The abrupt and mysterious resignation of Murphy Oil Corp. (MUR) Chief Executive David Wood took analysts by surprise and led to prompt speculation--but the company is saying that Mr. Wood's departure is not a sign of deeper problems.
"There's nothing sinister, no scandal," said Barry Jeffery, director of investor relations at Murphy. "It's just a decision by Dave to retire and move on."
Mr. Jeffery said details of Mr. Wood's departing pay package were not yet public. When reached by phone on Thursday, Mr. Wood declined comment.
"Can't help you," said Mr. Wood, who is also resigning as a board member but will stay as a consultant for one year.
The Murphy board didn't state a reason for Mr. Wood's departure when it announced his resignation late Wednesday. The executive, who was with Murphy for 17 years, is only 55, and at a recent analyst meeting, "gave no indication whatsoever he might be quitting," Deutsche Bank analyst Paul Sankey said in a research note. "Now, we find ourselves, with very limited--in fact no--explanation of what has happened here, facing a sudden CEO retirement that raises many questions," Mr. Sankey added.
Some analysts speculated that the executive's exit may be linked to the company's poor performance in recent years. Murphy, a mid-sized oil producer and refiner, in recent years has posted disappointing results both in its refineries, slammed by dropping U.S. demand for fuel, and in its oil production business, in which it recently drilled unlucky wells and routinely missed production forecasts. "We haven't been where I want it to be, and so we're making steps to get better at that," Mr. Wood said at the company's annual analyst meeting last month, according to a transcript.
The company's troubles mean that "we are not surprised by the board's decision, though how much will substantively change after Wood's departure remains to be seen," said Raymond James analysts in a research note.
Mr. Wood bet that selling the company's refineries to focus on the generally more profitable oil production business would help turn the ship around. Murphy last year sold two refineries, one in Wisconsin and one in Louisiana, and it's trying to sell its one remaining facility in Wales, U.K.
But those divestitures may have been perceived by others in Murphy as ill-timed, as they occurred just as an unexpected surge in U.S. oil production is increasing the profitability of the domestic refining business, says Oil Price Information Service's chief oil analyst, Tom Kloza. Mr. Wood "may be a victim as he sold two assets that would probably command much more money, or create consistent cash flow for Murphy,", Mr. Kloza said.
Mr. Wood was replaced by Steve Cosse, currently a board member and a former general counsel of the company.
Murphy shares were down 3% Thursday afternoon at $44.21.
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-Nathalie Tadena contributed to this story.
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