Murphy Oil Announces Earnings

Published in CSP Daily News

Net income up, but R&M loss

EL DORADO, Ark. -- Murphy Oil Corp. said that net income in first-quarter 2005 was $113.2 million ($1.20 per diluted share) compared to net income of $98.2 million ($1.05 per diluted share) in first-quarter 2004.

Net income in the prior year's first quarter included income from discontinued operations of $17.5 million ($.19 per share) related to results of certain conventional oil and gas properties in Western Canada that were sold in the second quarter of last year. First-quarter income from continuing operations was $113.2 million ($1.20 per share) [image-nocss] in 2005 and $80.7 million (86 cents per share) in 2004. The improvement in 2005 results was mostly attributable to higher exploration and production earnings and lower net corporate costs.

Murphy's income from continuing exploration and production operations was $124.9 million in first-quarter 2005 compared to $101.2 million in the same quarter of 2004. Higher realized sales prices for crude oil and natural gas and higher crude oil sales volumes were the primary reasons for improved earnings. Partially offsetting the improvements in prices and volumes were higher exploration expenses, which increased from $49.1 million in the 2004 period to $70.3 million in 2005.

The company's worldwide crude oil and condensate sales prices averaged $39.90 per barrel for the current quarter compared to $30.95 per barrel in first-quarter 2004. Total crude oil and gas liquids production from continuing operations was 108,738 barrels per day (bpd) in first-quarter 2005 compared to 95,128 bpd in the 2004 quarter.

Murphy's refining and marketing operations incurred a loss of $5.5 million in the 2005 quarter compared to a loss of $6.4 million in the 2004 quarter. The company's North American operations lost $8.3 million in first-quarter 2005 and $10.5 million in the 2004 period. The smaller loss was primarily due to better performance and margins at the Meraux refinery; however, margins for the company's U.S. retail gasoline system were lower and were hurt by rising wholesale gasoline prices during much of the current period.

R&M operations in the U.K. earned $2.8 million in first-quarter 2005, down from a $4.1 million profit in the same quarter of 2004, with the weaker results based on operating margins that also were squeezed by higher crude prices during the 2005 period.

Claiborne P. Deming, president and CEO of the El Dorado, Ark.-based company, said Murphy's financial results continue to benefit from strong oil and gas prices that have carried over into the second quarter. Production and sales volumes are expected to average about 126,000 barrels of oil equivalent per day in the second quarter. Thus far in April, we have realized much stronger U.S. downstream margins, so we are optimistic that this will lead to better overall results in our downstream business for the full second quarter. We currently expect earnings in the second quarter to be between $1.80 and $2.00 per share. Results could vary based on commodity prices, drilling results, timing of oil sales and refining and marketing margins.