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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

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FORM 8-K

 

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CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of report (Date of earliest event reported): April 28, 2004

 

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MURPHY OIL CORPORATION

(Exact name of registrant as specified in its charter)

 

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Delaware		1-8590		71-0361522
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

200 Peach Street P.O. Box 7000, El Dorado, Arkansas		71731-7000
(Address of principal executive offices)		(Zip Code)

 

Registrant’s telephone number, including area code 870-862-6411

 

Not applicable

(Former Name of Former Address, if Changed Since Last Report)

 

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Item 9. Regulation FD Disclosure and Item 12. Results of Operations and Financial Condition

 

The following information is furnished pursuant to Item 9, “Regulation FD Disclosure” and Item 12, “Results of Operations and Financial Condition.”

 

On April 28, 2004, Murphy Oil Corporation issued a press release announcing its earnings for the first quarter that ended on March 31, 2004. The full text of this press release is attached hereto as Exhibit 99.1.

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Signature

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

Date: April 29, 2004

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Exhibit Index

 

99.1

Press release dated April 28, 2004, as issued by Murphy Oil Corporation.

Exhibit 99.1

 

MURPHY OIL ANNOUNCES EARNINGS

 

EL DORADO, Arkansas, April 28, 2004 – Murphy Oil Corporation (NYSE: MUR) announced today that net income in the first quarter of 2004 was $98.2 million ($1.05 per diluted share) compared to net income of $87.1 million ($.94 per diluted share) in the first quarter of 2003. The improvement in 2004 income was attributable to better exploration and production earnings, partially offset by higher losses in refining and marketing operations and higher net costs from corporate functions. The Company has previously announced that it has binding agreements to sell most of its conventional oil and gas assets in Western Canada. The Company expects to close on the sale in the second quarter 2004. The operating results of these assets to be sold have been accounted for as discontinued operations for all periods presented. Earnings from discontinued operations were $17.5 million ($.19 per share) in 2004 and $11.2 million ($.12 per share) in 2003. Earnings from continuing operations were $80.7 million ($.86 per share) in 2004 and $82.9 million ($.90 per share) in 2003.

 

Murphy’s income from continuing exploration and production operations was $101.2 million in the first quarter of 2004 compared to $75.7 million in the same quarter of 2003. Higher realized sales prices for crude oil, higher oil and natural gas sales volumes from continuing operations, and a $15.4 million after-tax gain on disposal of several minor oil and gas properties were the primary reasons for improved earnings. Exploration expenses increased from $15.4 million in the 2003 period to $49.1 million in 2004 primarily due to higher dry hole costs of $39.1 million in the United States and Malaysia. The Company’s worldwide crude oil and condensate sales prices averaged $30.95 per barrel for the current quarter compared to $27.90 per barrel in the first quarter of 2003. Total crude oil and gas liquids production from continuing operations was 95,128 barrels per day in the first quarter of 2004 compared to 67,813 barrels per day in the 2003 quarter. The 40% increase in crude oil production in the 2004 period was mostly attributable to production from the Medusa and Habanero fields in the deepwater Gulf of Mexico and the West Patricia field in shallow-water Malaysia, all of which came on stream in mid to late 2003. North American natural gas sales prices averaged $5.88 per thousand cubic feet (MCF) in the most recent quarter compared to $5.95 per MCF in the same quarter of 2003. Natural gas sales volumes from continuing operations increased from 116 million cubic feet per day in the first quarter of 2003 to 124 million cubic feet per day in the just completed quarter, primarily due to production from the Medusa and Habanero fields. In the first quarter of 2003, the Company’s hedging program reduced the average worldwide crude oil sales price and North American natural gas sales price by $3.16 per barrel and $.49 per MCF, respectively.

 

The Company’s refining and marketing operations incurred a loss of $6.4 million in the 2004 quarter compared to a loss of $3.5 million in the 2003 quarter. The Company’s North American operations lost $10.5 million in the first quarter of 2004 and $6.4 million in the 2003 period. The larger loss was primarily due to poorer performance at the Meraux refinery, which is operating at less than optimum capacity during integration of a new unit and the rebuilding of the ROSE unit after the mid-year 2003 fire. Refining and marketing operations in the U.K. earned $4.1 million in the first quarter of 2004, up from a $2.9 million profit in the same quarter of 2003, with improved earnings based on better operating margins during the latest quarter.

 

Corporate functions reflected a loss of $14.1 million in the 2004 quarter compared to income of $10.7 million in the first quarter 2003. The 2003 period included a $20.1 million

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gain from resolution of prior-year U.S. tax matters. The 2004 period included lower interest capitalization because of start-up of the Medusa and Habanero fields and completion of the Meraux refinery expansion.

