What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-02-15 compared with 2022-02-17 · 228 added, 175 removed, 1113 unchanged (27% of the section changed)

4 unchanged sentences

The SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules that generally require every company that files reports with the SEC to evaluate its effectiveness of internal controls over financial reporting.

We acquired QuickChek on January 29, 2021.

Management excluded QuickChek from its assessment of the effectiveness of the Company's internal controls over financial reporting as of December 31, 2021.

This exclusion is in accordance with the guidance issued by the Staff of the SEC that an assessment of a recent business combination may be omitted from management's report on internal control over financial reporting in the year of acquisition.

QuickChek represented 8.9% of the Company's total assets (excluding goodwill, certain intangible assets, and capital lease and right of use assets which are included within the scope of the assessment) and 8.5% of total revenues as of and for the year ended December 31, 2021.

Management has conducted an evaluation of the effectiveness of the Company's internal control over financial reporting based on the criteria set forth in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

18 unchanged sentences

Information required by this item is incorporated by reference to Murphy USA’s definitive Proxy Statement for the Annual Meeting of Stockholders on May 4, 2023 under the caption “Review, Approval or Ratification of Transactions with Related Persons.”

PRINCIPAL ACCOUNTING FEES AND SERVICES

PRINCIPAL ACCOUNTANT FEES AND SERVICES

17 unchanged sentences

Note 4 - Inventories

N ote 5 - Business Acquisition

Note 5 - Marketable Securities

Note 6 - Business Acquisition

Note 7 - Property, Plant and Equipment

2 unchanged sentences

Note 10 - Long-Term Debt

Note 10 - A sset Retirement Obligation (ARO)

Note 1 1 - Asset Retirement Obligation (ARO)

Note 1 2 - Income Taxes

24 unchanged sentences

3.2 Murphy USA Inc.

Amended and Restated Bylaws (incorporated by reference to Murphy USA’s Quarterly Report on Form 10-Q filed November 8, 2013)

Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 Murphy USA’s Current Report on Form 8-K filed March 18, 20 2 2 )

4.1 Indenture (including form of notes) dated as of April 25, 2017 among Murphy Oil USA, Inc., Murphy USA Inc., as a guarantor, the other guarantors party thereto and U.S.

16 unchanged sentences

10.7 Form of Murphy USA 2013 Long-Term Incentive Plan RSU Agreement (incorporated by reference to Exhibit 10.11 to Murphy USA Inc's Annual Report on Form 10-K filed February 19, 2021)†

10.8 Form of Murphy USA 2013 Long-Term Incentive Plan Performance Share Agreement (incorporated by reference to Exhibit 10.12 to M urphy USA Inc's Annual Report on Form 10-K filed on February 19 20 21 ) †

10.9 Form of Murphy USA 2013 Non-Employee Director Award (inc orporated by reference to Exhibit 10.13 to Murphy USA Inc's Annual Report on Form 10-K file February 19, 2021) †

10.8 Form of Murphy USA 2013 Long-Term Incentive Plan Performance Share Agreement (incorporated by reference to Exhibit 10.12 to Murphy USA Inc's Annual Report on Form 10-K filed on February 19 2021)†

10.9 Form of Murphy USA 2013 Non-Employee Director Award (incorporated by reference to Exhibit 10.13 to Murphy USA Inc's Annual Report on Form 10-K file February 19, 2021)†

10.10 Murphy USA Inc.

1 unchanged sentence

10.11 Credit Agreement, dated as of January 29, 2021, by and among Murphy USA Inc., Murphy Oil USA, Inc., Royal Bank of Canada, as term administrative agent, JPMorgan Chase Bank, N.A., as revolving administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to Murphy USA's Current Report on Form 8-K as filed February 1, 2021)

10.12* Form of Murphy USA 2013 Long-Term Incentive Plan Option Agreement (February 2023 grants)

10.13* Form of Murphy USA 2013 Long-Term Incentive Plan RSU Agreement (February 2023 grants)

10.14* Form of Murphy USA 2013 Long-Term Incentive Plan Performance Stock Unit Agreement (February 2023 grants)

10.15* Form of Murphy USA 2013 Non-Employee Director Equity Grant (February 2023 grants)

10.16* Form of Murphy USA 2013 Non-Employee Director Cash Deferral Equity Grant (February 2023 grants)

21* List of Subsidiaries of Murphy USA

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Andrew Clyde, President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on

February 17, 2022 by the following persons on behalf of the registrant and in the capacities indicated.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on February 15, 2023 by the following persons on behalf of the registrant and in the capacities indicated.

Madison Murphy /s/ David B.

40 unchanged sentences

All internal control systems have inherent limitations, and therefore, can provide only reasonable assurance with respect to the reliability of financial reporting and preparation of consolidated financial statements.

We acquired QuickChek on January 29, 2021.

Management excluded QuickChek from its assessment of the effectiveness of the Company's internal controls over financial reporting as of December 31, 2021.

Management has conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting based on the criteria set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

21 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Assessment of impairment triggering events related to property, plant and equipment

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The property, plant and equipment balance, at cost less accumulated depreciation, as of December 31, 2022 was $2,459.3 million.

