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Item 1. Business

2022-02-25 compared with 2021-02-26 · 373 added, 259 removed, 182 unchanged (78% of the section changed)

Murphy Oil Corporation is a global oil and natural gas exploration and production company, with both Onshore and Offshore operations and properties.

As used in this report, the terms Murphy, Murphy Oil, we, our, its and Company may refer to Murphy Oil Corporation or any one or more of its consolidated subsidiaries.

The Company was originally incorporated in Louisiana in 1950 as Murphy Corporation.

It was reincorporated in Delaware in 1964, at which time it adopted the name Murphy Oil Corporation, and was reorganized in 1983 to operate primarily as a holding company of its various businesses.

In 2013, the U.S.

downstream business was separated from Murphy Oil Corporation’s oil and natural gas exploration and production business.

For reporting purposes, Murphy’s exploration and production activities are subdivided into three geographic segments, including the United States, Canada, and all other countries.

Additionally, Corporate activities include interest income, interest expense, foreign exchange effects, corporate risk management activities and administrative costs not allocated to the segments.

The Company’s corporate headquarters, originally located in El Dorado, Arkansas, were relocated to Houston, Texas in 2020.

In addition to the following information about each business activity, data about Murphy’s operations, properties and business segments, including revenues by class of products and financial information by geographic area, are provided on pages 27 through 41, 74 through 76, 102 through 116 and 119 of this Form 10-K report.

Interested parties may obtain the Company’s public disclosures filed with the Securities and Exchange Commission (SEC), including Form 10-K, Form 10-Q, Form 8-K and other documents, by accessing the Investor Relations section of Murphy Oil Corporation’s Website at www.murphyoilcorp.com.

Exploration and Production

The Company explores for and produces crude oil, natural gas and natural gas liquids worldwide.

The Company’s management team, based in Houston, Texas, directs the Company’s worldwide exploration and production activities.

During 2020, Murphy’s principal exploration and production activities were conducted in the United States by wholly-owned Murphy Exploration & Production Company – USA (Murphy Expro USA) and its subsidiaries, in Canada by wholly-owned Murphy Oil Company Ltd.

(MOCL) and its subsidiaries, and in Australia, Brazil, Brunei, Mexico and Vietnam by wholly-owned Murphy Exploration & Production Company – International (Murphy Expro International) and its subsidiaries.

Murphy’s operations and production in 2020 were in the United States, Canada and Brunei (held for sale).

Unless otherwise indicated, all references to the Company’s offshore U.S.

and total oil, natural gas liquids and natural gas production and sales volumes, and proved reserves include a noncontrolling interest in MP Gulf of Mexico, LLC (MP GOM;

see further details below).

Murphy’s worldwide 2020 production on a barrel of oil equivalent basis (six thousand cubic feet of natural gas equals one barrel of oil) was 174,636 barrels of oil equivalent per day, a decrease of 5.9% compared to 2019.

See Management’s Discussion and Analysis of Financial Condition and Results of Operations starting on page 28 for further details on 2020 production and sales volume.

United States

In the United States, Murphy has production of crude oil, natural gas liquids and natural gas primarily from fields in the Gulf of Mexico and in the Eagle Ford Shale area of South Texas.

The Company produced approximately 101,300 barrels of crude oil and natural gas liquids per day and approximately 94 MMCF of natural gas per day in the U.S.

These amounts represented 87.7% of the Company’s total worldwide oil and natural gas liquids and 26.5% of worldwide natural gas production volumes.

During 2020, approximately 69% of total U.S.

hydrocarbon production was produced at fields in the Gulf of Mexico, of which approximately 74% was derived from six fields, including Dalmatian, Kodiak, Marmarlard, Neidermeyer, St.

Malo and Cascade/Chinook.

Total average daily production in the Gulf of Mexico in 2020 was 69,700 barrels of crude oil and natural gas liquids and approximately 66 MMCF of natural gas.

Production in the Gulf of Mexico was significantly impacted by a record breaking hurricane year which resulted in shut-ins and loss of approximately 6.4 MBOED of production in 2020.

At December 31, 2020, Murphy had total proved reserves for Gulf of Mexico fields of 144.4 million barrels of oil and natural gas liquids and 127 billion cubic feet of natural gas.

In 2019, the Company completed a transaction with LLOG Exploration Offshore L.L.C.

and LLOG Bluewater Holdings, L.L.C., (LLOG), which was effective January 1, 2019.

Through this transaction, Murphy acquired strategic deepwater Gulf of Mexico assets.

In 2018, Murphy Expro USA and Petrobras America Inc.

(PAI), a subsidiary of Petróleo Brasileiro S.A., closed a transaction among Murphy, PAI and MP Gulf of Mexico, LLC (MP GOM), a subsidiary of Murphy.

The transaction had an effective date of October 1, 2018.

MP GOM is now owned 80% by Murphy and 20% by PAI.

Throughout this 10-K report, unless stated otherwise, financial and operational metrics relating to MP GOM include PAI’s 20% noncontrolling interest in MP GOM.

100% of revenues, costs, assets, liabilities and cash flows of MP GOM are fully consolidated in the financial statements.

Below is a summary of Company’s major working interests in the U.S.

Gulf of Mexico:

Field Working Interest (incl.

28.5% Mississippi Canyon 565/609

100.0% Walker Ridge 206/250

100.0% Walker Ridge 425/469

100.0% Garden Banks 244

70.0% DeSoto Canyon Blocks 4/134

62.5% Green Canyon Blocks 338/339/382

60.0% Mississippi Canyon 122/165/166

34.0% Green Canyon 345/389/390/434

24.4% Mississippi Canyon 255/299/300

Marmalard East

64.6% Mississippi Canyon 301

60.0% Mississippi Canyon Blocks 538/582

34.0% Green Canyon 478

Nearly Headless Nick

26.84% Mississippi Canyon 387

52.8% Mississippi Canyon 208/209/252

75.0% South Timbalier South 231/232

50.0% Green Canyon 432/388/431/475/476

Son of Bluto II

26.84% Mississippi Canyon 386/431

62.5% Mississippi Canyon Block 734

Non-operated:

33.75% Garden Banks 341

54.1% Mississippi Canyon Blocks 727/771

11.5% Keathley Canyon 874/875/918/919

25.0% Walker Ridge 633/634/677/678

30.0% Viosca Knoll 783

1 Fields in development phase.

2 Field in appraisal phase.

The Company holds rights to approximately 134 thousand gross acres in South Texas in the Eagle Ford Shale unconventional oil and natural gas play.

During 2020, approximately 31% of total U.S.

hydrocarbon production was produced in the Eagle Ford Shale.

Total 2020 production in the Eagle Ford Shale area was 31,608 barrels of oil and liquids per day and approximately 27 MMCF per day of natural gas.

At December 31, 2020, the Company’s proved reserves for the U.S.

Onshore business totaled 130.9 million barrels of liquids and 192.5 billion cubic feet of natural gas.

In Canada, the Company holds working interests in the following:

(a) a dry natural gas area at Tupper Montney (100% owned), (b) Kaybob Duvernay (operated), (c) liquids rich Placid Montney (non-operated), and (d) two non-operated offshore assets – the Hibernia and Terra Nova fields offshore Newfoundland in the Jeanne d’Arc Basin.

Murphy has approximately 142 thousand gross acres of Tupper Montney mineral rights located in northeast British Columbia.

Daily production in 2020 in onshore Canada averaged 9,200 barrels of liquids and approximately 261 MMCF of natural gas.

Total onshore Canada proved liquids and natural gas reserves at December 31, 2020, were approximately 15.4 million barrels and 2.1 trillion cubic feet, respectively.

The Company currently has a commitment for 483 MMCFD of natural gas processing capacity.

In 2016, the Company completed its transaction to divest natural gas processing and sales pipeline assets that support Murphy’s Montney natural gas fields in the Tupper area.

Connected with this sale, the Company entered into a commitment for 285 MMCFD of natural gas processing capacity for minimum monthly payments through 2051.

In 2018, the Company entered into a further commitment, commencing November 2020 for an additional 198 MMCFD processing capacity through November 2040.

The Company holds a 70% operated working interest in Kaybob Duvernay lands and a 30% non-operated working interest in liquids rich Placid Montney lands, both in Alberta.

The Company has approximately 336 thousand gross acres of Kaybob Duvernay and Placid Montney mineral rights.

Murphy has a 6.5% working interest in Hibernia Main, a 4.3% working interest in Hibernia South Extension, and a 10.475% working interest at Terra Nova.

Oil production in 2020 was approximately 4,893 barrels of oil per day for Hibernia.

During 2020, Terra Nova did not operate as asset integrity work is currently being reviewed and undertaken.

Total proved oil reserves at December 31, 2020 were approximately 14.1 million barrels of liquids and 3.7 billion cubic feet of natural gas.

The Company has a working interest of 8.051% in Block CA-1 and a 30% working interest in Block CA-2;

both assets are currently held for sale.