 

Claiborne P. Deming, President and Chief Executive Officer, commented, “Based on stronger oil and gas prices in 2004, Murphy Oil’s first quarter consolidated earnings were the best since the second quarter of 2001. High oil prices experienced in the just completed quarter are predicted to weaken in the second quarter, but have thus far held strong based on high demand and an effective curtailment of production by OPEC. Natural gas prices will likely remain high in tandem with oil prices. Production from continuing operations is expected to average 117,000 barrels of oil equivalent per day in the second quarter. Anticipated operating performance improvements at the Meraux refinery should lead to better financial results in the Company’s downstream business in the second quarter of 2004. Additionally, the start of the summer driving season in the U.S. should lead to stronger results in our retail gasoline business. We currently expect earnings from continuing operations in the second quarter to be between $.90 and $1.20 per share. Results could vary based on commodity prices, drilling results and timing of oil sales.”

 

The public is invited to access the Company’s conference call to discuss first quarter 2004 results on Thursday, April 29, at 12:00 p.m. CDT either via the Internet through the Investor Relations section of Murphy’s website at http://www.murphyoilcorp.com/ir or via the telephone by dialing 1-800-366-7640. The telephone reservation number for the call is 577079. Replays of the call will be available through the same address on the Murphy website, and a recording of the call will be available through May 3 at 1-800-405-2236.

 

Summary financial data and operating statistics for the first quarter 2004 with comparisons to 2003 are contained in the attached tables.

 

The forward-looking statements reflected in this release are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. No assurance can be given that the results discussed herein will be attained, and certain important factors that may cause actual results to differ materially are contained in Murphy’s January 15, 1997 Form 8-K report on file with the U.S. Securities and Exchange Commission.

 

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MURPHY OIL CORPORATION

FUNCTIONAL RESULTS OF OPERATIONS (Unaudited)

(Millions of dollars)

 

		Three Months Ended March 31, 2004							Three Months Ended March 31, 2003*
		Revenues				Income			Revenues			Income
Exploration and production
United States		$	131.3			36.5			50.7			12.8
Canada			142.5			53.6			117.5			44.7
United Kingdom			38.4			13.8			58.2			19.1
Ecuador			16.4			2.9			11.3			5.5
Malaysia			25.6			(4.0	)		—			(5.5	)
Other			1.0			(1.6	)		.7			(.9	)
			355.2			101.2			238.4			75.7
Refining and marketing
North America			1,187.8			(10.5	)		909.5			(6.4	)
United Kingdom			132.8			4.1			122.3			2.9
			1,320.6			(6.4	)		1,031.8			(3.5	)
			1,675.8			94.8			1,270.2			72.2
Intersegment transfers elimination			(30.0	)		—			(13.0	)		—
			1,645.8			94.8			1,257.2			72.2
Corporate			2.3			(14.1	)		1.0			10.7
Revenues/income from continuing operations			1,648.1			80.7			1,258.2			82.9
Discontinued operations, net of taxes			—			17.5			—			11.2
Revenues/income before cumulative effect of accounting change			1,648.1			98.2			1,258.2			94.1
Cumulative effect of accounting change, net of taxes			—			—			—			(7.0	)
Total revenues/net income		$	1,648.1			98.2			1,258.2			87.1

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*	Reclassified to conform to current presentation.

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MURPHY OIL CORPORATION

CONTINUING OIL AND GAS OPERATING RESULTS (Unaudited)

 

(Millions of dollars)		United States			Canada		United Kingdom		Ecuador		Malaysia			Other			Synthetic Oil – Canada		Total
Three Months Ended March 31, 2004
Oil and gas sales and other operating revenues		$	131.3		103.1		38.4		16.4		25.6			1.0			39.4		355.2
Production expenses			17.9		9.2		6.4		7.9		2.7			—			19.7		63.8
Depreciation, depletion and amortization			16.9		25.9		7.3		2.9		5.3			—			2.7		61.0
Accretion expense			.9		.7		.7		—		.1			.1			.1		2.6
Exploration expenses
Dry holes			28.6		—		—		—		13.4			.1			—		42.1
Geological and geophysical			1.3		.7		—		—		.1			.2			—		2.3
Other			.4		.2		.1		—		—			.1			—		.8
			30.3		.9		.1		—		13.5			.4			—		45.2
Undeveloped lease amortization			3.3		.6		—		—		—			—			—		3.9
Total exploration expenses			33.6		1.5		.1		—		13.5			.4			—		49.1
Selling and general expenses			5.8		2.4		.8		.1		1.3			2.2			.2		12.8
Income tax provisions (benefits)			19.7		20.9		9.3		2.6		6.7			(.1	)		5.6		64.7
Results of operations (excluding corporate overhead and interest)		$	36.5		42.5		13.8		2.9		(4.0	)		(1.6	)		11.1		101.2
Three Months Ended March 31, 2003*
Oil and gas sales and other operating revenues		$	50.7		96.0		58.2		11.3		—			.7			21.5		238.4
Production expenses			7.8		8.2		11.5		4.2		—			—			14.4		46.1
Depreciation, depletion and amortization			8.3		21.7		9.6		1.5		.2			.1			2.0		43.4
Accretion expense			.8		.5		.9		—		—			.1			.1		2.4
Exploration expenses
Dry holes			2.9		—		—		—		—			—			—		2.9
Geological and geophysical			3.6		.3		—		—		4.4			—			—		8.3
Other			.5		.1		.1		—		—			.1			—		.8
			7.0		.4		.1				4.4			.1			—		12.0
Undeveloped lease amortization			2.6		.8		—		—		—			—			—		3.4
Total exploration expenses			9.6		1.2		.1		—		4.4			.1			—		15.4
Selling and general expenses			4.6		2.2		1.1		.1		.9			1.6			.1		10.6
Income tax provisions (benefits)			6.8		20.8		15.9		—		—			(.3	)		1.6		44.8
Results of operations (excluding corporate overhead and interest)		$	12.8		41.4		19.1		5.5		(5.5	)		(.9	)		3.3		75.7

