EL DORADO, Ark. -- Murphy Oil Corp. said that net income in first-quarter 2006 was $113.9 million (60 cents per diluted share), comparable to net income of $113.2 million (60 cents per diluted share) in first-quarter 2005.
In 2006, substantially higher income for the company's exploration and production operations was mostly offset by losses in the refining and marketing business caused by downtime and unrecoverable repair costs at the Meraux, La., refinery following Hurricane Katrina.
Murphy's income from exploration and production [image-nocss] operations was $161.6 million in first-quarter 2006 compared to $124.9 million in the same quarter of 2005.
The El Dorado, Ark.-based company's refining and marketing operations incurred a loss of $37.3 million in the 2006 quarter compared to a loss of $5.5 million in the 2005 quarter. In North America, downstream operations lost $37.1 million in 2006 and $8.3 million in 2005. The larger loss in 2006 was mostly caused by foregone refining margins, coupled with expenses for ongoing costs and $13 million of unrecoverable Katrina-related repairs at the Meraux refinery, which was shut down for the entire first quarter.
Although most repair costs are recoverable from insurance, damages caused by flooding have certain coverage limits. Additional pretax repair costs of approximately $37 million are projected to be expensed in second-quarter 2006. Commissioning and startup, anticipated to last several weeks, should commence at Meraux beginning the first week of May. The company's Superior, Wis., refinery ran well during first-quarter 2006 and had improved margins compared to the 2005 period. Similar to the 2005 first quarter, the 2006 quarter's results for U.S. retail marketing operations were unfavorably affected by generally rising wholesale gasoline prices that squeezed margins.
Claiborne P. Deming, president and CEO, said, In the downstream businesswe continue our build out of retail gasoline stations at Wal-Mart Supercenters. Thus far in April, crude oil sales prices have risen, but U.S. retail gasoline margins continue to be weak because of the unrelenting rise in wholesale gasoline prices. We currently expect earnings in the second quarter to be between 75 [cents] and $1 per diluted share. Results could vary based on commodity prices, drilling results, timing of oil sales, the pace of the Meraux refinery startup and refining and marketing margins.
Separately, New York City-based Amerada Hess Corp. reported net income of $695 million for first-quarter 2006 compared with net income of $219 million for first-quarter 2005.
Exploration and production earnings were $706 million in first-quarter 2006 compared with $263 million in first-quarter 2005. Marketing and refining earnings were $49 million in first-quarter 2006 compared with $63 million in first-quarter 2005. Refining earnings were $21 million in first-quarter 2006 compared with $42 million in first-quarter 2005. Marketing operations generated earnings of $12 million in first-quarter 2006, compared with $13 million in the same period of 2005.
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