What changed in this filing

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Item 1. Financial Statements

2022-05-05 compared with 2021-10-28 · 179 added, 236 removed, 528 unchanged (44% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

September 30, December 31,

March 31, December 31,

(Millions of dollars, except share amounts) 2022 2021

5 unchanged sentences

Total current assets 910.8 767.8

Property, plant and equipment, at cost less accumulated depreciation and amortization of $ 1,321.3 at 2021 and $ 1,191.4 at 2020

Property, plant and equipment, at cost less accumulated depreciation and amortization of $ 1,428.2 and $ 1,373.4 at 2022 and 2021, respectively

2,391.6 2,378.4

28 unchanged sentences

Total liabilities and stockholders' equity $ 4,206.2 $ 4,048.2

*Prior year amounts have been reclassified to conform with current period presentation

See notes to consolidated financial statements.

2 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(Millions of dollars, except share and per share amounts) 2022 2021

16 unchanged sentences

Other income (expense)

Interest income 0.1 — 0.1 1.0

Interest expense ( 19.6 ) ( 21.3 )

1 unchanged sentence

Total other income (expense) ( 20.3 ) ( 21.3 )

Income (loss) before income taxes 137.7 88.1 381.0 428.4

Income before income taxes 200.4 73.3

Income tax expense (benefit) 48.0 18.0

13 unchanged sentences

(Millions of dollars) Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Net income $ 152.4 $ 55.3

5 unchanged sentences

Realized gain reclassified to interest expense — 0.1

Amortization of unrealized gain to interest expense 0.3 — 0.7 —

0.3 0.5 0.8 ( 3.7 )

Amortization of unrealized (gain) loss to interest expense 0.2 0.2

Deferred income tax (benefit) expense — 0.1

5 unchanged sentences

(Millions of dollars)

Nine Months Ended

September 30,

Three Months Ended

Operating Activities

4 unchanged sentences

Accretion of asset retirement obligations 0.7 0.6

Pretax (gains) losses from sale of assets ( 0.4 ) ( 1.4 )

(Gains) losses from sale of assets — ( 0.2 )

Net (increase) decrease in noncash operating working capital 118.9 108.0

23 unchanged sentences

Balance as of December 31, 2020 46,767,164 $ 0.5 $ ( 1,490.9 ) $ 533.3 $ 1,743.1 $ ( 1.9 ) $ 784.1

Cumulative effect of a change in accounting principle — — — — 1.1 — 1.1

Net income (loss) — — — — 89.3 — 89.3

Loss on interest rate hedge, net of tax — — — — — ( 2.7 ) ( 2.7 )

Purchase of treasury stock — — ( 140.6 ) — — — ( 140.6 )

Issuance of treasury stock — — 5.2 ( 5.7 ) — — ( 0.5 )

Amounts related to share-based compensation — — — ( 5.6 ) — — ( 5.6 )

Share-based compensation expense — — — 2.8 — — 2.8

Balance as of March 31, 2020 46,767,164 0.5 ( 1,235.2 ) 530.2 1,453.3 ( 2.0 ) 746.8

Net income (loss) — — — — 168.9 — 168.9

Loss on interest rate hedge, net of tax — — — — — ( 0.5 ) ( 0.5 )

Share-based compensation expense — — — 2.8 — — 2.8

Balance as of June 30, 2020 46,767,164 $ 0.5 $ ( 1,235.2 ) $ 533.0 $ 1,622.2 $ ( 2.5 ) $ 918.0

Net income (loss) — — — — 66.9 — 66.9

Loss on interest rate hedge, net of tax — — — — — 0.4 0.4

Purchase of treasury stock — — ( 89.9 ) — — — ( 89.9 )

Issuance of treasury stock — — 3.3 ( 3.3 ) — — —

Amounts related to share-based compensation — — — ( 5.1 ) — — ( 5.1 )

Share-based compensation expense — — — 5.4 — — 5.4

Balance as of September 30, 2020 46,767,164 $ 0.5 $ ( 1,321.8 ) $ 530.0 $ 1,689.1 $ ( 2.1 ) $ 895.7

Murphy USA Inc.

Consolidated Statements of Changes in Equity

(Millions of dollars, except share amounts) Shares Par Treasury Stock APIC Retained Earnings AOCI Total

Balance as of December 31, 2020 46,767,164 $ 0.5 $ ( 1,490.9 ) $ 533.3 $ 1,743.1 $ ( 1.9 ) $ 784.1

Net income (loss) — — — — 55.3 — 55.3

Gain on interest rate hedge, net of tax — — — — — 0.2 0.2

Net income — — — — 55.3 — 55.3

Amortization of unrealized loss on interest rate hedge, net of tax — — — — — 0.2 0.2

Cash dividends declared ($ 0.25 per share)

6 unchanged sentences

Balance as of March 31, 2021 46,767,164 $ 0.5 $ ( 1,535.3 ) $ 525.6 $ 1,791.5 $ ( 1.7 ) $ 780.6

Net income (loss) — — — — 128.8 — 128.8

Gain on interest rate hedge, net of tax — — — — — 0.2 0.2

Cash dividends declared ($ 0.25 per share)

— — — — ( 6.7 ) — ( 6.7 )

Dividend equivalent units accrued — — — — — — —

Purchase of treasury stock — — ( 148.3 ) — — — ( 148.3 )

Issuance of treasury stock — — 0.5 ( 0.5 ) — — —

Amounts related to share-based compensation — — — ( 0.5 ) — — ( 0.5 )

Share-based compensation expense — — — 3.8 — — 3.8

Balance as of June 30, 2021 46,767,164 0.5 ( 1,683.1 ) 528.4 1,913.6 ( 1.5 ) 757.9

Net income (loss) — — — — 104.0 — 104.0

Gain on interest rate hedge, net of tax — — — — — 0.2 0.2

(Millions of dollars, except share amounts) Shares Par Treasury Stock APIC Retained Earnings AOCI Total

Balance as of December 31, 2021 46,767,164 $ 0.5 $ ( 1,839.3 ) $ 534.8 $ 2,112.4 $ ( 1.2 ) $ 807.2

Net income — — — — 152.4 — 152.4

Amortization of unrealized loss on interest rate hedge, net of tax — — — — — 0.2 0.2

Cash dividends declared ($ 0.29 per share)

— — — — ( 7.2 ) — ( 7.2 )

Dividend equivalent units accrued — — — 0.2 ( 0.2 ) — —

Purchase of treasury stock — — ( 151.8 ) — — — ( 151.8 )

2 unchanged sentences

Share-based compensation expense — — — 2.9 — — 2.9

Balance as of September 30, 2021 46,767,164 $ 0.5 $ ( 1,715.9 ) $ 530.5 $ 2,011.0 $ ( 1.3 ) $ 824.8

Balance as of March 31, 2022 46,767,164 $ 0.5 $ ( 1,982.3 ) $ 516.7 $ 2,257.6 $ ( 1.0 ) $ 791.5

See notes to consolidated financial statements.

