Original Source: FD (FAIR DISCLOSURE) WIRE
. Claiborne Deming, Murphy Oil Corporation, President & CEO . Mindy West, Murphy Oil Corporation, Director, Shareholder Relations . John Eckart, Murphy Oil Corporation, Controller . Kevin Fitzgerald, Murphy Oil Corporation, Treasurer
3Q04 net income was $118.7m or $1.27 per diluted share vs. $68.7m in 3Q03, which was $0.74 a share. Excluding discontinued operations, MUR's income was $115.8m in 3Q04, $1.24 a share vs. $66.8m in 3Q03. Q&A Focus: Kikeh, Kakap, Medusa, Habanero, Ecuador, reserves, tax, Todak, and outlook.
A. Key Data From Call 1. 3Q04 E&P business = $119m. 2. 3Q04 downstream business = approx. $19m. 3. 3Q04 corporate net costs = $21m. 4. As of Sept. 30, long-term debt = $1.05b.
S1. Performance Review (J.E.) 1. Income: 1. 3Q04 net income was $118.7m or $1.27 per diluted share vs. $68.7m in 3Q03, which was $0.74 a share. 2. Net income in the current period includes $2.9m or $0.03 per share from discontinued operations, which relate to Western Canada's properties that were sold in 2Q04.
1. That compares to $0.02 in 2003. 3. Excluding discontinued operations, MUR's income was $115.8m in the current qtr., $1.24 a share vs. $66.8m in the prior period. 4. The 2004 continuing operating income includes $24.6m gain on the sale of MUR's `T` Block field in the UK North Sea. 1. This gain amounts to $0.26 per share. 2. Results (Type Of Business): 1. E&P business earned almost $119m vs. $66m in 3Q03. 2. Downstream business earned approx. $19m vs. $5m in 3Q03. 3. Corporate net costs were $21m vs. $4m cost last year. 3. E&P Business: 1. Benefited from: 1. The `T` Block sale and the gain there on. 2. Better oil and gas sales prices. 2. Volumes & Prices: 1. Oil price averaged over $40 a barrel, which was up 57% from 3Q03. 2. North American natural gas sold for $6 in MCF, which was 22% higher than 3Q03.
3. Oil sales volumes were actually about flat with 3Q03 due to
the timing of some of the liftings. 4. Oil production was about 10,000 barrels a day higher than the prior year in 3Q03. 1. Due primarily to the Medusa field in the deep water Gulf of Mexico, Mississippi Canyon 538 and 582 that started up late in the year in 2003. 5. Natural gas sales volumes were down about 7m cubic feet a day. 1. Due to downtime related to tropical storms in the Gulf of Mexico. 3. Storms (Gulf of Mexico): 1. In 3Q04, MUR recorded estimated cost to repair storm damages of $2.6m of cost in E&P side, as well as $750,000 of cost in the downstream side. 1. Not recoverable from its insurance policies due to policy deductibles.
2. Looking at the downtime related to the storm, MUR had a total income affect of lost production in the Gulf of Mexico of about $11m on an after-tax basis, $0.12 a share. 1. Based on 4900 barrels of oil equivalents a day lost due to the storm. 4. Ecuador:
1. Had virtually no sales in Ecuador. 1. No sales from Block 16. 2. MUR is working with the operator following a change in its transportation arrangements to commence selling the oil there in 4Q04. 3. Total lost sales in 3Q04 amounted to about $8m on an after-tax basis of net income lost. 5. Exploration Expenses:
1. $70m in 3Q04 vs. $44m in 3Q03, with increase mostly due to
dry hole cost of the East Cost of Canada on Scotian Shelf. 2. Higher seismic cost over MUR's large Malaysian acreage position.
4. Downstream: 1. Results were much stronger in both North America and UK in 3Q04, as MUR earned almost $19m. 1. In 3Q03, MUR's Meraux refinery was off line for all of the period following a fire there in June of '03. 2. Wal-Mart retail results were good.
1. Margins were squeezed a bit with higher oil prices in the
qtr., but still profitable. 3. UK operations had another solid qtr. of earnings. 1. Setting the pace for a record year of profits from this business. 2. Almost at a record profit through the first nine months. 5. Corporate: 1. 3Q04 net costs were $21.5m in 3Q04 vs. $4m in 3Q03. 2. Co. had $13.6m after-tax unfavorable variance in FX and higher Sarbanes compliance and other administrative costs. 1. FX effect is due to the weakening of the US dollar against primarily the Canadian dollar, but also a bit against the
Pound Sterling and the Euro. 3. On an YTD basis, from continuing operations, MUR made almost $365m of income vs. $222m YTD in '03. 4. E&P prices are 34% higher on oil prices and 12% higher on gas prices in North America. 5. On a barrel of oil produced, MUR is 18,000 barrels per day higher in sales volumes this YTD, and has higher gains on property sales, including the `T` Block sale. 1. These favorable variance are only partially offset by higher exploration expense. 6. On MUR's downstream business, had better results in North America. 1. Attributable to: 1. Improved performance of Meraux refinery. 2. YTD results in the UK, downstream have been strong. 7. Corporate costs on an YTD basis are up from $1m in '03 to $47m in '04. 1. Combination of factors. 1. Higher net interest cost. 1. Essentially due to lower capitalization on Medusa and Habanero field development and on Meraux Clean Fuels expansion project. 2. MUR also had unfavorable variances in FX, weaker US dollar and higher G&A cost with Sarbanes-Oxley work and higher expenses for retirement and insurance as well. 3. In 2003, YTD, first nine months, it included a $20m benefit in the US and corporate from a settlement of tax
matters and that did not repeat this year. 6. Balance Sheet:
1. As of …