Murphy Oil Corp Q2 2024 10-Q Filed

TL;DR

**MURPHY OIL CORP 10-Q FILED: Q2 2024 RESULTS ARE IN - CHECK THE NUMBERS**

AI Summary

Murphy Oil Corporation filed its 10-Q for the period ending June 30, 2024. The company reported financial results for the second quarter and the first half of the year, detailing revenues and operational performance in its oil and gas exploration and production segments. Specific financial figures and operational metrics for these periods are included in the filing.

Why It Matters

This filing provides investors with the latest financial and operational data for Murphy Oil, crucial for understanding the company's performance in the volatile energy market.

Risk Assessment

Risk Level: medium — Oil and gas companies are subject to significant commodity price volatility and regulatory changes, impacting financial performance.

Key Numbers

• 2024 Q2 — Reporting Period (Second quarter of 2024 financial results)
• 2024-06-30 — Period End Date (End date for the financial reporting period)
• 2024-01-01 — Year-to-Date Start Date (Beginning of the year for financial reporting)
• 2023-12-31 — Previous Year End Date (End of the prior fiscal year)

Key Players & Entities

• MURPHY OIL CORP (company) — Filer of the 10-Q
• 20240630 (date) — End of the reporting period
• 20240808 (date) — Filing date
• HOUSTON (location) — Company headquarters city
• DE (location) — State of incorporation

FAQ

Key Financial Figures

• $1.00 — ange on which registered Common Stock, $1.00 Par Value MUR New York Stock Exchange

Filing Documents

• mur-20240630.htm (10-Q) — 1636KB
• mur-20240630xex1038.htm (EX-10.38) — 102KB
• mur-20240630xex311.htm (EX-31.1) — 10KB
• mur-20240630xex312.htm (EX-31.2) — 10KB
• mur-20240630xex321.htm (EX-32.1) — 6KB
• mur-20240630_g1.jpg (GRAPHIC) — 160KB
• 0000717423-24-000026.txt ( ) — 8473KB
• mur-20240630.xsd (EX-101.SCH) — 52KB
• mur-20240630_cal.xml (EX-101.CAL) — 104KB
• mur-20240630_def.xml (EX-101.DEF) — 186KB
• mur-20240630_lab.xml (EX-101.LAB) — 650KB
• mur-20240630_pre.xml (EX-101.PRE) — 424KB
• mur-20240630_htm.xml (XML) — 1230KB

– Financial Information

Part I – Financial Information

Financial Statements

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

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

Management's Discussion and Analysis of Financial Condition and Results of

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 2 3

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 40

Controls and Procedures

Item 4. Controls and Procedures 40

– Other Information

Part II – Other Information

Legal Proceedings

Item 1. Legal Proceedings 41

Risk Factors

Item 1A. Risk Factors 41

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 41

Other Information

Item 5. Other Information 42

Exhibits

Item 6. Exhibits 42 Signature 43 1 Table of Contents

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

FINANCIAL STATEMENTS

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 disaggregatio

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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,

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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 reven

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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 th

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

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