Murphy Oil posts full year profits of $1.1 billion as transformation continues

Despite a fourth quarter loss driven by a mark-to-market loss and the extinguishment of debt, Murphy Oil finished 2019 with a $1.1 billion profit as it repositions itself as a Western Hemisphere oil and gas driller.

The El Dorado-based energy company reported Thursday (Jan. 30) a fourth quarter loss of $71.7 million, or $0.46 net loss per diluted share, on revenue of $637.4 million. That quarterly loss included a $106 million non-cash mark-to-market loss on crude oil derivatives and a $25 million loss on extinguishment of debt, the company said.

For the full year, Murphy Oil reported net income of $1.149 billion, or $6.98 per diluted share, on revenue of $2.829 billion. One year ago, Murphy Oil posted full year net income of $411 million, or $2.36 per diluted share, on revenue of $1.791 billion.

During the year, Murphy Oil also completed a $500 million share repurchase program.

“Over the course of 2019, we executed two noteworthy transactions as we continued to strategically transform our asset base. Our new portfolio generated strong net income in 2019, supported by increased oil production and positive differentials to West Texas Intermediate oil pricing. This growth led to additional cash flow generation which, in addition to proceeds from the sale of Malaysia, allowed us to return more than $660 million to shareholders through share repurchases and a competitive dividend,” said Roger W. Jenkins, President and Chief Executive Officer.

Murphy Oil has been repositioning itself in 2019. Murphy Oil Corp. announced in March that it was selling its Malaysian subsidiary’s deep-water oil and gas assets in Southeast Asia for $2.13 billion. The deal allows the El Dorado independent energy firm to further focus its operations on its growing Gulf of Mexico operations and the Eagle Ford shale play in West Texas, company officials said.

“With the transition out of Malaysia, increasing our Gulf of Mexico business, and continued investment in our onshore businesses, we have been able to maintain a sizable asset base – all while maintaining our liquids weighting at 57%,” said Jenkins.

Murphy Oil laid out its capital expenditure program for 2020, which includes significant investments throughout the Gulf of Mexico and Canada.

For 2020, Murphy plans to spend $680 million in the Eagle Ford Shale, representing a 13% increase from 2019. The company has also allocated $175 million to its Canada onshore business, which is 38% lower than in 2019. Murphy has allocated approximately $480 million, or 33%, of capital to its offshore assets, with 30% planned for the Gulf of Mexico and the remaining 3% for Canada offshore.

“Murphy has again established a capital budget that is focused on spending within free cash flow and covering our longstanding quarterly dividend. We are strategically allocating capital to high returning, oil-weighted projects in the Gulf of Mexico and Eagle Ford Shale that in turn drive a stronger production foundation for long-term cash flow generation,” said Jenkins.

Shares of Murphy Oil (NYSE: MUR) opened trading at $20.35 and was trending higher in early trading. The company’s stock has traded between a low of $17.04 and a high of $31.13 over the last 52 weeks.