What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-05-04 compared with 2021-11-04 · 223 added, 396 removed, 543 unchanged (53% of the section changed)

3 unchanged sentences

(Thousands of dollars)

September 30,

2022 December 31,

1 unchanged sentence

Cash and cash equivalents $ 480,587 521,184

Accounts receivable, less allowance for doubtful accounts of $ 1,605 in 2021 and 2020

Accounts receivable, net

371,838 258,150

17 unchanged sentences

Other accrued liabilities 441,382 360,859

Liabilities associated with assets held for sale — 14,372

Total current liabilities 1,598,879 1,164,326

20 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(Thousands of dollars, except per share amounts)

2021 2020 2021 2020

Revenues and other income

Revenue from sales to customers $ 687,549 425,324 $ 2,038,905 1,311,627

(Loss) gain on derivative instruments ( 59,164 ) ( 5,290 ) ( 499,794 ) 319,502

Revenue from production $ 834,528 592,527

Sales of purchased natural gas 36,846 —

Total revenue from sales to customers 871,374 592,527

Loss on crude contracts ( 320,777 ) ( 214,385 )

Gain on sale of assets and other income 2,364 1,843

4 unchanged sentences

Transportation, gathering and processing 46,923 42,912

Costs of purchased natural gas 33,665 —

Exploration expenses, including undeveloped lease amortization 47,566 11,780

Selling and general expenses 33,529 29,503

Restructuring expenses — 4,982 — 46,379

Depreciation, depletion and amortization 164,124 198,278

1 unchanged sentence

Impairment of assets — 171,296

Other (benefit) expense ( 32,791 ) 20,224 58,616 ( 2,957 )

Other operating expense 105,942 21,079

Total costs and expenses 595,085 641,735

Operating income (loss) from continuing operations 223,371 ( 278,055 ) ( 28,595 ) ( 1,206,709 )

Operating loss from continuing operations ( 42,124 ) ( 261,750 )

Other income (loss)

Interest income and other (loss) ( 1,593 ) ( 5,177 ) ( 11,459 ) ( 10,107 )

Other expense ( 2,495 ) ( 5,341 )

Interest expense, net ( 37,277 ) ( 88,100 )

Total other loss ( 39,772 ) ( 93,441 )

Income (loss) from continuing operations before income taxes 174,853 ( 328,414 ) ( 218,453 ) ( 1,341,693 )

Income tax expense (benefit) 36,838 ( 62,584 ) ( 62,498 ) ( 248,890 )

Income (loss) from continuing operations 138,015 ( 265,830 ) ( 155,955 ) ( 1,092,803 )

(Loss) from discontinued operations, net of income taxes ( 706 ) ( 778 ) ( 600 ) ( 6,907 )

Net income (loss) including noncontrolling interest 137,309 ( 266,608 ) ( 156,555 ) ( 1,099,710 )

Net income (loss) attributable to noncontrolling interest 28,853 ( 23,055 ) 85,509 ( 122,869 )

NET INCOME (LOSS) ATTRIBUTABLE TO MURPHY $ 108,456 ( 243,553 ) $ ( 242,064 ) ( 976,841 )

INCOME (LOSS) PER COMMON SHARE – BASIC

Loss from continuing operations before income taxes ( 81,896 ) ( 355,191 )

Income tax benefit ( 16,961 ) ( 88,159 )

Loss from continuing operations ( 64,935 ) ( 267,032 )

(Loss) income from discontinued operations, net of income taxes ( 551 ) 208

Net loss including noncontrolling interest ( 65,486 ) ( 266,824 )

Net income attributable to noncontrolling interest 47,850 20,614

NET LOSS ATTRIBUTABLE TO MURPHY $ ( 113,336 ) ( 287,438 )

LOSS PER COMMON SHARE – BASIC

Continuing operations $ ( 0.73 ) ( 1.87 )

Discontinued operations — —

Net income (loss) $ 0.70 ( 1.59 ) $ ( 1.57 ) ( 6.36 )

INCOME (LOSS) PER COMMON SHARE – DILUTED

Net loss $ ( 0.73 ) ( 1.87 )

LOSS PER COMMON SHARE – DILUTED

Continuing operations $ ( 0.73 ) ( 1.87 )

Discontinued operations — —

Net income (loss) $ 0.70 ( 1.59 ) $ ( 1.57 ) ( 6.36 )

Net loss $ ( 0.73 ) ( 1.87 )

Cash dividends per Common share 0.15 0.125

4 unchanged sentences

Murphy Oil Corporation and Consolidated Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)

Three Months Ended

September 30, Nine Months Ended

September 30,

(Thousands of dollars) 2022 2021

Net income (loss) including noncontrolling interest $ 137,309 ( 266,608 ) $ ( 156,555 ) ( 1,099,710 )

Other comprehensive (loss) income, net of tax

Net (loss) gain from foreign currency translation ( 31,308 ) 28,323 6,534 ( 39,520 )

Net loss including noncontrolling interest $ ( 65,486 ) ( 266,824 )

Other comprehensive income, net of tax

Net gain from foreign currency translation 18,020 19,897

Retirement and postretirement benefit plans 3,336 4,136

Deferred loss on interest rate hedges reclassified to interest expense — 1,690

Other comprehensive (loss) income ( 26,655 ) 32,346 21,159 ( 83,834 )

COMPREHENSIVE INCOME (LOSS) $ 110,654 ( 234,262 ) $ ( 135,396 ) ( 1,183,544 )

Other comprehensive income 21,356 25,723

Comprehensive loss including noncontrolling interest ( 44,130 ) ( 241,101 )

Comprehensive income attributable to noncontrolling interest 47,850 20,614

COMPREHENSIVE LOSS ATTRIBUTABLE TO MURPHY $ ( 91,980 ) ( 261,715 )

See Notes to Consolidated Financial Statements, page 7.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

Nine Months Ended

September 30,

Three Months Ended

(Thousands of dollars) 2022 2021

Operating Activities

Net income (loss) including noncontrolling interest $ ( 156,555 ) ( 1,099,710 )

Adjustments to reconcile net income (loss) to net cash provided by continuing operations activities

Loss from discontinued operations 600 6,907

Net loss including noncontrolling interest $ ( 65,486 ) ( 266,824 )

Adjustments to reconcile net loss to net cash provided by continuing operations activities

Loss (income) from discontinued operations 551 ( 208 )

Depreciation, depletion and amortization 164,124 198,278

Dry hole and previously suspended exploration costs 17,899 8,255

Unsuccessful exploration well costs and previously suspended exploration costs 32,831 717

Amortization of undeveloped leases 4,198 4,602

Accretion of asset retirement obligations 11,876 10,492

Impairment of assets 171,296 1,206,284

Noncash restructuring expense — 17,565

Deferred income tax (benefit) expense ( 65,149 ) ( 231,748 )

Mark to market loss (gain) on contingent consideration 105,111 ( 29,476 )

Mark to market loss (gain) on derivative instruments 228,497 ( 104,463 )

Deferred income tax benefit ( 20,253 ) ( 88,867 )

Mark to market loss on contingent consideration 98,126 14,923

Mark to market loss on crude contracts 188,509 153,505

Long-term non-cash compensation 17,288 12,124

Net decrease (increase) in noncash working capital 117,330 ( 26,261 )

Impairment of assets — 171,296

Net (increase) in noncash working capital ( 80,922 ) ( 9,052 )

Other operating activities, net ( 12,512 ) 36,780

4 unchanged sentences

Proceeds from sales of property, plant and equipment — 268,023

Net cash required by investing activities ( 311,926 ) ( 723,661 )

Net cash (required) provided by investing activities ( 244,908 ) 9,744

Financing Activities

5 unchanged sentences

Distributions to noncontrolling interest ( 39,884 ) ( 36,006 )

Contingent consideration payment ( 55,169 ) —

Cash dividends paid ( 23,300 ) ( 19,287 )

1 unchanged sentence

Capital lease obligation payments ( 158 ) ( 178 )

Net cash (required) provided by financing activities ( 585,593 ) 59,091

Cash Flows from Discontinued Operations 1

Operating activities — ( 1,202 )

Investing activities — 4,494

Financing activities — —

Net cash provided by discontinued operations — 3,292

Net cash (required) by financing activities ( 133,932 ) ( 327,820 )

Effect of exchange rate changes on cash and cash equivalents ( 87 ) 574

Net increase (decrease) in cash and cash equivalents 194,461 ( 87,124 )

Net (decrease) in cash and cash equivalents ( 40,597 ) ( 79,736 )

Cash and cash equivalents at beginning of period 521,184 310,606

Cash and cash equivalents at end of period $ 480,587 230,870

1 Net cash provided by discontinued operations is not part of the cash flow reconciliation.

See Notes to Consolidated Financial Statements, page 7.

