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Why Is Murphy Oil (MUR) Up 7.1% Since Last Earnings Report?

A month has gone by since the last earnings report for Murphy Oil (MUR). Shares have added about 7.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Murphy Oil due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Murphy Oil Q1 Earnings and Revenues Surpass Estimates

Murphy Oil Corporation posted first-quarter 2023 adjusted net income of $1.24 per share, beating the Zacks Consensus Estimate of 95 cents by 30.5%. The bottom line improved a whopping 69.9% from the year-ago quarter’s earnings of 73 cents.

Revenues

In the quarter under review, Murphy Oil’s revenues of $842 million beat the Zacks Consensus Estimate of $754 million by 11.6%. The top line improved by 52.2% from the prior-year quarter’s $553 million.

Operational Highlights

Murphy Oil produced 172,508 barrels of oil equivalent per day (BOE/D) in the first quarter (excluding noncontrolling interest in GOM), compared with 141,007 BOE/D in first-quarter 2022. Out of the total first-quarter 2023 production, 55% was oil. MUR’s first-quarter production exceeded the upper end of expected production volumes in the range of 161,500-1,69,000 BOE/D. First-quarter volumes were driven by a strong performance from the Khaleesi, Mormont and Samurai fields in the Gulf of Mexico.

In the quarter under review, Murphy Oil’s total costs and expenses amounted to $544.9 million, down 8.4% from $595.1 million in the prior-year quarter.

Murphy Oil incurred net interest charges of $28.9 million, down 22.5% from $37.3 million in the prior-year quarter. Murphy Oil achieved its debt reduction goal of $650 million in 2022 through senior note redemptions, partial tender and open market transactions, which lowered annual interest expenses. The company aims to lower its debts further by another $500 million in 2023.

Financial Condition

Murphy Oil had cash and cash equivalents of $312.4 million as of  Mar 31, 2023 compared with $492 million as of Dec 31, 2022.

Long-term debt totaled $1,822.9 million on Mar 31, 2023 compared with $1,822.5 million as of Dec 31, 2022.

Net cash used by continuing operational activities in the first three months of 2023 was $345.3 million compared with $244.9 million used in the first three months of 2022.

Guidance

MUR expects its second-quarter 2023 production guidance, excluding NCI, in the range of 173,000-181,000 BOE/D band.

Murphy Oil reiterates 2023 capital expenditures in the range of $875- $1,025 million. MUR is expecting 2023 production volumes in the range of 1,75,500–1,83,500 BOE/D, excluding NCI.

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How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -18.28% due to these changes.

VGM Scores

At this time, Murphy Oil has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Murphy Oil has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Murphy Oil belongs to the Zacks Oil and Gas - Exploration and Production - United States industry. Another stock from the same industry, Range Resources (RRC), has gained 11.6% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.

Range Resources reported revenues of $853 million in the last reported quarter, representing a year-over-year change of -13.6%. EPS of $0.99 for the same period compares with $1.18 a year ago.

Range Resources is expected to post earnings of $0.35 per share for the current quarter, representing a year-over-year change of -72.4%. Over the last 30 days, the Zacks Consensus Estimate has changed -14%.

Range Resources has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.

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