Murphy Oil Announces Preliminary Quarterly Earnings

Murphy Oil Corporation (NYSE: MUR) announced today that income from continuing operations in the third quarter of 2012 was $228.9 million ($1.17 per diluted share) compared to $347.3 million ($1.79 per diluted share) in the third quarter of 2011. Net income, which includes the results of discontinued operations, was $226.7 million ($1.16 per diluted share) in the third quarter 2012 compared to $406.1 million ($2.09 per diluted share) in the 2011 third quarter. Earnings in the 2012 quarter were below prior year levels primarily due to the effects of lower North American natural gas sales prices, weaker U.S. retail marketing margins, an income tax benefit in the 2011 quarter, and an unfavorable variance from foreign exchange.

During the third quarter of 2012, the Company’s Board of Directors agreed to sell the Company’s exploration and production operations in the United Kingdom. The sale of these assets is expected to be completed near year-end 2012. The results of these operations in both years, as well as the results of U.S. refining operations in 2011, are presented as discontinued operations. The results of discontinued operations was a loss of $2.2 million ($0.01 per diluted share) in the 2012 third quarter compared to income of $58.8 million ($0.30 per diluted share) in the 2011 quarter.

For the first nine months of 2012, income from continuing operations was $801.7 million ($4.12 per diluted share) compared to $847.4 million ($4.36 per diluted share) in 2011. The decline in continuing operations income in 2012 was primarily attributable to weaker U.S. retail marketing margins and an unfavorable variance in the effects of foreign exchange in the current year. Net income in 2012 totaled $812.2 million ($4.17 per diluted share) compared to $986.6 million ($5.07 per diluted share) for the same period in 2011. Net income in the current year included discontinued operations income of $10.5 million ($0.05 per diluted share) compared to discontinued operations income of $139.2 million ($0.71 per diluted share) in 2011.

Net Income
		Three Months Ended						Nine Months Ended
		September 30						September 30
		2012				2011		2012			2011
(Millions of Dollars)
Exploration and Production		$	221.1			273.4		760.0			758.8
Refining and Marketing			42.8			68.9		119.1			129.3
Corporate			(35.0	)		5.0		(77.4	)		(40.7	)
Income from continuing operations			228.9			347.3		801.7			847.4
Income (loss) from discontinued operations			(2.2	)		58.8		10.5			139.2
Net income		$	226.7			406.1		812.2			986.6
Income per Common share – Diluted:
Income from continuing operations		$	1.17			1.79		4.12			4.36
Net income			1.16			2.09		4.17			5.07

Third Quarter 2012 vs. Third Quarter 2011

Exploration and Production (E&P)

The Company’s income contribution from E&P continuing operations was $221.1 million in the third quarter of 2012 compared to $273.4 million in the same quarter of 2011. The decline in earnings in the 2012 quarter compared to 2011 was primarily attributable to lower sales prices for North American natural gas, higher depreciation expense related to oil and natural gas volumes sold, and lower income tax benefits. Higher crude oil sales volumes in the current quarter partially offset these unfavorable variances. Depreciation expense rose in 2012 due to higher sales volumes, primarily in the Eagle Ford Shale of South Texas and at the Kikeh field, offshore Malaysia. The 2011 quarter included a tax benefit of $25.6 million in Malaysia based on a determination that past costs incurred in Block P are deductible against taxable income of Block K.

E&P Metrics
		Three Mos. Ended					Nine Mos. Ended
		September 30					September 30
		2012			2011		2012		2011
Oil Production Volume – Bbls. per day			105,796		96,437		105,766		101,269
Natural Gas Sales Volume – MCF per day			454,573		470,183		495,711		447,044
Total BOE Production Volume – BOE per day			181,558		174,801		188,385		175,776
Average Realized Oil Sales Price – Per Bbl.		$	96.09		95.95		97.13		94.36
Average Realized North American
Natural Gas Sales Price – Per MCF		$	2.61		4.20		2.43		4.26
Average Realized Sarawak
Natural Gas Sales Price – Per MCF		$	7.59		7.54		7.79		6.76

Exploration expenses totaled $94.0 million in the third quarter 2012, up from $85.5 million in the 2011 quarter. The increase was primarily attributable to dry holes on the Central Dohuk license in the Kurdistan region of Iraq and in Malaysia during the 2012 quarter. These dry holes were partially offset by prior year costs that did not repeat for 3D seismic acquisition on Block CA-2, offshore Brunei, and other geophysical costs for licenses in the Kurdistan region of Iraq.

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