Murphy Oil Corporation
(
MUR
) engaging in the exploration, production, refining and marketing
of oil and gas in the U.S. and the U.K announced fourth quarter and
fiscal 2011 results. Loss from continuing operations was 59 cents,
far below the Zacks Consensus Estimate of earnings of $1.41 and the
year-ago earnings of 77 cents per share. The significant
year-over-year decline reflects an impairment charge of $368.6
million for the Azurite field in the Republic of the Congo.
However, this was partially offset by higher year-over-year sales
prices for crude oil production.
In the reported quarter, loss from discontinued operations
related to the final adjustments associated with the sale of the
Superior, Wisconsin refinery and the Meraux, Louisiana refinery was
$0.6 million, which comes to a nil figure in per share terms.
Therefore, the company reported a loss per share of 59 cents versus
earnings of 90 cents per share a year ago.
Excluding income from discontinued operations of 68 cents per
share in fiscal 2011, income from continuing operations was $3.81,
below the Zacks Consensus Estimate of $5.24 and the fiscal 2010
figure of $4.03. Including income from discontinued operations, the
company reported net income of $4.49 per share compared with $4.13
per share in fiscal 2010.
Total Revenue
Murphy's total revenue for fourth-quarter 2011 grew 22.5% to
$6.82 billion from $5.6 billion reported in the year-ago period.
The company experienced significant growth in both the
Exploration and Production
and
Refining and Marketing
segments. Reported quarter revenue was also higher than the Zacks
Consensus Estimate by $399.5 million.
Top-line in the fiscal year was $27.74 billion, up 37.6% from
the year-ago figure of $20.17 billion. However, it failed to meet
the Zacks Consensus Estimate of $28.34 billion.
Segment Details
Exploration and Production:
The fourth quarter 2011 revenue from this division was $1.19
billion, up 28.2% year over year.
Refining and Marketing:
Reported quarter revenue from this division grew by 20.6% to $5.6
billion from $4.7 billion in the year-ago quarter.
Corporate
:
In the fourth quarter 2011, revenues from Corporate activities were
($10.2) million versus $1.7million in the year-earlier period.
Quarterly Highlights
Murphy's total worldwide production in the most recent quarter
was 190,103 barrels of oil equivalents per day (boe/d), up 6.8%
year over year.
The increase in total output was primarily due to higher natural
gas volume production, whereas oil production volume declined over
the prior-year period.
Natural gas sales volumes spurred 33.6% year over year to 488
million cubic feet per day driven by higher natural gas production
offshore Sarawak, Malaysia and in the Tupper area in British
Columbia.
Murphy's worldwide crude oil and condensate sales price averaged
$96.90 per barrel for the fourth quarter of 2011 compared with
$73.60 per barrel in the fourth quarter of 2010, reflecting an
increase of 31.7%.
North American natural gas sales prices decreased 28 cents per
thousand cubic feet (
MCF
) in the quarter to $3.67 per MCF. However, natural gasproduced
offshore Sarawak Malaysia was sold at an average of $7.85 per MCF
in the fourth quarter 2011, up from $5.57 per MCF in the fourth
quarter 2010.
Exploration expenses during the quarter rose 67.3% to $185.4
million from $110.8 million recorded in the fourth quarter 2010.
The increase in expenses was due to higher dry hole costs in Brunei
and southern Alberta, which were partially offset by lower dry hole
costs in Republic of the Congo.
Interest expenses of the company at the end of the quarter were
$14.2 million versus $11.7 million a year ago. The increase was
attributable to higher interest for tax and other settlements and
lower amounts of interest capitalized to oil and natural gas
development projects.
Financial Update
Net cash provided by operating activities during the fourth
quarter 2011 was $259.3 million, down 72% from $927.7 million in
the fourth quarter 2010. Total capital expenditure was $769.4
million versus $706.6 million in the year-ago period.
Guidance
Murphy estimates total production in the first quarter 2012 to
average 195,000 boe/d and sales volumes to clock 193,000 boe/d as
it expects to work on the initiatives taken in 2011. The company
expects the full-year 2012 average production to be 200,000
boe/d.
Murphy expects first quarter 2012 earnings in the range of $1.30
to $1.40 per share. This earnings projection takes into account the
downstream contribution of approximately $22 million, and total
exploration expense within a range of $60 million to $80
million.
Our Take
Murphy possesses one of the best upstream affluence themes among
the domestic oil and natural gas integrated companies and
independent E&P group. Murphy Oil continues to augment
shareholder value by maintaining a superior E&P production
profile. The exploration line-up provides a strong production
profile, translating into a robust EPS-growth opportunity.
However, we remain on the sidelines given the volatile commodity
environment and investor unrest due to the failures at the
company's exploration wells.We have a long-term Neutral
recommendation on the stock. The company presently retains a
short-term Zacks #2 Rank (Buy).
Based in El Dorado, Arkansas, Murphy Oil Corporation is a global
oil and gas exploration and production company with refining and
marketing operations in the U.S. and the U.K. The company conducts
its upstream operations in the U.S., Canada, Congo, the U.K., and
Malaysia. The company mainly competes with
BP plc
(
BP
) and
Exxon Mobil Corporation
(
XOM
).
BP PLC (
BP
): Free Stock Analysis Report
MURPHY OIL (
MUR
): Free Stock Analysis Report
EXXON MOBIL CRP (
XOM
): Free Stock Analysis Report
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