What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-02 compared with 2023-08-03 · 176 added, 142 removed, 554 unchanged (36% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

(Thousands of dollars, except share amounts) June 30,

(Thousands of dollars, except share amounts) September 30,

2023 December 31,

42 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(Thousands of dollars, except per share amounts) 2023 2022 2023 2022

3 unchanged sentences

Total revenue from sales to customers 953,766 1,166,409 2,606,584 3,234,021

Loss on derivative instruments – ( 103,068 ) – ( 423,845 )

Gain (loss) on derivative instruments – 115,191 – ( 308,654 )

Gain on sale of assets and other income 5,879 21,825 9,365 32,076

9 unchanged sentences

Accretion of asset retirement obligations 11,675 11,286 34,196 34,725

Other operating expense 4,960 36,913 16,948 142,855

Other operating expense (benefit) 4,385 ( 27,129 ) 21,333 115,726

Total costs and expenses 582,136 550,337 1,776,767 1,694,871

Operating income from continuing operations 377,509 753,088 839,182 1,262,572

Other income (loss)

Other (expenses) income ( 7,694 ) 5,308 ( 7,767 ) 2,813

Other income 8,811 18,301 1,044 21,114

Interest expense, net ( 29,984 ) ( 37,440 ) ( 88,695 ) ( 116,102 )

5 unchanged sentences

Net income including noncontrolling interest 277,804 574,076 583,974 918,094

Net (loss) income attributable to noncontrolling interest ( 6,431 ) 58,947 16,239 106,797

Net income attributable to noncontrolling interest 22,462 45,648 38,701 152,445

NET INCOME ATTRIBUTABLE TO MURPHY $ 255,342 $ 528,428 $ 545,273 $ 765,649

15 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(Thousands of dollars) 2023 2022 2023 2022

10 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

(Thousands of dollars) 2023 2022

10 unchanged sentences

Mark to market loss on contingent consideration 7,113 98,451

Mark to market loss on derivative instruments – 100,343

Mark to market gain on derivative instruments

– ( 138,707 )

Long-term non-cash compensation 42,502 57,612

13 unchanged sentences

Early redemption of debt cost – ( 5,419 )

Distributions to noncontrolling interest ( 15,983 ) ( 94,854 )

Repurchase of common stock ( 75,023 ) —

Contingent consideration payment ( 60,243 ) ( 81,742 )

Cash dividends paid ( 128,657 ) ( 89,354 )

Distributions to noncontrolling interest ( 20,052 ) ( 145,273 )

Withholding tax on stock-based incentive awards ( 14,232 ) ( 17,338 )

2 unchanged sentences

Net cash required by financing activities ( 547,359 ) ( 785,633 )

Net cash required by discontinued operations

Effect of exchange rate changes on cash and cash equivalents ( 414 ) ( 5,180 )

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(Thousands of dollars except number of shares) 2023 2022 2023 2022

1 unchanged sentence

$ – $ – $ – $ –

Common Stock – par $ 1.00 , authorized 450,000,000 shares, issued 195,100,628 shares at June 30, 2023 and 195,100,628 shares at June 30, 2022

Common Stock – par $ 1.00 , authorized 450,000,000 shares, issued 195,100,628 shares at September 30, 2023 and 195,100,628 shares at September 30, 2022

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

16 unchanged sentences

Balance at beginning of period ( 1,586,522 ) ( 1,616,340 ) ( 1,614,717 ) ( 1,655,447 )

Purchase of treasury shares ( 75,773 ) – ( 75,773 ) –

Awarded restricted stock, net of forfeitures ( 81 ) 1,313 28,114 40,420

11 unchanged sentences

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

Note A – Nature of Business and Interim Financial Statements

NATURE OF BUSINESS – Murphy Oil Corporation is an international oil and natural gas exploration and production company that conducts its business through various operating subsidiaries.

The Company primarily produces oil and natural gas in the United States (U.S.) and Canada and conducts oil and natural gas exploration activities worldwide.

Note A – Basis of Presentation

The unaudited financial statements presented herein, in the opinion of Murphy’s management, include all accruals necessary to present fairly the Company’s financial position as at September 30, 2023 and December 31, 2022, and the results of operations, statements of operations, cash flows and changes in stockholders’ equity for the interim periods ended September 30, 2023 and 2022, in conformity with U.S generally accepted accounting principles (GAAP).

