What changed in this filing

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Item 1. Financial Statements

2022-11-03 compared with 2022-08-04 · 225 added, 166 removed, 710 unchanged (36% of the section changed)

3 unchanged sentences

(Thousands of dollars)

September 30,

2022 December 31,

43 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

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

3 unchanged sentences

Total revenue from sales to customers 1,166,409 687,549 3,234,021 2,038,905

Loss on crude contracts ( 103,068 ) ( 226,245 ) ( 423,845 ) ( 440,630 )

Gain (Loss) on derivative instruments 115,191 ( 59,164 ) ( 308,654 ) ( 499,794 )

Gain on sale of assets and other income 21,825 2,315 32,076 21,217

10 unchanged sentences

Impairment of assets — — — 171,296

Other operating expense 36,913 70,328 142,855 91,407

Other operating (income) expense ( 27,129 ) ( 32,791 ) 115,726 58,616

Total costs and expenses 550,337 407,329 1,694,871 1,588,923

5 unchanged sentences

Income (loss) from continuing operations before income taxes 733,949 174,853 1,167,584 ( 218,453 )

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

Income tax expense (benefit) 159,451 36,838 247,574 ( 62,498 )

Income (loss) from continuing operations 574,498 138,015 920,010 ( 155,955 )

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

Loss from discontinued operations, net of income taxes ( 422 ) ( 706 ) ( 1,916 ) ( 600 )

Net income (loss) including noncontrolling interest 574,076 137,309 918,094 ( 156,555 )

17 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(Thousands of dollars) 2022 2021 2022 2021

11 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

Six Months Ended

Nine Months Ended

September 30,

(Thousands of dollars) 2022 2021

2 unchanged sentences

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

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

Loss from discontinued operations 1,916 600

Depreciation, depletion and amortization 574,501 615,372

4 unchanged sentences

Mark to market loss on contingent consideration 98,451 105,111

Mark to market loss on crude contracts 100,343 284,360

Mark to market loss (gain) on crude contracts ( 138,707 ) 228,497

Long-term non-cash compensation 57,612 42,080

9 unchanged sentences

( 125,602 ) ( 22,906 )

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

Proceeds from sales of property, plant and equipment ( 2,129 ) 270,038

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

Net cash (required) by investing activities ( 928,599 ) ( 311,926 )

11 unchanged sentences

Net cash (required) by financing activities ( 785,633 ) ( 585,593 )

Cash Flows from Discontinued Operations

Operating activities ( 14,500 ) —

Net cash (required) by discontinued operations ( 14,500 ) —

Effect of exchange rate changes on cash and cash equivalents ( 5,180 ) 697

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(Thousands of dollars)

1 unchanged sentence

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 June 30, 2022 and 195,100,628 shares at June 30, 2021

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

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

39 unchanged sentences

and LLOG Bluewater Holdings, L.L.C., (LLOG) acquisition, we hold a 0.5 % interest in two variable interest entities (VIEs), Delta House Oil and Gas Lateral LLC and Delta House Floating Production System (FPS) LLC (collectively Delta House).

These VIEs have not been consolidated because we are not considered the primary beneficiary.

These VIEs have not been consolidated as Murphy is not considered the primary beneficiary.

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

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.

As of September 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 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.).

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

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

Note B – New Accounting Principles and Recent Accounting Pronouncements

1 unchanged sentence

Income Taxes .

In December 2019, the FASB issued ASU 2019-12, which removes certain exceptions for investments, intraperiod allocations and interim calculations, and adds guidance to reduce complexity in accounting for income taxes.

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2019-12, which removes certain exceptions for investments, intraperiod allocations and interim calculations, and adds guidance to reduce complexity in accounting for income taxes.

The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.

11 unchanged sentences

For operated oil and natural gas production where the non-operated working interest owner does not take-in-kind its proportionate interest in the produced commodity, the Company acts as an agent for the working interest owner and recognizes revenue only for its own share of the commingled production.

