Murphy Oil's 3Q loss shrinks

$16.2M figure reflects cost cutting during energy slump

Graphs showing Murphy Oil third quarter information.
Graphs showing Murphy Oil third quarter information.

Murphy Oil Corp. posted a loss of $16.2 million for its 2016 third quarter, the El Dorado-based company said Wednesday.

Murphy Oil's third-quarter financial results were an improvement from the $1.6 billion loss the company reported for the third quarter in 2015. The company saw its revenue for the period drop 29 percent to $500.5 million.

The company, like other U.S. energy producers, has been hit by the two-year slump in oil prices.

Murphy Oil had a loss of 9 cents per share for the period ending Sept. 30, an improvement from a loss of $9.26 a share during the same period in 2015. Analysts expected the company to post a loss of 20 cents per share.

"I am pleased with our third quarter operational results as well as our continued focus on reducing costs," said Murphy Oil Chief Executive Officer Roger Jenkins in a prepared statement.

"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," the statement said.

The company shares rose 3.4 percent to $29.71 on the New York Stock Exchange on Wednesday. The company released its financial results after markets closed.

The slump in oil prices, which began in 2014 as the world became overrun in crude, has pushed many balance sheets into the red since prices first dropped, and has forced energy companies to seek ways to cut costs, such as layoffs and idling drilling rigs.

Murphy Oil said Wednesday that the company had lowered general and administrative expenses by 23 percent from the 2015 third quarter. The company did not detail how it cut those expenses or say whether the reduction resulted in layoffs.

Oil prices, which hit above $50 a barrel earlier this month, received a lift after oil producer talks indicated that the Organization of the Petroleum Exporting Countries was inclined to curb output.

But on Wednesday, oil prices dropped as doubts increased about OPEC members' ability to agree to a production cut at its meeting in November. West Texas Intermediate crude dropped 1.6 percent to close at $49.18 a barrel, and Brent crude fell 1.6 percent to $49.98 a barrel.

"The talks from OPEC and Russia have given people a little bit of optimism about prices stabilizing around the $50 level," said Michael Lynch, president of Strategic Energy and Economic Research Inc. "But it's still mostly talk, not action."

The recent upturn in prices has encouraged some U.S. energy producers to slightly increase activity in shale plays, especially in the Marcellus in the Northeast, and the Permian Basin in Texas, Lynch said.

"The companies that don't have high debt levels, that aren't burden with high debts, find that they can produce at a $50 level," he said.

Murphy Oil had 23 new wells in the Eagle Ford Shale in Texas start operating during its third quarter, the company said. Murphy Oil also increased its guidance for the fourth quarter, saying it expects to have 17 new wells -- 10 more than it previously estimated -- operational in the fourth quarter.

Murphy Oil will hold a conference call with analysts to discuss its financial results at noon today. The call will be streamed live on the company's website, ir.murphyoilcorp.com.

Business on 10/27/2016

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