2 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(Thousands of dollars)

2021 2020 2021 2020

Cumulative Preferred Stock – par $ 100 , authorized 400,000 shares, none issued

Common Stock – par $ 1.00 , authorized 450,000,000 shares, issued 195,100,628 shares at September 30, 2021 and 195,100,628 shares at September 30, 2020

Common Stock – par $ 1.00 , authorized 450,000,000 shares, issued 195,100,628 shares at March 31, 2022 and 195,100,628 shares at March 31, 2021

Balance at beginning of period 195,101 195,101

14 unchanged sentences

Balance at beginning of period ( 527,711 ) ( 601,333 )

Foreign currency translation gain (loss), net of income taxes ( 31,308 ) 28,323 6,534 ( 39,520 )

Foreign currency translation gain, net of income taxes 18,020 19,897

Retirement and postretirement benefit plans, net of income taxes 3,336 4,136

10 unchanged sentences

Balance at beginning of period 163,485 179,810

Net income (loss) attributable to noncontrolling interest 28,853 ( 23,055 ) 85,509 ( 122,869 )

Net income attributable to noncontrolling interest 47,850 20,614

Distributions to noncontrolling interest owners ( 39,884 ) ( 36,006 )

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

These notes are an integral part of the financial statements of Murphy Oil Corporation and Consolidated Subsidiaries (Murphy/ Company) on pages 2 through 6 of this Form 10-Q report.

These notes are an integral part of the financial statements of Murphy Oil Corporation and Consolidated Subsidiaries (the Company or Murphy) on pages 2 through 6 of this Form 10-Q report.

Note A – Nature of Business and Interim Financial Statements

5 unchanged sentences

These non-consolidated VIEs are not material to our financial position or results of operations.

As of September 30, 2021, our maximum exposure to loss was $ 3.4 million (excluding operational impacts), which represents our net investment in Delta House.

As of March 31, 2022, our maximum exposure to loss was $ 3.2 million (excluding operational impacts), which represents our net investment in Delta House.

We have not provided any financial support to Delta House other than amounts previously required by our membership interest.

INTERIM FINANCIAL STATEMENTS – In the opinion of Murphy’s management, the unaudited financial statements presented herein include all accruals necessary to present fairly the Company’s financial position at September 30, 2021 and December 31, 2020, and the results of operations, cash flows and changes in stockholders’ equity for the interim periods ended September 30, 2021 and 2020, in conformity with accounting principles generally accepted in the United States of America (U.S.).

INTERIM FINANCIAL STATEMENTS – In the opinion of the Murphy’s management, the unaudited financial statements presented herein include all accruals necessary to present fairly the Company’s financial position at March 31, 2022 and December 31, 2021, and the results of operations, cash flows and changes in stockholders’ equity for the interim periods ended March 31, 2022 and 2021, in conformity with accounting principles generally accepted in the United States of America (U.S.).

In preparing the financial statements of the Company in conformity with accounting principles generally accepted in the U.S., management has made a number of estimates and assumptions related to the reporting of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities.

1 unchanged sentence

Consolidated financial statements and notes to consolidated financial statements included in this Form 10-Q report should be read in conjunction with the Company’s 2021 Form 10-K report, as certain notes and other pertinent information have been abbreviated or omitted in this report.

Financial results for the three-month and nine-month periods ended September 30, 2021 are not necessarily indicative of future results.

Financial results for the three-month period ended March 31, 2022 are not necessarily indicative of future results.

Note B – New Accounting Principles and Recent Accounting Pronouncements

21 unchanged sentences

For the offshore business in Canada, contracts are based on index prices and revenue is recognized at the time of vessel load based on the volumes on the bill of lading and point of custody transfer.

The Company also purchases natural gas in Canada to meet certain sales commitments.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

2 unchanged sentences

The Company reviews performance based on two key geographical segments and between onshore and offshore sources of revenue within these geographies.

For the three-month and nine-month periods ended September 30, 2021, the Company recognized $ 687.5 million and $ 2,038.9 million, respectively, from contracts with customers for the sales of oil, natural gas liquids and natural gas.

For the three-month and nine-month periods ended September 30, 2020, the Company recognized $ 425.3 million and $ 1,311.6 million, respectively, from contracts with customers for the sales of oil, natural gas liquids and natural gas.

For the three-month periods ended March 31, 2022, and 2021, the Company recognized $ 871.4 million and $ 592.5 million, respectively, from total revenue from sales to customers, from sales of oil, natural gas liquids and natural gas.

For the three-month periods ended March 31, 2022, and 2021, the Company recognized $ 834.5 million and $ 592.5 million, respectively, from sales of oil, natural gas liquids and natural gas from production.

Three Months Ended

September 30, Nine Months Ended

September 30,

(Thousands of dollars) 2022 2021

6 unchanged sentences

Total crude oil and condensate revenue 702,846 490,796

556,620 354,947 1,704,226 1,110,365

Net natural gas liquids revenue

4 unchanged sentences

Total natural gas liquids revenue 35,531 21,569

31,903 14,311 77,074 35,490

Net natural gas revenue

4 unchanged sentences

Total natural gas revenue 96,151 80,162

99,026 56,066 257,605 165,772

Total revenue from contracts with customers 687,549 425,324 2,038,905 1,311,627

(Loss) gain on derivative instruments ( 59,164 ) ( 5,290 ) ( 499,794 ) 319,502

Revenue from production 834,528 592,527

Sales of purchased natural gas 1

Total revenue from sales to customers 871,374 592,527

Loss on crude contracts ( 320,777 ) ( 214,385 )

Gain on sale of assets and other income 2,364 1,843

Total revenue and other income $ 630,700 421,865 1,560,328 1,637,135

Total revenues and other income $ 552,961 379,985

1 Sales of purchase natural gas are associated with Canada Onshore.

In 2022, the Company included additional line items on the face of the Consolidated Statements of Operations to report Sales of purchased natural gas and Costs of purchased natural gas.

Sales and purchases of natural gas are reported on a gross basis when Murphy takes control of the products and has risks and rewards of ownership.

Contract Balances and Asset Recognition

As of September 30, 2021, and December 31, 2020, receivables from contracts with customers, net of royalties and associated payables, on the balance sheet from continuing operations, were $ 144.0 million and $ 135.2 million, respectively.

As of March 31, 2022, and December 31, 2021, receivables from contracts with customers, net of royalties and associated payables, on the balance sheet from continuing operations, were $ 258.6 million and $ 169.8 million, respectively.

Payment terms for the Company’s sales vary across contracts and geographical regions, with the majority of the cash receipts required within 30 days of billing.

Based on a forward-looking expected loss model in accordance with ASU 2016-13, the Company did not recognize any impairment losses on receivables or contract assets arising from customer contracts during the reporting periods.

The Company has not entered into any revenue contracts that have financing components as at September 30, 2021.

The Company does not employ sales incentive strategies such as commissions or bonuses for obtaining sales contracts.

For the periods presented, the Company did not identify any assets to be recognized associated with the costs to obtain a contract with a customer.

The Company has not entered into any revenue contracts that have financing components as of March 31, 2022.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

Note C – Revenue from Contracts with Customers (Contd.)

The Company does not employ sales incentive strategies such as commissions or bonuses for obtaining sales contracts.

For the periods presented, the Company did not identify any assets to be recognized associated with the costs to obtain a contract with a customer.

Performance Obligations

6 unchanged sentences

The underlying reason for entering a fixed price contract is generally unrelated to anticipated future prices or other observable data and serves a particular purpose in the Company’s long-term strategy.