The exception to this is the reporting of the noncontrolling interest in MP GOM as prescribed by ASC 810-10-45.

- In the United States, the Company primarily produces oil and natural gas from fields in the Eagle Ford Shale area of South Texas and in the Gulf of Mexico.

The exception to this is the reporting of the noncontrolling interest in MP Gulf of Mexico, LLC (MP GOM) as prescribed by ASC 810-10-45.

- In the United States, the Company primarily produces oil and natural gas from fields in the Eagle Ford Shale area of South Texas and in the Gulf of Mexico (GOM).

Revenue is generally recognized when oil and natural gas are transferred to the customer at the delivery point.

7 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 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.

For the three-month periods ended September 30, 2022, and 2021, the Company recognized $ 1,166 million and $ 687.5 million, respectively, from total revenue from sales to customers, from sales of oil, natural gas liquids and natural gas.

For the nine-month periods ended September 30, 2022, and 2021, the Company recognized $ 3,234.0 million and $ 2,038.9 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

September 30, Nine Months Ended

September 30,

(Thousands of dollars) 2022 2021 2022 2021

26 unchanged sentences

Total revenue from sales to customers 1,166,409 687,549 3,234,021 2,038,905

Loss on crude contracts ( 103,068 ) ( 226,245 ) ( 423,845 ) ( 440,630 )

Gain (Loss) on derivative instruments 115,191 ( 59,164 ) ( 308,654 ) ( 499,794 )

Gain on sale of assets and other income 21,825 2,315 32,076 21,217

3 unchanged sentences

Contract Balances and Asset Recognition

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.

As of September 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 $ 210.1 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.

3 unchanged sentences

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 has not entered into any revenue contracts that have financing components as of September 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 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

As of September 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 September 30, 2022

Location Commodity End Date Description Approximate Volumes

17 unchanged sentences

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.

As of September 30, 2022, the Company had total capitalized exploratory well costs for continuing operations pending the determination of proved reserves of $ 181.5 million.

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

(Thousands of dollars) 2022 2021

2 unchanged sentences

Capitalized exploratory well costs charged to expense ( 20,295 ) —

Balance at June 30 $ 178,421 197,537

Balance at September 30 $ 181,461 186,623

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.

2 unchanged sentences

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

September 30,

(Thousands of dollars) Amount No.

6 unchanged sentences

$ 181,461 10 7 186,623 13 7

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.

Of the $ 172.6 million of exploratory well costs capitalized more than one year at September 30, 2022, $ 95.5 million is in Vietnam, $ 54.9 million is in the U.S., $ 15.5 million is in Mexico, $ 2.8 million is in Brunei, and $ 3.9 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 six months of 2022.

There were no impairments in the first nine 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 third quarter of 2022, the Company completed the disposition of its 62.5 % operated working interest of the Thunder Hawk field for a purchase price of $ 20.0 million, less closing adjustments of $ 22.2 million, resulting in a total net payment to the buyer of $ 2.2 million.

Additionally, the buyer assumed the asset retirement obligations of approximately $ 47.9 million.

An $ 18.8 million gain on sale was recorded in the period related to the sale.

Also in the third quarter, the Company completed the disposition of the CA-2 asset in Brunei for contingent consideration valued at approximately $ 8.7 million.

No gain or loss was recorded related to this sale.

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.

In August 2022, the Company acquired an additional working interest of 3.37 % in the Lucius field for a purchase price of $ 77.1 million, net of closing adjustments.

In June 2022, the Company acquired an additional working interest of 11.0 % in the Kodiak field for a purchase price of $ 48.5 million, net of closing adjustments.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

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

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 closing adjustments.

