What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-08-04 compared with 2022-05-04 · 262 added, 152 removed, 614 unchanged (40% of the section changed)

48 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(Thousands of dollars, except per share amounts) 2022 2021 2022 2021

18 unchanged sentences

Total costs and expenses 549,449 539,859 1,144,534 1,181,594

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

Operating income (loss) from continuing operations 551,608 9,784 509,484 ( 251,966 )

Other income (loss)

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

Other income (expense) 5,308 ( 4,525 ) 2,813 ( 9,866 )

Interest expense, net ( 41,385 ) ( 43,374 ) ( 78,662 ) ( 131,474 )

Total other (loss) ( 36,077 ) ( 47,899 ) ( 75,849 ) ( 141,340 )

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 )

Income (loss) from continuing operations before income taxes 515,531 ( 38,115 ) 433,635 ( 393,306 )

Income tax (benefit) expense 105,084 ( 11,177 ) 88,123 ( 99,336 )

Income (loss) from continuing operations 410,447 ( 26,938 ) 345,512 ( 293,970 )

(Loss) income from discontinued operations, net of income taxes ( 943 ) ( 102 ) ( 1,494 ) 106

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

Net income (loss) including noncontrolling interest 409,504 ( 27,040 ) 344,018 ( 293,864 )

Net income attributable to noncontrolling interest 58,947 36,042 106,797 56,656

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

LOSS PER COMMON SHARE – BASIC

NET INCOME (LOSS) ATTRIBUTABLE TO MURPHY $ 350,557 ( 63,082 ) $ 237,221 ( 350,520 )

INCOME (LOSS) PER COMMON SHARE – BASIC

Continuing operations $ 2.27 ( 0.41 ) $ 1.54 ( 2.27 )

Discontinued operations ( 0.01 ) — ( 0.01 ) —

Net loss $ ( 0.73 ) ( 1.87 )

LOSS PER COMMON SHARE – DILUTED

Net income (loss) $ 2.26 ( 0.41 ) $ 1.53 ( 2.27 )

INCOME (LOSS) PER COMMON SHARE – DILUTED

Continuing operations $ 2.24 ( 0.41 ) $ 1.51 ( 2.27 )

Discontinued operations ( 0.01 ) — ( 0.01 ) —

Net loss $ ( 0.73 ) ( 1.87 )

Net income (loss) $ 2.23 ( 0.41 ) $ 1.50 ( 2.27 )

Cash dividends per Common share $ 0.175 0.125 0.325 0.250

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(Thousands of dollars) 2022 2021 2022 2021

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

Net income (loss) including noncontrolling interest $ 409,504 ( 27,040 ) $ 344,018 ( 293,864 )

Other comprehensive (loss) income, net of tax

Net (loss) gain from foreign currency translation ( 51,545 ) 17,945 ( 33,525 ) 37,842

Retirement and postretirement benefit plans 3,173 4,146 6,509 8,282

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

Other comprehensive income 21,356 25,723

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

Other comprehensive (loss) income ( 48,372 ) 22,091 ( 27,016 ) 47,814

Comprehensive income (loss) including noncontrolling interest $ 361,132 ( 4,949 ) 317,002 ( 246,050 )

Comprehensive income attributable to noncontrolling interest 58,947 36,042 106,797 56,656

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

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO MURPHY $ 302,185 ( 40,991 ) $ 210,205 ( 302,706 )

See Notes to Consolidated Financial Statements, page 7.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

Three Months Ended

Six Months Ended

(Thousands of dollars) 2022 2021

Operating Activities

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

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

Net income (loss) including noncontrolling interest $ 344,018 ( 293,864 )

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

Loss (income) from discontinued operations 1,494 ( 106 )

3 unchanged sentences

Accretion of asset retirement obligations 23,439 22,656

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

Deferred income tax (benefit) expense 66,691 ( 101,195 )

