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Murphy Oil Corporation (MUR - Analyst Report) is expected to release its third quarter 2012 results on October 31, 2012. The Zacks Consensus Estimate for the third quarter of 2012 is $1.20 per share (significant year-over-year decrease of 30.92%) on revenues of $7,077 million (a year-over-year decrease of 2.25%).

Second-quarter 2012, a Synopsis

Murphy Oil reported second-quarter 2012 pro forma earnings of $1.52 per share, up from $1.44 per share in the prior-year quarter. This was driven by a decline in exploration expenses and interest costs, partially offset by higher operating costs, a rise in selling and general expenses and depreciation, depletion and amortization charges. Quarterly earnings, however, beat the Zacks Consensus Estimate of $1.33 per share.

Murphy's total revenue for second-quarter 2012 decreased 3.0% to $7.2 billion from $7.4 billion in the year-ago quarter. This revenue decline was attributable to lower numbers in refining and marketing segment; partially offset by a rise in exploration and production segment revenue. Revenue in the quarter under review was lower than the Zacks Consensus Estimate of $9.6 billion.

Guidance

The company expects total worldwide production volumes of 183,000 Boe/d. Sales volumes of oil and natural gas are expected to average 179,000 Boe/d. For full-year 2012, the company expects production rate to remain at 193,000 Boe/d level.

Read our full coverage on this earnings report: Murphy Oil Posts Mixed Bag

Zacks Consensus

The analysts covered by Zacks expects Murphy to post third-quarter 2012 earnings of $1.20 per share, lower than $1.73 delivered in the prior-year quarter. Currently, the Zacks Consensus Estimate ranges between earnings of $1.00 and $1.34 a share.

For 2012, the Zacks Consensus Estimate stood at $5.69 per share, a penny below than the prior-year earnings of 5.70 per share. The current Zacks Consensus Estimate ranges between $5.14 and $6.12 per share.

Estimate Revisions Trend

Agreement

We see an increasing trend for estimates for the third quarter of 2012. Among the 12 estimates, none of the estimates moved in the upward direction over the last 7 days. However, eight estimates moved upward in the last 30 days. One moved in the opposite direction over the last 7 days, and 3 in the last 30 days.

Similarly, for full-year 2012, among the 11 estimates, one of the estimates moved in the upward direction over the last 7 days and 6 in the last 30 days. None moved in the opposite direction over the last 7 days, while 3 moved down in the last 30 days.

The analysts seem to be positive for third quarter as well as full year 2012.

Magnitude

The Zacks Consensus Estimate for third quarter 2012 remained static for the last 7 days. However, it jumped 10 cents to 1.20 cents over the last 30 days. For full-year 2012 also, the Zacks Consensus Estimate did not move in the last 7 days but moved up by 6 cents in the last 30 days.

Surprise History

With respect to earnings surprises, Murphy has topped the Zacks Consensus Estimate in two of the last four quarters in the range of (7.09%) to 47.86%. The average surprise over the last four quarter remained at positive 13.27%. The earnings beat in June 2012 was the highest at 14.29%.

Our Recommendation

Murphy possesses one of the best upstream affluence themes among the domestic oil and natural gas integrated companies and independent E&P group. Murphy continues to augment shareholder value by maintaining a superior E&P production profile. Consecutively, significant progress in offshore drilling activities in Kurdistan and Eagle Ford Shale, natural gas discoveries in Malaysia and Brunei, and first well completion at the Three Forks zone of Southern Alberta might fuel the company’s future performance.

However, volatile oil prices, and uncertainty related to drilling results will weigh on the company’s profitability. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.

Based in El Dorado, Arkansas, Murphy Oil is a global oil and gas exploration and production company with refining and marketing operations in the U.S. and the U.K. The company conducts its upstream operations in the U.S., Canada, Congo, the U.K., and Malaysia. The Exploration and Production (E&P) segment explores and produces crude oil, natural gas and natural gas liquids worldwide. The Refining and Marketing (R&M) segment refines crude oil and other feedstock into petroleum products, such as gasoline. Further, it not only distillates, buys and sells crude oil and refined products; but also transports and markets petroleum products.

The company mainly competes with Occidental Petroleum Corporation (OXY - Analyst Report) and Marathon Oil Corporation (MRO - Analyst Report).

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