Murphy Oil 2Q Earnings Off, Production Projection Revised Downward

by Michelle Corbet  on Thursday, Jul. 31, 2014 11:43 am  

Roger Jenkins, CEO of Murphy Oil Corp.

Murphy Oil Corp. of El Dorado reported Wednesday it would reduce its projected 2014 production after income from continuing operations fell 45 percent compared to last year’s second quarter. 

Income from continuing operations in the second quarter of 2014 was $142.7 million, or 79 cents per diluted share, compared to $259.9 million, or $1.37 per diluted share, in the second quarter of last year.

Revenue was $1.3 billion, flat compared to the same quarter last year.

Murphy Oil attributed the lower adjusted earnings to higher exploration expenses, higher extraction costs in Malaysia associated with several new field startups, lower oil and natural gas sales prices from its operations in the Malaysian state of Sarawak, unfavorable effects in the U.S. from commodity contracts and higher financing costs.  

"We continue to make progress on three fronts: profitable production and reserves growth, execution at Eagle Ford Shale [in South Texas] and lowering operating expenses,” President and CEO Roger W. Jenkins said in a news release.

In all, the company reported quarterly net income of $129.4 million, or 72 cents per share, down from $402.6 million, or $2.12 per share, in the previous year. Adjusting for discontinued operations and other one-time items, net income was $161.7 million, or 90 cents per share, compared to $216.7 million, or $1.38, in the same quarter last year.

Second-quarter production averaged 210,191 barrels of oil equivalent per day, about 3 percent below the company’s guidance of 217,000 barrels for the quarter.

The shortfall for the quarter was attributed to lower oil and gas volumes related to operational delays at the Kikeh production facility in Southeast Asia, continued unplanned downtime at a third-party methanol plant that process Kikeh gas, a rig mobilization delay at a Sarawak oil platform and various downtime events at shallow and deep-water facilities.   

Based on second-quarter production levels as well as early results in the third quarter, the company has revised downward its projected full-year 2014 production to 220,000-225,000 barrels per day from 225,000- 230,000 barrels per day. 

Downtime due to unscheduled maintenance at the Syncrude Project in Canada, an unplanned outage at the Kikeh production facility and revisions for further production risks through third-party operated facilities were several factors that led to this reduction. 

Jenkins said operating expenses "continue to trend down" despite the startup of several fields.

Reuters Africa out of Mumbai reported Thursday that India’s state-owned Oil & Natural Gas Corp. and Oil India Ltd. have submitted a joint bid worth about $1.5 billion to buy Murphy’s Oil’s Malaysian oil and gas assets.

Murphy, which has interests in oil and gas fields in Malaysia, Vietnam, Indonesia, Brunei and Australia, has invited bids for a 30 percent stake in its Malaysian assets.



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