Murphy Oil earnings up on higher revenue

A tightening belt and improved earnings in its exploration and production business helped Murphy Oil offset sliding losses in its refinery and downstream operations.

The El Dorado-based oil and gas company posted first quarter 2012 net income of $290.1 million on revenue of nearly $7 billion. One year ago, Murphy Oil recorded profits of $268.9 million on revenue of $6.27 billion.

The company said its exploration and production operations were boosted by higher sales prices for crude oil and lower expenses associated with its exploration efforts.

Murphy Oil’s downstream operations — which include its refinery and retail businesses – actually lost about $4.2 million during the quarter. U.S. downstream operations generated a $7.2 million loss.

The company said margins for U.S. retail marketing operations “were depressed” due to significantly higher wholesale gasoline purchase prices. Officials also disclosed that merchandise sales margins were flat compared to the previous year.

David Wood, Murphy’s president and CEO, warned that low natural gas prices restricted earnings for the quarter and could impact future earnings.

“The divergence in North American oil and natural gas prices during the first quarter was quite extreme. Although oil prices remain strong in the early days of the second quarter, natural gas prices in North America have further softened during the shoulder months in the spring. Our company has made a good start with exploratory drilling in early 2012,” he said.

Murphy Oil’s (NYSE:MUR) stock closed trading on Wednesday at $55.29 per share. The company’s stock has traded between $40.41 and $71.72 during the past 52 weeks.