Murphy Oil Further Justifies Its Split

The important decision to spinoff its downstream operations was magnified in Murphy Oil's (NYSE: MUR  ) third quarter earnings release. While missing analyst estimates by $0.03 is negligible, the growing issues for Murphy Oil are expanding its resources base, and establishing viable oil reserves for the long term. Oil and NGL production increased 10% from the same quarter in 2011, but with only one-third of all proven resources still to be developed, the company needs to acquire more potential drilling locations.

By spinning off its downstream operations, Murphy Oil will shed its thin-margined refining and marketing arm, and focus its capital on the highly-profitable oil exploration and development. Both independent operations will be allowed to focus on their respective strategic priorities, making both segments more valuable over the long term.

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Joel South has no positions in the stocks mentioned above. Taylor Muckerman has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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