By Nathalie Tadena
Murphy Oil Corp.'s /quotes/zigman/234838/quotes/nls/mur MUR -0.66% third-quarter earnings declined 44% as weaker natural-gas prices hurt the oil-and-gas producer's results.
The company noted weaker U.S. retail marketing margins, an income-tax benefit in the year-earler quarter and an unfavorable variance from foreign exchange also contributed to the earnings decline.
Murphy's earnings had mostly been higher over the past year on increased oil prices, though profits and oil prices slipped in the second quarter. Meanwhile, North American natural-gas prices remain depressed. The company also has been parceling out its refining operations as it exits that business.
Murphy's board recently approved the spinoff of its U.S. fuel-making and distribution business into a new company, Murphy Oil USA Inc., as the company intends to focus on oil and gas extraction in the U.S., Canada and Malaysia.
Earlier this month, Murphy Oil also said it was meeting with Third Point LLC--a hedge fund run by Dan Loeb that had accumulated a "significant stake" and had filed for regulatory approval to increase that position, if it desired. Third Point had spelled out a four-step process for the energy company that included a spinoff of the retail business, selling its Canadian natural-gas assets, completely exiting the U.K. refining business and selling its 5% stake in Syncrude oil sands projects.
Murphy reported a profit of $226.7 million, or $1.16 a share, down from $406.1 million, or $2.09 a share, a year earlier. Earnings from continuing operations fell to $1.17 a share from $1.79 a share.
The company in August predicted earnings between 90 cents and $1.15 a share, below analyst estimates at the time.
Revenue slipped 1.4% to $7.12 billion.
Oil production increased 9.7%, though average realized oil prices edged up 0.1%. Natural-gas sales volume declined 3.3% while average North America gas sales prices slipped 38%.
For the fourth quarter, the company projects earnings from continuing operations of $1.10 to $1.70 a share. Analysts polled by Thomson Reuters had forecast $1.47 a share.
Shares closed at $60 and were unchanged after hours. The stock is up 12% over the past three months.