In CA-1, on November 23, 2017, the governments of Brunei and Malaysia signed a Unitization Framework Agreement (UFA) which resulted in the Jagus East discovery in Block CA-1 forming part of a unitized field with the Gumusut-Kakap (GK) Unit in Malaysia.

Following the UFA, on July 4, 2018, a Participation Agreement was signed which finalized the Company’s interest in the Brunei section of the GK Unit.

In CA-2, in December 2014, the governmental authority approved the Gas Holding Area (GHA) for the Kelidang Cluster (KC) development.

The consortium is presently carrying out pre-development engineering related to the KC development with the aim to achieve project sanction in 2023.

The CA-1 and CA-2 blocks cover 1.4 million and 157,602 gross acres, respectively.

Four exploration wells were drilled in Block CA-1 and seven exploration wells were drilled in Block CA-2 at the end of 2020.

In Australia, the Company holds four offshore exploration permits and serves as operator of three of them.

All of the permits have high quality 3D seismic data available and exploration studies are ongoing.

None of the permits has a drilling commitment and all have options to renew beyond the current expiry dates.

The Company is currently reviewing retaining the Australia permits.

The Company holds a 65% working interest in Blocks 144 and 145;

and a 40% interest in Block 15-1/05 and Block 15-2/17.

The Company is operator of each of the three Production Sharing Contracts (PSCs).

Block 15-1/05 contains the Lac Da Vang (LDV) discovered field and the consortium is progressing pre-development engineering.

Declaration of Commerciality was made in January 2019 and the field Outline Development Plan was approved in

The Lac Da Trang (LDT) 1X exploration well, the last remaining commitment of the PSC, was completed in April 2019.

The sanction of the LDV development is under review with PetroVietnam.

In Block 15-2/17, the Company is progressing study activity in anticipation of drilling an exploration commitment well by the end of 2022.

In Blocks 144 and 145, the Company acquired 2D seismic for these blocks in 2013 and undertook seabed surveys in 2015 and 2016.

The remaining commitment for the acquisition, processing and interpretation of six hundred square kilometers (600 km2) of 3D seismic is tentatively scheduled for 2022.

In March 2017, as part of Mexico’s fourth phase, round one deepwater auction, Murphy was awarded Block 5.

Murphy is the operator of the Block with a 40% working interest.

Block 5 is located in the deepwater Salinas Basin covering approximately 640,000 gross acres (2,600 square kilometers), with water depths ranging from 2,300 to 3,500 feet (700 to 1,100 meters).

The initial exploration period for the license is four years and includes a commitment to drill one exploration well which was drilled in 2019.

A further exploration well is planned for 2021-2022.

The Company holds an interest in 9 blocks in the offshore regions of the Sergipe-Alagoas Basin (SEAL) in Brazil (SEAL-M-351, SEAL-M-428, SEAL-M-430, SEAL-M-501, SEAL-M-503, SEAM-M-505, SEAL-M-573, SEAL-M-575 and SEAL-M-637).

ExxonMobil is the operator of the blocks.

Murphy has a 20% working interest, ExxonMobil has a 50% working interest and Enauta Energia SA holds a 30% working interest.

Murphy has also farmed into 3 additional blocks in the Portiguar Basin (POT-M-857, POT-M-863, and POT-M-865) with a 30% working interest;

Wintershall Dea is the operator.

Murphy’s total acreage position in Brazil as of December 31, 2020 is approximately 2,452,568 gross acres, offsetting several major Petrobras discoveries.

There are no well commitments.

Proved Reserves

Total proved reserves for crude oil, natural gas liquids and natural gas as of December 31, 2020 are presented in the following table below:

Proved Reserves

All Products Crude

Oil Natural Gas

Liquids Natural Gas 4

Proved Developed Reserves:

(MMBOE) (MMBBL) (BCF)

United States 230.3 161.4 25.5 260.2

120.0 74.9 18.6 158.8

110.3 86.5 6.9 101.4

Canada 180.5 18.4 3.2 953.6

171.2 9.6 3.2 950.7

9.3 8.8 — 2.9

Total proved developed reserves 410.8 179.8 28.7 1,213.8

Proved Undeveloped Reserves:

United States 98.2 79.2 9.1 59.3

43.0 30.8 6.5 33.7

55.2 48.4 2.6 25.6

Canada 205.9 7.5 0.4 1,187.9

200.5 2.2 0.4 1,187.1

5.4 5.3 — 0.8

Total proved undeveloped reserves 304.1 86.7 9.5 1,247.2

Total proved reserves 3

714.9 266.5 38.2 2,461.0

1 Includes proved developed reserves of 14.2 MMBOE, consisting of 12.7 MMBBL oil, 0.6 MMBBL NGLs, and 5.7 BCF natural gas, attributable to the noncontrolling interest in MP GOM.

2 Includes proved undeveloped reserves of 3.2 MMBOE, consisting of 2.9 MMBBL oil, 0.1 MMBBL NGLs, and 0.8 BCF natural gas, attributable to the noncontrolling interest in MP GOM.

3 Includes proved reserves of 17.4 MMBOE, consisting of 15.6 MMBBL oil, 0.7 MMBBL NGLs, and 6.5 BCF natural gas, attributable to the noncontrolling interest in MP GOM.

4 Includes proved natural gas reserves to be consumed in operations as fuel of 72.0 BCF and 108.8 BCF for the U.S.

and Canada, respectively, with 1.6 BCF attributable to the noncontrolling interest in MP GOM.

Murphy Oil’s 2020 total proved reserves and proved undeveloped reserves are reconciled from 2019 as presented in the table below:

( Millions of oil equivalent barrels ) 1

Reserves Total Proved

Beginning of year 825.0 352.7

Revisions of previous estimates (194.7) (178.0)

Extensions and discoveries 150.3 148.8

Conversions to proved developed reserves — (17.7)

Sale of properties (1.7) (1.7)

Production (63.9) —

End of year 2

1 For purposes of these computations, natural gas sales volumes are converted to equivalent barrels of oil using a ratio of six MCF of natural gas to one barrel of oil.

2 Includes 17.4 MMBOE and 3.2 MMBOE for total proved and proved undeveloped reserves, respectively, attributable to the noncontrolling interest in MP GOM.

Proved Reserves (Cont’d.)

During 2020, Murphy’s total proved reserves decreased by 110.1 million barrels of oil equivalent (MMBOE).

The decrease in reserves principally relates to less capital allocation over the next five years toward onshore shale production growth resulting in a transfer of 164.7 MMBOE to probable, reduced price resulting in a loss of 41.8 MMBOE and 2020 production of 63.9 MMBOE;

partially offset by improved base performance of 30 MMBOE plus extensions and discoveries of 126 MMBOE in Onshore Canada, 16 MMBOE in the Eagle Ford Shale, and 8 MMBOE in Offshore U.S.

Gulf of Mexico and east Canada.

Murphy’s total proved undeveloped reserves at December 31, 2020 decreased 48.6 MMBOE from a year earlier.

The proved undeveloped reserves reported in the table as extensions and discoveries during 2020 were predominantly attributable to three areas:

the onshore Canada area of Tupper Montney, the Eagle Ford Shale in South Texas, and the U.S.

Gulf of Mexico.

Each of these areas had active development work ongoing during the year.

The majority of proved undeveloped reserves associated with revisions of previous estimates was the result of reduced capital expenditures in the Eagle Ford Shale over the next five years.

The majority of the proved undeveloped reserves migration to the proved developed category are attributable to drilling in the Eagle Ford Shale, Gulf of Mexico, Kaybob Duvernay, and Tupper Montney.

The Company spent approximately $594 million in 2020 to convert proved undeveloped reserves to proved developed reserves.

The Company expects to spend approximately $447 million in 2021, $526 million in 2022 and $314 million in 2023 to move currently undeveloped proved reserves to the developed category.

The anticipated level of spending in 2021 primarily includes drilling and development in the Gulf of Mexico, Eagle Ford Shale and Tupper Montney areas.

At December 31, 2020, proved reserves are included for several development projects, including oil developments at the Eagle Ford Shale in South Texas;

natural gas developments in Tupper Montney;

deepwater Gulf of Mexico;

and Kaybob Duvernay in onshore Canada.

Total proved undeveloped reserves associated with various development projects at December 31, 2020 were approximately 304.1 MMBOE, which represent 43% of the Company’s total proved reserves.

Certain development projects have proved undeveloped reserves that will take more than five years to bring to production.

The Company is currently executing a drilling and completion campaign in Tupper Montney in onshore Canada and operates deepwater fields in the Gulf of Mexico that have six and two undeveloped locations, respectively that exceed this five-year window.

Two of the six Tupper Montney PUDs are already online and producing above expectations.

Total reserves associated with the eight locations amount to approximately 2.7% of the Company’s total proved reserves at year-end 2020.

The development of certain reserves extends beyond five years due to an ongoing drilling campaign that is close to completion and limited well slot availability, thus making it necessary to wait for depletion of other wells prior to initiating further development of these locations.

