Murphy Oil Corp. is deciding whether to shut down its Milford Haven refinery in Wales after talks with a potential buyer collapsed last month.
The El Dorado-based company’s subsidiary Murco Petroleum said in a statement Thursday that it had entered a “period of consultation” with its employees and their representatives about the future of the company and the refinery.
“Murphy has been trying to get out of the refining market in the [United Kingdom] for three years,” said Mark Antelme, a spokesman for Murco, which is based in the U.K. “The refining market has been very difficult.”
Antelme said Murco had been in talks with Greybull for the firm to purchase the refinery and its assets, but the exclusivity period expired at the end of March without a deal.
So now the company is open to talk to other interested parties, but is also reviewing the future of the company and refinery, as it has taken more than three years to find a buyer, Antelme said.
In the statement released by Murco, the company said it “has negotiated with numerous parties” in those three years but failed to finda buyer.
“Our focus today is on helping our people understand what this means for them,” Tom McKinlay, managing director of Murco, said in a statement. “For over three years, we have left no stone unturned in trying to find a buyer for the plant.”
Murco employs 370 full-time workers at the refinery.
McKinlay said the company’s struggles to find a buyer “highlight the challenges and on-going changes confronting the European refining industry and are in no way a reflection on the attitude and work ethic of the Murco team. We will continue to do all we can to ensure our employees are supported during this time.”
It has been difficult for Murphy Oil to sell its Milford Haven refinery because the industry in Europe is struggling, said Pavel Molchanov, an analyst with Raymond James & Associates.
“This is a relatively small refinery, which means it’s not especially economic to run, and the refinery market in Europe is relatively challenged,” he said. “The entire European refinery business has generally been in the red, and this is no exception.”
During the company’s fourth quarter, Murphy Oil had a $73 million write-down on its U.K. refining and marketing operations.
Molchanov said one of the things hurting the refining industry in Europe is that oil demand is down.
He said Murphy Oil has already classified the refinery as a “discontinued operation.”
Murphy Oil has been working to exit the refinery business to become an exploration and production company, said Leo Mariani, an analyst for RBC Capital Markets. Milford Haven is Murphy Oil’s only remaining refinery.
Murphy Oil separated its retail gasoline and marketing business from its exploration and production operations last year.
Shares of Murphy Oil saw little movement Friday before closing at $61.91 on the New York Stock Exchange.
Molchanov said the “market has the reality that it will be hard [for Murphy Oil] to find a buyer.”
“If they find a buyer, that would be icing on the cake,” he said.
Business, Pages 29 on 04/05/2014