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*	Reclassified to conform to current presentation.

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MURPHY OIL CORPORATION

SUMMARIZED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(Thousands of dollars, except per share amounts)

 

		Three Months Ended March 31,
		2004				2003*
Revenues		$	1,648,072			1,258,169
Costs and expenses
Crude oil and product purchases			1,167,265			904,693
Operating expenses			168,410			142,896
Exploration expenses			49,149			15,399
Selling and general expenses			30,681			28,933
Depreciation, depletion and amortization			80,196			57,176
Accretion on discounted liabilities			2,507			2,471
Interest expense			14,288			13,961
Interest capitalized			(4,252	)		(9,536	)
			1,508,244			1,155,993
Income from continuing operations before income taxes			139,828			102,176
Income tax expense			59,132			19,319
Income from continuing operations			80,696			82,857
Discontinued operations, net of tax			17,543			11,248
Income before cumulative effect of change in accounting principle			98,239			94,105
Cumulative effect of change in accounting principle			—			(6,993	)
Net income		$	98,239			87,112
Per Common share - Basic
Continuing operations		$	.88			.91
Discontinued operations			.19			.12
Cumulative effect of change in accounting principle			—			(.08	)
Net income		$	1.07			.95
Per Common share - Diluted
Continuing operations		$	.86			.90
Discontinued operations			.19			.12
Cumulative effect of change in accounting principle			—			(.08	)
Net income		$	1.05			.94
Cash dividends per Common share		$	.20			.20
Average Common shares outstanding (thousands)
Basic			91,926			91,738
Diluted			93,173			92,350

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*	Reclassified to conform to current presentation.

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MURPHY OIL CORPORATION

SUMMARIZED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Thousands of dollars)

 

		Three Months Ended March 31,
		2004				2003*
Operating Activities
Income from continuing operations		$	80,696			82,857
Adjustments to reconcile income from continuing operations to net cash provided by operating activities
Depreciation, depletion and amortization			80,196			57,176
Provisions for major repairs			7,612			6,410
Expenditures for major repairs and asset retirement obligations			(6,358	)		(3,694	)
Dry holes			42,104			2,936
Amortization of undeveloped leases			3,907			3,342
Accretion on discounted liabilities			2,507			2,471
Deferred and noncurrent income tax charges (benefits)			8,787			(17,001	)
Pretax gains from disposition of assets			(29,207	)		(24	)
Net decrease in operating working capital other than cash and cash equivalents			75,243			34,509
Other			205			(5,905	)
Net cash provided by continuing operations			265,692			163,077
Net cash provided by discontinued operations			40,183			49,469
Net cash provided by operating activities			305,875			212,546
Investing Activities
Property additions and dry holes			(190,514	)		(158,100	)
Proceeds from sale of assets			37,140			8,006
Other - net			(893	)		30
Investing activities of discontinued operations			(20,839	)		(25,181	)
Net cash required by investing activities			(175,106	)		(175,245	)
Financing Activities
Increase (decrease) in notes payable			(60,534	)		42,024
Decrease in nonrecourse debt of a subsidiary			(7,879	)		(9,056	)
Proceeds from exercise of stock options and employee stock purchase plans			926			943
Cash dividends paid			(18,394	)		(18,353	)
Other			—			(72	)
Net cash provided by (used in) financing activities			(85,881	)		15,486
Effect of exchange rate changes on cash and cash equivalents			73			(855	)
Net increase in cash and cash equivalents			44,961			51,932
Cash and cash equivalents at January 1			252,425			164,957
Cash and cash equivalents at March 31		$	297,386			216,889

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*	Reclassified to conform to current presentation.

