Murphy Oil Corporation
) reported second-quarter 2012 pro forma earnings of $1.52 per
share, up from $1.44 per share in the prior-year quarter.
This was driven by a decline in exploration expenses and
interest costs, partially offset by higher operating costs, a rise
in selling and general expenses and depreciation, depletion and
amortization charges. Quarterly earnings, however, beat the Zacks
Consensus Estimate of $1.33 per share.
Murphy's total revenue for second-quarter of 2012 decreased 3.0% to
$7.2 billion from $7.4 billion in the year-ago quarter. This
revenue decline was due to lower numbers in refining and marketing
segment; partially offset by a rise in exploration and production
segment revenue. Revenue in the quarter under review was lower than
the Zacks Consensus Estimate of $9.6 billion.
Exploration and Production:
Second-quarter 2012 revenue from this division was $1,110.8
million, up 5.1% year over year from $1,056.5 million. This
increase was driven by a rise in crude oil and natural gas sales
volume compared to the prior-year quarter. This positive was
partially offset by lower average realized sales prices on
worldwide oil and North American natural gas production.
Refining and Marketing:
Revenue from this division decreased 5.3% to $6.1 billion from $6.4
billion in the year-ago quarter. This was due to lower fuel sales
volume per store, a decline in merchandise sales per store volume
in the U.S., and weak contribution from ethanol production
In the quarter, revenues from corporate activities were $10.8
million versus $8.3 million in the year-earlier period.
Murphy's total worldwide production in the most recent quarter was
188,575 barrels of oil equivalent per day ("Boe/d"), up 10.6% year
over year. The production increase was driven by higher volumes
produced at the Kikeh field, offshore Sabah, Eagle Ford Shale area,
and Tupper West area in British Columbia. This was partially offset
by lower volumes produced at fields in the Gulf of Mexico, Terra
Nova at offshore Eastern Canada, and Azurite field at offshore
Republic of the Congo.
Total sales volumes of crude oil and gas liquids averaged 104,768
barrels per day in the second-quarter 2012 compared with 90,004
barrels per day in 2011.
Natural gas sales volumes spurred 11% year over year as the company
benefited from production in Tupper West area in Northeast British
Columbia during the quarter.
Murphy's worldwide crude oil and condensate sales price averaged
$94.33 per barrel for the second quarter of 2012 compared with
$99.37 per barrel in the prior-year quarter. North American natural
gas sales prices decreased to $2.15 per thousand cubic feet ("Mcf")
in the reported quarter compared with $4.26 per Mcf in the
comparable quarter last year.
Exploration expenses during the quarter declined 21.1% to $96.6
million from $122.5 million recorded in the second quarter of 2011.
The lower expense primarily reflects lower dry hole expenses.
Interest expenses of the company at the end of the quarter were
down 8% year over year to $11.6 million.
Long-term debt of the company as of June 30, 2012 was $791.5
million versus $249.6 million as of December 31, 2011.
During the quarter, net cash provided by operating activities was
$356.1 million, down from $395.0 million in second-quarter 2011.
Total capital expenditure during the second quarter of 2012 was
$909.6 million, up 16.3% from $782.1 million in the second quarter
The Board of Directors of Murphy Oil Corporation announced an
increase to its quarterly dividend: 31.3 cents per share from 27.5
cents per share. On an annualized basis, the dividend will be $1.25
per share, up 15 cents from $1.10 per share.
In the third quarter of 2012, the company expects total worldwide
production volumes of 183,000 Boe/d. Sales volumes of oil and
natural gas are expected to average 179,000 Boe/d. For full-year
2012, the company expects production rate to remain at 193,000
The company expects exploration expense in the third quarter of
2012 to be in the range of $50 million - $120 million.
In the next quarter, the company expects earnings to be in the
range of 90 cents - $1.15 per share, taking into account earnings
from downstream businesses of approximately $45 million.
In July 2012, one of the company's peer
Occidental Petroleum Corporation
) reported second-quarter 2012 operating earnings of $1.64 per
share, down 26.5% year over year from $2.23 per share in the
prior-year quarter. The quarterly earnings surpassed the Zacks
Consensus Estimate of $1.60 per share.
Occidental's quarterly revenue decreased 6.6% to $5,768 million
from $6,173 million in the year-ago quarter. Reported revenue fell
short of the Zacks Consensus Estimate of $5,958 million.
The company is well positioned to move into the third quarter of
2012 with a good start at exploratory drilling. The company
continues to make progress with its offshore drilling activities at
Central Dohuk block in Kurdistan as well as in Eagle Ford
The company also plans to start its 2012 offshore drilling
program in Australia, Congo and Malaysia. The company has made two
natural gas discoveries in Malaysia and Brunei.
In addition to its international expansion, the company is also
strengthening its American operations, which include its recent
entry into the Three Forks zone of Southern Alberta and the Muskwa
oil play in Northern Alberta.
MURPHY OIL (MUR): Free Stock Analysis Report
OCCIDENTAL PET (OXY): Free Stock Analysis
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Moreover, the company continues to augment shareholder value by
maintaining a superior exploration and production profile, which
reflects a robust earnings per share growth opportunity. A
continuously evolving production landscape and an expanding global
acreage make Murphy an attractive investment.
However, we are concerned regarding the volatile commodity
environment, fluctuation in oil prices, crude oil and natural gas
sales timing, U.K. refining margins and drilling results.
Murphy Oil Corporation currently retains a Zacks #3 Rank, which
translates into a short-term Hold rating.
El Dorado, Arkansas-based Murphy Oil Corporation engages in the
exploration, production, refining and marketing of oil and gas in
the U.S. and U.K.