and extremely stable for 50 years. And so we're really happy to invest there. I guess some people, the coming this party term could be off putting, but that's what they are, and that's what they call themselves. They are a very pro foreign investment communist government. It's a very stable government. It's effectively a unit party for 50 years. We're happy to be doing business there. We're very happy with the ability to invest with confidence and have no concerns. Have there ever been a period where we've been concerned that the government instability or the risk of something being taken from us. They're welcoming. They're extremely encouraging for us to invest. They're supportive. Last year, I met with the senior leader of the Communist Party, Mr. To Lam, and he said all the things I just told to you. He said that they're supportive and they want us to invest, and they're there to help our project move along in a timely manner and hope that we continue to discover more Camel colors.

Okay. Great. And then my second question on Slide 11. When I look at your -- I'm looking at the different horizons you've discovered oil in the HSV, the rightmost one there, it suggests to me that your first two wells, you've only tested through the, I guess, the middle Oligocene and you haven't tested yet the lower Oligocene or Eocene. And so I'm curious, are the 3x and 4x designed to test those deeper horizons? And also, it looks like maybe you go down to the Oligocene, but you're not going all the way to the pre-cenozoic like you have in the Brown Camel. So why not go that deep? Maybe just kind of -- I know there's a couple of questions in there, but just are you appraising those lower Oligocene and Eocene in the 3x and 4x, it looks like you are. And then why not go deeper? And maybe that's -- maybe there's a larger discussion there about a deeper setting here versus the Brown Camel find?

Yes, nicely spotted there. The 3X well that we're currently on is specifically designed to test the four reservoirs that you see there, including the deeper potential than the oil discoveries we've announced in two reservoirs so far. So it is specifically designed to test for deeper potential. One of those reservoirs is the reservoir that is being developed and will soon produce at Lac Da Vang field. The basement here, the pre -- I can't say the word very well, cenozoic, is not viewed by us at this time as being particularly prospective in the HSV location. And Chris, maybe if you want to add any color around why.

Yes. So as we look at these different dots indicating productive reservoirs in the basin, obviously, you're increasing with depth. At the location, what we're drilling at Hai Su Vang, the Golden Sea Lion, Basement is very deep and would take a very long time to drill to. And the image quality is not very good on the block. So there's a lot of uncertainty with the prospectivity of the traditionally productive basement interval in Vietnam and the Cuu Long Basin.

Yes. So what we've been finding so far, if we encounter reservoir sands that are of high quality, they've been filled with oil. And so we're trying to identify all the potential of the reservoir sands that have the potential to be commercially developed.

Your next question comes from Paul Cheng with Scotiabank.

Can you give us a comparison from a CapEx standpoint on Golden Sea Lion versus the Golden Camel? I mean Golden Camel a number of years ago, you start the last several years, inflation has been high. So everything else equal, that may lead to a higher unit cost, but then you have much better economy of scale. So how -- when you put everything together, how should we look at it? I know it's still a little bit early, but if you can give us some point and also that other than, say, inflation and the economy of scale, will the design or the structure itself will also lead to a lower unit cost development or higher unit cost development? That's the first question.

Yes, Paul, thanks for that. As we talked about earlier today, the development cost of Lac Da Vang Golden Camel is around $9 to $10 a barrel. For Hai Su Vang, we highlighted that we have not yet selected a development concept. But with the different ranges of potential development concepts there, I would anticipate the development CapEx to be in the $5 to $10 a barrel range. In general, I think there are things with Hai Su Vang that suggest it could be more capital efficient than Lac Da Vang. The reservoir production rates that we're expecting from -- that we have seen, I should say, from our drill stem tests and the first two wells are very high and suggest you may need less wells for the same resource in Hai Su Vang compared to Lac Da Vang. So that would suggest potentially less spending on wells. I will say though, it is a very large structure, and it will need multiple drilling centers. And so that's something we have to figure out is the exact extent of the reservoir to be developed, how many drill centers do we need in order to reach all the targets to drill the development wells. It's a bit early to say. But I would say that it would not be unreasonable to expect unit development cost to be slightly better than Lac Da Vang, and we'll update that when we know probably about a year from now.

That's great. And can you remind us that how long is the -- when the exploration period will expire?

The exploration period has still got a long way to go, and we're not concerned about that being an issue for us. We have lots of years left, and we can find that date. I don't recall it. But it's not in my mind because it's not a big concern.

Okay. So...

My [indiscernible] tells us it's five years from now. Five years from now.

