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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 March 31, 2022
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
mur-20220331_g1.jpg
MURPHY OIL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware71-0361522
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)
9805 Katy Fwy, Suite G-20077024
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 classTrading SymbolName of each exchange on which registered
Common Stock, $1.00 Par ValueMURNew 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 April 30, 2022 was 155,372,135.



MURPHY OIL CORPORATION
TABLE OF CONTENTS
Page
1

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

(Thousands of dollars)
March 31,
2022
December 31,
2021
ASSETS
Current assets
Cash and cash equivalents$480,587 521,184 
Accounts receivable, net
371,838 258,150 
Inventories59,339 54,198 
Prepaid expenses32,585 31,925 
Assets held for sale15,701 15,453 
Total current assets960,050 880,910 
Property, plant and equipment, at cost less accumulated depreciation, depletion and amortization of $12,660,784 in 2022 and $12,457,851 in 2021
8,237,743 8,127,852 
Operating lease assets907,504 881,389 
Deferred income taxes408,346 385,516 
Deferred charges and other assets28,094 29,273 
Total assets$10,541,737 10,304,940 
LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt, finance lease$662 654 
Accounts payable939,941 623,129 
Income taxes payable21,587 19,951 
Other taxes payable21,415 20,306 
Operating lease liabilities173,892 139,427 
Other accrued liabilities441,382 360,859 
Total current liabilities1,598,879 1,164,326 
Long-term debt, including finance lease obligation2,466,114 2,465,414 
Asset retirement obligations859,335 839,776 
Deferred credits and other liabilities472,708 570,574 
Non-current operating lease liabilities752,364 761,162 
Deferred income taxes188,047 182,892 
Total liabilities6,337,447 5,984,144 
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 2022 and 195,100,628 shares in 2021
195,101 195,101 
Capital in excess of par value880,537 926,698 
Retained earnings5,082,034 5,218,670 
Accumulated other comprehensive loss(506,355)(527,711)
Treasury stock(1,618,478)(1,655,447)
Murphy Shareholders' Equity4,032,839 4,157,311 
Noncontrolling interest171,451 163,485 
Total equity4,204,290 4,320,796 
Total liabilities and equity$10,541,737 10,304,940 
See Notes to Consolidated Financial Statements, page 7.
2

Murphy Oil Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Three Months Ended
March 31,
(Thousands of dollars, except per share amounts)
20222021
Revenues and other income
Revenue from production$834,528 592,527 
Sales of purchased natural gas36,846  
Total revenue from sales to customers871,374 592,527 
Loss on crude contracts(320,777)(214,385)
Gain on sale of assets and other income2,364 1,843 
Total revenues and other income552,961 379,985 
Costs and expenses
Lease operating expenses136,825 147,164 
Severance and ad valorem taxes14,635 9,231 
Transportation, gathering and processing 46,923 42,912 
Costs of purchased natural gas33,665  
Exploration expenses, including undeveloped lease amortization47,566 11,780 
Selling and general expenses33,529 29,503 
Depreciation, depletion and amortization164,124 198,278 
Accretion of asset retirement obligations11,876 10,492 
Impairment of assets 171,296 
Other operating expense105,942 21,079 
Total costs and expenses595,085 641,735 
Operating loss from continuing operations(42,124)(261,750)
Other income (loss)
Other expense(2,495)(5,341)
Interest expense, net(37,277)(88,100)
Total other loss(39,772)(93,441)
Loss from continuing operations before income taxes(81,896)(355,191)
Income tax benefit(16,961)(88,159)
Loss from continuing operations(64,935)(267,032)
(Loss) income from discontinued operations, net of income taxes(551)208 
Net loss including noncontrolling interest(65,486)(266,824)
Less: Net income attributable to noncontrolling interest47,850 20,614 
NET LOSS ATTRIBUTABLE TO MURPHY$(113,336)(287,438)
LOSS PER COMMON SHARE – BASIC
Continuing operations$(0.73)(1.87)
Discontinued operations  
Net loss$(0.73)(1.87)
LOSS PER COMMON SHARE – DILUTED
Continuing operations$(0.73)(1.87)
Discontinued operations  
Net loss$(0.73)(1.87)
Cash dividends per Common share0.15 0.125 
Average Common shares outstanding (thousands)
Basic154,916 153,953 
Diluted154,916 153,953 
See Notes to Consolidated Financial Statements, page 7.
3

