EX-99.1

EX-99.1 2 d530009dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

MURPHY OIL ANNOUNCES PRELIMINARY FIRST QUARTER 2013 EARNINGS

EL DORADO, Arkansas, May 1, 2013 – Murphy Oil Corporation (NYSE: MUR) announced today that net income in the first quarter of 2013 was $360.6 million ($1.88 per diluted share), compared to net income of $290.1 million ($1.49 per diluted share) in the first quarter of 2012. The first quarter of 2013 included income from discontinued operations of $152.6 million ($0.80 per diluted share) compared to income of $8.6 million ($0.05 per diluted share) in 2012. The 2013 discontinued operations results primarily related to a gain on sale of two oil and natural gas properties in the United Kingdom during the quarter. Income from continuing operations was $208.0 million ($1.08 per diluted share) in the first quarter 2013, down from $281.5 million ($1.44 per diluted share) in the 2012 quarter. Income from continuing operations declined in the 2013 quarter compared to 2012 due primarily to higher expenses for exploration, administration, financing and income taxes. Better results for the Company’s downstream operations partially offset these higher expenses.

Net Income


	Three Mos. Ended March 31,
(Millions of Dollars except per share)	2013			2012
Exploration and Production	$	231.9			313.0
Refining and Marketing		25.3			(4.2	)
Corporate		(49.2	)		(27.3	)

Income from continuing operations		208.0			281.5
Income from discontinued operations		152.6			8.6

Net income	$	360.6			290.1


Income per Common share – Diluted:
Income from continuing operations	$	1.08			1.44
Net income	$	1.88			1.49

Exploration and Production (E&P)

Income contribution from continuing E&P operations was $231.9 million in the first quarter of 2013, down from $313.0 million in the same quarter of 2012.

E&P Metrics


	Three Mos. Ended March 31,
	2013		2012
Oil Production Volume – Bbls. per day		126,888		107,490
Natural Gas Sales Volume – MCF per day		449,925		525,635
Total BOE Production Volume – BOE per day		201,876		195,096

Average Realized Oil Sales Price – $ per Bbl.	$	96.00		97.78
Average Realized North American Natural Gas Sales Price – $ per MCF	$	3.11		2.56
Average Realized Sarawak Natural Gas Sales Price – $ per MCF	$	6.82		7.80

The results of operations improved in 2013 in the United States compared to the prior year, however, lower income in Canada, Malaysia and other areas during the 2013 quarter more than offset the stronger U.S. results. U.S. income improved in 2013 primarily due to higher production in the Eagle Ford Shale area of South Texas. Canadian results were lower than the prior year due to extremely weak heavy oil prices, dry hole costs associated with unsuccessful wells drilled in the Muskwa Shale area of Alberta, and lower sales volumes, lower sales prices and higher extraction costs for both synthetic oil and East Coast operations. Operations in Malaysia had lower income in 2013 primarily due to less profit generated at natural gas fields offshore Sarawak, where both sales volumes and sales prices were significantly lower than the prior year. Results in the Republic of the Congo included well workover costs of $11.3 million during the 2013 quarter. Exploration expenses for other foreign operations were higher in the 2013 quarter and included unsuccessful drilling costs for a shallow-water well in Cameroon and geophysical expenses for exploration licenses in Australia, Cameroon and Indonesia.

The Company’s worldwide crude oil, condensate and natural gas liquid sales prices averaged $96.00 per barrel for the 2013 first quarter compared to the 2012 first quarter average of $97.78 per barrel. Total crude oil, condensate and gas liquids production of 126,888 barrels per day in the first quarter of 2013 was 18% above the 107,490 barrels per day produced in the 2012 quarter. The increase in oil production during the 2013 quarter was primarily associated with volume growth in the Eagle Ford Shale, where the Company has a significant development drilling program ongoing. Total sales volumes of crude oil, condensate and natural gas liquids averaged 131,479 barrels per day in the first quarter 2013 compared to 108,562 barrels per day in the 2012 quarter. North American natural gas sales prices averaged $3.11 per thousand cubic

feet (MCF) in the 2013 first quarter compared to $2.56 per MCF in the same quarter of 2012. Natural gas produced at fields offshore Sarawak, Malaysia was sold at an average of $6.82 per MCF in the 2013 quarter, down from $7.80 per MCF in the 2012 first quarter. Natural gas sales volume of about 450 million cubic feet per day in the first three months of 2013 was 14% below the 525 million cubic feet per day sold in the 2012 period. This gas sales decline was primarily attributable to lower production in the Tupper area of Western Canada and lower sales volume from gas fields offshore Sarawak, Malaysia, primarily due to planned maintenance at our gas receiving facility.

