Murphy Oil Corporation (NYSE:MUR) Q1 2023 Earnings Conference Call May 3, 2023 9:00 AM ET Company Participants Kelly Whitley ??? Vice President, Investor Relations and Communications Roger Jenkins ??? President and Chief Executive Officer Tom Mireles ??? Executive Vice President and Chief Financial Officer Eric Hambly ??? Executive Vice President of Operations Conference Call Participants Arun Jayaram ??? JPMorgan Neal Dingmann ??? Truist Paul Cheng ??? Scotiabank Neil Mehta ??? Goldman Sachs Charles Meade ...

King's Quay 1-Year Anniversary Apr 5, 2023 • > 30 MMBOE gross cumulative production in 1 year • Achieved recent gross production record of 126 MBOEPD • 97% average uptime • St. Malo waterflood continuing ahead of first water injection in 2H 2024 • Terra Nova anticipated return to production at year-end 2023 Offshore Canada Development Projects 13 www.murphyoilcorp.com NYSE: MUR Exploration Update Advancing Gulf of Mexico Operated Exploration Plans | --- | --- | --- | --- | --- | --- | --- | --- | |-------|- ...

PART I – FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Murphy Oil Corporation's unaudited consolidated financial statements and notes for Q1 2023 and comparative periods [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (Thousands of dollars) | Item | March 31, 2023 | December 31, 2022 | Change | % Change | | :-------------------------------- | :------------- | :---------------- | :----- | :------- | | Total Assets | $10,188,529 | $10,308,952 | $(120,423) | -1.17% | | Total Liabilities | $4,883,861 | $5,160,059 | $(276,198) | -5.35% | | Total Equity | $5,304,668 | $5,148,893 | $155,775 | 3.03% | | Cash and cash equivalents | $312,383 | $491,963 | $(179,580) | -36.51% | | Total current assets | $801,841 | $972,325 | $(170,484) | -17.53% | | Total current liabilities | $1,028,013 | $1,257,834 | $(229,821) | -18.27% | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations Highlights (Three Months Ended March 31, Thousands of dollars, except per share amounts) | Item | 2023 | 2022 | Change | % Change | | :------------------------------------ | :--------- | :--------- | :--------- | :------- | | Total revenues and other income | $841,716 | $552,961 | $288,755 | 52.22% | | Total costs and expenses | $544,920 | $595,085 | $(50,165) | -8.43% | | Operating income (loss) | $296,796 | $(42,124) | $338,920 | 804.60% | | Net income (loss) attributable to Murphy | $191,644 | $(113,336) | $304,980 | 269.10% | | Basic EPS | $1.23 | $(0.73) | $1.96 | 268.49% | | Diluted EPS | $1.22 | $(0.73) | $1.95 | 267.12% | | Cash dividends per common share | $0.275 | $0.15 | $0.125 | 83.33% | - Total revenues and other income increased significantly by **52.22%** due to the absence of derivative instrument losses in 2023, which were **$320.8 million** in 2022[12](index=12&type=chunk) [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Consolidated Statements of Comprehensive Income (Loss) Highlights (Three Months Ended March 31, Thousands of dollars) | Item | 2023 | 2022 | Change | % Change | | :------------------------------------------------ | :--------- | :--------- | :--------- | :------- | | Net income (loss) including noncontrolling interest | $214,314 | $(65,486) | $279,800 | 427.26% | | Other comprehensive income | $4,767 | $21,356 | $(16,589) | -77.68% | | Comprehensive income (loss) attributable to Murphy | $196,411 | $(91,980) | $288,391 | 313.54% | - Comprehensive income attributable to Murphy significantly improved from a loss of **$91.98 million** in Q1 2022 to an income of **$196.41 million** in Q1 2023, primarily driven by the increase in net income[14](index=14&type=chunk) [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Highlights (Three Months Ended March 31, Thousands of dollars) | Item | 2023 | 2022 | Change | % Change | | :-------------------------------------- | :--------- | :--------- | :--------- | :------- | | Net cash provided by operating activities | $279,776 | $338,330 | $(58,554) | -17.31% | | Net cash required by investing activities | $(345,319) | $(244,908) | $(100,411) | 41.00% | | Net cash required by financing activities | $(114,655) | $(133,932) | $19,277 | -14.39% | | Net decrease in cash and cash equivalents | $(179,580) | $(40,597) | $(138,983) | 342.35% | - Net cash provided by operating activities