Business - Continued

Murphy Oil’s Reserves Processes and Policies

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The Reserves Manager coordinates and oversees the third-party audits which are performed annually and under Company policy generally target coverage of at least one-third of the barrel oil-equivalent volume of the Company’s proved reserves.

Murphy Oil’s Reserves Processes and Policies (Cont’d.)

The estimated proved reserves reported in this Form 10-K are prepared by Murphy’s employees.

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The training includes materials provided to each participant that outlines the latest guidance from the SEC as well as best practices for many engineering and geologic matters related to reserves estimation.

Business - Continued

Murphy Oil’s Reserves Processes and Policies (Contd.)

The Company’s QREs maintain files containing pertinent data regarding each significant reservoir.

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Supplemental disclosures relating to oil and natural gas producing activities are reported on pages 110 through 126 of this Form 10-K report.

Business - Continued

Acreage and Well Count

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Certain acreage held by the Company will expire in the next three years.

Scheduled expirations in 2021 include 116 thousand net acres in Brunei, 35 thousand net acres in onshore Canada and 3 thousand net acres in the Gulf of Mexico.

Acreage currently scheduled to expire in 2022 include 4,521 thousand net acres in Vietnam (which can be retained with sanction of development plan), 47 thousand net acres in Brunei, 46 thousand net acres in the Gulf of Mexico and 22 thousand net acres in onshore Canada.

Scheduled expirations in 2023 include 75 thousand net acres in Brazil, 10 thousand net acres in onshore Canada and 16 thousand net acres in the Gulf of Mexico.

Scheduled expirations in 2022 include 4,521 thousand net acres in Vietnam (seeking extensions), 46 thousand net acres in the Gulf of Mexico, 35 thousand net acres in onshore Canada, and 30 thousand net acres in Brunei.

Acreage currently scheduled to expire in 2023 include 241 thousand net acres in Australia, 75 thousand net acres in Brazil, 35 thousand net acres in onshore Canada, 16 thousand net acres in the Gulf of Mexico, and 1 thousand net acres in Spain.

Scheduled expirations in 2024 include 47 thousand net acres in the Gulf of Mexico and 17 thousand net acres in onshore Canada.

Business - Continued

Acreage and Well Count (Contd.)

As used in the three tables that follow, “gross” wells are the total wells in which all or part of the working interest is owned by Murphy, and “net” wells are the total of the Company’s fractional working interests in gross wells expressed as the equivalent number of wholly-owned wells.

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United States Onshore 1,108 912 25 4

– Offshore 58 29 20 10

Gulf of Mexico 62 30 16 9

Total United States 1,170 942 41 13

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Totals 1,236 958 427 334

Acreage and Well Count (Cont’d.)

Murphy’s net wells drilled in the last three years are shown in the following table.

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United States Onshore — — 21.0 10.6 21.0 10.6

Gulf of Mexico — — 5.0 2.0 5.0 2.0

Canada Onshore — — 13.0 12.1 13.0 12.1

Offshore — — — — — —

Canada — — — — — —

Brazil 1.0 0.2 — — 1.0 0.2

Totals 1.0 0.2 39.0 24.7 40.0 24.9

Discontinued Operations

Malaysia – In July 2019, the Company closed a divestiture of its two subsidiaries conducting Malaysian operations, Murphy Sabah Oil Co., Ltd.

and Murphy Sarawak Oil Co., Ltd., in a transaction with PTT Exploration and Production Public Company Limited (PTTEP) which was effective January 1, 2019.

Total cash consideration received upon closing was $2.0 billion.

A gain on sale of $985.4 million was recorded as part of discontinued operations on the Consolidated Statement of Operations.

The Company has accounted for and reported the Malaysia business as discontinued operations for all periods presented.

Refining and Marketing – The Company decommissioned the Milford Haven refinery units and completed the sale of its remaining downstream assets in the U.K.

in 2015 for cash proceeds of $5.5 million.

The Company has accounted for and reported this U.K.

downstream business as discontinued operations for all periods presented.

In October 2019, the current owner of the former Milford Haven Refinery issued a completion certificate acknowledging the Company had satisfactorily completed all obligations regarding the decommissioning and demolition of the facility’s refinery equipment.

Environmental, Health and Safety

We are subject to various international, foreign, national, state, provincial and local environmental, health and safety laws and regulations, including related to the generation, storage, handling, use, disposal and remediation of petroleum products, wastewater and hazardous materials;

the emission and discharge of such materials to the environment, including greenhouse gas emissions;

Business - Continued

Sustainability

Environment and Climate Change

We understand that our industry, and the use of our products, create emissions – which raise climate change concerns.

At the same time, access to affordable, reliable energy is essential to improving the world’s quality of life and the functioning of the global economy.

We believe that as the energy economy transitions, oil and natural gas will continue to play a vital role in the long-term energy mix.

We are committed to reducing our GHG emissions, and focused on understanding and mitigating our climate change risks.

To guide our climate change strategy, Murphy has adopted a climate change position, and we are setting meaningful emissions goals.

In 2021, we endorsed the goal of eliminating routine flaring by 2030, under the current World Bank definition of routine flaring.

This adds to the Company’s previously established greenhouse gas (GHG) emissions intensity reduction target of 15% to 20% by 2030 from our 2019 level, excluding our discontinued and divested Malaysia operations.

Murphy recognizes that emissions are only one element of our total environmental footprint.

Protecting natural resources is also an important factor in our overall sustainability efforts.

See our discussion of Climate Change and Emissions on page 48.

Further, we are subject to various international, foreign, national, state, provincial and local environmental, health and safety laws and regulations, including related to the generation, storage, handling, use, disposal and remediation of petroleum products, wastewater and hazardous materials;

the emission and discharge of such materials to the environment, including GHG emissions;

wildlife, habitat and water protection;

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Clean Water Act (CWA) and analogous state laws impose restrictions and strict controls with respect to the discharge of pollutants, including spills and leaks of produced water and other oil and natural gas wastes, into regulated waters.

Oil Pollution Act (OPA) imposes certain duties and liabilities on the owner or operator of a facility,

vessel or pipeline that is a source or that poses the substantial threat of an oil discharge, or the lessee or permittee of the area in which a discharging offshore facility is located.

Oil Pollution Act (OPA) imposes certain duties and liabilities on the owner or operator of a facility, vessel or pipeline that is a source or that poses the substantial threat of an oil discharge, or the lessee or permittee of the area in which a discharging offshore facility is located.

OPA assigns joint and several liability, without regard to fault, to each liable party for oil removal costs and a variety of public and private damages.

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assets and net worth or post bonds or other acceptable financial assurance that the regulatory obligations will be met.

In April 2016, the BSEE enacted broad regulatory changes related to Gulf of Mexico well design, well control, casing, cementing, real-time monitoring, and subsea containment, among other items.

These changes are known broadly as the Well Control Rule, and amendments to this rule were enacted in May 2019.

Compliance is required over the next several years.

In July 2016, BOEM issued an updated Notice to Lessees and Operators (NTL) providing details on revised procedures BOEM used to determine a lessee’s ability to carry out decommissioning obligations for activities on the Outer Continental Shelf (OCS), including the Gulf of Mexico.

This revised policy became effective in September 2016 and instituted new criteria by which the BOEM will evaluate the financial strength and reliability of lessees and operators active on the OCS.

If the BOEM determines under the revised policy that a company does not have the financial ability to meet its decommissioning and other obligations, that company will be required to post additional financial security as assurance.

In January 2017 BOEM extended the implementation timeline for the NTL by six months for properties which have co-lessees, and in February 2017 BOEM withdrew sole liability orders issued in December 2016 to allow time for the new administration to review the financial assurance program for decommissioning.

These include, in the Gulf of Mexico, well design, well control, casing, cementing, real-time monitoring, and subsea containment, among other items.

Under applicable requirements, BOEM evaluates the financial strength and reliability of lessees and operators active on the Outer Continental Shelf, including the Gulf of Mexico.

If the BOEM determines that a company does not have the financial ability to meet its decommissioning and other obligations, that company will be required to post additional financial security as assurance.

Business - Continued

Air emissions and climate change .

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Environmental Protection Agency (EPA) has been monitoring and regulating GHG emissions, including carbon dioxide and methane, from certain sources in the oil and natural gas sector due to their association with climate change.

An international climate agreement (the Paris Agreement) was agreed to at the 2015 United Nations Framework Convention on Climate Change in Paris, France.

The Paris Agreement entered into force in November 2016.

Although the U.S.

officially withdrew from the Paris Agreement on November 4, 2020, on January 20, 2021, President Biden began the 30-day process of rejoining the Paris Agreement, which became effective for the U.S.

on February 19, 2021.

In addition, international climate efforts, including the 2015 “Paris Agreement” and the 2021 UN Framework Convention on Climate Change (COP26), have resulted in commitments from many countries to reduce GHG emissions and have called for parties to eliminate certain fossil fuel subsidies and pursue further action on non-carbon dioxide GHGs.

Murphy is currently required to report GHG emissions from its U.S.