Mark to market loss on contingent consideration 129,818 76,677

2 unchanged sentences

Impairment of assets — 171,296

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

(Gain) from sale of assets ( 35 ) —

Net (increase) decrease in noncash working capital ( 121,598 ) 26,565

Other operating activities, net ( 27,458 ) 39,494

2 unchanged sentences

Property additions and dry hole costs 1

( 552,825 ) ( 422,841 )

Acquisition of oil and gas properties 1

( 46,491 ) ( 22,473 )

Property additions for King's Quay FPS — ( 17,734 )

Proceeds from sales of property, plant and equipment 47 269,363

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

Net cash (required) by investing activities ( 599,269 ) ( 193,685 )

Financing Activities

11 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents ( 1,595 ) 1,552

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

Net (decrease) increase in cash and cash equivalents ( 89,165 ) 107,494

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

Cash and cash equivalents at end of period $ 432,019 418,100

1 Certain prior-period amounts have been reclassified to conform to the current period presentation.

See Notes to Consolidated Financial Statements, page 7.

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(Thousands of dollars)

2022 2021 2022 2021

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 March 31, 2022 and 195,100,628 shares at March 31, 2021

Common Stock – par $ 1.00 , authorized 450,000,000 shares, issued 195,100,628 shares at June 30, 2022 and 195,100,628 shares at June 30, 2021

Balance at beginning of period 195,101 195,101 195,101 195,101

9 unchanged sentences

Balance at beginning of period 5,082,034 5,062,813 5,218,670 5,369,538

Net loss attributable to Murphy ( 113,336 ) ( 287,438 )

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

Net income (loss) attributable to Murphy 350,557 ( 63,082 ) 237,221 ( 350,520 )

Cash dividends paid ( 27,191 ) ( 19,303 ) ( 50,491 ) ( 38,590 )

Balance at end of period 5,405,400 4,980,428 5,405,400 4,980,428

1 unchanged sentence

Balance at beginning of period ( 506,355 ) ( 575,610 ) ( 527,711 ) ( 601,333 )

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

Foreign currency translation (loss) gain, net of income taxes ( 51,545 ) 17,945 ( 33,525 ) 37,842

Retirement and postretirement benefit plans, net of income taxes 3,173 4,146 6,509 8,282

24 unchanged sentences

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

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.

As of June 30, 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 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.).

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 June 30, 2022 and December 31, 2021, and the results of operations, cash flows and changes in stockholders’ equity for the interim periods ended June 30, 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 period ended March 31, 2022 are not necessarily indicative of future results.

Financial results for the three-month and six-month periods ended June 30, 2022, are not necessarily indicative of future results.

Note B – New Accounting Principles and Recent Accounting Pronouncements

26 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 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.

For the three-month period ended June 30, 2022, and 2021, the Company recognized $ 1,196 million and $ 758.8 million, respectively, from total revenue from sales to customers, from sales of oil, natural gas liquids and natural gas.

For the six-month period ended June 30, 2022, and 2021, the Company recognized $ 2,067.6 million and $ 1,351.4 million, respectively, from total revenue from sales to customers, from sales of oil, natural gas liquids and natural gas.

Three Months Ended

June 30, Six Months Ended

(Thousands of dollars) 2022 2021 2022 2021

5 unchanged sentences

Offshore 38,354 31,772 67,186 49,834

13,636 — 13,636 —

Total crude oil and condensate revenue 969,774 656,810 1,672,620 1,147,606

13 unchanged sentences

Sales of purchased natural gas

United States

Offshore 181 — 181 —

Onshore 49,758 — 86,604 —

Total sales of purchased natural gas 49,939 — 86,785 —

Total revenue from sales to customers 1,196,238 758,829 2,067,612 1,351,356

2 unchanged sentences

Total revenues and other income $ 1,101,057 549,643 $ 1,654,018 929,628

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.

1 unchanged sentence

Contract Balances and Asset Recognition

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.

