UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
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 30, 2008
MURPHY OIL CORPORATION
(Exact name of registrant as specified in its charter)
| 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 or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02. | Results of Operations and Financial Condition |
The following information is furnished pursuant to Item 2.02, “Results of Operations and Financial Condition.”
On April 30, 2008, Murphy Oil Corporation issued a news release announcing its earnings for the first quarter that ended March 31, 2008. The full text of this news release is attached hereto as Exhibit 99.1.
| Item 9.01. | Financial Statements and Exhibits |
| (c) | Exhibits |
| 99.1 |
A news release dated April 30, 2008 announcing earnings for the first quarter that ended March 31, 2008 is attached hereto as Exhibit 99.1. |
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 hereunto duly authorized.
| MURPHY OIL CORPORATION | ||||
| By: | /s/ John W. Eckart | |||
| John W. Eckart | ||||
| Vice President and Controller | ||||
| Date: May 1, 2008 | ||||
Exhibit Index
| 99.1 |
News release dated April 30, 2008, as issued by Murphy Oil Corporation. |
Exhibit 99.1
MURPHY OIL ANNOUNCES PRELIMINARY FIRST QUARTER 2008 EARNINGS
EL DORADO, Arkansas, April 30, 2008 – Murphy Oil Corporation (NYSE: MUR) announced today that net income in the first quarter of 2008 was $409.0 million ($2.14 per diluted share), compared to net income of $110.6 million ($0.58 per diluted share) in the first quarter of 2007. The larger profit in 2008 compared to 2007 was primarily due to higher crude oil sales prices and sales volumes, which led to improved earnings in the Company’s exploration and production business. The first quarter 2008 also included a $39.9 million after-tax gain on sale of all Berkana Energy shares in Canada. Earnings in the Company’s refining and marketing business in 2008 were hampered by much tighter refining margins compared to the 2007 quarter.
Exploration and Production
Murphy’s income contribution from exploration and production operations was $428.0 million in the first quarter of 2008 compared to $88.8 million in the same quarter of 2007. Higher realized sales prices for crude oil and natural gas, higher oil and natural gas sales volumes and the aforementioned gain on sale of Berkana shares were the primary reasons for improved earnings in the 2008 period.
The Company’s worldwide crude oil and condensate sales prices averaged $84.95 per barrel for the 2008 first quarter compared to $47.89 per barrel in the 2007 first quarter. Total crude oil and gas liquids production was 113,339 barrels per day in the first quarter of 2008 compared to 84,555 barrels per day in the 2007 quarter. The increase in crude oil volumes in 2008 was mostly attributable to the August 2007 production start-up of the Kikeh field in Block K Malaysia. Oil production volumes declined in 2008 compared to 2007 at several areas, including Front Runner in the Gulf of Mexico, Seal and Syncrude in Western Canada, and West Patricia in Block SK 309 Malaysia. North American natural gas sales prices averaged $8.40 per thousand cubic feet (MCF) in the 2008 first quarter compared to $7.28 per MCF in the same quarter of 2007. Natural gas sales volumes were 69 million cubic feet per day in the first
quarter of 2008 compared to 61 million cubic feet per day in the 2007 period, with the increase primarily due to production in the 2008 period at the Mondo NW field in the Gulf of Mexico following its start-up in July 2007. Natural gas sales volumes in Canada declined in 2008 mostly due to the sale of the Berkana shares in mid-January 2008.
Exploration expense in the 2008 period was $66.5 million compared to $48.4 million in 2007. Undeveloped leasehold amortization increased $21.1 million in 2008, mostly related to acreage acquired at the Tupper natural gas field under development in northeastern British Columbia. Geological and geophysical expense increased $9.2 million in 2008 compared to 2007 due to seismic activities at the Tupper field and in Block P, offshore Malaysia, but these were partially offset by lower seismic costs in the Republic of Congo. Dry hole expense was lower by $14.2 million in the 2008 period mostly in the Gulf of Mexico.
