Company Quick10K Filing
Quick10K
Murphy Oil
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$27.62 174 $4,800
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-08-08 Earnings, Exhibits
8-K 2019-07-11 M&A, Other Events, Exhibits
8-K 2019-06-12 Regulation FD, Exhibits
8-K 2019-05-30 Enter Agreement, M&A, Off-BS Arrangement, Exhibits
8-K 2019-05-22 Regulation FD, Exhibits
8-K 2019-05-09 Shareholder Vote
8-K 2019-05-07 Regulation FD, Exhibits
8-K 2019-05-02 Earnings, Exhibits
8-K 2019-04-19 Enter Agreement, Regulation FD, Exhibits
8-K 2019-04-15 Officers
8-K 2019-03-25 Regulation FD, Exhibits
8-K 2019-03-21 Enter Agreement, Regulation FD, Exhibits
8-K 2019-02-07 Officers, Exhibits
8-K 2019-01-31 Earnings, Exhibits
8-K 2018-12-03 Enter Agreement, Leave Agreement, M&A, Earnings, Off-BS Arrangement, Exhibits
8-K 2018-11-07 Earnings, Exhibits
8-K 2018-10-10 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-09-05 Regulation FD, Exhibits
8-K 2018-08-20 Officers, Exhibits
8-K 2018-08-08
8-K 2018-05-09 Shareholder Vote
8-K 2018-05-01 Other Events
8-K 2018-04-25 Other Events, Exhibits
8-K 2018-02-22 Officers, Exhibits
8-K 2018-02-12 Officers, Exhibits
8-K 2018-01-31 Earnings, Exhibits
TSM Taiwan Semiconductor Manufacturing 224,300
MET Metlife 45,120
PRSP Perspecta 3,840
SNH Senior Housing Properties Trust 1,970
RFP Resolute Forest Products 641
IPHS Innophos Holdings 625
UEIC Universal Electronics 607
GTYH GTY Technology 472
WHLM Wilhelmina 31
STRI STR Holdings 0
MUR 2019-06-30
Part I - Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis
Item 2. Management's Discussion and Analysis (Contd.)
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Procceeds
Item 6. Exhibits
EX-31.1 mur-20190630xex311.htm
EX-31.2 mur-20190630xex312.htm
EX-32.0 mur-20190630xex32.htm

Murphy Oil Earnings 2019-06-30

MUR 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

MUR-2019.06.30-10Q
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Table of Contents

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q  
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2019
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to
Commission file number 1-8590
murphyoilcorplogo.jpg
MURPHY OIL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
71-0361522
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification Number)
300 Peach Street, P.O. Box 7000
71731-7000
El Dorado,
Arkansas
(Zip Code)
(Address of principal executive offices)
 
(870)
862-6411
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
 Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock, $1.00 Par Value
MUR
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes     No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  No
Number of shares of Common Stock, $1.00 par value, outstanding at July 31, 2019 was 162,250,593.
 


Table of Contents

MURPHY OIL CORPORATION
TABLE OF CONTENTS

Page
 
 

1

Table of Contents

PART I – FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS
Murphy Oil Corporation and Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS (unaudited)
(Thousands of dollars)

June 30,
2019
 
December 31,
2018 ¹
ASSETS
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
326,044

 
359,923

Accounts receivable, less allowance for doubtful accounts of $1,605 in 2019 and 2018
425,845

 
231,686

Inventories
86,701

 
80,024

Prepaid expenses
49,477

 
34,316

Assets held for sale
1,863,825

 
173,865

Total current assets
2,751,892

 
879,814

Property, plant and equipment, at cost less accumulated depreciation, depletion and amortization of 8,656,715 in 2019 and $8,070,487 in 2018
10,041,184

 
8,432,133

Operating lease assets
590,938

 