Some retail sites may generate negative cash flow or experience events that indicate its carrying value might not be recovered, indicating a higher risk that these retail sites might be impaired.

This requires the Company to consider profitability and retail site specific factors when evaluating its retail sites for impairment in order to determine whether or not an impairment triggering event has occurred.

Some retail sites may generate negative cash flow or experience events that indicate carrying values might not be recovered, indicating a higher risk that these retail sites might be impaired.

This requires the

Company to consider profitability and retail site specific factors when evaluating its retail sites for impairment in order to determine whether or not an impairment triggering event has occurred.

We identified the assessment of impairment triggering events related to property, plant and equipment as a critical audit matter.

3 unchanged sentences

We evaluated the asset group level at which the Company’s analysis was performed.

We assessed the Company’s methodology of identifying retail site specific factors to be considered in the triggering events analysis, including the length of the time period used by the Company to evaluate retail site profitability to identify triggering events.

We assessed the Company’s methodology of identifying retail site specific factors to be considered in the triggering events analysis, including length of the time period used by the Company to evaluate retail site profitability to identify triggering events.

We also compared the historical cash flows by asset group to the general ledger information to assess the reliability of the information used.

Evaluation of the initial measurement of acquired trade name

As discussed in Notes 2 and 5 to the consolidated financial statements, on January 29, 2021, the Company acquired Quick Chek Corporation in a business combination.

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

These fair value determinations required judgment and involved the use of significant estimates and assumptions.

As a result of the transaction, the Company recorded a trade name intangible asset with an acquisition-date fair value of $115.4 million.

We identified the evaluation of the initial measurement of the acquired trade name intangible asset as a critical audit matter.

The assessment of certain underlying assumptions used to measure the fair value of the acquired trade name required a high degree of auditor judgment due to the extent of management judgment used in their determination.

Such assumptions included revenue growth rates, the discount rate, and the royalty rate.

Changes in these assumptions could have a significant impact on the fair value of the trade name intangible asset.

The primary procedures performed to address this critical audit matter included the following.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s acquisition-date valuation process, including controls related to the development of the assumptions noted above.

We evaluated the Company’s revenue growth rates by comparing them to historical growth rates.

We performed sensitivity analyses over the Company’s revenue growth rates to assess the impact of the changes in those assumptions on the Company’s determination of fair value.

In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the discount rate by comparing it to a range that was independently developed based on publicly available market data and the royalty rate by comparing it against publicly available market data for comparable transactions.

We have served as the Company’s auditor since 2013.

Houston, Texas

Dallas, Texas

February 15, 2023

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated income statements, statements of comprehensive income, statements of cash flows, and statements of changes in equity for each of the years in the three-year period ended December 31, 2022, and the related notes and financial statement schedule II (collectively, the consolidated financial statements), and our report dated February 15, 2023 expressed an unqualified opinion on those consolidated financial statements.

The Company acquired Quick Chek Corporation during 2021, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021, Quick Chek Corporation’s internal control over financial reporting associated with 8.9% of total assets (excluding goodwill, certain intangible assets, and capital lease and right of use assets which are included within the scope of the assessment) and 8.5% of total revenues included in the consolidated financial statements of the Company as of and for the year ended December 31, 2021.

Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Quick Chek Corporation.

Basis for Opinion

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Houston, Texas

Dallas, Texas

February 15, 2023

4 unchanged sentences

Cash and cash equivalents $ 60.5 $ 256.4

Accounts receivable—trade, less allowance for doubtful accounts of $ 0.1 in 2021 and 2020

Marketable securities, current 17.9 —

Accounts receivable—trade, less allowance for doubtful accounts of $ 0.3 in 2022 and $ 0.1 in 2021, respectively

Inventories, at lower of cost or market 319.1 292.3

1 unchanged sentence

Total current assets 726.8 767.8

Marketable securities, non-current 4.4 —

Property, plant and equipment, at cost less accumulated depreciation

and amortization of $ 1,373.4 in 2021 and $ 1,191.4 in 2020

and amortization of $ 1,553.1 in 2022 and $ 1,373.4 in 2021, respectively

2,459.3 2,378.4

8 unchanged sentences

Trade accounts payable and accrued liabilities 839.2 660.3

Income taxes payable — 8.8

Total current liabilities 854.2 675.3

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Common Stock, par $ 0.01 , (authorized 200,000,000 shares,

46,767,164 shares issued at December 31, 2021 and 2020)

46,767,164 shares issued at December 31, 2022 and 2021, respectively)

Treasury stock ( 25,017,324 and 21,831,904 shares held at

December 31, 2022 and 2021, respectively)

( 2,633.3 ) ( 1,839.3 )

Additional paid in capital (APIC) 518.9 534.8

3 unchanged sentences

Total liabilities and stockholders' equity $ 4,123.2 $ 4,048.2

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

See accompanying notes to consolidated financial statements.