Production expenses increased $100.6 million in 2013 compared to 2012 based on higher hydrocarbon volumes sold in the U.S. and higher production costs associated with an oil sale at the Azurite field in Republic of the Congo. Depreciation expense increased $60.1 million in 2013 due to both higher hydrocarbon volumes sold in the Eagle Ford Shale area and a higher overall per barrel capital amortization rate.

Exploration expense in the 2013 period was $108.5 million compared to $52.9 million in 2012. Dry hole expense was higher by $40.4 million in 2013 primarily due to unsuccessful drilling in Western Canada and Cameroon. Geological and geophysical expense was $28.2 million higher in 2013 compared to 2012 due to the current quarter including higher seismic acquisition costs in the deepwater Gulf of Mexico as well as in Australia, Cameroon and Indonesia.

Refining and Marketing (R&M)

Murphy’s R&M continuing operations generated a profit of $25.3 million in the 2013 first quarter compared to a loss of $4.2 million in the 2012 quarter.

R&M Metrics


	Three Mos. Ended March 31,
	2013			2012
U.S. Retail Fuel Margin – Per gallon	$	0.110			0.071
U.S. Retail Merchandise Sales – Per store month	$	146,986			152,923
U.K. Refinery inputs – Bbls. per day		115,768			130,750
U.K. R&M Unit Margin – Per Bbl.	$	(0.03	)		0.79
Total Petroleum Product Sales – Bbls. per day		424,072			450,527

United States downstream operations generated a profit of $29.4 million in the 2013 quarter, compared to a loss of $7.2 million in 2012. Improved results for U.S. marketing

operations were the primary driver to the higher 2013 income. U.S. retail margins in the 2013 first quarter were $0.039 per gallon stronger than the same period in 2012. Average U.S. retail fuel sales volumes in 2013 on a per-store basis were lower by about 1.5% compared to 2012. Total margin on merchandise sales in 2013 was down slightly compared to the 2012 quarter. This decline was primarily associated with lower sales volumes and associated margins for cigarettes. Other U.S. marketing operating results were stronger in the 2013 quarter compared to the prior year due to both higher margins for fuel moved through product terminals and higher sales prices for ethanol renewable identification numbers (RINs). Results for ethanol production operations in 2013 were improved compared to 2012 as the benefit from stronger prices for dried distillers grain in the latest quarter at the Hankinson, North Dakota plant was partially offset by weaker crush spreads at the Hereford, Texas plant. The Company has previously announced its intent to separate the U.S. retail marketing business into a stand-alone publicly-owned company in 2013.

Refining and marketing operations in the United Kingdom incurred a loss of $4.1 million in the first quarter 2013 compared to income of $3.0 million in the same quarter of 2012. The unfavorable result for U.K. R&M operations in 2013 was primarily due to weaker net refining margins in the most recent quarter at the Milford Haven, Wales refinery. Additionally, the refinery had certain units offline for scheduled maintenance during the 2013 quarter, which led to lower processed crude oil feedstocks. The Company has announced its intent to sell the U.K. R&M operations and those efforts continue to progress.

Corporate

Corporate functions had net costs of $49.2 million in the 2013 first quarter compared to net costs of $27.3 million in the 2012 first quarter. The larger net cost in 2013 compared to 2012 was principally due to higher expenses for administration and interest in the current year. The 2013 increase in administrative costs related to higher employee compensation costs and professional services associated with the intended separation of the U.S. retail marketing business. Interest expense increased in the current year due to higher average borrowing levels, partially offset by additional interest costs capitalized to ongoing oil development projects. The 2013 quarter also included larger unfavorable impacts from transactions denominated in foreign currencies; these transactions led to after-tax costs of $4.1 million in the 2013 quarter compared to after-tax costs of $1.5 million in the 2012 quarter.

