Murphy Oil 2025 Q1 Earnings Beats Expectations with Net Income Decline

Murphy Oil (MUR) reported its fiscal 2025 Q1 earnings on May 07th, 2025. The company posted a profit that decreased from the same period last year but surpassed analysts' estimates. Murphy Oil's net income for Q1 2025 totaled $73 million, or $0.50 per diluted share, exceeding the consensus estimate of $0.49 per share. Despite a revenue drop of 16.4% to $665.71 million, the company maintained its capital expenditure guidance and production outlook for the year, reaffirming its commitment to shareholder returns.

Revenue

Murphy Oil's revenue for Q1 2025 declined by 16.4% to $665.71 million compared to $796.41 million in the previous year. Sales to customers contributed $672.73 million, while production revenue mirrored this figure. Net crude oil and condensate revenue was $551.02 million, with the United States generating $461.82 million—the offshore segment contributing $352.36 million and onshore $109.46 million. Canadian operations added $89.20 million, splitting into $74.47 million offshore and $14.73 million onshore. Natural gas liquids revenue was $19.48 million, primarily from U.S. operations. Net natural gas revenue reached $102.23 million, with Canadian sectors providing $74.32 million. The company also reported a derivative loss of $9.46 million and asset sales gains of $2.44 million, culminating in total revenues of $665.71 million.

Earnings/Net Income

Murphy Oil's EPS for Q1 2025 decreased by 13.6% to $0.51 compared to $0.59 in Q1 2024, with net income falling by 22.0% to $89.42 million from $114.66 million in the previous year. The decline reflects challenges despite exceeding analysts' expectations.

Price Action

The stock price of Murphy Oil has edged down 0.76% during the latest trading day, but has increased 2.29% over the past week, showing resilience despite a 5.91% month-to-date drop.

Post-Earnings Price Action Review

Over the past five years, buying Murphy Oil shares after quarterly revenue drops and holding them for 30 days has yielded a 28.30% return, contrasting with a benchmark return of 84.08%. The strategy's compound annual growth rate (CAGR) was 5.13%, experiencing a maximum drawdown of -23.39%. The Sharpe ratio stood at 0.27, indicating moderate risk and returns. This trend reflects investors' cautious optimism following earnings reports where revenue declines are observed. Despite revenue challenges, Murphy Oil demonstrates resilience with strategic investments and shareholder-focused initiatives, maintaining market interest and moderate profitability.

CEO Commentary

“I am excited to announce today an oil discovery at the Lac Da Hong-1X (Pink Camel) well, which is the second discovery in our current Vietnam exploration program. This discovery enhances the value of Murphy's growing Vietnam business when coupled with our nearby Lac Da Vang (Golden Camel) development and our recent Hai Su Vang (Golden Sea Lion) discovery,” said Eric M. Hambly, President and Chief Executive Officer. Hambly expressed optimism about the acquisition of an FPSO, emphasizing its cost reduction benefits, and reiterated the company’s focus on progressing development plans in the Gulf of America and Vietnam to generate excess cash flow for shareholder returns.

Guidance

Murphy Oil Corporation reaffirms its commitment to shareholder returns, stating it will allocate a minimum of 50 percent of adjusted free cash flow primarily through share buybacks. The company remains focused on maintaining a strong balance sheet while assessing potential dividend increases. Hambly noted the strategic goal of keeping total long-term debt at $1.0 billion, indicating a disciplined approach to capital allocation and continued investment in growth opportunities.

Additional News

In recent weeks, Murphy Oil has been active in enhancing shareholder value. The company repurchased $100 million worth of shares, demonstrating its commitment to returning capital to investors. Additionally, Murphy Oil announced the acquisition of the BW Pioneer floating production storage and offloading vessel in the Gulf of America, a strategic move aimed at reducing operational costs. The acquisition aligns with the company’s goal to improve efficiency and profitability in its offshore operations. Moreover, the company declared a quarterly dividend of $0.325 per share, reflecting its robust financial position and dedication to rewarding shareholders. These developments underscore Murphy Oil’s strategic focus on optimizing its asset portfolio and financial management.