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Murphy Oil (MUR) to Gain on Cost Savings, High-Margin Assets

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Murphy Oil Corporation’s (MUR - Free Report) cost-saving initiatives, low-cost asset development and steady developmental activities in the United States and at international locations are likely to enhance its performance.

We recently updated a research report on this currently Zacks Rank #3 (Hold) company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The company has a trailing four-quarter earnings surprise of 35.91%, on average.

What’s Aiding the Stock?

Murphy Oil possesses one of the best upstream portfolios among the domestic oil and natural gas integrated companies as well as in the independent E&P group. The company is regularly pursuing developmental activities in the United States and on foreign shores. It undertook cost-cutting initiatives and has a set target to lower its G&A expenses by 50% from the 2015-readings.

Over the past several months, the company has been trying to transform its portfolio through acquisitions, divestitures and oil-weighted discoveries. Its focus on developing high-margin liquid assets is evident from the production mix. Moreover, Murphy Oil’s Tupper Montney asset in Canada is one of the leading low-cost operating assets in North America. Tupper Montney asset produced 237 million cubic feet of gas per day during the second quarter.

Furthermore, the company has a long history of adding shareholder value, courtesy of steady cash flows. Since 2012, Murphy Oil has returned $3.9 billion to its shareholders through buybacks and dividend payouts. A consistently efficient operating performance enabled it to reward its shareholders through routine dividend payouts.

Headwinds

However, Murphy Oil operates in a highly-competitive environment, which might hurt its profitability. Also, stringent regulations and unfavorable foreign currency conversion rates are its near-term concerns.

Price Performance

Shares of Murphy Oil have declined 16.8% in the past 12 months compared with the industry’s 28% fall.

Stocks to Consider

A few better-ranked stocks from the same sector are Concho Resources Inc. , EOG Resources, Inc. (EOG - Free Report) and Noble Energy Inc. , each carrying a Zacks Rank #2 (Buy) at present.

The long-term (three-five) earnings growth rate for Concho Resources is pegged at 11.93%. It has a trailing four-quarter earnings surprise of 67.15%, on average.

EOG Resources’ long-term earnings growth rate stands at 9.38%. The Zacks Consensus Estimate for 2020 earnings has been revised 109.1% upward over the past 30 days.

Noble Energy’s long-term earnings growth rate is 18.63%. It has a trailing four-quarter earnings surprise of 148%, on average.

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