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Murphy Oil Corporation (NYSE:MUR) (“Murphy”) announced that its Board of Directors has approved a plan to spin off to its stockholders its U.S. downstream subsidiary, Murphy Oil USA, Inc. (“Murphy USA”), into an independent and separately traded company, and has also authorized a special dividend of $2.50 per share for a total dividend of approximately $500 million and a share buyback program of up to $1 billion of the company’s shares of common stock. Murphy also reaffirmed the plan to divest the U.K. downstream operations and stated that it is continuing to review possible options with respect to selected assets.
Spin-off to Create Two Distinct Companies
Murphy believes that creating two publicly traded companies would offer a number of advantages:
Each business would focus on its strategic priorities with financial targets that best fit its own market and opportunities;
Each business would be able to allocate resources and deploy capital in a manner consistent with its priorities; and
Investors, both current and prospective, would be able to value the two businesses based on their respective financial characteristics and make investment decisions based on those characteristics.
Murphy USA will continue to be a flexible, low-price, high volume fuel seller with key strategic relationships and experienced management. Murphy USA’s business will consist of retail marketing of petroleum products and convenience merchandise through a large chain of retail gasoline stations. Additionally, Murphy USA’s assets will include seven product distribution terminals and two ethanol production facilities in North Dakota and Texas.
Murphy will become an independent exploration and production company with principal activities focused in the United States, Canada and Malaysia. The Company will continue its exploration program and offshore development projects complemented by predictable growth in its North America onshore businesses primarily in the Eagle Ford Shale and Seal areas
. The United Kingdom downstream operations will remain with Murphy until such time as these assets are fully divested.
The spin-off of Murphy USA will be subject to customary conditions, including confirmation of the tax free nature of the transaction and receipt of customary regulatory approvals. The spin-off will be effected through a distribution of the shares of Murphy USA pro rata to all Murphy stockholders as of a record date to be established by Murphy’s Board of Directors. The spin-off of Murphy USA is expected to be finalized in 2013.