4 unchanged sentences

and its consolidated subsidiaries (“Murphy USA” or the “Company”) markets refined products through a network of retail gasoline stores and to unbranded wholesale customers.

In addition, it operates non-fuel convenience stores in select markets in the Northeast.

Murphy USA operates a chain of owned retail stores under the brand name of Murphy USA® which are almost all located in close proximity to Walmart stores in 25 states, markets gasoline and other products at standalone stores under the Murphy Express brand, and Quick Chek Corporation ("QuickChek") has convenience stores located in New Jersey and New York.

At September 30, 2021, the Company had a total of 1,669 Company stores of which 1,151 were Murphy USA, 360 were Murphy Express and 158 were QuickChek.

In addition, we operate non-fuel convenience stores in select markets.

The Company owns and operates a chain of retail stores under the brand name of Murphy USA® which are almost all located in close proximity to Walmart stores, markets gasoline and other products at standalone stores under the Murphy Express brand, and also has a mix of convenience stores with and without retail gasoline that operate under the name of QuickChek®.

At March 31, 2022, the Company had a total of 1,686 Company stores of which 1,151 were Murphy USA, 376 were Murphy Express and 159 were QuickChek.

The Company also has certain product supply and wholesale assets, including product distribution terminals and pipeline positions.

Basis of Presentation — Murphy USA was incorporated in March 2013 and, in connection with its incorporation, Murphy USA issued 100 shares of common stock, par value $ 0.01 per share, to Murphy Oil Corporation (“Murphy Oil”) for $ 1.00 .

On August 30, 2013, Murphy USA was separated from Murphy Oil through the distribution of 100 % of the common stock of Murphy USA to holders of Murphy Oil stock.

Murphy USA Inc., Murphy Oil USA, and certain of its subsidiaries operate on a calendar year basis, while the subsidiary QuickChek uses a weekly retail calendar where each quarter has 13 weeks and its historical fiscal year end was the Friday nearest to October 31.

For the three month period ended September 30, 2021, the QuickChek results cover the period from July 3, 2021 to October 1, 2021.

For the year-to-date period, the QuickChek results cover the period from January 29, 2021 (the date of acquisition) to October 1, 2021.

The difference in timing of the month ends is immaterial to the overall consolidated results.

On January 29, 2021, the Company acquired 100 % of QuickChek Corporation ("QuickChek"), a privately held convenience store chain.

Murphy USA Inc., Murphy Oil USA, Inc.

and certain of its subsidiaries operate on a calendar year basis, while the subsidiary QuickChek uses a weekly retail calendar where each quarter has 13 weeks.

For the three month period ended March 31, 2022, the QuickChek results cover the period from January 1, 2022 to April 1, 2022 and for the three month period ended March 31, 2021, results cover the period January 29, 2021 to April 2, 2021.

The difference in timing of the period ends is immaterial to the overall consolidated results.

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

Actual results may differ from these estimates.

Accounting policies related to the acquisition of QuickChek —

Business combinations — The purchase price of an acquisition is measured as the aggregate of the fair value of the consideration transferred.

The purchase price is allocated to the fair values of the tangible and intangible assets acquired and liabilities assumed, with any excess recorded as goodwill.

These fair value determinations require judgment and may involve the use of significant estimates and assumptions.

The purchase price allocation may be provisional during a measurement period of up to one year to provide reasonable time to obtain the information necessary to identify and measure the assets acquired and liabilities assumed.

Any such measurement period adjustments are recognized in the period in which the adjustment amount is determined.

Transaction costs associated with the acquisition are expensed as incurred.

Goodwill and intangible assets — Goodwill represents the excess of the aggregate of the consideration transferred over the net assets acquired and liabilities assumed and is tested annually for impairment, or more frequently if there are indicators of impairment.

Acquired finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives, and are reviewed for impairment when events or circumstances indicate that the asset group to which the intangible assets belong might be impaired.

The Company revises the estimated remaining useful life of these assets when events or changes in circumstances warrant a revision.

If the Company revises the useful life, the unamortized balance is amortized over the useful life on a prospective basis.

Indefinite-lived intangibles are tested annually for impairment, or more often if indicators warrant.

Interim Financial Information — The interim period financial information presented in these consolidated financial statements is unaudited and includes all known accruals and adjustments, in the opinion of management, necessary for a fair presentation of the consolidated financial position of Murphy USA and its results of operations and cash flows for the periods presented.

2 unchanged sentences

001-35914), as filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934 on February 17, 2022.

Recently Issued Accounting Standards —

In January 2021, the FASB issued ASU 2021-01, "Reference Rate Reform (Topic 848):

This standard extends certain of the optional expedients and exceptions in ASC 848 that apply to derivative contracts impacted by the discounting transition, including derivatives that do not reference LIBOR or other reference rates that are expected to be discontinued.

The new standard applies to all entities and is in effect for a limited time, from March 12, 2020 through December 31, 2022.

The Company has determined this standard has not had a material impact on the Company's consolidated financial statements.

In August 2021, the FASB issued ASU 2021-08, "Accounting for Contract Assets and Contract Liabilities from Contracts with Customers," which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities (deferred revenue) from acquired contracts using the revenue recognition guidance in Topic 606.

Under Topic 606, the acquirer applies the revenue model as if it had originated the contracts.

This is a departure from the current requirement to measure contract assets and contract liabilities at fair value.

This ASU is effective for the Company for the year beginning January 1, 2023, with early adoption permitted.

The Company has determined this will not likely have a material impact on the Company's consolidated financial statements.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recently Issued Accounting Standards —

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting".

This standard included optional guidance for a limited period of time to help ease the burden in accounting for the effects of reference rate reform.

The new standard is effective for all entities through December 31, 2022.

The Company does not expect the adoption of this standard to have a material impact on the Company's consolidated financial statements.

Note 2 — Revenues

7 unchanged sentences

The Company continues to account for these transactions as non-monetary exchanges under existing accounting guidance and typically reports these on a net basis in the Consolidated Statements of Income.

The following tables disaggregate our revenues by major source for the three and nine months ended September 30, 2021 and 2020, respectively:

Three Months Ended September 30, 2021 Three Months Ended September 30, 2020

The following tables disaggregate our revenues by major source for the three months ended March 31, 2022 and 2021, respectively:

Three Months Ended March 31, 2022 Three Months Ended March 31, 2021

(Millions of dollars) Marketing Corporate and Other Assets Consolidated Marketing Corporate and Other Assets Consolidated

2 unchanged sentences

Petroleum product sales (at wholesale) 1

Total petroleum product sales 3,573.9 — 3,573.9 2,056.0 — 2,056.0

Merchandise sales 953.4 — 953.4 756.8 — 756.8

Other operating revenues:

RINs 71.5 — 71.5 25.2 — 25.2

Other revenues 2

420.0 — 420.0 251.0 — 251.0

Total revenues $ 4,600.3 $ 0.1 $ 4,600.4 $ 2,839.1 $ ( 0.1 ) $ 2,839.0

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

(Millions of dollars) Marketing Corporate and Other Assets Consolidated Marketing Corporate and Other Assets Consolidated

Petroleum product sales (at retail) 1

$ 8,615.6 — $ 8,615.6 $ 5,558.8 $ — $ 5,558.8

Petroleum product sales (at wholesale) 998.6 — 998.6 566.3 — 566.3

Total petroleum product sales 4,148.4 — 4,148.4 2,635.8 — 2,635.8

14 unchanged sentences

We have accounts receivable from the various credit/debit card providers at any point in time related to product sales made on credit cards and debit cards.