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Total operating expenses 22,479.8 16,758.0 10,706.6

Net settlement proceeds — — 0.1

Gain (loss) on sale of assets 2.1 1.5 1.3

Income from operations 604.0 559.0 268.5

Income (loss) from operations 968.4 604.0 559.0

Other income (expense)

Interest income 0.1 1.0 3.2

Investment income 3.0 0.1 1.0

Interest expense ( 85.3 ) ( 82.4 ) ( 51.2 )

Loss on early debt extinguishment — — ( 14.8 )

Other nonoperating income (expense) ( 2.3 ) 0.2 0.3

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Interest rate swap:

Initial fair value — — ( 0.1 )

Realized gain (loss) — ( 0.1 ) ( 0.9 )

Unrealized gain (loss) — 0.1 ( 3.4 )

Reclassified to interest expense:

Reclassified to interest expense (interest rate swap):

Realized (gain) loss reclassified to interest expense — 0.1 0.9

14 unchanged sentences

Deferred and noncurrent income tax charges (benefits) 31.5 19.0 2.5

Loss on early debt extinguishment — — 14.8

Accretion of asset retirement obligations 2.7 2.5 2.3

Amortization of discount on marketable securities ( 0.1 ) — —

Pretax (gains) losses from sale of assets ( 2.1 ) ( 1.5 ) ( 1.3 )

Net decrease (increase) in noncash operating working capital 82.8 ( 13.1 ) ( 48.7 )

Net (increases) decrease in noncash operating working capital 44.8 82.8 ( 13.1 )

Other operating activities - net 24.6 25.1 26.2

Net cash provided by operating activities 737.4 563.7 313.3

Net cash provided (required) by operating activities 994.7 737.4 563.7

Investing Activities

2 unchanged sentences

Proceeds from sale of assets 8.8 3.4 8.1

Investment in marketable securities ( 22.2 ) — —

Other investing activities - net ( 0.6 ) ( 1.8 ) ( 1.7 )

Net cash required by investing activities ( 914.2 ) ( 224.3 ) ( 203.1 )

Net cash provided (required) by investing activities ( 319.3 ) ( 914.2 ) ( 224.3 )

Financing Activities

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Borrowings of debt 5.0 892.8 —

Early debt extinguishment costs — — ( 10.4 )

Debt issuance costs — ( 9.9 ) —

1 unchanged sentence

Net cash provided (required) by financing activities ( 871.3 ) 269.6 ( 456.1 )

Net change in cash, cash equivalents, and restricted cash 92.8 ( 116.7 ) 95.8

Net change in cash, cash equivalents, and

restricted cash ( 195.9 ) 92.8 ( 116.7 )

Cash, cash equivalents, and restricted cash at January 1 256.4 163.6 280.3

6 unchanged sentences

Net income — — — — 386.1 — 386.1

Gain on interest rate hedge, net of tax — — — — — 0.7 0.7

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

Loss on interest rate hedge, net of tax — — — — — ( 2.6 ) ( 2.6 )

Cash dividends declared, ($ 0.25 per share)

— — — — ( 6.9 ) — ( 6.9 )

Dividend equivalent units accrued — — — 0.1 ( 0.1 ) — —

Purchase of treasury stock — — ( 399.6 ) — — — ( 399.6 )

4 unchanged sentences

Net income — — — — 396.9 — 396.9

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

Loss on interest rate hedge, net of tax — — — — — ( 2.6 ) ( 2.6 )

Gain on interest rate hedge, net of tax — — — — — 0.7 0.7

Cash dividends declared, ($ 1.04 per share)

21 unchanged sentences

The business of Murphy USA Inc.

and its subsidiaries (“Murphy USA” or the “Company”) primarily consists of the U.S.

and its subsidiaries (“Murphy USA”, "we", or the “Company”) primarily consists of the U.S.

retail marketing business that was separated from its former parent company, Murphy Oil Corporation (“Murphy Oil”), plus other assets, liabilities and operating expenses of Murphy Oil that were associated with supporting the activities of the U.S.

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TAXES COLLECTED FROM CUSTOMERS AND REMITTED TO GOVERNMENT AUTHORITIES – Excise and other taxes collected on sales of refined products and remitted to governmental agencies are included in operating revenues and operating expenses in the Consolidated Income Statements.

Excise taxes on petroleum products collected and remitted were $ 2.0 billion in 2021, $ 1.8 billion in 2020, and $ 1.9 billion in 2019.

CASH EQUIVALENTS – Short-term investments, which include government securities, money market funds and other instruments with government securities as collateral, that have a maturity of three months or less from the date of purchase are classified as cash equivalents.

Excise taxes on

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

petroleum products collected and remitted were $ 2.2 billion in 2022, $ 2.0 billion in 2021, and $ 1.8 billion in 2020.

MARKETABLE SECURITIES – The Company considers highly liquid treasury notes, corporate debt securities, and other funds with original maturities of more than three months to be marketable securities.

Securities with less than one year to maturity are included in short-term marketable securities, and all other securities are classified as long-term marketable securities.

Marketable securities are classified as held-to-maturity when the Company has both the positive intent and ability to hold the securities to maturity and are carried at amortized cost.

Marketable securities are classified as available-for-sale when the Company does not have the intent to hold securities to maturity to allow flexibility in response to liquidity needs and are carried at fair value.

The Company records securities at fair value on its consolidated balance sheets, with unrealized gains and losses reported as a component of accumulated other comprehensive income (loss).

