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Why Is Murphy Oil (MUR) Down 8.7% Since the Last Earnings Report?

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More than a month has gone by since the last earnings report for Murphy Oil Corporation (MUR - Free Report) . Shares have lost about 8.7% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Murphy Posts Narrower-than-Expected Loss in Q2

Murphy Oil reported second-quarter 2017 loss of $0.11 per share, narrower than the Zacks Consensus Estimate of a loss of $0.15. Also, the number was significantly better than the year-ago quarter’s loss of $0.36.

On a GAAP basis, net loss per share was $0.10, against a gain of $0.02 a year ago.

Revenues

In the quarter under review, Murphy Oil’s revenues came in at $474.5 million, missing the Zacks Consensus Estimate of $495 million by 4.1%. On a year-over-year basis, revenues increased 8.5%.

Quarterly Highlights

Murphy Oil produced 162,857 barrels of oil equivalent per day (BOE/d) in the second quarter, within the guided range of 160,000–164,000 BOE/d. It sold 160,203 barrels of oil equivalent per day, during the second quarter.

In the second quarter, Murphy completed the drilling of Murphy record well in the Kaybob Duvernay achieving an IP30 rate approaching 1,800 barrels per day.

The company executed pacesetter wells in the Eagle Ford Shale, along with drilling two wells. It also drilled a discovery well in Vietnam Block 11-2/11 in the Nam Con Son Basin.

Financial Condition

Murphy Oil had cash and cash equivalents of $1,058.5 million as of Jun 30, 2017, compared with $872.8 million as of Dec 31, 2016.

Long-term debt was $2,367.1 million as of Jun 30, 2017, compared with $2,422.8 million as of Dec 31, 2016.

Net cash from operating activities in the second quarter was $285.9 million, remarkably higher than $70.1 million in the year-ago quarter.

In the reported quarter, the company’s total capital expenditure from continuing operations was $200.5 million compared with $318.8 million in the year-ago quarter.

Guidance

Murphy Oil expects third-quarter and full-year 2017 total net production of 156,000–158,000 BOE/d and 163,000–167,000 BOE/d, respectively. Total net sales for third-quarter 2017 are expected in the band of 157,000–160,000 BOE/d.

The company estimates total exploration expenses of $42.0 million in third-quarter 2017.

The company reaffirmed 2017 capital expenditure budget of $890 million.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter.

VGM Scores

At this time, the stock has a nice Growth Score of B, though it is lagging a lot on the momentum front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for value investors than growth investors.

Outlook

While estimates have been trending upward for the stock, the magnitude of these revisions indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.




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