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Additionally, starting in 2017, a carbon tax began to be applied to certain operations in Alberta.

Any limitation on, or further regulation of, greenhouse gases, including through a cap and trade system, technology mandate, emissions tax, or expanded reporting requirements, could restrict the Company’s operations, curtail demand for hydrocarbons generally and/or impose increased costs to operate and maintain facilities, install pollution emission controls and administer and manage emissions trading programs.

Any limitation on, or further regulation of, GHG gases, including through a cap and trade system, technology mandate, emissions tax, or expanded reporting requirements, could restrict the Company’s operations, curtail demand for hydrocarbons generally and/or impose increased costs to operate and maintain facilities, install pollution emission controls and administer and manage emissions trading programs.

Endangered and threatened species.

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Similar protections are offered to migratory birds under the Migratory Bird Treaty Act, and marine mammals under the Marine Mammal Protection Act.

As noted above, Murphy is subject to various laws and regulatory regimes governing similar matters in other jurisdictions in which it operates.

More specifically, Murphy’s operations in Canada are subject to and conducted under Canadian laws and regulations that address many of the same environmental, health and safety issues as those in the U.S., including, without limitation, pollution and contamination, air quality and emissions, water discharges, and other health and safety concerns.

Health and Safety

Murphy’s commitment to safety is strong, and so are our actions to protect our workforce and communities.

Our employees are our most valuable asset.

Murphy strives to achieve incident-free operations through continuous improvement processes managed by the Company’s Health, Safety, Environment (HSE) Management System (HSE-MS), which engages all personnel, contractors and partners associated with Murphy operations and facilities, and provides a consistent method for integrating HSE concepts into our procedures and programs.

We work hard to build a culture of safety across our organization, with regular training, exercise drills and key targeted safety initiatives.

Response to COVID-19.

During the COVID-19 pandemic, we have taken a proactive approach and adopted strict protocols to protect our employees and their families, contractors and the communities in which we work from the virus.

Our response program continues to be led by our Incident Management Team (IMT), under the guidance of our Crisis Management Team (CMT), leveraging the advice and recommendations of infectious disease experts and establishing safety protocols for all workers.

We also developed a COVID-19 tracking app, providing executives with real-time information on infection rates and close contacts, in order to make decisions regarding our COVID-19 response.

The Company is subject to the requirements of the U.S.

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In Canada, the Company is subject to Federal OH&S Legislation, the provincially-administered Occupational Health and Safety Act (Alberta), the Workers Compensation Act (British Columbia), and WHMIS - the Workplace Hazardous Materials Information System.

Human Capital Resources

Business - Continued

Human Capital Management

At Murphy, we believe in providing energy that empowers people, and that is what our 696 employees do every day.

As of December 31, 2021, we had 408 office-based employees and 288 field employees, all of whom are guided by our mission, vision, values and behaviors.

Together with the Executive Management Team, the Vice President of Human Resources and Administration is responsible for developing and executing our human capital management strategy.

This includes the attraction, recruitment, development and engagement of talent to deliver on our strategy and the design of employee compensation, health and welfare benefits, and talent programs.

Together with the Executive Leadership Team, the Vice President of Human Resources and Administration, who reports directly to our CEO, is responsible for developing and executing our human capital management strategy.

This includes the attraction, recruitment, development and engagement of talent to deliver on our strategy, the design of employee compensation, health and welfare benefits, and talent programs.

We focus on the following factors in order to implement and develop our human capital strategy:

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• Talent Development and Training

• Health and Welfare Benefits

• Diversity, Equity and Inclusion

• Health and Welfare Benefits

The Board of Directors receives related updates from management on a regular cadence including the review of compensation, benefits, succession and talent development, and diversity, equity and inclusion.

Employee Compensation Programs

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We benchmark for market practices, and regularly review our compensation against the market to ensure it remains competitive to attract and retain the best talent.

Our current practices align our employees’ compensation with the interests of our shareholders, and support our focus on cash flow generation, capital returns and environmental stewardship.

For further detail on the Company’s compensation framework please see Exhibit 99.1 on Form 8-K filed on February 8, 2021 and the Compensation Discussion and Analysis section of the forthcoming Proxy Statement relating to the Annual Meeting of Stockholders on May 12, 2021.

We believe our current practices align our employees’ compensation with the interests of our shareholders, and support our focus on cash flow generation, capital return and environmental stewardship.

For further detail on the Company’s compensation framework please see the Compensation Discussion and Analysis section of the forthcoming Proxy Statement relating to the Annual Meeting of Stockholders on May 11, 2022.

Employee Performance and Feedback

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• Develop employee capabilities through effective feedback and coaching

• Maintain a process that is consistent throughout the organization to measure employee performance and are tied to Company and Shareholder interests

All employees’ performance is evaluated annually through self-assessments that are reviewed in discussions with supervisors.

• Maintain a process that is consistent throughout the organization to measure employee performance and is tied to Company and shareholder interests

All employees’ performance is evaluated at least annually through self-assessments that are reviewed in discussions with supervisors.

Employees’ performance is evaluated on various key performance indicators set annually, including behaviors that support our mission, vision, values and an assessment conducted by the employees’ direct supervisor.

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Through our digital platform, My Murphy Learning, employees can access self-directed courses, external articles and videos that cover topics such as business, technology and productivity.

Also, we are able to administer mandatory compliance training for our employees through My Murphy Learning, with a 100% utilization rate.

We also administer mandatory compliance training for our employees through My Murphy Learning, with a 100% completion rate.

Further, we strive to empower our leadership, so we sponsor several programs to address career advancement for emerging leaders and executives.

Plus, we provide a tuition reimbursement program for those who choose to acquire additional knowledge to increase their effectiveness in their present position or to prepare the employee for advancement.

Plus, we provide a tuition reimbursement program for those who choose to acquire additional knowledge to increase their effectiveness in their present position or to prepare for career advancement.

Murphy holds internal technical ideas forums each year designed to share best practice and technical advances across the Company, including safety and environmental topics.

Business - Continued

We encourage employee engagement and solicit feedback through internal surveys and our employee driven Ambassador program to gain insights into workplace experiences.

Employees are provided opportunities to raise suggestions and collaborate with leadership to improve programs and increase alignment.

Employees are provided opportunities to raise suggestions and collaborate with leadership to improve programs and increase their alignment with Murphy’s mission, vision, values and behaviors.

To ensure that our human capital investment and development programs are effective, we track voluntary turnover.

This data is shared on a regular basis with our leadership team, who use it in addition to other pertinent data to develop our human capital strategy.

In 2020, our voluntary employee turnover was 6%.

This data is shared on a regular basis with our Executive Leadership Team, who use it in addition to other pertinent data to develop our human capital strategy.

In 2021, our voluntary employee turnover rate was 5.7%.

Health and Welfare Benefits

We believe that doing our part to aid in maintaining the health and welfare of our employees is a critical element in Murphy achieving success.

As such, we provide our employees and their families with a comprehensive set of benefits that are competitive and aligned to Murphy’s mission, vision, values and behaviors.

We also believe that the wellbeing of our employees is enhanced when they can give back to their local communities or charities either through the company “Impact –

Murphy Makes a Difference” program or on their own and receive a company match for donations and additional vacation days to volunteer time.

In addition, we offer an Employee Assistance Program (EAP) that provides confidential assistance to employees and their immediate family members for mental and physical wellbeing, as well as legal and financial issues.

As such, we provide our employees and their families with a comprehensive set of subsidized benefits that are competitive and aligned to Murphy’s mission, vision, values and behaviors.

In 2021, we further enhanced our benefit offerings including by implementing a vacation roll over policy, expanding dental coverage and increasing the number of weeks fully paid for short term disability.

We also believe that the well-being of our employees is enhanced when they can give back to their local communities or charities either through the company “Impact – Murphy Makes a Difference” program or on their own and receive a company match for donations.

In addition, we offer an Employee Assistance Program (EAP) that provides confidential assistance to employees and their immediate family members for mental and physical well-being, as well as legal and financial issues.

We also maintain an Ethics Hotline that is available to all our employees to report, anonymously if desired, any matter of concern.

Communications to the hotline, which is facilitated by an independent third party, are routed to appropriate functions, Human Resources, Law or Compliance, for investigation and resolution.

Response to COVID-19

We have taken a proactive approach to addressing the COVID-19 pandemic’s impact on our employees.

We have implemented a mitigation and response program which is being led by our Incident Management Team (IMT), leveraging the advice and recommendations of infectious disease experts, establishing safety protocols for field workers and work from home procedures for office employees.

In order to protect the health of our employees, we have balanced a carefully considered return to office policy that complies with local guidelines.

During, the pandemic, we wanted to reinforce aligning our culture with our mission, vision, values and behaviors, so we have significantly increased leadership updates and management outreach in conjunction with CEO sponsored quarterly Town Hall events.

Diversity, Equity and Inclusion

We are committed to fostering work environments that value diversity, equity, and inclusion.

We are committed to fostering work environments that value diversity, equity, and inclusion (DE&I).

