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Gold/Mining/Energy : ENERGY EXPLORATION & PRODUCTION -- Ignore unavailable to you. Want to Upgrade?

To: Dennis Roth who wrote (93)	5/15/2008 8:50:08 AM
From: Dennis Roth	Read Replies (1) \| Respond to of 111

Murphy Oil Corp. (MUR): Focus turns to exploration program post-Kikeh; maintain Neutral - Goldman Sachs - May 15, 2008 What's changed Murphy Oil hosted its annual analyst meeting on Tuesday, May 13, 2008 in El Dorado, Arkansas. The company provided an overview of its assets and key growth initiatives. Implications We maintain our Neutral rating (relative to an Attractive coverage view) on Murphy following the company’s analyst day. We continue to have a generally favorable outlook for Murphy shares given the company’s industry-leading E&P production growth and leverage to our bullish commodity price outlook. However, following the successful development of the company’s large Kikeh field in deepwater Malaysia, we believe it will take additional visibility into the company’s longer-term E&P production growth outlook in order for shares to meaningfully further outperform. The company has begun to address its post-Kikeh outlook with a renewed exploration opportunity set and increasing focus on additional small acquisitions. We believe that significant upside for shares could exist should results from exploration wells exceed the minimal value embedded in our target price. However, given the high-risk nature of wildcat drilling programs, we are less willing to give advanced credit for future exploration success. Without this and given the company’s aggressive capital spending program, we believe the risk/reward for Murphy shares is more balanced at this time than that of our Buy rated integrated oils, which include ConocoPhillips (also Conviction Buy), Chevron and Hess. Valuation We see 22% upside to our unchanged, $105 12-month target price, which is based on asset value, P/E and cash flow valuation analyses. Key risks Key risk is sustained lower commodity prices.