Murphy Oil Corporation’s MUR stable financial position, cost-saving initiatives and low-cost asset development are expected to boost its prospects. Murphy Oil’s long-term debt-to-capital ratio is 36.9%, much lower than the S&P 500 index’s average of 41.66%. During the quarter, the company has successfully refinanced $550 million notes due in Dec 2017 and does not have any further debt maturities till 2022.

Murphy Oil delivered positive earnings surprise in three out of the last four quarters, with an average beat of 25.26%. In the last 60 days, the Zacks Consensus Estimate for 2018 earnings per share increased 450.0% on the back of 8.77% growth in total revenues.

Murphy Oil has undertaken cost-saving initiatives which have already made a positive impact and are likely to drive prospects. The company was able to achieve decade-low quarterly lease operating expenses (LOE) of $7.58 per barrel in the third quarter, courtesy of these initiatives and lower costs in Eagle Ford Shale.

The new low cost findings in the U.S. onshore Midland Basin and in Sergipe-Alagoas Basin offshore Brazil, will further expand margins. Murphy Oil will make additional capital expenditure to develop its Midland Basin, Brazilian low costs find and acquired assets in Gulf of Mexico Clipper Field.

These developments had a positive impact on Murphy Oil’s price performance. The company’s shares have returned 20.9% in the last three months compared with the Zacks Domestic E&P Oil & Gas industry's rally of 16.1%.

However, the company operates in highly-competitive environments, which could affect its profitability and hinder future developments. The company faces strong competition from major integrated oil companies, state-owned foreign oil companies, independent producers of oil and natural gas and independent refining companies.

Zacks Rank & Key Picks

Murphy Oil currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the same industry are Concho Resources, Inc. CXO, Pioneer Natural Resources Company PXD and Noble Midstream Partners LP NBLX. All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Concho Resources reported third-quarter 2017 earnings from continuing operations of 45 cents per share, beating the Zacks Consensus Estimate of 26 cents by 73.08%. Its 2017 earnings estimates increased 11.9% to $1.79 from $1.60 in the last 60 days.

Pioneer Natural Resources reported third-quarter 2017 earnings from continuing operations of 48 cents per share, beating the Zacks Consensus Estimate of 30 cents by 60.0%. Its 2017 earnings estimates moved up by 26.3% to $1.44 from $1.14 in the last 60 days.

Noble Midstream Partners reported third-quarter 2017 earnings from continuing operations of $1.15 per unit, beating the Zacks Consensus Estimate of $1.05 by 9.52%. Its 2017 earnings estimates rose 10.8% to $4.01 from $3.62 in the last 60 days.

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