This commitment includes providing equal access to and participation in programs and services without regard to race, creed, religion, color, national origin, disability, sex (including pregnancy), sexual orientation, gender identity, veteran status, age or stereotypes or assumptions based thereon.

We also support interest-based groups such as sports, hobbies and charity volunteering.

We welcome our employees’ differences, experiences and beliefs, and we are investing in a more productive, engaged, diverse and inclusive workforce.

During 2020, under the leadership of our Vice President Human Resources and Administration, we expanded the responsibilities of our Director Talent Development to include the strategic management and planning for diversity and inclusion programs within the company, as well as enhancing our understanding, and providing mandatory training and development for all employees.

In addition, our Board has had a woman representative for over 30 years, and currently includes two women directors.

Our Nominating and Governance Committee is actively focused on issues of diversity and inclusion as part of its overall mandate.

The Board of Directors receives DE&I updates on Demographic Data, Strategic Partnerships, Recruiting Strategies and Programs from management on a regular cadence.

Throughout 2021, we focused on creating a unified engagement program to build awareness and encourage open and respectful discussions.

We launched a video series where employees were invited to record short videos to share their ideas and experiences on what Diversity, Equity and Inclusion means to them.

Under the sponsorship of our Vice President, Human Resources and Administration, we encourage employee engagement and continuous feedback on our programs through our employee-level DE&I committee.

The committee, which consists of employees at various levels in the organization, promotes a culture of DE&I.

In addition, our Board has had at least one woman member for over 30 years, and currently includes three women directors.

Our Nominating and Governance Committee is actively focused on issues of DE&I as part of its overall mandate.

Also, our Board expanded the focus of the Health, Safety and Environment Committee to include Corporate Responsibility.

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Other (Administrative Support and Field) 7 %

Business - Continued

Minorities 1 Representation (US-Based Only)

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We believe that it is important we attract employees with diverse backgrounds where we operate and are focusing on increasing the number of women and minorities in our workforce ensuring a vibrant talent pipeline.

We acknowledge these efforts were hindered in 2020 by office closures and the reduction in force, both caused by the OPEC+ oil price disruptions and the ongoing COVID-19 pandemic (discussed further in Management’s Discussion and Analysis of Financial Condition and Results of Operations on page 28), and we look to ongoing improvement in our diversity representation.

Environmental, Social and Governance (ESG) Disclosure

We publish an annual sustainability report according to internationally recognized ESG reporting frameworks and standards, including Sustainability Accounting Standards Board (SASB), Task Force on Climate-related Financial Disclosures (TCFD), Global Reporting Initiative (GRI):

Core option and IPIECA.

As this is an area of continual improvement across our industry, we strive to update our disclosures in line with operating developments and with emerging best practice ESG reporting standards.

In 2021, we published our third annual sustainability report, located on the Company’s website.

Website Access to SEC Reports

Murphy Oil’s internet Website address is http://www.murphyoilcorp.com.

The information contained on the Company’s Website is not part of this report on Form 10-K.

The information contained on the Company’s Website is not part of, or incorporated into, this report on Form 10-K.

The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available on Murphy’s Website, free of charge, as soon as reasonably practicable after such reports are filed with, or furnished to, the SEC.

You may also access these reports at the SEC’s Website at http://www.sec.gov.

The Company faces risks in the normal course of business and through global, regional, and local events that could have an adverse impact on its reputation, operations, and financial performance.

The Board of Directors exercises oversight of the Company’s enterprise risk management program, which includes strategic, operational and financial matters, as well as compliance and legal risks.

The Board of Directors receives updates annually on the risk management processes.

The following are some important factors that could cause the Company’s actual results to differ materially from those projected in any forward-looking statements.

If any of the events or circumstances described in any of the following risk factors occurs, our business, results of operations and/or financial condition could be materially and adversely affected, and our actual results may differ materially from those contemplated in any forward-looking statements we make in any public disclosures.

Price Risk Factors

Volatility in the global prices of crude oil, natural gas liquids and natural gas can significantly affect the Company’s operating results, cash flows and financial condition.

Among the most significant variable factors impacting the Company’s results of operations are the sales prices for crude oil and natural gas that it produces.

Many of the factors influencing prices of crude oil and natural gas are beyond our control.

These factors include:

• the occurrence or threat of epidemics or pandemics, such as the outbreak of coronavirus disease 2019 (COVID-19), or any government response to such occurrence or threat which may lower the demand for hydrocarbon fuels;

• worldwide and domestic supplies of, and demand for, crude oil, natural gas liquids and natural gas;

• the ability of the members of OPEC and certain non-OPEC members, for example, Russia, to agree to and maintain production levels;

• the production levels of non-OPEC countries, including, amongst others, production levels in the shale plays in the United States;

• the level of drilling, completion and production activities by other exploration and production companies, and variability therein, in response to market conditions;

• political instability or armed conflict in oil and natural gas producing regions;

• changes in weather patterns and climate, including as a result of climate change;

• natural disasters such as hurricanes and tornadoes, including as a result of climate change;

• the price, availability and the demand for and of alternative and competing forms of energy, such as nuclear, hydroelectric, wind or solar;

• the effect of conservation efforts and focus on climate-change;

• technological advances affecting energy consumption and energy supply;

• increased activism against, or change in public sentiment for, oil and gas exploration, development, and production activities and considerations including climate change and the transition to a lower carbon economy;

• domestic and foreign governmental regulations and taxes, including further legislation requiring, subsidizing or providing tax benefits for the use of alternative energy sources and fuels;

• general economic conditions worldwide.

Risk Factors - Continued

In 2021, a combination of the global availability of vaccines and a relaxation of certain government-imposed lockdowns in response to the ongoing coronavirus disease 2019 (COVID-19) pandemic has led to an improving global economic outlook and subsequently increased demand for oil and gas.

Several COVID-19 variants, such as Delta and Omicron, temporarily created uncertainty in the outlook;

however, vaccines remained effective and therefore demand for oil and gas has remained resilient in the second half of 2021 and early 2022.

The demand resilience has revealed an oil supply shortage, and hence is applying upward pressure to current and future oil and gas prices in early 2022.

The OPEC+ group of oil producing countries (OPEC+) continues to target increasing supply by 0.4 million barrels per day (bpd) a month, with aims to fully phase out prior cuts by September 2022, at the current rate of OPEC+ supply increases.

In 2020, OPEC+ cut production by 10 million bpd following the COVID-19 demand reduction.

It has gradually reinstated supply so that the curtailments were approximately 5.8 million bpd at the end of 2021.

However, some members of the OPEC+ are not meeting their commitments to reinstate supply..

West Texas Intermediate (WTI) crude oil prices averaged $68 per barrel in 2021, compared to $39 in 2020, $57 in 2019, and $65 in 2018.

The closing price for WTI at the end of 2021 was $72 per barrel, reflecting a 52% increase from the price at the end of 2020.

As of close on February 24, 2022, the NYMEX WTI forward curve price for the remainder of 2022 and 2023 were $86.31 and $77.72 per barrel, respectively.

The current futures forward curve indicates that prices may continue at or near current prices for an extended time.

and Canadian crude oils are priced from oil indices other than WTI, and these indices are influenced by different supply and demand forces than those that affect WTI prices.

The most common crude oil indices used to price the Company’s crude include WTI Houston (MEH), Heavy Louisiana Sweet (HLS), Mars and Brent.

The average New York Mercantile Exchange (NYMEX) natural gas sales price was $3.84 per million British Thermal Units (MMBTU) in 2021, compared to $1.99 in 2020, $2.52 in 2019, and $3.12 in 2018.

The closing price for NYMEX natural gas as of December 31, 2021 was $3.72 per MMBTU.

The Company also has some limited exposure to the Canadian benchmark natural gas price, AECO, which averaged US$2.89 per MMBTU in 2021.

The closing price for AECO as of December 31, 2021 was US$3.20 per MMBTU.

The Company has entered into certain forward fixed price contracts as detailed in the Outlook section on page 54 a nd certain variable netback contracts providing exposure to Malin, Dawn and other locations.

Lower prices, should they occur, will materially and adversely affect our results of operations, cash flows and financial condition.

Lower oil and natural gas prices could reduce the amount of oil and natural gas that the Company can economically produce, resulting in a reduction in the proved oil and natural gas reserves we could recognize, which could impact the recoverability and carrying value of our assets.

The Company cannot predict how changes in the sales prices of oil and natural gas will affect the results of operations in future periods.

The Company has hedged a portion of its exposure to the effects of changing prices of crude oil and natural gas by selling forwards, swaps and other forms of derivative contracts.

Lower oil and natural gas prices adversely affect the Company in several ways:

• Lower sales value for the Company’s oil and natural gas production reduces cash flows and net income.

• Lower cash flows may cause the Company to reduce its capital expenditure program, thereby potentially restricting its ability to grow production and add proved reserves.

• Lower oil and natural gas prices could lead to impairment charges in future periods, therefore reducing net income.

• Reductions in oil and natural gas prices could lead to reductions in the Company’s proved reserves in future years.

