Murphy’s operations in Canada include limited heavy oil exploration and exploitation in Western Canada combined with our non-operated interests in legacy properties: Syncrude (5%), Hibernia (6.5%) and Terra Nova (12%). In June 2007, the Company announced the acquisition of the Tupper leases, a tight natural gas sands play in northeastern British Columbia.

Murphy owns a 5% working interest in the Syncrude oil sands project which is the world’s largest producer of crude oil from oil sands and the largest single source producer in Canada. The project combines mining, extraction and upgrading technologies to produce a light, sweet synthetic crude. A series of expansion stages have been implemented to improve operating efficiency and increase production. The Second of those stages was completed during 2000 and exploits recently developed technologies in a new mine location. Located on one of the most attractive leases, this mine should provide a low cost source of oil sand for many decades.

The Third and Fourth Stages at Syncrude included further mine expansions and significant augmentation of the captive refinery by constructing a third coker. The Third Stage was completed during the late Summer of 2006 and has increased Syncrude’s gross production to 455,000 barrels a day. These stages represent the strategic path of Syncrude to maximize value through a market driven tiered development and add a source of steady production growth to the Murphy portfolio.

Murphy has built a world class position on Canada’s East Coast by being an early player through participation in Hibernia and Terra Nova oil fields.

In 1993, Murphy joined forces with four other international oil exploration companies and the Canadian government to develop Hibernia as a state-of-the-art project. The structure itself is a one-acre concrete “island” which provides an outlet to produce one of the largest crude oil finds of the last 30 years, as current estimates assume over 700 million barrels recoverable. Furthermore, tapping marginal satellite fields and linking them to the Hibernia facility could also extend the life of the project. In fact, other such exploratory opportunities have already been identified and are being considered.

Placed on stream in late 1997, Hibernia produces through a massive concrete gravity base sitting on the ocean floor. Since November 1999, the platform has averaged in excess of 150,000 barrels of oil a day, and has achieved daily production rates over 200,000 barrels a day. Reservoir performance has consistently exceeded expectations resulting in an increase to Murphy's ultimate reserve recovery estimates for the field to over 700 million gross barrels. The project is both immense and profitable, even in a low oil price environment. We are proud to be a part of such a challenging project and consider Hibernia to boast legacy status in our asset portfolio.

Murphy is involved in another mammoth project at Terra Nova, which began pumping oil in January 2002 through a floating production, storage and offloading vessel. The FPSO is the first of its kind, a design built specifically for the harsh environment of Grand Banks. At peak, Terra Nova adds 15,000 barrels of oil a day to Murphy's account. Estimated to harbor 300-400 million barrels of oil and produce in excess of 130,000 barrels a day, Terra Nova is a strong complement to Hibernia and is another example of Murphy's ownership of first class legacy reserves.