Murphy Oil Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)


Three Months Ended
March 31,
(Thousands of dollars)20222021
Net loss including noncontrolling interest$(65,486)(266,824)
Other comprehensive income, net of tax
Net gain from foreign currency translation18,020 19,897 
Retirement and postretirement benefit plans3,336 4,136 
Deferred loss on interest rate hedges reclassified to interest expense 1,690 
Other comprehensive income21,356 25,723 
Comprehensive loss including noncontrolling interest(44,130)(241,101)
Less: Comprehensive income attributable to noncontrolling interest47,850 20,614 
COMPREHENSIVE LOSS ATTRIBUTABLE TO MURPHY$(91,980)(261,715)
See Notes to Consolidated Financial Statements, page 7.
4

Murphy Oil Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Three Months Ended
March 31,
(Thousands of dollars)20222021
Operating Activities
Net loss including noncontrolling interest$(65,486)(266,824)
Adjustments to reconcile net loss to net cash provided by continuing operations activities
Loss (income) from discontinued operations551 (208)
Depreciation, depletion and amortization164,124 198,278 
Unsuccessful exploration well costs and previously suspended exploration costs 32,831 717 
Amortization of undeveloped leases4,198 4,602 
Accretion of asset retirement obligations11,876 10,492 
Deferred income tax benefit(20,253)(88,867)
Mark to market loss on contingent consideration98,126 14,923 
Mark to market loss on crude contracts188,509 153,505 
Long-term non-cash compensation17,288 12,124 
Impairment of assets 171,296 
Net (increase) in noncash working capital(80,922)(9,052)
Other operating activities, net(12,512)36,780 
Net cash provided by continuing operations activities338,330 237,766 
Investing Activities
Property additions and dry hole costs(244,908)(240,545)
Property additions for King's Quay FPS (17,734)
Proceeds from sales of property, plant and equipment 268,023 
Net cash (required) provided by investing activities(244,908)9,744 
Financing Activities
Borrowings on revolving credit facility  140,000 
Repayment of revolving credit facility  (340,000)
Retirement of debt (576,358)
Debt issuance, net of cost 541,980 
Early redemption of debt cost (34,177)
Distributions to noncontrolling interest(39,884)(36,006)
Contingent consideration payment(55,169) 
Cash dividends paid(23,300)(19,287)
Withholding tax on stock-based incentive awards(15,421)(3,794)
Capital lease obligation payments(158)(178)
Net cash (required) by financing activities(133,932)(327,820)
Effect of exchange rate changes on cash and cash equivalents(87)574 
Net (decrease) in cash and cash equivalents(40,597)(79,736)
Cash and cash equivalents at beginning of period521,184 310,606 
Cash and cash equivalents at end of period$480,587 230,870 
See Notes to Consolidated Financial Statements, page 7.
5

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

Three Months Ended
March 31,
(Thousands of dollars)
20222021
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 at March 31, 2022 and 195,100,628 shares at March 31, 2021
Balance at beginning of period195,101 195,101 
Exercise of stock options — 
Balance at end of period195,101 195,101 
Capital in Excess of Par Value
Balance at beginning of period926,698 941,692 
Exercise of stock options, including income tax benefits(7,220)(39)
Restricted stock transactions and other(45,169)(33,000)
Share-based compensation6,228 5,650 
Balance at end of period880,537 914,303 
Retained Earnings
Balance at beginning of period5,218,670 5,369,538 
Net loss attributable to Murphy(113,336)(287,438)
Cash dividends(23,300)(19,287)
Balance at end of period5,082,034 5,062,813 
Accumulated Other Comprehensive Loss
Balance at beginning of period(527,711)(601,333)
Foreign currency translation gain, net of income taxes18,020 19,897 
Retirement and postretirement benefit plans, net of income taxes3,336 4,136 
Deferred loss on interest rate hedges reclassified to interest expense, net of income taxes 1,690 
Balance at end of period(506,355)(575,610)
Treasury Stock
Balance at beginning of period(1,655,447)(1,690,661)
Awarded restricted stock, net of forfeitures32,297 29,206 
Exercise of stock options4,672 39 
Balance at end of period – 39,730,079 shares of Common Stock in 2022 and 40,784,118 shares of Common Stock in 2021, at cost
(1,618,478)(1,661,416)
Murphy Shareholders’ Equity4,032,839 3,935,191 
Noncontrolling Interest
Balance at beginning of period163,485 179,810 
Net income attributable to noncontrolling interest47,850 20,614 
Distributions to noncontrolling interest owners(39,884)(36,006)
Balance at end of period171,451 164,418 
Total Equity$4,204,290 4,099,609 
See Notes to Consolidated Financial Statements, page 7.
6