Refining and Marketing
Murphy’s refining and marketing operations generated income of $10.2 million in the 2008 quarter compared to income of $35.7 million in the 2007 quarter. In North America, downstream earnings were $1.0 million in 2008 compared to earnings of $34.5 million in 2007. North American results were lower in 2008 mostly due to significantly weaker refining margins, which were hurt by higher prices for crude oil feedstocks. Margins for U.S. retail marketing operations were slightly improved in the 2008 quarter. Refining and marketing operations in the United Kingdom generated income of $9.2 million in the first quarter of 2008, compared to income of $1.2 million in the same quarter of 2007. Total refinery inputs and petroleum products sold in the U.K. were significantly higher in 2008 than 2007 due to the purchase on December 1, 2007 of the remaining 70% interest in the Milford Haven, Wales refinery.
Corporate
Corporate functions had net costs of $29.2 million in the 2008 first quarter compared to net costs of $13.9 million in 2007. Net costs increased in 2008 compared to 2007 due to a combination of higher losses on foreign currency exchange caused by a weaker U.S. dollar,
higher administrative expenses due mostly to stock-based and other incentive compensation, and higher net interest expense associated with higher borrowing levels and lower amounts capitalized to oil and gas development projects. The Company capitalized most of its interest expense to the Kikeh oil development project in the first quarter of 2007. Total net after-tax losses on foreign exchange were $4.8 million in the 2008 quarter compared to an $0.8 million gain in 2007.
Claiborne P. Deming, President and Chief Executive Officer, commented, “Our ongoing development projects continue to progress. The next batch of producing oil wells at the Kikeh field are scheduled for start-up near the end of the second quarter. In addition, our natural gas development at Tupper in British Columbia remains on track for first production in the fourth quarter of this year. Exploration drilling in the Eastern Gulf of Mexico will commence in the second quarter along with drilling in Block K Malaysia. Our worldwide production volumes are expected to average about 115,000 barrels of oil equivalent per day in the second quarter, but sales volumes are expected to average 108,000 barrels of oil equivalent per day. Crude oil sales prices have continued to strengthen in April, and margins throughout the U.S. downstream system are still being adversely affected by the high crude oil prices. We currently expect earnings in the second quarter to be between $1.90 and $2.10 per diluted share. Results could vary based on commodity prices, drilling results, timing of oil sales and refining and marketing margins.”
The public is invited to access the Company’s conference call to discuss first quarter 2008 results on Thursday, May 1, 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 1-800-366-7449. The telephone reservation number for the call is 11112008. 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 5 by dialing 1-800-405-2236. Audio downloads will be available on the Murphy website through June 1 and via Thomson StreetEvents for their service subscribers.
Summary financial data and operating statistics for the first quarter 2008 with comparisons to 2007 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.
