Murphy Oil to Repurchase Shares - Analyst Blog

Murphy Oil Corporation MUR announced that its board of directors has approved a new share repurchase program. This will allow the company to repurchase its shares of common stock worth up to $125 million.

Murphy Oil has not yet disclosed the method and time of its share repurchase plan. The company expects to complete it by Dec 31, 2014.

It is evident from past records that Murphy Oil follows steady share buyback strategy. The company recently completed its share repurchase program worth $1 billion. During first-quarter 2014, Murphy Oil repurchased common stock worth $250 million, under the aforesaid program, through an accelerated share repurchase agreement with a financial institution.

Murphy Oil's share buyback initiative will help to increase shareholder value by reducing the total outstanding shares of the company. The company's strong cash balance and cash generation capacity supports its share repurchase program. Murphy Oil's cash and cash equivalents as of Mar 31, 2014 were $648.6 million and cash flow from operating activities during first-quarter 2014 was $735.9 million.

In addition to pursuing a systematic share repurchase activities, Murphy Oil is consistently returning wealth to its shareholders through payment of regular dividends. During the first quarter, the company distributed $56.1 million as dividend to its shareholders, which accounts for 32.1% of the adjusted earnings.

Apart from share repurchase and payment of dividend, Murphy Oil continues with its steady investments in growth projects in Eagle Ford Shale, Malaysia and several other locations, given its strong financial position. These initiatives will enable the company to boost its future performance, thereby paying more returns to its shareholders.

Murphy Oil currently has a Zacks Rank #3 (Hold). However, some better-ranked stocks in the oil and gas sector include Athlon Energy Inc. ATHL, Encana Corporation ECA and Marathon Oil Corporation MRO. Athlon Energy and Encana hold a Zacks Rank #1 (Strong Buy), while Marathon Oil carries a Zacks Rank #2 (Buy).