Deferred income taxes
104,368

 
146,197

Deferred charges and other assets
47,642

 
49,435

Non-current assets held for sale

 
1,545,008

Total assets
$
13,536,024

 
11,052,587

LIABILITIES AND EQUITY
 
 
 
Current liabilities
 
 
 
Current maturities of long-term debt
$
687

 
668

Short-term loan payable
500,000

 

Accounts payable
598,466

 
348,026

Income taxes payable
17,245

 
15,309

Other taxes payable
20,325

 
17,649

Operating lease liabilities
128,635

 

Other accrued liabilities
164,782

 
177,948

Liabilities associated with assets held for sale
772,751

 
286,458

Total current liabilities
2,202,891

 
846,058

Long-term debt, including capital lease obligation
4,185,875

 
3,109,318

Asset retirement obligations
824,053

 
752,519

Deferred credits and other liabilities
587,826

 
624,436

Non-current operating lease liabilities
468,168

 

Deferred income taxes
168,667

 
129,894

Non-current liabilities associated with assets held for sale

 
392,720

Total liabilities
8,437,480

 
5,854,945

Equity
 
 
 
Cumulative Preferred Stock, par $100, authorized 400,000 shares, none issued

 

Common Stock, par $1.00, authorized 450,000,000 shares, issued 195,083,364 shares in 2019 and 195,076,924 shares in 2018
195,083

 
195,077

Capital in excess of par value
933,944

 
979,642

Retained earnings
5,677,248

 
5,513,529

Accumulated other comprehensive loss
(549,045
)
 
(609,787
)
Treasury stock
(1,517,217
)
 
(1,249,162
)
Murphy Shareholders' Equity
4,740,013

 
4,829,299

Noncontrolling interest
358,531

 
368,343

Total equity
5,098,544

 
5,197,642

Total liabilities and equity
$
13,536,024

 
11,052,587

1 Reclassified to conform to current presentation (see Note A). See Notes to Consolidated Financial Statements, page 7.

2

Table of Contents

Murphy Oil Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(Thousands of dollars, except per share amounts)

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

2019
 
2018 ¹
 
2019
 
2018 ¹
Revenues
 
 
 
 
 
 
 
Revenue from sales to customers
$
646,114

 
426,767

 
1,236,664

 
823,096

Gain (loss) on crude contracts
57,916

 
(37,624
)
 
57,916

 
(67,126
)
Gain on sale of assets and other income
5,019

 
437

 
5,473

 
8,400

Total revenues
709,049

 
389,580

 
1,300,053

 
764,370

Costs and expenses
 
 
 
 
 
 
 
Lease operating expenses
137,132

 
81,236

 
268,828

 
170,069

Severance and ad valorem taxes
13,072

 
12,876

 
23,169

 
25,033

Exploration expenses, including undeveloped lease amortization
30,674

 
18,889

 
63,212

 
47,627

Selling and general expenses
57,532

 
56,295

 
120,892

 
104,391

Depreciation, depletion and amortization
264,302

 
190,751

 
493,708

 
373,494

Accretion of asset retirement obligations
9,897

 
6,396

 
19,237

 
12,768

Other expense (benefit)
25,437

 
658

 
55,442

 
(10,387
)
Total costs and expenses
538,046

 
367,101

 
1,044,488

 
722,995

Operating income from continuing operations
171,003

 
22,479

 
255,565

 
41,375

Other income (loss)
 
 
 
 
 
 
 
Interest and other income (loss)
(8,968
)
 
(717
)
 
(13,716
)
 
3,870

Interest expense, net
(54,096
)
 
(44,325
)
 
(100,165
)
 
(88,866
)
Total other loss
(63,064
)
 
(45,042
)
 
(113,881
)
 
(84,996
)
Income (loss) from continuing operations before income taxes
107,939

 
(22,563
)
 
141,684

 
(43,621
)
Income tax expense (benefit)
9,115

 
2,622

 
19,937

 
(109,017
)
Income (loss) from continuing operations
98,824

 
(25,185
)
 