See Note 5 "Marketable Securities" and Note 18 "Assets and Liabilities Measured at Fair Value" for additional information on our policy and the fair value measurement of the Company's marketable securities.

ACCOUNTS RECEIVABLE – The Company’s accounts receivable are recorded at the invoiced amount and do not bear interest.

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Certain merchandise inventories at QuickChek stores are on a LIFO basis while all other items are valued on average cost.

Materials and supplies are valued at the lower of average cost or estimated value.

Materials and supplies are valued at the lower of average cost or net realizable value.

VENDOR ALLOWANCES AND REBATES – Murphy USA receives payments for vendor allowances, volume rebates and other related payments from various suppliers of its convenience store merchandise.

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Certain marketing facilities are primarily depreciated using the composite straight-line method with depreciable lives ranging from 16 to 25 years.

Gasoline stores, improvements to gasoline stores and other assets are depreciated over 3 to 50 years by individual unit on the straight-line method.

Gasoline stores,

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

improvements to gasoline stores and other assets are depreciated over 3 to 50 years by individual unit on the straight-line method.

The Company capitalizes interest costs as a component of construction in progress on individually significant projects based on the weighted average interest rates incurred on its long-term borrowings.

Total interest cost capitalized was $ 2.1 million in 2021 and $ 1.4 million in 2020 and 2019.

The Company has undertaken like-kind exchange ("LKE") transactions under the Federal tax code in an effort to acquire and sell real and personal property in a tax efficient manner.

Total interest cost capitalized was $ 1.1 million in 2022, $ 2.1 million in 2021 and $ 1.4 million in 2020.

The Company has undertaken like-kind exchange ("LKE") transactions under the Federal tax code in an effort to acquire and sell real property in a tax efficient manner.

The Company generally enters into forward transactions, in which property is sold and the proceeds are reinvested by acquiring similar property;

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If the Company determines that it is the primary beneficiary of the exchange accommodation titleholder, the replacements assets held by the exchange accommodation titleholder are consolidated and recorded in Property, Plant and Equipment on the Consolidated Balance Sheets.

The unspent proceeds that are held in trust with the intermediary are recorded as noncurrent assets in the Consolidated Balance Sheet as the cash was restricted for the acquisition of property, plant and equipment.

At December 31, 2022 and 2021, the Company had no open LKE transactions with an intermediary.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

2 unchanged sentences

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

IMPAIRMENT OF ASSETS – Long-lived assets, which include property and equipment, and finite-lived and indefinite-lived intangible assets, are tested for recoverability whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

IMPAIRMENT OF ASSETS – Long-lived assets, which include property and equipment and finite-lived assets, are tested for recoverability whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

Indefinite-lived intangible assets are tested annually.

A long-lived asset is not recoverable if its carrying amount exceeds the sum of the undiscounted cash flows expected to result from its use and eventual disposition.

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ENVIRONMENTAL LIABILITIES – A liability for environmental matters is established when it is probable that an environmental obligation exists and the cost can be reasonably estimated.

If there is a range of reasonably estimated costs, the most likely amount will be recorded, or if no amount is most likely, the minimum of the range is used.

If there is a range of reasonably estimated costs, the most likely amount will be recorded, or if no amount is most likely, the minimum of the

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

range is used.

Related expenditures are charged against the liability.

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A derivative that is not a highly effective hedge does not qualify for hedge accounting.

The change in the fair value of a qualifying fair value hedge is recorded in earnings along with the gain

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

or loss on the hedged item.

The change in the fair value of a qualifying fair value hedge is recorded in earnings along with the gain or loss on the hedged item.

The effective portion of the change in the fair value of a qualifying cash flow hedge is recorded in Accumulated other comprehensive income (AOCI) in the consolidated Balance Sheets until the hedged item is recognized currently in earnings.

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GAAP, management has made a number of estimates and assumptions related to the reporting of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities.

Actual results may differ from the estimates.

Actual results may differ from

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the estimates.

On an ongoing basis, we review our estimates based on currently available information.

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2 Primarily includes collection allowance on excise and sales taxes and other miscellaneous items

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Marketing segment

17 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 tickets, newspapers and other small categories of merchandise.

16 unchanged sentences

At December 31, 2022 and December 31, 2021, we had $ 164.1 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

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

succeeding quarter.

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 from our customers, which have a very short settlement window.

9 unchanged sentences

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 December 31, 2021 and 2020, the replacement cost (market value) of LIFO inventories exceeded the LIFO carrying value for petroleum products by $ 227.5 million and $ 101.3 million, respectively, and store merchandise for resale by $ 0.5 million and none , respectively.

At December 31, 2022 and 2021, the replacement cost (market value) of LIFO inventories exceeded the LIFO carrying value for petroleum products by $ 249.1 million and $ 227.5 million, respectively, and store merchandise for resale by $ 1.6 million and $ 0.5 million, respectively.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 5 — Marketable Securities

The Company invests a portion of its excess operational cash in marketable securities.

The goal of the Company's investment policy, in order of priority, are as follows:

(1) preservation of principal, (2) maintaining a high degree of liquidity to meet cash flow requirements, and (3) deliver competitive returns subject to prevailing market conditions and the Company's stated objectives related to safety and liquidity.