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 – Nature of Business and Interim Financial Statements
NATURE OF BUSINESS – Murphy Oil Corporation is an international oil and natural gas exploration and production company that conducts its business through various operating subsidiaries.  The Company primarily produces oil and natural gas in the United States and Canada and conducts oil and natural gas exploration activities worldwide.
In connection with the LLOG Exploration Offshore L.L.C. and LLOG Bluewater Holdings, L.L.C., (LLOG) acquisition, we hold a 0.5% interest in two variable interest entities (VIEs), Delta House Oil and Gas Lateral LLC and Delta House Floating Production System (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 March 31, 2022, our maximum exposure to loss was $3.2 million (excluding operational impacts), which represents our net investment in Delta House. We have not provided any financial support to Delta House other than amounts previously required by our membership interest.
INTERIM FINANCIAL STATEMENTS – In the opinion of the Murphy’s management, the unaudited financial statements presented herein include all accruals necessary to present fairly the Company’s financial position at March 31, 2022 and December 31, 2021, and the results of operations, cash flows and changes in stockholders’ equity for the interim periods ended March 31, 2022 and 2021, 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.
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 2021 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 period ended March 31, 2022 are not necessarily indicative of future results.
Note B – New Accounting Principles and Recent Accounting Pronouncements
Accounting Principles Adopted
Income Taxes. In December 2019, the FASB issued ASU 2019-12, which removes certain exceptions for investments, intraperiod allocations and interim calculations, and adds guidance to reduce complexity in accounting for income taxes. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Implementation on a prospective or retrospective basis varies by specific topics within the ASU. The Company adopted this guidance in the first quarter of 2021 and it did not have a material impact on its consolidated financial statements.
Recent Accounting Pronouncements
None affecting the Company.




7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
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 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 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 in MP GOM as prescribed by ASC 810-10-45.
U.S. - In the United States, 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.
8

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-month periods ended March 31, 2022, and 2021, the Company recognized $871.4 million and $592.5 million, respectively, from total revenue from sales to customers, from sales of oil, natural gas liquids and natural gas.
For the three-month periods ended March 31, 2022, and 2021, the Company recognized $834.5 million and $592.5 million, respectively, from sales of oil, natural gas liquids and natural gas from production.
Three Months Ended
March 31,
(Thousands of dollars)20222021
Net crude oil and condensate revenue
United States
Onshore$171,696 114,490 
                     Offshore465,621 328,341 
Canada    
Onshore36,697 29,903 
Offshore28,832 18,062 
Total crude oil and condensate revenue702,846 490,796 
Net natural gas liquids revenue
United States
Onshore16,685 7,528 
 
Offshore13,979 10,054 
Canada
Onshore4,867 3,987 
Total natural gas liquids revenue35,531 21,569 
Net natural gas revenue
United States
Onshore11,369 6,443 
Offshore26,201 22,138 
Canada
Onshore58,581 51,581 
Total natural gas revenue96,151 80,162 
Revenue from production834,528 592,527 
Sales of purchased natural gas1
36,846  
Total revenue from sales to customers871,374 592,527 
Loss on crude contracts(320,777)(214,385)
Gain on sale of assets and other income2,364 1,843 
Total revenues and other income$552,961 379,985 
1  Sales of purchase natural gas are associated with Canada Onshore.

