Murphy Oil Slides Into The Red As Oil, Natural Gas Prices Cut Profits

Murphy Oil Corp. fell into the red during the first quarter as declining crude oil and natural gas prices cut a huge swath across the oil giant’s entire operations.

For the period ended March 31, El Dorado-based Murphy Oil reported a net loss of $14.4 million, or eight cents a share, compared with a profit of $155.3 million, or 85 cents a share, a year earlier. Revenues fell to $921.7 million, down 28% from $1.28 billion a year ago.

Income from continuing operations fell to $3.5 million, or two cents a share, from $169.3 million, or 93 cents a share, a year earlier. This year’s results included a $199.5 million after-tax gain on a 10% sale of Murphy’s assets in Malaysia.

Excluding certain nonrecurring items, the loss from continuing operations was $198 million or $1.11 a share, compared with a profit of 96 cents a share a year earlier. Wall Street analysts had expected the Arkansas oil company to report a loss of 87 cents a share on revenue of $764 million, according to Thomson Reuters.

Company officials attributed the $373.3 million decline in profits compared to a year ago to a nearly 50% decline in both Brent and West Texas Intermediate benchmark crude prices and a 44% decline in the Henry Hub natural gas price.

“We continue to progress the optimization of our portfolio, reaching closure on the final phase of the sell-down of our Malaysia assets and signing a sales agreement for our remaining U.K. downstream assets. We remain focused on allocating capital and reducing operating expenditures,” Murphy CEO and President Roger Jenkins said in news release. “Looking ahead, Murphy is well-positioned with a solid balance sheet and cash positions to carry out our capital plans and evaluate opportunities that will enhance our business.”

In its U.S. exploration and production operations, Murphy said it averaged nearly 64,200 barrels of oil equivalent per day (boepd) net, essentially flat to the fourth quarter 2014. “As planned, we have reduced our rig count in EFS to four rigs during the first quarter and we expect to stay at this level for the rest of the year,” the company said.

Overall, Murphy’s first quarter production first quarter production averaged near 221,550 boepd, “slightly ahead of our guidance of 221,000 boepd.” Going forward, Murphy said it expects second quarter net production of only 97,000 boepd, and full-year production of 195,000 to 207,000 boepd on capital expenditures of $2.3 billion.

Murphy Oil’s first quarter 2015 highlights were as follows:

• Completed the sell-down of 30% of its Malaysia oil and gas assets.
• Signed an agreement to sell the remaining U.K. downstream assets with the transaction scheduled to close mid-year.
• Added an exploration block in the Vulcan Sub-Basin offshore Australia and a deepwater block offshore Sarawak, Malaysia.
• Submitted the high bid for five blocks in the Gulf of Mexico Central lease sale in March.
• Progressed the two-well Medusa expansion project with both wells drilled to plan and one well completed.
• Advanced the Kodiak two-well sub-sea tie-back project with the first well drilled to plan.
• Completed the initial phase of development drilling at the South Acis oil field and Belum gas field with better than expected results.
• Delivered 45 new wells on line in the Eagle Ford Shale.

In early trading on Thursday, Murphy’s shares were up 79 cents at $49.19. The Arkansas oil giant’s shares have traded between $42.19 and $68.43 for the full year.