In preparing the financial statements of the Company in conformity with GAAP, management has made a number of estimates and assumptions that affect the reporting of amounts of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities.

Actual results may differ from the estimates.

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 2022 Form 10-K report, as certain notes and other pertinent information have been abbreviated or omitted in this report.

Financial results for the three-month and nine-month periods ended September 30, 2023 are not necessarily indicative of future results.

In connection with the LLOG Exploration Offshore L.L.C.

3 unchanged sentences

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

As of June 30, 2023, our maximum exposure to loss was $ 3.1 million (excluding operational impacts), which represents our net investment in Delta House.

As of September 30, 2023, our maximum exposure to loss was $ 3.1 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, 2023 and December 31, 2022, and the results of operations, statements of operations, cash flows and changes in stockholders’ equity for the interim periods ended June 30, 2023 and 2022, in conformity with U.S generally accepted accounting principles (GAAP).

Actual results may differ from the estimates.

Financial results for the three-month and six-month periods ended June 30, 2023 are not necessarily indicative of future results.

Note B – New Accounting Principles and Recent Accounting Pronouncements

7 unchanged sentences

Additionally, revenue from sales to customers is generated from three primary revenue streams:

crude oil and condensate, natural gas liquids, and natural gas.

crude oil and condensate, natural gas liquids (NGL), and natural gas.

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

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

- In the U.S., 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.

Revenue is generally recognized when oil and natural gas are transferred

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note C - Revenue from Contracts with Customers (Continued)

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 U.S., 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.

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

to the customer at the delivery point.

Revenue recognized is largely index-based with price adjustments for floating market differentials.

Canada - In Canada, contracts include long-term floating commodity index priced and natural gas physical forward sales fixed-price contracts.

Canada - In Canada, contracts include long-term floating commodity index priced and natural gas fixed-price forward physical contracts.

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note C – Revenue from Contracts with Customers (Continued)

Disaggregation of Revenue

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 June 30, 2023, and 2022, the Company recognized $ 812.9 million and $ 1,196.2 million, respectively, from total revenue from sales to customers, from sales of oil, natural gas liquids and natural gas.

For the six-month periods ended June 30, 2023, and 2022, the Company recognized $ 1,652.8 million and $ 2,067.6 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) 2023 2022 2023 2022

26 unchanged sentences

Total revenue from sales to customers 953,766 1,166,409 2,606,584 3,234,021

Loss on derivative instruments – ( 103,068 ) – ( 423,845 )

Gain (loss) on derivative instruments – 115,191 – ( 308,654 )

Gain on sale of assets and other income 5,879 21,825 9,365 32,076

1 unchanged sentence

Contract Balances and Asset Recognition

As of June 30, 2023, and December 31, 2022, receivables from contracts with customers, net of royalties and associated payables, on the balance sheets from continuing operations, were $ 197.4 million and $ 201.1 million,

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note C – Revenue from Contracts with Customers (Continued)

respectively.

As of September 30, 2023, and December 31, 2022, receivables from contracts with customers, net of royalties and associated payables, on the balance sheets, were $ 248.8 million and $ 201.1 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 June 30, 2023.

The Company has not entered into any revenue contracts that have financing components as of September 30, 2023.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note C - Revenue from Contracts with Customers (Continued)

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

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

For the periods presented, the Company did not identify any costs incurred to obtain a contract with a customer that should be recognized as an asset.

Performance Obligations

6 unchanged sentences

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

As of June 30, 2023, 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, 2023

As of September 30, 2023, 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, 2023

Location Commodity End Date Description Approximate Volumes

8 unchanged sentences

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

Canada Natural Gas Q4 2027 Contracts to sell natural gas at CAD index prices 10 MMCFD

Canada NGL Q3 2023 Contracts to sell natural gas liquids at CAD prices 952 BOEPD

Canada Natural Gas Q4 2027 Contracts to sell natural gas at USD index prices 20 MMCFD

Canada NGL Q1 2024 Contracts to sell natural gas liquids at various CAD pricing As produced

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note D – Property, Plant and Equipment

1 unchanged sentence

Under Financial Accounting Standards Board 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note D – Property, Plant and Equipment (Continued)

As of June 30, 2023, the Company had total capitalized exploratory well costs for continuing operations pending the determination of proved reserves of $ 193.4 million.

