Murphy Oil to Spin Off Retail Segment into Separate Company

by Luke Jones  on Tuesday, Oct. 16, 2012 8:39 am  

Murphy Oil CEO Steven Cossé said the spinoff's board of directors and management team are being assembling and will be announced near the time of the spinoff, which is set to happen "by 2013."

Murphy Oil Corp. of El Dorado said Tuesday that its board of directors has approved a plan to spin off its U.S. downstream subsidiary, Murphy Oil USA Inc., into an independent and separately traded company.

As Arkansas Business has reported, Murphy Oil has been considering spinning off the unit since at least late last year.

In a news release, the company also said its board had authorized a special dividend of $2.50 per share for a total dividend of about $500 million and a share buyback program of up to $1 billion of the company's shares of common stock.

Murphy Oil also reaffirmed plans to divest downstream operations it owns in the United Kingdom and stated that it is "continuing to review possible options with respect to selected assets."

During a morning conference call on the deal, Murphy Oil CEO Steven Cossé said the new company will continune to be based in El Dorado. He said the spinoff's board of directors and management team are being assembling and will be announced near the time of the spinoff, which is set to happen "by 2013."

In making the announcement, Murphy Oil gave three reasons for creating the new company:

  • Each business would focus on its strategic priorities with financial targets best fitting its own market and opportunities;
  • Each business would be able to allocate resources and deploy capital in a manner consistent with its priorities; and
  • Investors would be able to value the two businesses based on their respective financial characteristics and make investment decisions based on those characteristics.

After the spinoff, Murphy USA will consist of retail marketing and convenience merchandise, seven product distribution terminals and two ethanol production facilities in North Dakota and Texas.

Meanwhile, Murphy Oil Corp. will become an independent exploration and production company with activities focused in the U.S., Canada and Malaysia. The company will continue its exploration program, offshore development projects and onshore businesses. It also said its unsold downstream operations in the United Kingdom will remain with Murphy Oil Corp. until they can be sold.

"We look forward to these two separate well-positioned companies growing and prospering in their respective industries," Cossé said in a news release.

"Our strong balance provides the opportunity to enhance value to our shareholders through this special dividend and share repurchase program."

Shares of Murphy (NYSE: MUR) were up more than 6 percent to $62.78 in trading on Tuesday.

"Today's announcements are consistent with our commitment to creating value for shareholders,"? Claiborne Deming, Murphy's chairman of the board, said in a news release.

 

 

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