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Murphy Oil reports strong profits as crude oil near $70 a barrel Thursday, Feb 2, 2006 By Wesley Brown Arkansas News Bureau LITTLE ROCK - Murphy Oil Corp. reported strong fourth-quarter and yearly profits Wednesday as crude oil futures rose to nearly $70 per barrel on concerns that political unrest in several OPEC countries may further reduce international oil supplies. The El Dorado oil giant had said earlier this month that abandoned oil wells in deepwater Africa and costs related to a Hurricane Katrina-related oil spill would push profits lower for the period ending Dec. 31. "On the back of very strong prices for oil and natural gas in 2005, Murphy Oil posted the largest net income in the history of the company," Murphy President and CEO Claiborne P. Deming, said in a statement. "But for Hurricane Katrina and its aftermath, the year's results would have been quite a bit better." On Jan. 12, Murphy predicted fourth-quarter profits in the range of 75 cents to 95 cents per share, including a one-time tax benefit of nearly $30 million. Wall Street analysts had projected the Arkansas oil producer to report earnings of 79 cents per share, according to Thomson First Call. However, Murphy beat analysts' expectations by 3 cents a share, reporting fourth-quarter earnings of $154.6 million, or 82 cents per share, compared to $134.5 million - 72 cents a share - a year ago. For the year, the company saw net income of $846.5 million, or $4.51 per diluted share, versus $701.3 million, or $3.75 per diluted share, for 2004. In Murphy's upstream exploration and production operations, net income came in at $128.7 million, compared to $152.7 million in the fourth quarter of 2004. Those lower earnings were primarily due to higher drilling costs and weaker tax benefits, company officials said. Murphy's downstream refining and marketing operations generated a profit of $31.4 million compared to $30.1 million in the fourth quarter of 2004. Those operations include Murphy's retail partnership with Wal-Mart Stores Inc. of Bentonville. Despite the strong report, Murphy still faces a tough year ahead in fiscal 2006. Earlier this week, a federal judge in New Orleans gave class-action status to a lawsuit against Murphy following a Katrina-related oil spill. In September, Katrina tipped over a Murphy oil tank holding 65,000 barrels of crude at the company's refinery complex located in St. Bernard Parish, just east of New Orleans. Louisiana officials estimate that as many as 4,000 homes will have to be razed and two to three feet of soil removed before the area could be inhabited again. "The repair of the Meraux refinery and clean-up of the area affected by the oil spill caused by Hurricane Katrina continues to receive high priority within the company," Deming said. The complex was shut down for the last four months of 2005. Overall, Murphy was able to sell its crude oil on the international market in the fourth quarter at an average price of $45.78 per barrel for the 2005, up nearly 16 percent from $39.51 per barrel in 2004. North American natural gas sales prices for the quarter averaged $13.56 per thousand cubic feet, nearly doubled the $7.48 per mcf in 2004. On Wednesday, crude oil prices rose more than $1 in trading on the New York Mercantile Exchange despite data from the Department of Energy that worldwide oil supplies were on the rise. Light sweet crude for March delivery closed at $68.65, up 73 cents. Nymex traders bidded up prices out of concern that the war in Iraq, political unrest in Nigeria and Iran's nuclear stance could cut worldwide oil supplies. All three countries are members of the Organization of Petroleum Producing Countries, the oil cartel better known as OPEC. In Murphy's earnings release, Deming commented that he believes oil prices will stay strong in early 2006 "due to concern within the marketplace about continued stable worldwide production." Murphy's share closed down six cents at $56.94 on the New York Stock Exchange. |
