Murphy Oil posts higher 3Q profits on strong crude prices

by Wesley Brown (wesbrocomm@gmail.com) 77 views 

Murphy Oil Corp., which exited its longtime deepwater oil operations in Malaysia during the third quarter, easily beat Wall Street expectations as the Arkansas oil explorer benefitted from premium crude oil prices and improved productivity in its Gulf of Mexico portfolio and Eagle Ford shale play.

For the period ended Sept. 30, Murphy reported net income of $1.1 billion, or $6.76 per share, compared to earnings of $93.9 million, or 54 cents per share, in the same period of 2018. Those weighty results include a $960 million gain from the $2.1 billion sale of the company’s Malaysian oil and assets in early July.

Adjusted net income, which excludes the results of those discontinued operations in Southeast Asia and other one-off items, was $57 million, or 26 cents per share. Total revenues in the quarter jumped 82.2% to $817 million, up 67% when compared to only $490.5 million in the third quarter of 2018.

In early trading Thursday, Murphy Oil’s shares (NYSE: MUR) were up 26 cents, or 1.3% at $19.51 in New York. Wall Street had expected the oil and gas independent to report third quarter earnings of 26 cents per share on revenue of nearly $711 million, according to Thomson Reuters.

“Our company is performing exceptionally well. With a significant gain on sale of nearly $1 billion, we have the Malaysia divestiture behind us and are pleased to complete our first quarter as a transformed and streamlined Murphy,” said Murphy Oil President and CEO Roger Jenkins. “As an oil-weighted, Western Hemisphere focused company, our primary operations in the Gulf of Mexico and Eagle Ford Shale continue to achieve low operating costs and strong realized prices, driving healthy EBITDA given their prime access to premium markets.”

Companywide, Murphy Oil’s third quarter oil and gas production averaged 192 MBOEPD million barrels of production a day with 66% liquids. As Murphy now moves its focus to its North American oil and gas assets, its onshore business produced approximately 109 (MBOEPD) in the third quarter.

“In support of Murphy’s future, we remain committed to a portfolio of exploration projects, achieved through low-cost entries with appropriate working interests. The recently added Brazilian blocks reiterate our focus on Western Hemisphere assets near existing discoveries,” said Jenkins.

For the rest of 2019, Murphy estimates total production of 198 to 206 MBOEPD, comprised of 69% liquids. Full year production is expected to be in the range of 174 to 178 MBOEPD, officials said, excluding non-controlling interest. Murphy also reaffirmed its previously announced 2019 capital program of $1.35 to $1.45 billion.

Murphy continued to realize premium pricing in the third quarter 2019, with Eagle Ford Shale oil prices registering above $58 per barrel and North America offshore prices approaching $61 per barrel, both excluding the impact of commodity hedges. In the third quarter, more than 94% of the company’s oil volumes were sold at a premium to the average West Texas Intermediate (WTI) price of $56.45 per barrel.

Over the past 52 weeks, Murphy Oil shares have traded in the range of $17.04 as a low and $33.21 on the high end.

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