These receivables are typically collected in two to seven days , depending on the terms with the particular credit/debit card providers.

These receivables are typically collected in two to seven days , depending on the terms with the particular credit/debit card

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Payment fees retained by the credit/debit card providers are recorded as store and other operating expenses.

9 unchanged sentences

As noted above, a mixture of payment types are used for these revenues and the same terms for credit/debit card receivables are realized.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The most significant judgment with respect to merchandise sales revenue is determining whether we are the principal or agent for some categories of merchandise such as lottery tickets, lotto, newspapers and other small categories of merchandise.

4 unchanged sentences

These programs create a performance obligation which requires us to defer a portion of sales revenue to the loyalty program participants until they redeem their rewards.

The rewards may be redeemed for free or discounted merchandise or cash discounts at all stores and on fuel purchases only at Murphy USA and Murphy Express stores.

The rewards may be redeemed for free or discounted merchandise or cash discounts at all stores and on fuel purchases at Murphy USA and Murphy Express stores.

Earned rewards expire after an account is inactive for a period of 90 days at Murphy USA and Murphy Express, while certain QuickChek rewards require use within the month.

1 unchanged sentence

Deferred revenue associated with both rewards programs are included in Trade accounts payable and accrued liabilities in our Consolidated Balance Sheet.

The deferred revenue balances at September 30, 2021 and December 31, 2020 were immaterial.

The deferred revenue balances at March 31, 2022 and December 31, 2021 were immaterial.

For the sale of RINs, we recognize revenue when the RIN is transferred to the counter-party and the sale is completed.

4 unchanged sentences

Trade accounts receivable on the balance sheet represents both receivables related to contracts with customers and other trade receivables.

At September 30, 2021 and December 31, 2020, we had $ 125.5 million and $ 88.3 million of receivables, respectively, related to contracts with customers recorded.

At March 31, 2022 and December 31, 2021, we had $ 165.1 million and $ 111.8 million of receivables, respectively, related to contracts with customers recorded.

All of the trade accounts receivable related to contracts with customers outstanding at the end of each period were collected during the succeeding quarter.

These receivables were generally related to credit and debit card transactions along with short term bulk and wholesale sales to our customers, which have a very short settlement window.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3 — Inventories

Inventories consisted of the following:

(Millions of dollars) September 30,

(Millions of dollars) March 31,

2022 December 31,

Petroleum products - First-In, First-Out ("FIFO") basis $ 335.6 $ 223.0

Last-In, First-Out ("LIFO") reserve - petroleum products ( 232.7 ) ( 101.3 )

Petroleum products - LIFO basis 102.9 121.7

Store merchandise for resale 178.1 152.0

Petroleum products - FIFO basis $ 451.1 $ 339.8

Store merchandise for resale - FIFO basis 182.3 173.1

Less LIFO reserve ( 373.7 ) ( 228.0 )

Total petroleum products and store merchandise inventory 259.7 284.9

Materials and supplies 6.2 7.4

Total inventories $ 265.9 $ 292.3

At September 30, 2021 and December 31, 2020, the replacement cost (market value) of LIFO inventories exceeded the LIFO carrying value by $ 232.7 million and $ 101.3 million, respectively.

The QuickChek subsidiary values its general merchandise inventory utilizing the LIFO method and values the inventory of gasoline and certain other merchandise items using the FIFO method.

The QuickChek LIFO reserve balance for the current year was immaterial.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Murphy USA and Murphy Express branded petroleum products are valued using the last-in, first-out (LIFO) method and certain QuickChek store merchandise for resale is valued using the LIFO method.

At March 31, 2022 and December 31, 2021, the replacement cost (market value) of LIFO inventories exceeded the LIFO carrying value for petroleum products by $ 373.2 million and $ 227.5 million, respectively and for store merchandise for resale was $ 0.5 million for both March 31, 2022 and December 31, 2021.

Note 4 — Business Acquisition

On January 29, 2021, MUSA completed the previously announced transaction to acquire 100 % of QuickChek, a privately-held convenience store chain with a regional brand consisting of 156 stores located in New Jersey and New York, in an all-cash transaction.

On January 29, 2021, MUSA completed the previously announced transaction to acquire 100 % of QuickChek, a privately-held convenience store chain with a regional brand which consisted of 156 stores located in New Jersey and New York, in an all-cash transaction.

The acquisition was made to expand the MUSA network into the Northeast by adding stores that had an existing food and beverage model and is consistent with the Company's stated strategic priorities of developing enhanced food and beverage capabilities and accelerating its growth plans.

The excess of the purchase price over the preliminary estimated fair value of the net, identifiable assets acquired was recorded as goodwill.

The excess of the purchase price over the fair value of the net, identifiable assets acquired was recorded as goodwill.

The factors contributing to the recognition of goodwill are a mixture of direct and reverse synergies that are expected to be realized by both QuickChek and Murphy USA as a result of this acquisition.

The direct synergies include additional margin capture on the retail fuel side from the tactical pricing decisions and improved benefits from increased scale on the product acquisition side combined with other cost savings in both merchandise and store operations.

The reverse synergies reflect management's ability to leverage QuickChek's product pricing and operational capabilities related to food and beverage sales to Murphy's existing store footprint.

The reverse synergies reflect management's ability to leverage QuickChek's product pricing and operational capabilities related to food and beverage sales to Murphy branded stores.

All fair values were final as of December 31, 2021.

The Company has determined that the trade name has an indefinite life, as there is no economic, contractual, or other factors that limit its useful life and expects to generate value as long as the trade name is utilized, and therefore is not subject to amortization.

The fair value of intangible assets was based on widely-accepted valuation techniques, including discounted cash flows.

The following table summarizes the preliminary fair value of the consideration transferred at the date of the acquisition, as well as the calculation of preliminary goodwill based on the excess of consideration over the provisional fair value of net assets acquired:

The following table summarizes the fair value of the consideration transferred at the date of the acquisition, as well as the calculation of goodwill based on the excess of consideration over the fair value of net assets acquired:

(Millions of dollars)

2 unchanged sentences

Fair value of consideration transferred, net of cash acquired $ 641.1

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Millions of dollars)

Assets acquired:

16 unchanged sentences

Fair value of consideration transferred, net of cash and cash equivalents acquired $ 641.1

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Due to the timing of the acquisition, the allocation of the purchase price to assets acquired and liabilities assumed is preliminary pending finalization of management's analysis and is expected to be completed prior to December 31, 2021.