Note E – Assets Held for Sale and Discontinued Operations

1 unchanged sentence

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 six-month periods ended June 30, 2022 and 2021 were as follows:

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(Thousands of dollars) 2022 2021 2022 2021

1 unchanged sentence

Costs and expenses

Other costs and expenses (benefits) 943 348 1,504 552

(Loss) income before taxes ( 943 ) ( 102 ) ( 1,494 ) 106

Other costs and expenses 422 850 1,926 1,401

Loss before taxes ( 422 ) ( 706 ) ( 1,916 ) ( 600 )

Income tax expense — — — —

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

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,

Loss from discontinued operations $ ( 422 ) ( 706 ) $ ( 1,916 ) ( 600 )

In September 2022, the Company sold its share of Brunei block CA-2 to Petronas Carigali Brunei Ltd (see Note D for additional information).

The remaining balance of assets held for sale on the Consolidated Balance Sheet as of September 30, 2022 consists only of the Company’s former headquarters office building in El Dorado, Arkansas.

As of December 31, 2021, assets held for sale includes 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) September 30,

2022 December 31,

3 unchanged sentences

Note F – Financing Arrangements and Debt

As of June 30, 2022, the Company had a $ 1.6 billion revolving credit facility (RCF).

As of September 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 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.

At September 30, 2022, the Company had no outstanding borrowings under the RCF and $ 53.9 million of outstanding letters of credit, which reduce the borrowing capacity of the RCF.

At September 30, 2022, the interest rate in effect on borrowings under the facility was 4.84 %.

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

In September 2022, the Company paid $ 5.5 million to complete an open market repurchase of $ 7.1 million aggregate principal amount of its 6.125 % senior notes due 2042 (2042 Notes).

There were no additional cash costs related to the September 2022 debt extinguishment on the 2042 Notes for the three months and nine months ended September 30, 2022.

In August 2022, the Company redeemed the remaining $ 42.4 million of its 6.875 % senior notes due in 2024 (2024 Notes) and tendered $ 100.0 million and $ 98.1 million aggregate principal amount of its 5.750 % and 6.375 % senior notes due 2025 and 2028 (2025 Notes and 2028 Notes), respectively.

The total cost of the debt extinguishment of $ 4.0 million is included in Interest expense, net on the Consolidated Statement of Operations for the three months and nine months ended September 30, 2022.

The debt extinguishment on the 2025 and 2028 Notes had cash costs of $ 2.0 million and is shown as a financing activity on the Consolidated Statement of Cash Flows for the three months and nine months ended September 30, 2022.

In June 2022, the Company redeemed $ 200.0 million aggregate principal amount of its 6.875 % 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 nine months ended September 30, 2022.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

Note F – Financing Arrangements and Debt (Contd.)

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.

The Company incurred transaction costs of $ 8.1 million on the issuance of these new notes and the Company will pay interest semi-annually on January 15 and July 15 of each year, beginning July 15, 2021.

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;

The proceeds of the $ 550.0 million notes, along with cash on hand, were used to redeem $ 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;

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 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 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.

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 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.

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

On October 31, 2022, the Company issued a notice of partial redemption with respect to $ 200.0 million aggregate principal amount of its 5.750 % 2025 Notes.

The Company will redeem the 2025 Notes at the applicable redemption price set forth in the indenture governing the 2025 Notes, plus accrued and unpaid interest, if any, to, but not including, the date of redemption.

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.

The redemption date of the 2025 Notes will be November 30, 2022.

Note G – Other Financial Information

Additional disclosures regarding cash flow activities are provided below.

Six Months Ended

Nine Months Ended

September 30,

(Thousands of dollars) 2022 2021

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

(Increase) in accounts receivable ¹ $ ( 263,104 ) ( 104,775 )

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

(Increase) decrease in accounts receivable ¹ $ ( 130,792 ) 75,100

(Increase) decrease in inventories ( 410 ) 9,718

2 unchanged sentences

Increase (decrease) in income taxes payable 18,750 ( 1,493 )

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

Net (increase) decrease in noncash operating working capital $ ( 59,874 ) 117,330

Supplementary disclosures:

5 unchanged sentences

$ 29,327 36,300

(Increase) decrease in capital expenditure accrual ( 1,929 ) 20,614

Decrease in capital expenditure accrual 34,853 31,301

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

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

Note H – Employee and Retiree Benefit Plans

The Company has defined benefit pension plans that are principally noncontributory and cover most full-time employees.

