* Mulling sale of Syncrude, Montney
* Shares up nearly 10 pct in afternoon
* Spin-off seen complete mid-2013
(Adds details on units, updates stock price)
By Anna Driver
Oct 16 Murphy Oil Corp said it will spin
off its smaller retail gasoline business in the United States,
review options for other assets, pay a special dividend and buy
back shares as it seeks to return more cash to shareholders.
The news sent Murphy's shares climbing nearly 10 percent on
Tuesday afternoon on the New York Stock Exchange.
Murphy and a number of other companies, including
ConocoPhillips and Marathon Oil Corp, have sold
or split off their refining units with the aim of allowing
investors to assess the value of the businesses on a standalone
Tuesday's announcement came days after Murphy Oil said it
was talking with shareholders, including hedge fund manager
Daniel Loeb's Third Point LLC, to find ways to increase share
"I think we would be remiss if we didn't listen to
shareholders" who have advocated for a spinoff of the retail
business and a share buyback, Steven Cosse, Murphy's chief
executive officer, told analysts on a conference call.
Loeb recently told Third Point fund investors that shares of
the oil and gas company could be 60 percent higher, and he
outlined changes it could make to add value, such as spinning
off its retail business or selling its Canadian natural gas
Houston-based energy investment bank Simmons & Co said
Murphy's planned changes are a step toward improving the stock's
"Management had previously shown an unwillingness to take
the necessary steps to unlock trapped value in the stock," the
bank said. "This obviously changes with this announcement and we
believe could be a sign for more aggressive move to continue to
improve the valuation in shares."
Murphy has hired an investment bank to explore options for
its stake in a Canadian oil sands project as well as its Montney
natural gas assets in British Columbia.
Murphy has a 5 percent stake in Syncrude Canada Ltd, one of
Canada's largest oil sands plants with the capacity to produce
350,000 barrels of synthetic crude oil per day.
The Montney shale region in northeastern British Columbia
contains trillions of cubic feet of natural gas and is one of
the main sources of supply for a handful of liquefied natural
gas plants planned in the province.
It has sought a buyer for a refinery in Britain since 2010.
The El Dorado, Arkansas-based company also said its board
authorized a special dividend of $2.50 per share for a total
payout of about $500 million, and a common stock buyback program
of up to $1 billion.
After the planned split, Murphy will be an independent
exploration and production company.
Murphy Oil USA, the downstream unit, will be called Murphy
USA, a publicly traded company with more than 1,100 gasoline
retail outlets, most of which are located in Walmart store
parking lots. Murphy USA will also operate seven product
distribution terminals and two ethanol production plants in
North Dakota and Texas.
In the first six months of this year, Murphy's exploration
and production business had net income of $552 million, while
its refining and marketing arm had a profit of $76 million.
The Murphy USA spinoff to shareholders is expected to be
completed by mid-2013, the company told analysts.
Murphy shares were up 9.5 percent at $64.60 on Tuesday
(Reporting by Anna Driver in Houston, Swetha Gopinath in
Bangalore, Steve James in New York and Scott Haggett in Calgary;
editing by Jeffrey Benkoe, Maureen Bavdek and Matthew Lewis)