Murphy Oil Corporation MUR reported second-quarter 2015 loss of 48 cents per share, narrower than the Zacks Consensus Estimate of a loss of 54 cents. This amounted to a positive surprise of 11.1%.

In the year-ago quarter, the company reported earnings of $1.38 per share. The downslide was primarily due to a huge year-over-year slide in realized sales prices.
 

On a GAAP basis, net loss per share was 42 cents as against earnings of 72 cents per share a year ago. The variance between the adjusted and GAAP figures was due to the combined impact of gain from sale of a 10% interest in Malaysia, foreign exchange gains and mark-to-market gain on crude oil derivative contracts, which were offset by the Alberta corporate tax rate increase and restructuring charges.

Revenues

In the quarter under review, Murphy Oil’s revenues came in at $738.3 million, beating the Zacks Consensus Estimate by 7.8%. However, on a year-over-year basis, reported revenues tanked 45.3% mainly due to lower exploration and production revenues from the U.S. and global operations.

Quarterly Highlights

Murphy Oil produced 201,952 barrels of oil equivalent per day (BOE/d) in the second quarter, above the guidance of 197,000 Boe/d. Production exceeded the guidance due to new well performance in the Eagle Ford Shale and startup of the Medusa expansion project. However, total hydrocarbon production declined 3.9% year over year.

Total net hydrocarbon sales volume was 194,700 BOE/d in the quarter, down 10.1% from 216,596 BOE/d a year ago.

Murphy Oil’s total costs and expenses decreased 18.8% year over year to $848.4 million.

Exploration expenses (excluding the amortization of undeveloped leases) in the second quarter declined more than half to around $65 million.

The company spent $30.5 million as interest expenses, down 9.8% from $33.8 million a year ago.

Financial Condition

Murphy Oil had cash and cash equivalents of $909.3 million as of Jun 30, 2015, compared with $1,193.3 million as of Dec 31, 2014.

Long-term debt was $3,264.9 million as of Jun 30, 2015, compared with $2,517.7 million billion as of Dec 31, 2014.

Net cash from operating activities in the second quarter was $193.5 million, remarkably lower than $729.3 million in the year-ago period.

In the reported quarter, the company’s total capital expenditure from continuing operations was $532.2 million compared with $969.1 million in the year-ago quarter.

Guidance

Murphy Oil expects third-quarter 2015 total net production and sales volume of 200,000 BOE/d and 197,000 BOE/d, respectively.

The company estimates total exploration expense of $144 million in the third quarter of 2015.

Murphy Oil slightly increased its total production guidance for 2015 to the range of 200,000 to 208,000 BOE/d from an earlier projection of 195,000 to 207,000 BOE/d.

The company maintained its 2015 capital expenditure budget at $2.3 billion.

Other Oil Releases

TOTAL S.A. TOT reported second-quarter 2015 operating earnings of $1.34 per share (€1.21 per share), surpassing the Zacks Consensus Estimate by 20.7%.

Anadarko Petroleum Corporation APC reported second-quarter 2015 adjusted earnings of 1 cent per share. The Zacks Consensus Estimate was at a loss of 54 cents.

Hess Corporation HES reported second-quarter 2015 adjusted loss from continuing operation of 52 cents per share, narrower than the Zacks Consensus Estimate of 70 cents loss.

Our View

The ongoing softness in commodity prices has impacted the performance of Murphy Oil despite the cut in overall expenses during the second quarter of 2015.

On a more constructive side, Murphy Oil achieved first oil from the two-well Medusa subsea expansion ahead of schedule and completed the sale of the remaining U.K. downstream assets.

Even though the company has increased its production guidance for 2015, weak commodity prices will continue to impact its performance in the upcoming quarters.

Murphy Oil currently holds a Zacks Rank #2 (Buy).

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