In 2022, the Company included additional line items on the face of the Consolidated Statements of Operations to report Sales of purchased natural gas and Costs of purchased natural gas. Sales and purchases of natural gas are reported on a gross basis when Murphy takes control of the products and has risks and rewards of ownership.
Contract Balances and Asset Recognition
As of March 31, 2022, and December 31, 2021, receivables from contracts with customers, net of royalties and associated payables, on the balance sheet from continuing operations, were $258.6 million and $169.8 million, respectively. Payment terms for the Company’s sales vary across contracts and geographical regions, with the majority of the cash receipts required within 30 days of billing. Based on a forward-looking expected loss model in accordance with ASU 2016-13, the Company did not recognize any impairment losses on receivables or contract assets arising from customer contracts during the reporting periods.
The Company has not entered into any revenue contracts that have financing components as of March 31, 2022.
9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
Note C – Revenue from Contracts with Customers (Contd.)
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 March 31, 2022, the Company had the following sales contracts in place which are expected to generate revenue from sales to customers for a period of more than 12 months starting at the inception of the contract:
Current Long-Term Contracts Outstanding at March 31, 2022
LocationCommodityEnd DateDescriptionApproximate Volumes
U.S.Natural Gas and NGLQ1 2023Deliveries from dedicated acreage in Eagle FordAs produced
CanadaNatural GasQ4 2022Contracts to sell natural gas at USD index pricing8 MMCFD
CanadaNatural GasQ4 2022Contracts to sell natural gas at CAD fixed prices5 MMCFD
CanadaNatural GasQ4 2022Contracts to sell natural gas at USD fixed pricing20 MMCFD
CanadaNatural GasQ4 2023Contracts to sell natural gas at USD index pricing25 MMCFD
CanadaNatural GasQ4 2023Contracts to sell natural gas at CAD fixed prices38 MMCFD
CanadaNatural GasQ4 2024Contracts to sell natural gas at USD index pricing31 MMCFD
CanadaNatural GasQ4 2024Contracts to sell natural gas at CAD fixed prices100 MMCFD
CanadaNatural GasQ4 2024Contracts to sell natural gas at CAD fixed prices34 MMCFD
CanadaNatural GasQ4 2024Contracts to sell natural gas at USD fixed pricing15 MMCFD
CanadaNatural GasQ4 2026Contracts to sell natural gas at USD index pricing49 MMCFD
CanadaNGLQ3 2023Contracts to sell natural gas liquids at CAD pricing952 BOED
Fixed price contracts are accounted for as normal sales and purchases for accounting purposes.

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 March 31, 2022, the Company had total capitalized exploratory well costs for continuing operations pending the determination of proved reserves of $172.7 million.  The following table reflects the net changes in capitalized exploratory well costs during the three-month periods ended March 31, 2022 and 2021.
10

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

(Thousands of dollars)20222021
Beginning balance at January 1$179,481 181,616 
Additions pending the determination of proved reserves3,698 785 
Capitalized exploratory well costs charged to expense(10,473) 
Balance at March 31$172,706 182,401 
The capitalized well costs charged to expense during 2022 represent expenditures related to the Cutthroat-1 exploration well in block SEAL-M-428 in the Sergipe-Alagoas Basin offshore Brazil. There were no hydrocarbons found in this well.
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.
March 31,
20222021
(Thousands of dollars)AmountNo. of WellsNo. of ProjectsAmountNo. of WellsNo. of Projects
Aging of capitalized well costs:
Zero to one year$2,810 2 2    
One to two years   23,514 3 3 
Two to three years23,667 3 3 30,562 2 2 
Three years or more146,229 8 2 128,325 6  
$172,706 13 7 182,401 11 5 
Of the $169.9 million of exploratory well costs capitalized more than one year at March 31, 2022, $94.0 million is in Vietnam, $47.6 million is in the U.S., $15.3 million is in Mexico, $8.2 million is in Brunei, and $4.8 million is in Canada.  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 first quarter of 2022. In the first quarter of 2021, the Company recorded an impairment charge of $171.3 million for Terra Nova due to the status, including agreements with partners, of operating and production plans. Later in 2021, the Company acquired an additional 7.525% working interest at Terra Nova following a commercial agreement to sanction an asset life extension project.