121,747

 
65,396

Income from discontinued operations, net of income taxes
24,418

 
70,704

 
74,264

 
148,376

Net income including noncontrolling interest
123,242

 
45,519

 
196,011

 
213,772

Less: Net income attributable to noncontrolling interest
30,970

 

 
63,557

 

NET INCOME ATTRIBUTABLE TO MURPHY
$
92,272

 
45,519

 
132,454

 
213,772

INCOME (LOSS) PER COMMON SHARE – BASIC
 
 
 
 
 
 
 
Continuing operations
$
0.40

 
(0.14
)
 
0.34

 
0.38

Discontinued operations
0.15

 
0.41

 
0.44

 
0.86

Net Income
$
0.55

 
0.27

 
0.78

 
1.24

 
 
 
 
 
 
 
 
INCOME (LOSS) PER COMMON SHARE – DILUTED
 
 
 
 
 
 
 
Continuing operations
$
0.40

 
(0.15
)
 
0.34

 
0.37

Discontinued operations
0.14

 
0.40

 
0.43

 
0.85

Net Income
$
0.54

 
0.25

 
0.77

 
1.22

 
 
 
 
 
 
 
 
Cash dividends per Common share
0.25

 
0.25

 
0.50

 
0.50

 
 
 
 
 
 
 
 
Average Common shares outstanding (thousands)
 
 
 
 
 
 
 
Basic
168,538

 
173,043

 
170,556

 
172,908

Diluted
169,272

 
173,983

 
171,433

 
174,927

1 Reclassified to conform to current presentation (see Note A).
See Notes to Consolidated Financial Statements, page 7.

3

Table of Contents

Murphy Oil Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
(Thousands of dollars)


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

2019
 
2018
 
2019
 
2018

 
 
 
 
 
 
 
Net income
$
92,272

 
45,519

 
132,454

 
213,772

Other comprehensive income (loss), net of tax
 
 
 
 
 
 
 
Net (loss) gain from foreign currency translation
28,606

 
(34,910
)
 
54,055

 
(87,185
)
Retirement and postretirement benefit plans
2,762

 
3,938

 
5,516

 
7,108

Deferred loss on interest rate hedges reclassified to interest expense
586

 
586

 
1,171

 
1,171

Reclassification of certain tax effects to retained earnings

 

 

 
(30,237
)
Other

 

 

 
(3,737
)
Other comprehensive income (loss)
31,954

 
(30,386
)
 
60,742

 
(112,880
)
COMPREHENSIVE INCOME
$
124,226

 
15,133

 
193,196

 
100,892

See Notes to Consolidated Financial Statements, page 7.

4

Table of Contents

Murphy Oil Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(Thousands of dollars)

Six Months Ended
June 30,

2019
 
2018 ¹
Operating Activities
 
 
 
Net income including noncontrolling interest
$
196,011

 
213,772

Adjustments to reconcile net income to net cash provided by continuing operations activities:
 
 


(Income) loss from discontinued operations
(74,264
)
 
(148,376
)
Depreciation, depletion and amortization
493,708

 
373,494

Previously suspended exploration costs (credits)
12,901

 
(8
)
Amortization of undeveloped leases
15,150

 
22,774

Accretion of asset retirement obligations
19,237

 
12,768

Deferred income tax charge (benefit)
18,001

 
(148,653
)
Pretax (gain) loss from sale of assets
(12
)
 
118

Mark to market and revaluation of contingent consideration
28,890

 

Mark to market of crude contracts
(50,831
)
 
27,088

Long-term non-cash compensation
44,755

 
29,010

Net (increase) decrease in noncash operating working capital
(5,366
)
 
22,498

Other operating activities, net
(42,749
)
 
(72,804
)
Net cash provided by continuing operations activities
655,431

 
331,681

Investing Activities
 
 
 
Acquisition of oil and gas properties
(1,226,261
)
 

Property additions and dry hole costs
(645,169
)
 
(565,237
)
Proceeds from sales of property, plant and equipment
16,816

 
621

Net cash required by investing activities
(1,854,614
)
 
(564,616
)
Financing Activities
 
 
 
Borrowings on revolving credit facility
1,075,000

 

Proceeds from term loan
500,000

 

Repurchase of common stock
(299,924
)
 

Capital lease obligation payments
(335
)
 

Withholding tax on stock-based incentive awards
(6,991
)
 
(6,922
)
Distribution to noncontrolling interest
(68,776
)
 

Cash dividends paid
(85,503
)
 
(86,517
)
Net cash provided (required) by financing activities
1,113,471

 
(93,439
)
Cash Flows from Discontinued Operations 2
 
 
 
Operating activities
122,272

 
290,849

Investing activities
(49,798
)
 
(49,910
)
Financing activities
(4,914
)
 
(4,648
)
Net cash provided by discontinued operations
67,560

 
236,291

Cash transferred from discontinued operations to continuing operations
48,565

 
464,258

Effect of exchange rate changes on cash and cash equivalents
3,268

 
24,382

Net increase (decrease) in cash and cash equivalents
(33,879
)
 
162,266

Cash and cash equivalents at beginning of period
359,923

 
630,433

Cash and cash equivalents at end of period
$
326,044

 
792,699

1  Reclassified to conform to current presentation (See Note A).
2  Cash flows from discontinued operations are not part of the cash flow reconciliation.

See Notes to Consolidated Financial Statements, page 7.

5

Table of Contents

Murphy Oil Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)
(Thousands of dollars)

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

2019
 
2018
 
2019
 
2018
Cumulative Preferred Stock – par $100, authorized 400,000 shares, none issued
$

 

 

 

Common Stock – par $1.00, authorized 450,000,000 shares, issued 195,083,364 shares at June 30, 2019 and 195,065,341 shares at June 30, 2018
 
 
 
 
 
 
 
Balance at beginning of period
195,083

 
195,065

 
195,077

 
195,056

Exercise of stock options

 

 
6

 
9

Balance at end of period
195,083

 
195,065

 
195,083

 
195,065

Capital in Excess of Par Value
 
 
 
 
 
 
 
Balance at beginning of period
924,904

 
891,191

 
979,642

 
917,665

Exercise of stock options, including income tax benefits

 

 
(123
)
 
(175
)
Restricted stock transactions and other

 
(280
)
 
(38,732
)
 
(32,766
)
Stock-based compensation
9,040

 
7,215

 
17,676

 
13,402

Adjustments to acquisition valuation

 

 
(24,519
)
 

Balance at end of period
933,944

 
898,126

 
933,944

 
898,126

Retained Earnings
 
 
 
 
 
 
 
Balance at beginning of period
5,627,081

 
5,400,474

 
5,513,529

 
5,245,242

Net income (loss) for the period
92,272

 
45,519

 
132,454

 
213,772

Reclassification of certain tax effects from accumulated other comprehensive loss

 

 

 
30,237

Sale and leaseback gain recognized upon adoption of ASC 842, net of tax impact

 

 
116,768

 

Cash dividends
(42,105
)
 
(43,259
)
 
(85,503
)
 
(86,517
)
Balance at end of period
5,677,248

 
5,402,734

 
5,677,248

 
5,402,734

Accumulated Other Comprehensive Loss
 
 
 
 
 
 
 
Balance at beginning of period
(580,999
)
 
(544,737
)
 
(609,787
)
 
(462,243
)
Foreign currency translation (loss) gain, net of income taxes
28,606

 
(34,910
)
 
54,055

 
(87,185
)
Retirement and postretirement benefit plans, net of income taxes
2,762

 
3,938

 
5,516

 
7,108

Deferred loss on interest rate hedges reclassified to interest expense, net of income taxes
586

 
586

 
1,171

 
1,171

Reclassification of certain tax effects to retained earnings

 

 

 
(30,237
)
Other

 

 

 
(3,737
)
Balance at end of period
(549,045
)
 
(575,123
)
 
(549,045
)
 
(575,123
)
Treasury Stock
 
 
 
 
 
 
 
Balance at beginning of period
(1,217,293
)
 
(1,249,686
)
 
(1,249,162
)
 
(1,275,529
)
Purchase of treasury shares
(299,924
)
 

 
(299,924
)
 

Awarded restricted stock, net of forfeitures

 
524

 
31,869

 
26,367

Balance at end of period – 32,832,771 shares of Common Stock in 2019 and 22,018,095 shares of Common Stock in 2018, at cost
(1,517,217
)
 
(1,249,162
)
 
(1,517,217
)
 
(1,249,162
)
Murphy Shareholders’ Equity
4,740,013

 
4,671,640

 
4,740,013

 
4,671,640

Noncontrolling Interest
 
 
 
 
 
 
 
Balance at beginning of period
377,901

 

 
368,343

 

Acquisition closing adjustments

 

 
(4,592
)
 

Net income attributable to noncontrolling interest
30,970

 

 
63,557

 

Distributions to noncontrolling Interest Owners
(50,340
)
 

 
(68,777
)
 

Balance at end of period
358,531

 

 
358,531

 

Total Equity
$
5,098,544

 
4,671,640

 
5,098,544

 
4,671,640

See Notes to Consolidated Financial Statements, page 7.

6

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
These notes are an integral part of the financial statements of Murphy Oil Corporation and Consolidated Subsidiaries (Murphy/the Company) on pages 2 through 6 of this Form 10-Q report.
Note A – Nature of Business and Interim Financial Statements
NATURE OF BUSINESS – Murphy Oil Corporation is an international oil and gas company that conducts its business through various operating subsidiaries.  The Company primarily produces oil and natural gas in the United States and Canada and conducts oil and natural gas exploration activities worldwide.
Malaysia has been classified as held for sale on the accompanying balance sheets; and effective January 1, 2019 Malaysia was reported as discontinued operations as the sale represents a strategic shift that has a major effect on the Company’s operations and financial results. Prior periods have been reclassified to conform with the current presentation. See Notes E and R for more information regarding the sale of this asset.
In connection with the LLOG acquisition, further discussed in Note Q, we now hold a 0.5% interest in two variable interest entities (VIEs), Delta House Oil and Gas Lateral LLC and Delta House FPS LLC (collectively Delta House). These VIEs have not been consolidated because we are not considered the primary beneficiary. These non-consolidated VIEs are not material to our financial position or results of operations. As of June 30, 2019, our maximum exposure to loss was $3.7 million, which represents our net investment in Delta House. We have not provided any financial support to Delta House other than amounts previously required by our membership interest.
INTERIM FINANCIAL STATEMENTS – In the opinion of Murphy’s management, the unaudited financial statements presented herein include all accruals necessary to present fairly the Company’s financial position at June 30, 2019 and December 31, 2018, and the results of operations, cash flows and changes in stockholders’ equity for the interim periods ended June 30, 2019 and 2018, in conformity with accounting principles generally accepted in the United States of America (U.S.).  In preparing the financial statements of the Company in conformity with accounting principles generally accepted in the U.S., management has made a number of estimates and assumptions related to the reporting of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities.  Actual results may differ from the estimates.
Financial statements and notes to consolidated financial statements included in this Form 10-Q report should be read in conjunction with the Company’s 2018 Form 10-K report, as certain notes and other pertinent information have been abbreviated or omitted in this report.  Financial results for the three-month and six-month periods ended June 30, 2019 are not necessarily indicative of future results.
Note B – New Accounting Principles and Recent Accounting Pronouncements
Accounting Principles Adopted
Leases.  In February 2016, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) 2016-02 (Topic 842) to increase transparency and comparability among companies by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.  The main difference between previous Generally Accepted Accounting Principles (GAAP) and this ASU is the recognition of right-of-use assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP.  The company adopted the standard in the first quarter of 2019 utilizing the modified retrospective transition method through a cumulative-effect adjustment at the beginning of the first quarter of 2019.  The Company has elected the package of practical expedients, which allows the Company not to reassess (1) whether any expired or existing contracts as of the adoption date are or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date and (3) initial direct costs for any existing leases as of the adoption date. The Company did not elect to apply the hindsight practical expedient when determining lease term and assessing impairment of right-of-use assets. The adoption of ASU 2016-02 resulted in the recognition of right-of-use assets of $618.1 million, current lease liabilities for operating leases of approximately $155.5 million, non-current lease liabilities of $468.4 million and a cumulative-effect adjustment to credit retained earnings of $116.8 million on its Consolidated Balance Sheets, with no material impact to its Consolidated Statements of Operations. See Note P for further information regarding the impact of the adoption of ASU 2016-02 on the Company’s financial statements.
Compensation – Stock Compensation.  In June 2018, the FASB issued an ASU 2018-07 which supersedes existing guidance for equity-based payments to nonemployees and expands the scope of guidance for stock compensation to include all share-based payment arrangements related to the acquisition of goods and services from both nonemployees and employees.  As a result, the same guidance that provides for employee share-based payments, including most of its requirements related to classification and measurement, applies to nonemployee share-based payment arrangements.  The Company adopted this guidance during the first quarter of 2019 and it did not have material impact on its consolidated financial statements.

7

Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
Note B – New Accounting Principles and Recent Accounting Pronouncements (Contd.)

Recent Accounting Pronouncements
Fair Value Measurement.  In August 2018, the FASB issued ASU 2018-13 which modifies disclosure requirements related to fair value measurement.  The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.  Implementation on a prospective or retrospective basis varies by specific disclosure requirement.  Early adoption is permitted. The standard also allows for early adoption of any removed or modified disclosures upon issuance of this ASU while delaying adoption of the additional disclosures until their effective date. The Company is currently assessing the potential impact of this ASU to its consolidated financial statements.
Recent Accounting Pronouncements (Contd.)
Compensation-Retirement Benefits-Defined Benefit Plans-General.  In August 2018, the FASB issued ASU 2018-14 which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.  For public companies, the amendments in this ASU are effective for fiscal years beginning after December 15, 2020, with early adoption permitted, and is to be applied on a retrospective basis to all periods presented. The Company is currently assessing the potential impact of this ASU to its consolidated financial statements.
Note C – Revenue from Contracts with Customers
Nature of Goods and Services
The Company explores for and produces crude oil, natural gas and natural gas liquids (collectively oil and gas) in select basins around the globe. The Company’s revenue from sales of oil and gas production activities are primarily subdivided into two key geographic segments: the U.S. and Canada.  Additionally, revenue from sales to customers is generated from three primary revenue streams: crude oil and condensate, natural gas liquids, and natural gas.
For operated oil and gas production where the non-operated working interest owner does not take-in-kind its proportionate interest in the produced commodity, the Company acts as an agent for the working interest owner and recognizes revenue only for its own share of the commingled production. 
U.S.- In the United States, the Company primarily produces oil and gas from fields in the Eagle Ford Shale area of South Texas and in the Gulf of Mexico.  Revenue is generally recognized when oil and gas are transferred to the customer at the delivery point. Revenue recognized is largely index based with price adjustments for floating market differentials.
Canada- In Canada, contracts are primarily long-term floating commodity index priced, except for certain natural gas physical forward sales fixed-price contracts. For the Onshore business in Canada, the recorded revenue is net of transportation costs and any gain or loss on spot purchases made to meet committed volumes on sales contracts for the month. For the Offshore business in Canada, contracts are based on index prices and revenue is recognized at the time of vessel load based on the volumes on the bill of lading and point of custody transfer.

8

Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
Note C – Revenue from Contracts with Customers (Contd.)

Disaggregation of Revenue
The Company reviews performance based on two key geographical segments and between onshore and offshore sources of revenue within these geographies.
For the three-months ended June 30, 2019 and 2018, the Company recognized $646.1 million and $426.8 million, respectively, from contracts with customers for the sales of oil, natural gas liquids and natural gas. For the six-months ended June 30, 2019 and 2018 the Company recognized $1,236.7 million and $823.1 million, respectively, from contracts with customers for the sales of oil, natural gas liquids and natural gas.
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
(Thousands of dollars)
 
2019
 
2018
 
2019
 
2018
Net crude oil and condensate revenue
 
 
 
 
 
 
 
United States
Onshore
$
192,182

 
198,823

 
325,772

 
381,472

                     
Offshore
334,189

 
94,393

 
650,212

 
165,922

Canada    
Onshore
26,472

 
28,426

 
53,816

 
49,719

 
Offshore
41,518

 
48,316

 
85,364

 
102,631

Other
 
3,123

 

 
5,975

 

Total crude oil and condensate revenue
597,484

 
369,958

 
1,121,139

 
699,744

 
 
 
 
 
 
 
 
 
Net natural gas liquids revenue
 
 
 
 
 
 
 
United States
Onshore
6,384

 
13,236

 
12,525

 
25,370

 
Offshore
2,988

 
2,920

 
7,164

 
4,559

Canada
Onshore
2,771

 
3,447

 
6,229

 
6,916

Total natural gas liquids revenue
12,143

 
19,603

 
25,918

 
36,845

 
 
 
 
 
 
 
 
 
Net natural gas revenue
 
 
 
 
 
 
 
United States
Onshore
5,533

 
6,292

 
11,397

 
13,062

 
Offshore
6,643

 
2,825

 
9,149

 
5,762

Canada   
Onshore
24,311

 
28,089

 
69,061

 
67,683

Total natural gas revenue
36,487

 
37,206

 
89,607

 
86,507

Total revenue from contracts with customers
646,114

 
426,767

 
1,236,664

 
823,096

 
 
 
 
 
 
 
 
 
Gain (loss) on crude contracts
57,916

 
(37,624
)
 
57,916

 
(67,126
)
Gain on sale of assets and other income
5,019

 
437

 
5,473

 
8,400

Total revenue
 
$
709,049

 
389,580

 
1,300,053

 
764,370



9

Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
Note C – Revenue from Contracts with Customers (Contd.)


Contract Balances and Asset Recognition
As of June 30, 2019, and December 31, 2018, receivables from contracts with customers, net of royalties and associated payables, on the balance sheet from continuing operations, were $191.6 million and $147.6 million, respectively. Payment terms for the Company’s sales vary across contracts and geographical regions, with the majority of the cash receipts required within 30 days of billing. Based on historical collections and ability of customers to pay, the Company did not recognize any impairment losses on receivables or contract assets arising from customer contracts during the reporting periods.
The Company has not entered into any upstream oil and gas sale contracts that have financing components as at June 30, 2019.
The Company does not employ sales incentive strategies such as commissions or bonuses for obtaining sales contracts. For the periods presented, the Company did not identify any assets to be recognized associated with the costs to obtain a contract with a customer.
Performance Obligations
The Company recognizes oil and gas revenue when it satisfies a performance obligation by transferring control over a commodity to a customer.  Judgment is required to determine whether some customers simultaneously receive and consume the benefit of commodities. As a result of this assessment for the Company, each unit of measure of the specified commodity is considered to represent a distinct performance obligation that is satisfied at a point in time upon the transfer of control of the commodity.
For contracts with market or index-based pricing, which represent the majority of sales contracts, the Company has elected the allocation exception and allocates the variable consideration to each single performance obligation in the contract. As a result, there is no price allocation to unsatisfied remaining performance obligations for delivery of commodity product in subsequent periods.
The Company has entered into several long-term, fixed-price contracts in Canada. The underlying reason for entering a fixed price contract is generally unrelated to anticipated future prices or other observable data and serves a particular purpose in the company’s long-term strategy. The contractually stated price for each unit of commodity transferred under these contracts represents the stand-alone selling price of the commodity.
As of June 30, 2019, the Company had the following sales contracts in place which are expected to generate revenue from sales to customers for a period of 12 months or more starting at the inception of the contract:
໿
Current Long-Term Contracts Outstanding at June 30, 2019
 
 
 
 
 
 
 
 
 
Location
 
Commodity
 
End Date
 
Description
 
Approximate Volumes
U.S.
 
Oil
 
Q3 2019
 
Fixed quantity delivery in Eagle Ford
 
4,000 BOED
U.S.
 
Oil
 
Q4 2021
 
Fixed quantity delivery in Eagle Ford
 
17,000 BOED
U.S.
 
Oil, Gas and NGL
 
Q2 2026
 
Deliveries from dedicated acreage in Eagle Ford
 
As produced
Canada
 
Gas
 
Q4 2020
 
Contracts to sell natural gas at Alberta AECO fixed prices
 
59 MMCFD
Canada
 
Gas
 
Q4 2020
 
Contracts to sell natural gas at USD Index pricing
 
60 MMCFD
Canada
 
Gas
 
Q4 2024
 
Contracts to sell natural gas at USD Index pricing
 
30 MMCFD
Canada
 
Gas
 
Q4 2026
 
Contracts to sell natural gas at USD Index pricing
 
38 MMCFD

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

10

Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
Note D – Property, Plant and Equipment


Exploratory Wells
Under FASB guidance exploratory well costs should continue to be capitalized when the well has found a sufficient quantity of reserves to justify its completion as a producing well and the Company is making sufficient progress assessing the reserves and the economic and operating viability of the project.
At June 30, 2019, the Company had total capitalized exploratory well costs for continuing operations pending the determination of proved reserves of $245.0 million.  The following table reflects the net changes in capitalized exploratory well costs during the six-month periods ended June 30, 2019 and 2018.
(Thousands of dollars)
2019
 
2018
Beginning balance at January 1
$
207,855

 
155,103

Additions pending the determination of proved reserves
50,307

 
30,493

Capitalized exploratory well costs charged to expense
(13,145
)
 

Balance at June 30
$
245,017

 
185,596


The capitalized well costs charged to expense during the first six months of 2019 included the CM-1X and the CT-1X wells in Vietnam Block 11-2/11. The wells were originally drilled in 2017. There were no capitalized well costs charged to expense during the first six months of 2018.
The following table provides an aging of capitalized exploratory well costs based on the date the drilling was completed for each individual well and the number of projects for which exploratory well costs have been capitalized.  The projects are aged based on the last well drilled in the project.

June 30,

2019
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
(Thousands of dollars)
Amount
 
No. of Wells
 
No. of Projects
 
Amount
 
No. of Wells
 
No. of Projects
Aging of capitalized well costs:
 
 
 
 
 
 
 
 
 
 
 
Zero to one year
$
33,125

 
3

 
2

 
$
34,779

 
2

 
2

One to two years
61,293

 
1

 
1

 
35,934

 
2

 
1

Two to three years
27,266

 
1

 
1

 
50,272

 
2

 
2

Three years or more
123,333

 
5

 

 
64,611

 
6

 


$
245,017

 
10

 
4

 
$
185,596

 
12

 
5


Of the $211.9 million of exploratory well costs capitalized more than one year at June 30, 2019, $57.2 million is in Brunei, $66.1 million is in Vietnam, $61.3 million is in the Gulf of Mexico and $