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Murphy Oil: Key Takeaways From The Fourth Quarter 2018

Feb. 11, 2019 6:47 PM ETMurphy Oil Corporation (MUR)4 Comments


  • Total revenues were $692.0 million this quarter, or up 27.8% from the same quarter a year ago and up 2.5% sequentially. It was a solid quarter.
  • The company produced 176,422 barrels of oil equivalent per day (Boe/d) in the fourth quarter (61% liquids,) up 4.8% from the same quarter a year ago.
  • While MUR is an excellent stock, I am not optimistic short term, and I believe the oil sector is about to retrace to ~$22-23, which is an excellent opportunity to buy.

Image: Murphy well pad site just North of Campbellton on U.S. Hwy. 281 A. Source: Pleasanton express.

Investment Thesis

I consider Murphy Oil Corp. (NYSE:MUR) as a solid long-term second choice in the oil division, particularly for an investor who desires to participate in the oil & gas exploration with assets concentrated in North America.

Murphy Oil controls one of the best upstream portfolios among the domestic oil & natural gas integrated companies. Other companies that can be considered equivalent include Penn Virginia Corporation (PVAC), Anadarko Petroleum (APC), and Apache Corporation (APA).

The first choice is, of course, an investment in oil supermajors like Royal Dutch Shell (RDS.A) (RDS.B) or Exxon Mobil (XOM), which are companies covering a broader aspect of the oil industry.

About 64.9% of the revenue in the fourth quarter comes from properties in the USA (Eagle Ford) and Canada (Montney).

Fourth quarter results were impressive and beat expectation as I will show below.

Furthermore, Murphy Oil is paying a 3.8% dividend yield.

However, for long shareholders who own already a position in the stock, it is essential to trade an estimated 30% of your holding due to extreme volatility in the oil prices.

Quick Presentation Of The Company Assets

As I said in my previous article, the case for Murphy Oil is quite simple to present. The company's business model looks promising even with oil prices back to $60s a barrel. The company is showing adequate proven oil reserves and increased proved reserves by 17% year over year, to 816 million barrels oil equivalent, with 57% liquids-weighting.

Source: Murphy Oil Presentation

Murphy Oil - Financial Table 4Q'18 - The Raw Numbers

Murphy Oil 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18
Total Revenues and others in $ Million 500.5 505.8 676.6 474.5

This article was written by

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I am a former test & measurement doctor engineer (geodetic metrology). I was interested in quantum metrology for a while.

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I have also managed an old and broad private family Portfolio successfully -- now officially retired but still active -- and trade personally a medium-size portfolio for over 40 years.

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Note: I am not a financial advisor. All articles are my honest opinion. It is your responsibility to conduct your own due diligence before investing or trading.

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I may start buying around $23.

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