Murphy Oil Posts Higher Earnings Exiting 2009
Murphy Oil announced net income in the fourth quarter of 2009 was $318.8 million ($1.65 per diluted share), compared to net income of $127.4 million ($0.67 per diluted share) in the fourth quarter 2008. The 2009 period included a $185.3 million after-tax benefit from anticipated recovery of deepwater federal royalties previously paid for certain oil and gas properties in the Gulf of Mexico.
A U.S. circuit court of appeals affirmed in 2009 a ruling that the U.S. government improperly collected royalties on these leases when oil and gas prices exceeded certain levels. This amount includes after-tax interest income of $27.0 million.
Net income in the 2009 fourth quarter also included a $31.3 million after-tax charge associated with an anticipated reduction of the Company's working interest in the Terra Nova field, offshore Eastern Canada. The Terra Nova joint operating agreement requires a redetermination process to occur with resulting adjustments settled in cash and applied retroactively to the deemed date of payout which is approximately December 2004. In the second quarter 2009, the Company recognized a charge assuming a working interest reduction from the current 12.0% to approximately 11.5%. The charge recorded in the fourth quarter 2009 further reduces the Company's anticipated working interest to approximately 10.5%. The redetermination process is being arbitrated with completion anticipated in late 2010. The final results of the arbitration could improve the Company’s working interest percentage above 10.5%. Excluding these two items, income for the fourth quarter 2009 was $164.8 million, a 29% increase from the fourth quarter 2008.
For the year of 2009, net income totaled $837.6 million ($4.35 per diluted share), which was significantly below the $1.74 billion ($9.06 per diluted share) of net income in 2008. The 2009 results included income from discontinued operations of $97.1 million ($0.50 per diluted share), which arose primarily from a gain on sale of the Company’s operations in Ecuador in March 2009. The current period benefited by $185.3 million after taxes from an anticipated recovery of federal royalties and associated interest, while the prior period included gain on sales of two properties in Canada.
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