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Murphy Oil's Steady E&P and Development Activities Bode Well

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Murphy Oil Corporation’s (MUR - Free Report) stable financial position, low-cost asset development and long-term investments are expected to boost its performance.

The company has a four-quarter positive earnings surprise of 40.91%, on average.

In the past six months, shares of the company have returned 6.3% against the industry’s decline of 21.9%.



What’s Driving the Stock?

Murphy Oil possesses one of the best upstream portfolios among the domestic oil and natural gas integrated companies as well as independent E&P group. The company is pursuing steady E&P and development activities in the United States and other international locations. Moreover, the company is trying to transform through acquisitions, divestitures and oil-weighted discoveries. Focus on developing high-margin liquid assets is evident from the production mix.

Murphy Oil projects 2020 capital expenditure in the range of $1.4-$1.5 billion and production in the band of 190-202 thousand barrels of oil equivalent per day (MBOEPD). The company expects that in excess of 60% production will comprise oil within 2020-2024 time frame.

Murphy Oil expects to generate $1.4 billion free cash flow in the 2020-2024 time period after dividend payouts. The company expects its annual average capital expenditures to be $1.3 billion in 2020-2024 time period. In 2019, the company’s capital expenditures for continuing operations amounted to $2,698.2 million up 46.5% year over year. Increased capital expenditures indicate higher development drilling activities in the Eagle Ford Shale.

The company has an extensive history of boosting shareholders’ value, courtesy of steady cash flows. Since 2012, Murphy Oil returned $3.9 billion to its shareholders through buybacks and dividend payouts. The consistent performance of the company enabled it to reward shareholders through regular dividend payments. During 2019, the company repurchased nearly $500 million shares and returned nearly $660 million.

However, a highly-competitive industry, stringent regulations and unfavorable foreign currency conversion rates are headwinds.

Zacks Rank

The stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks to Consider

Few better-ranked stocks from the same sector are Chevron Corporation (CVX - Free Report) , Marathon Oil Corporation (MRO - Free Report) and World Fuel Services Corporation . All the three stocks hold a Zacks Rank #2 (Buy).

Long-term earnings growth of Chevron, Marathon Oil and World Fuel Services is pegged at 6%, 7.80% and 5%, respectively.

Chevron, Marathon Oil and World Fuel Services have  trailing four-quarter positive earnings surprise of 12.58%, 190.82% and 22.41%, on average, respectively.

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