As of September 30, 2021, the Company had the following sales contracts in place which are expected to generate revenue from sales to customers for a period of more than 12 months starting at the inception of the contract:

Current Long-Term Contracts Outstanding at September 30, 2021

As of March 31, 2022, the Company had the following sales contracts in place which are expected to generate revenue from sales to customers for a period of more than 12 months starting at the inception of the contract:

Current Long-Term Contracts Outstanding at March 31, 2022

Location Commodity End Date Description Approximate Volumes

Oil Q4 2021 Fixed quantity delivery in Eagle Ford 17,000 BOED

Natural Gas and NGL Q1 2023 Deliveries from dedicated acreage in Eagle Ford As produced

Canada Natural Gas Q4 2022 Contracts to sell natural gas at USD index pricing 8 MMCFD

Canada Natural Gas Q4 2022 Contracts to sell natural gas at CAD fixed prices 5 MMCFD

Canada Natural Gas Q4 2022 Contracts to sell natural gas at USD fixed pricing 20 MMCFD

Canada Natural Gas Q4 2023 1

Contracts to sell natural gas at USD index pricing 25 MMCFD

Canada Natural Gas Q4 2023 Contracts to sell natural gas at USD index pricing 25 MMCFD

Canada Natural Gas Q4 2023 Contracts to sell natural gas at CAD fixed prices 38 MMCFD

1 unchanged sentence

Canada Natural Gas Q4 2024 Contracts to sell natural gas at CAD fixed prices 100 MMCFD

Canada Natural Gas Q4 2024 1

Contracts to sell natural gas at CAD fixed prices 34 MMCFD

Canada Natural Gas Q4 2024 Contracts to sell natural gas at CAD fixed prices 34 MMCFD

Canada Natural Gas Q4 2024 Contracts to sell natural gas at USD fixed pricing 15 MMCFD

Canada Natural Gas Q4 2026 1

Contracts to sell natural gas at USD index pricing 49 MMCFD

1 These contracts are scheduled to commence after the balance sheet date, at various dates between Q4 2021 and Q1 2022.

Canada Natural Gas Q4 2026 Contracts to sell natural gas at USD index pricing 49 MMCFD

Canada NGL Q3 2023 Contracts to sell natural gas liquids at CAD pricing 952 BOED

Fixed price contracts are accounted for as normal sales and purchases for accounting purposes.

2 unchanged sentences

Under FASB guidance exploratory well costs should continue to be capitalized when the well has found a sufficient quantity of reserves to justify its completion as a producing well and the Company is making sufficient progress assessing the reserves and the economic and operating viability of the project.

As of September 30, 2021, the Company had total capitalized exploratory well costs for continuing operations pending the determination of proved reserves of $ 186.6 million.

The following table reflects the net changes in capitalized exploratory well costs during the nine-month periods ended September 30, 2021 and 2020.

As of March 31, 2022, the Company had total capitalized exploratory well costs for continuing operations pending the determination of proved reserves of $ 172.7 million.

The following table reflects the net changes in capitalized exploratory well costs during the three-month periods ended March 31, 2022 and 2021.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

4 unchanged sentences

Capitalized exploratory well costs charged to expense ( 10,473 ) —

Balance at September 30 $ 186,623 187,859

The capitalized well costs charged to expense during 2020 represent a charge for asset impairments (see below).

Balance at March 31 $ 172,706 182,401

The capitalized well costs charged to expense during 2022 represent expenditures related to the Cutthroat-1 exploration well in block SEAL-M-428 in the Sergipe-Alagoas Basin offshore Brazil.

There were no hydrocarbons found in this well.

The following table provides an aging of capitalized exploratory well costs based on the date the drilling was completed for each individual well and the number of projects for which exploratory well costs have been capitalized.

The projects are aged based on the last well drilled in the project.

September 30,

(Thousands of dollars) Amount No.

6 unchanged sentences

$ 172,706 13 7 182,401 11 5

Of the $ 183.3 million of exploratory well costs capitalized more than one year at September 30, 2021, $ 92.3 million is in Vietnam, $ 45.0 million is in the U.S., $ 25.9 million is in Brunei, $ 15.3 million is in Mexico, and $ 4.8 million is in Canada.

Of the $ 169.9 million of exploratory well costs capitalized more than one year at March 31, 2022, $ 94.0 million is in Vietnam, $ 47.6 million is in the U.S., $ 15.3 million is in Mexico, $ 8.2 million is in Brunei, and $ 4.8 million is in Canada.

In all geographical areas, either further appraisal or development drilling is planned and/or development studies/plans are in various stages of completion.

During the first quarter of 2021, the Company recorded an impairment charge of $ 171.3 million for Terra Nova due to the status, including agreements with the partners, of operating and production plans.

In 2020, declines in future oil and natural gas prices (principally driven by reduced demand from the COVID-19 pandemic) led to impairments in certain of the Company’s U.S.

Offshore and Other Foreign properties.

The Company recorded pretax noncash impairment charges of $ 1,206.3 million to reduce the carrying values to their estimated fair values at select properties.

The fair values were determined by internal discounted cash flow models using estimates of future production, prices, costs and discount rates believed to be consistent with those used by principal market participants in the applicable region.

The following table reflects the recognized impairments for the nine months ended September 30, 2021 and 2020.

Nine Months Ended

September 30,

(Thousands of dollars) 2021 2020

$ — 1,152,515

Canada 171,296 —

Other Foreign — 39,709

Corporate — 14,060

$ 171,296 1,206,284

During the first quarter of 2021, the King’s Quay FPS was sold to ArcLight Capital Partners, LLC (ArcLight) for proceeds of $ 267.7 million, which reimburses the Company for previously incurred capital expenditures.

There were no impairments in the first quarter of 2022.

In the first quarter of 2021, the Company recorded an impairment charge of $ 171.3 million for Terra Nova due to the status, including agreements with partners, of operating and production plans.

Later in 2021, the Company acquired an additional 7.525 % working interest at Terra Nova following a commercial agreement to sanction an asset life extension project.

There were no divestments in the first quarter of 2022.

During the first quarter of 2021, the King’s Quay FPS was sold to ArcLight Capital Partners, LLC (ArcLight) for proceeds of $ 267.7 million, which reimbursed the Company for previously incurred capital expenditures.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

2 unchanged sentences

refining and marketing and Malaysian exploration and production operations as discontinued operations for all periods presented.

The results of operations associated with discontinued operations for the three-month and nine-month periods ended September 30, 2021 and 2020 were as follows:

The results of operations associated with discontinued operations for the three-month periods ended March 31, 2022 and 2021 were as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

(Thousands of dollars) 2022 2021

5 unchanged sentences

(Loss) income from discontinued operations $ ( 551 ) 208

As of September 30, 2021, assets held for sale on the Consolidated Balance Sheet include the carrying value of the net property, plant equipment of CA-2 project in Brunei and the Company’s office building in El Dorado, Arkansas.

As of June 30, 2021, the CA-1 asset in Brunei is no longer being marketed for sale.

As of December 31, 2020, assets held for sale included the King’s Quay Floating Production System (FPS) of $ 250.1 million (sold in March 2021), the Brunei exploration and production properties, and the Company’s office building in El Dorado, Arkansas.

(Thousands of dollars) September 30,

As of March 31, 2022 and December 31, 2021, assets held for sale on the Consolidated Balance Sheet include the carrying value of the net property, plant and equipment of CA-2 project in Brunei and the Company’s former headquarters office building in El Dorado, Arkansas.

(Thousands of dollars) March 31,

2022 December 31,

Current assets

Cash $ — 10,185

Inventories — 406

Property, plant, and equipment, net 15,701 15,453

Deferred income taxes and other assets — 9,441

Total current assets associated with assets held for sale $ 15,701 15,453

Current liabilities

Accounts payable $ — 5,306

Other accrued liabilities — 45

Current maturities of long-term debt (finance lease) — 737

Taxes payable — 1,510

Long-term debt (finance lease) — 6,513

Asset retirement obligation — 261

Total current liabilities associated with assets held for sale $ — 14,372

Note F – Financing Arrangements and Debt

As of September 30, 2021, the Company had a $ 1.6 billion revolving credit facility (RCF).

As of March 31, 2022, the Company had a $ 1.6 billion revolving credit facility (RCF).

The RCF is a senior unsecured guaranteed facility which expires in November 2023.

At September 30, 2021, the Company had no outstanding borrowings under the RCF and $ 31.4 million of outstanding letters of credit, which reduce the borrowing capacity of the RCF.

At September 30, 2021, the interest rate in effect on borrowings under the facility was 1.78 %.

At September 30, 2021, the Company was in compliance with all covenants related to the RCF.

At March 31, 2022, the Company had no outstanding borrowings under the RCF and $ 31.4 million of outstanding letters of credit, which reduce the borrowing capacity of the RCF.

At March 31, 2022, the interest rate in effect on borrowings under the facility was 2.15 %.

At March 31, 2022 and 2021, the Company was in compliance with all covenants related to the RCF.

In March 2021, the Company issued $ 550.0 million of new notes that bear interest at a rate of 6.375 % and mature on July 15, 2028.

1 unchanged sentence

The proceeds of the $ 550.0 million notes, along with cash on hand, were used to redeem and cancel $ 259.3 million of the Company’s 4.00 % notes due June 2022 and $ 317.1 million of the Company’s 4.95 % notes due December 2022 (originally issued as 3.70 % notes due 2022;

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

Note F – Financing Arrangements and Debt (Contd.)

the 2022 Notes).

The cost of the debt extinguishment of $ 36.9 million is included in Interest expense, net on the Consolidated Statement of Operations for the nine months ended September 30, 2021.

