CAMDEN The following story appeared in the the May 8, 2020 edition of the Camden News
Murphy Oil Corporation announced Wednesday that the company will close their headquarters in El Dorado after a 70-year history in the city.
“The bottom line is we just didn’t have a choice with the environment for macro oil prices being so low, and also with the timing of COVID and the timing of that recovery being uncertain,”
Kelly Whitley, vice president of investor and communications, said. “It was really a last resort, because our company was founded there and our headquarters has been in El Dorado for 70 years and obviously we’re an integrated part of the community.”
The company has suffered dramatic losses since the start of the year. Towards the end of February, Whitley said, the company faced an oversupplied market due to an oil trade war with OPEC (Organization of Petroleum Exporting Countries) and Russia flooding the market with low-price crude oil, followed immediately by a severe reduction in demand as the United States and other countries ordered citizen quarantines due to the COVID-19 pandemic.
“I think the trade war with OPEC and the Russians started in late February into early March, so obviously that was on the supply side, and then on the demand side, with having COVID globally and stay-at-home orders last 54 days, there’s no demand for our product,” Whitley said. “We were already oversupplied and now we have no demand, so we have both working against us.”
The company has implemented several cost-cutting measures, including reducing capital expenditures by about $700 million from a planned $1.45 billion, lowering the company’s dividend by half and reducing executive salaries by between 22 and 35%.
“We realize, reluctantly, that we need to consolidate our offices to capture additional cost savings to remain competitive in this unprecedented industry environment. We simply do not have a choice and came to this decision only after exhausting all other cost saving measures,” stated Claiborne P. Deming, chairman of the company’s board, in the press release. “The El Dorado office closure is particularly painful and difficult, because the company was founded here by C. H. Murphy, Jr. and has been an integral and important part of the community for many years.”
In addition to the El Dorado headquarters closure, the company will also close an office in Calgary, Alberta, Canada. Whitley said 82 people are employed in El Dorado, and according to the company’s press release, about 110 workers are based in Calgary. Whitley said some employees in El Dorado will be offered the opportunity to transfer, while the remainder will receive severances.
“I think in the past we’ve been fair with our employees. Some will also get retirement, so that’s an option too,” Whitley said, adding that severances will be “congruent with past practices,” but declining to estimate a dollar amount.
Murphy Oil will now be headquartered in Houston, Texas, where their exploration and production office is located and about 400 employees are based.
“El Dorado has served as more of a corporate headquarters that had very big finance, accounting and law that was done in that office,” Whitley said. “The exploration and production office has always been here (in Houston), so we have a large presence here, and it’s the world capital for energy, too.”
The company will maintain the Murphy Promise, a scholarship established in 2007 which will provide scholarships for up to 100% of an El Dorado High School graduate’s college tuition depending on their time in the district. Whitley said that to her knowledge, the company intends to maintain the scholarship “in perpetuity.”
“This decision is one we take with sadness, but with the understanding that our only path forward is to consolidate into one office in Houston. The company recognizes the hardship this decision causes to many in El Dorado and Calgary, and we are committed to treating all those impacted consistent with past practices and plan to offer appropriate severance arrangements,” said Roger W. Jenkins, president and chief executive officer, in the press release. “These actions will not impact our field operations in the US and Canada, and we anticipate these office closures to be completed early in the third quarter 2020.”
Whitley said the company does not currently have plans for their building in El Dorado, which began construction in 2014 after the company split from Murphy USA in 2013. Murphy USA operates retail gas stations and is headquartered in El Dorado. They had not made any similar announcements as of Wednesday evening.