As of June 30, 2022, and December 31, 2021, receivables from contracts with customers, net of royalties and associated payables, on the balance sheet from continuing operations, were $ 292.4 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 of March 31, 2022.

Based on a forward-looking expected loss model in accordance with ASU 2016-13, the Company did

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

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

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 of June 30, 2022.

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

8 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 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

As of June 30, 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 June 30, 2022

Location Commodity End Date Description Approximate Volumes

15 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 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.)

Note D – Property, Plant and Equipment (Contd.)

As of June 30, 2022, the Company had total capitalized exploratory well costs for continuing operations pending the determination of proved reserves of $ 178.4 million.

The following table reflects the net changes in capitalized exploratory well costs during the six-month periods ended June 30, 2022 and 2021.

(Thousands of dollars) 2022 2021

2 unchanged sentences

Capitalized exploratory well costs charged to expense ( 10,472 ) —

Balance at March 31 $ 172,706 182,401

Balance at June 30 $ 178,421 197,537

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.

10 unchanged sentences

$ 178,421 15 8 197,537 14 8

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.

Of the $ 174.2 million of exploratory well costs capitalized more than one year at June 30, 2022, $ 94.7 million is in Vietnam, $ 48.5 million is in the U.S., $ 15.5 million is in Mexico, $ 10.6 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.

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.

There were no impairments in the first six months 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 at end of the first quarter 2021.

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

There were no divestments in the first six months 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.

In June 2022, the Company acquired an additional working interest of 11.0 % in the Kodiak field for a purchase price of $ 46.5 million, net of post-closing adjustments.

In the second quarter of 2021, the Company acquired an additional 3.5 % working interest in the Lucius field for a purchase price of $ 22.5 million, net of post-closing adjustments.

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 periods ended March 31, 2022 and 2021 were as follows:

The results of operations associated with discontinued operations for the three-month and six-month periods ended June 30, 2022 and 2021 were as follows:

Three Months Ended

June 30, Six Months Ended

(Thousands of dollars) 2022 2021 2022 2021

5 unchanged sentences

(Loss) income from discontinued operations $ ( 943 ) ( 102 ) $ ( 1,494 ) 106

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,

As of June 30, 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 the CA-2 project in Brunei and the Company’s former headquarters office building in El Dorado, Arkansas.

(Thousands of dollars) June 30,

2022 December 31,

3 unchanged sentences

Note F – Financing Arrangements and Debt

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

As of June 30, 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 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.

At June 30, 2022, the Company had no outstanding borrowings under the RCF and $ 27.6 million of outstanding letters of credit, which reduce the borrowing capacity of the RCF.

At June 30, 2022, the interest rate in effect on borrowings under the facility was 3.46 %.

At June 30, 2022 and 2021, the Company was in compliance with all covenants related to the RCF.

On June 2, 2022, the Company redeemed $ 200.0 million aggregate principal amount of its 6.875 % senior notes due 2024 (2024 Notes).

The cost of the debt extinguishment of $ 4.3 million is included in Interest expense, net on the Consolidated Statement of Operations for the three months and six months ended June 30, 2022.

The cash costs of $ 3.4 million are shown as a financing activity on the Consolidated Statement of Cash Flows for the six months ended June 30, 2022.

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.

2 unchanged sentences

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 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 and six months ended June 30, 2021.

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

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).

On July 20, 2022, the Company issued a notice of redemption with respect to all of its outstanding, $ 42.4 million aggregate principal amount, 6.875 % senior notes due 2024.

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, but not including, the date of redemption.

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

The redemption date of the 2024 Notes will be August 19, 2022.

On August 1, 2022, the Company announced the commencement of cash tender offers (the “Tender Offers”) to purchase up to $ 200.0 million in aggregate purchase price of its outstanding 5.750 % senior notes due 2025, 6.375 % senior notes due 2028 and

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

Note F – Financing Arrangements and Debt (Contd.)