Discontinued Operations

Discontinued operations include oil and gas production activities in the United Kingdom. Income from discontinued operations was $152.6 million in the first quarter of 2013 compared to $8.6 million in the 2012 quarter. The 2013 quarter included an after-tax gain of $147.4 million associated with the sale of the Schiehallion and Amethyst fields in the U.K. The Company expects to conclude the sale of the remaining Mungo/Monan field during the second quarter. All results of operations for these U.K. oil and gas properties have been reported as discontinued operations in the consolidated financial statements.

Steven A. Cossé, Murphy’s President and Chief Executive Officer, commented, “The process for completing the separation of our U.S. retail business in the second half of the year is going according to plan, largely due to the efforts of the retail management team led by Andrew Clyde. The U.S. retail business operated well in the first quarter 2013, with better than normal fuel margins achieved during the winter season. In the upstream business, our production levels exceeded expectations during the first quarter, principally due to good performance in the Eagle Ford Shale area. We will continue our active exploration drilling program with upcoming wells offshore Australia and Cameroon. The sale of the Mungo/Monan field in the U.K. should be completed in the second quarter.

“We anticipate total worldwide production volumes of 202,000 barrels of oil equivalent per day in the second quarter of 2013. Sales volumes of oil and natural gas are projected to average 201,000 barrels of oil equivalent per day during the quarter. At the present time, we expect income from continuing operations in the second quarter to range between $1.50 and $1.65 per diluted share. The second quarter estimate includes projected exploration expense of between $50 million and $80 million, and income from our downstream businesses of approximately $73 million. Results could vary based on the risk factors described below.”

The public is invited to access the Company’s conference call to discuss first quarter 2013 results on Thursday, May 2, at 12:00 p.m. CDT either via the Internet through the Investor Relations section of Murphy’s Web site at http://www.murphyoilcorp.com/ir or via the telephone by dialing 1-877-741-4253. The telephone reservation number for the call is 2999412. Replays of the call will be available through the same address on the Murphy Web site, and a recording of the call will be available through May 6 by dialing 1-888-203-1112 and referencing reservation number 2999412. Audio downloads will be available on the Murphy Web site through June 1 and via Thomson StreetEvents for their service subscribers.

Summary financial data and operating statistics for the first quarter 2013 with comparisons to 2012 are contained in the attached tables.

This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements, which express management’s current views concerning future events or results, including Murphy’s plans to separate its U.S. retail marketing business and to divest its U.K. downstream operations, are subject to inherent risks and uncertainties. Factors that could cause one or more of these forecasted events not to occur include, but are not limited to, a failure to obtain necessary regulatory approvals, a failure to obtain assurances of anticipated tax treatment, a deterioration in the business or prospects of Murphy or its U.S. retail marketing business, adverse developments in Murphy or its U.S. retail marketing business’ markets, adverse developments in the U.S. or global capital markets, credit markets or economies generally or a failure to execute a sale of the U.K. downstream operations on acceptable terms or in the timeframe contemplated. Factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements include, but are not limited to, the volatility and level of crude oil and natural gas prices, the level and success rate of our exploration programs, our ability to maintain production rates and replace reserves, customer demand for our products, adverse foreign exchange movements, political and regulatory instability, and uncontrollable natural hazards. For further discussion of risk factors, see Murphy’s 2012 Annual Report on Form 10-K on file with the U.S. Securities and Exchange Commission. Murphy undertakes no duty to publicly update or revise any forward-looking statements.