The cash costs of $ 34.2 million are shown as a financing activity on the Consolidated Statement of Cash Flows for the nine months ended September 30, 2021.

In August 2021, the Company redeemed $ 150.0 million aggregate principal amount of its 6.875 % senior notes due 2024 (2024 Notes).

The cost of the debt extinguishment of $ 3.5 million is included in Interest expense, net on the Consolidated Statement of Operations for the nine months ended September 30, 2021.

The cash costs of $ 2.6 million are shown as a financing activity on the Consolidated Statement of Cash Flows for the nine months ended September 30, 2021.

collectively the 2022 Notes).

The cost of the debt extinguishment of $ 36.9 million is included in Interest expense, net on the Consolidated Statement of Operations for the three months ended March 31, 2021.

The cash costs of $ 34.2 million are shown as a financing activity on the Consolidated Statement of Cash Flows for the three months ended March 31, 2021.

The Company also has a shelf registration statement on file with the U.S.

Securities and Exchange Commission that permits the offer and sale of debt and/or equity securities through October 15, 2024.

Subsequent to quarter end, the Company issued a notice of partial redemption with respect to $ 150.0 million aggregate principal amount of its 6.875 % senior notes due 2024 (2024 Notes).

The Company will redeem the 2024 Notes at the applicable redemption price set forth in the indenture governing the 2024 Notes, plus accrued and unpaid interest, if any, to the date of redemption.

The redemption date of the 2024 Notes will be December 2, 2021.

On May 2, 2022, the Company issued a notice of partial redemption with respect to $ 200.0 million aggregate principal amount of its 6.875 % senior notes due 2024 (the Notes).

The Company will redeem the Notes at the applicable redemption price set forth in the indenture governing the Notes, plus accrued and unpaid interest, if any, to but, not including, the date of redemption.

The redemption date of the Notes will be June 2, 2022.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

Note G – Other Financial Information

Additional disclosures regarding cash flow activities are provided below.

Nine Months Ended

September 30,

Three Months Ended

(Thousands of dollars) 2022 2021

Net (increase) decrease in operating working capital, excluding cash and cash equivalents:

Decrease in accounts receivable ¹ $ 75,100 251,706

Decrease in inventories 9,718 4,747

Net decrease (increase) in operating working capital, excluding cash and cash equivalents:

(Increase) in accounts receivable ¹ $ ( 117,928 ) ( 16,954 )

(Increase) decrease in inventories ( 4,541 ) 392

(Increase) in prepaid expenses ( 515 ) ( 3,652 )

Increase (decrease) in accounts payable and accrued liabilities ¹ 40,687 ( 264,078 )

(Decrease) in income taxes payable ( 1,493 ) ( 1,236 )

Net (increase) decrease in noncash operating working capital $ 117,330 ( 26,261 )

Increase in accounts payable and accrued liabilities ¹ 40,426 11,810

Increase (decrease) in income taxes payable 1,636 ( 648 )

Net (increase) in noncash operating working capital $ ( 80,922 ) ( 9,052 )

Supplementary disclosures:

4 unchanged sentences

Asset retirement costs capitalized 2

Decrease in capital expenditure accrual 31,301 74,742

$ 3,889 6,390

(Increase) decrease in capital expenditure accrual ( 49,352 ) 13,617

1 Excludes receivable/payable balances relating to mark-to-market of derivative instruments and contingent consideration relating to acquisitions.

2 Excludes non-cash capitalized cost offset by impairment of $ 74.4 million in the first quarter of 2021 and a gain in other operating income of $ 71.8 million following a commercial agreement to sanction an asset life extension project at Terra Nova in the third quarter of 2021, which extended the life of Terra Nova by approximately 10 years.

2 Excludes non-cash capitalized cost offset by Terra Nova impairment of $ 74.4 million in the first quarter of 2021.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

9 unchanged sentences

the life insurance benefits are noncontributory.

The table that follows provides the components of net periodic benefit expense for the three-month and nine-month periods ended September 30, 2021 and 2020.

Three Months Ended September 30,

Pension Benefits Other Postretirement Benefits

(Thousands of dollars) 2021 2020 2021 2020

Service cost $ 1,770 1,664 328 342

Interest cost 4,258 4,827 521 612

Expected return on plan assets ( 6,038 ) ( 5,773 ) — —

Amortization of prior service cost (credit) 155 149 — —

Recognized actuarial loss 5,269 5,690 ( 8 ) ( 24 )

Net periodic benefit expense $ 5,414 6,557 841 930

Nine Months Ended September 30,

The table that follows provides the components of net periodic benefit expense for the three-month periods ended March 31, 2022 and 2021.

Three Months Ended March 31,

Pension Benefits Other Postretirement Benefits

6 unchanged sentences

Net periodic benefit expense $ 3,656 5,356 656 840

Other - curtailment — 586 — ( 1,825 )

Other - special termination benefits — 8,435 — —

Total net periodic benefit expense $ 16,120 27,722 2,521 1,586

The components of net periodic benefit expense, other than the service cost, curtailment and special termination benefits components, are included in the line item “Interest and other income (loss)” in Consolidated Statements of Operations.

During the nine-month period ended September 30, 2021, the Company made contributions of $ 31.0 million to its defined benefit pension and postretirement benefit plans.

The components of net periodic benefit expense, other than the service cost, are recorded in Other expense in the Consolidated Statements of Operations.

During the three-month period ended March 31, 2022, the Company made contributions of $ 8.7 million to its defined benefit pension and postretirement benefit plans.

Remaining funding in 2022 for the Company’s defined benefit pension and postretirement plans is anticipated to be $ 34.4 million.

1 unchanged sentence

The costs resulting from all share-based and cash-based incentive plans are recognized as an expense in the Consolidated Statements of Operations using a fair value-based measurement method over the periods that the awards vest.

The 2017 Annual Incentive Plan (2017 Annual Plan) authorizes the Executive Compensation Committee (the Committee) to establish specific performance goals associated with annual cash awards that may be earned by officers, executives and certain other employees.

Cash awards under the 2017 Annual Plan are determined based on the Company’s actual financial and operating results as measured against the performance goals established by the Committee.

On December 7, 2021, the Board approved the replacement of the 2017 Annual Incentive Plan (2017 Annual Plan) with the Murphy Oil Corporation Annual Incentive Plan (AIP) effective as of January 1, 2022.

The new AIP can be found as an exhibit to the Company’s 2021 Form 10-K filed on February 25, 2022 and will remain in effect until such time as the Plan is terminated by the Board.

The AIP authorizes the Executive Compensation Committee (the Committee) to establish specific performance goals associated with annual cash awards that may be earned by officers, executives and certain other employees.

Cash awards under the AIP are determined based on the Company’s actual financial and operating results as measured against the performance goals established by the Committee.

The 2020 Long-Term Incentive Plan (2020 Long-Term Plan) authorizes the Committee to make grants of the Company’s Common Stock to employees.

These grants may be in the form of stock options (nonqualified or incentive), stock appreciation rights (SAR), restricted stock, restricted stock units (RSU), performance units, performance shares, dividend equivalents and

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

other stock-based incentives.

The 2020 Long-Term Plan expires in 2030.

2 unchanged sentences

Share awards that have been canceled, expired, forfeited or otherwise not issued under an award shall not count as shares issued under this Plan.

During the first nine months of 2021, the Committee granted the following awards from the 2020 Long-Term Plan:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

Note I – Incentive Plans (Contd.)

During the first three months of 2022, the Committee granted the following awards from the 2020 Long-Term Plan:

2020 Long-Term Incentive Plan

1 unchanged sentence

Performance Based RSUs 1

1,156,800 February 2, 2021 $ 16.03 Monte Carlo at Grant Date

580,600 February 1, 2022 $ 47.37 Monte Carlo

Time Based RSUs 2

385,600 February 2, 2021 $ 12.30 Average Stock Price at Grant Date

273,400 February 1, 2022 $ 32.12 Average Stock Price

Cash Settled RSUs 3

1,022,700 February 2, 2021 $ 12.30 Average Stock Price at Grant Date

674,300 February 1, 2022 $ 32.12 Average Stock Price

1 Performance based RSUs are scheduled to vest over a three year performance period.

2 Time based RSUs are generally scheduled to vest over three years from the date of grant.

3 Cash settled RSUs are scheduled to vest over three years from the date of grant.

3 Cash settled RSUs are generally scheduled to vest over three years from the date of grant.

The Company also has a Stock Plan for Non-Employee Directors that permits the issuance of restricted stock, restricted stock units and stock options or a combination thereof to the Company’s Non-Employee Directors.

