El Dorado, AK-based Murphy Oil Corp. lowered its expectations for the fourth quarter, announcing it expects income before special items to tally between 55-60 cents a share, below Wall Street’s estimates of 67 cents. Murphy earned 62 cents a share in 4Q2002.

Fourth quarter production is expected to average of 124,000 boe/d, while sales volumes are pegged at 127,000 boe/d.

Murphy blamed the lower income estimate on $15 million in charges during the quarter for the reduction of capitalized interest. The charges followed the company’s completion of two Gulf of Mexico deepwater drilling projects and an upgrade at its Louisiana refinery.

Dry hole charges in the quarter are expected to fall between $19-to-$22 million, while exploration expenses are expected to average $35-to-$40 million.

Following the announcement late Tuesday, Merrill Lynch cut its full-year, 2003 projection for Murphy to $2.49 from $2.56. In addition, the research firm sharply lowered its 2004 earnings per share estimate to $2.65 from $2.95, citing higher corporate charges and lower downstream earnings.

“The negative surprise versus our estimate was a sizeable loss in the refining and marketing segment — versus our forecast of modestly above break-even results — and higher corporate charges due to lower capitalized interest,” said Merrill Lynch in a research note.

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