Shares of El Dorado-based Murphy Oil Corp. rose 4.2 percent Thursday as the $1.6 billion quarterly loss reported Wednesday turned out to be lower than expected and came from mostly noncash sources.
"The loss was less than expected," said Leo Mariani, an analyst with RBC Capital Markets. "And they reported strong cash flow in the quarter."
Some of the world's largest oil producers reported sharper declines in earnings on Thursday, leading them to lower their dividends and make bigger spending cuts.
"I would say in general, it's one of the better reports we've seen out of earnings so far," Mariani said about Murphy Oil's third-quarter financial results. Shares of the company closed Thursday at $28.26 on the New York Stock Exchange.
Oil producers have benefited from the U.S. shale boom in recent years but are now struggling in a period of low oil prices. Crude prices fell last year as a result of a market glut and sluggish demand, and remain almost 50 percent lower than they were a year ago.
Announcements made by several oil companies Thursday highlight the difficulties facing the industry.
Royal Dutch Shell Plc reported a loss of $7.42 billion for the third quarter as the company took a charge of almost $8 billion.
ConocoPhillips, which reported a $1.1 billion loss, further reduced its 2015 capital budget from $11.5 billion to $10.2 billion.
And Marathon Oil Corp., which releases its financial results next week, cut its quarterly dividend from 21 cents per share to 5 cents per share.
"We believe the revised dividend appropriately addresses the uncertainty of a lower for longer commodity price environment," Chief Executive Officer Lee Tillman of Marathon Oil said in a statement.
"The decision aligns with our priority of maintaining a strong balance sheet through the cycle and provides us additional capital flexibility to support growth from our deep inventory of investment opportunities in the U.S. resource plays when commodity prices improve," he said.
When Murphy Oil reported its financial results Wednesday, the company said its workforce will be reduced by about 23 percent from 2014 levels by the end of this year.
The company did not provide further details on the workforce reduction. A spokesman did not respond to phone messages or an email seeking comment.
Murphy Oil has a global workforce of about 1,400, said Luana Siegfried, an analyst with Raymond James. A 23 percent reduction would reduce the company's workforce by more than 300 positions, she said.
"I think that in the case of workforce, I think that included outside contractors also -- not just employees within the company," RBC's Mariani said.
Analysts said it is possible that there will be more layoffs in the oil industry, which has already seen tens of thousands of job losses this year.
"I do think that's something we could possibly see: other [exploration and production] companies going in this same direction," Siegfried said. "It's the very beginning of earnings season, but the companies that reported, pointed up to [capital expenditures] reduction next year."
Business on 10/30/2015