Low prices could make a portion of the Company’s proved reserves uneconomic, which in turn could lead to the removal of certain of the Company’s year-end reported proved oil reserves in future periods.

These reserve reductions could be significant.

• In order to manage the potential volatility of cash flows and credit requirements, we maintain appropriate bank credit facilities.

Inability, as a result of low oil and gas prices, to access, renew or replace such credit facilities or access other sources of funding as they mature would negatively impact our liquidity.

Risk Factors - Continued

• Lower prices for oil and natural gas could cause the Company to lower its dividend because of lower cash flows.

See Note L – Financial Instruments and Risk Management for additional information on the derivative instruments used to manage certain risks related to commodity prices.

Murphy’s commodity price risk management may limit the Company’s ability to fully benefit from potential future price increases for oil and natural gas.

The Company, from time to time, enters into various contracts to protect its cash flows against lower oil and natural gas prices.

Because of these contracts, if the prices for oil and natural gas increase in future periods, the Company will not fully benefit from the price improvement on all production.

In 2021, the Company entered into collar contracts.

Under the collar contracts, which also mature monthly, the Company purchased put options and sold call options with no net premiums paid to or received from counterparties.

Upon maturity, collar contracts require payments by the Company if the NYMEX average closing price is above the ceiling price or payments to the Company if the NYMEX average closing price is below the floor price.

See Note L – Financial Instruments and Risk Management for additional information on the derivative instruments used to manage certain risks related to commodity prices.

Operational Risk Factors

Murphy operates in highly competitive environments which could adversely affect it in many ways, including its profitability, cash flows and its ability to grow.

Murphy operates in the oil and natural gas industry and experiences competition from other oil and natural gas companies, which include major integrated oil companies, private equity investors and independent producers of oil and natural gas, and state-owned foreign oil companies.

Many of the major integrated and state-owned oil companies and some of the independent producers that compete with the Company have substantially greater resources than Murphy.

In addition, the oil industry as a whole competes with other industries in supplying energy requirements around the world.

Within the industry, Murphy competes for, among other things, valuable acreage positions, exploration licenses, drilling equipment and talent.

Exploration drilling results can significantly affect the Company’s operating results.

The Company drills exploratory wells which subjects its exploration and production operating results to exposure to dry hole expense, which may have adverse effects on, and create volatility for, the Company’s results of operations.

The Company’s strategy is to participate in three to five exploration wells per year.

In 2021, the Company drilled a successful exploration well in Brunei (Jagus Subthrust) and participated in one unsuccessful (non-commercial) well in the U.S.

Gulf of Mexico.

The Cutthroat well in Brazil, originally planned for 2021, will now be drilled in early 2022 due to permitting delays.

The Company has budgeted $75 million for its 2022 exploration program, which includes the Cutthroat well in Brazil, the operated well in Mexico (Tulum), as well as a non-operated well in Brunei.

If Murphy cannot replace its oil and natural gas reserves, it may not be able to sustain or grow its business.

Murphy continually depletes its oil and natural gas reserves as production occurs.

To sustain and grow its business, the Company must successfully replace the oil and natural gas it produces with additional reserves.

Therefore, it must create and maintain a portfolio of good prospects for future reserves additions and production.

The Company does this by obtaining rights to explore for, develop and produce hydrocarbons in prospective areas.

In addition, it must find, develop and produce (and/or acquire) reserves at a competitive cost to be successful in the long-term.

Murphy’s ability to operate profitably in the exploration and production business, therefore, is dependent on its ability to find (and/or acquire), develop and produce oil and natural gas reserves at costs that are less than the realized sales price for these products.

Risk Factors - Continued

Murphy’s proved reserves are based on the professional judgment of its engineers and may be subject to revision.

Proved reserves of crude oil, natural gas liquids (NGL) and natural gas included in this report on pages 110 through 119 have been prepared according to the Securities and Exchange (SEC) guidelines by qualified Company personnel or qualified independent engineers based on an unweighted average of crude oil, NGL and natural gas prices in effect at the beginning of each month of the respective year as well as other conditions and information available at the time the estimates were prepared.

Estimation of reserves is a subjective process that involves professional judgment by engineers about volumes to be recovered in future periods from underground oil and natural gas reservoirs.

Estimates of economically recoverable crude oil, NGL and natural gas reserves and future net cash flows depend upon a number of variable factors and assumptions, and consequently, different engineers could arrive at different estimates of reserves and future net cash flows based on the same available data and using industry accepted engineering practices and scientific methods.

In 2021, 93.2% of the Proved reserves were audited by third-party auditors.

Murphy’s actual future oil and natural gas production may vary substantially from its reported quantity of proved reserves due to a number of factors, including:

• Oil and natural gas prices which are materially different from prices used to compute proved reserves,

• Operating and/or capital costs which are materially different from those assumed to compute proved reserves,

• Future reservoir performance which is materially different from models used to compute proved reserves, and

• Governmental regulations or actions which materially impact operations of a field.

The Company’s proved undeveloped reserves represent significant portions of total proved reserves.

As of December 31, 2021, and including noncontrolling interests, approximately 34% of the Company’s crude oil and condensate proved reserves, 26% of natural gas liquids proved reserves and 49% of natural gas proved reserves are undeveloped.

The ability of the Company to reclassify these undeveloped proved reserves to the proved developed classification is generally dependent on the successful completion of one or more operations, which might include further development drilling, construction of facilities or pipelines, and well workovers.

The discounted future net revenues from our proved reserves as reported on pages 124 and 125 should not be considered as the market value of the reserves attributable to our properties.

As required by generally accepted accounting principles (GAAP), the estimated discounted future net revenues from our proved reserves are based on an unweighted average of the oil and natural gas prices in effect at the beginning of each month during the year.

Actual future prices and costs may be materially higher or lower than those used in the reserves computations.

In addition, the 10% discount factor that is required to be used to calculate discounted future net revenues for reporting purposes under GAAP is not necessarily the most appropriate discount factor based on our cost of capital, the risks associated with our business and the risk associated with the industry in general.

Murphy is sometimes reliant on joint venture partners for operating assets, and/or funding development projects and operations.

Certain of the Company’s major oil and natural gas producing properties are operated by others.

Therefore, Murphy does not fully control all activities at certain of its revenue generating properties.

During 2021, approximately 24% of the Company’s total production was at fields operated by others, while at December 31, 2021, approximately 15% of the Company’s total proved reserves were at fields operated by others.

Additionally, the Company relies on the availability of transportation and processing facilities that are often owned and operated by others.

These third-party systems and facilities may not always be available to the Company, and if available, may not be available at a price that is acceptable to the Company.

Risk Factors - Continued

Some of Murphy’s development projects entail significant capital expenditures and have long development cycle times.

As a result, the Company’s partners must be able to fund their share of investment costs through the development cycle, through cash flow from operations, external credit facilities, or other sources, including financing arrangements.

Murphy’s partners are also susceptible to certain of the risk factors noted herein, including, but not limited to, commodity price, fiscal regime changes, government project approval delays, regulatory changes, credit downgrades and regional conflict.

If one or more of these factors negatively impacts a project partners’ cash flows or ability to obtain adequate financing, it could result in a delay or cancellation of a project, resulting in a reduction of the Company’s reserves and production, which negatively impacts the timing and receipt of planned cash flows and expected profitability.

Murphy’s business is subject to operational hazards, physical security risks and risks normally associated with the exploration and production of oil and natural gas, which could become more significant as a result of climate change.

The Company operates in urban and remote, and sometimes inhospitable, areas around the world.

The occurrence of an event, including but not limited to acts of nature such as hurricanes, floods, earthquakes (and other forms of severe weather), mechanical equipment failures, industrial accidents, fires, explosions, acts of war, civil unrest, piracy and acts of terrorism could result in the loss of hydrocarbons and associated revenues, environmental pollution or contamination, personal injury, (including death), and property damages for which the Company could be deemed to be liable and which could subject the Company to substantial fines and/or claims for punitive damages.

This risk extends to actions and operational hazards of other operators in the industry, which may also impact the Company.

The location of many of Murphy’s key assets causes the Company to be vulnerable to severe weather, including hurricanes and tropical storms.

Many of the Company’s offshore fields are in the U.S.

Gulf of Mexico, where hurricanes and tropical storms can lead to shutdowns and damages.

hurricane season runs from June through November.

Moreover, it should be noted that scientists have predicted that increasing concentrations of greenhouse gases in the earth’s atmosphere may produce climate changes that increase significant weather events, such as increased frequency and severity of storms, droughts, and floods and other climatic events.

If such effects were to occur, our operations could be adversely affected.

Although the Company maintains insurance for such risks as described elsewhere in this Form 10-K report, due to policy deductibles and possible coverage limits, weather-related risks are not fully insured.

Murphy is subject to numerous environmental, health and safety laws and regulations, and such existing and any potential future laws and regulations may result in material liabilities and costs.