The Company has not disclosed pro forma information of the combined business as the transaction is not material to revenue or net earnings.

In connection with the acquisition, the Company recognized certain acquisition-related expenses which were expensed as incurred.

These expenses, recognized within acquisition related costs in the consolidated statements of operations, include amounts related to transaction and integration costs, including fees for advisory and professional services incurred as part of the acquisition and integration costs subsequent to the acquisition in the amount of $ 9.7 million for the nine months ended September 30, 2021.

These expenses, recognized within acquisition related costs in the consolidated statements of operations, include amounts related to transaction and integration costs, including fees for advisory and professional services incurred as part of the acquisition and integration costs subsequent to the acquisition in the amount of $ 0.2 million and $ 8.8 million for the three months ended March 31, 2022 and 2021, respectively.

Note 5 — Goodwill and Intangible Assets

The Company's goodwill is assigned to its Marketing segment and no ne of the goodwill is deductible for tax purposes.

(Millions of dollars)

Goodwill balance, January 1, 2021 $ —

(Millions of dollars) March 31,

2022 December 31,

Goodwill balance, at beginning of period $ 328.0 $ —

QuickChek acquisition — 328.0

Goodwill balance, September 30, 2021

We amortize intangible assets subject to amortization on a straight-line or accelerated basis based on the period for which the economic benefits of the asset or liability are expected to be realized.

In connection with our acquisition of QuickChek on January 29, 2021, we recorded the following amounts of intangible assets, in addition to the Company's existing intangible asset pipeline space, which is being amortized over a 40 year life.

Goodwill balance, at end of period $ 328.0 $ 328.0

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In connection with the acquisition of QuickChek on January 29, 2021, we recorded the following amount of intangible assets.

2021 Remaining Useful Life

6 unchanged sentences

Total intangible assets acquired $ 106.8

Intangible assets subject to amortization at September 30, 2021 and December 31, 2020 consisted of the following:

Remaining Useful Life (in years) September 30, 2021 December 31, 2020

We amortize intangible assets subject to amortization on a straight-line basis based on the period for which the economic benefits of the asset or liability are expected to be realized.

The intangible assets subject to amortization was in addition to the Company's existing intangible asset pipeline space, which is being amortized over a 40 year life.

Intangible assets subject to amortization at March 31, 2022 and December 31, 2021 consisted of the following:

Remaining Useful Life (in years) March 31, 2022 December 31, 2021

(Millions of dollars) Cost Net Cost Net

Intangible assets subject to amortization:

Pipeline space 33.4 $ 39.6 $ 33.4 $ 39.6 $ 33.7

1 unchanged sentence

Total intangible assets subject to amortization 30.5 25.0 30.5 25.1

Intangible assets not subject to amortization, indefinite lives:

Trade name 115.4 115.4 115.4 115.4

Liquor licenses 0.2 0.2 0.2 0.2

Total intangible assets not subject to amortization 115.6 115.6 115.6 115.6

Intangible assets, net of amortization $ 146.1 $ 140.6 $ 146.1 $ 140.7

Murphy USA Inc.

2 unchanged sentences

Long-term debt consisted of the following:

(Millions of dollars) September 30,

(Millions of dollars) March 31,

2022 December 31,

3.75 % senior notes due 2031 (net of unamortized discount of $ 5.8 at September 30, 2021)

5.625 % senior notes due 2027 (net of unamortized discount of $ 2.1 at September 30, 2021 and $ 2.4 at December 2020)

4.75 % senior notes due 2029 (net of unamortized discount of $ 5.0 at September 30, 2021 and $ 5.4 at December 31, 2020)

Term loan due 2023 (effective interest rate of n/a at September 30, 2021 and 2.67 % at December 31, 2020)

Term loan due 2028 (effective interest rate of 2.27 % at September 30, 2021) net of unamortized discount of $ 0.9 at September 30, 2021

5.625 % senior notes due 2027 (net of unamortized discount of $ 1.9 at March 31, 2022 and $ 2.0 at December 2021)

$ 298.1 $ 298.0

4.75 % senior notes due 2029 (net of unamortized discount of $ 4.7 at March 31, 2022 and $ 4.8 at December 31, 2021)

3.75 % senior notes due 2031 (net of unamortized discount of $ 5.5 at March 31, 2022 and $ 5.7 at December 31,2021)

Term loan due 2028 (effective interest rate of 2.27 % at March 31, 2022 and December 31, 2021 and net of unamortized discount of $ 0.8 at March 31, 2022 and $ 0.9 at December 31, 2021)

Capitalized lease obligations, autos and equipment, due through 2025 2.3 2.7

4 unchanged sentences

Total long-term debt, net of current $ 1,797.4 $ 1,800.1

On April 25, 2017, Murphy Oil USA, Inc., our primary operating subsidiary, issued $ 300 million of 5.625 % Senior Notes due 2027 (the "2027 Senior Notes") under its existing shelf registration statement.

The 2027 Senior Notes are fully and unconditionally guaranteed by Murphy USA, and are guaranteed by certain 100% owned subsidiaries that guarantee our credit facilities.

On April 25, 2017, Murphy Oil USA, Inc., our primary operating subsidiary, issued $ 300 million of 5.625 % Senior Notes due 2027 (the "2027 Senior Notes").

The 2027 Senior Notes are fully and unconditionally guaranteed by Murphy USA, and are guaranteed by certain 100% owned subsidiaries that guarantee our Credit Facilities, as defined herein.

The indenture governing the 2027 Senior Notes contains restrictive covenants that limit, among other things, the ability of Murphy USA, Murphy Oil USA, Inc.

1 unchanged sentence

On September 13, 2019, Murphy Oil USA, Inc., issued $ 500 million of 4.75 % Senior Notes due 2029 (the “2029 Senior Notes”).

The net proceeds from the issuance of the 2029 Senior Notes were used to fund, in part, the tender offer and redemption of the $ 500 million aggregate principal amount of its senior notes due 2023.

The net proceeds from the issuance of the 2029 Senior Notes were used to fund, in part, the tender offer and redemption of the prior note issuance.

The 2029 Senior Notes are fully and unconditionally guaranteed by Murphy USA, and are guaranteed by certain 100% owned subsidiaries that guarantee our Credit Facilities.

The indenture governing the 2029 Senior Notes contains restrictive covenants that are essentially identical to the covenants for the 2027 Senior Notes.

The indenture governing the 2029 Senior Notes contains restrictive covenants that are substantially similar to the covenants for the 2027 Senior Notes.

