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Murphy Oil Announces Preliminary Quarterly And Annual Financial Results

Murphy Oil Corporation (NYSE: MUR) announced today that its net income in the fourth quarter of 2012 was $158.7 million ($0.82 per diluted share) compared to a net loss of $113.9 million ($0.59 per diluted share) in the fourth quarter of 2011. Net income in the fourth quarter of 2012 was improved over the same 2011 quarter principally due to lower impairment expenses and income tax benefits associated with operating losses in two foreign countries in the current period. The just completed quarter included total impairment charges of $261.0 million ($239.6 million after taxes) associated with both oil production operations in Republic of the Congo and ethanol production operations in Hereford, Texas. The Congo impairment related primarily to unsuccessful drilling operations in the fourth quarter and the removal of proved oil reserves at year-end 2012 at the Azurite field. The field continues to produce while we evaluate future options. Operating results in the fourth quarter of the prior year included an impairment charge for Azurite of $368.6 million. The Hereford ethanol plant was deemed impaired at year-end 2012 due to an expectation of weak future ethanol crush spreads. Income tax benefits in the upstream business totaled $108.3 million associated with tax deductions for operating losses in Republic of the Congo and Suriname. The 2012 fourth quarter included a loss from discontinued operations of $3.7 million ($0.02 per diluted share), compared to income from discontinued operations of $4.0 million ($0.02 per diluted share) in the 2011 quarter. Income from continuing operations in the fourth quarter of 2012 was $162.4 million ($0.84 per diluted share), but was a loss of $117.9 million ($0.61 per diluted share) a year ago.

For the year of 2012, net income totaled $970.9 million ($4.99 per diluted share) compared to $872.7 million ($4.49 per diluted share) in 2011. Net income included income from discontinued operations of $6.8 million ($0.04 per diluted share) in 2012 and $143.2 million ($0.74 per diluted share) in 2011. Income from continuing operations for the years of 2012 and 2011 totaled $964.1 million ($4.95 per diluted share) and $729.5 million ($3.75 per diluted share), respectively.

 

Net Income

 
  Three Months Ended   Years Ended

December 31,

December 31,

2012

 

2011

2012

 

2011

(Millions of Dollars)
Exploration and Production $ 145.0 (144.6 ) 905.0 614.2
Refining and Marketing 38.5 61.0 157.6 190.3
Corporate  

(21.1

)

(34.3

)

(98.5

)

(75.0

)

 
Income (loss) from continuing operations 162.4 (117.9 ) 964.1 729.5
Income (loss) from discontinued operations  

(3.7

)

4.0

 

6.8

 

143.2

 
 
Net income (loss)

$

158.7

  (113.9 ) 970.9   872.7  
 
Income (loss) per Common share – Diluted:
Income (loss) from continuing operations $ 0.84 (0.61 ) 4.95 3.75
Net income (loss) 0.82 (0.59 ) 4.99 4.49
 
 

Fourth quarter 2012 vs. Fourth quarter 2011

Exploration and Production (E&P)

Income for the Company’s E&P continuing operations was $145.0 million in the fourth quarter of 2012 compared to a loss of $144.6 million in the same quarter of 2011. The improvement in earnings in the fourth quarter 2012 compared to the same period in 2011 was primarily attributable to a larger impairment charge in Republic of the Congo in 2011 and income tax benefits recognized in 2012 totaling $108.3 million associated with operating losses in Republic of the Congo and Suriname. The 2012 quarter also benefited from higher crude oil sales volumes and lower exploration expenses, but these were mostly offset by lower oil and natural gas sales prices and higher overall extraction and administrative expenses. The increase in extraction expenses in the current year was attributable to higher worldwide average crude oil production and higher depreciation unit rates in Malaysia associated with ongoing capital development activities.

 

E&P Metrics

       
Three Mos. Ended Years Ended
December 31, December 31,

2012

2011

2012

2011

Oil Production Volume – Bbls. per day 132,918 108,771 112,591 103,160
Natural Gas Sales Volume – MCF per day 473,487 487,991 490,124 457,365
Total BOE Production Volume – BOE per day 211,833 190,103 194,278 179,388
 
Average Realized Oil Sales Price – $ per Bbl. $ 92.82 96.67 95.58 94.18

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

$ 3.34 3.67 2.65 4.08

Average Realized Sarawak Natural Gas Sales Price – $ per MCF

$ 6.78 7.85 7.50 7.10
 
 

Exploration expenses totaled $137.2 million in the fourth quarter 2012, down from $185.6 million in the 2011 quarter. The decrease was primarily attributable to lower dry hole costs associated with unsuccessful exploratory drilling in the 2012 quarter in Canada and Brunei, partially offset by higher dry hole costs in the current quarter in Republic of the Congo.

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