Murphy Oil ekes out profit of $2.9M

Murphy Oil Corp. posted a profit of $2.9 million for its 2016 second quarter Wednesday, reversing a loss of $73.8 million a year ago.

The El Dorado-based company's earnings were helped by tax benefits associated with the sale of its interest in Syncrude Canada Ltd., an oil sands mining venture in Alberta, and its Montney natural gas pipeline assets.

Excluding the results of the assets, Murphy Oil had a loss of $62 million, or 36 cents per share, for the second quarter.

"During the second quarter, we continued progressing our 2015 repositioning efforts as we closed the Syncrude non-core asset sale, along with the Montney processing assets, and entered into a new North American unconventional play and further strengthened our balance sheet," Roger Jenkins, president and chief executive officer of Murphy Oil, said in a prepared statement.

The company had earnings per share of 2 cents for the period ending June 30, up from a loss of 42 cents last year. Many analysts expected Murphy Oil to post a loss 39 cents for the quarter.

Murphy Oil shares declined 3.6 percent to $27.80 on the New York Stock Exchange on Wednesday. The company released its financial results after markets closed.

Luana Siegfried, an analyst with Raymond James, said she expected the company to post a loss of 38 cents per share and report a drop in production, partly due to recent wildfires in Canada.

"Generally speaking, oil prices were trading higher in the quarter; thus, all things equal, companies will benefit from higher realization of prices," she said in an email before the company released its financial results.

Energy sector earnings are expected to be down 72 percent in the second quarter. Other companies have reported losses including oil-field service companies Schlumberger Ltd., with a $2.1 billion loss, and Halliburton, with a $3.2 billion loss.

Oil prices have been in a slump since 2014 as a result of a worldwide glut. Energy firms have sought to reduce costs by laying off employees, selling assets, idling drilling rigs and canceling or postponing projects.

Jenkins said Wednesday that Murphy Oil is still focusing on costs and capital allocation, as the company pursues "new exploitation efforts" in its onshore formations.

Murphy Oil said it reduced general and administrative expenses by about 15 percent during the quarter. A company spokesman said the spending cuts did not involve second-quarter layoffs.

Murphy Oil laid off 250 employees, about 20 percent of its workforce, during its first quarter. The company also reduced its workforce by 20 percent in October 2015.

Crude prices experienced a rally earlier this year, resulting in higher prices during the second quarter. However, the rebound hasn't been sustained. Oil prices have fallen 18 percent since early June, and concerns about demand have weighed on prices.

Oil prices fell to a three-month low Wednesday after a report showed U.S. inventories climbed last week. West Texas Intermediate crude fell 2.3 percent to $41.92 a barrel in New York, and Brent crude declined 3 percent to $43.47 a barrel in London.

Murphy Oil said revenue was $437.5 million during the second quarter, down from $738.3 million during the 2015 second quarter.

Murphy Oil said it received about $1.15 billion during the second quarter from the sale of its Syncrude and Montney assets. The company used the funds to reduce its outstanding debt by $971 million.

Part of the money also was used to pay for part of Murphy Oil's acquisition of a working interest in Athabasca Oil Corp.'s oil mining operations in Canada.

Murphy Oil will hold a conference call today at noon to discuss its financial results. The call will be broadcast live on the investor section of the company's website, www.murphyoilcorp.com.

Business on 07/28/2016

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