On January 29, 2021, Murphy Oil USA, Inc., issued $ 500 million of 3.75 % Senior Notes due 2031 (the “2031 Senior Notes” and, together with the 2027 Senior Notes and the 2029 Senior Notes, the "Senior Notes").

The net proceeds from the issuance of the 2031 Senior Notes were used to fund the acquisition of QuickChek and for other general corporate purposes.

The 2031 Senior Notes are fully and unconditionally guaranteed by Murphy USA, and are guaranteed by certain 100% owned subsidiaries that guarantee our credit facilities.

The indenture governing the 2031 Senior Notes contains restrictive covenants that are essentially identical to the covenants for the 2027 and 2029 Senior Notes.

The net proceeds from the issuance of the 2031 Senior Notes were used, in part, to fund the acquisition of QuickChek and other obligations related to that transaction.

The 2031 Senior Notes are fully and unconditionally guaranteed by the Company and by the Company's subsidiaries that guarantee our Credit facilities.

The indenture governing the 2031 Senior Notes contains restrictive covenants that are substantially similar to the covenants for the 2027 and 2029 Senior Notes.

The Senior Notes and the guarantees rank equally with all of our and the guarantors’ existing and future senior unsecured indebtedness and effectively junior to our and the guarantors’ existing and future secured indebtedness (including indebtedness with respect to the Credit Facilities) to the extent of the value of the assets securing such indebtedness.

The Senior Notes are structurally subordinated to all of the existing and future third-party liabilities, including trade payables, of our existing and future subsidiaries that do not guarantee the notes.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Credit Facilities and Term Loan

On January 29, 2021, the Company entered into a new credit agreement that consists of both a cash flow revolving credit facility and a senior unsecured term loan that replaced the Company's prior ABL facility and term loan contained in the credit facility that was last renewed in 2019, respectively.

Revolving Credit Facility and Term Loan

On January 29, 2021, the Company entered into a new credit agreement that consists of both a cash flow revolving credit facility and a senior secured term loan that replaced the Company's prior ABL facility and term loan.

The credit agreement provides for a senior secured term loan in an aggregate principal amount of $ 400 million (the "Term Facility")(which was borrowed in full on January 29, 2021) and revolving credit commitments in an aggregate amount equal to $ 350 million (the "Revolving Facility", and together with the Term Facility, the "Credit Facilities").

The outstanding balance of the term loan was $ 397 million at March 31, 2022 and $ 398 million at December 31, 2021.

The term loan is due January 2028 and we are required to make quarterly principal payments of $ 1 million, which began on July 1, 2021.

As of March 31, 2022, we had no outstanding borrowings under the revolving facility while there were $ 4.1 million in outstanding letters of credit, which reduces the amount available to borrow.

Interest payable on the Credit Facilities is based on either:

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The Term Facility amortizes in quarterly installments starting with the first amortization payment being due on July 1, 2021 at a rate of 1.00 % per annum.

Murphy USA is also required to prepay the Term Facility with a portion of its excess cash flow, a portion of the net cash proceeds of certain asset sales, casualty events (subject to certain reinvestment rights) and issuances of indebtedness not permitted under the Credit Agreement and with designated proceeds received from certain asset sales, issuances of indebtedness and sale-leaseback transactions, subject to certain exceptions.

Murphy USA is also required to prepay the Term Facility with a portion of its excess cash flow, a portion of the net cash proceeds of certain asset sales and casualty events (subject to certain reinvestment rights) and the net cash proceeds of issuances of indebtedness not permitted under the Credit Agreement.

The credit agreement allows Murphy USA to prepay, in whole or in part, the Term Facility outstanding thereunder, together with any accrued and unpaid interest, with prior notice but without premium or penalty other than breakage and redeployment costs.

The credit agreement contains certain covenants that limit, among other things, the ability of the Company and certain of its subsidiaries to incur additional indebtedness or liens, to make certain investments, to enter into sale-leaseback transactions, to make certain restricted payments, to enter into consolidations, mergers or sales of material assets and other fundamental changes, to transact with affiliates, to enter into agreements restricting the ability of subsidiaries to incur liens or pay dividends, or to make certain accounting changes.

The Credit Agreement also contains total leverage ratio and secured net leverage ratio financial maintenance covenants which are tested quarterly.

In conformance to the secured net leverage ratio financial maintenance covenant, the Company must maintain a maximum secured net leverage ratio of 3.75 to 1.0 with an ability in certain circumstances to temporarily increase that limit to 4.25 to 1.0.

The Revolving Facility credit agreement also impose total leverage ratio and secured net leverage ratio financial maintenance covenants which are tested quarterly.

Pursuant to the total leverage ratio financial maintenance covenant, the Company must maintain a total leverage ratio of not more than 5.0 to 1.0 with an ability in certain circumstances to temporarily increase that limit to 5.5 to 1.0 and a maximum secured net leverage ratio of not more than 3.75 to 1.0 with an ability in certain circumstances to temporarily increase that limit to 4.25 to 1.0.

The Credit Agreement also contains customary events of default.

Pursuant to the credit agreement's covenant limiting certain restricted payments, certain payments in respect of our equity interests, including dividends, when the total leverage ratio, calculated on a pro forma basis, is greater than 3.0 to 1.0 could be limited.

At September 30, 2021, our total leverage ratio was 2.40 to 1.0 which meant our ability at that date to make restricted payments was not limited.

If our total leverage ratio, on a pro forma basis, exceeds 3.0 to 1.0, any restricted payments made following that time until the ratio is once again, on a pro forma basis, below 3.0 to 1.0 would be limited by the covenant, which contains certain exceptions, including an ability to make restricted payments in cash in an aggregate amount not to exceed $ 100 million in any fiscal year and an additional ability to make restricted payments in an aggregate amount not to exceed the greater of $ 113 million or 4.50 % of consolidated net tangible assets over the life of the credit agreement.

At March 31, 2022, our total leverage ratio was 1.90 to 1.0 which meant our ability at that date to make restricted payments was not limited.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

restricted payments in cash in an aggregate amount not to exceed the greater of $ 112.3 million or 4.50 % of consolidated net tangible assets over the life of the credit agreement.

All obligations under the credit agreement are guaranteed by Murphy USA and the subsidiary guarantors party thereto, and all obligations under the credit agreement, including the guarantees of those obligations, are secured by certain assets of Murphy USA, Murphy Oil USA, Inc.

and the guarantors party to the guarantee and collateral agreement in respect thereof.

Note 7— Asset Retirement Obligations (ARO)

The majority of the ARO recognized by the Company at September 30, 2021 and December 31, 2020 is related to the estimated costs to dismantle and abandon certain of its retail gasoline stores.

The majority of the ARO recognized by the Company at March 31, 2022 and December 31, 2021 is related to the estimated costs to dismantle and abandon certain of its retail gasoline stores.

The Company has not recorded an ARO for certain of its marketing assets because sufficient information is presently not available to estimate a range of potential settlement dates for the obligation.

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A reconciliation of the beginning and ending aggregate carrying amount of the ARO is shown in the following table.

