Murphy Oil Corp. of El Dorado on Wednesday reported a third-quarter loss of $1.6 billion, or $9.26 per share, and said it will cut its workforce by 23 percent.
The loss and plan to streamline operations come amid what the company called a “low commodity price environment,” which has seen the price of oil per barrel to fall to historically low levels and forced other energy companies to cut overhead.
Despite the results, CEO Roger Jenkins said the company was well-positioned in the tough environment.
“[W]e continue to focus on driving costs lower in our business both in operating expenses and in general and administrative costs,” he said in a news release. “Today, Murphy is better positioned financially to carry out our plans and compete in the upstream oil and natural gas business going forward in a ‘lower-for-longer’ commodity price environment.”
Shares of Murphy Oil (NYSE: MUR) were trading up more than 4 percent at about $28.41 just after 2 p.m. on Thursday.
Conference Call
Jenkins said in an afternoon conference call that the company remains in a favorable financial position with a healthy balance sheet. It is adopting a new emphasis on low-risk exploration in southeast Asia, he said, where new wells can be dug for about $15 million.
“We’re not as singularly focused as we were before,” he said.
As for the upcoming budget expected to be approved in December, Jenkins said it would be significantly reduced but didn’t give any specifics on layoffs or other cost-cutting measures.
In the current environment, Jenkins said the company must focus on maintaining its balance sheet and it is doing so by hitting “singles and doubles.”
“We feel good about where we are in a pretty poor price environment,” he said.
‘Proactive Approach’
In its news release, the company said during the year, “management has taken a proactive approach” toward improving efficiency and structure in response to low energy prices. It said savings from those efforts to cut the year’s general and administrative expenses by 18 percent from 2014, or $64 million, will be fully realized next year. It said year-end 2015 staffing levels will be cut by about 23 percent from 2014.
The company did not provide specific details on the staffing cuts.
The company’s third-quarter loss of $1.6 billion, or $9.26 per share, compared to profit of $246 million, or $1.38 per share, in the same quarter last year. Revenue was $715 million, down from $1.4 billion in the same quarter last year.
Murphy Oil said this year’s third quarter results include a non-cash impairment of oil and natural gas properties of $2.3 billion, or $1.5 billion net of taxes. The impairment was caused by “the low market price for future production,” with oil prices that declined between $8 and $15 per barrel compared to three months earlier. Property impairments occurred at the Seal heavy oil field in western Canada, and oil and natural gas fields offshore Malaysia and the deepwater Gulf of Mexico, the company said.
Third-quarter net loss from continuing operations was $1.587 billion, or $9.22 per share, compared to a profit of $271 million, or $1.52 per share, during the same quarter last year. The company’s adjusted loss, which excludes the results of discontinued operations and other one-time items, of $124.5 million, or 72 cents per share.
Sign up for Daily E-news
