"U.S. retail margins were poor for most of the first quarter, street prices lagged rising wholesale prices," said David M. Wood, president, CEO and director, during the company's conference [image-nocss] call. "Also during the latter part of the first quarter we saw year-over-year sales volumes decrease on both gasoline and diesel at our sites. While this is in the same direction of the overall industry average, it is in contrast to the activity previously seen at our stations where we had been seeing year-on-year growth. Margin from merchandise sales continues to trend upward, however."
He said that the El Dorado, Ark.-based oil company has 1,030 retail outlets in operation; 993 Murphy USA sites and 37 Murphy Express sites.
The smaller profit from continuing operations in 2009 compared to 2008 was primarily due to significantly lower worldwide crude oil and North American natural gas sales prices, which led to much lower earnings in the company's exploration and production business. The first quarter 2008 also included a $39.9 million after-tax gain on sale of Berkana Energy in Canada. Earnings in the company's refining and marketing business in the 2009 first quarter were about even with the prior year as improved U.S. refining margins were mostly offset by much tighter U.S. retail marketing margins and lower margins for operations in the U.K.
Murphy's income contribution from continuing exploration and production operations was $50.3 million in the first quarter of 2009 compared to $427.2 million in the same quarter of 2008. Lower realized sales prices for crude oil and natural gas and higher exploration expenses were the primary reasons for weaker earnings in the 2009 period.
Murphy's refining and marketing operations generated income of $10.8 million in the 2009 first quarter compared to income of $10.2 million in the 2008 quarter. In North America, downstream earnings were $14.6 million in 2009 compared to earnings of $1.0 million in 2008. North American results were improved in 2009 mostly due to significantly better refining margins, which benefited from lower prices for crude oil feedstocks.
Click hereto view a complete transcript of the conference call (courtesy of SeekingAlpha.com).
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