####

MURPHY OIL CORPORATION

FUNCTIONAL RESULTS OF OPERATIONS (Unaudited)

(Millions of dollars)


	Three Months Ended March 31, 2013						Three Months Ended March 31, 2012
	Revenues			Income			Revenues		Income
Exploration and production
United States	$	408.9			93.8			221.1		50.8
Canada		260.8			13.3			307.0		73.3
Malaysia		560.0			205.2			564.0		224.1
Republic of the Congo		69.5			(14.8	)		57.6		1.6
Other		(0.2	)		(65.6	)		—		(36.8	)

		1,299.0			231.9			1,149.7		313.0

Refining and marketing
United States		4,019.5			29.4			4,264.2		(7.2	)
United Kingdom		1,329.5			(4.1	)		1,540.0		3.0

		5,349.0			25.3			5,804.2		(4.2	)

		6,648.0			257.2			6,953.9		308.8
Corporate		(8.0	)		(49.2	)		3.0		(27.3	)

Revenue/income from continuing operations		6,640.0			208.0			6,956.9		281.5
Discontinued operations, net of tax		—			152.6			—		8.6

Total revenues/net income	$	6,640.0			360.6			6,956.9		290.1

MURPHY OIL CORPORATION

OIL AND GAS OPERATING RESULTS (Unaudited)

THREE MONTHS ENDED MARCH 31, 2013 AND 2012


			Canada
(Millions of dollars)	United States		Conven- tional			Syn- thetic		Malaysia			Republic of the Congo			Other			Total
Three Months Ended March 31, 2013
Oil and gas sales and other revenues	$	408.9		155.4			105.4		560.0			69.5			(.2	)		1,299.0
Production expenses		90.4		43.4			56.0		86.6			75.9			—			352.3
Depreciation, depletion and amortization		130.4		81.5			13.7		133.9			—			1.2			360.7
Accretion of asset retirement obligations		3.3		1.5			2.7		3.3			1.1			—			11.9
Exploration expenses
Dry holes		.7		30.5			—		.4			—			9.4			41.0
Geological and geophysical		12.7		.1			—		.3			—			26.4			39.5
Other		1.5		.3			—		—			.1			10.7			12.6

		14.9		30.9			—		.7			.1			46.5			93.1
Undeveloped lease amortization		6.1		5.3			—		—			—			4.0			15.4

Total exploration expenses		21.0		36.2			—		.7			.1			50.5			108.5

Selling and general expenses		16.1		6.4			.2		.5			.5			13.7			37.4

Results of operations before taxes		147.7		(13.6	)		32.8		335.0			(8.1	)		(65.6	)		428.2
Income tax provisions (benefits)		53.9		(2.8	)		8.7		129.8			6.7			—			196.3

Results of operations (excluding corporate overhead and interest)	$	93.8		(10.8	)		24.1		205.2			(14.8	)		(65.6	)		231.9


Three Months Ended March 31, 2012
Oil and gas sales and other revenues	$	221.1		189.4			117.6		564.0			57.6			—			1,149.7
Production expenses		48.5		44.4			52.6		89.2			17.0			—			251.7
Depreciation, depletion and amortization		63.0		77.2			13.3		112.7			33.8			.6			300.6
Accretion of asset retirement obligations		2.8		1.3			2.0		2.9			.2			—			9.2
Exploration expenses
Dry holes		—		.8			—		—			—			(.2	)		.6
Geological and geophysical		.2		4.2			—		(.1	)		.1			6.9			11.3
Other		3.9		.2			—		—			.2			8.1			12.4

		4.1		5.2			—		(.1	)		.3			14.8			24.3
Undeveloped lease amortization		11.1		7.1			—		—			—			10.4			28.6

Total exploration expenses		15.2		12.3			—		(.1	)		.3			25.2			52.9

Selling and general expenses		12.1		4.1			.2		.3			.9			11.0			28.6

Results of operations before taxes		79.5		50.1			49.5		359.0			5.4			(36.8	)		506.7
Income tax provisions		28.7		13.8			12.5		134.9			3.8			—			193.7

Results of operations (excluding corporate overhead and interest)	$	50.8		36.3			37.0		224.1			1.6			(36.8	)		313.0

MURPHY OIL CORPORATION

SUMMARIZED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(Thousands of dollars, except per share amounts)


	Three Months Ended March 31,
	2013			2012*
Revenues	$	6,639,954			6,956,936


Costs and expenses
Crude oil and product purchases		4,999,645			5,514,379
Operating expenses		599,102			488,485
Exploration expenses		108,493			52,927
Selling and general expenses		109,742			88,159
Depreciation, depletion and amortization		393,754			332,588
Accretion of asset retirement obligations		12,165			9,446
Interest expense		27,028			11,739
Interest capitalized		(13,388	)		(6,423	)