Divestments
There were no divestments in the first quarter of 2022. During the first quarter of 2021, the King’s Quay FPS was sold to ArcLight Capital Partners, LLC (ArcLight) for proceeds of $267.7 million, which reimbursed the Company for previously incurred capital expenditures.
11

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)


Note E – Assets Held for Sale and Discontinued Operations
The Company has accounted for its former U.K. and U.S. refining and marketing and Malaysian exploration and production operations as discontinued operations for all periods presented.  The results of operations associated with discontinued operations for the three-month periods ended March 31, 2022 and 2021 were as follows:
Three Months Ended
March 31,
(Thousands of dollars)20222021
Revenues $10 44 
Costs and expenses
Other costs and expenses (benefits)561 (164)
(Loss) income before taxes(551)208 
Income tax expense  
(Loss) income from discontinued operations$(551)208 
As of March 31, 2022 and December 31, 2021, assets held for sale on the Consolidated Balance Sheet include the carrying value of the net property, plant and equipment of CA-2 project in Brunei and the Company’s former headquarters office building in El Dorado, Arkansas.
(Thousands of dollars)March 31,
2022
December 31,
2021
Current assets
Property, plant, and equipment, net15,701 15,453 
Total current assets associated with assets held for sale$15,701 15,453 

Note F – Financing Arrangements and Debt
As of March 31, 2022, the Company had a $1.6 billion revolving credit facility (RCF). The RCF is a senior unsecured guaranteed facility which expires in November 2023. At March 31, 2022, the Company had no outstanding borrowings under the RCF and $31.4 million of outstanding letters of credit, which reduce the borrowing capacity of the RCF. At March 31, 2022, the interest rate in effect on borrowings under the facility was 2.15%. At March 31, 2022 and 2021, the Company was in compliance with all covenants related to the RCF.

In March 2021, the Company issued $550.0 million of new notes that bear interest at a rate of 6.375% and mature on July 15, 2028. The Company incurred transaction costs of $8.1 million on the issuance of these new notes and the Company will pay interest semi-annually on January 15 and July 15 of each year, beginning July 15, 2021. The proceeds of the $550.0 million notes, along with cash on hand, were used to redeem and cancel $259.3 million of the Company’s 4.00% notes due June 2022 and $317.1 million of the Company’s 4.95% notes due December 2022 (originally issued as 3.70% notes due 2022; collectively the 2022 Notes). The cost of the debt extinguishment of $36.9 million is included in Interest expense, net on the Consolidated Statement of Operations for the three months ended March 31, 2021. The cash costs of $34.2 million are shown as a financing activity on the Consolidated Statement of Cash Flows for the three months ended March 31, 2021.
The Company also has a shelf registration statement on file with the U.S. Securities and Exchange Commission that permits the offer and sale of debt and/or equity securities through October 15, 2024.
On May 2, 2022, the Company issued a notice of partial redemption with respect to $200.0 million aggregate principal amount of its 6.875% senior notes due 2024 (the Notes). The Company will redeem the Notes at the applicable redemption price set forth in the indenture governing the Notes, plus accrued and unpaid interest, if any, to but, not including, the date of redemption. The redemption date of the Notes will be June 2, 2022.

12

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
Note G – Other Financial Information
Additional disclosures regarding cash flow activities are provided below.
Three Months Ended
March 31,
(Thousands of dollars)20222021
Net decrease (increase) in operating working capital, excluding cash and cash equivalents:
(Increase) in accounts receivable ¹$(117,928)(16,954)
(Increase) decrease in inventories(4,541)392 
(Increase) in prepaid expenses(515)(3,652)
Increase in accounts payable and accrued liabilities ¹40,426 11,810 
Increase (decrease) in income taxes payable1,636 (648)
Net (increase) in noncash operating working capital$(80,922)(9,052)
Supplementary disclosures:
Cash income taxes paid, net of refunds$103 720 
Interest paid, net of amounts capitalized of $5.3 million in 2022 and $3.3 million in 2021
40,181 44,577 
Non-cash investing activities:
Asset retirement costs capitalized 2
$3,889 6,390 
(Increase) decrease in capital expenditure accrual(49,352)13,617 
1 Excludes receivable/payable balances relating to mark-to-market of derivative instruments and contingent consideration relating to acquisitions.
2 Excludes non-cash capitalized cost offset by Terra Nova impairment of $74.4 million in the first quarter of 2021.