The Company’s operations are subject to various international, foreign, national, state, provincial, and local environmental, health and safety laws and regulations, including related to the generation, storage, handling, use, disposal and remediation of petroleum products, wastewater and hazardous materials;

the emission and discharge of such materials to the environment, including greenhouse gas emissions;

wildlife, habitat and water protection;

the placement, operation and decommissioning of production equipment;

and the health and safety of our employees, contractors and communities where our operations are located.

These laws and regulations are subject to frequent change and have tended to become stricter over time.

They can impose permitting and financial assurance obligations, as well as operational controls and/or siting constraints on our business, and can result in additional capital and operating expenditures.

Murphy also could be subject to strict liability for environmental contamination in various jurisdictions where it operates, including with respect to its current or former properties, operations and waste disposal sites, or those of its predecessors.

Contamination has been identified at some locations, and the Company has been required, and in the future may be required, to investigate, remove or remediate previously disposed wastes;

or otherwise clean up contaminated soil, surface water or groundwater, address spills and leaks from pipelines and production equipment, and perform remedial plugging operations.

In addition to significant investigation and remediation costs, such matters can result in fines and also give rise to third-party claims for personal injury and property or other environmental damage.

Risk Factors - Continued

It is possible in the future certain regulatory bodies such as the Railroad Commission of Texas may enact regulation that bans or reduces flaring for US Onshore operations.

Compliance with such regulations could result in capital investment which would reduce the Company’s net cash flows and profitability.

The Company’s onshore North America oil and natural gas production is dependent on a technique known as hydraulic fracturing whereby water, sand and certain chemicals are injected into deep oil and natural gas bearing reservoirs in North America.

This process occurs thousands of feet below the surface and creates fractures in the rock formation within the reservoir which enhances migration of oil and natural gas to the wellbore.

The Company primarily uses this technique in the Eagle Ford Shale in South Texas and in Western Canada.

Texas law imposes permitting, disclosure, disposal and well construction requirements on hydraulic fracturing operations, as well as public disclosure of certain information regarding the components used in the hydraulic fracturing process.

Regulations in the provinces of British Columbia and Alberta also govern various aspects of hydraulic fracturing activities under their jurisdictions.

It is possible that Texas, other states in which we may conduct fracturing in the future, the U.S., Canadian provinces and certain municipalities may adopt further laws or regulations which could render the process unlawful, less effective or drive up its costs.

If any such action is taken in the future, the Company’s production levels could be adversely affected, or its costs of drilling and completion could be increased.

Once new laws and/or regulations have been enacted and adopted, the costs of compliance are appraised.

Hydraulic fracturing operations subject the Company to operational risks inherent in the drilling and production of oil and natural gas.

These risks include underground migration or surface spillage due to releases of oil, natural gas, formation water or well fluids, as well as any related surface or groundwater contamination, including from petroleum constituents or hydraulic fracturing chemical additives.

Ineffective containment of surface spillage and surface or groundwater contamination resulting from hydraulic fracturing operations, including from petroleum constituents or hydraulic fracturing chemical additives, could result in environmental pollution, remediation expenses and third-party claims alleging damages, which could adversely affect the Company’s financial condition and results of operations.

In addition, hydraulic fracturing requires significant quantities of water;

the wastewater from oil and natural gas operations is often disposed of through underground injection.

Certain increased seismic activities have been linked to underground water injection.

Any diminished access to water for use in the hydraulic fracturing process, any inability to properly dispose of wastewater, or any further restrictions placed on wastewater, could curtail the Company’s operations or otherwise result in operational delays or increased costs.

In addition, BOEM and BSEE have regulations applicable to lessees in federal waters that impose various safety, permitting and certification requirements applicable to exploration, development and production activities in the Gulf of Mexico, and also require lessees to have substantial U.S.

assets and net worth or post bonds or other acceptable financial assurance that the regulatory obligations will be met.

These include, in the Gulf of Mexico, well design, well control, casing, cementing, real-time monitoring, and subsea containment, among other items.

Under applicable requirements, BOEM evaluates the financial strength and reliability of lessees and operators active on the OCS.

In addition, various executive orders by the current presidential administration and the Department of Interior over the course of 2021 regarding a temporary suspension of normal-course issuance of permits for fossil fuel development on federal lands and a pause on new oil and natural gas leases on public lands and offshore waters, and the Secretary of Interior’s related review of permitting and leasing practices, could adversely impact Murphy’s operations.

For further details, see See “Risk Factors – General Risk Factors – Murphy’s operations and earnings have been and will continue to be affected by domestic and worldwide political developments.”

Risk Factors - Continued

We face various risks associated with increased activism against, or change in public sentiment for, oil and gas exploration, development, and production activities and sustainability considerations, including climate change and the transition to a lower carbon economy.

Opposition toward oil and gas drilling, development, and production activity has been growing globally.

Companies in the oil and gas industry are often the target of activist efforts from both individuals and non‑governmental organizations and other stakeholders regarding safety, human rights, climate change, environmental matters, sustainability, and business practices.

Anti‑development activists are working to, among other things, delay or cancel certain operations such as offshore drilling and development.

Activism may continue to increase regardless of whether the current presidential administration in the U.S.

is perceived to be following, or actually follows, through on the current president’s campaign commitments to promote decreased fossil fuel exploration and production in the U.S, including as a result of the administration’s environmental and climate change executive orders described earlier in this 10-K.

Our need to incur costs associated with responding to these initiatives or complying with any resulting new legal or regulatory requirements resulting from these activities that are substantial and not adequately provided for, could have a material adverse effect on our business, financial condition and results of operations.

In addition, a change in public sentiment regarding the oil and gas industry could result in a reduction in the demand for our products or otherwise affect our results of operations or financial condition.

Financial Risk Factors

Capital financing may not always be available to fund Murphy’s activities;

and interest rates could impact cash flows.

Murphy usually must spend and risk a significant amount of capital to find and develop reserves before revenue is generated from production.

Although most capital needs are funded from operating cash flow, the timing of cash flows from operations and capital funding requirements may not always coincide, and the levels of cash flow generated by operations may not fully cover capital funding requirements, especially in periods of low commodity prices.

Therefore, the Company maintains financing arrangements with lending institutions to meet certain funding needs.

The Company periodically renews these financing arrangements based on foreseeable financing needs or as they expire.

In November 2018, the Company entered into a $1.6 billion revolving credit facility (the “RCF”).

The RCF is a senior unsecured guaranteed facility and will expire in November 2023.

As of December 31, 2021, the Company had no outstanding borrowings under the RCF.

However, in the event the RCF was drawn, amounts drawn under the RCF may bear interest in relation to 1-month, 2-month, 3-month and 6-month LIBOR, depending on our selection of rates.

In July 2017, the Financial Conduct Authority in the U.K.

announced a desire to phase out LIBOR as a benchmark by the end of 2021.

Some USD LIBOR tenors (overnight, 1-month, 3-month, 6-month and 12-month) will continue to be published until June 30, 2023, but U.S.

regulators have published guidance instructing banks to cease entering into new contracts referencing USD-LIBOR no later than December 31, 2021.

While methodologies to transition existing agreements that depend on LIBOR as a reference rate are being developed, we can provide no assurance that market-accepted rates and transition methodologies will be available and finalized at the time of LIBOR cessation.

If clear market standards and transition methodologies have not developed by the time LIBOR becomes unavailable, we may have difficulty reaching agreement on acceptable replacement rates under the RCF.

If we are unable to negotiate replacement rates, on favorable terms, it could have an adverse effect on our earnings and cash flows.

In March 2020, the Federal Reserve Bank of New York began publishing the Secured Overnight Financing Rate (SOFR) and associated indices.

However, SOFR is fundamentally different from USD LIBOR for two key reasons.

First, SOFR is a secured rate, while LIBOR is an unsecured rate.

Second, SOFR is an overnight rate, while USD LIBOR represents interbank funding over different maturities.

As a result, there can be no assurance that SOFR will perform in the same way as LIBOR would have at any time, including, without limitation, as a result of changes in interest and yield rates in the market, market volatility or global or regional economic, financial, political, regulatory, judicial or other events.

For example, since publication of SOFR began on April 3, 2018, daily changes in SOFR have, on occasion, been more volatile than daily changes in comparable benchmark or other market rates.

Risk Factors - Continued

In 2021, the Company undertook several actions to reduce overall debt.

See Note G – Financing Arrangements and Debt for information regarding the Company’s outstanding debt as of December 31, 2021.

The Company’s ability to obtain additional financing is affected by the Company’s debt credit ratings and competition for available debt financing.

A ratings downgrade could materially and adversely impact the Company’s ability to access debt markets, increase the borrowing cost under the Company’s credit facility and the cost of future debt, and potentially require the Company to post additional letters of credit or other forms of collateral for certain obligations.

Further, changes in economic environments and investors’ view of risk of the exploration and production industry could adversely impact interest rates.

This could result in higher interest costs on capital funding lowering net income and cash-flows.