		6,236,541			6,491,300

Income from continuing operations before income taxes		403,413			465,636
Income tax expense		195,443			184,198

Income from continuing operations		207,970			281,438
Income from discontinued operations, net of income taxes		152,629			8,633


Net income	$	360,599			290,071


Income per Common share – Basic
Continuing operations	$	1.09			1.45
Discontinued operations		0.80			0.05

Net income	$	1.89			1.50


Income per Common share – Diluted
Continuing operations	$	1.08			1.44
Discontinued operations		0.80			0.05

Net income	$	1.88			1.49


Cash dividends per Common share	$	0.3125			0.275

Average Common shares outstanding (thousands)
Basic		190,810			193,922
Diluted		191,765			194,885

*	Reclassified to conform to current presentation.

MURPHY OIL CORPORATION

SUMMARIZED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Thousands of dollars)


	Three Months Ended March 31,
	2013			2012¹
Operating Activities
Net income	$	360,599			290,071
Adjustments to reconcile net income to net cash provided by operating activities
Income from discontinued operations		(152,629	)		(8,633	)
Depreciation, depletion and amortization		393,754			332,588
Amortization of deferred major repair costs		5,949			5,911
Expenditures for asset retirement		(15,881	)		(6,957	)
Dry hole costs		41,011			620
Amortization of undeveloped leases		15,390			28,632
Accretion of asset retirement obligations		12,165			9,446
Deferred and noncurrent income tax charges		25,341			8,072
Pretax gains from disposition of assets		(40	)		(90	)
Net decrease in noncash operating working capital other than cash and cash equivalents		211,462			301,071
Other - net		10,114			16,823

Net cash provided by continuing operations		907,235			977,554
Net cash provided by discontinued operations		13,892			13,452

Net cash provided by operating activities		921,127			991,006


Investing Activities
Property additions and dry hole costs		(1,035,021	)		(561,705	)
Proceeds from sale of assets		29			123
Purchases of investment securities²		(230,320	)		(469,564	)
Proceeds from maturity of investment securities²		130,385			507,305
Expenditures for major repairs		(4,894	)		—
Investing activities of discontinued operations
Sales proceeds		211,549			—
Property additions and other		(7,974	)		(5,559	)
Other - net		2,306			3,889

Net cash required by investing activities		(933,940	)		(525,511	)


Financing Activities
Borrowing (repayment) of notes payable		261,989			(11	)
Proceeds from exercise of stock options and employee stock purchase plans		1,281			6,599
Excess tax benefits related to exercise of stock options		—			1,037
Withholding tax on stock-based incentive awards		(7,337	)		(5,501	)
Issue costs of debt facility		(91	)		—
Cash dividends paid		(59,672	)		(53,383	)

Net cash provided (required) by financing activities		196,170			(51,259	)


Effect of exchange rate changes on cash and cash equivalents		(13,568	)		8,540


Net increase in cash and cash equivalents		169,789			422,776
Cash and cash equivalents at beginning of period		947,316			513,873

Cash and cash equivalents at end of period	$	1,117,105			936,649

¹	Reclassified to conform to current presentation.

²	Represents cash invested in Canadian government securities with maturities greater than 90 days at the date of acquisition.

MURPHY OIL CORPORATION

OTHER FINANCIAL DATA

(Unaudited, except for December 31, 2012)

(Millions of dollars)


	March 31, 2013		Dec. 31, 2012
Total current assets	$	4,098.8		4,108.6
Total current liabilities		3,272.1		3,409.1
Total assets		17,751.7		17,522.6
Long-term debt		2,507.3		2,245.2
Stockholders' equity		9,138.5		8,942.0


	Three Months Ended March 31,
	2013		2012
Capital expenditures – continuing operations
Exploration and production
United States	$	512.9		214.6
Canada		141.0		154.3
Malaysia		223.0		301.0
Other		89.1		36.8

		966.0		706.7

Refining and marketing
United States		64.2		18.3
United Kingdom		6.2		4.5

		70.4		22.8

Corporate		3.8		1.8

Total capital expenditures – continuing operations		1,040.2		731.3

Charged to exploration expenses*
United States		14.9		4.1
Canada		30.9		5.2
Malaysia		0.7		(0.1	)
Other		46.6		15.1

