A $370 million impairment charge has left Murphy Oil Corp. of El Dorado with a fourth-quarter loss of more than $113 million.
The company reported the charge on Monday, describing it as non-cash and resulting from lower-than-expected production and ultimate oil recovery projected from the company’s Azurite field offshore of the Republic of Congo.
On Wednesday, the company (NYSE: %%MUR%%) said its fourth-quarter loss came in at $113.9 million or 59 cents per diluted share, compared to net income of $174.1 million or 90 cents per diluted share during the same quarter last year.
The company noted that fourth-quarter net income included a loss from discontinued operations of $600,000, while its 2010 fourth quarter included income from discontinued operations of $24.6 million or 13 cents per diluted share.
Excluding discontinued operating results, Murphy Oil said the loss from continuing operations was $113.3 million or 59 cents per diluted share, compared to income of $149.5 million or 77 cents per diluted share in the same quarter of 2010.
Quarterly revenue reached $6.8 billion in 2011, up 24 percent from $5.5 billion in 2010.
Full Year; Looking Ahead
The company was profitable for the full year, with net income at $872.7 million, up 9 percent from the $798.1 million it reported for 2010. Full-year total revenue reached $27.7 billion, up 34 percent from 2010.
For the first quarter of 2012, the company said it expects net income between $1.30 and $1.40 per diluted share.
In the company’s report, David Wood, Murphy’s chairman and CEO, called 2011 an "important year" for Murphy Oil.
"The sale of our two U.S. refineries was a key step in our strategy to reposition the company and we are now focused on the divestiture of the U.K. downstream assets," Wood said.
Murphy Oil announced in 2010 that it would sell its refinery business to focus on the exploration, production and retail parts of business. Last year, it finalized the sale of its stateside refineries.
Retail Sale
In a conference call Thursday, Wood said the company is considering selling or spinning off its U.S. retail arm.
"We are also evaluating the potential to separate our retail business and to unlock its value, which we believe is unrealized within our current corporate structure," Wood said.
This was despite the company’s addition of 29 new Murphy USA stations during the fourth quarter of 2011, and Wood claiming the company would expand its portfolio with Wal-Mart Stores Inc.
Later, however, Wood said he had some reservations about the retail arm’s value.
"What I’ve said is that I think it’s a valuable business," he said. "I don’t know that it’s valued within us. I’m pretty convinced it’s not, and so we’re going to look at what we should do going forward."
Wood said he would speak to Murphy’s board in the first half of the year about the possible divestiture.