Nothing in the policy is intended to indicate that management must invest excess operational cash;

it merely allows it subject to specific limitations.

Securities are generally required to have a final maturity of 24 months or less with a weighted average maturity for the portfolio of no longer than 12 months and must have an active secondary market.

Investments may include U.S.

Treasury bills, notes and bond, U.S.

Agency securities, repurchase agreements, certificates of deposit, institutional, government money market funds that maintain a stable $ 1.00 net asset value, domestic and foreign commercial paper, municipal securities, domestic and foreign debt issued by corporations or financial institutions with the primary objective of minimizing the potential risk of principal loss.

The Company determines the classification of its marketable securities based on its investment strategy at the time of purchase.

All marketable securities in the periods presented have been classified as available-for-sale.

The carrying values of marketable securities within cash and cash equivalents and marketable securities consist of the following:

December 31, 2022

(Millions of dollars) Amortized

Losses Estimated

Available-for-sale debt securities:

Marketable securities current

Cash and cash equivalents $ — $ — $ — $ —

U S Govt Bonds 8.8 — — 8.8

Corporate bonds 6.0 — — 6.0

Non U S Corporate bonds 3.0 — — 3.0

Investment income receivable 0.1 — — 0.1

17.9 — — 17.9

Marketable securities non-current

Corporate bonds 4.4 — — 4.4

Total Marketable Securities $ 22.3 $ — $ — $ 22.3

The amortized cost basis and fair value of the Company's available-for-sale marketable securities at December 31, 2022, by contractual maturity, are as follows:

(Millions of dollars) Amortized Cost Fair Value

Less than 1 year $ 19.3 $ 19.3

1 to 2 years 3.0 3.0

Total $ 22.3 $ 22.3

There was no impairment on any available-for-sale marketable securities as of December 31, 2022, while there were none at December 31, 2021.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 6 — 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 which consisted of 156 stores located in New Jersey and New York, in an all-cash transaction.

On January 29, 2021, MUSA acquired 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.

3 unchanged sentences

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.

1 unchanged sentence

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)

(Millions of dollars) January 29,

Cash paid to shareholders $ 641.9

Less cash and cash equivalents acquired 0.8

cash and cash equivalents acquired 0.8

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

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Millions of dollars)

Assets acquired:

14 unchanged sentences

Net assets acquired 313.1

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Millions of dollars) January 29,

Goodwill 328.0

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

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 $ 10.4 million and $ 1.7 million for the years ended December 31, 2021 and 2020, respectively.

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 $ 1.5 million, $ 10.4 million, and $ 1.7 million for the years ended December 31, 2022, 2021, and 2020, respectively.

Note 7 – Property, Plant and Equipment

14 unchanged sentences

Depreciation expense of $ 219.4 million, $ 211.6 million and $ 160.0 million was recorded for the years ended December 31, 2022, 2021 and 2020, respectively.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8 – 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.

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

(Millions of dollars) 2022 2021

Goodwill balance, January 1, 2021 $ —

Goodwill balance, at beginning of period $ 328.0 $ —

QuickChek acquisition — 328.0

Goodwill balance, December 31, 2021 $ 328.0

Goodwill balance, at end of period $ 328.0 $ 328.0

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Remaining Useful Life January 29,

Useful Life January 29,

(Millions of dollars) (in years) Carrying Value

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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 at December 31, 2021 and December 31, 2020 consisted of the following:

Intangible assets at December 31, 2022 and 2021 consisted of the following:

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

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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 $ 140.4 $ 146.1 $ 140.7

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Accrued compensation and benefits 46.6 36.5

Current operating lease liabilities 20.5 18.1

Other 34.9 32.0

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4.75 % senior notes due 2029 (net of unamortized discount of $ 4.2 at 2022 and $ 4.8 at 2021)

3.75 % senior notes due 2031 (net of unamortized discount of $ 5.7 at 2021 and none at 2020)

Term loan due 2023 (effective interest rate of 2.67 % at 2020)

Term loan due 2028 (effective interest rate of 2.27 % at 2021) net of unamortized discount of $ 0.9 at 2021 and none at 2020

3.75 % senior notes due 2031 (net of unamortized discount of $ 5.1 at 2022 and $ 5.7 at 2021)

Term loan due 2028 (effective interest rate of 5.95 % at 2022 and 2.27 % at 2021) net of unamortized discount of $ 0.7 at 2022 and $ 0.9 at 2021

Capitalized lease obligations, vehicles, due through 2026 2.3 2.7

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Total long-term debt, net of current $ 1,791.9 $ 1,800.1

On January 29, 2021, the Company completed its acquisition of QuickChek for an all-cash consideration of $ 641.1 million.

In conjunction with the closing of the acquisition, the Company entered in a credit agreement that provides for a cash flow revolving facility with commitments of $ 350 million and a term loan in a principal amount of $ 400 million.

The Company also issued a new series of 3.750 % senior unsecured notes due 2031 in an aggregate principal amount of $ 500 million.

As a result of the above transactions, the ABL facility existing at December 31, 2020, was terminated and the term loan with $ 200 million remaining balance outstanding at January 29, 2021 was repaid and retired.

