Murphy Oil Corporation (MUR) has completed the spin-off of its U.S. downstream subsidiary, Murphy Oil USA, Inc. (“Murphy USA”). Currently, Murphy USA is working as an independent entity and will trade on the New York Stock Exchange under the ticker symbol “MUSA” on Sep 3, 2013.
Murphy Oil is currently focusing more on the exploration and production activities, hence spinning-off its U.S. retail marketing division seems quite appropriate in the present scenario.
Per the spin-off agreement, the shareholders of Murphy Oil will receive one share of Murphy USA common stock in exchange of every four shares of Murphy Oil, at the close of business on the record date of Aug 21, 2013.
Post spin-off, Murphy USA’s headquarters will remain in El Dorado, Arkansas. The company will engage in retail fuel products marketing and convenience merchandise through a large chain of retail gasoline stations. As of Jun 30, 2013, the company has 1,179 retail fuel stations. Most of the fuel stations are situated near Walmart (WMT) stores, primarily in the Southern and Midwestern U.S.
Murphy Oil will become an independent exploration and production company. The company will primarily be operating in the U.S., Canada, Malaysia, Australia and other international locations. The company will continue its exploration program and offshore development projects in the North American onshore operations, primarily in the Eagle Ford Shale.
As of Jun 30, 2013, Murphy Oil had cash balance of approximately $1 billion and net cash provided by operating activities of $1.7 billion during the first six months of 2013. A strong financial position will enable the company to manage its present restructuring load.
This spin off will help both the companies to allocate its assets and reorganize the existing resources as per their own market conditions and priorities. We believe this transaction will subsequently enable both the companies to concentrate on their own strategic preferences and identify their capability for future growth.
Post transaction, we believe both the companies will focus on achieving reasonable revenues, improving their cost structure, and maintaining robust margins and strong liquidity position, going forward.
Murphy Oil currently has a Zacks Rank #3 (Hold). However, other stocks from the industry that are presently performing well include TransAtlantic Petroleum Ltd. (TAT) with a Zacks Rank #1 (Strong Buy), and PostRock Energy Corp. (PSTR) and Braskem S.A. (BAK), each with a Zacks Rank #2 (Buy).
Murphy Oil engages in the exploration, production, refining and marketing of oil and gas in the U.S. and several international locations.
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