TEXT-S&P rates Murphy Oil Corp notes 'BBB'
Nov 27 - Standard & Poor's Ratings Services today assigned its 'BBB' issue rating to Murphy Oil Corp.'s announced senior unsecured note offering. The offering will consist of three maturities of five-, 10-, and 30-years; however, the amounts allocated to each maturity have not been determined at this time. Murphy Oil's subsidiaries do not guarantee the notes and they will be structurally subordinated to all existing and future debts and other liabilities of those subsidiaries. We expect the company to use net proceeds to fund the previously announced special dividend of $2.50 per share of common stock ($500 million total) and $1.0 billion share repurchase program. The ratings on El Dorado, Ark.-based Murphy Oil Corp. reflect our assessment of its "satisfactory" business risk, "modest" financial risk, and "strong" liquidity position. The rating also considers the limited scale of the company's exploration and production (E&P) operations relative to similarly rated peers, which is somewhat buffered by consistently strong financial performance and favorable outlook for crude oil prices. Pro forma for the special dividend and share repurchases we expect credit measures to remain adequate for the current ratings. In particular, funds from operations (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. RELATED RESEARCH AND CRITERIA -- Methodology: Business Risk/Financial Risk Matrix Expanded, Sept. 18, 2012 -- Methodology And Assumptions: Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011. -- Corporate Ratings Criteria 2008, published April 15, 2008. RATINGS LIST Murphy Oil Corp. Corporate credit rating BBB/Stable/-- New Ratings Senior Unsecured Notes Five-year BBB 10-year BBB 30-year BBB Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
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