Crude Oil Spike, Other Factors Boost Murphy Oil Numbers

Murphy Oil Corp. officials had a lot to like in the first quarter of 2011.

The El Dorado-based oil and gas company saw revenues spike to $7.35 billion in the quarter compared to $5.18 billion one year ago. Net income rose to $268.9 million versus $148.9 million in last year’s comparable period.

Key factors for Murphy Oil’s strong performance include:

• Record crude oil prices
• Record natural gas production volumes
• Improved refining margins
• Lower losses from foreign currencies thanks to a strengthening dollar

Murphy Oil CEO David Wood said, “We began 2011 with a good financial performance mostly attributable to a combination of strong oil prices and better than expected refining margins during the winter season. Once again our financial results have benefited from being heavily weighted with oil production. The higher oil prices did have a dampening effect, however, on our retail gasoline margins, which coupled with the normal weak gasoline demand during the winter, led to thin profits in this U.S. business."

Wood also noted that crude oil volume was lower than normal. The company pointed out that North American natural gas sales prices were lower and exploration expenses climbed higher.

Murphy has been shifting its business model during the past two years. It has been selling a large chunk of its U.S. refinery and United Kingdom downstream business. The company said it is "on target for disposal of these assets in 2011."

It has also been looking to diversify into alternative fuels. Murphy reported that construction at its ethanol plant in Hereford, Texas was completed in the first quarter and start-up and commissioning of the plant commenced at the end of the March.

Shares of Murphy Oil closed the day at $73.24. It’s 52-week range has seen shares trade between a low of $48.14 and a high of $78.16.