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
MUR reported net income of $347m or $1.85 per share in 2Q05 vs. nearly $350m or $1.87 a share in 2Q04. For 1H05, MUR earned $461m of profit vs. $248m in 1H04, an improvement of $212m. The Co. expects to produce 113,000 and 130,000 BOE a day for 3Q05 and 4Q05 respectively. Q&A Focus: Malaysian operations, guidance, and downstream market.
A. Key Data From Call 1. 2Q05 net income = $347m. 2. 2Q05 EPS = $1.85. 3. Long-term debt at 2Q05 end = $609m. 4. 2Q05 debt-to-capital ratio = 16.7%. 5. 1H05 profit = $461m. 6. 3Q05 production guidance = 113,000 BOE a day. 7. 4Q05 production guidance = 130,000 BOE a day. 8. FY05 production guidance = 125,000 BOE a day.
S1. Review of Financials (J.E.) 1. 2Q05 Results: 1. Net income was $347m or $1.85 per share vs. nearly $350m in 2Q04 at $1.87 a share. 1. Both quarters included a significant gain from sale of exploration and production (E&P) properties. 2. In 2Q05, there was a $106m gain, which was $0.57 a share on sale of mature properties on the Continental Shelf of the Gulf of Mexico.
1. This gain is included in MUR's continuing operations. 2. In 2Q04, MUR had discontinued operating results that included a gain of $167m from the sale of most conventional oil and gas properties in Western Canada. 3. There was a larger gain in 2Q04 than 2Q05.
3. Excluding these gains in each qtr., the Co.'s normalized
operating earnings are a quarterly record in 2Q05. 1. This Co.-wide consolidated record includes record operating results from both MUR's E&P and Refining and Marketing businesses in 2Q05.
2. All of MUR's EPS figures reflect its two-for-one stock split
effected in June 2005. 2. Performance by Business Segment: 1. E&P business earned nearly $290m in 2Q05, including the gain
of $106m vs. $139m in 2Q04. 2. Refining and Marketing earned $67m vs. $39m in 2Q04. 3. Corporate net costs were about $1.5m less in 2Q05 vs. 2Q04. 4. Excluding the gain: 1. E&P earnings were up about 31%. 2. Refining and Marketing was up about 70%.
3. Corporate costs were down about 14% overall. 5. The higher E&P earnings are attributable to not only the gain but excluding that, MUR had higher oil and gas prices and higher oil production.
1. These were partially offset by higher exploration expense in Malaysia and also in Congo and the Co. had lower natural gas production. 6. Pricing & Sales: 1. MUR's avg. oil prices were about $9 a barrel higher in 2Q05 vs. 2Q04. 1. MUR's North American natural gas prices were up about $1 an MCF. 2. Oil sales volumes were up about 15,000 barrels a day, mostly due to Front Runner production coming on in 2005 and higher heavy oil volumes in MUR's Western Canada Seal field. 3. Natural gas volumes were up about 16m cubic feet day, primarily due to lower volumes produced on properties that MUR sold in June 2005. 7. MUR's improvement in its 2005 Refining and Marketing earnings were mostly related to stronger Gulf Coast refining margins vs. 2Q04. 8. Both MUR's refining and retail marketing were nicely profitable in 2Q05. 3. Costs:
1. Net cost of corporate activities was again lower by about
$1.5m. 2. The Co. had lower net interest cost. 3. MUR had lower avg. borrowings. 4. MUR capitalized a higher percentage of its interest cost on its development projects in the E&P business. 5. MUR also had higher FX profits in 2005, partially offset by higher administrative costs, the biggest portion of which related to stock-based incentive compensation. 4. Other Financials: 1. For 1H05, MUR earned $461m of profit vs. $248m in 1H04, an improvement of $212m. 2. MUR's long-term debt stood at $609m at the end of June. 3. Debt-to-capital ratio was 16.7%.
S2. Review of Operations (C.D.) 1. Exploration and Production Statistics:
1. Front Runner is producing 43,000 BOE a day from four wells.
1. The next well comes onstream on 09/15/04. 2. Medusa is producing 40,000 BOE a day. 3. Habanero, 18,000 BOE a day. 4. In Malaysia, Kikeh remains on schedule for 2H07 startup. 1. Field development plans for Kenarong and Pertang in Peninsular Malaysia will be submitted to Petronas in 3Q05. 2. Production Guidance:
1. Remains at 125,000 BOE a day for 2005. 2. 3Q05 will be 113,000 BOE a day, as MUR experiences planned shutdowns for maintenance at Terra Nova, Schiehallion, West Patricia, and Mungo/Monan.
3. 4Q05 will be 130,000 BOE a day. 3. Exploratory Drilling:
1. MUR picked up in the Gulf, picks up the Ocean Victory around
10/01/05, and will re-enter the Thunderhawk #2 well, and drill
down to see if there is a third sand. 1. MUR will then likely drill a #3 well at Thunderhawk as an appraisal and development well. 2. At that point, MUR will move to Mississippi Canyon Block 819 where it has a 37.5% interest, and test a prospect called Thunderbird, which is in the 80m barrel range. 2. In Malaysia, Offshore Sabah, the Ocean Rover is currently farmed out to another co. 1. MUR …