(Millions of dollars) September 30,

(Millions of dollars) March 31,

2022 December 31,

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The effective tax rate is calculated as the amount of income tax expense (benefit) divided by income before income tax expense (benefit).

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

Three months ended September 30, 24.5 % 24.1 %

Nine months ended September 30, 24.4 % 24.1 %

In the nine months ended September 30, 2021, the Company recognized approximately $ 1.2 million of excess tax benefits related to stock compensation for employees, $ 1.0 million in expense for other discrete tax items related to state deferred tax rate adjustments due to the QuickChek acquisition, and $ 0.4 million in other discrete tax benefits.

For the nine months ended September 30, 2020, the Company recognized tax benefits of approximately $ 1.4 million in excess tax benefits related to stock compensation and $ 1.7 million for other discrete tax items.

As of September 30, 2021, the earliest years remaining open for federal and state audit and/or settlement are 2017 and 2015, respectively.

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

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

Three months ended March 31, 24.0 % 24.6 %

In the three months ended March 31, 2022, the Company recognized approximately $ 1.5 million of excess tax benefits related to stock compensation for employees.

For the three months ended March 31, 2021, the Company recognized approximately $ 0.9 million in excess tax benefits related to stock compensation and $ 1.0 million for other discrete tax items related to state deferred tax rate adjustments due to the QuickChek acquisition.

As of March 31, 2022, the earliest years remaining open for federal audit and/or settlement are 2018 and 2016 for state purposes.

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

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 9 — Incentive Plans

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The MUSA 2013 Plan authorizes the Executive Compensation Committee of our Board of Directors (“the Committee”) to grant non-qualified or incentive stock options, stock appreciation rights, stock awards (including restricted stock and restricted stock unit awards), cash awards, and performance awards to our employees.

No more than 5.5 million shares of MUSA common stock may be delivered under the MUSA 2013 Plan and no more than 1 million shares of

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

common stock may be awarded to any one employee, subject to adjustment for changes in capitalization.

No more than 5.5 million shares of MUSA common stock may be delivered under the MUSA 2013 Plan and no more than 1 million shares of common stock may be awarded to any one employee, subject to adjustment for changes in capitalization.

The maximum cash amount payable pursuant to any “performance-based” award to any participant in any calendar year is $ 5.0 million.

Effective with its initial quarterly dividend in December 2020, the Company issues dividend equivalent units ("DEU") on all outstanding, unvested equity awards (except stock options) in an amount commensurate with regular quarterly dividends paid on common stock.

Beginning with its initial quarterly dividend in December 2020, the Company issues dividend equivalent units ("DEU") on all outstanding, unvested equity awards (except stock options) in an amount commensurate with regular quarterly dividends paid on common stock.

The terms of the DEU mirror the underlying awards and will only vest if the related award vests.

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Stock price at valuation date $ 181.18

Changes in options outstanding for Company employees during the period from December 31, 2020 to September 30, 2021 are presented in the following table:

Changes in options outstanding for Company employees during the period from December 31, 2021 to March 31, 2022 are presented in the following table:

Options Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (Millions of Dollars)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Changes in restricted stock units outstanding for Company employees during the period from December 31, 2020 to September 30, 2021 are presented in the following table:

Changes in restricted stock units outstanding for Company employees during the period from December 31, 2021 to March 31, 2022 are presented in the following table:

Employee RSUs Number of units Weighted Average Grant Date Fair Value Total Fair Value (Millions of Dollars)

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Outstanding at 3/31/2022 153,434 $ 125.76 $ 30.7

PERFORMANCE-BASED RESTRICTED STOCK UNITS (MUSA 2013 Plan) – In February 2021, the Committee awarded performance-based restricted stock units (performance units) to certain employees.

PERFORMANCE-BASED RESTRICTED STOCK UNITS (MUSA 2013 Plan) – In February 2022, the Committee awarded performance-based restricted stock units (performance units or PSU) to certain employees.

Half of the performance units vest based on a 3-year return on average capital employed ("ROACE") calculation and the other half vest based on a 3-year total shareholder return ("TSR") calculation that compares MUSA to a group of 18 peer companies.

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For the ROACE portion of the awards, the valuation will be based on the grant date fair value of $ 181.18 per unit and the number of awards will be periodically assessed to determine the probability of vesting.

Changes in performance-based restricted stock units outstanding for Company employees during the period from December 31, 2020 to September 30, 2021 are presented in the following table:

Changes in performance-based restricted stock units outstanding for Company employees during the period from December 31, 2021 to March 31, 2022 are presented in the following table:

Employee PSU's Number of Units Weighted Average Grant Date Fair Value Total Fair Value (Millions of Dollars)

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Awards under the Directors Plan may be in the form of restricted stock, restricted stock units, stock options, or a combination thereof.

An aggregate of 500,000 shares of common stock shall be available for issuance of grants under the Directors Plan.

An aggregate of 500,000 shares of common stock was reserved for issuance of grants under the Directors Plan.

RESTRICTED STOCK UNITS (Directors Plan) – The Committee has also granted time based RSUs to the non-employee directors of the Company as part of their overall compensation package for being a member of the Board of Directors.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Changes in restricted stock units outstanding for Company non-employee directors during the period from December 31, 2020 to September 30, 2021 are presented in the following table:

Changes in restricted stock units outstanding for Company non-employee directors during the period from December 31, 2021 to March 31, 2022 are presented in the following table:

Director RSU's Number of Units Weighted Average Grant Date Fair Value Total Fair Value (Millions of Dollars)

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Outstanding at 3/31/2022 26,831 $ 132.84 $ 5.4

For the nine months ended September 30, 2021 and 2020, share-based compensation was $ 10.0 million and $ 11.0 million, respectively.

There was $ 0.4 million in income tax benefits realized for the tax deductions from options exercised for the nine months ended September 30, 2021 and there were $ 0.8 million in the period ended September 30, 2020.

For the three months ended March 31, 2022 and 2021, share-based compensation was $ 2.9 million and $ 3.6 million, respectively.

Note 10 — Financial Instruments and Risk Management

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Certain interest rate derivative contracts were accounted for as hedges and gain or loss associated with recording the fair value of these contracts was deferred in AOCI until the anticipated transactions occur.

As of September 30, 2021, all current commodity derivative activity is immaterial.

At September 30, 2021 there was $ 0.9 million cash deposit and at December 31, 2020 the cash deposit was $ 0.6 million related to commodity derivative contracts reported in Prepaid expenses and other current assets in the Consolidated Balance Sheets.

These cash deposits have not been used to increase the reported net assets or reduce the reported net liabilities on the derivative contracts at September 30, 2021 or December 31, 2020.

As of March 31, 2022, all current commodity derivative activity is immaterial.

At March 31, 2022, there was $ 1.6 million cash deposit and at December 31, 2021 the cash deposit was $ 0.6 million related to commodity derivative contracts reported in Prepaid expenses and other current assets in the Consolidated Balance Sheets.