2 unchanged sentences

The Company currently has outstanding incentive awards issued to Directors under the 2021 NED Plan and the 2018 NED Plan.

All awards on or after May 12, 2021, will be made under the 2021 NED Plan.

During the first nine months of 2021, the Committee granted the following awards to Non-Employee Directors:

2018 Stock Plan for Non-Employee Directors

Type of Award Number of Awards Granted Grant Date Grant Date Fair Value Valuation Methodology

Time Based RSUs 1

182,652 February 3, 2021 $ 13.14 Closing Stock Price at Grant Date

1 Non-employee directors time-based RSUs are scheduled to vest in February 2022.

All awards on or after May 12, 2021, were made under the 2021 NED Plan.

During the first three months of 2022, the Committee granted the following awards to Non-Employee Directors:

2021 Stock Plan for Non-Employee Directors

1 unchanged sentence

Time Based RSUs 1

5,655 June 10, 2021 $ 23.58 Closing Stock Price at Grant Date

73,092 February 2, 2022 $ 32.84 Closing Stock Price

1 Non-employee directors time-based RSUs are scheduled to vest in February 2023.

1 unchanged sentence

The employee receives net shares, after applicable withholding obligations, upon each stock option exercise.

The actual income tax benefit realized from the tax deductions related to stock option exercises of the share-based payment arrangements were immaterial for the nine-month period ended September 30, 2021.

The actual income tax benefit realized from the tax deductions related to stock option exercises of the share-based payment arrangements were immaterial for the three-month period ended March 31, 2022.

Amounts recognized in the financial statements with respect to share-based plans are shown in the following table:

Nine Months Ended

September 30,

Three Months Ended

(Thousands of dollars) 2022 2021

5 unchanged sentences

Note J – Earnings Per Share

Net (loss) income attributable to Murphy was used as the numerator in computing both basic and diluted income per Common share for the three-month and nine-month periods ended September 30, 2021 and 2020.

Net loss attributable to Murphy was used as the numerator in computing both basic and diluted income per Common share for the three-month periods ended March 31, 2022 and 2021.

The following table reports the weighted-average shares outstanding used for these computations.

Three Months Ended September 30, Nine Months Ended

September 30,

Three Months Ended

(Weighted-average shares) 2022 2021

2 unchanged sentences

Diluted method 154,916,004 153,952,552

1 Due to a net loss recognized by the Company for the nine-month period ended September 30, 2021 and the three-month and nine-month periods ended September 30, 2020, no unvested stock awards were included in the computation of diluted earnings per share because the effect would have been antidilutive.

The following table reflects certain options to purchase shares of common stock that were outstanding during the periods presented but were not included in the computation of diluted shares above because the incremental shares from the assumed conversion were antidilutive.

Three Months Ended September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Antidilutive stock options excluded from diluted shares 1,316,222 2,111,068 1,502,758 2,305,973

Weighted average price of these options $ 34.42 $ 38.54 $ 34.97 $ 40.15

1 Due to a net loss recognized by the Company for the three-month periods ended March 31, 2022 and 2021, no unvested stock awards were included in the computation of diluted earnings per share because the effect would have been antidilutive.

Note K – Income Taxes

The Company’s effective income tax rate is calculated as the amount of income tax expense (benefit) divided by income (loss) from continuing operations before income taxes.

For the three-month and nine-month periods ended September 30, 2021 and 2020, the Company’s effective income tax rates were as follows:

Three months ended September 30, 21.1 % 19.1 %

Nine months ended September 30, 28.6 % 18.6 %

The effective tax rate for the three-month period ended September 30, 2021 was above the U.S.

statutory tax rate of 21% primarily due to income generated in Canada, which has a higher tax rate, offset by no tax applied to the pre-tax income of the noncontrolling interest in MP GOM, which has the impact of decreasing the effective tax rate on income.

The effective tax rate for the three-month period ended September 30, 2020 was below the statutory tax rate of 21% due to exploration expenses in certain foreign jurisdictions in which no income tax benefit is available, as well as no tax benefit available from the pre-tax loss of the noncontrolling interest in MP GOM.

The effective tax rate for the nine-month period ended September 30, 2021 was above the U.S.

statutory tax rate of 21% primarily due to no tax applied to the pre-tax income of the noncontrolling interest in MP GOM, which has the impact of increasing the effective tax rate on an overall loss.

The effective tax rate for the nine-month period ended September 30, 2020 was below the statutory tax rate of 21% due to exploration expenses in certain foreign jurisdictions in which no income tax benefit is available, as well as no tax benefit available from the pre-tax loss of the noncontrolling interest in MP GOM.

These items reduced the tax credit on a reported pre-tax net loss.

The Company’s tax returns in multiple jurisdictions are subject to audit by taxing authorities, and currently the Company is under audit in several of these jurisdictions.

These audits often take multiple years to complete and settle.

For the three-month periods ended March 31, 2022 and 2021, the Company’s effective income tax rates were as follows:

Three months ended March 31, 20.7 % 24.8 %

The effective tax rate for the three-month period ended March 31, 2022 was below the U.S.

statutory tax rate of 21% primarily due to exploration expenses in certain foreign jurisdictions in which no income tax benefit is currently available, offset by no tax applied to the pre-tax income of the noncontrolling interest in MP GOM.

The effective tax rate for the three-month period ended March 31, 2021 was above the statutory tax rate of 21% primarily due to losses recorded in Canada which have a higher tax rate, no tax applied to the pre-tax income of the noncontrolling interest in MP GOM, offset by exploration expenses in certain foreign jurisdictions in which no income tax benefit is currently available.

The Company’s tax returns in multiple jurisdictions are subject to audit by taxing authorities.

These audits often take years to complete and settle.

Although the Company believes that recorded liabilities for unsettled issues are adequate, additional gains or losses could occur in future years from resolution of outstanding unsettled matters.

As of September 30, 2021, the earliest years remaining open for audit and/or settlement in our major taxing jurisdictions are as follows:

Additionally, the Company could be required to pay amounts into an escrow account as any matters are identified and appealed with the relevant taxing authorities.

As of March 31, 2022, the earliest years remaining open for audit and/or settlement in our major taxing jurisdictions are as follows:

United States – 2016;

Canada – 2016;

Malaysia – 2014;

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

Note K– Income Taxes (Contd.)

United Kingdom – 2018.

Following the divestment of Malaysia in the third quarter of 2019, the Company has retained certain possible liabilities and rights to income tax receivables relating to Malaysia for the years prior to 2019.

and Malaysia – 2014.

The Company has retained certain possible liabilities and rights to income tax receivables relating to Malaysia for the years prior to 2019.

The Company believes current recorded liabilities are adequate.

6 unchanged sentences

For accounting purposes, the Company has not designated commodity and foreign currency derivative contracts as hedges, and therefore, it recognizes all gains and losses on these derivative contracts in its Consolidated Statements of Operations.

Certain interest rate derivative contracts were previously accounted for as hedges and the gain or loss associated with recording the fair value of these contracts was deferred in Accumulated other comprehensive loss and amortized to the income statement over time.

During the nine-month period ended September 30, 2021, the Company redeemed all of the remaining notes due 2022 and expensed the remainder of the previously deferred loss on the interest rate swap of $ 2.1 million to Interest expense in the Consolidated Statement of Operations.

Commodity Price Risks

2 unchanged sentences

Under the collar contracts, which also mature monthly, the Company purchased a put option and sold a call option 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.

At September 30, 2021, volumes per day associated with outstanding crude oil derivative contracts and the weighted average prices for these contracts are as follows:

September 30, 2021

Upon maturity,

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

Note L – Financial Instruments and Risk Management (Contd.)

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.

At March 31, 2022, volumes per day associated with outstanding crude oil derivative contracts and the weighted average prices for these contracts are as follows:

NYMEX WTI swap contracts:

Volume per day (Bbl):

45,000 20,000

Price per Bbl:

$ 42.77 $ 44.88

NYMEX WTI collar contracts:

1 unchanged sentence

Price per Bbl:

Average Ceiling:

Average Floor:

Foreign Currency Exchange Risks

The Company is subject to foreign currency exchange risk associated with operations in countries outside the U.S.

The Company had no foreign currency exchange derivatives outstanding at September 30, 2021 and 2020.

At September 30, 2021 and December 31, 2020, the fair value of derivative instruments not designated as hedging instruments are presented in the following table.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

Note L – Financial Instruments and Risk Management (Contd.)

