Murphy Oil Expects to Take 4Q Hit for Failed Well Off Congo Coast
Murphy Oil Corp. said a well drilled off the shore of the Republic of the Congo was unsuccessful, as the oil-and-gas company also said it has expanded its presence in an exploration area off the coast of Australia.
Murphy said the cost of the unsuccessful well in the Mer Profonde North permit area totals $48 million and that it will be expensed in the fourth quarter. The company also expects write-downs of $29 million related to a well drilled in October 2010 where activity has been suspended pending results of additional exploratory drilling.
In the Browse Basin off the coast of Australia, Murphy picked up a 20% working interest in a block where drilling is expected to begin next month. Further terms weren't disclosed.
Murphy's board last month approved plans to spin off the company's U.S. fuel-making and distribution business into a new company, Murphy Oil USA Inc., as Murphy aims to focus more closely on oil and gas extraction in the U.S., Canada and Malaysia. Murphy Oil in October 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 potentially increase that position.
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 Oil in October reported that its third-quarter earnings declined 44% as results were hurt by factors including weaker natural-gas prices and U.S. retail marketing margins.
Shares were down 21 cents at $57.50 in early trading. The stock is up by one-third from a 52-week low in June.
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