The following table reflects the net changes in capitalized exploratory well costs during the six-month periods ended June 30, 2023 and 2022.

As of September 30, 2023, the Company had total capitalized exploratory well costs pending the determination of proved reserves of $ 185.5 million.

The following table reflects the net changes in capitalized exploratory well costs during the nine-month periods ended September 30, 2023 and 2022.

(Thousands of dollars) 2023 2022

1 unchanged sentence

Additions pending the determination of proved reserves 40,825 22,275

Reclassifications to proved properties based on the

determination of proved reserves ( 1,065 ) –

Capitalized exploratory well costs charged to expense ( 26,143 ) ( 20,295 )

Balance at June 30 $ 193,405 $ 178,421

Capital additions of $ 47.7 million in 2023 are primarily related to Oso #1 well (Atwater Valley 138) and Longclaw GC 433 #1 in the Gulf of Mexico and LDV-4X in Vietnam.

Balance at September 30 $ 185,477 $ 181,461

Capital additions of $ 40.8 million in 2023 are primarily related to Oso #1 well (Atwater Valley 138) and LDV-4X in Vietnam.

In the first quarter of 2023, drilling of the Oso #1 well was temporarily suspended prior to reaching the objective.

The Company plans to return to the well in the third quarter of 2023.

Capitalized well costs charged to dry hole expense of $ 26.2 million for the six months ended June 30, 2023 are related to Cholula -1 EXP well in Mexico and Chinook #7 exploration well in the Gulf of Mexico.

The preceding table excludes well costs of $ 70.3 million incurred and expensed directly to dry hole during the six months ended June 30, 2023, related to the Chinook #7 exploration well in the Gulf of Mexico.

The Company plans to return to the well in the fourth quarter of 2023.

Capitalized well costs charged to dry hole expense of $ 26.1 million for the nine months ended September 30, 2023 are related to Cholula-1EXP well in Mexico and Chinook #7 (Walker Ridge 425) exploration well in the Gulf of Mexico.

The preceding table excludes well costs of $ 81.7 million incurred and expensed directly to dry hole during the nine months ended September 30, 2023, related to the Chinook #7 (Walker Ridge 425) exploration well in the Gulf of Mexico.

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

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

September 30,

(Thousands of dollars) Amount No.

6 unchanged sentences

$ 185,477 6 5 $ 181,461 10 7

Of the $ 184.9 million of exploratory well costs capitalized more than one year at June 30, 2023, $ 112.4 million was in Vietnam, $ 65.0 million was in the U.S., $ 4.8 million was in Canada, and $ 2.7 million was in Brunei.

Of the $ 185.5 million of exploratory well costs capitalized more than one year at September 30, 2023, $ 112.8 million was in Vietnam, $ 65.3 million was in the U.S., $ 4.7 million was in Canada, and $ 2.7 million was in Brunei.

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 six months ended June 30, 2023 or 2022.

On July 31, 2023 the Company entered into a purchase and sale agreement to sell a portion of our operated non-core Kaybob Duvernay assets and all of our non-operated Placid Montney assets, located in Alberta, Canada for net cash consideration of C$ 150 million.

The transaction is anticipated to close in the third quarter of 2023, subject to closing conditions and adjustments.

No gain or loss is anticipated in relation to this transaction.

These assets did not meet the accounting criteria to be disclosed as held for sale as of June 30, 2023 and continue to be classified as “Property, plant and equipment” on the Company’s Consolidated Balance Sheets.

Note E – Financing Arrangements and Debt

As of June 30, 2023, the Company had an $ 800 million revolving credit facility (RCF).

The RCF is a senior unsecured guaranteed facility which expires on November 17, 2027, unless the outstanding principal amount of the Company’s 5.75 % senior notes due 2025 (2025 Notes) as at February 15, 2025 exceeds $ 50.0 million, in

There w ere no imp airments in the nine months ended September 30, 2023 or 2022.

