Murphy Oil Corp. on Wednesday posted a huge loss of nearly $1.6 billion in the third quarter as depressed oil and gas prices cast a broad shadow across the Arkansas oil giant’s exploration and production operations.
For the period ended Sept. 30, Murphy reported a third quarter loss of $9.26 per share, or $1.59 billion, compared to net income of $45 million, $1.51 per share, in the same period of 2014.
On an adjusted basis, excluding discontinued operations and certain one-time items, the El Dorado-based oil company posted third quarter earnings of $124.5 million, or 72 cents per share, on revenue of nearly $715 million. Those adjusted earnings beat Wall Street expectations for a loss of 93 cents per share on sales of $632 million, according to a survey of analysts by Thomson Reuters.
Murphy officials highlighted the fact that earnings before and after taxes were significantly impacted by a greater than 50% slide in benchmark Brent and West Texas Intermediate (WTI) crude prices, which closed Wednesday on the New York Mercantile Exchange at $49.94 and $45.94 per barrel, respectively.
In doing so, the company took a one-time impairment charge of $2.3 billion on future production due to low crude oil prices, which company officials said declined between $8 and $15 per barrel from the second quarter.
On a positive note, the Arkansas oil giant said third quarter 2015 production averaged nearly 207,600 barrels of oil equivalent per day (boepd), ahead of its earlier forecast of 200,000 boepd. Those improved production results were primarily due to the Sarawak oil and natural gas fields in offshore Malaysia performing better and enhanced drilling and completion techniques bumping up new well production at the Eagle Ford Shale in West Texas.
“During the third quarter, we delivered almost 7,600 barrels per day of high-margin volumes above our guidance, driven by continuous improvements in productivity and ongoing operating efficiencies,” Murphy President and CEO Roger Jenkins said in a news release.
“In addition, we continue to focus on driving costs lower in our business both in operating expenses and in general and administrative costs,” Jenkins continued. “Today, Murphy is better positioned financially to carry out our plans and compete in the upstream oil and natural gas business going forward in a ‘lower-for-longer’ commodity price environment.”
MURPHY STAFFING LEVELS TO DECLINE 23% BY YEAR’S END
As a result of the depressed oil and gas prices, Murphy said the company’s management has taken proactive steps to improving Murphy’s efficiency and structure. That includes the previously announced cost-cutting program announced at the beginning of the quarter when Murphy sliced more than 100 positions from its global workforce of more than 1,500 employees – a nearly 7% reduction.
The ongoing cost-cutting program is expected to trim general and administrative expenses by 18% compared to 2014 levels, resulting in savings of $64 million by 2016, officials said. As a result, year-end 2015 staffing levels are now expected to be reduced by 23% from a year ago.
Going forward, Murphy increased its full-year 2015 production guidance to a range of 205,000 to 290,000 boepd, and expects fourth quarter production to be around 199,000 boepd. The Arkansas company’s capital budget will remain at $2.3 billion with $1.7 billion already spent through the end of the third quarter.
In after hours trading on Wednesday, Murphy’s shares were trending higher at $27.12, up 93 cents or $3.55%. Still, the Arkansas oil giant’s stock has been trading most of the year on the low end of the range between $23.20 and $55.36.