These cash deposits have not been used to increase the reported net assets or reduce the reported net liabilities on the derivative contracts at March 31, 2022 or December 31, 2021.

Interest Rate Risks

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At that time the hedge was de-designated and therefore hedge accounting is no longer applicable and mark-to-market gains and losses are recognized in the period in which the change occurs in the Consolidated Statement of Income in interest expense.

The Company is reclassifying the accumulated other comprehensive gain on the previous interest rate swap, $ 2.4 million as of the de-designation date, into interest expense using a straight-line approach over the remaining life of the originally designated hedging relationship.

The amount of pre-tax gains in accumulated other comprehensive loss that was reclassified into interest expense was $ 0.2 million and $ 0.6 million for the three months and nine months ended September 30, 2021, respectively, leaving a balance of $ 1.8 million at September 30, 2021.

The current loan balance subject to the hedge is $ 90.0 million.The Company is reclassifying the accumulated other comprehensive loss on the previous interest rate swap, $ 2.4 million as of the de-designation date, into interest expense using a straight-line approach over the remaining life of the originally designated hedging relationship.

The amount of pre-tax gains in accumulated other comprehensive loss that was reclassified into interest expense was $ 0.2 million for the three months ended March 31, 2022 and 2021.

The remaining balance at March 31, 2022 was $ 1.3 million.

Prior to the de-designation, changes in the fair values of the interest rate swaps were recorded as a component of other comprehensive loss.

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Diluted earnings per common share adjusts basic earnings per common share for the effects of stock options and restricted stock in the periods where such items are dilutive.

On October 28, 2020, the Board of Directors approved an up to $ 500 million share repurchase program to be in effect through December 2023.

For the nine months ended September 30, 2021, the Company repurchased 1,699,043 shares of common stock for an average price of $ 136.22 per share including brokerage fees.

For the nine months ended September 30, 2020, 2,018,934 shares were repurchased for an average price of $ 114.16 per share under previous board authorizations.

The following table provides a reconciliation of basic and diluted earnings per share computations for the three and nine months ended September 30, 2021 and 2020:

On October 28, 2020, the Board of Directors approved a $ 500 million share repurchase program effective through December 2023.

The 2020 program was completed in January 2022, and a new authorized program for up to $ 1 billion, approved in December 2021 to be executed by December 31, 2026, is now in effect.

For the three months ended March 31, 2022, the Company repurchased 836,953 shares of common stock for an average price of $ 181.36 per share including brokerage fees.

For the three months ended March 31, 2021, 397,882 shares were repurchased for an average price of $ 125.67 per share.

The following table provides a reconciliation of basic and diluted earnings per share computations for the three months ended March 31, 2022 and 2021:

Three Months Ended

September 30, Nine Months Ended

September 30,

(Millions of dollars, except share and per share amounts) 2022 2021

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Three Months Ended

September 30, Nine Months Ended

September 30,

Potentially dilutive shares excluded from the calculation as their inclusion would be anti-dilutive 2022 2021

Stock Options 51,900 81,300

Restricted share units 903 — 21,357 21,000

PSUs 14,673 20,491

Total anti-dilutive shares 66,573 101,791

Note 12 — Other Financial Information

CASH FLOW DISCLOSURES — Cash income taxes paid, net of refunds, were $ 86.1 million and $ 66.5 million for the nine month periods ended September 30, 2021 and 2020, respectively.

Interest paid, net of amounts capitalized, was $ 57.9 million and $ 39.0 million for the nine month periods ended September 30, 2021 and 2020, respectively.

CASH FLOW DISCLOSURES — There were no cash income taxes paid nor refunds received for the three month periods ended March 31, 2022 and 2021, respectively.

Interest paid, net of amounts capitalized, was $ 26.2 million and $ 18.4 million for the three month periods ended March 31, 2022 and 2021, respectively.

CHANGES IN WORKING CAPITAL:

Nine Months Ended

September 30,

Three Months Ended

(Millions of dollars) 2022 2021

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

At the balance sheet date, the fair value of derivative contracts was determined using NYMEX quoted values but was immaterial.

The following table presents the carrying amounts and estimated fair values of financial instruments held by the Company at September 30, 2021 and December 31, 2020.

At the balance sheet date, the fair value of commodity derivatives contracts was determined using NYMEX quoted values and the value of the Interest rate swap derivative was derived by using level 3 inputs, but the balances for each were immaterial.

The carrying value of the Company’s Cash and cash equivalents, Accounts receivable-trade, Trade accounts payable, interest rate swap contracts and accrued liabilities approximates fair value.

See also Note 10 "Financial Instruments and Risk Management" in these consolidated financial statements for the period ended March 31, 2022, for more information.

The following table presents the carrying amounts and estimated fair values of financial instruments held by the Company at March 31, 2022 and December 31, 2021.

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

The table excludes Cash and cash equivalents, Accounts receivable-trade, Restricted cash, and Trade accounts payable and accrued liabilities, all of which had fair values approximating carrying amounts.

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

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

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 and these qualify as Level 1 inputs.

The Company has off-balance sheet exposures relating to certain financial guarantees and

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At September 30, 2021 At December 31, 2020

letters of credit.

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

At March 31, 2022 At December 31, 2021

Carrying Carrying

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Murphy Oil also obtained insurance covering certain levels of environmental exposures.

The Company believes costs related to these sites will not have a material adverse effect on Murphy USA’s net income, financial condition or liquidity in a future period.

With respect to any remaining potential liabilities, the Company believes costs related to these properties will not have a material adverse effect on Murphy USA’s net income, financial condition or liquidity in a future period.

Certain environmental expenditures are likely to be recovered by the Company from other sources, primarily environmental funds maintained by certain states.

Since no assurance can be given that future recoveries from other sources will occur, the Company has not recorded a benefit for likely recoveries at September 30, 2021, however certain jurisdictions provide reimbursement for these expenses which have been considered in recording the net exposure.

Since no assurance can be given that future recoveries from other sources will occur, the Company has not recorded a benefit for likely recoveries at March 31, 2022, however certain jurisdictions provide reimbursement for these expenses which have been considered in recording the net exposure.

Environmental Protection Agency (EPA) currently considers the Company a Potentially Responsible Party (PRP) at one Superfund site.

The potential total cost to all parties to perform necessary remedial work at this site may be substantial.

As to the site, the potential total cost to all parties to perform necessary remedial work at this site may be substantial.

However, based on current negotiations and available information, the Company believes that it is a de minimis party as to ultimate responsibility at the Superfund site.

Accordingly, the Company has not recorded a liability for remedial costs at the Superfund site at September 30, 2021.

The Company could be required to bear a pro rata share of costs attributable to nonparticipating PRPs or could be assigned additional responsibility for remediation at this site or other Superfund sites.