On September 15, 2023, the Company completed the previously announced divestment of certain non-core operated Kaybob Duvernay assets and all of our non-operated Placid Montney assets, located in Alberta, Canada for net cash proceeds of C$ 139.0 million.

No gain or loss was recorded related to this transaction, and the effective date of the transaction was March 1, 2023.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note E – Financing Arrangements and Debt (Continued)

which case, the RCF will expire on that date.

As of June 30, 2023, the Company had $ 248.7 million outstanding on the 2025 Notes.

At June 30, 2023, the Company had no outstanding borrowings under the RCF and $ 30.4 million of outstanding letters of credit, which reduce the borrowing capacity of the RCF.

At June 30, 2023, the interest rate in effect on borrowings under the RCF would have been 7.74 %.

At June 30, 2023, the Company was in compliance with all covenants related to the RCF.

Note E – Financing Arrangements and Debt

As of September 30, 2023, the Company had an $ 800 million revolving credit facility (RCF).

The RCF is a senior unsecured guaranteed facility which expires on November 17, 2027.

At September 30, 2023, the Company had no outstanding borrowings under the RCF and $ 4.1 million of outstanding letters of credit, which reduce the borrowing capacity of the RCF.

At September 30, 2023, the interest rate in effect on borrowings under the RCF would have been 7.92 %.

At September 30, 2023, the Company was in compliance with all covenants related to the RCF.

In September 2023, the Company redeemed the remaining $ 248.7 million principal amount outstanding of its 5.75 % senior notes due 2025 (2025 Notes).

The non-cash costs of the debt extinguishment of $ 0.9 million is included in “Interest expense, net” on the Consolidated Statements of Operations for the nine months ended September 30, 2023.

The Company irrevocably deposited the repayment amount with a trustee in September 2023.

With this deposit, as per the terms of the 2025 Notes indenture, all covenants and conditions were complied with to satisfy and discharge the full indebtedness of the 2025 Notes.

The Trustee has been irrevocably instructed to repay all sums outstanding and payable on the Redemption Date in accordance with the Indenture.

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

2 unchanged sentences

Additional disclosures regarding cash flow activities are provided below.

Six Months Ended

Nine Months Ended

September 30,

(Thousands of dollars) 2023 2022

2 unchanged sentences

(Increase) decrease in inventories ( 6,609 ) ( 410 )

(Increase) decrease in prepaid expenses 8,291 ( 1,693 )

Increase in accounts payable and accrued liabilities ¹ 6,642 147,790

(Increase) in prepaid expenses ( 3,364 ) ( 8,561 )

Increase (decrease) in accounts payable and accrued liabilities ¹ ( 60,582 ) 61,139

Increase (decrease) in income taxes payable ( 2,544 ) 18,750

6 unchanged sentences

Asset retirement costs capitalized $ 16,219 $ 29,327

(Increase) decrease in capital expenditure accrual 20,522 ( 1,929 )

Decrease in capital expenditure accrual 75,760 34,853

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note G – Asset Retirement Obligations

The asset retirement obligations liabilities (ARO) recognized by the Company are related to the estimated costs to dismantle and abandon its producing oil and natural gas properties and related equipment.

A reconciliation of the beginning and ending aggregate carrying amount of the ARO for the six-month periods ended June 30, 2023 and 2022 is shown in the following table.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note G – Asset Retirement Obligations (Continued)

(Thousands of dollars) June 30, 2023 June 30, 2022

A reconciliation of the beginning and ending aggregate carrying amount of the ARO for the nine-month periods ended September 30, 2023 and 2022 is shown in the following table.

(Thousands of dollars) September 30, 2023 September 30, 2022

Balance at beginning of year $ 911,653 $ 971,893

4 unchanged sentences

Changes due to translation of foreign currencies ( 340 ) ( 13,592 )

Balance at end of year 876,099 974,545

Current portion of liability at June 30 ¹ ( 32,771 ) ( 110,653 )

Noncurrent portion of liability at June 30 $ 843,328 863,892

Balance at end of period 871,788 945,544

Current portion of liability 1

( 12,665 ) ( 96,937 )

Noncurrent portion of liability $ 859,123 $ 848,607

1 Included in “Other accrued liabilities” on the Consolidated Balance Sheets.

2 unchanged sentences

prices for oil field services, technological changes, governmental requirements and other factors.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note H – Employee and Retiree Benefit Plans

8 unchanged sentences

the life insurance benefits are noncontributory.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The table that follows provides the components of net periodic benefit expense for the three-month and six-month periods ended June 30, 2023 and 2022.