September 30, 2021 December 31, 2020

(Thousands of dollars) Asset (Liability) Derivatives Asset (Liability) Derivatives

Type of Derivative Contract Balance Sheet Location Fair Value Balance Sheet Location Fair Value

Commodity swaps Accounts receivable $ — Accounts receivable 13,050

Accounts payable ( 312,448 ) Accounts payable ( 89,842 )

Deferred credits and other liabilities ( 41,645 ) Deferred credits and other liabilities ( 12,833 )

Commodity collars Accounts receivable — Accounts receivable —

Accounts payable ( 15,929 ) Accounts payable —

For the three-month and nine-month periods ended September 30, 2021 and 2020, the gains and losses recognized in the Consolidated Statements of Operations for derivative instruments not designated as hedging instruments are presented in the following table.

Gain (Loss) Gain (Loss)

(Thousands of dollars) Statement of Operations Location Three Months Ended September 30, Nine months ended September 30,

The Company had no foreign currency exchange derivatives outstanding at March 31, 2022 and 2021.

At March 31, 2022 and December 31, 2021, the fair value of derivative instruments not designated as hedging instruments are presented in the following table.

(Thousands of dollars) Asset (Liability) Derivatives Fair Value

Type of Derivative Contract Balance Sheet Location March 31, 2022 December 31, 2021

Commodity swaps Accounts payable $ ( 306,095 ) ( 239,882 )

Commodity collars Accounts receivable — 4,280

Accounts payable ( 162,123 ) ( 19,533 )

For the three-month periods ended March 31, 2022 and 2021, the gains and losses recognized in the Consolidated Statements of Operations for derivative instruments not designated as hedging instruments are presented in the following table.

(Thousands of dollars) Statement of Operations Location Three months ended March 31,

Type of Derivative Contract 2022 2021

Commodity swaps (Loss) gain on derivative instruments $ ( 43,235 ) ( 5,290 ) ( 483,865 ) 319,502

Commodity collars (Loss) gain on derivative instruments ( 15,929 ) — ( 15,929 ) —

Commodity swaps Loss on crude contracts $ ( 156,359 ) ( 214,385 )

Commodity collars Loss on crude contracts ( 164,418 ) —

Fair Values – Recurring

4 unchanged sentences

Level 3 inputs are unobservable inputs which reflect assumptions about pricing by market participants.

The carrying value of assets and liabilities recorded at fair value on a recurring basis at September 30, 2021 and December 31, 2020, are presented in the following table.

September 30, 2021 December 31, 2020

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

Note L – Financial Instruments and Risk Management (Contd.)

The carrying value of assets and liabilities recorded at fair value on a recurring basis at March 31, 2022 and December 31, 2021, are presented in the following table.

March 31, 2022 December 31, 2021

(Thousands of dollars) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

Commodity swaps $ — — — — — 13,050 — 13,050

$ — — — — — 13,050 — 13,050

Commodity collars $ — — — — — 4,280 — 4,280

$ — — — — — 4,280 — 4,280

Nonqualified employee savings plan $ 17,038 — — 17,038 16,962 — — 16,962

Commodity swaps — 354,093 — 354,093 — 102,675 — 102,675

Commodity collars — 162,123 — 162,123 — 19,533 — 19,533

Contingent consideration — — 239,108 239,108 — — 196,151 196,151

Commodity swaps — 306,095 — 306,095 — 239,882 — 239,882

$ 17,038 468,218 239,108 724,364 16,962 259,415 196,151 472,528

The fair value of commodity (WTI crude oil) derivative contracts in 2021 and 2020 were based on active market quotes for WTI crude oil.

The before tax income effect of changes in the fair value of crude oil derivative contracts is recorded in Gain (loss) on derivative instruments in the Consolidated Statements of Operations.

The fair value of commodity (WTI crude oil) swaps was based on active market quotes for WTI crude oil.

The fair value of commodity (WTI crude oil) collars was determined using an option pricing model.

The before tax income effect of changes in the fair value of crude oil derivative contracts is recorded in Loss on crude contracts in the Consolidated Statements of Operations.

The nonqualified employee savings plan is an unfunded savings plan through which participants seek a return via phantom investments in equity securities and/or mutual funds.

1 unchanged sentence

The income effect of changes in the fair value of the nonqualified employee savings plan is recorded in Selling and general expenses in the Consolidated Statements of Operations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

Note L – Financial Instruments and Risk Management (Contd.)

The contingent consideration, related to two acquisitions in 2019 and 2018, is valued using a Monte Carlo simulation model.

The income effect of changes in the fair value of the contingent consideration is recorded in Other expense (benefit) in the Consolidated Statements of Operations.

The contingent consideration, related to 2018 and 2019 U.S.

Gulf of Mexico acquisitions, is valued using a Monte Carlo simulation model.

For the three months ended March 31, 2022 and 2021, the pre-tax income effect of changes in the fair value of the contingent consideration was an expense of $ 98.1 million and $ 14.9 million respectively and is recorded in Other operating expense in the Consolidated Statements of Operations.

In the three months ended March 31, 2022, the pre-tax income effect of changes in the fair value of the contingent consideration exclude cash payments of $ 55.2 million, which reduced the value of the contingent consideration liability.

Contingent consideration is payable annually in years 2022 to 2026.

The Company offsets certain assets and liabilities related to derivative contracts when the legal right of offset exists.

There were no offsetting positions recorded at September 30, 2021 and December 31, 2020.

There were no offsetting positions recorded at March 31, 2022 and December 31, 2021.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

Note M – Accumulated Other Comprehensive Loss

The components of Accumulated other comprehensive loss on the Consolidated Balance Sheets at December 31, 2020 and September 30, 2021 and the changes during the nine-month period ended September 30, 2021, are presented net of taxes in the following table.

The components of Accumulated other comprehensive loss on the Consolidated Balance Sheets at December 31, 2021 and March 31, 2022 and the changes during the three-month period ended March 31, 2022, are presented net of taxes in the following table.

(Thousands of dollars) Foreign

1 unchanged sentence

Postretirement

Adjustments Deferred

Interest Rate

Adjustments Total

Balance at December 31, 2021 $ ( 311,895 ) ( 215,816 ) ( 527,711 )

3 unchanged sentences

Net other comprehensive income (loss) 18,020 3,336 21,356

Balance at September 30, 2021 $ ( 317,477 ) ( 262,697 ) — ( 580,174 )

1 Reclassifications before taxes of $ 16,282 are included in the computation of net periodic benefit expense for the nine-month period ended September 30, 2021.

Balance at March 31, 2022 $ ( 293,875 ) ( 212,480 ) ( 506,355 )

1 Reclassifications before taxes of $ 4,210 are included in the computation of net periodic benefit expense for the three-month period ended March 31, 2022.

See Note H for additional information.

Related income taxes of $ 3,347 are included in Income tax expense (benefit) for the nine-month period ended September 30, 2021.

2 Reclassifications before taxes of $ 2,140 are included in Interest expense, net, for the nine-month period ended September 30, 2021.

Related income taxes of $ 450 are included in Income tax expense (benefit) for the nine-month period ended September 30, 2021.

See Note L for additional information.

Related income taxes of $ 874 are included in Income tax expense (benefit) for the three-month period ended March 31, 2022.

Note N – Environmental and Other Contingencies

24 unchanged sentences

Violation of environmental, health and safety laws, regulations and permits can result in the imposition of significant civil and criminal penalties, injunctions and construction bans or delays.

A discharge of hazardous substances into the environment

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

Note N– Environmental and Other Contingencies (Contd.)

could, to the extent such event is not insured, subject the Company to substantial expense, including both the cost to comply with applicable laws and regulations and claims by neighboring landowners and other third parties for any personal injury and property damage that might result.

A discharge of hazardous substances into the environment could, to the extent such event is not insured, subject the Company to substantial expense, including both the cost to comply with applicable laws and regulations and claims by neighboring landowners and other third parties for any personal injury and property damage that might result.

Item 103 of SEC Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that the Company reasonably believes will exceed a specified threshold.

1 unchanged sentence

The Biden administration has indicated that it intends to increase regulatory oversight of the oil and gas industry, with a focus on climate change and greenhouse gas emissions (including methane emissions).

The Biden administration has issued a number of executive orders that address climate change, including creation of climate-related task forces, directives to federal agencies to procure carbon-free electricity, and a goal of a carbon pollution-free power sector by 2035 and a net-zero emissions U.S.

The Biden administration has issued a number of executive orders that address climate change, including creation of climate-related task forces, directives to federal agencies

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

Note N– Environmental and Other Contingencies (Contd.)

to procure carbon-free electricity, and a goal of a carbon pollution-free power sector by 2035 and a net-zero emissions U.S.

economy by 2050.

24 unchanged sentences

For geographic purposes, revenues are attributed to the country in which the sale occurs.

