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HOUSTON - Murphy Oil Corporation (NYSE: MUR), a $3.69 billion market cap energy company trading at an attractive P/E ratio of 9.32, has reached an agreement to purchase the BW Pioneer floating production storage and offloading (FPSO) vessel from BW Offshore for a gross purchase price of $125 million. According to InvestingPro analysis, the company maintains a GOOD financial health score, suggesting strong operational capability for such acquisitions. The deal, subject to standard closing adjustments, entails an initial payment of approximately $100 million by the end of the first quarter of 2025 and the remainder upon fulfillment of certain contractual obligations expected by the end of the second quarter of 2025. With its current 5.15% dividend yield and 55-year track record of maintaining dividend payments, Murphy Oil demonstrates strong shareholder return commitment alongside strategic growth initiatives.
The BW Pioneer, the first FPSO approved for operations in the Gulf of America, has been operational since 2009 after its conversion. With a storage capacity of around 600,000 barrels of oil and processing capability of about 80,000 barrels per day, the vessel will continue its service at the Cascade and Chinook fields in the Gulf.
President and CEO of Murphy Oil, Eric M. Hambly, expressed satisfaction with the transaction, highlighting the expected annual operating cost reduction of nearly $60 million and a payback period of approximately two years, regardless of oil prices. Hambly also pointed out that the acquisition is included in the company’s reaffirmed 2025 capital expenditure guidance of $1,135 million to $1,285 million, with first-quarter CAPEX confirmed at $425 million.
The transaction is anticipated to enhance returns for future infield development and exploration while increasing net proved developed reserves by around 8 million barrels of oil equivalent. Additionally, the FPSO’s location in the prolific Wilcox trend presents opportunities for both operated and non-operated exploration prospects to tie back to a cost-advantaged facility.
BW Offshore will continue to provide operations and maintenance services under a new five-year reimbursable contract, ensuring the ongoing partnership between the two entities.
This news is based on a press release statement and contains forward-looking statements that involve risks and uncertainties. Murphy Oil Corporation is an independent oil and natural gas exploration and production company with a focus on delivering energy solutions. For detailed analysis of Murphy Oil’s valuation and growth prospects, including 8 additional exclusive ProTips, visit InvestingPro to access the comprehensive Pro Research Report, part of our coverage of 1,400+ US equities.
In other recent news, Murphy Oil Corporation reported its Q4 2024 earnings, missing analyst expectations for both earnings per share (EPS) and revenue. The company posted an EPS of $0.35, significantly below the expected $0.69, and revenue of $670.96 million, falling short of the forecasted $763.43 million. Despite these results, Murphy Oil has made strides in reducing its total debt by approximately 60% since 2020, achieving its lowest net debt in over a decade. Analysts from Mizuho Securities and KeyBanc Capital Markets have both adjusted their price targets for Murphy Oil to $37, maintaining an Outperform and Overweight rating, respectively. Mizuho’s adjustment follows discussions with the company’s new CEO and CFO, while KeyBanc remains optimistic about Murphy Oil’s potential, citing robust free cash flow and growth prospects in Vietnam. Murphy Oil continues to focus on its strategic priorities, including significant capital expenditure in 2025 aimed at developing existing assets and international exploration. The company has also announced plans to maintain a strong balance sheet and execute high-return projects.
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