Murphy Oil Earnings 2020-06-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

mur-20200630

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, 2020


☐			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. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☒ No

Number of shares of Common Stock, $1.00 par value, outstanding at July 31, 2020 was 153,598,625.

MURPHY OIL CORPORATION

TABLE OF CONTENTS


			Page
Part I – Financial Information
Item 1. Financial Statements
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 – Nature of Business and Interim Financial Statements			7
Note B – New Accounting Principles and Recent Accounting Pronouncements			7
Note C – Revenue from Contracts with Customers			8
Note D – Property, Plant, and Equipment			10
Note E – Discontinued Operations and Assets Held for Sale			12
Note F – Financing Arrangements and Debt			12
Note G – Other Financial Information			13
Note H – Employee and Retiree Benefit Plans			14
Note I – Incentive Plans			15
Note J – Earnings Per Share			16
Note K – Income Taxes			16
Note L – Financial Instruments and Risk Management			17
Note M – Accumulated Other Comprehensive Loss			18
Note N – Environmental and Other Contingencies			19
Note O – Business Segments			21
Note P – Acquisitions			22
Note Q – Restructuring Charges			22
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			24




Item 3. Quantitative and Qualitative Disclosures About Market Risk			38
Item 4. Controls and Procedures			38
Part II – Other Information			39
Item 1. Legal Proceedings			39
Item 1A. Risk Factors			39

Item 6. Exhibits			41
Signature			42

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Murphy Oil Corporation and Consolidated Subsidiaries

CONSOLIDATED BALANCE SHEETS (unaudited)


(Thousands of dollars)	June 30, 2020		December 31, 2019
ASSETS
Current assets
Cash and cash equivalents	$	145,505	306,760
Accounts receivable, less allowance for doubtful accounts of $1,605 in 2020 and 2019	372,549		426,684
Inventories	59,728		76,123
Prepaid expenses	61,271		40,896
Assets held for sale	124,337		123,864
Total current assets	763,390		974,327
Property, plant and equipment, at cost less accumulated depreciation, depletion and amortization of $10,603,617 in 2020 and $9,333,646 in 2019	8,891,419		9,969,743
Operating lease assets	779,591		598,293
Deferred income taxes	290,006		129,287
Deferred charges and other assets	29,624		46,854

Total assets	$	10,754,030	11,718,504
LIABILITIES AND EQUITY
Current liabilities

Accounts payable	$	366,205	602,096
Income taxes payable	18,646		19,049
Other taxes payable	16,988		18,613
Operating lease liabilities	103,341		92,286
Other accrued liabilities	151,848		197,447
Liabilities associated with assets held for sale	13,711		13,298
Total current liabilities	670,739		942,789
Long-term debt, including capital lease obligation	2,956,419		2,803,381
Asset retirement obligations	844,545		825,794
Deferred credits and other liabilities	628,904		613,407
Non-current operating lease liabilities	697,674		521,324
Deferred income taxes	182,267		207,198

Total liabilities	5,980,548		5,913,893
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 2020 and 195,089,269 shares in 2019	195,101		195,089
Capital in excess of par value	931,429		949,445
Retained earnings	5,823,426		6,614,304
Accumulated other comprehensive loss	(690,341)		(574,161)
Treasury stock	(1,691,070)		(1,717,217)
Murphy Shareholders' Equity	4,568,545		5,467,460
Noncontrolling interest	204,937		337,151
Total equity	4,773,482		5,804,611
Total liabilities and equity	$	10,754,030	11,718,504