Total charged to exploration expenses		93.1		24.3

Total capitalized – continuing operations	$	947.1		707.0

* Excludes amortization of undeveloped leases of	$	15.4		28.6

MURPHY OIL CORPORATION

STATISTICAL SUMMARY


	Three Months Ended March 31,
	2013		2012
Net crude oil, condensate and gas liquids produced – barrels per day		126,888		107,490
Continuing operations		125,239		104,419
United States		40,062		20,280
Canada – light		228		205
– heavy		8,519		8,406
– offshore		9,243		9,377
– synthetic		12,417		13,311
Malaysia		53,355		49,959
Republic of the Congo		1,415		2,881
Discontinued operations – United Kingdom		1,649		3,071

Net crude oil, condensate and gas liquids sold – barrels per day		131,479		108,562
Continuing operations		129,925		105,427
United States		40,062		20,280
Canada – light		228		205
– heavy		8,519		8,406
– offshore		7,943		8,619
– synthetic		12,417		13,311
Malaysia		53,914		48,703
Republic of the Congo		6,842		5,903
Discontinued operations – United Kingdom		1,554		3,135

Net natural gas sold – thousands of cubic feet per day		449,925		525,635
Continuing operations		447,014		521,894
United States		59,484		51,231
Canada		191,799		242,285
Malaysia – Sarawak		149,083		184,635
– Kikeh		46,648		43,743
Discontinued operations – United Kingdom		2,911		3,741

Total net hydrocarbons produced – equivalent barrels per day¹		201,876		195,096

Total net hydrocarbons sold – equivalent barrels per day¹		206,467		196,168

Weighted average sales prices
Crude oil, condensate and gas liquids – dollars per barrel²
United States	$	106.53	$	110.08
Canada³ – light		81.91		91.40
– heavy		28.04		51.14
– offshore		111.44		118.39
– synthetic		94.30		96.95
Malaysia⁴		94.44		94.74
Republic of the Congo⁴		112.89		107.26
Discontinued operations – United Kingdom		113.19		120.01
Natural gas – dollars per thousand cubic feet
United States²	$	3.51	$	2.64
Canada³		2.99		2.54
Malaysia – Sarawak⁴		6.82		7.80
– Kikeh		0.24		0.24
Discontinued Operations – United Kingdom³		12.30		9.58

¹	Natural gas converted on an energy equivalent basis of 6:1.

²	Includes intracompany transfers at market prices.

³	U.S. dollar equivalent.

⁴	Prices are net of payments under the terms of the respective production sharing contracts.

MURPHY OIL CORPORATION

STATISTICAL SUMMARY (Continued)


	Three Months Ended March 31,
	2013			2012
Refining and Marketing
United States retail marketing:
Fuel margin per gallon*	$	0.110		$	0.071
Gallons sold per store month		250,952			254,806
Merchandise sales revenue per store month	$	146,986		$	152,923
Merchandise margin as a percentage of merchandise sales		12.9	%		13.0	%
Store count at end of period (Company operated)		1,172			1,133

United Kingdom refining and marketing - unit margins per barrel	$	(0.03	)	$	0.79

Petroleum products sold - barrels per day		424,072			450,527
United States		305,794			319,976
Gasoline		264,765			274,391
Kerosine		192			216
Diesel and home heating oils		40,837			45,369
United Kingdom		118,278			130,551
Gasoline		44,510			44,679
Kerosine		15,105			15,872
Diesel and home heating oils		42,031			43,683
Residuals		12,698			15,698
LPG and other		3,934			10,619

U.K. refinery inputs - barrels per day		115,768			130,750
Milford Haven, Wales - crude oil		112,411			127,001
- other feedstocks		3,357			3,749

U.K. refinery yields - barrels per day		115,768			130,750
Gasoline		40,420			44,573
Kerosine		15,465			16,089
Diesel and home heating oils		40,604			40,340
Residuals		12,135			15,586
LPG and other		4,160			10,593
Fuel and loss		2,984			3,569

*	Represents net sales prices for fuel less purchased cost of fuel.