13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

Note H – Employee and Retiree Benefit Plans
The Company has defined benefit pension plans that are principally 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 are based on 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 periods ended March 31, 2022 and 2021.
Three Months Ended March 31,
Pension BenefitsOther Postretirement Benefits
(Thousands of dollars)2022202120222021
Service cost$2,129 1,768 292 326 
Interest cost5,243 4,286 574 521 
Expected return on plan assets(8,138)(6,133)  
Amortization of prior service cost (credit)600 156 (133) 
Recognized actuarial loss3,822 5,279 (77)(7)
Net periodic benefit expense$3,656 5,356 656 840 
The components of net periodic benefit expense, other than the service cost, are recorded in Other expense in the Consolidated Statements of Operations.
During the three-month period ended March 31, 2022, the Company made contributions of $8.7 million to its defined benefit pension and postretirement benefit plans. Remaining funding in 2022 for the Company’s defined benefit pension and postretirement plans is anticipated to be $34.4 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.
On December 7, 2021, the Board approved the replacement of the 2017 Annual Incentive Plan (2017 Annual Plan) with the Murphy Oil Corporation Annual Incentive Plan (AIP) effective as of January 1, 2022. The new AIP can be found as an exhibit to the Company’s 2021 Form 10-K filed on February 25, 2022 and will remain in effect until such time as the Plan is terminated by the Board. The AIP authorizes the Executive 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. 
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 life of the 2020 Long-Term Plan. Shares issued pursuant to awards granted under this Plan may be shares that are authorized and unissued or shares that were reacquired by the Company, including shares purchased in the open market. Share awards that have been canceled, expired, forfeited or otherwise not issued under an award shall not count as shares issued under this Plan.
14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
Note I – Incentive Plans (Contd.)
During the first three months of 2022, the Committee granted the following awards from the 2020 Long-Term Plan:
2020 Long-Term Incentive Plan
Type of AwardNumber of Awards GrantedGrant DateGrant Date Fair ValueValuation Methodology
Performance Based RSUs 1
580,600 February 1, 2022$47.37 Monte Carlo
Time Based RSUs 2
273,400 February 1, 2022$32.12 Average Stock Price
Cash Settled RSUs 3
674,300 February 1, 2022$32.12 Average Stock Price
1 Performance based RSUs are scheduled to vest over a three year performance period.
2 Time based RSUs are generally scheduled to vest over three years from the date of grant.
3 Cash settled RSUs are generally scheduled to vest over three years from 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.
At the Company’s annual stockholders’ meeting held on May 12, 2021, shareholders approved the replacement of the 2018 Stock Plan for Non-Employee Directors (2018 NED Plan) with the 2021 Stock Plan for Non-Employee Directors (2021 NED Plan). The 2021 NED Plan 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 NED Plan and the 2018 NED Plan. All awards on or after May 12, 2021, were made under the 2021 NED Plan.
During the first three months of 2022, the Committee granted the following awards to Non-Employee Directors:
2021 Stock Plan for Non-Employee Directors
Type of AwardNumber of Awards GrantedGrant DateGrant Date Fair ValueValuation Methodology
Time Based RSUs 1
73,092 February 2, 2022$32.84 Closing Stock Price
1 Non-employee directors time-based RSUs are scheduled to vest in February 2023.
All stock option exercises are non-cash transactions for the Company.  The employee receives net shares, after applicable withholding obligations, upon each stock option exercise. The actual income tax benefit realized from the tax deductions related to stock option exercises of the share-based payment arrangements were immaterial for the three-month period ended March 31, 2022.
Amounts recognized in the financial statements with respect to share-based plans are shown in the following table:
Three Months Ended
March 31,
(Thousands of dollars)20222021
Compensation charged against income before tax benefit$13,962 8,196 
Related income tax benefit recognized in income2,272 1,165 
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).
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
Note J – Earnings Per Share
Net loss attributable to Murphy was used as the numerator in computing both basic and diluted income per Common share for the three-month periods ended March 31, 2022 and 2021.  The following table reports the weighted-average shares outstanding used for these computations.
Three Months Ended
March 31,
(Weighted-average shares)20222021
Basic method154,916,004 153,952,552 
Dilutive stock options and restricted stock units ¹  
Diluted method154,916,004 153,952,552 
1 Due to a net loss recognized by the Company for the three-month periods ended March 31, 2022 and 2021, no unvested stock awards were included in the computation of diluted earnings per share because the effect would have been antidilutive.
