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Murphy Oil Reports Solid Quarter, Sending Stock Up

2 min read

Murphy Oil Corp. of El Dorado blew past Wall Street expectations Thursday, announcing third-quarter revenue up 66% over the same quarter last year, spurring a stock-price rally.

The oil and gas exploration giant, which recently expanded its operations in the Gulf of Mexico, reported quarterly net income of $1.1 billion, or $6.76 per diluted share of stock. Shares (NYSE: MUR) were trading Thursday morning at $20.20, up nearly 4% from Wednesday.

Adjusted net income, excluding discontinued operations and one-off items like $1 billion in proceeds from the sale of Malaysian offshore assets, was $57 million, or 36 cents per diluted share.

The company attributed the strong results to its increased Gulf of Mexico position and its Malaysian exit. The company also announced a $1.9 billion debt repayment and the repurchase of $500 million in shares in its stock buyback program.

Murphy closed the previously announced Malaysia asset divestiture in the third quarter, reaping $2.0 billion in cash. 

The company reported its highest oil volumes since the first quarter of 2015, and increased production in its Eagle Ford shale play in Texas. Murphy also cited reduced operating expenses and the potential for big results from its St. Malo waterflood project in the Gulf of Mexico.

Adjusted EBITDA of $438 million in the quarter was the company’s best since 2014, and with that cash flow and the Malaysian proceeds, it was able to repay $1.4 billion under its $1.6 billion senior unsecured credit facility.

“Our company is performing exceptionally well,” President and CEO Roger W. Jenkins said in a statement. “With a significant gain on sale of nearly $1.0 billion, we have the Malaysia divestiture behind us and are pleased to complete our first quarter as a transformed and streamlined Murphy.”

Jenkins called the remade company an “oil-weighted, Western Hemisphere focused company,” and said its Gulf of Mexico and Eagle Ford operations “continue to achieve low operating costs and strong realized prices, driving healthy EBITDA given their prime access to premium markets.”

As of September 30, Murphy had about $2.0 billion of liquidity, Jenkins said.

“Murphy has meaningfully de-levered its balance sheet and improved liquidity this quarter with cash from the Malaysia asset sale as part of ongoing portfolio transformation,” he said. “As promised, we consistently return cash through our substantial dividend and reliably delivered on our share repurchase program ahead of schedule, supporting Murphy’s tenet of benefiting our shareholders.”

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