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, 2023 and 2022.

Three Months Ended September 30,

Pension Benefits Other Postretirement Benefits

7 unchanged sentences

Total net periodic benefit expense $ 4,576 $ 3,697 $ 106 $ 656

Six Months Ended June 30,

Nine Months Ended September 30,

Pension Benefits Other Postretirement Benefits

7 unchanged sentences

Total net periodic benefit expense $ 13,732 $ 11,068 $ 304 $ 1,967

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

During the six-month period ended June 30, 2023, the Company made contributions of $ 18.9 million to its defined benefit pension and postretirement benefit plans.

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

During the nine-month period ended September 30, 2023, the Company made contributions of $ 31.5 million to its defined benefit pension and postretirement benefit plans.

Remaining funding in 2023 for the Company’s defined benefit pension and postretirement plans is anticipated to be $ 5.5 million.

3 unchanged sentences

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note I - Incentive Plans (Continued)

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

3 unchanged sentences

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note I – Incentive Plans (Continued)

canceled, expired, forfeited or otherwise not issued under an award shall not count as shares issued under the Plan.

During the six months ended June 30, 2023, the Committee granted the following awards from the 2020 Long-Term Plan:

2020 Long-Term Incentive Plan

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

During the nine months ended September 30, 2023, the Committee granted the following awards from the 2020 Long-Term Plan:

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

11 unchanged sentences

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

During the six months ended June 30, 2023, the Committee granted the following awards to Non-Employee Directors:

2021 Stock Plan for Non-Employee Directors

During the nine months ended September 30, 2023, the Committee granted the following awards to Non-Employee Directors:

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

4 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, 2023.

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, 2023.

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) 2023 2022

5 unchanged sentences

Note J – Earnings Per Share

Net income 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, 2023 and 2022.

Net income attributable to Murphy was used as the numerator in computing both basic and diluted income per Common share for the three-month and nine-month periods ended September 30, 2023 and 2022.

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(Weighted-average shares) 2023 2022 2023 2022

3 unchanged sentences

1 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.

Six Months Ended

Three Months Ended September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Antidilutive stock options excluded from diluted shares – 1,316,222 – 163,800

2 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, 2023 and 2022, the Company’s effective income tax rates were as follows:

Three months ended June 30, 27.4 % 20.4 %

Six months ended June 30, 22.4 % 20.3 %

The effective tax rate for the three-month period ended June 30, 2023, was above the U.S.

For the three-month and nine-month periods ended September 30, 2023 and 2022, the Company’s effective income tax rates were as follows:

Three months ended September 30, 21.9 % 21.7 %

Nine months ended September 30, 22.2 % 21.2 %

The effective tax rate for the three-month period ended September 30, 2023, was above the U.S.

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

no tax benefit applied to the pre-tax loss of the noncontrolling interest in MP GOM;

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;

stock-based compensation;

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

The effective tax rate for the three-month period ended June 30, 2022, was below the 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 six-month period ended June 30, 2023 was above the U.S.

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, 2022, was above the U.S.

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

4 unchanged sentences

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 six-month period ended June 30, 2022 was below the 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 nine-month period ended September 30, 2023, 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 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;

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note K – Income Taxes (Continued)

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

1 unchanged sentence

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.

Additionally, the Company has paid amounts into escrow, and may from time to time pay more amounts

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note K – Income Taxes (Continued)

into escrow, in order to continue tax disputes with the relevant taxing authorities.

As of June 30, 2023, the earliest years remaining open for audit and/or settlement in our major taxing jurisdictions are as follows:

Additionally, the Company has paid amounts into escrow, and may from time to time pay more amounts into escrow, in order to continue tax disputes with the relevant taxing authorities.

As of September 30, 2023, the earliest years remaining open for audit and/or settlement in our major taxing jurisdictions are as follows:

Canada – 2016;

10 unchanged sentences

Commodity Price Risks

During the second quarter of 2023, the Company did no t have any outstanding crude oil derivative contracts.