The Company has defined benefit pension plans that are noncontributory and cover most full-time employees.

All pension plans are funded except for the U.S.

6 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 six-month periods ended June 30, 2022 and 2021.

Three Months Ended June 30,

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

Three Months Ended September 30,

Pension Benefits Other Postretirement Benefits

6 unchanged sentences

Net periodic benefit expense $ 3,697 5,414 $ 656 841

Six Months Ended June 30,

Nine Months Ended September 30,

Pension Benefits Other Postretirement Benefits

7 unchanged sentences

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.

During the nine-month period ended September 30, 2022, the Company made contributions of $ 30.7 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 $ 11.9 million.

7 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

Shares issued pursuant to awards granted under the 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 the Plan.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

Note I – Incentive Plans (Contd.)

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:

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

2020 Long-Term Incentive Plan

2 unchanged sentences

580,600 February 1, 2022 $ 47.37 Monte Carlo

Performance Based RSUs 1

15,100 July 1, 2022 $ 37.77 Monte Carlo

Time Based RSUs 2

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

Time Based RSUs 2

5,000 July 1, 2022 $ 29.80 Average Stock Price

Cash Settled RSUs 3

7 unchanged sentences

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

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

During the first nine 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 six-month period ended June 30, 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 nine-month period ended September 30, 2022.

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

Six Months Ended

Nine Months Ended

September 30,

(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 and six-month periods ended June 30, 2022 and 2021.

Net income (loss) 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, 2022 and 2021.

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

Three Months Ended June 30, Six Months Ended

Three Months Ended September 30, Nine Months Ended

September 30,

(Weighted-average shares) 2022 2021 2022 2021

2 unchanged sentences

Diluted method 157,336,173 155,932,262 157,406,902 154,239,440

1 Due to a net loss recognized by the Company for the nine-month period ended September 30, 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

Three Months Ended September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

3 unchanged sentences

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 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.

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

Three months ended September 30, 21.7 % 21.1 %

Nine months ended September 30, 21.2 % 28.6 %

The effective tax rate for the three-month period ended September 30, 2022, was above the U.S.

statutory tax rate of 21% primarily due to several factors, including:

the effects of income generated in foreign tax jurisdictions, certain of which have income tax rates higher than the U.S.

Federal rate;

state tax expense;

and certain expenses, including exploration and other expenses in certain foreign jurisdictions, for which no income tax benefits are currently available.

These impacts were partially 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 September 30, 2021, was above the 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 nine-month period ended September 30, 2022, was above the U.S.

statutory tax rate of 21% primarily due to several factors, including:

the effects of income generated in foreign tax jurisdictions, certain of which have income tax rates higher than the U.S.

Federal rate;

state tax expense;

and certain expenses, including exploration and other expenses in certain foreign jurisdictions, for which no income tax benefits are currently available.

These impacts were mostly offset by no tax applied to the pre-tax income of the noncontrolling interest in MP GOM.

The effective tax rate for the nine-month period ended September 30, 2021, was above the statutory tax rate of 21% primarily due to no tax applied to the pretax income of the noncontrolling interest in MP GOM, which has the impact of increasing the effective tax rate on an overall loss.

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.

Although the Company believes that recorded liabilities for unsettled issues are adequate, additional gains

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

Note K– Income Taxes (Contd.)

or losses could occur in future years from resolution of outstanding unsettled matters.

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

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

United States – 2016;

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The Company believes current recorded liabilities are adequate.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

Note L – Financial Instruments and Risk Management

Murphy uses derivative instruments, such as swaps and zero-cost commodity price collar contracts, to manage certain risks related to commodity prices, foreign currency exchange rates and interest rates.