5.875 % senior notes due 2027.

Details of the Tender Offers can be found as part of the Company’s Form 8-K filed on August 1, 2022.

Note G – Other Financial Information

Additional disclosures regarding cash flow activities are provided below.

Three Months Ended

Six Months Ended

(Thousands of dollars) 2022 2021

5 unchanged sentences

Increase (decrease) in income taxes payable 5,501 ( 352 )

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

Net decrease (increase) in noncash operating working capital $ ( 121,598 ) 26,565

Supplementary disclosures:

7 unchanged sentences

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 Terra Nova impairment of $ 74.4 million in the first quarter of 2021.

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

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 periods ended March 31, 2022 and 2021.

Three Months Ended March 31,

The table that follows provides the components of net periodic benefit expense for the three-month and six-month periods ended June 30, 2022 and 2021.

Three Months Ended June 30,

Pension Benefits Other Postretirement Benefits

4 unchanged sentences

Amortization of prior service cost (credit) 579 156 ( 133 ) —

Recognized actuarial loss 3,822 5,279 ( 77 ) ( 7 )

Recognized actuarial loss (gain) 3,822 5,281 ( 78 ) ( 8 )

Net periodic benefit expense $ 3,715 5,350 655 840

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.

Six Months Ended June 30,

Pension Benefits Other Postretirement Benefits

(Thousands of dollars) 2022 2021 2022 2021

Service cost $ 4,258 3,536 584 653

Interest cost 10,382 8,586 1,148 1,042

Expected return on plan assets ( 16,092 ) ( 12,288 ) — —

Amortization of prior service cost (credit) 1,179 312 ( 266 ) —

Recognized actuarial loss (gain) 7,644 10,560 ( 155 ) ( 15 )

Net periodic benefit expense $ 7,371 10,706 1,311 1,680

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

During the six-month period ended June 30, 2022, the Company made contributions of $ 18.4 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 $ 24.4 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.

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.

The Annual Incentive Plan (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.

3 unchanged sentences

A total of five million shares are issuable during the life of the 2020 Long-Term Plan.

Shares issued pursuant to awards granted under this Plan may be shares that are authorized and unissued or shares that were reacquired by the Company, including shares purchased in the open market.

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

Shares issued pursuant to awards granted under this Plan may be shares that are authorized

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:

and unissued or shares that were reacquired by the Company, including shares purchased in the open market.

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

2020 Long-Term Incentive Plan

10 unchanged sentences

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.

At the Company’s annual stockholders’ meeting held on May 12, 2021, shareholders approved the replacement of the 2018 Stock Plan for Non-Employee Directors (2018 NED Plan) with the 2021 Stock Plan for Non-Employee Directors (2021 NED Plan).

The 2021 NED Plan permits the issuance of restricted stock, restricted stock units and stock options or a combination thereof to the Company’s Non-Employee Directors.

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

The 2021 Stock Plan for Non-Employee Directors (2021 NED Plan) permits the issuance of restricted stock, restricted stock units and stock options or a combination thereof to the Company’s Non-Employee Directors.

The Company currently has outstanding incentive awards issued to Directors under the 2021 NED Plan and the 2018 Stock Plan for Non-Employee Directors.

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:

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

2021 Stock Plan for Non-Employee Directors

5 unchanged sentences

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 three-month period ended March 31, 2022.

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 six-month period ended June 30, 2022.

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

Three Months Ended

Six Months Ended

(Thousands of dollars) 2022 2021

5 unchanged sentences

Note J – Earnings Per Share

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.

Net loss attributable to Murphy was used as the numerator in computing both basic and diluted income per Common share for the three-month and six-month periods ended June 30, 2022 and 2021.

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

Three Months Ended

Three Months Ended June 30, Six Months Ended

(Weighted-average shares) 2022 2021 2022 2021

2 unchanged sentences

Diluted method 157,455,130 154,394,602 157,851,722 154,153,158

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.

