US independent Murphy Oil has sanctioned the development of its King's Quay project in the Green Canyon area of the US Gulf of Mexico, the first standalone deep-water greenfield development in the region to get the go-ahead this year.

Murphy said first steel was cut last month in South Korea for a project it inherited as part of a $1.37 billion asset sale deal agreed earlier in the year with Llog Exploration and Llog Bluewater Holdings.

“We entered into a very nice floating production system arrangement with Llog in which we wanted to take over that operatorship of that facility, execute it in the history and ability that we bring to the table and we have a big ability to sell that project down,” chief executive Roger Jenkins told investors on a conference call.

Murphy authorised a trio of separate projects, the first of which is the standalone King's Quay floating platform with capacity for 80,000 barrels per day of oil, with the other two involving tie-backs to the facility.

Murphy has a 50% stake, the company said, without divulging the rest of the ownership. Jenkins added that midstream companies were looking at the opportunity to buy in.

Previous project operator Llog last year issued a $452.7 million award to Hyundai Heavy Industries to build the hull and topsides.

Murphy expects first production in mid-2022 with initial output expected to exceed 30,000 barrels of oil equivalent per day.

The company expects net project capital expenditure of about $85 million in 2019, $110 million in 2020, $90 million in 2021 and $10 million in 2022 for the floater, according to an investor presentation.

The second project to get the go-ahead is the Khaleesi and Mormont development in the US Gulf, which will include seven wells producing via the new production system. Four already drilled wells will also be used.

Murphy has a 34% stake in the discoveries, which lie in GC 390 and GC 478 respectively.

Llog reported the finds, named after the Game of Thrones fantasy TV series, to regulators in 2017.

Murphy also sanctioned the Samurai development, which it had drilled in partnership with explorer BHP, as a four-well tie-back to King's Quay.

The pair announced a find at the prospect in 2018, which covers GC Blocks 432 and 476.

Murphy said the gross resource at Khaleesi-Mormont is estimated at 165 million barrels of oil equivalent, of which 90% is liquids, while Samurai has an estimated gross resource of 60 million boe, with 15 million boe in upside.

The company plans about $50 million in capital spending in both 2019 and 2020 on Khaleesi-Mormont with $100 million planned for 2021. Meanwhile, Samurai, is expected to ramp up spending to $25 million in 2020 and about $175 million in 2021. Both projects are expected to require less than $50 million combined in 2022.

Murphy also said that following the end of the quarter the company drilled a successful well at the Hoffe Park 2 prospect in Mississippi Canyon Block 122.

"We encountered oil in multiple zones and are completing the evaluation of the well."

In the third quarter, the company plans to start work to tie in the Dalmatian 2 well in DeSoto Canyon Block 4, with first oil expected in the fourth quarter.

Work is also planned to tie in the Nearly Headless Nick well in Mississippi Canyon 387, with first production at the Delta House hub too planned for the fourth quarter.

Also a workover is planned for the Chinook 5 well in Walker Ridge 425.

Murphy reported net income of $92 million in the three months to June, up from $45.5 million in the same period last year.

Production was 159,000 barrels of oil equivalent per day, exceeding planned guidance.

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Murphy marches ahead with King's Quay plans