Murphy uses derivative instruments, such as swap and zero-cost commodity price collar contracts, to manage certain risks related to commodity prices, foreign currency exchange rates and interest rates.

The use of derivative instruments for risk management is covered by operating policies and is closely monitored by the Company’s senior management.

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Commodity Price Risks

The Company has entered into crude oil swaps and collar contracts.

The Company has entered into crude oil swap and collar contracts.

Under the swaps contracts, which mature monthly, the Company pays the average monthly price in effect and receives the fixed contract price on a notional amount of sales volume, thereby fixing the price for the commodity sold.

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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:

At September 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:

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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 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.

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

At September 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 June 30, 2022 December 31, 2021

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

Commodity swaps Accounts payable $ ( 84,933 ) ( 239,882 )

1 unchanged sentence

Commodity collars Accounts receivable — 4,280

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.)

For the three-month and nine-month periods ended September 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.

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

Commodity swaps Loss on crude contracts $ ( 46,552 ) ( 226,245 ) $ ( 202,911 ) ( 440,630 )

Commodity collars Loss on crude contracts ( 56,516 ) — ( 220,934 ) —

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

Type of Derivative

Contract 2022 2021 2022 2021

Commodity swaps Gain (Loss) on derivative instruments $ 50,089 ( 43,235 ) $ ( 152,822 ) ( 483,865 )

Commodity collars Gain (Loss) on derivative instruments 65,102 ( 15,929 ) ( 155,832 ) ( 15,929 )

Fair Values – Recurring

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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 June 30, 2022 and December 31, 2021, are presented in the following table.

June 30, 2022 December 31, 2021

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

September 30, 2022 December 31, 2021

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

8 unchanged sentences

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

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

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.

For the nine months ended September 30, 2022 and 2021, the pre-tax income effect of changes in the fair value of the contingent consideration was an expense of $ 98.5 million and $ 105.1 million respectively and is recorded in Other operating (income) expense in the Consolidated Statements of Operations.

In the nine months ended September 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.

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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 June 30, 2022 and December 31, 2021.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

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

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, 2022 and December 31, 2021.

Note M – Accumulated Other Comprehensive Loss

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.

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

(Thousands of dollars) Foreign

7 unchanged sentences

Net other comprehensive income (loss) ( 135,791 ) 9,674 ( 126,117 )

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.

Balance at September 30, 2022 $ ( 447,686 ) ( 206,142 ) ( 653,828 )

1 Reclassifications before taxes of $ 12,293 are included in the computation of net periodic benefit expense for the nine-month period ended September 30, 2022.

See Note H for additional information.

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

Related income taxes of $ 2,619 are included in Income tax expense (benefit) for the nine-month period ended September 30, 2022.

Note N – Environmental and Other Contingencies

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and laws and regulations affecting the Company’s relationships with employees, suppliers, customers, stockholders and others.

Governmental actions are often motivated by political considerations and may be taken without full consideration of their consequences or may be taken in response to actions of other governments.

It is not practical to attempt to predict the likelihood of such actions, the form the actions may take or the effect such actions may have on the Company.

Given the factors involved in various government actions, including political considerations, it is difficult to predict their likelihood, the form they may take, or the effect they may have on the Company.

ENVIRONMENTAL, HEALTH AND SAFETY MATTERS – Murphy and other companies in the oil and natural gas industry are subject to numerous federal, state, local and foreign laws and regulations dealing with the environment and protection of health and safety.

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Pursuant to recent SEC amendments to this item, the Company will be using a threshold of $ 1.0 million for such proceedings.

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.

economy by 2050.

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

There continues to be an increase in regulatory oversight of the oil and gas industry at the federal level, with a focus on climate change and greenhouse gas emissions (including methane emissions).

