Murphy Oil limits 4Q loss to $63.9M

Graph showing Murphy Oil's financial fourth quarter
Graph showing Murphy Oil's financial fourth quarter

Murphy Oil Corp. reported a loss of $63.9 million during the fourth quarter of 2016, wrapping up a year in which Chief Executive Officer Roger Jenkins said the company was able to survive "one of our industry's worst commodity price collapses."

The El Dorado-based company's quarter was an improvement from a year ago, when Murphy lost $587.1 million or a loss of $3.41 per share during the fourth quarter. Murphy Oil reported losing 37 cents per share in the fourth quarter of 2016, but its adjusted losses of 16 cents per share -- which account for nonrecurring costs and to discontinued operations -- were in line with analyst expectations.

Revenue of $505.8 million in the quarter beat expectations of $481.6 million, although it was a 23 percent drop from $658 million a year ago.

The quarter's results ended a year in which Murphy Oil reported a net loss of $276 million, or $1.60 per share. The company was able to narrow its full-year losses from $2.27 billion or $13.03 a share in 2015.

"We successfully monetized non-core assets, including Montney midstream and Syncrude, while entering into a new unconventional liquids play in the Kaybob Duvernay," Jenkins said in a prepared statement that referred to Canadian shale plays. "The company is now set up with a solid balance sheet, ample liquidity and stabilized production levels while maintaining our top quartile dividend yield within cash flow."

Murphy Oil shares fell 3.3 percent to $31.10 Thursday.

The company pointed out several highlights in the fourth quarter and full year in its earnings release: Murphy Oil spent $605 million on capital investments, excluding acquisitions, and reduced its general expenses by 14 percent. The company also generated $1.2 billion by divesting noncore assets to reduce the overall complexity and streamline its North American onshore portfolio.

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Murphy Oil also said it entered into an agreement in the fourth quarter to sell its heavy oil Seal asset in Canada for $65 million to Baytex Energy Corp. The sale closed Jan. 20.

Bob Williams, senior vice president at Simmons First Investment Group Inc. in Little Rock, said the company has been able to cut costs during a "tumultuous time" for the sector.

"The main thing they did last year was sell off a bunch of their assets that basically didn't make sense in the core business," Williams said. "It seems to me that clearly what they're trying to do is focus and simplify their operation, and they did a great job in cutting expenses."

But Williams believes energy "continues to be an almost speculative market" moving forward.

Murphy Oil said it is planning for $890 million in capital expenditures in fiscal 2017, with nearly 65 percent of it being allocated toward "onshore unconventional businesses" with a majority in the Eagle Ford Shale in Texas and Kaybob Duvernay. Offshore expenditures will be focused on short-cycle projects that maintain existing assets and other activities expected to increase production in future years.

Production for the first quarter of 2017 is estimated between 166,000 to 170,000 barrels of oil equivalent per day, according to the company. Full-year production is expected to be in the range of 162,000 to 168,000 barrels of oil equivalent per day.

"We believe our improved portfolio provides us with a stabilized and balanced production base that will be our foundation for growth," John Eckart, Murphy Oil's chief financial officer, said during a conference call Thursday. "We're set up to be successful headed into 2017."

Business on 01/27/2017

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