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)	2020		2019	2020	2019
Revenues and other income
Revenue from sales to customers	$	285,745	680,436	886,303	1,309,790
(Loss) gain on crude contracts	(75,880)		57,916	324,792	57,916
Gain on sale of assets and other income	1,677		5,598	4,175	6,790
Total revenues and other income	211,542		743,950	1,215,270	1,374,496
Costs and expenses
Lease operating expenses	144,644		137,132	353,792	268,828
Severance and ad valorem taxes	6,442		13,072	15,864	23,169
Transportation, gathering and processing	41,090		34,901	85,457	74,443
Exploration expenses, including undeveloped lease amortization	29,468		30,674	49,594	63,212
Selling and general expenses	39,100		57,532	75,872	120,892
Restructuring expenses	41,397		—	41,397	—
Depreciation, depletion and amortization	231,446		264,302	537,548	493,708
Accretion of asset retirement obligations	10,469		9,897	20,435	19,237
Impairment of assets	19,616		—	987,146	—
Other (benefit) expense	22,007		25,437	(23,181)	55,442
Total costs and expenses	585,679		572,947	2,143,924	1,118,931
Operating (loss) income from continuing operations	(374,137)		171,003	(928,654)	255,565
Other income (loss)
Interest and other income (loss)	(5,171)		(8,968)	(4,930)	(13,716)
Interest expense, net	(38,598)		(54,096)	(79,695)	(100,165)
Total other loss	(43,769)		(63,064)	(84,625)	(113,881)
(Loss) income from continuing operations before income taxes	(417,906)		107,939	(1,013,279)	141,684
Income tax (benefit) expense	(94,773)		9,115	(186,306)	19,937
(Loss) income from continuing operations	(323,133)		98,824	(826,973)	121,747
(Loss) income from discontinued operations, net of income taxes	(1,267)		24,418	(6,129)	74,264
Net (loss) income including noncontrolling interest	(324,400)		123,242	(833,102)	196,011
Less: Net (loss) income attributable to noncontrolling interest	(7,216)		30,970	(99,814)	63,557
NET (LOSS) INCOME ATTRIBUTABLE TO MURPHY	$	(317,184)	92,272	(733,288)	132,454
(LOSS) INCOME PER COMMON SHARE – BASIC
Continuing operations	$	(2.05)	0.40	(4.74)	0.34
Discontinued operations	(0.01)		0.15	(0.04)	0.44
Net (loss) income	$	(2.06)	0.55	(4.78)	0.78
(LOSS) INCOME PER COMMON SHARE – DILUTED
Continuing operations	$	(2.05)	0.40	(4.74)	0.34
Discontinued operations	(0.01)		0.14	(0.04)	0.43
Net (loss) income	$	(2.06)	0.54	(4.78)	0.77
Cash dividends per Common share	0.13		0.25	0.38	0.50

Average Common shares outstanding (thousands)
Basic	153,581		168,538	153,429	170,556
Diluted	153,581		169,272	153,429	171,433

See Notes to Consolidated Financial Statements, page 7.

Table of Contents

Murphy Oil Corporation and Consolidated Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(Thousands of dollars)	2020		2019	2020	2019
Net (loss) income including noncontrolling interest	$	(324,400)	123,242	(833,102)	196,011
Other comprehensive (loss) income, net of tax
Net (loss) gain from foreign currency translation	50,568		28,606	(67,843)	54,055
Retirement and postretirement benefit plans	(39,234)		2,762	(48,945)	5,516
Deferred loss on interest rate hedges reclassified to interest expense	309		586	608	1,171

Other comprehensive (loss) income	11,643		31,954	(116,180)	60,742
COMPREHENSIVE (LOSS) INCOME	$	(312,757)	155,196	(949,282)	256,753

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)	2020		2019
Operating Activities
Net (loss) income including noncontrolling interest	$	(833,102)	196,011
Adjustments to reconcile net (loss) income to net cash (required) provided by continuing operations activities:
Loss (income) from discontinued operations	6,129		(74,264)
Depreciation, depletion and amortization	537,548		493,708
Previously suspended exploration costs	7,677		12,901
Amortization of undeveloped leases	14,770		15,150
Accretion of asset retirement obligations	20,435		19,237
Impairment of assets	987,146		—
Noncash restructuring expense	17,565		—
Deferred income tax (benefit) expense	(167,902)		18,001

