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Murphy Oil Unit Expects to Win Mexico's Block 5 Platform
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A joint venture led by Murphy Oil Corporation’s (MUR - Free Report) Mexican affiliate, Murphy Sur, S. de R.L. de C.V., is expected to secure Block 5 in Mexico’s fourth-phase, round-one deepwater auction. Murphy has a 30% working interest in the joint venture, while other players include PC Carigali Mexico Operations, S.A. de C.V., a fully owned unit of PETRONAS, with a working interest of 23.34%; Ophir Energy with a 23.3% working interest; and Sierra Offshore Exploration with a 23.33% working interest.
Block 5 is located in the deepwater Salinas basin. The initial exploration period of the contract is four years and it incorporates a work program commitment of one well.
Portfolio to Drive Growth
Murphy Oil possesses one of the best upstream portfolios among the domestic oil and natural gas integrated companies and independent E&P groups. The company is pursuing steady E&P and development activities in the U.S. and other international locations. In 2016, Murphy Oil will invest $620 million, out of which 79% will be directed toward field development & development drilling.
Moreover, the company’s entry into the Eagle Ford shale was successful. In addition to the 23 online wells at the end of third quarter, it plans to bring begin operating another 17 wells in the fourth quarter. Production from the Eagle Ford shale at the end of third quarter was 46,064 barrels of oil equivalent per day, with liquid comprising 87% of the total produce.
Price Movement
Murphy Oil has outperformed the Zacks Categorized Oil & Gas – U.S. Exploration and Production industry over the last 12 months. The company’s share price gained 40.4% during the period, while the industry improved 37.4%.
Notably, Murphy Oil is combating the volatile oil price environment by undertaking cost-saving initiatives, which have already benefitted the company and are likely to continue doing so. Thanks to these initiatives, the company was able to lower the lease operating cost per Boe by 5.4%, and general & administrative expenses by 24% in the first nine months of 2016.
Murphy Oil is also making consistent efforts to reduce drilling and completion costs. The company presently spends around $4.3 million per well across its entire play, which is 18% lower than $5.3 million spent for each well in the third quarter of 2015.
Further, the company’s balance sheet carries a low level of leverage, offering it ample financial flexibility.
Zacks Rank & Key Picks
Murphy Oil carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the same space include Diamondback Energy, Inc. (FANG - Free Report) , Abraxas Petroleum Corporation (AXAS - Free Report) and Matador Resources Company (MTDR - Free Report) .
Diamondback Energy has seen 14 upward estimate revisions over the last 60 days for 2016. During the same time frame, its estimates increased from $1.03 to $1.39, reflecting an upside of 35%. The stock sports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
Abraxas Petroleum, with a Zacks Rank #2 (Buy), has seen three upward estimate revisions over the last 60 days for 2016. During this period, its estimates narrowed 25% from a loss of 12 cents to a loss of 9 cents.
Matador Resources, another a Zacks Rank #2 stock, has seen five upward estimate revisions over the last 60 days for 2016. During the same period, its estimates narrowed 60% from a loss of 15 cents to a loss of 6 cents.
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Murphy Oil Unit Expects to Win Mexico's Block 5 Platform
A joint venture led by Murphy Oil Corporation’s (MUR - Free Report) Mexican affiliate, Murphy Sur, S. de R.L. de C.V., is expected to secure Block 5 in Mexico’s fourth-phase, round-one deepwater auction. Murphy has a 30% working interest in the joint venture, while other players include PC Carigali Mexico Operations, S.A. de C.V., a fully owned unit of PETRONAS, with a working interest of 23.34%; Ophir Energy with a 23.3% working interest; and Sierra Offshore Exploration with a 23.33% working interest.
Block 5 is located in the deepwater Salinas basin. The initial exploration period of the contract is four years and it incorporates a work program commitment of one well.
Portfolio to Drive Growth
Murphy Oil possesses one of the best upstream portfolios among the domestic oil and natural gas integrated companies and independent E&P groups. The company is pursuing steady E&P and development activities in the U.S. and other international locations. In 2016, Murphy Oil will invest $620 million, out of which 79% will be directed toward field development & development drilling.
Moreover, the company’s entry into the Eagle Ford shale was successful. In addition to the 23 online wells at the end of third quarter, it plans to bring begin operating another 17 wells in the fourth quarter. Production from the Eagle Ford shale at the end of third quarter was 46,064 barrels of oil equivalent per day, with liquid comprising 87% of the total produce.
Price Movement
Murphy Oil has outperformed the Zacks Categorized Oil & Gas – U.S. Exploration and Production industry over the last 12 months. The company’s share price gained 40.4% during the period, while the industry improved 37.4%.
Notably, Murphy Oil is combating the volatile oil price environment by undertaking cost-saving initiatives, which have already benefitted the company and are likely to continue doing so. Thanks to these initiatives, the company was able to lower the lease operating cost per Boe by 5.4%, and general & administrative expenses by 24% in the first nine months of 2016.
Murphy Oil is also making consistent efforts to reduce drilling and completion costs. The company presently spends around $4.3 million per well across its entire play, which is 18% lower than $5.3 million spent for each well in the third quarter of 2015.
Further, the company’s balance sheet carries a low level of leverage, offering it ample financial flexibility.
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Zacks Rank & Key Picks
Murphy Oil carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the same space include Diamondback Energy, Inc. (FANG - Free Report) , Abraxas Petroleum Corporation (AXAS - Free Report) and Matador Resources Company (MTDR - Free Report) .
Diamondback Energy has seen 14 upward estimate revisions over the last 60 days for 2016. During the same time frame, its estimates increased from $1.03 to $1.39, reflecting an upside of 35%. The stock sports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
Abraxas Petroleum, with a Zacks Rank #2 (Buy), has seen three upward estimate revisions over the last 60 days for 2016. During this period, its estimates narrowed 25% from a loss of 12 cents to a loss of 9 cents.
Matador Resources, another a Zacks Rank #2 stock, has seen five upward estimate revisions over the last 60 days for 2016. During the same period, its estimates narrowed 60% from a loss of 15 cents to a loss of 6 cents.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>