####
MURPHY OIL CORPORATION
FUNCTIONAL RESULTS OF OPERATIONS (Unaudited)
(Millions of dollars)
| Three Months Ended March 31, 2008 |
Three Months Ended March 31, 2007 |
||||||||||||
| Revenues | Income | Revenues | Income | ||||||||||
| Exploration and production |
|||||||||||||
| United States |
$ | 143.1 | 47.1 | 93.9 | 10.7 | ||||||||
| Canada |
349.5 | 151.3 | 202.5 | 65.5 | |||||||||
| United Kingdom |
86.1 | 32.1 | 37.5 | 12.1 | |||||||||
| Malaysia |
464.6 | 204.7 | 44.1 | 9.8 | |||||||||
| Ecuador |
23.2 | .8 | 25.4 | 4.1 | |||||||||
| Other |
1.4 | (8.0 | ) | 1.1 | (13.4 | ) | |||||||
| 1,067.9 | 428.0 | 404.5 | 88.8 | ||||||||||
| Refining and marketing |
|||||||||||||
| North America |
4,530.2 | 1.0 | 2,820.5 | 34.5 | |||||||||
| United Kingdom |
957.6 | 9.2 | 226.1 | 1.2 | |||||||||
| 5,487.8 | 10.2 | 3,046.6 | 35.7 | ||||||||||
| 6,555.7 | 438.2 | 3,451.1 | 124.5 | ||||||||||
| Intersegment transfers elimination |
(23.5 | ) | — | (23.1 | ) | — | |||||||
| 6,532.2 | 438.2 | 3,428.0 | 124.5 | ||||||||||
| Corporate |
.5 | (29.2 | ) | 6.9 | (13.9 | ) | |||||||
| Total revenues/net income |
$ | 6,532.7 | 409.0 | 3,434.9 | 110.6 | ||||||||
MURPHY OIL CORPORATION
OIL AND GAS OPERATING RESULTS (Unaudited)
THREE MONTHS ENDED MARCH 31, 2008 AND 2007
| (Millions of dollars) |
United States |
Canada | United Kingdom |
Malaysia | Ecuador | Other | Synthetic Oil – Canada |
Total | |||||||||||
| Three Months Ended March 31, 2008 |
|||||||||||||||||||
| Oil and gas sales and other operating revenues |
$ | 143.1 | 244.9 | 86.1 | 464.6 | 23.2 | 1.4 | 104.6 | 1,067.9 | ||||||||||
| Production expenses |
16.9 | 23.9 | 10.0 | 53.4 | 9.6 | — | 48.1 | 161.9 | |||||||||||
| Depreciation, depletion and amortization |
27.2 | 29.9 | 10.3 | 52.1 | 12.2 | .2 | 6.7 | 138.6 | |||||||||||
| Accretion of asset retirement obligations |
1.4 | 1.3 | .5 | 1.3 | — | .2 | .2 | 4.9 | |||||||||||
| Exploration expenses |
|||||||||||||||||||
| Dry holes |
.5 | — | — | (.3 | ) | — | — | — | .2 | ||||||||||
| Geological and geophysical |
10.2 | 10.5 | — | 12.7 | — | .6 | — | 34.0 | |||||||||||
| Other |
1.5 | .1 | .1 | — | — | 3.1 | — | 4.8 | |||||||||||
| 12.2 | 10.6 | .1 | 12.4 | — | 3.7 | — | 39.0 | ||||||||||||
| Undeveloped lease amortization |
5.1 | 22.0 | — | — | — | .4 | — | 27.5 | |||||||||||
| Total exploration expenses |
17.3 | 32.6 | .1 | 12.4 | — | 4.1 | — | 66.5 | |||||||||||
| Selling and general expenses |
7.1 | 3.6 | 1.0 | 1.2 | .1 | 4.5 | .2 | 17.7 | |||||||||||
| Minority interest |
— | .3 | — | — | — | — | — | .3 | |||||||||||
| Results of operations before taxes |
73.2 | 153.3 | 64.2 | 344.2 | 1.3 | (7.6 | ) | 49.4 | 678.0 | ||||||||||
| Income tax provisions |
26.1 | 36.8 | 32.1 | 139.5 | .5 | .4 | 14.6 | 250.0 | |||||||||||
| Results of operations (excluding corporate overhead and interest) |
$ | 47.1 | 116.5 | 32.1 | 204.7 | .8 | (8.0 | ) | 34.8 | 428.0 | |||||||||
| Three Months Ended March 31, 2007 |
|||||||||||||||||||
| Oil and gas sales and other operating revenues |