The Company believes that its share of the ultimate costs to

Accordingly, the Company has not recorded a liability for remedial costs at the Superfund site at March 31, 2022.

The Company could be required to bear a pro rata share of costs attributable to nonparticipating PRPs or could be

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

clean-up this site will be immaterial and will not have a material adverse effect on its net income, financial condition or liquidity in a future period.

assigned additional responsibility for remediation at this site or other Superfund sites.

The Company believes that its share of the ultimate costs to clean-up this site will be immaterial and will not have a material adverse effect on its net income, financial condition or liquidity in a future period.

Based on information currently available to the Company, the amount of future remediation costs to be incurred to address known contamination sites is not expected to have a material adverse effect on the Company’s future net income, cash flows or liquidity.

However, there is the possibility that additional environmental expenditures could be required to address contamination, including as a result of discovering additional contamination or the imposition of new or revised requirements applicable to known contamination.

Other than as noted above, Murphy USA is engaged in a number of other legal proceedings, all of which the Company considers routine and incidental to its business.

Murphy USA is engaged in a number of other legal proceedings, all of which the Company considers routine and incidental to its business.

Currently, the City of Charleston, South Carolina and the state of Delaware have filed lawsuits against energy companies, including the Company.

These lawsuits allege damages as a result of climate change and the plaintiffs are seeking unspecified damages and abatement under various tort theories.

At this early stage, the ultimate outcome of these matters remain uncertain, and neither the likelihood of an unfavorable outcome nor the ultimate liability, if any, can be determined.

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

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Murphy USA maintains statutory workers compensation insurance with a deductible of $ 1.0 million per occurrence, general liability insurance with a self-insured retention of $ 3.0 million per occurrence, and auto liability insurance with a deductible of $ 0.3 million per occurrence.

As of September 30, 2021, there were a number of outstanding claims that are of a routine nature.

As of March 31, 2022, there were a number of outstanding claims that are of a routine nature.

The estimated incurred but unpaid liabilities relating to these claims are included in Trade account payables and accrued liabilities on the Consolidated Balance Sheets.

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OTHER MATTERS — In the normal course of its business, the Company is required under certain contracts with various governmental authorities and others to provide financial guarantees or letters of credit that may be drawn upon if the Company fails to perform under those contracts.

At September 30, 2021, the Company had contingent liabilities of $ 10.5 million on outstanding letters of credit.

At March 31, 2022, the Company had contingent liabilities of $ 10.1 million on outstanding letters of credit.

The Company has not accrued a liability in its balance sheet related to these financial guarantees and letters of credit because it is believed that the likelihood of having these drawn is remote.

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Most leases include one or more options to renew, with renewal terms that can extend the lease term from 5 to 20 years or more.

The exercise of lease renewal options is at the Company's sole discretion.

Due to the uncertainties of future markets, economic factors, technology changes, demographic shifts and behavior, environmental regulatory requirements and other information that impacts decisions as to store location, management has determined that it was not reasonably certain to exercise contract options and they are not included in the lease term.

Additionally, short-term leases and leases with variable

The exercise of lease renewal options is

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

lease costs are immaterial.

at the Company's sole discretion.

Additionally, short-term leases and leases with variable lease costs are immaterial.

The Company reviews all options to extend, terminate, or otherwise modify its lease agreements to determine if changes are required to the right of use assets and liabilities.

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Leases are reflected in the following balance sheet accounts:

(Millions of dollars) Classification September 30,

(Millions of dollars) Classification March 31,

2022 December 31,

Operating (Right-of-use) Operating lease right-of-use assets $ 412.8 $ 147.7

Finance Property, plant, and equipment, at cost, less accumulated depreciation of $ 12.9 at September 30, 2021 and $ 2.8 at December 31, 2020

Operating (Right-of-use) Operating lease right-of-use assets, net $ 420.5 $ 419.2

Finance Property, plant, and equipment, at cost, less accumulated depreciation of $ 20.7 at March 31, 2022 and $ 16.7 at December 31, 2021

Total leased assets $ 553.9 $ 556.5

4 unchanged sentences

Total lease liabilities $ 568.8 $ 568.6

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended

September 30, Nine Months Ended

September 30,

(Millions of dollars) Classification 2022 2021

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Net lease costs $ 18.3 $ 12.9

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cash flow information:

Nine Months Ended

September 30,

Three Months Ended

(Millions of dollars) 2022 2021

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Financing cash flows from finance leases $ 2.8 $ 1.8

Maturity of Lease Liabilities at September 30, 2021:

Maturity of Lease Liabilities at March 31, 2022:

(Millions of dollars) Operating leases Finance leases

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Present value of lease liabilities $ 429.9 $ 138.9

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Lease Term and Discount Rate:

Nine Months Ended

September 30,

Three Months Ended

Weighted average remaining lease term (years)

4 unchanged sentences

Operating leases 6.3 %

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 16 — Business Segment

The Company's operations have one reportable segment which is Marketing.

The operations include the sale of retail motor fuel products and convenience merchandise along with the wholesale and bulk sale capabilities of our Product Supply and Wholesale ("PS&W") group.

As the primary purpose of the PS&W group is to support our retail operations and provide fuel for their daily operation, the bulk and wholesale fuel sales are secondary to the support functions performed by these groups.

As such, they are all treated as one segment for reporting purposes as they sell the same products.

This Marketing segment contains essentially all of the revenue generating functions of the Company.

Our operations include the sale of retail motor fuel products and convenience merchandise along with the wholesale and bulk sale capabilities of our product supply and wholesale group.

As the primary purpose of the product supply and wholesale group is to support our retail operations and provide fuel for their daily operation, the bulk and wholesale fuel sales are secondary to the group's support functions to our retail operations.

As such, they are all treated as one segment for reporting purposes as they sell the same products and have similar economic characteristics.

This Marketing segment contains essentially all of the revenue generating activities of the Company.

Results not included in the reportable segment include Corporate and Other Assets.

Net settlement proceeds from litigation are included in Corporate and other assets operating income.

The reportable segment was determined based on information reviewed by the Chief Operating Decision Maker (CODM).

The reportable segment was determined based on information reviewed by the Chief Operating Decision Maker.

Three Months Ended

September 30, 2021 September 30, 2020

(Millions of dollars) Total Assets at September 30, 2021 External Revenues Income (Loss) External Revenues Income (Loss)

Marketing $ 3,668.8 $ 4,600.3 $ 121.1 $ 2,839.1 $ 81.7

Corporate and other assets 425.5 0.1 ( 17.1 ) ( 0.1 ) ( 14.8 )

Total $ 4,094.3 $ 4,600.4 $ 104.0 $ 2,839.0 $ 66.9

Nine Months Ended

September 30, 2021 September 30, 2020

External Revenues Income (Loss) External Revenues Income (Loss)

March 31, 2022 March 31, 2021

Total Assets at March 31, 2022 External Revenues Income (Loss) External Revenues Income (Loss)

(Millions of dollars)

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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