On Dec 6, 2013, we have reiterated our Neutral recommendation
on petroleum company
Murphy Oil Corporation
). The company currently has a Zacks Rank #3 (Hold).
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Why the Reiteration?
In the third quarter of 2013, Murphy Oil's earnings per share and
revenues missed the Zacks Consensus Estimate. On a year-over-year
basis, the company's top and bottom line were boosted primarily
on the back of an improvement in the Exploration and Production
and Corporate segments' performances. In addition, an increase in
crude oil production levels at the Eagle Ford Shale also
positively impacted the company's quarterly results.
Murphy Oil is presently taking several initiatives to streamline
its existing operations while focusing more on exploration and
The company had spin-off its U.S. retail marketing division,
Murphy Oil USA, Inc. Currently, Murphy Oil USA is trading on the
New York Stock Exchange under the name of
Murphy USA Inc.
). The spin-off is expected to support both the entities to
utilize resources as per their preferences and market conditions.
In addition, Murphy Oil is in the middle of divesting its U.K.
downstream business and this process is still continuing in 2013.
The transaction will allow the company to focus more on its
existing properties while adding prospective assets.
On the flip side, prices of Murphy Oil's primary products are
often quite volatile. An economic slowdown can impact the
worldwide demand for energy commodities, resulting in reduction
of oil prices, natural gas and refined products. The volatility
in commodity prices can considerably affect the company's
Other Stocks to Consider
Stocks in the sector that are currently performing well include
Abraxas Petroleum Corp.
Bonanza Creek Energy, Inc.
), each with a Zacks Rank #1 (Strong Buy).