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TheStreet Open House

Murphy Oil Announces Preliminary First Quarter 2012 Earnings

Stocks in this article: MUR

Murphy Oil Corporation (NYSE: MUR) announced today that net income in the first quarter of 2012 was $290.1 million ($1.49 per diluted share), compared to net income of $268.9 million ($1.38 per diluted share) in the first quarter of 2011. The 2011 first quarter included income from discontinued operations of $30.5 million ($0.16 per diluted share) related to two U.S. refineries and associated marketing assets that were sold at the end of the third quarter of 2011. Income from continuing operations in the 2011 first quarter was $238.4 million ($1.22 per diluted share). Income from continuing operations and associated diluted income per share were 22% higher in the 2012 quarter compared to the same quarter of 2011. The improved income from continuing operations in 2012 compared to 2011 was primarily due to higher earnings from the Company’s exploration and production operations.

 
Net Income
 
    Three Mos. Ended
March 31,
2012     2011
(Millions of Dollars except per share)
Exploration and Production $ 321.6 260.4
Refining and Marketing (4.2 ) 0.3
Corporate   (27.3 ) (22.3 )
Income from continuing operations 290.1 238.4
Income from discontinued operations     30.5  
 
Net income $ 290.1   268.9  
 
Income per Common share - Diluted:
Income from continuing operations $ 1.49 1.22
Net income $ 1.49 1.38
 

Exploration and Production (E&P)

Income contribution from E&P operations was $321.6 million in the first quarter of 2012, up from $260.4 million in the same quarter of 2011. A higher average realized sales price for crude oil and lower exploration expenses were the primary drivers for the earnings improvement in the 2012 quarter. The 2012 quarter was unfavorably impacted by lower crude oil sales volumes and significantly lower North American natural gas sales prices.

 
E&P Metrics
 
    Three Mos. Ended
March 31,
2012     2011
Oil Production Volume – Bbls. per day 107,490 113,313
Natural Gas Sales Volume – MCF per day 525,635 413,034
Total BOE Production Volume – BOE per day 195,096 182,152
 
Average Realized Oil Sales Price – $ per Bbl. $ 97.78 86.73

Average Realized North American Natural Gas Sales Price – $ per MCF

$ 2.56 4.35

Average Realized Sarawak Natural Gas Sales Price – $ per MCF

$ 7.80 5.64
 

The Company’s worldwide crude oil, condensate and natural gas liquid sales prices averaged $97.78 per barrel for the 2012 first quarter compared to the 2011 first quarter average of $86.73 per barrel. Total crude oil, condensate and gas liquids production of 107,490 barrels per day in the first quarter of 2012 was below the 113,313 barrels per day produced in the 2011 quarter. The decline in oil production in 2012 was attributable to lower volumes produced at the Kikeh field, offshore Sabah, Malaysia, the Azurite field, offshore Republic of the Congo, and at Syncrude in Western Canada. Oil production in the U.S. was higher in the 2012 quarter and was attributable to ongoing development activities in the Eagle Ford Shale area of South Texas. Total sales volumes of crude oil, condensate and natural gas liquids averaged 108,562 barrels per day in the first quarter 2012 compared to 112,804 barrels per day in the 2011 quarter. North American natural gas sales prices averaged $2.56 per thousand cubic feet (MCF) in the 2012 first quarter compared to $4.35 per MCF in the same quarter of 2011. Natural gas produced at fields offshore Sarawak Malaysia was sold at an average of $7.80 per MCF in the 2012 quarter, up from $5.64 per MCF in the 2011 first quarter. Natural gas sales volume of over 525 million cubic feet per day in the first three months of 2012 was a quarterly record for the Company, and was up from 413 million cubic feet per day sold in the 2011 period. The increase in natural gas sales volume in 2012 was primarily due to a full quarter of natural gas production at the Tupper West area in Northeast British Columbia. Tupper West was on production for only a portion of the 2011 first quarter after coming online in February of last year.

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