Goldman Sachs Neutral On Murphy Oil After Earnings (MUR)

Goldman Sachs has a Neutral rating and a $88 price target on shares of Murphy Oil Corp. MUR following the company's earnings report. In a note to investors, Goldman writes, "While we think Murphy shares offer investors meaningful absolute share price upside in the context of our bullish crude oil view, we remain Neutral-rated relative to the sector as we see greater risk-adjusted upside for our lower-beta Buy-rated “big oil” favorites, ExxonMobil and Occidental Petroleum, and a better opportunity to gain higher-beta oil exposure via oil sands favorites, Suncor and Cenovus (CL Buy, $34.86). Murphy's ongoing shift into lower-risk North America unconventional resource growth appears to be progressing well, with operations in the Eagle Ford and Montney shale plays going as planned and early drilling results in the Southern Alberta Basin Bakken seemingly meeting management's initial expectations for the nascent play. That said, lingering operational challenges and workover activity at Kikeh (Malaysia) and the announcement of a second dry hole in Suriname may overshadow the progress and weigh on sentiment near-term. Separately, Murphy stated that it will take an asset-by-asset approach to its downstream restructuring, with the sale of one refinery expected by mid-2011 and all three within 2011. We look forward to a full operational update from the company at its analyst meeting in El Dorado, Arkansas, on May 11." Shares of MUR lost $4.67 yesterday to close at $68.57, a loss of 6.4%.