During the second quarter of 2022, the Company had crude oil swaps and collar contracts.

During the third quarter of 2023, the Company did no t have any crude oil derivative contracts.

During the third quarter of 2022, the Company had crude oil swaps and collar contracts.

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

3 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 June 30, 2023 and 2022.

For the three-month and six-month periods ended June 30, 2023 and 2022, 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.

The Company had no foreign currency exchange derivatives outstanding at September 30, 2023 and 2022.

For the three-month and nine-month periods ended September 30, 2023 and 2022, 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) Statements of Operations Location Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

Type of Derivative Contract 2023 2022 2023 2022

Commodity swaps Loss on derivative instruments $ – $ ( 46,552 ) $ – $ ( 202,911 )

Commodity collars Loss on derivative instruments – ( 56,516 ) – ( 220,934 )

Commodity swaps Gain (loss) on derivative instruments $ – $ 50,089 $ – $ ( 152,822 )

Commodity collars Gain (loss) on derivative instruments – 65,102 – ( 155,832 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note L – Financial Instruments and Risk Management (Continued)

Fair Values – Recurring

4 unchanged sentences

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note L – Financial Instruments and Risk Management (Continued)

The carrying value of assets and liabilities recorded at fair value on a recurring basis at June 30, 2023 and December 31, 2022, are presented in the following table.

June 30, 2023 December 31, 2022

The carrying value of assets and liabilities recorded at fair value on a recurring basis at September 30, 2023 and December 31, 2022, are presented in the following table.

September 30, 2023 December 31, 2022

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

4 unchanged sentences

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.

As of June 30, 2023, there were no outstanding commodity West Texas Intermediate (WTI) crude oil swaps and collars contracts subject to fair value measurement.

As of September 30, 2023, there were no outstanding commodity West Texas Intermediate (WTI) crude oil swaps and collars contracts subject to fair value measurement.

As of December 31, 2022, there were no outstanding commodity WTI crude oil swaps and collars contracts subject to fair value measurement.

17 unchanged sentences

As of December 31, 2022, the $ 150 million obligation limit was achieved and paid in the first half of 2023.

As at June 30, 2023, the Company had no remaining liabilities relating to prior acquisitions from PAI and LLOG.

As at December 31, 2022, the Company’s liabilities with PAI and LLOG were based on realized inputs of volumes and pricing as a result of reaching contractual thresholds or time limitations that ended in 2022.

1 unchanged sentence

The liability remaining was included in “Other accrued liabilities” in the Consolidated Balance Sheets.

During the six months ended June 30, 2023, the Company paid a total of $ 199.8 million in contingent consideration payments, thereby reducing the liability balance to nil as at June 30, 2023.

In the Consolidated Statement of Cash Flows, $ 139.6 million is shown in “Operating Activities” and $ 60.2 million is shown in “Financing Activities”.

As of the end of the second quarter of 2023, the Company had no remaining liabilities relating to prior acquisitions from PAI and LLOG.

During the nine months ended September 30, 2023, the Company paid a total of $ 199.8 million in contingent consideration payments.

In the Consolidated Statements of Cash Flows, $ 139.6 million is shown in “Operating Activities” and $ 60.2 million is shown in “Financing Activities”.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note L – Financial Instruments and Risk Management (Continued)

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, 2023 and December 31, 2022.

The following table presents the carrying amounts and estimated fair values of financial instruments held by the Company at June 30, 2023 and December 31, 2022.

There were no offsetting positions recorded at September 30, 2023 and December 31, 2022.

The following table presents the carrying amounts and estimated fair values of financial instruments held by the Company at September 30, 2023 and December 31, 2022.

The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties.

1 unchanged sentence

The fair value of current and long-term debt was estimated based on rates offered to the Company at that time for debt of the same maturities.

The Company has

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note L – Financial Instruments and Risk Management (Continued)

off-balance sheet exposures relating to certain letters of credit.

Substantially all of the Company’s long-term debt is actively traded in open markets, and accordingly, is classified as Level 1 in the fair value hierarchy.

The Company has off-balance sheet exposures relating to certain letters of credit.