Okay. So we have plenty of time to really -- if you want to delineate the deeper zones that to see what our potential.

Yes.

Your next question comes from Carlos Escalante with Wolfe Research.

This is Aayush Gupta on behalf of Carlos Escalante. He apologizes for not being on. So we'd like to ask about porosity. You have two successful flow tests on a basin where reservoir characterization as pointed by some research paper seems to point out Oligocene sands in the range of 5% to 20% with a mean towards the lower end. So why would you not disclose perhaps a range on that?

Let me start with an answer and maybe Chris can add more color if necessary. We are hesitant to disclose one parameter about something that is -- that's really one parameter over a very large field. What I would point you to is we've announced results from our drill stem test, and we've flow tested the 1x well, 10,000 barrels a day. and two different flow tests, summed together 12,000 barrels a day for the 2x well, which gives us high confidence in a highly productive, highly permeable reservoir of tremendous quality. Probably those flow rates are better than the basin average from different reservoirs. It's probably on the order of 3x to 5x higher production rate than has been commercially developed in the basin. So we're -- we think that's a very concrete result. In a reservoir, the scale we're talking about, which have multiple reservoirs in these reservoirs, porosity is something that varies across the reservoir. So we have so far two holes in the ground where we've encountered significant pay within the pay section, the porosity varies within just the well we're in. So to come up with an average number where we have small holes in an area the size of Manhattan is premature. We would rather get through our comprehensive appraisal program and come up with a much better model of what the average properties are. But having said that, I think we have high confidence that we have a highly productive prolific reservoir here and focusing on just one parameter is not -- I would say it's not critical. What is important ultimately is what is the oil in place and how much of the oil in place will be recovered. And porosity is one of about seven parameters that are related to determining how much oil will come out of the ground.

[Operator Instructions] Your next question is a follow-up from Leo Mariani with ROTH Capital Partners.

Just wanted to follow up a little bit on exploration. So we talked a lot about sort of appraisal at Hai Su Vang and development of Lac Da Vang. But can you maybe just talk a little bit more color about what kind of an exploration program can look like? I think on your previous call, you guys talked about drilling more exploration wells between '27 and '29. You just mentioned the five-year window a bit ago. But presumably, you're just going to be drilling kind of in and around these hubs that you're developing. I think I did hear you say a little bit ago that prospect size at Lac Da Vang is kind of 20 million to 30 million barrels. And maybe you can just kind of characterize what you're looking for? Is it more kind of smaller kind of satellite fields and everything gets tied back eventually? And is that the case for both hub developments? Are there any other sort of larger prospects left? Just hoping you could give us kind of an overview of what you guys are seeing from an exploration perspective.

Leo, that's a great question and it gives me an opportunity to give you some pretty good color here. We have one exploration well planned in Block 15-1/05 this year that is the Lac Da Vang North, so White Camel North. And that's a well we'll drill this year. What I expect is in the 2027 to 2029 time period, we are likely to come back here and have quite an active exploration program to test the remaining undrilled prospectivity on the block and set ourselves up for an optimal tieback development program. And these fields, I think Lac Da Vang preliminary results we said is probably in the 30 million to 60 million barrel range. The other fields, we have some work to do to kind of assess just how big they are. What is important and what Frank tried to point out was we need somewhere less than 10 million barrels to have a tieback work, and we're probably going to find things that are 20 million to 40 million barrels would be kind of a guess of the size of the future tiebacks there. So, what it does for us, it sets us up to fully test the block, just like we did in our Sarawak Malaysia business and then optimally plan a development where we efficiently develop all the total resource in the block over time. And it's likely that's done with common infrastructure. The FSO and pipeline infrastructure almost certainly will be used in common. It's possible that we may need more processing equipment or expand the capacity of the Lac Da Vang development to accommodate future higher processing capacity. We may find a field that's large enough that it justifies its own processing platform, and we would just have common FSO and pipeline infrastructure. I think you'll see us focus sooner on testing the prospectivity in 15-1/05 and then probably pivot to the 15-2, where, as you can see from our slides, there's a lot of remaining prospectivity to test. But the timing is probably more important than 15-1/05 because of the nature of an ability to move into tieback mode quickly with first oil in Hai Su Vang, obviously coming probably in the early 2030s or maybe 2030. So you'll probably see us be more active in 15.1 and then pivot later to explore more in 15.2.

There are no further questions at this time. This concludes today's conference call. Thank you for joining. You may now disconnect.