Murphy Oil stock falls off by 7.8%

First-quarter loss spooks investors

Graphs showing Murphy Oil first quarter information.
Graphs showing Murphy Oil first quarter information.

Murphy Oil Corp.'s almost $200 million loss during its 2016 first quarter and subsequent spending cuts sent the company's shares tumbling 7.8 percent Thursday.

The El Dorado-based company's stock fell $2.55 to $30.26 on the New York Stock Exchange in heavy trading Thursday.

Murphy Oil said Wednesday after markets closed that it had a $198.8 million loss during the first quarter, and has laid off 20 percent of its workforce as it sought to cut expenses amid the global oil slump.

"We remain laser-focused on reducing costs across our business," said Chief Executive Officer Roger Jenkins, during a conference call Thursday.

"During the quarter we reduced our 2016 annual capital with $580 million from the previously announced $825 million plan," he said.

Oil prices are in an almost two-year slump, having declined about 60 percent since 2014. Prices have fallen because of abundant supply and weak demand.

The weak oil prices have forced U.S. oil producers to cut spending by idling drilling rigs, deferring projects and laying off tens of thousands of employees.

Murphy Oil said Wednesday that the company laid off about 250 employees during the first quarter. The company had 1,258 employees as of Dec. 31, according to Murphy Oil's annual report.

"As a result of decrease activity following lower commodity prices we implemented a companywide workforce reduction, lowering our staffing levels by about 20 percent in 2016," Jenkins said Thursday.

The layoffs follow a separate 20 percent workforce reduction Murphy Oil announced in October.

When asked about the layoffs, spokesman Kelly Whitley said in an email: "Over the course of the past year and a half, Murphy has taken actions to lower costs in direct response to the negative impacts of low commodity prices."

"A reduction in force is an action that we have undertaken," she added. "Headcount has been lowered across all functions in every location to match the lower capital spend. We have not quantified by location."

Luana Siegfried, an analyst with Raymond James, said Murphy Oil's spending during the first quarter was down 75 percent from the previous year, and as a result, production is starting to fall.

Production during the first quarter was at the lowest level in four years, she said in an email.

"The results actually beat consensus, but they still look troublesome," Siegfried said. "Generally speaking, we are not surprised by the layoffs as the industry continues to show austerity in the face of a low price environment."

Business on 05/06/2016

Upcoming Events