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.

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and the restricted subsidiaries to incur additional indebtedness or liens, dispose of assets, make certain restricted payments or investments, enter into transactions with affiliates or merge with or into other entities.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 prior notes 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 2029 Senior Notes are fully and unconditionally guaranteed by Murphy USA, and are guaranteed by certain 100% owned subsidiaries that guarantee our credit

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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The outstanding balance of the term loan was $ 394.0 million at December 31, 2022.

The term loan is due January 2028 and requires quarterly principal payments of $ 1 million beginning July 1, 2021.

The revolving facility expires January 2026 while the term loan is due January 2028 and requires quarterly principal payments of $ 1.0 million beginning July 1, 2021.

As of December 31, 2022, we had none outstanding under the revolving facility, while there were $ 4.7 million in outstanding letters of credit, which reduces the amount available to borrow.

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Net deferred tax liabilities $ ( 327.4 ) $ ( 295.9 )

In management’s judgment, the net deferred tax assets in the preceding table will more likely than not be realized as reductions of future taxable income or by utilizing available tax planning strategies.

As of December 31, 2021, the earliest year remaining open for Federal and state audit and/or settlement is 2018 and 2016, respectively.

In management’s judgment, the deferred tax assets in the preceding table will more likely than not be realized as reductions of future taxable income or utilized by available tax planning strategies.

As of December 31, 2022, the earliest year remaining open for Federal audits and/or settlement is 2019 and for state audits and/or settlement is 2018.

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.

The FASB’s rules for accounting for income tax uncertainties clarify the criteria for recognizing uncertain income tax benefits and require additional disclosures about uncertain tax positions.

GAAP the financial statement recognition of the benefit for a tax position is dependent upon the benefit being more likely than not to be

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

sustainable upon audit by the applicable taxing authority.

The FASB’s rules for accounting for income tax uncertainties clarify the criteria for recognizing uncertain income tax benefits and require additional disclosures about uncertain tax positions.

GAAP the financial statement recognition of the benefit for a tax position is dependent upon the benefit being more likely than not to be sustainable upon audit by the applicable taxing authority.

If this threshold is met, the tax benefit is then measured and recognized at the largest amount that is greater than 50 percent likely of being realized upon ultimate settlement.

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Additions for tax positions related to prior years 0.2 0.3

Settlements with taxing authorities — ( 0.3 )

Expiration of statutes of limitation ( 0.1 ) ( 0.2 )

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At present, the Company expects to issue all shares that vest out of existing treasury shares rather than issuing new common shares.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2013 Stock Plan for Non-employee Directors

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The directors for Murphy USA are compensated with a mixture of cash payments and equity-based awards.

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

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

of grants under the Directors Plan.

Awards under the Directors Plan may be in the form of restricted stock, restricted stock units, dividend equivalent 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.

Since 2013, 150,673 time-based restricted stock units have been granted under the terms of the Directors Plan which leaves 349,327 shares available to be granted in the future.

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Total income tax benefits realized from tax deductions related to stock option exercises under share-based payment arrangements were $ 1.0 million, $ 0.3 million, and $ 0.7 million for the years ended December 31, 2022, 2021, and 2020, respectively.

Concurrent with its initial quarterly dividend in December 2020, the Company issued 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 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.

DEU's issued are included with grants in each respective table as applicable.

STOCK OPTIONS – The Committee fixes the option price of each option granted at no less than fair market value (FMV) on the date of the grant and fixes the option term at no more than 7 years from such date.

STOCK OPTIONS (MUSA 2013 Plan) – The Committee fixes the option price of each option granted at no less than fair market value (FMV) on the date of the grant and fixes the option term at no more than 7 years from such date.

Most of the nonqualified stock options granted to certain employees by the Committee were granted in February 2022.

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55,150 6.1 — —

$ 120.00 to $ 129.99

313,950 4.1 150,450 2.8

$ 130.00 to $ 139.99

3,300 6.2 — —

$ 140.00 to $ 149.99

366,100 4.2 167,950 3.0

RESTRICTED STOCK UNITS (MUSA 2013 Plan) – The Committee has granted time based restricted stock units (RSUs) as part of the compensation plan for its executives and certain other employees since its inception.

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The portion of the awards that vest based on TSR qualify as a market condition and must be valued using a Monte Carlo valuation model.

For the TSR portion of the awards, the fair value was determined to

For the TSR portion of the awards, the fair value was determined to be $ 259.17 per unit.

For the ROACE portion of the awards, the valuation was based on the grant

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

be $ 168.42 per unit.

For the ROACE portion of the awards, the valuation was based on the grant date fair value of $ 126.00 per unit and the number of awards will be periodically assessed to determine the probability of vesting.

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, 2021 to December 31, 2022 are presented in the following table:

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Eligible employees receive a stated percentage of their base and incentive pay of 5 %, 7 %, or 9 % determined on a formula that is based on a combination of age and years of service.

The Company’s combined expenses related to this plan were $ 15.0 million in 2021, $ 15.3 million in 2020 and $ 12.9 million in 2019.

