Murphy Oil posts third quarter loss of $16.2 million, beats Wall Street estimates

by Wesley Brown (wesbrocomm@gmail.com) 71 views 

After eking out a small profit in the second quarter, Murphy Oil Corp. fell back into the red again over the past three months as the Arkansas oil giant continues to cut costs and restructure operations as oil and natural gas prices improve.

For the period ended Sept. 30, the El Dorado-based oil and gas company reported a third quarter loss of $16.2 million, or nine cents, a big improvement over a net loss of $1.59 billion, or $9.26 per diluted share in the same period of 2015.

Murphy’s earnings were slightly above Wall Street’s view of a third quarter loss of 20 cents per share on revenue of $481 million, according to survey of analysts by Thomson Reuters. Adjusted losses, which included one-time gains, totaled 18 cents per share over the three-month reporting period.

“I am pleased with our third quarter operational results as well as our continued focus on reducing costs. We had an outstanding quarter in our high-cash margin offshore fields and our onshore business achieved continued success in high sand concentration fracs in the Eagle Ford Shale and Tupper Montney,” said Murphy Oil President and CEO Roger Jenkins. “Additionally, we were successful in obtaining a new unsecured credit facility while issuing new senior notes allowing for continued flexibility and ample liquidity on our balance sheet.”

In the previous quarter that ended June 30, the company was able to post a small profit as the Arkansas oil company benefitted from sales of its Canadian natural gas processing and pipeline assets and moves closer to being a pure play oil and gas producer. Jenkins said then that the Fortune 500 company continues to reposition itself as an unconventional shale play producer by selling non-core assets and strengthening its balance sheet to compete in the industry’s current low-price commodity environment.

During the third quarter, Murphy said production averaged more than 169.8 thousand barrels of oil equivalent per day (Mboepd), exceeding the high end of production guidance. Third quarter 2016 lease operating expense, excluding Syncrude, was $7.65 per boe, a 5% reduction from third quarter 2015. In addition, third quarter 2016 general and administrative cost declined 23% from third quarter 2015, to $55.5 million.

Murphy said it also entered into a $1.2 billion revolving credit facility and issued $550.0 million of 6.875% senior notes due in August 2024. The new revolving credit facility is a senior unsecured guaranteed facility expiring in August 2019.

The net proceeds from the senior notes will be used for general corporate purposes, which may include the repayment, repurchase or redemption of the company’s $550 million of 2.5% senior notes due in December 2017. Additionally, the company has available borrowing capacity of $630 million until June 2017 on its 2011 credit facility. The Arkansas oil company ended the quarter with $2.8 billion and $871 million in cash and liquid invested securities.

For the remainder of 2016, production for full-year 2016 is being tightened to the range of 174 – 175 Mboepd with fourth quarter 2016 production estimated in the range of 162-164 Mboepd. Capital spending for full-year 2016 is being maintained at $620 million, excluding $206.7 million associated with the acquisition cost of the Kaybob Duvernay and Placid Montney joint venture closed earlier this year.

Murphy’s shares (NYSE: MUR) closed Wednesday at $29.71, up 98 cents The company’s shares have traded at $14.30 per share on the low end and $37.48 as a 52-week high.

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