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 June 30, Six Months Ended

2022 2021 2022 2021

Antidilutive stock options excluded from diluted shares — 1,379,481 234,000 1,592,812

Weighted average price of these options $ — $ 33.79 $ 49.65 $ 35.07

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 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.

For the three-month and six-month periods ended June 30, 2022 and 2021, the Company’s effective income tax rates were as follows:

Three months ended June 30, 20.4 % 29.3 %

Six months ended June 30, 20.3 % 25.3 %

The effective tax rate for the three-month period ended June 30, 2022 was below 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.

The effective tax rate for the three-month period ended June 30, 2021 was above the 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 six-month period ended June 30, 2022 was below 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 offset by exploration expenses in certain foreign jurisdictions in which no income tax benefit is currently available .

The effective tax rate for the six-month period ended June 30, 2021 was above the statutory tax rate of 21% primarily due to loss generated in Canada, which has a higher tax rate, as well as no tax applied to the pre-tax income of the noncontrolling interest in MP GOM.

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

2 unchanged sentences

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:

As of June 30, 2022, the earliest years remaining open for audit and/or settlement in our major taxing jurisdictions are as follows:

United States – 2016;

1 unchanged sentence

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.

Following the sale in 2019, the Company has retained certain possible liabilities and rights to income tax receivables relating to the divested Malaysia business for the years prior to 2019.

The Company believes current recorded liabilities are adequate.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

Note L – Financial Instruments and Risk Management

9 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,

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:

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 June 30, 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:

8 unchanged sentences

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 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.

The Company had no foreign currency exchange derivatives outstanding at June 30, 2022 and 2021.

At June 30, 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

Type of Derivative Contract Balance Sheet Location June 30, 2022 December 31, 2021

Commodity swaps Accounts payable $ ( 239,382 ) ( 239,882 )

Commodity collars Accounts payable ( 146,780 ) ( 19,533 )

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,

For the three-month and six-month periods ended June 30, 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

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

Gain (Loss) Gain (Loss)

(Thousands of dollars) Statement of Operations Location Three Months Ended June 30, Six months ended June 30,

Type of Derivative Contract 2022 2021 2022 2021

7 unchanged sentences

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

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

The carrying value of assets and liabilities recorded at fair value on a recurring basis at June 30, 2022 and December 31, 2021, are presented in the following table.

June 30, 2022 December 31, 2021

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

1 unchanged sentence

$ — — — — — 4,280 — 4,280

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

Commodity swaps $ — 239,382 — 239,382 — 239,882 — 239,882

Commodity collars — 146,780 — 146,780 — 19,533 — 19,533

Contingent consideration — — 244,226 244,226 — — 196,151 196,151

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

Nonqualified employee savings plan 17,167 — — 17,167 16,962 — — 16,962

$ 17,167 386,162 244,226 647,555 16,962 259,415 196,151 472,528

2 unchanged sentences

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.

The fair value of this liability was based on quoted prices for these equity securities and mutual funds.

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.

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.

For the six months ended June 30, 2022 and 2021, the pre-tax income effect of changes in the fair value of the contingent consideration was an expense of $ 129.8 million and $ 76.7 million respectively and is recorded in Other operating expense in the Consolidated Statements of Operations.

In the six months ended June 30, 2022, the pre-tax income effect of changes in the fair value of the contingent consideration exclude cash payments of $ 81.7 million, which reduced the value of the contingent consideration liability.

Contingent consideration is payable annually in years 2022 to 2026.

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.

The fair value of this liability was based on quoted prices for these equity securities and mutual funds.

The pre-tax 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.

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 March 31, 2022 and December 31, 2021.

There were no offsetting positions recorded at June 30, 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, 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.