Mark to market (gain) loss on contingent consideration	(43,529)		28,890
Mark to market (gain) loss on crude contracts	(173,848)		(50,831)
Long-term non-cash compensation	22,760		44,755
Net decrease (increase) in noncash operating working capital	1,335		(5,366)
Other operating activities, net	(27,605)		(42,761)
Net cash provided by continuing operations activities	369,379		655,431
Investing Activities
Property additions and dry hole costs	(537,601)		(645,169)
Property additions for King's Quay FPS	(51,635)		—
Acquisition of oil and gas properties	—		(1,226,261)
Proceeds from sales of property, plant and equipment	—		16,816
Net cash required by investing activities	(589,236)		(1,854,614)
Financing Activities
Borrowings on revolving credit facility	370,000		1,075,000
Repayment of revolving credit facility	(200,000)		—
Cash dividends paid	(57,590)		(85,503)
Distributions to noncontrolling interest	(32,400)		(68,776)
Early retirement of debt	(12,225)		—
Withholding tax on stock-based incentive awards	(7,247)		(6,991)
Debt issuance, net of cost	(613)		—
Proceeds from term loan and other loans	371		500,000
Capital lease obligation payments	(336)		(335)
Repurchase of common stock	—		(299,924)
Net cash provided by financing activities	59,960		1,113,471
Cash Flows from Discontinued Operations ¹
Operating activities	(1,202)		122,272
Investing activities	4,494		(49,798)
Financing activities	—		(4,914)
Net cash provided by discontinued operations	3,292		67,560
Cash transferred from discontinued operations to continuing operations	—		48,565
Effect of exchange rate changes on cash and cash equivalents	(1,358)		3,268
Net increase (decrease) in cash and cash equivalents	(161,255)		(33,879)
Cash and cash equivalents at beginning of period	306,760		359,923
Cash and cash equivalents at end of period	$	145,505	326,044

¹ Net cash provided by discontinued operations is not part of the cash flow reconciliation. 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)	2020		2019	2020	2019
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 June 30, 2020 and 195,083,364 shares at June 30, 2019
Balance at beginning of period	195,101		195,083	195,089	195,077
Exercise of stock options	—		—	12	6
Balance at end of period	195,101		195,083	195,101	195,083
Capital in Excess of Par Value
Balance at beginning of period	924,930		924,904	949,445	979,642
Exercise of stock options, including income tax benefits	—		—	(156)	(123)
Restricted stock transactions and other	(636)		—	(33,240)	(38,732)
Share-based compensation	7,135		9,040	15,380	17,676
Adjustments to acquisition valuation	—		—	—	(24,519)
Balance at end of period	931,429		933,944	931,429	933,944
Retained Earnings
Balance at beginning of period	6,159,808		5,627,081	6,614,304	5,513,529
Net (loss) income for the period	(317,184)		92,272	(733,288)	132,454

Sale and leaseback gain recognized upon adoption of ASC 842, net of tax impact	—		—	—	116,768
Cash dividends	(19,198)		(42,105)	(57,590)	(85,503)
Balance at end of period	5,823,426		5,677,248	5,823,426	5,677,248
Accumulated Other Comprehensive Loss
Balance at beginning of period	(701,984)		(580,999)	(574,161)	(609,787)
Foreign currency translation (loss) gain, net of income taxes	50,568		28,606	(67,843)	54,055
Retirement and postretirement benefit plans, net of income taxes	(39,234)		2,762	(48,945)	5,516
Deferred loss on interest rate hedges reclassified to interest expense, net of income taxes	309		586	608	1,171

Balance at end of period	(690,341)		(549,045)	(690,341)	(549,045)
Treasury Stock
Balance at beginning of period	(1,691,706)		(1,217,293)	(1,717,217)	(1,249,162)
Purchase of treasury shares	—		(299,924)	—	(299,924)
Awarded restricted stock, net of forfeitures	636		—	26,147	31,869
Balance at end of period – 41,512,066 shares of Common Stock in 2020 and 32,832,771 shares of Common Stock in 2019, at cost	(1,691,070)		(1,517,217)	(1,691,070)	(1,517,217)
Murphy Shareholders’ Equity	4,568,545

