Best known for its extensive exploration and development inventory in Malaysia, Murphy Oil (NYSE:MUR) is exploring several other promising areas in the upstream segment. In addition, the company comes with a profitable downstream refining and marketing business. With its stock down more than 50% from its 52-week high, long-term investors have an opportunity here.

Murphy Oil is a partially integrated oil company with two business segments - exploration & production and refining & marketing.

Exploration & Production
Murphy Oil reached an average production level of 129,257 barrels of crude oil per day during the final quarter of 2008. It also produced a marginal amount of natural gas, bringing its total sales volumes on a barrel of oil equivalent basis to 140,112. The majority of production came from the company's Malaysian properties, particularly the Kikeh Field in Block K, which is located offshore. At year-end, production reached a rate of 120,000 barrels per day. In 2009, the company plans to add two more producing wells into this field. Murphy Oil also has interests in at least six other blocks in this area.

Another development project for Murphy Oil is the Thunder Hawk field in the Gulf of Mexico. One of Murphy's original partners in this project was Dominion Resources (NYSE:D) which originally held a 25% working interest, but sold its interest when it decided to exit the Gulf of Mexico several years ago. Production is expected to begin in the second quarter of 2009. The company is also exploring oil and gas fields in the offshore areas of the Republic of Congo and Suriname. (For more on this sector, read A Guide to Investing in Oil Markets.)

Refining & Marketing
Murphy Oil operates three refineries - two in the U.S. (in Wisconsin and Louisiana) and one in the United Kingdom. Capacity at the three locations totals 268,000 barrels per day. Murphy Oil also owns extensive retail gas station networks in the U.S. and the United Kingdom. The majority of its 1,000 gas stations are located in the parking lots of U.S.-based Wal-Mart (NYSE:WMT) stores. Previously, Wal-Mart leased these locations to Murphy Oil, but sold them to Murphy in mid-2007. In the fourth quarter of 2008, this segment earned a profit of $140.5 million.

Murphy Oil originally drilled for oil in Louisiana in the early 1900s. After going through several evolutions and businesses, it now is headquartered in El Dorado, Arkansas, a state better known for being home to Wal-Mart's headquarters, which to some degree explains the business connection between the two. In 1996, Murphy Oil spun off its timber and other real estate assets into a company called Deltic Timber Company (NYSE:DEL) so that it could concentrate solely on the development and exploration of oil and gas. In recent preliminary earnings, Deltic reported a loss of 2 cents per share for the final quarter of 2008.

Murphy Oil stands in good shape to survive the downturn in the economy and the fall in oil and gas prices. At December 31, 2008, its debt totaled $1.02 billion. Meanwhile, the company has $666 million in cash.

Bottom Line
When most energy investors hear about Murphy Oil, they usually think of its success in offshore Malaysia. However, the company benefits from involvement in other solid prospective areas, like the major project in the Gulf of Mexico, and a profitable downstream operation. (For further reading, check out our Oil and Gas Industry Primer.)

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