decreased by **17.31%** primarily due to contingent consideration payments and lower revenue, partially offset by lower derivative losses[17](index=17&type=chunk)[131](index=131&type=chunk) - Net cash required by investing activities increased by **41.00%** due to higher property additions and dry hole costs[17](index=17&type=chunk)[132](index=132&type=chunk) [Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Consolidated Statements of Stockholders' Equity Highlights (Three Months Ended March 31, Thousands of dollars) | Item | 2023 | 2022 | Change | % Change | | :-------------------------------- | :--------- | :--------- | :--------- | :------- | | Retained Earnings (End of Period) | $6,204,217 | $5,082,034 | $1,122,183 | 22.08% | | Net income (loss) attributable to Murphy | $191,644 | $(113,336) | $304,980 | 269.10% | | Cash dividends paid | $(42,925) | $(23,300) | $(19,625) | 84.23% | | Total Equity (End of Period) | $5,304,668 | $4,204,290 | $1,100,378 | 26.17% | - Retained earnings and total equity saw significant increases, driven by net income attributable to Murphy, despite higher cash dividends paid[19](index=19&type=chunk) [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [Note A – Nature of Business and Interim Financial Statements](index=8&type=section&id=Note%20A%20%E2%80%93%20Nature%20of%20Business%20and%20Interim%20Financial%20Statements) Murphy Oil Corporation is an international oil and natural gas exploration and production company, with unaudited interim financial statements prepared under GAAP - Murphy Oil Corporation is an international oil and natural gas exploration and production company with primary operations in the U.S. and Canada[22](index=22&type=chunk) - The company holds a **0.5%** interest in two non-consolidated variable interest entities (VIEs), Delta House, with a maximum exposure to loss of **$3.1 million** as of March 31, 2023[23](index=23&type=chunk) [Note B – New Accounting Principles and Recent Accounting Pronouncements](index=8&type=section&id=Note%20B%20%E2%80%93%20New%20Accounting%20Principles%20and%20Recent%20Accounting%20Pronouncements) No new accounting principles were adopted or recent accounting pronouncements affected the Company during the reporting period - No new accounting principles were adopted, and no recent accounting pronouncements affected the Company[26](index=26&type=chunk) [Note C – Revenue from Contracts with Customers](index=8&type=section&id=Note%20C%20%E2%80%93%20Revenue%20from%20Contracts%20with%20Customers) Revenue from crude oil, NGLs, and natural gas sales decreased from **$871.4 million** in Q1 2022 to **$840.0 million** in Q1 2023, recognized at the point of transfer - Revenue from sales to customers decreased from **$871.4 million** in Q1 2022 to **$840.0 million** in Q1 2023[32](index=32&type=chunk) Revenue from Sales to Customers (Thousands of dollars) | Revenue Stream | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :----------------------------- | :-------------------------------- | :-------------------------------- | | Total crude oil and condensate revenue | $672,117 | $702,846 | | Total natural gas liquids revenue | $26,362 | $35,531 | | Total natural gas revenue | $97,752 | $96,151 | | Revenue from production | $796,231 | $834,528 | | Sales of purchased natural gas | $43,737 | $36,846 | | Total revenue from sales to customers | $839,968 | $871,374 | - The Company has several long-term, fixed-price natural gas contracts in Canada extending to Q4 2027 and NGL contracts to Q3 2023[39](index=39&type=chunk) [Note D – Property, Plant and Equipment](index=10&type=section&id=Note%20D%20%E2%80%93%20Property%2C%20Plant%20and%20Equipment) Capitalized exploratory well costs increased to **$196.5 million** as of March 31, 2023, primarily due to additions for the Oso-1 well in the Gulf of Mexico Capitalized Exploratory Well Costs (Thousands of dollars) | Item | March 31, 2023 | March 31, 2022 | | :------------------------------------------ | :------------- | :------------- | | Beginning balance at January 1 | $171,860 | $179,481 | | Additions pending determination of proved reserves | $24,685 | $3,698 | | Capitalized exploratory well costs charged to expense | $0 | $(10,473) | | Balance at March 31 | $196,545 | $172,706 | - Capital well additions of **$24.7 million** in