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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.