More than a year after Murphy Oil Corp. severed most of its old and deep roots in El Dorado, the region still leans hard on one of its branches.
Spinoff gasoline retailer Murphy USA, which jockeys with the school district and hospital to be the city’s top employer, has stayed in El Dorado, and is now the city’s last publicly traded company standing.
Murphy Oil announced plans to move its corporate headquarters from El Dorado to Houston in May 2020, at the depths of the COVID economic crisis, citing a collapse in petroleum prices and drastic cost-saving measures.
Once entrenched deeply in the region with hundreds of operating oil wells and timberlands dating to before El Dorado’s first oil boom a century ago, Murphy Oil eventually found that history and sentiment were all that held it to its birthplace.
The smart business choice was Houston, officials said, a city steeped in petroleum and already a workplace to 380 of Murphy Oil’s 800 or so employees. The move out of Arkansas involved only 82 jobs, with some workers getting a chance to relocate. Others got retirement or severance benefits.
By contrast, more than 600 of Murphy USA’s 15,000 total employees are in El Dorado, and while CEO Andrew Clyde never says never, he has no plans to move the company.
Clyde Looks Back
“My 40th high school reunion is coming up next year, so I’ve been looking back,” said Clyde, who grew up in El Dorado.
“When I look around, I’m just amazed at what is happening. When oil prices fell in the mid-’80s, after I’d gone off to college [at Southern Methodist University’s Cox School of Business], we had a real period of decline and saw a lot of companies leave. The population of El Dorado fell from 25,000 to under 19,000, and there was a big question mark in my mind when I’d come back and visit my parents as to what the future would hold for south Arkansas.”
Now, pending the state’s ability to beat back a resurgence of COVID, El Dorado is poised to boom anew, said Bill Luther, CEO of the El Dorado-Union County Chamber of Commerce. (See El Dorado Chamber Chief Describes a New Boom.) The residential real estate market is sizzling, jobs are plentiful, and residents are generally looking ahead, Luther said, though grateful to Murphy Oil as a longtime good neighbor.
“As far as economic impact goes, by the time Murphy Oil relocated to Houston, only about 80 employees were affected,” Luther told Arkansas Business. “I hate to refer to it this way, but that was just barely a blip in today’s economy. Murphy USA has a far larger economic impact.”
With economic momentum returning, manufacturers holding job fairs and a new lithium industry making headlines in the area, Murphy Oil’s exit looks less painful and more inevitable in retrospect, public officials and business leaders say.
“Ultimately, it gets down to access to the resources you need,” said Clyde, who led the Murphy USA spinoff in 2013 and became chief executive of the new company. “Common-goods retailers, like us, are spread out all over the country. We could do business anywhere. But Houston is a major petroleum hub, geophysicists and geoscientists are concentrated there, and so are all the service companies that support activities in that area.”
Clyde, a former Booz Allen consultant, helped grow Murphy USA from 1,200 sites at the time of the spinoff to more than 1,650 current locations.
At the time of Murphy Oil’s departure, Murphy Chairman Claiborne Deming said the company had cut capital expenditure budgets in half, to $700 million, halved its dividend and lowered executive salaries an average of 22%.
“But it wasn’t enough,” he said, describing the company’s hard choice to consolidate its offices. A 110-employee office in Calgary, Alberta, was shut at the same time. “The El Dorado office closure is particularly painful and difficult,” Deming said, “because the company was founded here by C.H. Murphy Jr. and has been an integral and important part of the community for many years.”
C.H. Murphy Jr. was Deming’s uncle, C.H. Murphy Sr. was his grandfather, and Deming himself came to El Dorado after law school to become part of the family business.
Deming is currently a director on the Murphy USA board; his cousin R. Madison Murphy is the company chairman.
Clyde noted that Murphy USA doesn’t require “the same highly specialized resources,” Clyde continued. “Murphy USA’s critical areas revolve around optimizing the business, using data and analytics to develop new strategies and tactics, so frankly our ability to access talent is easier than at a highly specialized exploration and production company. We could be successful anywhere.”
So what keeps Murphy USA in El Dorado, beyond the simple fact that it was spun off from an El Dorado company eight years ago?
The region offers employees “a low cost of living, a great place to raise your family, and a place to work with great employee engagement,” Clyde said. “We also have a strong commitment to the area and its people that we’ve demonstrated by our work with the United Way.”
Last September, Murphy USA’s home office generated record employee pledges of $375,000 from the charity, which the company matched. That $750,000 donation was in addition to a $10 million gift from the company to the Murphy USA Charitable Foundation to support improvements in El Dorado and other local communities, including initiatives like a national partnership with the Boys and Girls Club of America
Murphy USA’s sponsorship of the LPGA Symetra Tour El Dorado Shootout will return to Mystic Creek Golf Club this fall after taking a year off during the pandemic. Mystic Creek, which Golf Week recently named the 34th best course you can play in the United States, is owned by Murphy USA and was the site of two Division 1 collegiate championships this year.
“Charles Murphy Sr. was in the banking business,” Clyde said, mentioning another Murphy spinoff, Deltic Timber Corp., which was acquired in 2017 by Potlatch of Spokane, Washington, and is now PotlatchDeltic. “Ultimately, he acquired land for timber and other purposes, and then oil was discovered, and the story goes on from there. As Murphy Oil expanded into international and offshore production, many pursuits were no longer in the local area.”
Murphy Oil and its previous entities saw their businesses slowly diverge. The oil division surpassed timber and banking in revenue production in the mid-1930s. The oil boom, which brought 10,000 people to El Dorado basically overnight in the 1920s, quickly went bust, but Murphy Oil proved resilient, and eventually became an iconic Arkansas public company frequently mentioned with Walmart Inc. of Bentonville, Tyson Foods Inc. of Springdale and J.B. Hunt Transport Services Inc. of Lowell. Murphy family members and executives populated the state’s business and political firmament for decades.
Murphy USA was a company subsidiary for years, and came to specialize in small gas-station kiosks near Walmart stores.
Since the spinoff in August 2013, Murphy USA has pumped the gas, building more and larger stores and also stretching its geographical footprint into new states and expanding its Murphy Express brand for sites not connected to Walmart supercenters.
In February, Murphy USA closed on a $645 million acquisition of QuickChek Corp. of New Jersey.
That purchase added about 160 New Jersey and New York-area stores to the company fold. It was also a strategic purchase, Clyde said, explaining his plan to adopt QuickChek’s food service excellence companywide.
Murphy USA’s stock, which spun off at around $36 a share, was trading at a healthy $144 last week.
Meanwhile, Murphy Oil has ridden a volatile market, often precariously. A fuel price slump knocked it off the Fortune 500 list of largest U.S. companies in 2016, but last year it was No. 3 on Arkansas Business’ list of top public companies headquartered in the state with net income of $1.15 billion in 2019.
Then came the COVID crash, and a net loss of $1.1 billion for the full year of 2020. Murphy stock, which was trading at $35.78 a share in October 2018, fell to $5.51 on March 20, 2020.
In the face of all that, Murphy Oil drew praise from El Dorado Mayor Veronica Smith-Creer, the Chamber’s Luther and Murphy USA’s Clyde for keeping its “El Dorado Promise,” a program giving a graduating amount (between 60% and 100%) of company-paid tuition to every student who finishes at least four years of public schooling in the El Dorado School District.
Smith-Creer was out of her office last week but told Arkansas Business in a previous interview that Deming had called her before the announcement last year to “break it to me gently.”
“It was bad news, but not the worst,” she said, “because Murphy USA was remaining, and the El Dorado Promise was still in place.”