Back to top

Analyst Blog

Murphy Oil Corporation (MUR - Analyst Report) continues with its systematic U.K. asset divestment program. The company announced that its unit Murco Petroleum Limited (Murco) has inked an agreement with Motor Fuel Group to sell the retail gasoline assets to the latter. The transaction is expected to complete by Sep 30, 2014.

Murphy Oil is currently focusing on exploration and production activities in the U.S. as well as maintaining its mineral-rich international sites. After spinning off the U.S. retail marketing division and selling its U.K.-based oil and gas properties, the company is in the process of divesting its U.K. refining and marketing businesses.

On Jul 31, 2014, Murco had entered into an agreement with Klesch Refinery, Ltd. to sell its Milford Haven refinery and terminal assets to the latter. The company will discontinue this operation primarily due to weak operating margins. Subject to customary approvals, the deal will likely close no later than Oct 31, 2014.

During 2013, Murphy Oil sold its oil and gas assets in the U.K. The company had completed the spin-off of its U.S. downstream subsidiary, Murphy Oil USA, Inc., in Sep 2013. It is currently trading on the New York Stock Exchange as Murphy USA Inc. (MUSA - Snapshot Report).

The streamlining of the business will allow Murphy Oil to focus more on its strategic goals, while improving the cost structure, maintaining robust margins and maximizing shareholder value.

Murphy Oil is currently in the middle of multiple exploration and production ventures, including Titan-1 / ST and Urca in the Gulf of Mexico, Sarawak and Block K in Malaysia and Perth Basin in Australia. The company has invested $969.1 million in capital expenditure in the second quarter of the $3,800 million earmarked for 2014. Despite having a solid cash balance of $661.1 million as of Jun 30, 2014, the strategic asset sale will enable the company to accumulate more funds for future projects.

Murphy Oil currently has a Zacks Rank #3 (Hold). However, other better-ranked stocks from the industry include ConocoPhillips (COP - Analyst Report) and Hess Corporation (HES - Analyst Report), each with a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.