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Murphy Oil Announces Preliminary Second Quarter Earnings

Murphy Oil Corporation (NYSE: MUR) announced today that net income was $402.6 million ($2.12 per diluted share) in the 2013 second quarter, up from $295.4 million ($1.52 per diluted share) in the second quarter 2012. Net income in the 2013 quarter included income from discontinued operations of $70.5 million ($0.37 per diluted share) compared to income from discontinued operations of $4.1 million ($0.02 per diluted share) in the 2012 quarter. The 2013 income from discontinued operations was primarily generated by an after-tax gain of $71.9 million from sale of the Mungo and Monan fields in the United Kingdom during the just completed quarter. Income from continuing operations was $332.1 million ($1.75 per diluted share) for the 2013 second quarter compared to $291.3 million ($1.50 per diluted share) in the same quarter of 2012. The results of continuing operations improved in 2013 primarily due to higher earnings in the U.S. oil and gas business, which was attributable to growth in oil production in the Eagle Ford Shale area in South Texas.

For the first six months of 2013, net income was $763.2 million ($4.00 per diluted share), an improvement from $585.5 million ($3.01 per diluted share) in the similar 2012 period. Income from continuing operations for the six-month period of 2013 amounted to $540.1 million ($2.83 per diluted share), compared to income from continuing operations of $572.7 million ($2.94 per diluted share) in 2012. Income from discontinued operations of $223.1 million ($1.17 per diluted share) in the first six months of 2013 included a total gain after income taxes of $216.8 million from sale of all oil and gas properties in the United Kingdom.

Net Income
Three Mos. Ended Six Mos. Ended
June 30 June 30
2013 2012 2013 2012
(Millions of Dollars)
Exploration and Production $ 290.2 226.0 522.1 538.9
Refining and Marketing 72.2 80.5 97.5 76.3
Corporate   (30.3 ) (15.2 ) (79.5 ) (42.5 )
Income from continuing operations 332.1 291.3 540.1 572.7
Income from discontinued operations   70.5   4.1   223.1   12.8  
Net income $ 402.6   295.4   763.2   585.5  
Income per Common share – Diluted:
Income from continuing operations $ 1.75 1.50 2.83 2.94
Net income $ 2.12 1.52 4.00 3.01

Second Quarter 2013 vs. Second Quarter 2012

Exploration and Production (E&P)

The Company’s income from E&P continuing operations was $290.2 million in the second quarter of 2013 compared to $226.0 million in the same quarter of 2012. Improved 2013 quarterly income was driven by higher oil sales volumes in North America. Additionally, North American natural gas sales prices were significantly higher than in 2012, but the Company’s average realized crude oil sales prices were lower in the U.S. and Malaysia in the 2013 quarter. Natural gas production volumes in Canada and Malaysia in 2013 were below the levels produced in 2012. Exploration expenses were $88.8 million in the second quarter of 2013 compared to $96.7 million in the same period of 2012. Undeveloped leasehold amortization cost was $29.8 million lower in the 2013 quarter, primarily due to less expense associated with Eagle Ford Shale leases in the current year. Dry hole expense was $6.7 million higher in the 2013 second quarter primarily due to unsuccessful drilling results at the Bassett West prospect in Block WA-408-P offshore Australia. Geophysical costs were $12.0 million higher in the 2013 quarter, primarily associated with seismic data acquired in Australia, Vietnam, Indonesia and Suriname. The 2013 quarter included a $21.6 million impairment charge to writedown the carrying value of producing wells at Kainai in Southern Alberta. The 2013 quarter also had higher depreciation expense, primarily due to the increase in oil and gas sales volumes.

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