[StBernard] Murphy Oil selling refining business

[Westley Annis]

Murphy Oil selling refining business
Thu, Jul 22 2010
By Anna Driver and Erwin Seba
HOUSTON (Reuters) - Murphy Oil Corp (MUR.N: Quote, Profile, Research, Stock
Buzz) said on Thursday it would sell its three refineries to focus on oil
and gas exploration and its U.S. retail business.

Refiners have struggled to make profits as the global economic slowdown
sapped demand for fuels like diesel and gasoline.

Murphy's three plants, with a combined capacity of 280,000 barrels per day,
are in Superior, Wisconsin; Meraux, Louisiana; and Milford Haven, Wales. It
said it would also sell its retail system in the United Kingdom.

"From time to time we get indications of interest and that's why we hired
Goldman," Mindy West, the company's treasurer, said. "For Murphy, they are
just nonstrategic assets."

TOUGH TIME TO SELL

"This is a really tough time to be selling assets," Mark Gilman, analyst at
The Benchmark Company, said. "And these aren't really high-quality assets.
It's a strange time to make a decision like this."

Ray Deacon, analyst at Pritchard Capital Partners, said he hopes the company
can fetch at least $1.5 billion for the refining assets up for sale.

Within the industry, the refineries are not considered large enough or
sophisticated enough to draw top value of between $15,000 to $20,000 per
barrel of refining capacity.

Murphy's Louisiana refinery was the site of the worst oil spill during
Hurricane Katrina.

In 2005, floodwaters from Katrina lifted a half-filled crude oil storage
tank off its base at Murphy's 120,000 bpd Meraux, Louisiana refinery.

The resulting oil spill of 25,000 barrels of oil and water mix spread over
six square miles of New Orleans suburbs. The company paid $330 million to
settle a class-action lawsuit involving thousands of claims from homeowners
who found oil six feet up the walls inside their homes once the waters
receded.

The company, based in El Dorado, Arkansas, said it expected the transaction
to be completed in the first quarter of 2011. Analysts said the company
wants to sell all the assets in one deal.

Murphy's exploration is centered on deepwater drilling in the Gulf of
Mexico, Malaysia and the Congo. In the first quarter, that business had a
profit of $207 million, while the refining unit reported a loss of $29.7
million.

Murphy also operates gasoline stations, primarily located in Wal-Mart
(WMT.N: Quote, Profile, Research, Stock Buzz) Supercenter parking lots.

Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz) is Murphy's
financial advisor on the deal.

(Reporting by Anna Driver and Erwin Seba; Editing by Phil Berlowitz)