Murphy Oil Corporation MUR reported a third-quarter 2015 loss of 72 cents per share, narrower than the Zacks Consensus Estimate of a loss of 95 cents. This amounted to a positive surprise of 24.2%.

In the year-ago quarter, the company reported earnings of $1.15 per share. The downslide was primarily due to the plunge in realized sales prices.

On a GAAP basis, net loss per share was $9.26 as against earnings of $1.37 per share a year ago. The variance between the adjusted and GAAP figures was primarily due to impairment of assets, mark-to-market gain on crude oil derivative contracts and foreign exchange gains.

Revenues

In the quarter under review, Murphy Oil’s revenues came in at $714.9 million, beating the Zacks Consensus Estimate of $649 million by 10.1%. However, on a year-over-year basis, reported revenues tanked 50% mainly due to lower exploration and production revenues from the U.S. and global operations.

Quarterly Highlights

Murphy Oil produced 207,586 barrels of oil equivalent per day (BOE/d) in the third quarter, above the guidance of 200,000 BOE/d. Production exceeded the guidance due to new well performance in the Eagle Ford Shale and Sarawak oil and natural gas fields in Malaysia performing better than the expected level.

Total net hydrocarbon sales volume was 207,661 BOE/d in the quarter, down 8.9% from 227,822 BOE/d a year ago.

Murphy Oil’s total costs and expenses increased 201.3% year over year to $3,122.9 million. However, excluding impairment charges of $2,300.9 million in the quarter, total costs and expenses decreased 20.7% year over year to $822.2 million.

Exploration expenses (excluding the amortization of undeveloped leases) in the third quarter declined more than half to around $58.1 million.

The company spent $32 million as interest expenses, down 8.3% from $34.9 million a year ago.

Financial Condition

Murphy Oil had cash and cash equivalents of $878.7 million as of Sep 30, 2015, compared with $1,193.3 million as of Dec 31, 2014.

Long-term debt was $3,327.7 million as of Sep 30, 2015, compared with $2,517.6 million as of Dec 31, 2014.

Net cash from operating activities in the third quarter was $381.4 million, remarkably lower than $879.1 million in the year-ago period.

In the reported quarter, the company’s total capital expenditure from continuing operations was $526.4 million compared with $977.3 million in the year-ago quarter.

Guidance

Murphy Oil expects fourth-quarter 2015 total net production and sales volume of 199,000 BOE/d and 197,000 BOE/d, respectively.

The company estimates total exploration expense of $132 million in the fourth quarter of 2015.

Murphy Oil slightly increased its total production guidance for 2015 to the range of 205,000 to 209,000 BOE/d from an earlier projection of 200,000 to 208,000 BOE/d.

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

Other Oil Releases

TOTAL S.A. TOT reported third-quarter 2015 earnings of $1.17, higher than the Zacks Consensus Estimate of 72 cents by 62.5%.

Anadarko Petroleum Corporation APC reported a third-quarter 2015 loss of 72 cents, in line with the Zacks Consensus Estimate.

Hess Corporation HES reported an adjusted third-quarter 2015 loss from continuing operation of $1.03 per share, narrower than the Zacks Consensus Estimate of $1.13 loss.

Our View

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

In response to the weak prices, the company has taken a few measures to lower its operating expenses. The measures implemented are expected to lower G&A expenses by $64 million or 18% from 2014 levels.

Even though the company has increased its production guidance for 2015, weak commodity prices are expected to affect the top line in the upcoming quarters.

Murphy Oil currently holds a Zacks Rank #3 (Hold). Apache Corporation (APA), carrying a Zacks Rank #2 (Buy), is scheduled to release its third-quarter results on Nov 5, 2015. The Zacks Consensus Estimate is at a loss of 38 cents.

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