TEXT-S&P: Murphy Oil ratings unaffected by special dividend

Wed Oct 17, 2012 1:56pm EDT

Oct 17 - Standard & Poor's Ratings Services today said its ratings and
outlook on El Dorado, AR-based Murphy Oil Corp. (BBB/Stable/--) are
unchanged following the announcement that its Board has authorized a special
dividend of $2.50 per share, about $500 million total, and a share repurchase
program of up to $1 billion that we expect to be completed in 2013. 

In addition, Murphy announced it has been authorized to the spin-off its U.S. 
downstream subsidiary Murphy Oil USA, Inc., and that it will continue to 
pursue the sale of its U.K. downstream assets. Murphy also announced that it 
hired an investment banking firm to advise it on the possible sale of its 
Montney and Syncrude assets.

Pro forma for the special dividend and share repurchases we expect credit 
measures to remain adequate for current ratings. In particular, FFO to debt 
should remain above 50% through 2013. In addition, the potential sale of the 
U.K. downstream assets and spin-off of Murphy Oil USA are already included in 
our rating analysis.

We would re-evaluate the ratings if Murphy pursued further shareholder 
initiatives. Given its limited scale of operations relative to 
investment-grade peers, the sale of either the Montney or Syncrude assets, 
without offsetting growth from other assets such as the Eagle Ford Shale, 
would cause us to reassess our ratings.
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