For example, the Inflation Reduction Act of 2022 contains provisions that impose fees for excess methane emissions from petroleum and natural gas facilities.

In addition, there have been a number of executive orders issued that address climate change, including creation of climate-related task forces,

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

Note N– Environmental and Other Contingencies (Contd.)

infrastructure and environmental justice.

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.

Executive orders have also been issued related to oil and gas activities on federal lands, 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.

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Although 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.

officially withdrew from the Paris Agreement on November 4, 2020, the U.S.

has since rejoined the Paris Agreement, which became effective for the U.S.

on February 19, 2021.

20 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

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

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

(Millions of dollars) External

11 unchanged sentences

Total $ 10,229.2 1,303.4 574.1 630.7 137.3

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

Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021

(Millions of dollars) External

13 unchanged sentences

MANAGEMENT’S DISCUSSION AND ANALYSIS

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.

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

Prices were higher in the third quarter of 2022 as compared to the same period in 2021, principally due to demand recovery from COVID-19 and geopolitical uncertainty and market disruption following the Russian invasion of Ukraine.

Prices were lower in the third quarter 2022 as compared to the second quarter of 2022 primarily due to increased supply related to the Strategic Petroleum Reserve oil release in the third quarter, ongoing concerns related to possible economic slowdown and lower demand from China.

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 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;

For the three months ended September 30, 2022, West Texas Intermediate (WTI) crude oil prices averaged approximately $91.55 per barrel (compared to $108.41 in the second quarter of 2022 and $70.56 in the third quarter of 2021).

The average price for WTI in September of 2022 was approximately $83.80 per barrel, reflecting a 17% increase from September of 2021 and a 27% reduction from the average price from June of 2022.

The average price in October 2022 was $87.03 per barrel.

As of close on November 1, 2022, the NYMEX WTI forward curve prices for the remainder of 2022 and 2023 were $88.37 and $81.53 per barrel, respectively.

For the three months ended September 30, 2022, the Company produced 196 thousand barrels of oil equivalent per day (including noncontrolling interest) from continuing operations and invested $296.1 million in capital expenditures (on a value of work done basis), which included $79.1 million in acquisition capital, primarily for an additional working interests in the GOM Lucius field.

The Company reported net income from continuing operations of $574.5 million for the three months ended September 30, 2022;

this amount includes income attributable to noncontrolling interest of $45.6 million and after-tax gains on unrealized mark to market revaluations on commodity price swap and collar positions and contingent consideration of $188.8 million and $24.8 million, respectively.

In the third quarter of 2022, the Company reduced debt by $247.6 million aggregate principal amount of its 6.875%, 5.750%, 6.375%, 6.125% senior notes due 2024, 2025, 2028, 2042 for the principal amount plus cash costs of $2.0 million.

In 2021, the Company executed a series of financial transactions which redeemed the remaining notes due 2022 and partially redeemed the 2024 Notes.

In August 2022, the Company acquired an additional 3.37% working interest (there is no noncontrolling interest) in the Lucius field in the Gulf of Mexico for a purchase price of $77.1 million.

For the nine months ended September 30, 2022, the Company produced 173 thousand barrels of oil equivalent per day (including noncontrolling interest) from continuing operations and invested $918.0 million in capital expenditures (on a value of work done basis), which included $125.6 million related to acquisition capital and $25.3 million related to the Cutthroat exploration well in Brazil deferred from 2021.

The Company reported net income from continuing operations of $920.0 million for the nine months ended September 30, 2022.

This amount includes income attributable to noncontrolling interest of $152.4 million, after-tax gains on unrealized mark to market revaluations on commodity price swap and collar positions of $109.5 million and after-tax losses on contingent consideration of $77.5 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.

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.

In the second quarter of 2022, the Company achieved first production from the 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 facility.

In addition, the Company acquired an additional 11.0% working interest (with no noncontrolling interest) in the Kodiak field in the Gulf of Mexico for a purchase price of $48.5 million.

