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Murphy Oil: A Mixed Bag At Best

Jun. 10, 2020 2:33 PM ETMurphy Oil Corporation (MUR)2 Comments


  • Murphy Oil reported a first-quarter 2020 loss of $2.71 per share. The company generated total revenues of $1,003.73 million (which includes $400.67 million in gain on crude contracts).
  • Production in K Boep/d was a total of 185.6 Boep/d in 1Q'20.
  • Murphy cut the dividend by 50% this quarter or $0.50 per share annually.
  • I recommend trading short term an estimated 50% of your long-term holding due to extreme volatility in oil prices as we have experienced again recently.
  • Looking for a helping hand in the market? Members of The Gold And Oil Corner get exclusive ideas and guidance to navigate any climate. Get started today »

Source: Murphy Oil Corporation

Investment Thesis

The Arkansas-based Murphy Oil Corp. (NYSE:MUR) recently released its first quarter of 2020 results. Despite posting a loss, the results top analysts' estimates. However, it was a challenging quarter with the COVID-19 pandemic and the crash in oil prices.

The big issue that the company will have to confront in 2020 is the weakness in oil prices even if we have experienced a rebound lately. The market seems to focus on production, and after the recent OPEC+ cut, decided that oil was too cheap. However, the real situation is not at the supply level, in my opinion, but at the demand level.

The world economy's engine has come to a halt, and while it is not showing yet on paper, we are about to get a nasty surprise soon. Yes, cutting supplies is helpful, but it doesn't mean that the problem has vanished like the market seems to think. The issue is that not only is demand not here, but this situation will continue probably for months.

How can this simple logic be disregarded and how can so many investors continue to believe the worst is over? It has not started yet.

The market has its logic, and it is based on "momentum." When the time is ripe, the market is focusing on what could push all of us to buy or sell, no matter what. When the machine has been set in motion, then nothing can stop it until it runs out of fuel.

Call it euphoria or despair. It is what the market is made of. Trying to put a "logical logic" in this collective behavior is futile. The same could be applied to "justice" as well. The best is to acknowledge it and adopt a strategy to profit from it instead of being a victim.

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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.

I live mostly in Sweden with my loving wife.

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.

“Logic will get you from A to B. Imagination will take you everywhere.” Einstein.

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Comments (2)

Murphy has almost tripled from it's March lows. That's gotta make ya a bit nervous. I don't hold this one, but if I did, I agree, I'd be lightening up.
Fun Trading profile picture

If you look at the technical analysis, it has worked fine. However, I am not invested in MUR now. The time to lighten up was a bit before...MUR has retraced to the new resistance.

Good luck
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