Corporate, including interest income, other gains and losses (including foreign exchange gains/losses and realized and unrealized gains/losses on crude oil contracts), interest expense and unallocated overhead, is shown in the tables to reconcile the business segments to consolidated totals.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

Total Assets at September 30, 2021 Three Months Ended September 30, 2021 Three Months Ended September 30, 2020

(Millions of dollars) External

Revenues Income

(Loss) External

Revenues Income

Exploration and production ¹

United States $ 6,586.3 565.2 168.1 330.8 ( 172.6 )

Canada 2,241.2 124.6 73.9 96.3 ( 8.6 )

Other 264.6 — ( 5.2 ) — ( 11.7 )

Total exploration and production 9,092.1 689.8 236.8 427.1 ( 192.9 )

Corporate 1,237.8 ( 59.1 ) ( 98.8 ) ( 5.2 ) ( 72.9 )

Continuing operations 10,329.9 630.7 138.0 421.9 ( 265.8 )

Discontinued operations, net of tax 1.0 — ( 0.7 ) — ( 0.8 )

Total $ 10,330.9 630.7 137.3 421.9 ( 266.6 )

Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020

Corporate, including interest income, other gains and losses (including foreign exchange gains/losses and realized and unrealized gains/losses on commodity price derivatives), interest expense and unallocated overhead, is shown in the table to reconcile the business segments to consolidated totals.

Total Assets at March 31, 2022 Three Months Ended March 31, 2022 Three Months Ended March 31, 2021

(Millions of dollars) External

11 unchanged sentences

Total $ 10,541.7 553.0 ( 65.5 ) 380.0 ( 266.8 )

1 Additional details about results of oil and natural gas operations are presented in the table on pages 25 and 26.

1 Additional details about results of oil and natural gas operations are presented in the table on page 24.

MANAGEMENT’S DISCUSSION AND ANALYSIS

In 2021, the global distribution and administration of vaccinations 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.

Emerging COVID-19 variants, such as the Delta variant, continue to create uncertainty in the outlook, however in 2021 demand for oil and gas has remained resilient.

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

The OPEC+ group of oil producing countries (OPEC+) continues to target increasing supply by 0.4 million 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 barrels per day (bpd) following the COVID-19 demand reduction.

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

However, some members of the OPEC+ are falling short on supply increases.

Overall, the combination of OPEC+ supply constraints and the increase in demand driven by the global COVID-19 vaccine roll out has provided upward pressure to the oil price which directly impacts the Company’s product revenue from sales compared to one year ago.

For the three months ended September 30, 2021, West Texas Intermediate (WTI) crude oil prices averaged approximately $70.56 per barrel (compared to $66.07 in the second quarter of 2021 and $40.93 in the third quarter of 2020).

The closing price for WTI at the end of the third quarter of 2021 was approximately $71.54 per barrel, reflecting a modest increase from the second quarter 2021 closing price and an 81% increase from the third quarter 2020 closing price.

The average price in October 2021 was $81.22 per barrel.

As of close on November 2, 2021, the NYMEX WTI forward curve price for the remainder of 2021 and 2022 were $83.91 and $76.27 per barrel, respectively.

In the third quarter of 2021, the Company continued to delever by redeeming $150.0 million aggregate principal amount of its 6.875% senior notes due 2024 for the principal amount plus cash costs of $2.6 million.

Earlier in 2021, the Company executed a series of financial transactions which redeemed the remaining notes due 2022 and issued new 7 year senior unsecured notes maturing in July 2028.

The 2022 notes were redeemed for total use of funds of $619.5 million, which included redemption at par of $576.4 million, early retirement premium (make whole payment) of $34.2 million, and $8.9 million of accrued interest.

The 2028 notes were issued for total proceeds of $550.0 million and closing costs of $8.1 million.

The proceeds from issue are reported net of costs to issue on the Consolidated Balance Sheets.

In the third quarter of 2021, the Company acquired an additional 7.525% working interest at Terra Nova in Canada following a commercial agreement to sanction an asset life extension project.

This transaction deferred an asset obligation at Terra Nova by approximately 10 years and decreased the obligation associated with the abandonment liability of the working interest before the acquisition by approximately $72 million.

For the three months ended September 30, 2021, the Company produced 163 thousand barrels of oil equivalent per day (including noncontrolling interest) from continuing operations;

this includes the impact of Hurricane Ida on U.S.

Gulf of Mexico production of 14.5 thousand barrels of oil equivalent per day (including NCI).

The Company invested $110.5 million in capital expenditures (on a value of work done basis) in the three months ended September 30, 2021.

The Company reported net income from continuing operations of $138.0 million for the three months ended September 30, 2021.

This amount includes income attributable to noncontrolling interest of $28.9 million, after-tax gains on unrealized mark to market revaluations on commodity price swap and collar positions of $44.1 million, an after-tax non-cash credit of $53.6 million related to the deferral of asset retirement obligations and after-tax losses on contingent consideration of $22.4 million.

For the nine months ended September 30, 2021, the Company produced 170 thousand barrels of oil equivalent per day (including noncontrolling interest) from continuing operations;

this includes the impact of Hurricane Ida on U.S.

Gulf of Mexico production of 4.9 thousand barrels of oil equivalent per day (including NCI).

The Company invested $568.7 million in capital expenditures (on a value of work done basis) in the nine months ended September 30, 2021, which included $18.0 million to fund the development of the King’s Quay Floating Production System (FPS).

The FPS capital expenditures were reimbursed by Arclight in the first quarter of 2021 (see below).

The Company reported net loss from continuing operations of $156.0 million for the nine months ended September 30, 2021.

This amount includes income attributable to noncontrolling interest of $85.5 million, after-tax impairment charges of $128.0 million, an after-tax non-cash credit of $53.6 million related to the deferral of asset retirement obligations and after-tax losses on unrealized mark to market revaluations on commodity price swap and collar positions and contingent consideration of $180.5 million and $83.0 million, respectively.

In the first quarter of 2022, crude oil and natural gas benchmark prices increased when compared to the same period of 2021.

Prices were higher in the first quarter 2022 principally due to market concerns over supply shortfalls stemming from lack of investment in the exploration and production sector, ongoing demand recovery from COVID-19 and geopolitical uncertainty following the Russian invasion of Ukraine.

On input costs, and similarly to the overall inflationary pressure observed in the wider economy;

the oil and gas industry, and hence the Company, is observing higher costs for goods and services used in exploration and production.

Murphy continues to manage input costs through its dedicated procurement department focused on managing supply chain and other costs.

For the three months ended March 31, 2022, West Texas Intermediate (WTI) crude oil prices averaged approximately $94.29 per barrel (compared to $57.84 in the first quarter of 2021 and $77.19 in the fourth quarter of 2021).

The closing price for WTI at the end of the first quarter of 2022 was approximately $108.26 per barrel, reflecting a 74% increase from the first quarter 2021 closing price and a 51% increase from the fourth quarter of 2021 closing price.

The average price in April 2022 was $101.64 per barrel.

As of close on May 2, 2022, the NYMEX WTI forward curve price for the remainder of 2022 and 2023 were $99.44 and $86.38 per barrel, respectively.

For the three months ended March 31, 2022, the Company produced 150 thousand barrels of oil equivalent per day (including noncontrolling interest) from continuing operations.

The Company invested $304.7 million in capital expenditures (on a value of work done basis) in the three months ended March 31, 2022, (which included $22.3 million related to the deferral of the Cutthroat exploration well in Brazil from 2021).

The Company reported net loss from continuing operations of $64.9 million for the three months ended March 31, 2022.

This amount includes income attributable to noncontrolling interest of $47.9 million and after-tax losses on unrealized mark to market revaluations on commodity price derivative positions and contingent consideration of $148.9 million and $77.2 million, respectively.

For the three months ended March 31, 2021, the Company produced 165 thousand barrels of oil equivalent per day (including noncontrolling interest) from continuing operations.

The Company invested $251.1 million in capital expenditures (on a value of work done basis) for the three months ended March 31, 2021, which included $17.2 million to fund the development of the King’s Quay floating production system (which was subsequently reimbursed by Arclight).

The Company reported net loss from continuing operations of $267.0 million for the three months ended March 31, 2021.

This amount included income attributable to noncontrolling interest of $20.6 million, after-tax impairment charges of $128.0 million and after-tax losses on unrealized mark to market revaluations on commodity price derivative positions and contingent consideration of $121.3 million and $11.8 million, respectively.

In the first quarter of 2021, the Company’s subsidiary "Murphy Exploration & Production Company - USA" closed a transaction with ArcLight Capital Partners, LLC (ArcLight) for the sale of Murphy’s entire 50% interest in the King’s Quay FPS and associated export lateral pipelines.

