Analysts Ponder Murphy Oil Malaysia Production

Analysts Ponder Murphy Oil Malaysia Production

Analysts disagree on how much Murphy Oil Corp. stands to gain from its stake in a deepwater offshore Malaysian oilfield, with Goldman Sachs giving a strong recommendation and JPMorgan downgrading the stock.

Murphy owns an 80 percent stake in the Kikeh field, where it began drawing oil in August 2007. The company shares production with Malaysia’s Petronas Carigali, which holds the remaining 20 percent.

Goldman Sachs analyst Arjun Murti upgraded the stock to “Buy” from “Neutral,” raising his share price target to $115 from $105. He said that rising production from Kikeh puts the company in a position to benefit from record crude prices.

JPMorgan analyst Katherine Lucas Minyard said high oil prices have allowed Murphy to recover costs in Kikeh quicker than expected. But once the $1.8 billion in costs have been recovered, she said, the company will begin sharing profits with Petronas Carigali, and Murphy’s gains from production will be smaller than Wall Street expects.

She downgraded the stock to “Underweight” from “Neutral.”

The Kikeh field is about 75 miles offshore, beneath 4,300 feet of water. Murphy hopes to eventually produce 120,000 barrels of oil per day from it.

Murphy shares rose $1.32 to $94.64 in afternoon trading.

Share this post