Q1 2023 were primarily for the Oso-1 well in the Gulf of Mexico, which was temporarily suspended[43](index=43&type=chunk) - As of March 31, 2023, **$156.3 million** of exploratory well costs capitalized for more than one year are primarily located in Vietnam (**$97.2 million**), U.S. (**$37.0 million**), and Mexico (**$14.7 million**)[45](index=45&type=chunk) [Note E – Financing Arrangements and Debt](index=11&type=section&id=Note%20E%20%E2%80%93%20Financing%20Arrangements%20and%20Debt) As of March 31, 2023, the Company had an **$800 million** revolving credit facility with no outstanding borrowings and was in compliance with all covenants - The Company has an **$800 million** revolving credit facility (RCF) expiring November 17, 2027[47](index=47&type=chunk) - As of March 31, 2023, there were no outstanding borrowings under the RCF, but **$30.3 million** in outstanding letters of credit reduced borrowing capacity[47](index=47&type=chunk) - The Company was in compliance with all RCF covenants as of March 31, 2023[47](index=47&type=chunk) [Note F – Other Financial Information](index=12&type=section&id=Note%20F%20%E2%80%93%20Other%20Financial%20Information) This note provides supplementary cash flow disclosures, with net noncash operating working capital decreasing by **$75.0 million** in Q1 2023 Net (Increase) Decrease in Operating Working Capital (Thousands of dollars) | Item | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | (Increase) in accounts receivable | $(3,976) | $(117,928) | | (Increase) decrease in inventories | $(9,296) | $(4,541) | | (Increase) decrease in prepaid expenses | $3,813 | $(515) | | Increase (decrease) in accounts payable and accrued liabilities | $(63,800) | $40,426 | | Increase (decrease) in income taxes payable | $(1,772) | $1,636 | | Net (increase) in noncash operating working capital | $(75,031) | $(80,922) | - Cash income taxes paid, net of refunds, were **$3.3 million** in Q1 2023, up from **$0.1 million** in Q1 2022[51](index=51&type=chunk) - Interest paid, net of capitalized amounts, decreased to **$19.4 million** in Q1 2023 from **$40.2 million** in Q1 2022[51](index=51&type=chunk) [Note G – Employee and Retiree Benefit Plans](index=12&type=section&id=Note%20G%20%E2%80%93%20Employee%20and%20Retiree%20Benefit%20Plans) Net periodic benefit expense for pension benefits increased to **$4.5 million** in Q1 2023, while other postretirement benefits decreased to **$0.1 million** Net Periodic Benefit Expense (Thousands of dollars) | Component | Pension Benefits 2023 | Pension Benefits 2022 | Other Postretirement Benefits 2023 | Other Postretirement Benefits 2022 | | :-------------------------------- | :-------------------- | :-------------------- | :--------------------------------- | :--------------------------------- | | Service cost | $1,650 | $2,129 | $132 | $292 | | Interest cost | $8,507 | $5,243 | $874 | $574 | | Expected return on plan assets | $(8,194) | $(8,138) | – | – | | Amortization of prior service cost (credit) | $155 | $600 | $(133) | $(133) | | Recognized actuarial loss (gain) | $2,401 | $3,822 | $(781) | $(77) | | Net periodic benefit expense | $4,519 | $3,656 | $92 | $656 | - The Company contributed **$9.5 million** to its defined benefit pension and postretirement plans in Q1 2023, with an anticipated **$27.6 million** remaining for 2023[55](index=55&type=chunk) [Note H – Incentive Plans](index=13&type=section&id=Note%20H%20%E2%80%93%20Incentive%20Plans) Murphy recognizes costs from share-based and cash-based incentive plans, with Q1 2023 compensation charged against income before tax benefit at **$11.2 million** 2020 Long-Term Incentive Plan Awards Granted (January 31, 2023) | Type of Award | Number of Awards Granted | Grant Date Fair Value | | :---------------------- | :----------------------- | :-------------------- | | Performance Based RSUs | 409,160 | $60.46 | | Time Based RSUs | 499,220 | $43.27 | | Cash Settled RSUs | 123,230 | $43.27 | Share-Based Plan Compensation (Thousands of dollars) | Item | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :---------------------------------------- | :-------------------------------- | :-------------------------------- | | Compensation charged against income before tax benefit | $11,196 | $13,962 | | Related income tax benefit recognized in income | $1,581 | $2,272 | [Note I – Earnings Per Share](index=14&type=section&id=Note%20I%20%E2%80%93%20Earnings%20Per%20Share) Basic and diluted earnings per common share are calculated using net income attributable to Murphy, with Q1 2023 basic shares at **155.9 million** Weighted-Average Shares Outstanding (Thousands) | Method | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Basic method | 155,857 | 154,916 | | Dilutive stock options and restricted stock units | 1,532 | – | | Diluted method | 157,389 | 154,916 | [Note J – Income Taxes](index=14&type=section&id=Note%20J%20%E2%80%93%20Income%20Taxes) The Company's effective income tax rate for Q1 2023 was **20.1%**, slightly below the U.S. statutory rate, primarily due to noncontrolling interest income Effective Income Tax Rate | Period | 2023 | 2022 | | :-------------------------- | :----- | :----- | | Three months ended March 31 | 20.1% | 20.7% | - The effective tax rate for Q1 2023 was below the U.S. statutory rate of **21%** due to no tax on noncontrolling interest in MP GOM, offset by higher foreign tax rates and non-benefited foreign exploration expenses[65](index=65&type=chunk) - The earliest open years for audit in major taxing jurisdictions are U.S. – 2016; Canada – 2016; and Malaysia – 2016[67](index=67&type=chunk) [Note K – Financial Instruments and Risk Management](index=14&type=section&id=Note%20K%20%E2%80%93%20Financial%20Instruments%20and%20Risk%20Management) Murphy uses derivative instruments for risk management; in Q1 2023, there were no outstanding derivative contracts, a significant change from **$320.8 million** in losses in Q1 2022 - The Company did not have any outstanding crude oil or foreign currency derivative contracts in Q1 2023[70](index=70&type=chunk)[72](index=72&type=chunk) Gain (Loss) on Derivative Instruments (Thousands of dollars) | Type of Derivative Contract | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Commodity swaps | $0 | $(156,359) | | Commodity collars | $0 | $(164,418) | - Contingent consideration liabilities related to prior Gulf of Mexico acquisitions (LLOG and PAI) were **$25.0 million** at March 31, 2023, down from **$192.7 million** at December 31, 2022, with **$171.7 million** paid in Q1 2023[82](index=82&type=chunk) [Note L – Accumulated Other Comprehensive Loss](index=17&type=section&id=Note%20L%20%E2%80%93%20Accumulated%20Other%20Comprehensive%20Loss) Accumulated other comprehensive loss decreased to **$(529.9) million** at March 31, 2023, primarily due to foreign currency translation gains and benefit plan adjustments Components of Accumulated Other Comprehensive Loss (Thousands of dollars) | Component | Balance at Dec 31, 2022 | Net Other Comprehensive Income (Loss) Q1 2023 | Balance at Mar 31, 2023 | | :-------------------------------- | :---------------------- | :------------------------------------------ | :---------------------- | | Foreign Currency Translation Gains (Losses) | $(418,230) | $3,669 | $(414,561) | | Retirement and Postretirement Benefit Plan Adjustments | $(116,456) | $1,098 | $(115,358) | | Total | $(534,686) | $4,767 | $(529,919) | [Note M – Environmental and Other Contingencies](index=17&type=section&id=Note%20M%20%E2%80%93%20Environmental%20and%20Other%20Contingencies) Murphy's operations are subject to extensive environmental regulations, but no material adverse effects from legal proceedings or remediation costs are anticipated - The Company is subject to numerous environmental, health, and safety laws and regulations, including those related to climate change and GHG emissions[90](index=90&type=chunk)[92](index=92&type=chunk) - Murphy is not aware of any environmental legal proceedings likely to exceed the **$1.0 million** disclosure threshold[91](index=91&type=chunk) - The Company believes that costs related to known or currently unidentified environmental sites are not expected to have a material adverse effect on its future net income, cash flows, or liquidity[94](index=94&type=chunk) [Note N – Business Segments](index=18&type=section&id=Note%20N%20%E2%80%93%20Business%20Segments) Murphy operates primarily through its E&P segment, which reported total income of **$242.7 million** in Q1 2023, an increase from **$231.4 million** in Q1 2022 Business Segment Performance (Millions of dollars) | Segment | Income (Loss) Q1 2023 | Income (Loss) Q1 2022 | | :-------------------------- | :-------------------- | :-------------------- | | United States E&P | $226.0 | $252.9 | | Canada E&P | $21.9 | $22.7 | | Other E&P | $(5.2) | $(44.2) | | Total Exploration and Production | $242.7 | $231.4 | | Corporate | $(28.7) | $(296.3) | | Continuing operations | $214.0 | $(64.9) | - Corporate segment loss significantly reduced from **$(296.3) million** in Q1 2022 to **$(28.7) million** in Q1 2023, primarily due to the absence of derivative instrument losses[98](index=98&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes Murphy Oil Corporation's Q1 2023 financial performance, highlighting improved net income, increased production, and cash flow dynamics [Summary](index=20&type=section&id=Summary) - Crude oil and natural gas benchmark prices decreased in Q1 2023 compared to Q1 2022, with WTI crude oil averaging **$76.13/barrel** (down from **$94.29/barrel** in Q1 2022)[100](index=100&type=chunk)[102](index=102&type=chunk) - The Company produced **179.7 thousand barrels of oil equivalent per day (MBOEPD)** in Q1 2023, a **20%** increase from **149.9 MBOEPD** in Q1 2022[103](index=103&type=chunk)[104](index=104&type=chunk)[119](index=119&type=chunk) - Net income from continuing operations was **$214.0 million** in Q1 2023, a significant improvement from a net loss of **$64.9 million** in Q1 2022, primarily due to the absence of derivative losses[103](index=103&type=chunk)[104](index=104&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) [Exploration and Production (Overview)](index=21&type=section&id=Exploration%20and%20Production%20(Overview)) The E&P segment reported an overall income of **$242.7 million** in Q1 2023, an increase from **$231.4 million** in Q1 2022 E&P Income (Loss) by Geographic Segment (Millions of dollars) | Segment | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------- | :-------------------------------- | :-------------------------------- | | United States | $226.0 | $252.9 | | Canada | $21.9 | $22.7 | | Other | $(5.2) | $(44.2) | | Total | $242.7 | $231.4 | [Other Key Performance Metrics](index=22&type=section&id=Other%20Key%20Performance%20Metrics) EBITDA attributable to Murphy significantly increased to **$463.6 million** in Q1 2023, with Adjusted EBITDA rising to **$477.5 million** Key Performance Metrics (Millions of dollars, except per barrel of oil equivalents sold) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :---------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Net income (loss) attributable to Murphy (GAAP) | $191.6 | $(113.3) | | EBITDA attributable to Murphy (Non-GAAP) | $463.6 | $63.6 | | Adjusted EBITDA attributable to Murphy (Non-GAAP) | $477.5 | $361.3 | | Total barrels of oil equivalents sold (thousands) | 15,541 | 12,565 | | Adjusted EBITDA per barrel of oil equivalents sold (Non-GAAP) | $30.72 | $28.75 | - Adjusted EBITDA per barrel of oil equivalents sold increased to **$30.72** in Q1 2023 from **$28.75** in Q1 2022[112](index=112&type=chunk) [Oil and Gas Operating Results (Detailed Table)](index=23&type=section&id=Oil%20and%20Gas%20Operating%20Results%20(Detailed%20Table)) This section details oil and gas operating revenues and expenses by geographic segment for Q1 2023 and Q1 2022, including sales and exploration costs Oil and Gas Operating Results (Millions of dollars) | Item | US 2023 | Canada 2023 | Other 2023 | Total 2023 | US 2022 | Canada 2022 | Other 2022 | Total 2022 | | :------------------------------------ | :------ | :---------- | :--------- | :--------- | :------ | :---------- | :--------- | :--------- | | Oil and gas sales and other operating revenues | $682.3 | $112.1 | $3.6 | $798.0 | $707.4 | $129.3 | $0 | $836.7 | | Sales of purchased natural gas | $0 | $43.7 | $0 | $43.7 | $0 | $36.8 | $0 | $36.8 | | Lease operating expenses | $162.6 | $36.8 | $0.6 | $200.0 | $99.9 | $36.9 | $0 | $136.8 | | Total exploration expenses | $3.7 | $0.2 | $6.4 | $10.3 | $6.5 | $0.2 | $40.9 | $47.6 | | Results of operations before taxes | $282.3 | $29.5 | $(4.4) | $307.4 | $310.6 | $30.3 | $(43.8) | $297.1 | [Exploration and Production (Q1 2023 vs 2022 Analysis)](index=24&type=section&id=Exploration%20and%20Production%20(Q1%202023%20vs%202022%20Analysis)) U.S. E&P earnings decreased by **$26.9 million**, Canadian