The components of Accumulated other comprehensive loss on the Consolidated Balance Sheets at December 31, 2021 and June 30, 2022 and the changes during the six-month period ended June 30, 2022, are presented net of taxes in the following table.

(Thousands of dollars) Foreign

7 unchanged sentences

Net other comprehensive income (loss) ( 33,525 ) 6,509 ( 27,016 )

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.

Balance at June 30, 2022 $ ( 345,420 ) ( 209,307 ) ( 554,727 )

1 Reclassifications before taxes of $ 8,256 are included in the computation of net periodic benefit expense for the six-month period ended June 30, 2022.

See Note H for additional information.

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

Related income taxes of $ 1,747 are included in Income tax expense (benefit) for the six-month period ended June 30, 2022.

Note N – Environmental and Other Contingencies

20 unchanged sentences

the placement, operation and decommissioning of production equipment;

and the health and

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

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

These laws and regulations also generally require permits for existing operations, as well as the construction or development of new operations and the decommissioning facilities once production has ceased.

4 unchanged sentences

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

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.

economy by 2050.

The Biden administration has also issued orders related to oil and gas activities on federal lands,

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.

The Biden administration has also issued orders related to oil and gas activities on federal lands, infrastructure and environmental justice.

infrastructure and environmental justice.

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

1 unchanged sentence

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.

officially withdrew from the Paris Agreement on November 4, 2020, under the Biden administration it rejoined the Paris Agreement, which became effective for the U.S.

on February 19, 2021.

19 unchanged sentences

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

Total Assets at June 30, 2022 Three Months Ended June 30, 2022 Three Months Ended June 30, 2021

(Millions of dollars) External

11 unchanged sentences

Total $ 10,572.2 1,101.1 409.5 549.6 ( 27.0 )

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

Six Months Ended June 30, 2022 Six Months Ended June 30, 2021

(Millions of dollars) External

Revenues Income

(Loss) External

Revenues Income

Exploration and production ¹

United States 1,685.4 744.4 1,139.2 313.7

Canada 372.7 69.9 224.6 ( 111.6 )

Other 13.7 ( 47.7 ) — ( 17.3 )

Total exploration and production 2,071.8 766.6 1,363.8 184.8

Corporate ( 417.8 ) ( 421.1 ) ( 434.2 ) ( 478.8 )

Continuing operations 1,654.0 345.5 929.6 ( 294.0 )

Discontinued operations, net of tax — ( 1.5 ) — 0.1

Total 1,654.0 344.0 929.6 ( 293.9 )

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

MANAGEMENT’S DISCUSSION AND ANALYSIS

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.

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

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

Similar to the overall inflation 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 operations.

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.

For the three months ended June 30, 2022, West Texas Intermediate (WTI) crude oil prices averaged approximately $108.41 per barrel (compared to $94.29 in the first quarter of 2022 and $66.07 in the second quarter of 2021).

The average price for WTI in June of 2022 was approximately $114.34 per barrel, reflecting a 60% increase from June of 2021 and a 6% increase from the average price from March of 2022.

The average price in July 2022 was $99.38 per barrel.

As of close on August 2, 2022, the NYMEX WTI forward curve prices for the remainder of 2022 and 2023 were $92.82 and $86.14 per barrel, respectively.

For the three months ended June 30, 2022, the Company produced 173 thousand barrels of oil equivalent per day (including noncontrolling interest) from continuing operations and invested $317.1 million in capital expenditures (on a value of work done basis), which included $46.5 million for an additional working interest in the GOM Kodiak field.

The Company reported net income from continuing operations of $410.4 million for the three months ended June 30, 2022;

this amount includes income attributable to noncontrolling interest of $58.9 million, after-tax gains on unrealized mark to market revaluations on commodity price swap and collar positions of $69.6 million and after-tax losses on contingent consideration of $25.1 million.

In the second quarter of 2022, the Company achieved first production from the first four wells at the Khaleesi, Mormont, Samurai field development project in the Gulf of Mexico;

with production flowing through the Murphy-operated King’s Quay floating production and storage facility.

