By Nathan Owens
Staff Writer
EL DORADO — In spite of low oil prices nationwide, Murphy Oil Corp. has adapted and managed to rebound from commodity collapse, with an 88 percent annual income gain for 2016 compared to 2015, according to finance reports.
While low prices have hurt companies like Murphy Oil, it has resulted in some of the cheapest gasoline in years for consumers.
The combination of all-time low oil prices and 2015 quarterly losses pushed Murphy Oil to adjust its business and financial strategies to stay afloat.
In 2014 the price of crude oil barrels dropped by half, from over $100 to about $50 per barrel, according to the U.S. Bureau of Labor Statistics. Analysts speculated that the move from offshore to on-shore drilling by oil companies created an excess of gas and oil products in North America, which made the price of oil drop drastically.
And the prices continued to drop throughout 2015.
By Dec. 31, 2015, Murphy Oil had an annual net profit loss of nearly $3 billion on top of a 2016 first quarter loss of $198.8 million.
In response to low oil and natural gas prices Murphy Oil laid off 250 employees by May 2016, roughly 20 percent of its workforce.
Since the oil price drop Murphy Oil has focused on cost, ways to reduce cost, and company efficiency, said Kelly Whitley, vice president of investor relations and communications. In 2016, the company has sold assets, cut selling and general expenses, and lowered its debt by doing so.
“I think we’re off to an optimistic start,” Whitley said. “But I think we still want to maintain our focus on the balance sheet and making cost savings throughout the company.”
Murphy Oil Corp. reported a net income loss of $63.9 million for the fourth quarter of 2016, an 89 percent profit gain compared to a loss of $587.1 million for the fourth quarter of 2015.
“[It was a] year of improving the company’s North American onshore portfolio while surviving one of our industry’s worst commodity price collapses,” said Roger W. Jenkins, president and chief executive officer for Murphy Oil.
After the first quarter of 2016, the company has sold two non-core assets— Montney midstream and Syncrude—and planned to focus energies into the Kaybob Duvernay and Eagle Ford Shale, Jenkins said.
For 2017, Murphy Oil’s goal is to develop on- and offshore projects for max production and make up for past financial losses.
“Our focus in 2017 is three fold,” he said. “First, allocating a majority of
capital toward developing locations in the highest return areas in our onshore portfolio. Second, investing in selective offshore projects that deliver top quartile finding and development metrics. Third, covering all costs, including our dividend, within cash flow which will maintain our solid balance sheet.”
Murphy Oil is planning 2017 capital expenditures to be $890 million, and about 65 percent of that will be used for onshore unconventional business with majority expenses in the Eagle Ford Shale in Texas and Kaybob Duvernay in Canada. The expenses will be used for short-cycle projects and activities to increase oil production.
The company estimated that production for the first quarter of 2017 will be between 166-170 thousand barrels of oil equivalent per day (Mboepd) with a full year average between 162-168 Mboepd—a loss of 5 percent volume compared to last year’s average of 176 Mboepd.
Nathan Owens is a staff writer for the El Dorado News-Times and can be reached at 870-862-6611 or by email: [email protected]. For news updates follow him on Twitter: nowensednt.