E&P earnings were slightly unfavorable, and other international E&P operations significantly improved, reducing losses by **$39.0 million** - U.S. E&P earnings decreased by **$26.9 million**, primarily due to lower realized prices and higher lease operating expenses, partially offset by a **$93.4 million** reduction in other operating expense from lower contingent consideration adjustments[115](index=115&type=chunk) - Canadian E&P earnings were down **$0.8 million**, mainly due to lower revenues from pricing and sales volumes at Kaybob Duvernay and Hibernia, partially offset by lower selling and general expenses[116](index=116&type=chunk) - Other international E&P operations improved by **$39.0 million**, reducing losses from **$44.2 million** to **$5.2 million**, driven by **$34.5 million** lower exploration expenses[117](index=117&type=chunk) [Corporate (Q1 2023 vs 2022 Analysis)](index=24&type=section&id=Corporate%20(Q1%202023%20vs%202022%20Analysis)) Corporate loss significantly reduced to **$28.7 million** in Q1 2023 from **$296.3 million** in Q1 2022, primarily due to the absence of derivative instrument losses - Corporate loss decreased by **$267.6 million**, from **$296.3 million** in Q1 2022 to **$28.7 million** in Q1 2023[118](index=118&type=chunk) - The favorable variance was principally due to no losses on derivative instruments in Q1 2023 (compared to **$320.8 million** loss in Q1 2022)[118](index=118&type=chunk) - Other contributing factors included lower interest expense (**$8.4 million**) and favorable G&A (**$8.4 million**), partially offset by lower income tax benefit (**$72.0 million**)[118](index=118&type=chunk) [Production Volumes and Prices](index=24&type=section&id=Production%20Volumes%20and%20Prices) Total hydrocarbon production increased by **20%** to **179,745 BOEPD** in Q1 2023, while average crude oil and natural gas prices decreased by **22%** and **14.4%**, respectively Production Volumes (Barrels per day unless otherwise noted) | Commodity | Q1 2023 | Q1 2022 | Change | % Change | | :------------------------------------------ | :------ | :------ | :----- | :------- | | Net crude oil and condensate | 100,987 | 83,560 | 17,427 | 20.86% | | Net natural gas liquids | 11,325 | 9,342 | 1,983 | 21.23% | | Net natural gas (thousands of cubic feet per day) | 404,595 | 341,710 | 62,885 | 18.40% | | Total net hydrocarbons (BOEPD) | 179,745 | 149,854 | 29,891 | 19.95% | Weighted Average Sales Prices | Commodity | Q1 2023 | Q1 2022 | Change | % Change | | :-------------------------------- | :------ | :------ | :----- | :------- | | Crude oil and condensate ($/barrel) | $73.80 | $95.17 | $(21.37) | -22.45% | | Natural gas liquids ($/barrel) (U.S.) | $24.23 | $40.76 | $(16.53) | -40.56% | | Natural gas ($/MCF) | $2.68 | $3.13 | $(0.45) | -14.38% | - Increased production was primarily from the Gulf of Mexico (Khaleesi, Mormont, Samurai project) and Canada Onshore (Tupper Montney new wells)[119](index=119&type=chunk)[120](index=120&type=chunk)[122](index=122&type=chunk) [Financial Condition](index=27&type=section&id=Financial%20Condition) [Cash Provided by Operating Activities](index=27&type=section&id=Cash%20Provided%20by%20Operating%20Activities) Net cash provided by operating activities decreased by **$58.5 million** to **$279.8 million** in Q1 2023, primarily due to contingent consideration payments and lower revenue - Net cash provided by continuing operating activities decreased by **$58.5 million (17.31%)** to **$279.8 million** in Q1 2023[131](index=131&type=chunk) - Key factors for the decrease included **$124.0 million** in contingent consideration payments, **$38.3 million** lower revenue from production, and **$63.2 million** higher lease operating expenses[131](index=131&type=chunk) - This decrease was partially offset by **$132.3 million** lower realized losses on derivative instruments[131](index=131&type=chunk) [Cash Required by Investing Activities](index=27&type=section&id=Cash%20Required%20by%20Investing%20Activities) Net cash required by investing activities increased by **$100.4 million** to **$345.3 million** in Q1 2023, driven by higher capital expenditures in E&P - Net cash required by investing activities increased by **$100.4 million (41.0%)** to **$345.3 million** in Q1 2023[132](index=132&type=chunk) Total