On Jun 10, 2013, the shares of
Murphy Oil Corporation
) hit a 52-week high of $66.28. The company reported favorable
earnings surprises in three of the last four quarters with an
average beat of 20.6%.
We consider Murphy Oil's strong financial position and
significant progress in offshore drilling activities in the
domestic as well as international locations to be catalysts for
its future performance.
Yesterday, Murphy Oil made a gas discovery in the Browse Basin of
offshore Western Australia. The non-operated Bassett West-1 well
has encountered more than 20 feet (6.1 meter) of net gas
condensate pay. The company's effort toward strengthening
domestic operations along with expanding international footprint
Murphy Oil has solid liquidity position with cash balance $1.1
billion as of Mar 31, 2013 and net cash provided by operating
activities of $0.9 billion during the first three months of 2013.
This financial comfort enables the company to invest $4.3 billion
in 2013 for several development projects while following steady
Apart from investing in several projects, Murphy Oil's liquidity
also allows it to maximize shareholders' wealth through regular
dividend payments and share buyback. The company currently has
share repurchase authorization of up to $1 billion.
Additionally, Murphy Oil plans to sell its UK upstream operations
and spin-off the U.S. downstream subsidiary, Murphy Oil USA, Inc.
to an independent entity. The divestiture will allow the company
to have a deeper focus on its existing properties and add new
ones to drive further value. The spin-off will enable both the
organizations to allot resources and redeploy existing capital as
per their own priorities and market conditions.
Murphy Oil's second-quarter 2013 earnings guidance ranges from
$1.50 to $1.65 per share. The Zacks Consensus Estimate for
second-quarter is $1.56 per share. We expect the company's
long-term earnings growth to be 11.5% on the back of sales growth
Murphy Oil currently has a Zacks Rank #3 (Hold). The other stocks
in the sector that are worth considering include
Abraxas Petroleum Corp.
) with a Zacks Rank #1 (Strong Buy), and
Anadarko Petroleum Corp.
) with a Zacks Rank #2 (Buy).
ANADARKO PETROL (APC): Free Stock Analysis
ABRAXAS PETE/NV (AXAS): Free Stock Analysis
ENCANA CORP (ECA): Free Stock Analysis Report
MURPHY OIL (MUR): Free Stock Analysis Report
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