Price	21.95	EPS	8
Shares	168	P/E	3
MCap	3,690	P/FCF	2
Net Debt	2,344	EBIT	1,681
TEV	6,034	TEV/EBIT	4
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-06-30	Filed 2020-08-06
10-Q	2020-03-31	Filed 2020-05-07
10-K	2019-12-31	Filed 2020-02-27
10-Q	2019-09-30	Filed 2019-10-31
10-Q	2019-06-30	Filed 2019-08-08
10-Q	2019-03-31	Filed 2019-05-02
10-K	2018-12-31	Filed 2019-02-27
10-Q	2018-09-30	Filed 2018-11-08
10-Q	2018-06-30	Filed 2018-08-09
10-Q	2018-03-31	Filed 2018-05-03
10-K	2017-12-31	Filed 2018-02-26
10-Q	2017-09-30	Filed 2017-11-02
10-Q	2017-06-30	Filed 2017-08-02
10-Q	2017-03-31	Filed 2017-05-04
10-K	2016-12-31	Filed 2017-02-24
10-Q	2016-09-30	Filed 2016-11-02
10-Q	2016-06-30	Filed 2016-08-04
10-Q	2016-03-31	Filed 2016-05-06
10-K	2015-12-31	Filed 2016-02-26
10-Q	2015-09-30	Filed 2015-11-05
10-Q	2015-06-30	Filed 2015-08-05
10-Q	2015-03-31	Filed 2015-05-07
10-K	2014-12-31	Filed 2015-02-27
10-Q	2014-09-30	Filed 2014-11-05
10-Q	2014-06-30	Filed 2014-08-05
10-Q	2014-03-31	Filed 2014-05-07
10-K	2013-12-31	Filed 2014-02-28
10-Q	2013-09-30	Filed 2013-11-06
10-Q	2013-06-30	Filed 2013-08-06
10-Q	2013-03-31	Filed 2013-05-07
10-K	2012-12-31	Filed 2013-02-28
10-Q	2012-09-30	Filed 2012-11-06
10-Q	2012-06-30	Filed 2012-08-06
10-Q	2012-03-31	Filed 2012-05-07
10-K	2011-12-31	Filed 2012-02-28
10-Q	2011-09-30	Filed 2011-11-04
10-Q	2011-06-30	Filed 2011-08-05
10-Q	2011-03-31	Filed 2011-05-06
10-K	2010-12-31	Filed 2011-02-28
10-Q	2010-09-30	Filed 2010-11-05
10-Q	2010-06-30	Filed 2010-08-06
10-Q	2010-03-31	Filed 2010-05-07
10-K	2009-12-31	Filed 2010-02-26

8-K	2020-08-06	Earnings, Exhibits
8-K	2020-06-17
8-K	2020-05-21
8-K	2020-05-15
8-K	2020-05-06
8-K	2020-05-06
8-K	2020-04-01
8-K	2020-03-25
8-K	2020-03-12
8-K	2020-02-28
8-K	2020-01-30
8-K	2019-11-13
8-K	2019-11-13
8-K	2019-10-31
8-K	2019-10-02
8-K	2019-09-20
8-K	2019-08-08
8-K	2019-07-11
8-K	2019-06-12
8-K	2019-05-30
8-K	2019-05-22
8-K	2019-05-09
8-K	2019-05-07
8-K	2019-05-02
8-K	2019-04-19
8-K	2019-04-15
8-K	2019-03-25
8-K	2019-03-21
8-K	2019-02-07
8-K	2019-01-31
8-K	2018-12-03
8-K	2018-11-07
8-K	2018-10-10
8-K	2018-09-05
8-K	2018-08-20
8-K	2018-08-08
8-K	2018-05-09
8-K	2018-05-02
8-K	2018-05-01
8-K	2018-04-25
8-K	2018-02-22
8-K	2018-02-12
8-K	2018-01-31

EX-3.2	mur-20200630xex32ng.htm
EX-31.1	mur-20200630xex311ng.htm
EX-31.2	mur-20200630xex312ng.htm
EX-32.1	mur-20200630xex321ng.htm

MUR 10Q Quarterly Report

Murphy Oil Earnings 2020-06-30