The Company maintained the thrift plan of QuickChek on acquisition, and matches 100 % of the first 3 % and 50 % of the next 2 % contributed by eligible employees.

The Company made contributions of $ 1.9 million to the QuickChek plan in 2021.

The Company’s combined expenses related to these plans were $ 17.3 million in 2022, $ 16.9 million in 2021 and $ 15.3 million in 2020.

PROFIT SHARING PLAN – Eligible part-time employees of Murphy USA may participate in the Company’s noncontributory profit sharing plan.

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

Cash deposits were $ 0.6 million at December 31, 2021 and 2020 related to commodity derivative contracts and were reported in Prepaid expenses and other current assets in the Consolidated Balance Sheets.

Cash deposits were none at December 31, 2022 and at December 31, 2021 the cash deposit was $ 0.6 million related to commodity derivative contracts and were reported in Prepaid expenses and other current assets in the Consolidated Balance Sheets.

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

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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 $ 0.9 million for the twelve months ended December 31, 2021, leaving a balance of $ 1.5 million at December 31, 2021.

The amount of pre-tax gains in accumulated other comprehensive loss that was reclassified into interest expense was $ 0.9 million for the twelve months ended December 31, 2022 and 2021, leaving a balance of $ 0.6 million at December 31, 2022.

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, a share repurchase authorization of $ 500 million was put into place through December 2023.

Shares repurchased under the October 2020 authorization in 2020 were 969,654 common shares for $ 125.0 million, or $ 128.91 per share, leaving approximately $ 375.0 million available, at December 31, 2020.

During 2021, common shares repurchased under the October authorization were 2,398,477 common shares for $ 355.0 million, or $ 148.00 per share, leaving approximately $ 20.0 million, at December 31, 2021, available until December 2023.

In December 2021, the Board of Directors announced an additional authorization to repurchase shares of up to $ 1 billion to be executed by December 31, 2026, once the current program has been completed.

During 2019, the total number of common shares repurchased were 1,898,023 for $ 165.8 million, or $ 87.35 per share, of which 1,393,626 common shares for $ 125.0 million, or $ 89.70 per share were under a $ 400 million share repurchase authorization approved by the Company Board of Directors in July 2019, and other shares purchased were 504,397 common shares for $ 40.8 million, or $ 80.85 per share.

During 2020, the total number of common shares repurchased were 3,338,028 for $ 399.6 million, or $ 119.70 per share, of which 2,368,374 common shares were under the July 2019 plan for $ 274.6 million, or $ 115.93 per share, which completed the authorization in November 2020.

On December 1, 2021, the Board of Directors approved a share repurchase authorization of up to $ 1 billion to begin upon completion of the $ 500 million authorization made in October 2020, and is to be executed by December 31, 2026.

During the year 2022, the total number of share repurchases were 3,328,795 common shares for $ 806.4 million, at an average price of $ 242.24 per share.

The 2022 shares repurchased included 3,226,379 common shares for $ 786.3 million, at an average price of $ 243.72 per share under the 2021 $ 1 billion authorization, leaving approximately $ 213.7 million remaining available, as of December 31, 2022, and included 102,416 common shares repurchased for $ 20.0 million, at an average price of $ 195.45 per share which completed the October 2020 $ 500 million authorization.

Purchases in 2021 and 2020 under the October 2020 authorization were 2,398,477 common shares for $ 355.0 million, at an average price of $ 148.00 per share and 969,654 common shares for $ 125.0 million, at an average price of $ 128.91 per share, respectively.

Murphy USA Inc.

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Interest paid, net of amounts capitalized, was $ 81.6 million, $ 70.8 million and $ 49.1 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CHANGES IN WORKING CAPITAL -

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Net decrease (increase) in noncash operating working capital $ 44.8 $ 82.8 $ ( 13.1 )

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 18 — Assets and Liabilities Measured at Fair Value

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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 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.

The Company's available-for-sale marketable securities consist of high quality, investment grade securities from diverse issuers.

We value these securities at the closing price in the principal active markets as of the last business day of the reporting period.

The fair values of the Company's marketable securities by asset class are described in Note 5 "Marketable Securities" in these consolidated financial statements for the period ended December 31, 2022.

We value the deferred compensation plan assets, which consist of money market and mutual funds, based on quoted prices in active markets at the measurement date.

For additional information on deferred compensation plans see also Note 14 "Employee and Retirement Benefit Plans" in these consolidated financial statements for the period ended December 31, 2022.

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

See also Note 15 "Financial Instruments and Risk Management" in these consolidated financial statements for the period ended December 31, 2022, for more information.