In the second quarter of 2022, the Company redeemed $200.0 million aggregate principal amount of its 6.875% 2024 Notes for the principal amount plus cash costs of $3.4 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 31, 2021.

The Company reported net income from continuing operations of $138.0 million for the third quarter of 2021.

This amount included 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.

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.

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 (which was subsequently reimbursed by Arclight).

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

This amount included 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 derivative positions and contingent consideration of $180.5 million and $83.0 million, respectively.

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 June 30, Six Months Ended June 30,

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

(Millions of dollars) 2022 2021 2022 2021

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended June 30,

September 30, Nine Months Ended September 30,

(Millions of dollars) 2022 2021 2022 2021

4 unchanged sentences

Total $ 517.1 236.8 $ 1,283.7 421.6

MANAGEMENT’S DISCUSSION AND ANALYSIS (Contd.)

Results of Operations (contd.)

Other key performance metrics

2 unchanged sentences

Management uses EBITDA and adjusted EBITDA internally to evaluate the Company’s operational performance and trends between periods and relative to its industry competitors.

EBITDA and adjusted EBITDA are non-GAAP financial measures and should not be considered a substitute for Net income (loss) or Cash provided by operating activities as determined in accordance with accounting principles generally accepted in the United States of America.

EBITDA and adjusted EBITDA are non-GAAP financial measures and should not be considered a substitute for Net income (loss) or Cash provided by operating activities as determined in accordance with

MANAGEMENT’S DISCUSSION AND ANALYSIS (Contd.)

Results of Operations (contd.)

accounting principles generally accepted in the United States of America.

Also presented below is adjusted EBITDA per barrel of oil equivalent sold, a non-GAAP financial metric.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

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

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Mark-to-market (gain) loss on derivative instruments (239.1) (55.9) (138.7) 228.5

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

Mark-to-market (gain) loss on contingent consideration (31.4) 28.4 98.5 105.1

Foreign exchange gain (20.7) (2.8) (28.7) (1.5)

Gain on sale of assets ¹ (15.2) — (15.2) —

Accretion of asset retirement obligations ¹ 10.0 10.8 30.7 30.8

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

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

Discontinued operations loss 0.4 0.7 1.9 0.6

Impairment of assets — — — 171.3

Unutilized rig charges — 3.2 — 8.5

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

Adjusted EBITDA attributable to Murphy (Non-GAAP) $ 637.1 287.6 $ 1,630.3 933.7

1 unchanged sentence

Adjusted EBITDA per barrel of oil equivalents sold $ 36.35 20.23 $ 36.25 21.45

1 Depreciation, depletion, and amortization expense, impairment of assets and accretion of asset retirement obligations used in the computation of Adjusted EBITDA exclude the portion attributable to the non-controlling interest.

1 Depreciation, depletion, and amortization expense, gain on sale of assets and accretion of asset retirement obligations used in the computation of Adjusted EBITDA exclude the portion attributable to the non-controlling interest (NCI).

MANAGEMENT’S DISCUSSION AND ANALYSIS (Contd.)

Results of Operations (contd.)

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

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

(Millions of dollars) United

Canada Other Total

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Oil and gas sales and other operating revenues $ 973.8 164.1 4.8 1,142.7

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Results of operations (excluding Corporate segment) $ 481.5 41.4 (5.8) 517.1

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

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

19 unchanged sentences

Results of Operations (contd.)

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

OIL AND GAS OPERATING RESULTS – NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(Millions of dollars) United

Canada Other Total

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Oil and gas sales and other operating revenues $ 2,659.0 450.2 18.5 3,127.7

18 unchanged sentences

Results of operations (excluding Corporate segment) $ 1,225.9 111.3 (53.5) 1,283.7

Six months ended June 30, 2021

Nine months ended September 30, 2021

Oil and gas sales and other operating revenues $ 1,704.4 349.2 — 2,053.6

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