$ | 93.9 | 135.5 | 37.5 | 44.1 | 25.4 | 1.1 | 67.0 | 404.5 | ||||||||||
| Production expenses |
26.2 | 20.2 | 5.9 | 7.1 | 9.1 | — | 31.5 | 100.0 | |||||||||||
| Depreciation, depletion and amortization |
16.7 | 35.4 | 5.8 | 8.3 | 8.5 | .1 | 5.8 | 80.6 | |||||||||||
| Accretion of asset retirement obligations |
.8 | 1.0 | .5 | .7 | — | .2 | .2 | 3.4 | |||||||||||
| Exploration expenses |
|||||||||||||||||||
| Dry holes |
13.2 | 1.0 | — | — | .2 | — | — | 14.4 | |||||||||||
| Geological and geophysical |
9.8 | 2.8 | — | 4.8 | — | 7.4 | — | 24.8 | |||||||||||
| Other |
.5 | .1 | .1 | — | — | 2.1 | — | 2.8 | |||||||||||
| 23.5 | 3.9 | .1 | 4.8 | .2 | 9.5 | — | 42.0 | ||||||||||||
| Undeveloped lease amortization |
4.5 | 1.5 | — | — | — | .4 | — | 6.4 | |||||||||||
| Total exploration expenses |
28.0 | 5.4 | .1 | 4.8 | .2 | 9.9 | — | 48.4 | |||||||||||
| Selling and general expenses |
5.5 | 4.1 | 1.0 | 3.8 | .2 | 4.0 | .2 | 18.8 | |||||||||||
| Results of operations before taxes |
16.7 | 69.4 | 24.2 | 19.4 | 7.4 | (13.1 | ) | 29.3 | 153.3 | ||||||||||
| Income tax provisions |
6.0 | 23.5 | 12.1 | 9.6 | 3.3 | .3 | 9.7 | 64.5 | |||||||||||
| Results of operations (excluding corporate overhead and interest) |
$ | 10.7 | 45.9 | 12.1 | 9.8 | 4.1 | (13.4 | ) | 19.6 | 88.8 | |||||||||
MURPHY OIL CORPORATION
SUMMARIZED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Thousands of dollars, except per share amounts)
| Three Months Ended March 31, |
|||||||
| 2008 | 2007 | ||||||
| Revenues |
$ | 6,532,731 | 3,434,884 | ||||
| Costs and expenses |
|||||||
| Crude oil and product purchases |
5,156,051 | 2,724,384 | |||||
| Operating expenses |
400,880 | 296,483 | |||||
| Exploration expenses |
66,496 | 48,336 | |||||
| Selling and general expenses |
58,888 | 52,989 | |||||
| Depreciation, depletion and amortization |
172,822 | 107,987 | |||||
| Accretion of asset retirement obligations |
5,156 | 3,462 | |||||
| Interest expense |
21,153 | 15,489 | |||||
| Interest capitalized |
(6,949 | ) | (14,657 | ) | |||
| Minority interest |
298 | 26 | |||||
| 5,874,795 | 3,234,499 | ||||||
| Income before income taxes |
657,936 | 200,385 | |||||
| Income tax expense |
248,944 | 89,751 | |||||
| Net income |
$ | 408,992 | 110,634 | ||||
| Net income per Common share |
|||||||
| – Basic |
$ | 2.16 | 0.59 | ||||
| – Diluted |
2.14 | 0.58 | |||||
| Cash dividends per Common share |
$ | 0.1875 | 0.15 | ||||
| Average Common shares outstanding (thousands) |
|||||||
| – Basic |
189,151 | 187,148 | |||||
| – Diluted |
191,551 | 189,789 | |||||
MURPHY OIL CORPORATION
SUMMARIZED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Thousands of dollars)
| Three Months Ended March 31, |
|||||||
| 2008 | 2007 | ||||||
| Operating Activities |
|||||||
| Net income |
$ | 408,992 | 110,634 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities |
|||||||
| Depreciation, depletion and amortization |
172,822 | 107,987 | |||||
| Amortization of deferred major repair costs |
6,636 | 5,550 | |||||
