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Murphy Oil first quarter profits fall 5 percent Thursday, Apr 26, 2007 By Jason Wiest Arkansas News Bureau LITTLE ROCK - Lower oil and natural gas production, as well as lower sales prices during the first quarter, were to blame for a 5 percent fall in profits, Murphy Oil Co. announced Wednesday. Net income fell to $110.6 million, or 58 cents per diluted share, from $116 million, or 61 cents diluted per share, a year ago. Some analysts had expected earnings per share above 60 cents. Analysts with AG Edwards and Credit Suisse declined to comment Tuesday. AG Edwards analyst Bruce Lanni said in an April 10 report lower production and "ongoing issues at its major producing assets in the Gulf of Mexico and Canada ... has resulted in less attractive valuations." Lanni does not hold a stake in Murphy, according to the report. Revenues rose 15 percent to $3.43 billion behind improvements in its refining and marketing business, the company said. The El Dorado-based oil and natural gas producer has scheduled a first- quarter earnings conference call for today at noon. Murphy's income from exploration and production operations fell to $88.8 million in the first quarter of 2007, a 45 percent drop since income of $161.9 million in the same quarter of 2006. Total crude oil and gas liquids production fell 13.7 percent, to 84,555 barrels a day, during the first quarter of 2007, mostly attributable to lower production in two deepwater Gulf of Mexico fields. The company's worldwide crude oil and condensate sales prices averaged $47.86 per barrel, compared to $49.11 per barrel one year ago. Natural gas sales volumes fell to 61 million cubic feet per day from 84 million cubic feet per day in the first quarter of 2006 because of lower production, particularly at its Medusa field in the Gulf of Mexico and onshore in Vermillion Parish, La., the company reported. Natural gas sales prices averaged $7.28 per thousand cubic feet in the first quarter of 2007, down from $9.38 per MCF a year ago. In addition to lower production and realized sales prices, a $15.7 million pretax benefit for insurance proceeds in 2006 related to lost production because of Hurricane Katrina in the fourth quarter of 2005 also contributed to the earnings decline, the company said. The first quarter of 2007 did not bring all bad news for Murphy, however. Downstream operations - refining and marketing - generated $35.7 million this quarter, compared to a loss of $35.6 million in the 2006 quarter. The improvement was mostly due to a restart of its Meraux, La., refinery, which was shut-down in the 2006 period for repairs after Hurricane Katrina. Murphy Oil President Clairborne P. Deming said he anticipated better results in the second quarter, with earnings expected to be between 75 cents and 95 cents per share. "Crude oil sales prices have risen since the end of the first quarter, and our worldwide production volumes are expected to average about 88,000 barrels of oil equivalent per day in the second quarter," Deming said in a release. He noted that results could vary depending on commodity prices, drilling results, timing of oil sales and refining and marketing margins. "Given its leverage to crude oil, the company is in strong financial shape with the balance sheet at extremely healthy levels," Lanni said in the April 10 report, adding that Murphy could soon have a "significant amount of free cash flow" that would allow it to pursue development projects and exploration opportunities. Shares of Murphy Oil (NYSE: MUR) closed Wednesday at $58.27, up $1.75, or 3.1 percent. |