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

Financial assets and liabilities measured at fair value on a recurring basis

The following table presents the Company's financial assets and liabilities measured at fair value on a recurring basis, as of December 31, 2022 and 2021:

December 31, 2022

(Millions of dollars) Level 1 Level 2 Level 3 Fair Value

Financial assets

Marketable securities, current

U S Govt Bonds $ — $ 8.8 $ — $ 8.8

Corporate bonds — 6.1 — 6.1

Non U S Govt Bonds — 3.0 — 3.0

Accounts receivable - trade

Interest rate swap derivative — — 1.3 1.3

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022

(Millions of dollars) Level 1 Level 2 Level 3 Fair Value

Marketable securities, noncurrent

Corporate bonds — 4.4 — 4.4

Deferred compensation plan assets 9.5 — — 9.5

Financial liabilities

Deferred credits and other liabilities

Deferred compensation plan liabilities ( 14.7 ) — — ( 14.7 )

$ ( 5.2 ) $ 22.3 $ 1.3 $ 18.4

December 31, 2021

(Millions of dollars) Level 1 Level 2 Level 3 Fair Value

Financial assets

Prepaid expenses and other current assets

Fuel derivative $ — $ — $ 0.6 $ 0.6

Deferred compensation plan assets 10.2 — — 10.2

Financial liabilities

Trade accounts payable and accrued liabilities

Interest rate swap derivative — — ( 0.7 ) ( 0.7 )

Deferred credits and other liabilities

Deferred compensation plan liabilities ( 13.9 ) — — ( 13.9 )

$ ( 3.7 ) $ — $ ( 0.1 ) $ ( 3.8 )

Fair value of financial instruments not recognized at fair value

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, and Trade accounts payable and accrued liabilities, all of which had fair values approximating carrying amounts.

The table below excludes Cash and cash equivalents, Accounts receivable-trade, 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.

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

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

December 31, 2022 December 31, 2021

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Current and long-term debt, excluding finance leases $ ( 1,673.3 ) $ ( 1,643.0 ) $ ( 1,673.5 ) $ ( 1,709.5 )

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 19 – Commitments

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

Because governmental actions are often motivated by political considerations, may be taken without full consideration of their consequences, and may

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

be taken in response to actions of other governments, it is not practical to attempt to predict the likelihood of such actions, the form the actions may take or the effect such actions may have on the Company.

ENVIRONMENTAL MATTERS AND LEGAL MATTERS — Murphy USA is subject to numerous federal, state and local laws and regulations dealing with the environment.

Because governmental actions are often motivated by political considerations, may be taken without full consideration of their consequences, and may be taken in response to actions of other governments, it is not practical to attempt to predict the likelihood of such actions, the form the actions may take or the effect such actions may have on the Company.

ENVIRONMENTAL MATTERS AND LEGAL MATTERS — Murphy USA is subject to numerous federal, state and local laws, regulations and permit requirements dealing with the environment.

Violation of such environmental laws, regulations and permits can result in the imposition of significant civil and criminal penalties, injunctions, and other sanctions.

A discharge of hazardous substances into the environment could, to the extent such event is not insured, subject the

Company to substantial expense, including both the cost to comply with applicable regulations and claims by neighboring landowners and other third parties for any personal injury, property damage and other losses that might result.

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

The Company currently owns or leases, and has in the past owned or leased, properties at which hazardous substances have been or are being handled.

Although the Company believes it has used operating and disposal practices that were standard in the industry at the time, hazardous substances may have been disposed of or released on or under the properties owned or leased by the Company or on or under other locations where they have been taken for disposal.

In connection with these activities, hazardous substances may have been disposed of or released on or under the properties owned or leased by the Company or on or under other locations where they have been taken for disposal.

In addition, many of these properties have been operated by third parties whose management of hazardous substances was not under the Company’s control.

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With respect to the previously owned refinery properties, Murphy Oil retained those liabilities in the Separation and Distribution agreement that was entered into related to the separation on August 30, 2013.

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 position 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 December 31, 2021, 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.

With respect to any remaining potential liabilities, based on information currently available to the Company, the Company believes costs related to these

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

properties will not have a material adverse effect on Murphy USA’s net income, financial position or liquidity in a future period.

While it is possible that certain environmental expenditures could be recovered by the Company from other sources, primarily environmental funds maintained by certain states, no assurance can be given that future recoveries from these other sources will occur.

As such, the Company has not recorded a benefit for likely recoveries at December 31, 2022, however certain jurisdictions provide reimbursement for these expenses which have been considered in recording the net exposure.

EPA currently considers the Company a PRP at one Superfund site.

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

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

Based on information currently available to the Company, 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 position 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.

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

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INSURANCE — The Company maintains insurance coverage at levels that are customary and consistent with industry standards for companies of similar size.

Murphy USA maintains statutory workers compensation insurance with a deductible of $ 1.0 million per occurrence, general liability insurance with a deductible of $ 3.0 million per

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

occurrence, and auto liability insurance with a deductible of $ 0.3 million per occurrence.

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

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

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Subsequent changes to our tax liabilities because of these audits may subject us to interest and penalties.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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Note 22 — Recent Accounting and Reporting Rules

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes," which removes certain exceptions for:

recognizing deferred taxes on investments, performing intraperiod allocation and calculating income taxes for interim periods.

The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group.

This ASU was effective for the Company for the year beginning January 1, 2021 and this update did not have a material impact on the Company's consolidated financial statements.

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 which applies 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.

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

In December 2022, the FASB issued ASU 2022-06, "Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848." The amendments in this Update defer the sunset date of Topic 848 from December 31, 2022, to December 31, 2024.

These amendments apply to all entities and are effective upon issuance of the Update.

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

Murphy USA Inc.

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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-K

Item 9A. Controls and Procedures