What Are Murphy Oil’s 4Q16 Cash Flow Estimates?



Murphy Oil’s 4Q16 cash flow estimates

For 4Q16, Wall Street analysts expect Murphy Oil (MUR) to report cash flow of ~$233 million, or $1.33 a share, which is ~168% higher compared to cash flow of ~$87 million in 4Q15.

Sequentially, Murphy Oil’s estimated 4Q16 cash flow is ~39% higher compared to ~$167 million in 3Q16.

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Cash flow trends

Murphy Oil has reported falling cash flows since 4Q14, mainly due to declining production volumes and lower realized crude oil (USO) and natural gas (UNG) prices. In 3Q15, Murphy Oil’s cash flow increased due to a one-time income tax benefit. In 1Q16, Murphy Oil reported the lowest ever cash flow of ~$43 million.

Will Murphy Oil report positive free cash flow in 4Q16?

As we saw in Part 4, Wall Street analysts expect Murphy Oil to spend ~173 million in capital expenditure in 4Q16. Murphy Oil’s estimated capital expenditure is within its estimated cash flow for 4Q16. As a result, Murphy Oil is expected to report positive free cash flow of ~$60 million or ~$0.35 per share.

Other upstream players

Due to the steep downward trend in energy prices, most S&P 500 (SPY) energy companies have reported lower year-over-year cash flows. Southwestern Energy (SWN), EOG Resources (EOG), and Range Resources (RRC) reported $0.36 per share, $1.39 per share, and $0.18 per share, respectively, in cash flows in 3Q16.


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