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MURPHY OIL CORPORATION

OTHER FINANCIAL DATA

(Unaudited, except for December 31, 2003)

(Millions of dollars)

 

		March 31, 2004			Dec. 31, 2003
Working capital		$	197.5		228.5
Total assets			4,833.6		4,712.6
Long-term debt
Notes payable			1,000.3		1,061.4
Nonrecourse debt			22.6		28.9
Stockholders’ equity			2,026.5		1,950.9
		Three Months Ended March 31,
		2004			20031
Capital expenditures
Continuing operations
Exploration and production
United States		$	59.4		50.6
Canada			49.5		30.3
Malaysia			45.3		23.2
Other			5.1		12.5
			159.3		116.6
Refining and marketing
North America			32.3		47.4
International			1.8		3.0
			34.1		50.4
Corporate			.3		.2
			193.7		167.2
Discontinued operations			21.6		26.8
Total capital expenditures			215.3		194.0
Charged to exploration expenses2
United States			30.3		7.0
Canada			.9		.4
Malaysia			13.5		4.4
Other international			.5		.2
Total charged to exploration expenses			45.2		12.0
Included in discontinued operations			5.8		5.8
			51.0		17.8
Total capitalized		$	164.3		176.2

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1	Reclassified to conform to current presentation.

2	Excludes amortization of undeveloped leases of $3.9 million in 2004 and $3.4 million in 2003.

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MURPHY OIL CORPORATION

STATISTICAL SUMMARY

 

		Three Months Ended March 31,
		2004		20031
Net crude oil, condensate and gas liquids produced – barrels per day		102,426		74,984
Continuing operations		95,128		67,813
Crude oil and condensate
United States		18,608		3,175
Canada – light		228		929
– heavy		4,381		3,938
– offshore		28,879		27,792
– synthetic		12,527		9,343
United Kingdom		11,570		18,248
Ecuador		7,805		3,370
Malaysia		10,420		—
Natural gas liquids
United States		97		144
Canada		503		683
United Kingdom		110		191
Discontinued operations		7,298		7,171
Net crude oil, condensate and gas liquids sold – barrels per day		101,478		78,299
Continuing operations		94,180		71,128
Crude oil and condensate
United States		18,608		3,175
Canada – light		228		929
– heavy		4,381		3,938
– offshore		30,486		29,807
– synthetic		12,527		9,343
United Kingdom		11,573		18,458
Ecuador		7,625		4,491
Malaysia		8,045		—
Natural gas liquids
United States		97		144
Canada		503		683
United Kingdom		107		160
Discontinued operations		7,298		7,171
Net natural gas sold – thousands of cubic feet per day		212,555		228,164
Continuing operations		124,160		115,729
United States		98,515		77,958
Canada		14,564		26,135
United Kingdom		11,081		11,636
Discontinued operations		88,395		112,435
Total net hydrocarbons produced – equivalent barrels per day2		137,852		113,011
Total net hydrocarbons sold – equivalent barrels per day2		136,904		116,326

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1	Reclassified to conform to current presentation.

2	Natural gas converted on an energy equivalent basis of 6:1.

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MURPHY OIL CORPORATION

STATISTICAL SUMMARY (Continued)

 

		Three Months Ended March 31,
		2004			2003
Weighted average sales prices
Crude oil and condensate – dollars per barrel (1)
United States		$	31.77		24.78	(3)
Canada (2) – light			33.59		29.55
– heavy			16.63		12.40	(3)
– offshore			31.54		28.12	(3)
– synthetic			34.56		25.63	(3)
United Kingdom			31.61		32.46
Ecuador			23.68		27.88
Malaysia			34.82		—
Natural gas liquids – dollars per barrel (1)
United States		$	27.36		25.25
Canada (2)			28.43		26.82
United Kingdom			25.86		24.27
Natural gas – dollars per thousand cubic feet
United States (1)		$	5.97		6.30	(3)
Canada (2)			5.29		4.90	(3)
United Kingdom (2)			4.72		3.51
Refinery inputs – barrels per day			170,888		160,940
North America			135,035		124,778
United Kingdom			35,853		36,162
Petroleum products sold – barrels per day			301,718		228,261
North America			266,630		195,689
Gasoline			183,480		130,489
Kerosine			8,307		7,969
Diesel and home heating oils			58,522		37,687
Residuals			13,076		14,421
Asphalt, LPG and other			3,245		5,123
United Kingdom			35,088		32,572
Gasoline			12,472		10,001
Kerosine			3,294		2,546
Diesel and home heating oils			12,944		13,177
Residuals			4,142		4,506
LPG and other			2,236		2,342

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(1)	Includes intracompany transfers at market prices.

(2)	U.S. dollar equivalent.

(3)	Includes the effect of the Company’s 2003 hedging program.