Murphy earnings sharply higher on prices, lower exploration cost

Allen Baker, Petroleum News contributing writer

Murphy Oil Corp. had sharply higher earnings for the first quarter. The net profit figure was $87.1 million, up from $2.5 million in the same quarter a year ago.

The El Dorado, Ark., company reported earnings of $57.6 million in the fourth quarter.

The first quarter benefited from a $20 million gain for resolving income tax issues, but that was partly counterbalanced by an accounting change that cut income by $7 million.

Production of liquids was up 1 percent to 74,984 barrels daily, but that was down from 81,559 barrels in the fourth quarter.

On the gas side, dwindling flows from the Ladyfern field in western Canada and from some mature fields in the Gulf of Mexico brought a steep 26 percent decline to 228 million cubic feet daily from 309 million a year ago. Murphy produced 251 million cubic feet per day in the fourth quarter.

Prices made up for lower volume, with Murphy’s North American gas selling for double the price a year earlier — $5.60 per thousand cubic feet rather than $2.28. Average for crude and condensate was $26.87, up 36 percent from $19.76 in the comparable quarter a year ago. But hedging cut the effective yield by $3.54 a barrel for crude and 36 cents per thousand cubic feet for gas.

Downstream operations remained in the red, but the loss was $3.5 million for the quarter instead of $13.7 million in the 2002 first period. Downstream operations in the United Kingdom were profitable in the quarter, unlike a year ago.

Exploration expenses were lower in Canada and Malaysia, which also helped earnings.

Revenues came to $1.32 billion, up 75 percent from $755 million in the first quarter of 2002. Revenues totaled $1.08 billion for the fourth quarter.