In June 2022, the Company acquired an additional 11.0% working interest (there is no noncontrolling interest) in the Kodiak field in the Gulf of Mexico for a purchase price of $46.5 million.

For the three months ended June 30, 2021, the Company produced 182 thousand barrels of oil equivalent per day (including noncontrolling interest) from continuing operations and invested $207.1 million in capital expenditures (on a value of work done basis).

The Company reported net loss from continuing operations of $26.9 million for the second quarter of 2021.

This amount included income attributable to noncontrolling interest of $36.0 million and after-tax losses on unrealized mark to market revaluations on commodity price hedge positions and contingent consideration of $103.3 million and $48.8 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.

For the six months ended June 30, 2022, the Company produced 162 thousand barrels of oil equivalent per day (including noncontrolling interest) from continuing operations and invested $621.9 million in capital expenditures (on a value of work done basis), which included $46.5 million related to acquisition capital and $24.3 million related to the Cutthroat exploration well in Brazil deferred from 2021).

The Company reported net income from continuing operations of $345.5 million for the six months ended June 30, 2022.

This amount includes income attributable to noncontrolling interest of $106.8 million and after-tax losses on unrealized mark to market revaluations on commodity price derivative positions and contingent consideration of $79.3 million and $102.3 million, respectively.

For the six months ended June 30, 2021, the Company produced 174 thousand barrels of oil equivalent per day (including noncontrolling interest) from continuing operations and invested $458.2 million in capital expenditures (on a value of work done basis), which included $17.3 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 $294.0 million for the six months ended June 30, 2021.

This amount included income attributable to noncontrolling interest of $56.7 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 $224.6 million and $60.6 million, respectively.

MANAGEMENT’S DISCUSSION AND ANALYSIS (Contd.)

Summary (contd.)

During the six months ended June 30, 2022, crude oil and condensate volumes from continuing operations were lower than the prior year period.

The decrease in production volumes is due to an ongoing focused effort to reduce capital expenditures that began in 2020 to prioritize corporate debt reduction and return funds to shareholders.

Revenue from production was 47% higher during the first half of 2022 compared to the first half of 2021, primarily driven by the increase in price.

Results of Operations

1 unchanged sentence

Income (Loss)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(Millions of dollars) 2022 2021 2022 2021

1 unchanged sentence

Corporate and other (124.8) (223.9) (421.1) (478.8)

Loss from continuing operations (64.9) (267.0)

Income (loss) from continuing operations 410.4 (26.9) 345.5 (294.0)

Discontinued operations ¹ (0.9) (0.1) (1.5) 0.1

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

Net income (loss) including noncontrolling interest $ 409.5 (27.0) $ 344.0 (293.9)

1 The Company has presented its former U.K.

3 unchanged sentences

Income (Loss)

Three Months Ended March 31,

Three Months Ended

June 30, Six Months Ended June 30,

(Millions of dollars) 2022 2021 2022 2021

14 unchanged sentences

Three Months Ended

June 30, Six Months Ended

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

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

Income tax benefit (17.0) (88.2)

2022 2021 2022 2021

Net income (loss) attributable to Murphy (GAAP) $ 350.6 (63.1) $ 237.2 (350.5)

Income tax expense (benefit) 105.1 (11.2) 88.1 (99.3)

Interest expense, net 41.4 43.4 78.7 131.5

1 unchanged sentence

EBITDA attributable to Murphy (Non-GAAP) 685.3 186.4 748.8 87.3

Mark-to-market loss on derivative instruments 188.5 153.5

Mark-to-market (gain) loss on derivative instruments (88.1) 130.9 100.4 284.4

Mark-to-market loss on contingent consideration 31.7 61.8 129.8 76.7

1 unchanged sentence

Discontinued operations loss (income) 0.9 0.1 1.5 (0.1)

Foreign exchange (gain) loss (8.0) — (8.0) 1.3

Impairment of assets ¹ — — — 171.3

Unutilized rig charges — 2.5 — 5.3

Foreign exchange (gain) loss — 1.3

Adjusted EBITDA attributable to Murphy (Non-GAAP) $ 632.0 391.2 $ 993.2 646.2

4 unchanged sentences

Results of Operations (contd.)