The fair value of these, which represents fees associated with obtaining the instruments, was nominal.

June 30, December 31,

September 30, December 31,

(Thousands of dollars) Carrying

3 unchanged sentences

Note M – Accumulated Other Comprehensive Loss

The components of “Accumulated other comprehensive loss” on the Consolidated Balance Sheets at December 31, 2022 and June 30, 2023 and the changes during the six-month period ended June 30, 2023 are presented net of taxes in the following table.

The components of “Accumulated other comprehensive loss” on the Consolidated Balance Sheets at December 31, 2022 and September 30, 2023 and the changes during the nine-month period ended September 30, 2023 are presented net of taxes in the following table.

(Thousands of dollars) Foreign

7 unchanged sentences

Net other comprehensive income (loss) ( 2,601 ) 3,347 746

Balance at June 30, 2023 $ ( 381,478 ) $ ( 114,305 ) $ ( 495,783 )

1 Reclassifications before taxes of $ 2,669 thousand are included in the computation of net periodic benefit expense for the six-month period ended June 30, 2023.

Balance at September 30, 2023 $ ( 420,831 ) $ ( 113,109 ) $ ( 533,940 )

1 Reclassifications before taxes of $ 4,146 thousand are included in the computation of net periodic benefit expense for the nine-month period ended September 30, 2023.

See Note H for additional information.

Related income taxes of $ 518 thousand are included in “Income tax expense (benefit)” on the Consolidated Statements of Operations for the six-month period ended June 30, 2023.

Related income taxes of $ 799 thousand are included in "Income tax expense” on the Consolidated Statements of Operations for the nine-month period ended September 30, 2023.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

56 unchanged sentences

Based on information currently available to the Company, the ultimate resolution of environmental and legal matters referred to in this note is not expected to have a material adverse effect on the Company’s net income, financial condition or liquidity in a future period.

Note O – Common Stock Issued and Outstanding

Activity in the number of shares of the Company’s Common Stock issued and outstanding for the nine-month periods ended September 30, 2023 and 2022 is shown below.

( Number of shares outstanding )

September 30, 2023 September 30, 2022

Beginning of period 155,467,319 154,463,050

Stock options exercised 1

Restricted stock awards 1

689,824 822,614

Treasury shares purchased 2

End of period 154,473,141 155,455,283

1 Shares issued upon exercise of stock options and award of restricted stock are less withholding for statutory income taxes owed upon issuance of shares.

2 Details of the capital allocation framework can be found as part of the Company’s Form 8-K filed on August 4, 2022.

On August 4, 2022, the Company’s Board of Directors authorized a share repurchase program of up to $ 300 million of the Company’s Common Stock.

This repurchase program has no time limit and may be suspended or discontinued completely at any time without prior notice as determined by the Company at its discretion and dependent upon a variety of factors.

During the three and nine months ended September 30, 2023, the Company repurchased 1,684,522 shares of its Common Stock under the share repurchase program for $ 75.8 million, including excise taxes, commissions and fees.

Subsequent to the third quarter of 2023, the Company’s Board of Directors authorized an increase to the share repurchase program by an additional $ 300 million, bringing the total amount allowed to be repurchased under the program to $ 600 million, and has $ 525 million remaining available to repurchase.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note O – Business Segments

Note P – Business Segments

Information about business segments and geographic operations is reported in the following table.

3 unchanged sentences

refining and marketing operations as discontinued operations for all periods presented.

Total Assets at June 30, 2023 Three Months Ended June 30, 2023 Three Months Ended June 30, 2022

Total Assets at September 30, 2023 Three Months Ended September 30, 2023 Three Months Ended September 30, 2022

(Millions of dollars) External

11 unchanged sentences

Total $ 9,942.6 $ 959.6 $ 277.8 $ 1,303.4 $ 574.1

Six Months Ended June 30, 2023 Six Months Ended June 30, 2022

Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022

(Millions of dollars) External

11 unchanged sentences

Total $ 2,615.9 $ 584.0 $ 2,957.4 $ 918.1

1 Additional details about results of oil and natural gas operations are presented in the table on pages 27 and 28 .

1 Additional detail about the results of oil and natural gas operations is presented in the Exploration and Production Continuing Operations table on page 24 .

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