El Dorado’s corporate denizens, Murphy Oil Corp. and Murphy USA Inc., each pushed out their second quarter earnings after the close of business Wednesday as the closely held, publicly traded concerns each seek to cut costs and restructure their respective business models.
And nearly four years to the day Murphy Oil split off its former marketing and retail operations into another separate publicly traded company, the parent company has struggled to regain its footing amid depressed crude oil and natural gas prices.
For the period ended March 31, Murphy Oil reported a net loss of $17.6 million, or 10 cents per share, compared to net income of $2.9 million, or two cents per share, in the same period a year ago. Excluding one-items and other adjustments, Murphy reported earnings of $19 million, or 11 cents per share. Revenues rose slightly to $474.4 million, up 55% from $437.4 million in the second quarter of 2016.
A survey of oil and gas analysts on Wall Street expected the Arkansas oil company to report a second quarter loss of 16 cents per share on quarterly revenue of $491 million, according to Thomson Reuters.
Company officials said the most significant items affecting the adjusted loss were a U.S. tax benefit of $21 million related to investments in foreign exploration areas and an after-tax gain of $15 million for mark-to-market of open crude oil hedge contracts. These were essentially offset by a $31 million non-cash foreign exchange loss due to the weakening U.S. dollar compared to the Canadian dollar and a $6 million deferred tax expense on undistributed foreign earnings, company officials said.
“We continue to successfully execute on our 2017 plan. We have stabilized production levels and maintained high uptime performance across all our operated assets while employing data analytics to drive down unit operating costs to their lowest levels in a decade,” said Murphy Oil President and CEO Roger Jenkins.
The oil company revised its third quarter production guidance, which is now estimated in the range of 156 to 158 Mboepd (million barrels of oil equivalent per day). That guidance is below second quarter production because of pre-planned downtime work at the Sarawak oil and natural gas fields and the non-operated Terra Nova field, as well as the previously described loss of the non-operated Kodiak well in the Gulf of Mexico, company officials said.
Murphy Oil is also tightening estimated full year 2017 production guidance to be in the range of 163 to 167 Mboepd. The maintained guidance range is supported by the North American Onshore assets which are growing over 15% from fourth quarter 2016 to fourth quarter 2017, adjusted for divestitures.
Full year capital spending, which was $201 in the second quarter, will remain at $890 million for the full year. Company officials said they have improved the cash position while executing capital expenditures as planned and paying dividends to shareholders. The company had $2.8 billion of outstanding fixed rate notes and $1.1 billion in cash and liquid invested securities.
“Our high-margin offshore assets continue to provide valuable cash flow which is being used to grow our short-cycle North American Onshore portfolio. Our financial discipline is paying off as we have a healthy balance sheet with appropriate leverage, allowing us to weather the continued commodity price volatility,” Jenkins said. “Our 2017 plan is delivering value by paying a competitive dividend yield, providing upside optionality through enhancing our exploration portfolio and growing onshore production.”
MURPHY USA NET INCOME UP 20%
Murphy USA saw second quarter earnings jump 20% from a year ago as the company’s aggressive plan to grow away from its Walmart parking lot location has led to stronger per-store performance. For the period ended June 30, the convenience store operator and former Murphy Oil subsidiary reported net income of $55.6 million, or $1.51 per share, compared to net income of $46.3 million, or $1.17 per share, in the same period of 2016.
Total revenues rose 6.7% to $3.2 billion, compared to nearly $3 billion in the same period of 2016. Wall Street analysts had forecasted the former Murphy Oil subsidiary to report second quarter earnings of $1.06 per share on sales of $3.26 billion, according to Thomson Reuters.
“Our strong results in the second quarter demonstrate the substantial earnings power of our low cost, high volume business model during periods of favorable retail fuel margins,” said Murphy USA President and CEO Andrew Clyde.
Murphy USA opened five retail locations during the second quarter, bringing the store count to 1,411, consisting of 1,154 Murphy USA sites and 257 Murphy Express sites. The company has 24 stores under construction along with 2 kiosks undergoing a raze and rebuild which will return to operation as 1,200-square=foot stores before year end.
At the end of trading Wednesday, Murphy USA shares (NYSE: MUSA) were down 66 cents at $76.19. At the end of the second quarter, the company had more than 36 million shares outstanding, putting the El Dorado convenience store operator’s market capitalization at $2.8 billion.
Murphy Oil had 172.5 million shares outstanding and a market cap of $4.43 billion. The Arkansas oil giant’s shares (NYSE: MUR) closed down 60 cents at $25.68 in Wednesday’s record-setting session on the New York Stock Exchange. Both of the closely-held corporations, along with El Dorado-based Deltic Timber Corp., are tied to the family of the same name that are major shareholders in all three South Arkansas companies.