El Dorado-based Murphy Oil Corp. announced Tuesday that it will spin off its U.S. refining and marketing subsidiary, Murphy Oil USA Inc., into a separately traded company.
The move, which will move Murphy Oil’s focus to exploration and production, is expected to be finalized in 2013.
The spinoff company, Murphy USA, will consist of Murphy’s chain of gas stations, seven distribution terminals, and two ethanol plants in North Dakota and Texas, and will be held directly by shareholders, the company said in a statement.
Meanwhile, Murphy Oil will become “an independent exploration and production company with principal activities focused in the United States, Canada and Malaysia,” the company said.
The board members of Murphy USA will be announced closer to the spinoff date, and the company will be Arkansas-based, Murphy Oil officials said in a conference call.
The spinoff won’t be subject to shareholder approval, company officials said.
Murphy Oil has also authorized a special dividend of $2.50 per share and a share-buyback program of up to $1 billion, the company said. The dividend is payable on Dec. 3 to holders of record as of Nov. 16, the company said.
Company officials said they see the special dividend as an immediate way to enhance shareholder value, adding that they imagine the 2012 tax environment as friendlier than next year’s.
“Separating these two businesses will allow each to unlock its own potential for growth,” board Chairman Claiborne Deming said in a statement. “We have built two strong but distinct businesses. Murphy will be a pure-play exploration and production company with strong returns and attractive investment opportunities, while Murphy USA will be a leading retailer with over 1,100 retail gasoline outlets.”
The move comes after an investor letter from hedge fund Third Point LLC, published Oct. 4 on Murphy’s website, suggested the oil firm should shed assets. “The Board and management have been working to evaluate opportunities to illuminate the value in our stock price for the benefit of all of our shareholders,” Deming wrote at the time.
In the statement, the oil firm also reaffirmed its plans to unload its U.K. oil refinery but said it will retain the Milford Haven plant in Wales, which has been up for sale since summer 2010, until it can be sold.
Murphy Oil has scheduled a third-quarter earnings conference call for noon Nov. 1.
The company invited investors to join a 9 a.m. conference call, either by visiting the "investor relations" section of Murphy Oil’s website at www.murphyoilcorp.com/ir or by dialing (888) 378-4350.
The telephone reservation number for the call is 8483705, the company said. Replays of the call will be available at the website, and a recording of the call will be available through Oct.22 by calling (888) 203-1112 and using the same reservation number, the company added.
Read tomorrow's Arkansas Democrat-Gazette for further details.