Capital Expenditures (Millions of dollars) | Segment | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------ | :-------------------------------- | :-------------------------------- | | Exploration and production | $329.7 | $299.4 | | Corporate | $6.3 | $5.3 | | Total capital expenditures | $336.0 | $304.7 | - The increase in capital expenditures was primarily due to development drilling activities at Eagle Ford Shale, Samurai, St. Malo fields, and Oso exploration drilling[135](index=135&type=chunk) [Cash Required by Financing Activities](index=28&type=section&id=Cash%20Required%20by%20Financing%20Activities) Net cash required by financing activities decreased by **$19.3 million** to **$114.7 million** in Q1 2023, mainly due to contingent consideration payments and cash dividends - Net cash required by financing activities decreased by **$19.3 million (14.39%)** to **$114.7 million** in Q1 2023[136](index=136&type=chunk) - Key uses of cash included **$47.7 million** for contingent consideration payments, **$42.9 million** for cash dividends (**$0.275** per share), and **$9.7 million** for distributions to non-controlling interests[136](index=136&type=chunk) [Working Capital](index=28&type=section&id=Working%20Capital) Working capital resulted in a net liability of **$226.2 million** at March 31, 2023, an improvement of **$59.3 million** from December 31, 2022 - Working capital liability improved by **$59.3 million**, from **$285.5 million** at December 31, 2022, to **$226.2 million** at March 31, 2023[138](index=138&type=chunk) - The improvement was mainly driven by a **$225.5 million** decrease in other accrued liabilities (contingent consideration and incentive payments) and a **$26.9 million** decrease in accounts payable (due to no commodity derivative contracts outstanding)[138](index=138&type=chunk) - This was partially offset by a **$179.6 million** lower cash balance and **$19.0 million** higher operating lease liabilities[138](index=138&type=chunk) [Capital Employed](index=28&type=section&id=Capital%20Employed) Total capital employed increased to **$6,960.5 million** at March 31, 2023, with long-term debt at **26.2%** and shareholders' equity at **73.8%** Capital Employed (Millions of dollars) | Item | March 31, 2023 Amount | March 31, 2023 % | December 31, 2022 Amount | December 31, 2022 % | | :---------------------- | :-------------------- | :--------------- | :----------------------- | :------------------ | | Long-term debt | $1,823.0 | 26.2% | $1,822.4 | 26.7% | | Murphy shareholders' equity | $5,137.6 | 73.8% | $4,994.8 | 73.3% | | Total capital employed | $6,960.5 | 100.0% | $6,817.2 | 100.0% | - Approximately **$100.0 million** of cash and cash equivalents were held outside the U.S. as of March 31, 2023, with the majority in Canada, U.K., Mexico, and Brunei[141](index=141&type=chunk) [Accounting changes and recent accounting pronouncements](index=29&type=section&id=Accounting%20changes%20and%20recent%20accounting%20pronouncements) - Refer to Note B to the Consolidated Financial Statements for details on accounting changes and recent accounting pronouncements[142](index=142&type=chunk) [Outlook](index=29&type=section&id=Outlook) - The NYMEX WTI forward curve prices for the remainder of 2023 and 2024 were lower at **$74.52** and **$70.76** per barrel, respectively, as of May 1, 2023[142](index=142&type=chunk) - Production for Q2 2023 is expected to average between **173.0** and **181.0 MBOEPD**, excluding noncontrolling interest[142](index=142&type=chunk) - Capital expenditure spend for 2023 is projected to be between **$875.0 million** and **$1,025.0 million**, primarily funded by operating cash flow and available cash[143](index=143&type=chunk) Forward Fixed-Price Delivery Contracts (as of May 1, 2023) | Area | Commodity | Type | Volumes (MMcf/d) | Price/Mcf | Remaining Period Start Date | End Date | | :----- | :---------- | :----------------------- | :--------------- | :-------- | :-------------------------- | :--------- | | Canada | Natural Gas | Fixed price forward sales | 250 | C$2.35 | 4/1/2023 | 12/31/2023 | | Canada | Natural Gas | Fixed price forward sales | 162 | C$2.39 | 1/1/2024 | 12/31/2024 | | Canada | Natural Gas | Fixed price forward sales | 25 | US$1.98 | 4/1/2023 | 10/31/2024 | | Canada | Natural Gas | