MURPHY OIL CORP [MUR] Filings

10-Q 1 mur-20240630.htm 10-Q mur-20240630

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, 2024


☐			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

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)
9805 Katy Fwy, Suite G-200		77024
Houston,	Texas	(Zip Code)
(Address of principal executive offices)
(281)		675-9000
(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. ☐

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, 2024 was 150,887,425.

MURPHY OIL CORPORATION

TABLE OF CONTENTS


			Page
Part I – Financial Information
Item 1. Financial Statements			2
Consolidated Balance Sheets			2
Consolidated Statements of Operations			3
Consolidated Statements of Comprehensive Income			4
Consolidated Statements of Cash Flows			5
Consolidated Statements of Stockholders’ Equity			6
Notes to Consolidated Financial Statements			7
Note A – Basis of Presentation			7
Note B – New Accounting Principles and Recent Accounting Pronouncements			7
Note C – Revenue from Contracts with Customers			7
Note D – Property, Plant and Equipment			10

Note E – Financing Arrangements and Debt			11
Note F – Other Financial Information			11
Note G – Asset Retirement Obligations			12
Note H – Employee and Retiree Benefit Plans			13
Note I – Incentive Plans			13
Note J – Earnings Per Share			15
Note K – Income Taxes			15
Note L – Financial Instruments and Risk Management			16
Note M – Accumulated Other Comprehensive Loss			18
Note N – Environmental and Other Contingencies			18
Note O – Common Stock Issued and Outstanding			20
Note P – Business Segments			21
Note Q – Leases			22


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			23





Item 3. Quantitative and Qualitative Disclosures About Market Risk			40
Item 4. Controls and Procedures			40
Part II – Other Information
Item 1. Legal Proceedings			41
Item 1A. Risk Factors			41
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			41
Item 5. Other Information			42
Item 6. Exhibits			42
Signature			43

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


(Thousands of dollars, except share amounts)	June 30, 2024		December 31, 2023
ASSETS
Current assets
Cash and cash equivalents	$	333,619	$	317,074
Accounts receivable, net	336,965		343,992
Inventories	51,811		54,454
Prepaid expenses	35,053		36,674

Total current assets	757,448		752,194
Property, plant and equipment, at cost less accumulated depreciation, depletion and amortization of $13,495,406 in 2024 and $13,135,385 in 2023	8,214,554		8,225,197
Operating lease assets	885,582		745,185
Deferred income taxes	–		435
Deferred charges and other assets	36,134		43,686

Total assets	$	9,893,718	$	9,766,697
LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt, finance lease	$	739	$	723
Accounts payable	507,753		446,891
Income taxes payable	20,001		21,007
Other taxes payable	29,669		29,339
Operating lease liabilities	254,780		207,840
Other accrued liabilities	114,690		140,745

Total current liabilities	927,632		846,545
Long-term debt, including finance lease obligation	1,279,310		1,328,352
Asset retirement obligations	923,696		904,051
Deferred credits and other liabilities	291,110		309,605
Non-current operating lease liabilities	645,043		551,845
Deferred income taxes	324,379		276,646

Total liabilities	$	4,391,170	$	4,217,044
Equity
Cumulative Preferred Stock, par $100, authorized 400,000 shares, none issued	$	–	$	–
Common Stock, par $1.00, authorized 450,000,000 shares, issued 195,100,628 shares in 2024 and 195,100,628 shares in 2023	195,101		195,101
Capital in excess of par value	826,861		880,297
Retained earnings	6,672,275		6,546,079
Accumulated other comprehensive loss	(571,645)		(521,117)
Treasury stock	(1,798,872)		(1,737,566)
Murphy Shareholders' Equity	5,323,720		5,362,794
Noncontrolling interest	178,828		186,859
Total equity	5,502,548		5,549,653
Total liabilities and equity	$	9,893,718	$	9,766,697

See Notes to Consolidated Financial Statements, page 7.

Table of Contents

MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended June 30,				Six Months Ended June 30,
(Thousands of dollars, except per share amounts)	2024		2023		2024		2023
Revenues and other income
Revenue from production	$	797,510	$	799,836	$	1,592,113	$	1,596,067
Sales of purchased natural gas	3,497		13,014		3,742		56,751
Total revenue from sales to customers	801,007		812,850		1,595,855		1,652,818

Gain on sale of assets and other income	1,764		1,738		3,328		3,486
Total revenues and other income	802,771		814,588		1,599,183		1,656,304
Costs and expenses
Lease operating expenses	259,628		194,292		493,892		394,276
Severance and ad valorem taxes	10,417		12,765		20,503		24,205
Transportation, gathering and processing	53,470		59,868		110,023		113,790
Costs of purchased natural gas	2,987		9,657		3,147		41,926
Exploration expenses, including undeveloped lease amortization	42,677		115,793		87,106		125,975
Selling and general expenses	22,893		25,345		54,054		43,653

Depreciation, depletion and amortization	215,543		215,667		426,677		411,337
Accretion of asset retirement obligations	13,053		11,364		25,827		22,521
Other operating (income) expense	(2,219)		4,960		5,047		16,948
Impairment of assets	–		–		34,528		–
Total costs and expenses	618,449		649,711		1,260,804		1,194,631
Operating income from continuing operations	184,322		164,877		338,379		461,673
Other income (loss)
Other income (loss)	26,245		(7,694)		37,796		(7,767)
Interest expense, net	(20,986)		(29,856)		(41,007)		(58,711)
Total other income (loss)	5,259		(37,550)		(3,211)		(66,478)
Income from continuing operations before income taxes	189,581		127,327		335,168		395,195
Income tax expense	32,676		34,870		62,733		88,703
Income from continuing operations	156,905		92,457		272,435		306,492
Loss from discontinued operations, net of income taxes	(643)		(602)		(1,515)		(323)
Net income including noncontrolling interest	156,262		91,855		270,920		306,169
Less: Net income (loss) attributable to noncontrolling interest	28,523		(6,431)		53,179		16,239
NET INCOME ATTRIBUTABLE TO MURPHY	$	127,739	$	98,286	$	217,741	$	289,930
INCOME (LOSS) PER COMMON SHARE – BASIC
Continuing operations	$	0.84	$	0.63	$	1.44	$	1.86
Discontinued operations	–		–		(0.01)		–
Net income	$	0.84	$	0.63	$	1.43	$	1.86
INCOME (LOSS) PER COMMON SHARE – DILUTED
Continuing operations	$	0.83	$	0.62	$	1.43	$	1.84
Discontinued operations	–		–		(0.01)		–
Net income	$	0.83	$	0.62	$	1.42	$	1.84
Cash dividends per common share	$	0.300	$	0.275	$	0.600	$	0.550

Average common shares outstanding (thousands)
Basic	152,153		156,127		152,409		155,976
Diluted	153,144		157,299		153,480		157,308

See Notes to Consolidated Financial Statements, page 7.

Table of Contents

MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)


	Three Months Ended June 30,				Six Months Ended June 30,
(Thousands of dollars)	2024		2023		2024		2023
Net income including noncontrolling interest	$	156,262	$	91,855	$	270,920	$	306,169
Other comprehensive (loss) income, net of tax
Net (loss) gain from foreign currency translation	(16,824)		33,083		(52,352)		36,752
Retirement and postretirement benefit plans	914		1,053		1,824		2,151


Other comprehensive (loss) income	(15,910)		34,136		(50,528)		38,903
Comprehensive income including noncontrolling interest	$	140,352	$	125,991	$	220,392	$	345,072
Less: Comprehensive income (loss) attributable to noncontrolling interest	28,523		(6,431)		53,179		16,239
COMPREHENSIVE INCOME ATTRIBUTABLE TO MURPHY	$	111,829	$	132,422	$	167,213	$	328,833

See Notes to Consolidated Financial Statements, page 7.

Table of Contents

MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Six Months Ended June 30,
(Thousands of dollars)	2024		2023
Operating Activities
Net income including noncontrolling interest	$	270,920	$	306,169
Adjustments to reconcile net income to net cash provided by continuing operations activities
Depreciation, depletion and amortization	426,677		411,337
Impairment of assets	34,528		–
Unsuccessful exploration well costs and previously suspended exploration costs	58,280		96,533
Deferred income tax expense	53,928		92,557
Accretion of asset retirement obligations	25,827		22,521
Long-term non-cash compensation	21,823		22,076
Amortization of undeveloped leases	5,778		5,369


Loss from discontinued operations	1,515		323

Contingent consideration payment	–		(139,574)
Mark-to-market loss on contingent consideration	–		7,113
Other operating activities, net	(33,959)		(59,417)
Net decrease (increase) in noncash working capital	1,126		(15,340)

Net cash provided by continuing operations activities	866,443		749,667
Investing Activities
Property additions and dry hole costs	(516,876)		(694,753)



Net cash required by investing activities	(516,876)		(694,753)
Financing Activities
Borrowings on revolving credit facility	200,000		200,000
Repayment of revolving credit facility	(200,000)		(200,000)
Retirement of debt	(50,000)		–


Repurchase of common stock	(105,887)		–
Cash dividends paid	(91,545)		(85,867)
Withholding tax on stock-based incentive awards	(25,298)		(14,220)
Distributions to noncontrolling interest	(61,210)		(15,983)
Finance lease obligation payments	(331)		(296)
Contingent consideration payment	–		(60,243)
Issue costs of debt facility	–		(20)

Net cash required by financing activities	(334,271)		(176,629)






Effect of exchange rate changes on cash and cash equivalents	1,249		(893)
Net increase (decrease) in cash and cash equivalents	16,545		(122,608)
Cash and cash equivalents at beginning of period	317,074		491,963
Cash and cash equivalents at end of period	$	333,619	$	369,355

See Notes to Consolidated Financial Statements, page 7.

Table of Contents

MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)


	Three Months Ended June 30,				Six Months Ended June 30,
(Thousands of dollars except number of shares)	2024		2023		2024		2023

Common Stock – par $1.00, authorized 450,000,000 shares, issued 195,100,628 shares at June 30, 2024 and 195,100,628 shares at June 30, 2023


Balance at beginning and end of period	$	195,101	$	195,101	$	195,101	$	195,101
Capital in Excess of Par Value
Balance at beginning of period	816,815		857,000		880,297		893,578

Restricted stock transactions and other	(99)		(2,321)		(70,486)		(42,415)
Share-based compensation	10,145		7,272		17,050		10,788

Balance at end of period	826,861		861,951		826,861		861,951
Retained Earnings
Balance at beginning of period	6,590,308		6,204,217		6,546,079		6,055,498
Net income attributable to Murphy	127,739		98,286		217,741		289,930


Cash dividends paid	(45,772)		(42,942)		(91,545)		(85,867)
Balance at end of period	6,672,275		6,259,561		6,672,275		6,259,561
Accumulated Other Comprehensive Loss
Balance at beginning of period	(555,735)		(529,919)		(521,117)		(534,686)
Foreign currency translation (loss) gain, net of income taxes	(16,824)		33,083		(52,352)		36,752
Retirement and postretirement benefit plans, net of income taxes	914		1,053		1,824		2,151


Balance at end of period	(571,645)		(495,783)		(571,645)		(495,783)
Treasury Stock
Balance at beginning of period	(1,742,498)		(1,588,841)		(1,737,566)		(1,614,717)
Repurchase of common stock	(56,445)		–		(106,494)		–
Awarded restricted stock, net of forfeitures	71		2,319		45,188		28,195

Balance at end of period – 43,884,080 shares of common stock in 2024 and 38,945,622 shares of common stock in 2023, at cost	(1,798,872)		(1,586,522)		(1,798,872)		(1,586,522)
Murphy Shareholders’ Equity	5,323,720		5,234,308		5,323,720		5,234,308
Noncontrolling Interest
Balance at beginning of period	188,514		167,110		186,859		154,119

Net income attributable to noncontrolling interest	28,523		(6,431)		53,179		16,239
Distributions to noncontrolling interest owners	(38,209)		(6,304)		(61,210)		(15,983)
Balance at end of period	178,828		154,375		178,828		154,375
Total Equity	$	5,502,548	$	5,388,683	$	5,502,548	$	5,388,683

See Notes to Consolidated Financial Statements, page 7.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Note A – Basis of Presentation

The unaudited financial statements presented herein, in the opinion of Murphy’s management, include all accruals necessary to present fairly the Company’s financial position as at June 30, 2024 and December 31, 2023, and the results of operations, statements of operations, cash flows and changes in stockholders’ equity for the interim periods ended June 30, 2024 and 2023, in conformity with U.S. generally accepted accounting principles (GAAP). In preparing the financial statements of the Company in conformity with GAAP, management has made a number of estimates and assumptions that affect the reporting of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities. Actual results may differ from the estimates.

Consolidated financial statements and notes to consolidated financial statements included in this Form 10-Q report should be read in conjunction with the Company’s 2023 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, 2024 are not necessarily indicative of future results.

Note B – New Accounting Principles and Recent Accounting Pronouncements

Accounting Principles Adopted

None affecting the Company.

Recent Accounting Pronouncements

Income Tax Disclosures. In December 2023 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The standard becomes effective for annual periods beginning after December 15, 2024. The update requires financial statements to include consistent categories and greater disaggregation of information in the rate reconciliation, as well as income taxes paid disaggregated by jurisdiction. Murphy is currently evaluating the impact of adopting this standard.

Reportable Segment Disclosures. In November 2023 the FASB issued ASU 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The standard becomes effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The standard requires additional disclosures about operating segments, including segment expense information provided to the chief operating decision maker, and extends certain disclosure requirements to interim periods. The standard does not affect our determination of significant segments. Murphy is currently evaluating the impact of adopting this standard.

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 natural gas) in select basins around the globe. The Company’s revenue from sales of oil and natural gas production activities are primarily divided into two key geographic segments: the United States (U.S.) and Canada. Additionally, revenue from sales to customers is generated from three primary revenue streams: crude oil and condensate, natural gas liquids (NGL), and natural gas.

For operated oil and natural gas production where the non-operated working interest owner does not take in kind its proportionate interest in the produced commodity, the Company acts as an agent for the working interest owner and recognizes revenue only for its own share of the commingled production. The exception to this is the reporting of the noncontrolling interest (NCI) in MP Gulf of Mexico, LLC (MP GOM) as prescribed by GAAP.

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note C – Revenue from Contracts with Customers (Continued)

U.S. - In the U.S., the Company primarily produces oil and natural gas from fields in the Eagle Ford Shale area of South Texas and in the Gulf of Mexico. Revenue is generally recognized when oil and natural gas are transferred to the customer at the delivery point. Revenue recognized is largely index-based with price adjustments for floating market differentials.

Canada - In Canada, contracts include long-term floating commodity index priced and natural gas physical forward sales fixed-price contracts. For the offshore business in Canada, contracts are based on index prices and revenue is recognized at the time of vessel load based on the volumes on the bill of lading and point of custody transfer. The Company also purchases natural gas in Canada to meet certain sales commitments.

Disaggregation of Revenue

The Company reviews performance based on two key geographical segments and between onshore and offshore sources of revenue within these geographies.

The Company’s revenues and other income for the three-month and six-month periods ended June 30, 2024 and 2023 were as follows.


	Three Months Ended June 30,				Six Months Ended June 30,
(Thousands of dollars)	2024		2023		2024		2023
Net crude oil and condensate revenue
United States - Onshore	$	145,955	$	177,085	$	288,498	$	307,166
United States - Offshore 1	501,692		480,841		982,131		981,151
Canada - Onshore	19,580		19,306		33,453		41,258
Canada - Offshore	43,326		24,871		98,101		41,001
Other	4,307		–		4,209		3,644
Total crude oil and condensate revenue	714,860		702,103		1,406,392		1,374,220

Net natural gas liquids revenue
United States - Onshore	7,311		6,540		15,147		14,810
United States - Offshore 1	9,337		11,541		19,711		26,170
Canada - Onshore	1,595		1,517		3,032		4,980
Total natural gas liquids revenue	18,243		19,598		37,890		45,960

Net natural gas revenue
United States - Onshore	3,352		4,138		7,628		9,588
United States - Offshore 1	10,500		14,802		23,389		36,934
Canada - Onshore	50,555		59,195		116,814		129,365
Total natural gas revenue	64,407		78,135		147,831		175,887

Revenue from production	797,510		799,836		1,592,113		1,596,067

Sales of purchased natural gas



Canada - Onshore	3,497		13,014		3,742		56,751
Total sales of purchased natural gas	3,497		13,014		3,742		56,751

Total revenue from sales to customers	801,007		812,850		1,595,855		1,652,818


Gain on sale of assets and other income	1,764		1,738		3,328		3,486
Total revenues and other income	$	802,771	$	814,588	$	1,599,183	$	1,656,304

1 Includes revenue attributable to noncontrolling interest in MP GOM.

Contract Balances and Asset Recognition

As of June 30, 2024, and December 31, 2023, receivables from contracts with customers, net of royalties and associated payables, on the balance sheet from continuing operations, were $233.2 million and $193.7 million, respectively. Payment terms for the Company’s sales vary across contracts and geographical regions, with the majority of the cash receipts required within 30 days of billing. Based on a forward-looking expected loss model

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note C – Revenue from Contracts with Customers (Continued)

in accordance with ASU 2016-13, the Company did not recognize any impairment losses on receivables or contract assets arising from customer contracts during the reporting periods.

The Company has not entered into any revenue contracts that have financing components as of June 30, 2024.

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 natural 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.

As of June 30, 2024, the Company had the following sales contracts in place which are expected to generate revenue from sales to customers for a period over 12 months starting at the inception of the contract:

Long-Term Contracts Outstanding at June 30, 2024

Location

Commodity

End Date

Description

Approximate Volumes

U.S.

Natural Gas and NGL

Q1 2030

Deliveries from dedicated acreage in Eagle Ford

As produced

Canada

Natural Gas

Q4 2024

Contracts to sell natural gas at USD index pricing

31 MMCFD

Canada

Natural Gas

Q4 2024

Contracts to sell natural gas at CAD fixed pricing

124 MMCFD

Canada

Natural Gas

Q4 2024

Contracts to sell natural gas at USD fixed pricing

25 MMCFD

Canada

Natural Gas

Q4 2024

Contracts to sell natural gas at CAD index pricing

28 MMCFD

Canada

Natural Gas

Q4 2025

Contracts to sell natural gas at USD index pricing

25 MMCFD

Canada

Natural Gas

Q4 2026

Contracts to sell natural gas at USD index pricing

49 MMCFD

Canada

Natural Gas

Q4 2027

Contracts to sell natural gas at USD index pricing

30 MMCFD

Canada

Natural Gas

Q4 2028

Contracts to sell natural gas at USD index pricing

10 MMCFD

Canada

NGL

Q2 2025

Contracts to sell NGL at CAD index pricing

As produced

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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.

As of June 30, 2024, the Company had total capitalized drilling costs pending the determination of proved reserves of $43.0 million. The following table reflects the net changes in capitalized exploratory well costs during the six-month periods ended June 30, 2024 and 2023.


(Thousands of dollars)	2024		2023
Beginning balance at January 1	$	49,118	$	171,860
Additions pending the determination of proved reserves	20,391		47,733

Capitalized exploratory well costs charged to expense	(26,471)		(26,188)
Balance at June 30	$	43,038	$	193,405

Capitalized well costs charged to dry hole expense of $26.5 million for the six months ended June 30, 2024 was related to the Hoffe Park #1 (Mississippi Canyon 166) exploratory well in the Gulf of Mexico. Capital additions are mainly for Ocotillo #1 (Mississippi Canyon 40) exploratory well in the Gulf of Mexico. The preceding table excludes well costs of $31.8 million and $70.3 million incurred and expensed directly to dry hole for the six months ended June 30, 2024 and 2023, respectively. In 2024 the amount includes $25.5 million for the Orange #1 (Mississippi Canyon 216) exploration well in the Gulf of Mexico and in 2023 the amount includes $69.2 million related to the Chinook #7 exploration well in the Gulf of Mexico.

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


	June 30,
	2024				2023

(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	$	20,545	3	3	$	8,494	1	1
One to two years	–		–	–	38,497		1	1
Two to three years	–		–	–	2,698		1	1
Three years or more	22,493		3	3	143,716		4	3
	$	43,038	6	6	$	193,405	7	6

Of the $22.5 million of exploratory well costs capitalized more than one year at June 30, 2024, $15.1 million was in Vietnam, $4.7 million was in Canada, and $2.7 million was in Brunei. In all geographical areas, either further appraisal or development drilling is planned and/or development studies/plans are in various stages of completion.

Impairments

There were no impairments in the three months ended June 30, 2024. There were pre-tax impairments of $34.5 million in the six months ended June 30, 2024 related to Calliope field in Mississippi Canyon, in the Gulf of Mexico, where operational issues led to a reserve reduction. There were no impairments in the three and six months ended June 30, 2023.

Divestitures

On September 15, 2023, the Company completed the divestment of certain non-core operated Kaybob Duvernay assets and all of our non-operated Placid Montney assets, located in Alberta, Canada for net cash proceeds of C$139.0 million. No gain or loss was recorded related to this transaction, and the effective date of the transaction was March 1, 2023.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note E – Financing Arrangements and Debt

As of June 30, 2024, the Company had an $800 million revolving credit facility (RCF). The RCF is a senior unsecured guaranteed facility which expires on November 17, 2027. At June 30, 2024, the Company had no outstanding borrowings under the RCF and $3.7 million of outstanding letters of credit, which reduce the borrowing capacity of the RCF. At June 30, 2024, the interest rate in effect on borrowings under the RCF would have been 7.69%. At June 30, 2024, the Company was in compliance with all covenants related to the RCF.

In May 2024, the Company paid a total of $50.5 million to complete the open market repurchases of $26.5 million aggregate principal of its 5.875% senior notes due 2027 (2027 Notes) and $23.5 million aggregate principal of its 6.375% senior notes due 2028 (2028 Notes). The cash costs of the debt extinguishment of $0.5 million is included in “Interest expense, net” on the Consolidated Statements of Operations for the six months ended June 30, 2024.

The Company also has a shelf registration statement on file with the U.S. Securities and Exchange Commission (SEC) that permits the offer and sale of debt and/or equity securities through October 15, 2024.

Note F – Other Financial Information

Additional disclosures regarding cash flow activities are provided below.


	Six Months Ended June 30,
(Thousands of dollars)	2024		2023
Net (increase) decrease in operating working capital, excluding cash and cash equivalents:
(Increase) decrease in accounts receivable	$	7,355	$	(18,915)
(Increase) decrease in inventories	2,170		(8,353)
Decrease in prepaid expenses	2,296		8,291
Increase (decrease) in accounts payable and accrued liabilities ¹	(9,689)		6,642
Increase (decrease) in income taxes payable	(1,006)		(3,005)
Net decrease (increase) in noncash working capital	$	1,126	$	(15,340)
Supplementary disclosures:
Cash income taxes paid, net of refunds	$	3,236	$	10,904
Interest paid, net of amounts capitalized of $7.8 million in 2024 and $6.8 million in 2023	38,262		54,305

Non-cash investing activities:
Asset retirement costs capitalized	$	16,175	$	2,742
(Increase) decrease in capital expenditure accrual	(24,780)		20,522

1 Excludes payable balances relating to contingent consideration for prior acquisitions.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note G – Asset Retirement Obligations

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

A reconciliation of the beginning and ending aggregate carrying amount of the ARO for the six-month periods ended June 30, 2024 and 2023 are shown in the following table.


(Thousands of dollars)	June 30, 2024		June 30, 2023
Balance at beginning of year	$	914,763	$	911,653
Accretion	25,827		22,521
Liabilities incurred	14,199		4,805

Revisions of previous estimates	1,995		(822)
Liabilities settled	(2,925)		(64,978)



Changes due to translation of foreign currencies	(4,541)		2,920
Balance at end of period	949,318		876,099
Current portion of liability 1	(25,622)		(32,771)
Noncurrent portion of liability	$	923,696	$	843,328

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

The estimation of future ARO is based on a number of assumptions requiring professional judgment. The Company cannot predict the type of revisions to these assumptions that may be required in future periods due to the availability of additional information such as: prices for oil field services, technological changes, governmental requirements and other factors.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note H – Employee and Retiree Benefit Plans

The Company has defined benefit pension plans that are noncontributory and cover most full-time employees. All pension plans are funded except for the U.S. and Canadian nonqualified supplemental plan and the U.S. director’s plan. All U.S. tax qualified plans meet the funding requirements of federal laws and regulations. Contributions to foreign plans meet the requirements of local laws and tax regulations. The Company also sponsors health care and life insurance benefit plans, which are not funded, that cover most retired U.S. employees. The health care benefits are contributory; the life insurance benefits are noncontributory.

The table that follows provides the components of net periodic benefit expense for the three-month and six-month periods ended June 30, 2024 and 2023.


	Three Months Ended June 30,
	Pension Benefits				Other Postretirement Benefits
(Thousands of dollars)	2024		2023		2024		2023
Service cost	$	1,706	$	1,650	$	135	$	132
Interest cost	8,393		8,564		782		874
Expected return on plan assets	(8,359)		(8,254)		–		–
Estimated defined contribution provision	54		54		–		–
Amortization of prior service cost (credit)	579		155		(133)		(133)
Recognized actuarial loss (gain)	2,361		2,414		(812)		(767)



Total net periodic benefit expense	$	4,734	$	4,583	$	(28)	$	106

	Six Months Ended June 30,
	Pension Benefits				Other Postretirement Benefits
(Thousands of dollars)	2024		2023		2024		2023
Service cost	$	3,412	$	3,300	$	270	$	264
Interest cost	16,784		17,071		1,564		1,748
Expected return on plan assets	(16,716)		(16,448)		–		–
Estimated defined contribution provision	109		108		–		–
Amortization of prior service cost (credit)	1,158		310		(266)		(266)
Recognized actuarial loss (gain)	4,721		4,815		(1,624)		(1,548)
Total net periodic benefit expense	$	9,468	$	9,156	$	(56)	$	198

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

During the six-month period ended June 30, 2024, the Company made contributions of $18.9 million to its defined benefit pension and postretirement benefit plans. Remaining funding in 2024 for the Company’s defined benefit pension and postretirement plans is anticipated to be $22.3 million.

Note I – Incentive Plans

The costs resulting from all share-based and cash-based incentive plans are recognized as an expense in the Consolidated Statements of Operations using a fair value-based measurement method over the periods that the awards vest.

The Annual Incentive Plan (AIP) authorizes the Compensation Committee (the Committee) to establish specific performance goals associated with annual cash awards that may be earned by officers, executives and certain other employees. Cash awards under the AIP are determined based on the Company’s actual financial and operating results as measured against the performance goals established by the Committee.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note I – Incentive Plans (Continued)

The 2020 Long-Term Incentive Plan (2020 Long-Term Plan) authorizes the Committee to make grants of the Company’s common stock to employees. These grants may be in the form of stock options (nonqualified or incentive), stock appreciation rights (SAR), restricted stock, restricted stock units (RSU), performance units, performance shares, dividend equivalents and other stock-based incentives. The 2020 Long-Term Plan expires in 2030. A total of five million shares are issuable during the term of the 2020 Long-Term Plan. Shares issued pursuant to awards granted under the 2020 Long-Term Plan may be shares that are authorized and unissued or shares that were reacquired by the Company, including shares purchased in the open market. Shares underlying awards that have been canceled, expired, forfeited or otherwise not issued under an award shall not count as shares issued under the Plan.

During the six months ended June 30, 2024, the Committee granted the following awards from the 2020 Long-Term Plan:


Type of Award	Number of Awards Granted	Grant Date	Grant Date Fair Value		Valuation Methodology
Performance-based RSUs (TSR) 1	423,640	February 6, 2024	$	41.95	Monte Carlo
Performance-based RSUs (ROACE) 1	105,980	February 6, 2024	$	38.08	Average Stock Price
Time-based RSUs (Stock-Settled) 2	658,420	February 6, 2024	$	38.08	Average Stock Price
Time-based RSUs (Cash-Settled) 2	102,900	February 6, 2024	$	38.08	Average Stock Price
Performance-based RSUs (TSR) 1	5,830	April 1, 2024	$	50.81	Monte Carlo
Performance-based RSUs (ROACE) 1	1,450	April 1, 2024	$	45.98	Average Stock Price
Time-based RSUs (Stock-Settled) 2	4,840	April 1, 2024	$	45.98	Average Stock Price
Time-based RSUs (Cash-Settled) 2	460	April 1, 2024	$	45.98	Average Stock Price

1 Performance-based RSUs are tied to the achievement of Total Shareholder Return (TSR) and Return on Average Capital Employed (ROACE) performance goals and are scheduled to vest three years from the date of grant if performance conditions are met.

2 Time-based RSUs generally vest on the third anniversary of the date of grant.

The Company also has a Stock Plan for Non-Employee Directors that permits the issuance of restricted stock, restricted stock units and stock options or a combination thereof to the Company’s Non-Employee Directors.

The Company currently has outstanding incentive awards issued to Directors under the 2021 Stock Plan for Non-Employee Directors (2021 NED Plan) and the 2018 Stock Plan for Non-Employee Directors. All awards on or after May 12, 2021, were made under the 2021 NED Plan.

During the six months ended June 30, 2024, the Committee granted the following awards to Non-Employee Directors under the 2021 NED Plan:

Type of Award

Number of Awards Granted

Grant Date

Grant Date Fair Value

Valuation Methodology

Time-Based RSUs 1

47,412

February 07, 2024

37.97

Closing Stock Price

Time-Based RSUs 2

1,230

March 28, 2024

45.70

Closing Stock Price

Time-Based RSUs 2

1,364

June 28, 2024

41.24

Closing Stock Price

1 Non-employee directors time-based RSUs are scheduled to vest on the first anniversary of the date of grant. Non-employee directors may elect to defer settlement of their vested time-based RSUs until (1) termination of service from the Board or (2) a future date selected by the director at the time of their deferral election. These unvested time-based RSUs are included in the table above, will vest in one year, and become deferred RSUs.

2 Effective January 1, 2024, non-employee directors can elect to receive their annual cash retainers in the form of deferred RSUs. Director fees which are deferred into RSUs are calculated and expensed each quarter by taking fees earned in respect of the applicable quarter and dividing by the closing price of our common stock on the last trading day of the quarter. Each deferred RSU represents the right to receive one share of common stock following (1) termination of service from the Board or (2) a future date selected by the director at the time of their deferral election.

In 2017, the Company ceased granting stock options and SARs as a part of the Company’s long-term incentive compensation program. As of June 30, 2024 there were no outstanding stock options or SARs remaining.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note I – Incentive Plans (Continued)

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


	Six Months Ended June 30,
(Thousands of dollars)	2024		2023
Compensation charged against income before tax benefit	$	19,987	$	23,684
Related income tax benefit recognized in income	2,067		3,444

Certain incentive compensation granted to the Company’s named executive officers, to the extent their total compensation exceeds $1.0 million per executive per year, is not eligible for a U.S. income tax deduction under the Tax Cuts and Jobs Act (2017 Tax Act).

Note J – Earnings Per Share

Net income attributable to Murphy was used as the numerator in computing both basic and diluted income per common share for the three-month and six-month periods ended June 30, 2024 and 2023. The following table reports the weighted-average shares outstanding used for these computations.


	Three Months Ended June 30,		Six Months Ended June 30,
(Weighted-average shares)	2024	2023	2024	2023
Basic method	152,153,401	156,126,580	152,408,912	155,976,326
Dilutive stock options and restricted stock units	990,183	1,172,382	1,070,766	1,331,696
Diluted method	153,143,584	157,298,962	153,479,678	157,308,022

Note K – Income Taxes

The Company’s effective income tax rate is calculated as the amount of income tax expense (benefit) divided by income (loss) from continuing operations before income taxes. For the three-month and six-month periods ended June 30, 2024 and 2023, the Company’s effective income tax rates were as follows:


	2024	2023
Three months ended June 30,	17.2%	27.4%
Six months ended June 30,	18.7%	22.4%

The effective tax rate for the three-month period ended June 30, 2024, was below the U.S. statutory tax rate of 21% primarily due to no tax applied to the pre-tax income of the noncontrolling interest in MP GOM, and a Canada tax credit received. These impacts are partially offset by the effects of income generated in foreign tax jurisdictions, certain of which have income tax rates higher than the U.S. Federal rate, and certain expenses, including exploration and other expenses in certain foreign jurisdictions, for which no income tax benefits are currently available.

The effective tax rate for the three-month period ended June 30, 2023, was above the U.S. statutory tax rate of 21% primarily due to several factors, including: no tax benefit applied to the pre-tax loss of the noncontrolling interest in MP GOM; U.S. state tax expense; stock-based compensation; and certain expenses, including exploration and other expenses in certain foreign jurisdictions, for which no income tax benefits are currently available.

The effective tax rate for the six-month period ended June 30, 2024 was below the U.S. statutory tax rate of 21% primarily due to no tax applied to the pre-tax income of the noncontrolling interest in MP GOM, and a Canada tax credit received. These impacts were partially offset by several factors including: the effects of income generated in foreign tax jurisdictions, certain of which have income tax rates higher than the U.S. Federal rate; U.S. state tax expense and certain expenses, including exploration and other expenses in certain foreign jurisdictions, for which no income tax benefits are currently available.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note K – Income Taxes (Continued)

The effective tax rate for the six-month period ended June 30, 2023 was above the U.S. statutory tax rate of 21% primarily due to several factors, including: the effects of income generated in foreign tax jurisdictions, certain of which have income tax rates higher than the U.S. Federal rate; U.S. state tax expense and certain expenses, including exploration and other expenses in certain foreign jurisdictions, for which no income tax benefits are currently available. These impacts were partially offset by no tax applied to the pre-tax income of the noncontrolling interest in MP GOM.

The Company’s tax returns in multiple jurisdictions are subject to audit by taxing authorities. These audits often take years to complete and settle. Although the Company believes that recorded liabilities for unsettled issues are adequate, additional gains or losses could occur in future years from resolution of outstanding unsettled matters. Additionally, the Company could be required to pay amounts into an escrow account as any matters are identified and appealed with the relevant taxing authorities. As of June 30, 2024, the earliest years remaining open for audit and/or settlement in our major taxing jurisdictions are as follows: U.S. – 2016; Canada – 2016; and Malaysia – 2017. The Company has retained certain possible liabilities and rights to income tax receivables relating to Malaysia for the years prior to 2019.

Note L – Financial Instruments and Risk Management

Murphy, at times, uses derivative instruments to manage certain risks related to commodity prices, foreign currency exchange rates and interest rates. The use of derivative instruments for risk management is covered by operating policies and is closely monitored by the Company’s senior management. The Company does not hold any derivatives for speculative purposes, and it does not use derivatives with leveraged or complex features. Derivative instruments are traded with creditworthy major financial institutions or over national exchanges such as the New York Mercantile Exchange (NYMEX). The Company has a risk management control system to monitor commodity price risks and any derivatives obtained to manage a portion of such risks. For accounting purposes, the Company has not designated commodity and foreign currency derivative contracts as hedges, and therefore, it recognizes all gains and losses on these derivative contracts in its Consolidated Statements of Operations.

Commodity Price Risks

During the second quarter of 2024 and 2023, the Company did not have any crude oil derivative contracts.

Foreign Currency Exchange Risks

The Company is subject to foreign currency exchange risk associated with operations in countries outside the U.S. The Company had no foreign currency exchange derivatives outstanding at June 30, 2024 and 2023.

Fair Values – Recurring

The Company carries certain assets and liabilities at fair value in its Consolidated Balance Sheets. The fair value hierarchy is based on the quality of inputs used to measure fair value, with Level 1 being the highest quality and Level 3 being the lowest quality. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are observable inputs other than quoted prices included within Level 1. Level 3 inputs are unobservable inputs which reflect assumptions about pricing by market participants.

The fair value measurements for these assets and liabilities at June 30, 2024 and December 31, 2023, are shown in the following table.


	June 30, 2024								December 31, 2023
(Thousands of dollars)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total


Liabilities:
Nonqualified employee savings plan	$	18,365	$	–	$	–	$	18,365	$	17,785	$	–	$	–	$	17,785
	$	18,365	$	–	$	–	$	18,365	$	17,785	$	–	$	–	$	17,785

The nonqualified employee savings plan is an unfunded savings plan through which participants seek a return via phantom investments in equity securities and/or mutual funds. The fair value of this liability was based on quoted prices for these equity securities and mutual funds. The income effect of changes in the fair value of the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note L – Financial Instruments and Risk Management (Continued)

nonqualified employee savings plan is recorded in “Selling and general expenses” in the Consolidated Statements of Operations.

As of June 30, 2024 and December 31, 2023, there were no outstanding commodity WTI crude oil swaps and collars contracts subject to fair value measurement, nor were there any commodity swaps and collars liabilities.

In 2019, the Company acquired strategic deepwater Gulf of Mexico assets from LLOG Exploration Offshore L.L.C. and LLOG Bluewater Holdings, L.L.C. (LLOG). Under the terms of the transaction, in addition to the consideration paid, Murphy had an obligation to pay additional contingent consideration of up to $200 million in the event that certain revenue thresholds were exceeded between 2019 and 2022; and $50 million following first oil from certain development projects. The revenue threshold was not exceeded for 2019 or 2020; however, the threshold was met in 2021 and 2022.

In 2018, the Company, through a subsidiary, acquired Gulf of Mexico producing assets from Petrobras America Inc. (PAI), a subsidiary of Petróleo Brasileiro S.A. Under the terms of the transaction, in addition to the consideration paid, Murphy had an obligation to pay additional contingent consideration of up to $150 million if certain price and production thresholds were exceeded beginning in 2019 through 2025; and $50 million carry for PAI development costs in the St. Malo field if certain enhanced oil recovery projects were undertaken. The price and production thresholds were not exceeded for 2019 and 2020; however, the thresholds were met in 2021 and 2022. As of December 31, 2021, Murphy had completely funded the carried interest.

As of the end of the second quarter of 2023, the Company had no remaining liabilities relating to prior acquisitions from PAI and LLOG. During the six months ended June 30, 2023, the Company paid a total of $199.8 million in contingent consideration payments. In the Consolidated Statements of Cash Flows, $139.6 million is shown in “Operating Activities” and $60.2 million is shown in “Financing Activities”.

The Company offsets certain assets and liabilities related to derivative contracts when the legal right of offset exists. There were no offsetting positions recorded at June 30, 2024 and December 31, 2023.

The following table presents the carrying amounts and estimated fair values of financial instruments held by the Company at June 30, 2024 and December 31, 2023. 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, trade accounts receivable, trade accounts payable and accrued expenses, 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. Substantially all of the Company’s long-term debt is actively traded in open markets, and accordingly, is classified as Level 1 in the fair value hierarchy. The Company has off-balance sheet exposures relating to certain letters of credit. The fair value of these, which represents fees associated with obtaining the instruments, were minimal.


	June 30,				December 31,
	2024				2023
(Thousands of dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial liabilities:
Current and long-term debt	$	1,280,049	$	1,236,039	$	1,329,075	$	1,265,185

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note M – Accumulated Other Comprehensive Loss

The components of “Accumulated other comprehensive loss” on the Consolidated Balance Sheets at December 31, 2023 and June 30, 2024 and the changes during the six-month period ended June 30, 2024 are presented net of taxes in the following table.


(Thousands of dollars)	Foreign Currency Translation Gains (Losses)		Retirement and Postretirement Benefit Plan Adjustments		Total
Balance at December 31, 2023	$	(381,632)	$	(139,485)	$	(521,117)
Components of other comprehensive income (loss):
Before reclassifications to income	(52,352)		–		(52,352)
Reclassifications to income ¹	–		1,824		1,824
Net other comprehensive income (loss)	(52,352)		1,824		(50,528)
Balance at June 30, 2024	$	(433,984)	$	(137,661)	$	(571,645)

1 Reclassifications before taxes of $2.5 million are included in the computation of net periodic benefit expense for the six-month period ended June 30, 2024. See Note H for additional information. Related income taxes of $0.7 million are included in "Income tax expense” on the Consolidated Statements of Operations for the six-month period ended June 30, 2024.

Note N – Environmental and Other Contingencies

The Company’s operations and earnings have been and may be affected by various forms of governmental action both in the U.S. and throughout the world. Examples of such governmental action include, but are by no means limited to: tax legislation changes, including tax rate changes, and retroactive tax claims; royalty and revenue sharing increases; import and export controls; price controls; currency controls; allocation of supplies of crude oil and petroleum products and other goods; expropriation of property; restrictions and preferences affecting the issuance of oil and gas or mineral leases; restrictions on drilling and/or production; laws, regulations and government action intended for the promotion of safety and the protection and/or remediation of the environment including in connection with the purported causes or potential impacts of climate change; governmental support for other forms of energy; and laws and regulations affecting the Company’s relationships with employees, suppliers, customers, stockholders and others. Given the factors involved in various government actions, including political considerations, it is difficult to predict their likelihood, the form they may take, or the effect they may have on the Company.

ENVIRONMENTAL MATTERS – Murphy and other companies in the oil and gas industry are subject to numerous federal, state, local and foreign laws and regulations dealing with the environment and protection of health and safety. The principal environmental, health and safety laws and regulations to which Murphy is subject address such matters as the generation, storage, handling, use, disposal and remediation of petroleum products, wastewater and hazardous materials; the emission and discharge of such materials to the environment, including greenhouse gas (GHG) emissions; wildlife, habitat and water protection; the placement, operation and decommissioning of production equipment; and the health and safety of our employees, contractors and communities where our operations are located. These laws and regulations also generally require permits for existing operations, as well as the construction or development of new operations and the decommissioning of facilities once production has ceased.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note N – Environmental and Other Contingencies (Continued)

Violation of federal or state environmental, health and safety laws, regulations and permits can result in the imposition of significant civil and criminal penalties, injunctions and construction bans or delays. 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 both the cost to comply with applicable regulations and claims by neighboring landowners and other third parties for any personal injury and property damage that might result. In addition, Item 103 of SEC Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that the Company reasonably believes will exceed a specified threshold. Pursuant to this item, the Company will be using a threshold of $1.0 million for such proceedings and the Company is not aware of environmental legal proceedings likely to exceed this $1.0 million threshold.

There continues to be an increase in regulatory oversight of the oil and gas industry at the federal level, with a focus on climate change and GHG emissions (including methane emissions). For example, federal methane regulations are currently pending or enacted that would, among other things, require increased leak detection monitoring and repairs, stringent restrictions on venting and flaring, a new third-party monitoring program, and new fees on methane emissions from petroleum and natural gas facilities. In addition, there have been a number of executive orders issued that address climate change, including creation of climate-related task forces, directives to federal agencies to procure carbon-free electricity, and a goal of a carbon pollution-free power sector by 2035 and a net-zero emissions U.S. economy by 2050. Executive orders have also been issued related to oil and gas activities on federal lands, infrastructure and environmental justice. In addition, an international climate agreement (the Paris Agreement) was agreed to at the 2015 United Nations Framework Convention on Climate Change in Paris, France. The Paris Agreement entered into force in November 2016. Although the U.S. officially withdrew from the Paris Agreement on November 4, 2020, the U.S. has since rejoined the Paris Agreement, which became effective for the U.S. on February 19, 2021.

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. 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 these wastes have been taken for disposal. In addition, many of these properties have been operated by third parties whose treatment and disposal or release of hydrocarbons or other wastes were not under Murphy’s control. Under existing laws, the Company could be required to investigate, remove or remediate previously disposed wastes (including wastes disposed of or released by prior owners or operators), to investigate and clean up contaminated property (including contaminated groundwater) or to perform remedial plugging operations to prevent future contamination. Certain of these historical properties are in various stages of negotiation, investigation, and/or cleanup, and the Company is investigating the extent of any such liability and the availability of applicable defenses. The Company has retained certain liabilities related to environmental matters at formerly owned U.S. refineries that were sold in 2011. The Company also obtained insurance covering certain levels of environmental exposures related to past operations of these refineries. Murphy USA Inc. has retained any environmental exposure associated with Murphy’s former U.S. marketing operations that were spun-off in August 2013. The Company believes costs related to these sites will not have a material adverse effect on Murphy’s net income, financial condition or liquidity in a future period.

There is the possibility that environmental expenditures could be required at currently unidentified sites, and additional expenditures could be required at known sites. However, based on information currently available to the Company, the amount of future investigation and remediation costs incurred at known or currently unidentified sites is not expected to have a material adverse effect on the Company’s future net income, cash flows or liquidity.

LEGAL MATTERS – Murphy and its subsidiaries are engaged in a number of other legal proceedings (including litigation related to climate change), all of which Murphy considers routine and incidental to its business. Based on information currently available to the Company, the ultimate resolution of environmental and legal matters referred to in this note is not expected to have a material adverse effect on the Company’s net income, financial condition or liquidity in a future period.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note O – Common Stock Issued and Outstanding

Activity in the number of shares of common stock issued and outstanding for the six-month periods ended June 30, 2024 and 2023 is shown below.


(Number of shares outstanding)	June 30, 2024	June 30, 2023
Beginning of period	152,748,642	155,467,319

Restricted stock awards 1	1,102,501	687,687

Treasury shares purchased	(2,634,595)	–
End of period	151,216,548	156,155,006

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

On August 4, 2022, the Company’s Board of Directors authorized a share repurchase program of up to $300 million of the Company’s common stock. On October 30, 2023, the Company authorized an increase to the share repurchase program of an additional $300 million, bringing the total amount allowed to be repurchased under the program to $600 million. This repurchase program has no time limit and may be suspended or discontinued completely at any time without prior notice as determined by the Company at its discretion and dependent upon a variety of factors.

During the six months ended June 30, 2024, the Company repurchased 2.6 million shares of its common stock under the share repurchase program for $105.8 million ($106.5 million including excise taxes and fees). As of June 30, 2024, the Company had $344 million of its common stock remaining available to repurchase under the program.

On August 7, 2024, the Company’s Board of Directors authorized an increase to the share repurchase program of an additional $500 million, bringing the total amount allowed to be repurchased under the program to $1.1 billion. Subsequent to the second quarter of 2024, the Company repurchased 1,142,867 shares of its common stock in open-market transactions for $44.1 million, excluding taxes and fees. As of August 7, 2024 the Company had $800 million of its common stock remaining available to repurchase under the program.

The share repurchase program is a component of the Company’s capital allocation framework, the details of which can be found as part of the Company’s Form 8-K filed on August 4, 2022 and August 8, 2024.

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note P – Business Segments

Information about business segments and geographic operations is reported in the following table. For geographic purposes, revenues are attributed to the country in which the sale occurs. Corporate, including interest income, other gains and losses, interest expense and unallocated overhead, is shown in the table to reconcile the business segments to consolidated totals. The Company has accounted for its former United Kingdom (U.K.), Malaysia, and U.S. refining and marketing operations as discontinued operations for all periods presented.


	Total Assets at June 30, 2024		Three Months Ended June 30, 2024				Three Months Ended June 30, 2023
(Millions of dollars)			External Revenues		Income (Loss)		External Revenues		Income (Loss)
Exploration and production ¹
United States 2	$	7,222.6	$	679.5	$	185.7	$	696.2	$	168.9
Canada	2,050.5		119.0		8.9		118.3		2.5
Other	244.2		4.3		(10.1)		–		(32.3)
Total exploration and production	9,517.3		802.8		184.5		814.5		139.1
Corporate	375.3		–		(27.7)		0.1		(46.6)
Continuing operations	9,892.6		802.8		156.8		814.6		92.5
Discontinued operations, net of tax	1.1		–		(0.6)		–		(0.6)
Total	$	9,893.7	$	802.8	$	156.2	$	814.6	$	91.9

			Six Months Ended June 30, 2024				Six Months Ended June 30, 2023
(Millions of dollars)			External Revenues		Income (Loss)		External Revenues		Income (Loss)
Exploration and production ¹
United States 2			$	1,339.1	$	320.2	$