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,
-- Methodology And Assumptions: Liquidity Descriptors For Global
Corporate Issuers, Sept. 28, 2011.
-- Corporate Ratings Criteria 2008, published April 15, 2008.
Murphy Oil Corp.
Corporate credit rating BBB/Stable/--
Senior Unsecured Notes
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