Murphy Oil (MUR) 2013 Review

Murphy Oil is a global oil and natural gas exploration and production company with refining and marketing operations in North American and the UK.  The company has grown dividends and profits at a 11-13% rate over the last ten years earning a 10-15% return on equity.  While the company experiences some cyclicality in demand, it should continue to grow at an above average secular pace because:

(1) its impressive exploration portfolio,

(2) acquisitions,

(3) it plans to exit its losing and low margin businesses,

(4) its strong balance sheet allows it to pursue its aggressive capital expenditure program and share buy backs.

 Negatives:

(1) it is in a highly competitive industry

(2) product prices are volatile,

(3) its international exposure subjects it to currency fluctuations and foreign        government regulations,

(4) the warm winter weather impacted demand adversely.

            MUR is rated A+ by Value Line, has 11% of its capitalization in debt and its stock yields 2.1%.

Statistical Summary

                 Stock        Dividend       Payout      # Increases  

                 Yield      Growth Rate     Ratio       Since 2003

MUR         2.1%            6%             24%              10

Ind Ave     4.9                6               27                NA

                Debt/                         EPS Down       Net        Value Line

                 Equity         ROE      Since 2003      Margin       Rating

MUR         11%            10%            3                  3%            A+

Ind Ave     20                15             NA                 7              NA

      

     Chart

            Note: MUR stock made good initial progress off its December 2008 low, quickly surpassing the downtrend off the June 2008 high (red line) and the November 2008 trading high (green line); although it soon flattened out.  Long term, MUR is in an uptrend (straight blue lines).  Intermediate term, it is in a trading range (purple lines).  The wiggly blue line is on balance volume.  The Dividend Growth Portfolio owns a 75% position in MUR.  The upper boundary of its Buy Value Range is $34; the lower boundary of its Sell Half Range is $118.

http://finance.yahoo.com/q?s=MUR

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