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

OIL AND GAS OPERATING RESULTS – THREE MONTHS ENDED JUNE 30, 2022 AND 2021

(Millions of dollars) United

Canada Other Total

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Oil and gas sales and other operating revenues $ 977.8 156.8 13.7 1,148.3

16 unchanged sentences

Results of operations before taxes 612.9 64.2 (3.0) 674.1

Income tax provisions 121.4 17.0 0.5 138.9

Results of operations (excluding Corporate segment) $ 491.5 47.2 (3.5) 535.2

Three Months Ended June 30, 2021

Oil and gas sales and other operating revenues $ 648.9 120.6 — 769.5

Lease operating expenses 90.5 35.8 — 126.3

Severance and ad valorem taxes 10.9 0.5 — 11.4

Transportation, gathering and processing 33.6 16.1 — 49.7

Depreciation, depletion and amortization 180.0 43.5 0.5 224.0

Accretion of asset retirement obligations 9.2 3.0 — 12.2

Exploration expenses

Dry holes and previously suspended exploration costs (0.1) — — (0.1)

Geological and geophysical 2.1 — 0.8 2.9

Other exploration 2.3 0.1 4.1 6.5

4.3 0.1 4.9 9.3

Undeveloped lease amortization 2.5 — 1.8 4.3

Total exploration expenses 6.8 0.1 6.7 13.6

Selling and general expenses 5.3 3.9 2.1 11.3

Other 72.9 0.9 0.3 74.1

Results of operations before taxes 239.7 16.8 (9.6) 246.9

Income tax provisions 45.0 4.1 0.8 49.9

Results of operations (excluding Corporate segment) $ 194.7 12.7 (10.4) 197.0

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

MANAGEMENT’S DISCUSSION AND ANALYSIS (Contd.)

Results of Operations (contd.)

OIL AND GAS OPERATING RESULTS – SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(Millions of dollars) United

Canada Other Total

Six Months Ended June 30, 2022

Oil and gas sales and other operating revenues $ 1,685.2 286.1 13.7 1,985.0

Sales of purchased natural gas 0.2 86.6 — 86.8

Lease operating expenses 209.4 73.8 0.9 284.1

Severance and ad valorem taxes 31.5 0.7 — 32.2

Transportation, gathering and processing 61.5 35.3 — 96.8

Costs of purchased natural gas 0.2 81.4 — 81.6

Depreciation, depletion and amortization 280.2 69.8 3.5 353.5

Accretion of asset retirement obligations 18.5 4.9 0.1 23.5

Exploration expenses

Dry holes and previously suspended exploration costs (0.7) — 34.8 34.1

Geological and geophysical 2.6 0.1 1.0 3.7

Other exploration 4.4 0.4 12.1 16.9

6.3 0.5 47.9 54.7

Undeveloped lease amortization 4.7 0.1 3.2 8.0

Total exploration expenses 11.0 0.6 51.1 62.7

Selling and general expenses 11.5 8.9 4.5 24.9

Other 138.1 2.8 0.4 141.3

Results of operations before taxes 923.5 94.5 (46.8) 971.2

Income tax provisions (benefits) 179.1 24.6 0.9 204.6

Results of operations (excluding Corporate segment) $ 744.4 69.9 (47.7) 766.6

Three months ended March 31, 2021

Six months ended June 30, 2021

Oil and gas sales and other operating revenues $ 1,139.2 224.6 — 1,363.8

19 unchanged sentences

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