Murphy partially manages this risk through borrowing at fixed rates where-ever possible;

however, rates determined when refinancing or new capital is required are partly determined through factors outside of Murphy’s control, such as centrally (federal government) set interest rates and investors’ view of the exploration and production industry.

Murphy’s operations could be adversely affected by changes in foreign exchange rates.

The Company’s worldwide operational scope exposes it to risks associated with foreign currencies.

Most of the Company’s business is transacted in U.S.

dollars, and therefore the Company and most of its subsidiaries are U.S.

dollar functional entities for accounting purposes.

However, the Canadian dollar is the functional currency for all Canadian operations.

This exposure to currencies other than the U.S.

dollar functional currency can lead to impacts on consolidated financial results from foreign currency translation.

On occasions, the Canadian business may hold assets or incur liabilities denominated in a currency which is not Canadian dollars which could lead to exposure to foreign exchange rate fluctuations.

See also Note L – Financial Instruments and Risk Management in the Notes to Consolidated Financial Statements for additional information on derivative contracts.

The costs and funding requirements related to the Company’s retirement plans are affected by several factors.

A number of actuarial assumptions impact funding requirements for the Company’s retirement plans.

The most significant of these assumptions include return on assets, long-term interest rates and mortality.

If the actual results for the plans vary significantly from the actuarial assumptions used, or if laws regulating such retirement plans are changed, Murphy could be required to make more significant funding payments to one or more of its retirement plans in the future and/or it could be required to record a larger liability for future obligations in its Consolidated Balance Sheet.

Murphy has limited control over supply chain costs.

The Company often experiences pressure on its operating and capital expenditures in periods of strong crude oil and natural gas prices because an increase in exploration and production activities due to high oil and natural gas sales prices generally leads to higher demand for, and consequently higher costs for, goods and services in the oil and natural gas industry.

In 2021 and at the start of 2022, this scenario of higher costs for goods and services in the oil and gas natural gas industry is being observed.

In early 2022, the pressure of rising prices and demand for services has begun affecting the cost of goods and services in the oil and natural gas industry.

Murphy has a dedicated procurement department focused on managing supply chain and input costs.

Murphy also has certain transportation, processing and production handling services costs fixed through long-term contracts and commitments and therefore is partly protected from increasing price of services.

However, from time to time, Murphy will seek to enter new commitments, exercise options to extend contracts and retender contracts for rigs and other industry services which could expose Murphy to the impact of higher prices.

Risk Factors - Continued

The Company is exposed to credit risks associated with (i) sales of certain of its products to customers, (ii) joint venture partners and (iii) other counterparties.

Murphy is exposed to credit risk in three principle areas:

• Accounts receivable credit risk from selling its produced commodity to customers;

• Joint venture partners related to certain oil and natural gas properties operated by the Company.

These joint venture partners may not be able to meet their financial obligation to pay for their share of capital and operating costs as they become due;

• Counterparty credit risk related to forward price commodity hedge contracts to protect the Company’s cash flows against lower oil and natural gas prices

To mitigate these risks the Company:

• Actively monitors the credit worthiness of all its customers, joint venture partners, and forward commodity hedge counterparties;

• Given the inherent credit risks in a cyclical commodity price business, the Company has increased the focus on its review of joint venture partners, the magnitude of potential exposure, and planning suitable actions should a joint venture partner fail to pay its share of capital and operating expenditures.

The inability of a purchaser of the Company’s produced commodity, a joint venture partner of the Company, or counterparty in a forward price commodity hedge to meet their respective payment obligations to the Company could have an adverse effect on Murphy’s future earnings and cash flows.

General Risk Factors

We face various risks related to health epidemics, pandemics and similar outbreaks, which may have material adverse effects on our business, financial position, results of operations and/or cash flows.

As the COVID-19 pandemic has evolved from its emergence in early 2020, so has its global impact.

Our business has been affected in various ways, including in our results of operations.

In 2020 the spread of COVID-19 led to disruption in the global economy and weakness in demand in crude oil, natural gas liquids and natural gas, which applied downward pressure on global commodity prices.

In 2021, a combination of the global availability of vaccines and a relaxation of certain government-imposed lockdowns in response to the ongoing COVID-19 pandemic led to an improving global economic outlook and subsequently increased demand for oil and gas.

Several COVID-19 variants, such as Delta and Omicron, temporarily created uncertainty in the outlook;

however, vaccines remained effective and therefore demand for oil and gas has remained resilient in the second half of 2021 and early 2022.

The unpredictable nature of pandemics can therefore create volatility in commodity prices, hence see Risk Factors, “Price Risk Factors – Volatility in the global prices of crude oil, natural gas liquids and natural gas can significantly affect the Company’s operating results.”

If significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions, facility closures or other restrictions in connection with the COVID-19 or other pandemic, our operations will likely be impacted and decrease our ability to produce, oil, natural gas liquids and natural gas.

We may be unable to perform fully on our commitments and our costs may increase as a result of the COVID-19 outbreak.

These cost increases may not be fully recoverable or adequately covered by insurance.

The COVID-19 or other pandemic could also cause disruption in our supply chain;

cause delay, or limit the ability of vendors and customers to perform, including in making timely payments to us;

and cause other unpredictable events.

We continue to work with our stakeholders (including customers, employees, suppliers, financial and lending institutions and local communities) to address this global pandemic responsibly.

We continue to monitor the situation, to assess further possible implications to our business, supply chain and customers, and to take actions in an effort to mitigate adverse consequences.

The Company continues to exercise financial discipline in managing costs and capital expenditures.

We cannot predict the ongoing impact of the COVID-19 or other pandemic.

The extent to which the COVID-19 or other health pandemics or epidemics may impact our results will depend on future developments, including, among other factors, the duration and spread of the virus and its variants, availability, acceptance and

Risk Factors - Continued

effectiveness of vaccines along with related travel advisories, quarantines and restrictions, the recovery time of the disrupted supply chains and industries, the impact of labor market interruptions, and the impact of government interventions.

Murphy’s Information Technology environment may be exposed to cyber threats.

The oil and natural gas industry has become increasingly dependent on digital technologies to conduct exploration, development, and production activities.

We are no exception to this trend.

As a company, we depend on these technologies to estimate quantities of oil and natural gas reserves, process and record financial and operating data, analyze seismic and drilling information, communicate internally and externally, and conduct many other business activities.

Maintaining the security of our technology and preventing breaches is critical to our business operation.

We rely on our information systems to protect and secure intellectual property, strategic plans, customer information, and personally identifiable information, such as employee information.

A successful or undetected cyberattack has the potential to halt business operations, impair our reputation, weaken our competitive advantage, and / or adversely impact our financial condition.

Given the increasing global threats from cybercrime, the Company’s approach to mitigate cybersecurity risk focuses on three key elements:

• People - Security awareness education and readiness-testing throughout the year for employees and contractors;

• Process - Incorporating “cyber awareness” in our day to day processes and maturing key controls such as recurring internal and external cyber risk assessments, physical and digital asset protection, and security vulnerability remediation via preventative and detective measures;

• Technology - Investing in industry aligned security technology and threat intelligence capabilities.

As the sophistication of cyber threats continues to evolve, we may be required to dedicate additional resources to continue to modify or enhance our security measures, or to investigate and remediate any vulnerabilities to cyber-attacks.

Murphy’s operations and earnings have been and will continue to be affected by domestic and worldwide political developments.

From time to time, some governments intervene in the market for crude oil and natural gas produced in their countries through such actions as setting prices, determining rates of production, and controlling who may buy and sell the production.

Murphy is exposed to regulation, legislation and policies enacted by the federal government.

As an example, following the election and inauguration of current president in January 2021, the U.S.

Secretary of the Interior issued Order No.

3395 on January 20, 2021.

This order served to potentially impact the timing of issuance of oil and gas leases, lease amendments and extension, and drilling permits on federal lands and offshore waters.

However, following this notice, the Department of Interior has continued to approve permits and Murphy has not experienced a delay in project approvals.

An extension or permanency of this regime could impact the options available to Murphy for future development, reserves available for production and hence future cash flows and profitability.

In the event leasing delays or cancellations alter Murphy’s plans in the Gulf of Mexico, the Company believes it will be able to re-focus activities and allocate capital to other areas.

The Company does not hold any onshore federal lands in the U.S.

In addition, the current presidential administration has pursued other initiatives related to environmental, health and safety standards applicable to the oil and gas industry.

These include an executive order in January 2021 that directed the Secretary of the Interior to halt indefinitely new oil and natural gas leases on federal lands and offshore waters pending a since-completed review by the Secretary of the Interior of federal oil and gas permitting and leasing practices;

however, a June 2021 preliminary injunction in the U.S.

District Court for the Western District of Louisiana barred the current presidential administration from implementing the pause in new federal oil and gas leases.

This executive order also set forth other initiatives and goals, including procurement of carbon pollution-free electricity, elimination of fossil fuel subsidies, a carbon pollution-free power sector by 2035 and a net-zero emissions U.S.

economy by 2050.

Another executive order from January 2021 called for a

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What changed 10-K

Item 1. Business