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Murphy Oil Unit Spins Off Syncrude Assets to Suncor Energy
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Murphy Oil Corporation’s (MUR - Free Report) Canadian unit, Murphy Oil Company Ltd. ("MOCL"), has completed the sale of Syncrude Canada Ltd. to Suncor Energy Inc. (SU - Free Report) , a leading crude-oil producer in Canada. The transaction was announced on Apr 27, 2016 and it had an estimated value of $741 million (C$937 million).
The sale will allow Murphy Oil to divest its 5% non-operated stake in the Syncrude oil sands property located in Alberta, Canada, which produced an average 15,600 barrels of oil equivalent per day in the first quarter of 2016.
Murphy’s Strategy
Murphy Oil is currently streamlining its operations through asset divestments to focus extensively on E&P ventures in the U.S. A systematic asset divestment strategy will also enable Murphy Oil to fund projects that support its long-term growth strategy.
Notably, the company’s strategy of focusing on unconventional resources in North America while maintaining its global offshore presence has been paying off. Murphy Oil’s first-quarter production levels were above expectations due to strong contributions from the Eagle Ford shale in Texas and higher oil production in offshore Sabah, Malaysia and Canada.
However, due to the recent sale of the Syncrude assets and wildfires in Canada, Murphy Oil now expects second-quarter production to be 8,400 barrels oil equivalent per day (Boe/d), lower than the prior guidance of production of 177,000–180,000 Boe/d for the quarter
Recent Asset Sales
Murphy Oil sold natural gas processing and pipeline assets, which supported the Montney natural gas fields in the Tupper and Tupper West areas of northeastern British Columbia, to pipeline company Enbridge Inc. (ENB - Free Report) for a total cash consideration of $378 million (C$538 million), after adjustments.
The sale proceeds were deployed for the purchase of a 70% working interest in Kaybob Duvernay lands and a 30% non-operated working interest in Montney lands from the affiliates of Athabasca Oil Corporation. This move is expected to help Murphy to expand its footprint in the unconventional shale business of North America.
Peers’ Strategies
In a similar move, Devon Energy (DVN - Free Report) is planning to divest non-core assets worth $2 billion to $3 billion in 2016. The company is currently in talks to sell its 50% interest in the Access Pipeline in Canada. Year to date, the company has announced asset sale of nearly $2.15 billion. (Read more:Devon Energy to Sell More Assets; Ups Capex, Output View)
Zacks Rank
Murphy Oil currently has a Zacks Rank #3 (Hold).
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Murphy Oil Unit Spins Off Syncrude Assets to Suncor Energy
Murphy Oil Corporation’s (MUR - Free Report) Canadian unit, Murphy Oil Company Ltd. ("MOCL"), has completed the sale of Syncrude Canada Ltd. to Suncor Energy Inc. (SU - Free Report) , a leading crude-oil producer in Canada. The transaction was announced on Apr 27, 2016 and it had an estimated value of $741 million (C$937 million).
The sale will allow Murphy Oil to divest its 5% non-operated stake in the Syncrude oil sands property located in Alberta, Canada, which produced an average 15,600 barrels of oil equivalent per day in the first quarter of 2016.
Murphy’s Strategy
Murphy Oil is currently streamlining its operations through asset divestments to focus extensively on E&P ventures in the U.S. A systematic asset divestment strategy will also enable Murphy Oil to fund projects that support its long-term growth strategy.
MURPHY OIL Price
MURPHY OIL Price | MURPHY OIL Quote
Notably, the company’s strategy of focusing on unconventional resources in North America while maintaining its global offshore presence has been paying off. Murphy Oil’s first-quarter production levels were above expectations due to strong contributions from the Eagle Ford shale in Texas and higher oil production in offshore Sabah, Malaysia and Canada.
However, due to the recent sale of the Syncrude assets and wildfires in Canada, Murphy Oil now expects second-quarter production to be 8,400 barrels oil equivalent per day (Boe/d), lower than the prior guidance of production of 177,000–180,000 Boe/d for the quarter
Recent Asset Sales
Murphy Oil sold natural gas processing and pipeline assets, which supported the Montney natural gas fields in the Tupper and Tupper West areas of northeastern British Columbia, to pipeline company Enbridge Inc. (ENB - Free Report) for a total cash consideration of $378 million (C$538 million), after adjustments.
The sale proceeds were deployed for the purchase of a 70% working interest in Kaybob Duvernay lands and a 30% non-operated working interest in Montney lands from the affiliates of Athabasca Oil Corporation. This move is expected to help Murphy to expand its footprint in the unconventional shale business of North America.
Peers’ Strategies
In a similar move, Devon Energy (DVN - Free Report) is planning to divest non-core assets worth $2 billion to $3 billion in 2016. The company is currently in talks to sell its 50% interest in the Access Pipeline in Canada. Year to date, the company has announced asset sale of nearly $2.15 billion. (Read more:Devon Energy to Sell More Assets; Ups Capex, Output View)
Zacks Rank
Murphy Oil currently has a Zacks Rank #3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>