Murphy Oil Corporation
) reported its third-quarter 2012 pro forma earnings of $1.17 per
share, missing the Zacks Consensus Estimate of $1.20. Quarterly
earnings per share was also lower than the year-ago figure of
$1.79 due to weaker U.S. retail marketing margins, lower North
American natural gas sales prices, and an after tax loss from
foreign exchange transactions.
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The company's third-quarter 2012 GAAP earnings were $1.16 per
share versus $2.09 in the prior-year quarter. The variance
between GAAP and pro forma earnings was due to a penny charge
from discontinued operations.
Murphy's total revenue for third-quarter 2012 decreased to
$7,122.2 million from $7,220.2 million in the year-ago quarter.
This revenue decline was due to lower numbers in refining and
marketing segment, and a loss from corporate segment; partially
offset by a marginal rise in exploration and production segment
revenue. However, quarterly revenue was higher than the Zacks
Consensus Estimate of $7,077.0 million.
Exploration and Production:
Third-quarter 2012 revenue from this division was $1,083.8
million, up from $1,051.8 million in the prior-year quarter. This
increase was driven by a rise in crude oil and natural gas sales
volume compared with the prior-year quarter; partially offset by
lower natural gas sales volume compared with the year-ago
Refining and Marketing:
Revenue from this division decreased to $6,046.9 million from
$6,181.3 million in the year-ago quarter. This was primarily due
to weaker performance from the company's two U.S. ethanol
In the quarter, this division reported a cost of $8.5 million
versus revenue of $29.8 million in the year-earlier period.
Quarterly performance negatively impacted due to an after-tax
loss of $12.6 million related to foreign currencies transactions.
Though the company had a negative $42.7 million as intersegment
transfers elimination in the year-ago quarter, it has no
intersegment transfers elimination in this quarter.
Murphy's total worldwide production in this quarter was 181,558
barrels of oil equivalent per day ("Boe/d"), up from 174,801
Boe/d. The production increase was driven by higher volumes
produced at the Kikeh field and the Eagle Ford Shale area;
partially offset by lower volumes produced at fields in the Terra
Nova at offshore Eastern Canada, offshore Newfoundland and the
Azurite field at offshore Republic of the Congo.
Total sales volumes of crude oil and gas liquids averaged 105,796
barrels per day in third-quarter 2012 compared with 96,437
barrels per day in the year-ago quarter.
In the quarter under review, natural gas sales volumes averaged
454 million cubic feet per day ("MMcf/d"), down from 470 MMcf/d
due to lower production at the Tupper area in British Columbia,
and at the offshore Sarawak in Malaysia. These negatives were
partially offset by higher production volumes at the Eagle Ford
Murphy's third-quarter 2012 worldwide average crude oil,
condensate and gas liquids sales price was $96.09 per barrel
compared with $95.95 per barrel in the prior-year quarter. North
American natural gas sales prices decreased to $2.61 per thousand
cubic feet ("Mcf") in the reported quarter compared with $4.20
per Mcf in the year-ago quarter.
Exploration expenses during the quarter increased to $94.0
million from $85.5 million in the third quarter of 2011.
Interest expenses of the company at the end of the quarter
decreased $12.9 million versus $17.3 million in the year-ago
Long-term debt of the company as of September 30, 2012 was $1.2
billion versus $0.2 billion as of December 31, 2011.
During the quarter, net cash provided by operating activities was
$754.1 million, down from $958.8 million in third-quarter 2011.
Total capital expenditure during the third quarter of 2012 was
$1.2 billion compared with $0.7 billion in the year-ago quarter.
Currently, Murphy is paying quarterly dividend of 31.3 cents per
share. On an annualized basis, the dividend is $1.25 per share.
In addition, the company will pay a special dividend of $2.50 per
share on December 3, 2012.
In the fourth quarter of 2012, the company expects total
worldwide production volumes of 207,000 Boe/d. Sales volumes of
oil and natural gas are expected to average 206,000 Boe/d.
The company expects exploration expense in fourth-quarter 2012 to
be in the range of $60.0 million - $190.0 million.
In the next quarter, the company expects earnings to be in the
range of $1.10 - $1.70 per share, taking into account earnings
from downstream businesses of approximately $63 million.
Murphy has authorized a share buyback program of up to $1
billion. The company has already announced its plan to separate
its U.S. Downstream business.
One of the company's peers
Occidental Petroleum Corporation
) reported third-quarter 2012 pro forma earnings per share of
$1.70, beating the Zacks Consensus Estimate of $1.63. However,
quarterly earnings were down from the year-ago figure of $2.18.
Occidental's quarterly revenue marginally decreased to $5,965.0
million from $6,006.0 million in the year-ago quarter. However,
the top line beats the Zacks Consensus Estimate of $5,761.0
Murphy has reported mixed result in the third quarter of 2012;
missing our earnings projection, but beating the revenue
estimates due to rise in sales from exploration and production
segment. These were negatively impacted by lower North American
natural gas sales prices.
Murphy possesses one of the best upstream portfolios among the
domestic oil and natural gas companies. The company continues to
enhance shareholder's value by maintaining a superior Exploration
and Production ("E&P") production profile. In addition,
significant progress in offshore drilling activities in Kurdistan
and Eagle Ford Shale, natural gas discoveries in Malaysia and
Brunei, and first well completion at the Three Forks zone of
Southern Alberta might fuel the company's future performance.
However, volatile oil prices and uncertainty related to drilling
results will challenge the company's forthcoming financial
Murphy Oil Corporation currently has short-term Zacks #3 Rank
El Dorado, Arkansas-based Murphy Oil Corporation engages in the
exploration, production, refining and marketing of oil and gas in
the U.S. With a market capitalization of $11.66 billion, the
company has 3,176 full time employees.