'Bad Luck' Hampers Murphy Oil (MUR) Stock, But Plenty of Upside May Be in Store - Barron's
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Price: $46.16 +0.24%
Overall Analyst Rating:
NEUTRAL (
Up)
Dividend Yield: 2.6%
Revenue Growth %: -11.0%
Overall Analyst Rating:
NEUTRAL (
Up)Dividend Yield: 2.6%
Revenue Growth %: -11.0%
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Shares of Murphy Oil (NYSE: MUR) have seen an impressive rise over the last several weeks, coinciding with the rise in crude prices and a slight rebound in the U.S. economic recovery. However, Barron's contends the run might not be over, should Murphy be able to execute on several fronts.
After successful operations as an integrated oil company, with plays all over the U.S., Ireland, and others, Murphy Oil may want to scrap less profitable ventures in order to become more of an exploration and production company, aiming for rivals like Occidental Petroleum (NYSE: OXY) and Anadarko (NYSE: APC).
Recently, Murphy sold two U.S. refineries for about $1 billion, and may opt to exit some British operations next. A spinoff of about 1,119 U.S. gas stations could unlock additional shareholder value, as the move could be made on a tax-free basis.
But even after surging 25 percent over the last several weeks, shares are still down 28 percent on the year, paving the way for potential upside.
Factors holding Murphy back include CEO David Wood's promises for Murphy to deliver about 300,000 BOE per day by 2015. Murphy has missed targets over the last several quarters, and reported numerous dry wells. One Oppenheimer analyst said that of 13 wells on the docket for drilling in 2011, about half haven't proved "economical."
Bulls on the stock attribute the run more to something of Murphy's law -- a little bad luck -- rather than poor execution, saying the drilling results are well below the company's historical numbers. Should Murphy be able to achieve some exploration success, shares might see a strong move to the upside.
Numbers have also reflected improving metrics. In its most recent quarter, Murphy reported $406 million, or $2.09 per share in profit. The company reported $202.8 million, or $1.05 per share in profit reported for the same period last year.
And with plans to drill everywhere from the Gulf of Mexico to Kurdistand, Australia and beyond, Murphy might become a gusher for investors as "bad luck" starts to fade away.
Shares are 1 percent lower early Monday.
After successful operations as an integrated oil company, with plays all over the U.S., Ireland, and others, Murphy Oil may want to scrap less profitable ventures in order to become more of an exploration and production company, aiming for rivals like Occidental Petroleum (NYSE: OXY) and Anadarko (NYSE: APC).
Recently, Murphy sold two U.S. refineries for about $1 billion, and may opt to exit some British operations next. A spinoff of about 1,119 U.S. gas stations could unlock additional shareholder value, as the move could be made on a tax-free basis.
But even after surging 25 percent over the last several weeks, shares are still down 28 percent on the year, paving the way for potential upside.
Factors holding Murphy back include CEO David Wood's promises for Murphy to deliver about 300,000 BOE per day by 2015. Murphy has missed targets over the last several quarters, and reported numerous dry wells. One Oppenheimer analyst said that of 13 wells on the docket for drilling in 2011, about half haven't proved "economical."
Bulls on the stock attribute the run more to something of Murphy's law -- a little bad luck -- rather than poor execution, saying the drilling results are well below the company's historical numbers. Should Murphy be able to achieve some exploration success, shares might see a strong move to the upside.
Numbers have also reflected improving metrics. In its most recent quarter, Murphy reported $406 million, or $2.09 per share in profit. The company reported $202.8 million, or $1.05 per share in profit reported for the same period last year.
And with plans to drill everywhere from the Gulf of Mexico to Kurdistand, Australia and beyond, Murphy might become a gusher for investors as "bad luck" starts to fade away.
Shares are 1 percent lower early Monday.
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