| Expenditures for asset retirement obligations |
(1,211 | ) | (2,778 | ) | |||
| Dry holes |
241 | 14,447 | |||||
| Amortization of undeveloped leases |
27,488 | 6,375 | |||||
| Accretion of asset retirement obligations |
5,156 | 3,462 | |||||
| Deferred and noncurrent income tax charges |
110,784 | 10,534 | |||||
| Pretax gains from disposition of assets |
(42,386 | ) | (353 | ) | |||
| Net increase in operating working capital other than cash and cash equivalents |
(245,215 | ) | (32,445 | ) | |||
| Other |
3,222 | 8,591 | |||||
| Net cash provided by operating activities |
446,529 | 232,004 | |||||
| Investing Activities |
|||||||
| Property additions and dry holes |
(510,362 | ) | (300,276 | ) | |||
| Expenditures for major repairs |
(7,676 | ) | (33 | ) | |||
| Proceeds from sale of assets |
104,126 | 16,726 | |||||
| Other - net |
(5,749 | ) | (2,751 | ) | |||
| Net cash required by investing activities |
(419,661 | ) | (286,334 | ) | |||
| Financing Activities |
|||||||
| Increase in notes payable |
197,686 | 129,957 | |||||
| Proceeds from exercise of stock options and employee stock purchase plans |
9,922 | 12,220 | |||||
| Excess tax benefits related to exercise of stock options |
9,945 | 6,732 | |||||
| Cash dividends paid |
(35,564 | ) | (28,176 | ) | |||
| Net cash provided by financing activities |
181,989 | 120,733 | |||||
| Effect of exchange rate changes on cash and cash equivalents |
(13,435 | ) | (113 | ) | |||
| Net increase in cash and cash equivalents |
195,422 | 66,290 | |||||
| Cash and cash equivalents at January 1 |
673,707 | 543,390 | |||||
| Cash and cash equivalents at March 31 |
$ | 869,129 | 609,680 | ||||
MURPHY OIL CORPORATION
OTHER FINANCIAL DATA
(Unaudited, except for December 31, 2007)
(Millions of dollars)
| March 31, 2008 |
Dec. 31, 2007 | ||||
| Total current assets |
$ | 3,384.6 | 2,886.8 | ||
| Total current liabilities |
2,190.2 | 2,109.3 | |||
| Total assets |
11,260.8 | 10,535.8 | |||
| Long-term debt |
|||||
| Notes payable |
1,711.1 | 1,513.0 | |||
| Nonrecourse debt |
— | 3.2 | |||
| Stockholders’ equity |
5,442.7 | 5,066.2 | |||
| Three Months Ended March 31, | |||||
| 2008 | 2007 | ||||
| Capital expenditures |
|||||
| Exploration and production |
|||||
| United States |
$ | 150.8 | 66.5 | ||
| Canada |
98.3 | 52.4 | |||
| Malaysia |
152.7 | 157.2 | |||
| Other international |
53.8 | 45.6 | |||
| 455.6 | 321.7 | ||||
| Refining and marketing |
|||||
| North America |
116.8 | 34.5 | |||
| United Kingdom |
3.0 | 3.3 | |||
| 119.8 | 37.8 | ||||
| Corporate |
1.0 | 1.4 | |||
| Total capital expenditures |
576.4 | 360.9 | |||
| Charged to exploration expenses* |
|||||
| United States |
12.2 | 23.5 | |||
| Canada |
10.6 | 3.9 | |||
| Malaysia |
12.4 | 4.8 | |||
| Other international |
3.8 | 9.8 | |||
| Total charged to exploration expenses |
39.0 | 42.0 | |||
| Total capitalized |
$ | 537.4 | 318.9 | ||
| * | Excludes amortization of undeveloped leases of $27.5 million in 2008 and $6.4 million in 2007. |
