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."

"Separating these two businesses will allow each to unlock its own potential for growth. We have built two strong but distinct businesses," he said. "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. Given its existing positioning in the market, I am confident that Murphy USA will continue to grow the business and drive shareholder value."?

Former CEO David Wood discussed the possible spinoff throughout early 2011, but resigned in June before any action was taken. Current CEO Cossé mentioned the possibility of a spinoff during an August conference call.

During a conference call on Tuesday, Cossé said the company had hired a consulting firm earlier this year to analyze the retail arm's "underperformance issues."

"We've gotten the full report," he said. "It's very much a matter within our control. We have internally reorganized Murphy USA to address those issues. We've got new pricing protocols in place and new procedures."

Two weeks ago, Deming responded to hedge fund Third Point LLC of New York, which had been pressuring the company to spin off the unit.

Deming said Murphy Oil had met with Third Point and other investors and is "focused on maximizing long-term value for all shareholders."

This would not be the first time Murphy Oil has formed a separate publicly traded company. In 1996, the company's farm, timber and real estate subsidiary was spun-off to shareholders and is now known as Deltic Timber Corp. of El Dorado (NYSE: DEL).

Change in Direction

As one of the largest operators in the Gulf of Mexico, Murphy Oil Corp. markets crude oil and natural gas liquids from on- and offshore drilling operations throughout the world. The corporation also is involved in petroleum and natural gas exploration and production operations worldwide.

The $28 billion company's roots go back to a lumber and banking business in south Arkansas and to 1907, when the first oil production was established in the Caddo Field in north Louisiana.

In 2010, Murphy Oil announced plans to exit the refining businesses and sell its refineries at Superior, Wis., Meraux, La., and Milford Haven, Wales, along with its retail system in the United Kingdom. The company has yet to sell its refinery in Wales.

At the time, Wood said exiting the business would allow it to concentrate on growing its upstream and U.S. retail businesses.



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