LITTLE ROCK — Murphy Oil Corp. said Tuesday it will spin off its Murphy Oil USA subsidiary into an independent and separately traded company, making the El Dorado-based firm a pure exploration and production company.
As part of the transaction, Murphy Oil will pay a special dividend of $2.50 per share for a total dividend of about $500 million and a share buyback program of up to $1 billion of the company’s shares of common stock.
The deal, which is subject to regulatory and shareholder scrutiny, is expected to be finalized in 2013.
Murphy also reaffirmed its plan to divest its U.K. operations and said the company is continuing to review possible options with respect to selected assets.
"Today’s announcements are consistent with our commitment to creating value for shareholders," said Claiborne Deming, chairman of the Murphy board.
Murphy Oil’s plan will create two publicly traded companies — its oil and gas exploration and production group and its marketing and retail operations.
The company said it could gain several advantages from the spin-off:
—Each business would focus on its strategic priorities with financial targets that best fit its own market and opportunities.
—Each business would be able to allocate resources and deploy capital in a manner consistent with its priorities
—Investors, both current and prospective, would be able to value the two businesses based on their respective financial characteristics and make investment decisions accordingly.
Murphy USA will become a retail marketer of petroleum products and convenience merchandise through its large chain of retail gasoline stations. The company’s assets will include seven product distribution terminals and two ethanol production facilities in North Dakota and Texas.
Murphy Oil will become an independent exploration and production company with principal activities focused in the United States, Canada and Malaysia.
The company’s United Kingdom operations, which Murphy is trying to sell, will remain with Murphy until the assets are fully divested.
Murphy Oil stock (NYSE: MUR) closed Monday at $63.74 a share, up $4.74.
Arkansas News Bureau business columnist Roby Brock contributed to this report.