MURPHY OIL CORPORATION
STATISTICAL SUMMARY
| Three Months Ended March 31, | ||||
| 2008 | 2007 | |||
| Net crude oil, condensate and gas liquids produced – barrels per day |
113,339 | 84,555 | ||
| United States |
12,112 | 14,096 | ||
| Canada – light |
186 | 527 | ||
| – heavy |
9,907 | 12,913 | ||
| – offshore |
18,717 | 18,477 | ||
| – synthetic |
11,431 | 12,725 | ||
| United Kingdom |
6,727 | 6,315 | ||
| Malaysia |
46,378 | 10,405 | ||
| Ecuador |
7,881 | 9,097 | ||
| Net crude oil, condensate and gas liquids sold – barrels per day |
126,932 | 84,468 | ||
| United States |
12,112 | 14,096 | ||
| Canada – light |
186 | 527 | ||
| – heavy |
9,907 | 12,913 | ||
| – offshore |
17,153 | 18,580 | ||
| – synthetic |
11,431 | 12,725 | ||
| United Kingdom |
8,772 | 6,489 | ||
| Malaysia |
58,146 | 9,912 | ||
| Ecuador |
9,225 | 9,226 | ||
| Net natural gas sold – thousands of cubic feet per day |
68,983 | 61,119 | ||
| United States |
56,884 | 43,321 | ||
| Canada |
4,440 | 9,457 | ||
| United Kingdom |
7,659 | 8,341 | ||
| Total net hydrocarbons produced – equivalent barrels per day* |
124,836 | 94,742 | ||
| Total net hydrocarbons sold – equivalent barrels per day* |
138,429 | 94,655 | ||
| * | Natural gas converted on an energy equivalent basis of 6:1. |
MURPHY OIL CORPORATION
STATISTICAL SUMMARY (Continued)
| Three Months Ended March 31, | ||||||
| 2008 | 2007 | |||||
| Weighted average sales prices |
||||||
| Crude oil, condensate and gas liquids – dollars per barrel (1) |
||||||
| United States |
$ | 92.03 | $ | 50.52 | ||
| Canada (2) – light |
70.37 | 49.25 | ||||
| – heavy |
53.57 | 32.32 | ||||
| – offshore |
96.35 | 54.62 | ||||
| – synthetic |
100.56 | 58.46 | ||||
| United Kingdom |
98.51 | 55.84 | ||||
| Malaysia (3) |
89.63 | 49.25 | ||||
| Ecuador (4) |
26.74 | 30.43 | ||||
| Natural gas – dollars per thousand cubic feet |
||||||
| United States (1) |
$ | 8.52 | $ | 7.35 | ||
| Canada (2) |
6.80 | 6.96 | ||||
| United Kingdom (2) |
10.48 | 6.89 | ||||
| Refinery inputs – barrels per day |
244,508 | 179,928 | ||||
| North America |
135,550 | 150,166 | ||||
| United Kingdom |
108,958 | 29,762 | ||||
| Petroleum products sold – barrels per day |
524,061 | 422,001 | ||||
| North America |
427,411 | 387,430 | ||||
| Gasoline |
307,784 | 274,719 | ||||
| Kerosine |
3,934 | 3,425 | ||||
| Diesel and home heating oils |
97,128 | 88,235 | ||||
| Residuals |
13,268 | 15,355 | ||||
| Asphalt, LPG and other |
5,297 | 5,696 | ||||
| United Kingdom |
96,650 | 34,571 | ||||
| Gasoline |
30,644 | 12,165 | ||||
| Kerosine |
10,262 | 3,154 | ||||
| Diesel and home heating oils |
27,570 | 12,401 | ||||
| Residuals |
12,380 | 3,069 | ||||
| LPG and other |
15,794 | 3,782 | ||||
| (1) | Includes intracompany transfers at market prices. |
| (2) | U.S. dollar equivalent. |
| (3) | Prices are net of payments under the terms of the production sharing contracts for Blocks SK 309 and K. |
| (4) | All prices are net of legislated revenue sharing with the Ecuadorian government. |