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 periods ended March 31, 2022 and 2021, the Company’s effective income tax rates were as follows:
20222021
Three months ended March 31,20.7%24.8%
The effective tax rate for the three-month period ended March 31, 2022 was below the U.S. statutory tax rate of 21% primarily due to exploration expenses in certain foreign jurisdictions in which no income tax benefit is currently available, offset by no tax applied to the pre-tax income of the noncontrolling interest in MP GOM.
The effective tax rate for the three-month period ended March 31, 2021 was above the statutory tax rate of 21% primarily due to losses recorded in Canada which have a higher tax rate, no tax applied to the pre-tax income of the noncontrolling interest in MP GOM, offset by exploration expenses in certain foreign jurisdictions in which no income tax benefit is currently available.
The 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 March 31, 2022, the earliest years remaining open for audit and/or settlement in our major taxing jurisdictions are as follows: United States – 2016; Canada – 2016; and Malaysia – 2014. The Company has retained certain possible liabilities and rights to income tax receivables relating to Malaysia for the years prior to 2019. The Company believes current recorded liabilities are adequate.
Note L – Financial Instruments and Risk Management
Murphy uses derivative instruments, such as swaps and zero-cost commodity price collar contracts, 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
The Company has entered into crude oil swaps and collar contracts. Under the swaps contracts, which mature monthly, the Company pays the average monthly price in effect and receives the fixed contract price on a notional amount of sales volume, thereby fixing the price for the commodity sold. Under the collar contracts, which also mature monthly, the Company purchased a put option and sold a call option with no net premiums paid to or received from counterparties. Upon maturity,
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
Note L – Financial Instruments and Risk Management (Contd.)
collar contracts require payments by the Company if the NYMEX average closing price is above the ceiling price or payments to the Company if the NYMEX average closing price is below the floor price.
At March 31, 2022, volumes per day associated with outstanding crude oil derivative contracts and the weighted average prices for these contracts are as follows:
2022
NYMEX WTI swap contracts:
     Volume per day (Bbl):20,000 
     Price per Bbl:$44.88 
NYMEX WTI collar contracts:
     Volume per day (Bbl):25,000 
     Price per Bbl:
          Average Ceiling:$75.20 
          Average Floor: $63.24 
Foreign Currency Exchange Risks
The Company is subject to foreign currency exchange risk associated with operations in countries outside the U.S. The Company had no foreign currency exchange derivatives outstanding at March 31, 2022 and 2021.
At March 31, 2022 and December 31, 2021, the fair value of derivative instruments not designated as hedging instruments are presented in the following table.
(Thousands of dollars)Asset (Liability) Derivatives Fair Value
Type of Derivative ContractBalance Sheet LocationMarch 31, 2022December 31, 2021
Commodity swapsAccounts payable$(306,095)(239,882)
Commodity collarsAccounts receivable 4,280 
Accounts payable(162,123)(19,533)
For the three-month periods ended March 31, 2022 and 2021, the gains and losses recognized in the Consolidated Statements of Operations for derivative instruments not designated as hedging instruments are presented in the following table.
Gain (Loss)
(Thousands of dollars)Statement of Operations LocationThree months ended March 31,
Type of Derivative Contract20222021
Commodity swapsLoss on crude contracts$(156,359)(214,385)
Commodity collarsLoss on crude contracts(164,418) 
Fair Values – Recurring
The Company carries certain assets and liabilities at fair value in its Consolidated Balance Sheets.  The fair value hierarchy is based on the quality of inputs used to measure fair value, with Level 1 being the highest quality and Level 3 being the lowest quality.  Level 1 inputs are quoted prices in active markets for identical assets or liabilities.  Level 2 inputs are observable inputs other than quoted prices included within Level 1.  Level 3 inputs are unobservable inputs which reflect assumptions about pricing by market participants.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
Note L – Financial Instruments and Risk Management (Contd.)
The carrying value of assets and liabilities recorded at fair value on a recurring basis at March 31, 2022 and December 31, 2021, are presented in the following table.
March 31, 2022December 31, 2021
(Thousands of dollars)Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets:
Commodity collars$     4,280  4,280 
$     4,280  4,280 
Liabilities:
Nonqualified employee savings plan$17,038   17,038 16,962   16,962 
Commodity collars 162,123  162,123  19,533  19,533 
Contingent consideration