The transaction reimbursed Murphy for its share of project costs from inception to closing with proceeds of $267.7 million.

On April 12, 2022, subsequent to quarter end, the Company announced that it has achieved first oil from the Khaleesi, Mormont, Samurai field development project in the deepwater Gulf of Mexico, as production has begun flowing through the Murphy-operated King’s Quay FPS.

MANAGEMENT’S DISCUSSION AND ANALYSIS (Contd.)

Summary (contd.)

For the three months ended September 30, 2020, the Company produced 163 thousand barrels of oil equivalent per day (including noncontrolling interest) from continuing operations.

The Company invested $122.7 million in capital expenditures (on a value of work done basis), in the third quarter of 2020, which included $19.3 million to fund the development of the King’s Quay FPS.

The Company reported net loss from continuing operations of $265.8 million for the third quarter of 2020.

This amount included loss attributable to noncontrolling interest of $23.1 million, after-tax impairment charges of $145.9 million and after-tax losses on unrealized mark to market revaluations on commodity price hedge positions and contingent consideration of $54.8 million and $11.1 million, respectively.

For the nine months ended September 30, 2020, the Company produced 180 thousand barrels of oil equivalent per day (including noncontrolling interest) from continuing operations.

The Company invested $680.3 million in capital expenditures (on a value of work done basis) for the nine months ended September 30, 2020, which included $80.7 million to fund the development of the King’s Quay FPS.

The Company reported net loss from continuing operations of $1,092.8 million for the nine months ended September 30, 2020.

This amount included loss attributable to noncontrolling interest of $122.9 million, after-tax impairment charges of $854.2 million and after-tax gains on unrealized mark to market revaluations on commodity price hedge positions and contingent consideration of $82.5 million and $23.3 million, respectively.

In the first quarter, the Company’s subsidiary "Murphy Exploration & Production Company USA" closed a transaction with ArcLight Capital Partners, LLC (ArcLight) for the sale of Murphy’s entire 50% interest in the King’s Quay FPS and associated export lateral pipelines.

The transaction reimbursed Murphy for its share of project costs from inception to closing with proceeds of $267.7 million.

Results of Operations

1 unchanged sentence

Income (Loss)

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(Millions of dollars) 2022 2021

1 unchanged sentence

Corporate and other (296.3) (254.8)

Income (loss) from continuing operations 138.0 (265.8) (156.0) (1,092.8)

Loss from continuing operations (64.9) (267.0)

Discontinued operations ¹ (0.6) 0.2

Net income (loss) including noncontrolling interest $ 137.3 (266.6) (156.6) (1,099.7)

Net loss including noncontrolling interest $ (65.5) (266.8)

1 The Company has presented its former U.K.

3 unchanged sentences

Income (Loss)

Three Months Ended

September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(Millions of dollars) 2022 2021

14 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(Millions of dollars, except per barrel of oil equivalents sold)

2021 2020 2021 2020

Net income (loss) attributable to Murphy (GAAP) $ 108.5 (243.6) (242.1) (976.8)

Income tax expense (benefit) 36.8 (62.6) (62.5) (248.9)

Net loss attributable to Murphy (GAAP) $ (113.3) (287.4)

Income tax benefit (17.0) (88.2)

Interest expense, net 37.3 88.1

1 unchanged sentence

EBITDA attributable to Murphy (Non-GAAP) 63.6 (99.2)

Mark-to-market (gain) loss on derivative instruments (55.9) 69.3 228.5 (104.5)

Impairment of assets ¹ — 186.5 171.3 1,072.5

Mark-to-market loss (gain) on contingent consideration 28.4 14.0 105.1 (29.5)

Asset retirement obligation (gains) losses (71.8) — (71.8) —

Mark-to-market loss on derivative instruments 188.5 153.5

Mark-to-market loss on contingent consideration 98.1 14.9

Accretion of asset retirement obligations ¹ 10.5 10.5

Discontinued operations loss (income) 0.6 (0.2)

Impairment of assets ¹ — 171.3

Unutilized rig charges — 2.8

Foreign exchange (gains) losses (2.8) 0.8 (1.5) (2.5)

Discontinued operations loss 0.7 0.8 0.6 6.9

Restructuring expenses — 5.0 — 46.4

Inventory loss — — — 4.8

Seal insurance proceeds — (1.7) — (1.7)

Foreign exchange (gain) loss — 1.3

Adjusted EBITDA attributable to Murphy (Non-GAAP) $ 361.3 254.9

4 unchanged sentences

Results of Operations (contd.)

OIL AND GAS OPERATING RESULTS – THREE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

(Millions of dollars) United

Canada Other Total

Three Months Ended September 30, 2021

Oil and gas sales and other operating revenues $ 565.2 124.6 — 689.8

Lease operating expenses 96.7 33.4 0.1 130.2

Severance and ad valorem taxes 10.8 0.8 — 11.6

Transportation, gathering and processing 28.4 16.2 — 44.6

Depreciation, depletion and amortization 147.0 39.7 0.1 186.8

Accretion of asset retirement obligations 9.3 2.9 — 12.2

Exploration expenses

Dry holes and previously suspended exploration costs 17.3 — — 17.3

Geological and geophysical — — 0.3 0.3

Other exploration 1.3 0.1 0.5 1.9

18.6 0.1 0.8 19.5

Undeveloped lease amortization 3.1 0.1 1.8 5.0

Total exploration expenses 21.7 0.2 2.6 24.5

Selling and general expenses 4.2 4.0 1.2 9.4

Other ² 39.1 (71.7) 2.0 (30.6)

Results of operations before taxes 208.0 99.1 (6.0) 301.1

Income tax provisions (benefits) 39.9 25.2 (0.8) 64.3

Results of operations (excluding Corporate segment) $ 168.1 73.9 (5.2) 236.8

Three Months Ended September 30, 2020

Oil and gas sales and other operating revenues $ 330.8 96.3 — 427.1

Lease operating expenses 91.5 32.6 0.4 124.5

Severance and ad valorem taxes 6.4 0.3 — 6.7

Transportation, gathering and processing 29.3 12.0 — 41.3

Depreciation, depletion and amortization 166.2 59.6 0.5 226.3

Accretion of asset retirement obligations 9.4 1.4 — 10.8

Impairment of assets 205.1 — — 205.1

Exploration expenses

Dry holes and previously suspended exploration costs 0.6 — — 0.6

Geological and geophysical 0.1 — (0.1) —

Other exploration 0.6 0.1 3.6 4.3

1.3 0.1 3.5 4.9

Undeveloped lease amortization 4.9 0.1 2.3 7.3

Total exploration expenses 6.2 0.2 5.8 12.2

Selling and general expenses 5.3 3.4 1.6 10.3

Other 22.5 (1.5) 2.5 23.5

Results of operations before taxes (211.1) (11.7) (10.8) (233.6)

Income tax (benefits) provisions (38.5) (3.1) 0.9 (40.7)

Results of operations (excluding Corporate segment) $ (172.6) (8.6) (11.7) (192.9)

1 Includes results attributable to a noncontrolling interest in MP GOM.

2 For the three months ended September 30, 2021, Canada includes $71.8 million of income related to the deferral of an asset retirement obligation at Terra Nova.

MANAGEMENT’S DISCUSSION AND ANALYSIS (Contd.)

Results of Operations (contd.)

OIL AND GAS OPERATING RESULTS – NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

OIL AND GAS OPERATING RESULTS – THREE MONTHS ENDED MARCH 31, 2022 AND 2021

(Millions of dollars) United

Canada Other Total

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Oil and gas sales and other operating revenues $ 707.4 129.3 — 836.7

Sales of purchased natural gas — 36.8 — 36.8

Lease operating expenses 99.9 36.9 — 136.8

1 unchanged sentence

Transportation, gathering and processing 29.2 17.7 — 46.9

Costs of purchased natural gas — 33.7 — 33.7

Depreciation, depletion and amortization 126.5 34.2 0.1 160.8

Accretion of asset retirement obligations 9.4 2.5 — 11.9

Impairment of assets — 171.3 — 171.3

Exploration expenses

10 unchanged sentences

Results of operations (excluding Corporate segment) $ 252.9 22.7 (44.2) 231.4

Nine months ended September 30, 2020

Three months ended March 31, 2021

Oil and gas sales and other operating revenues $ 490.3 104.0 — 594.3

18 unchanged sentences

1 Includes results attributable to a noncontrolling interest in MP GOM.

2 For the nine months ended September 30, 2021, Canada includes $71.8 million of income related to the deferral of an asset retirement obligation at Terra Nova.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements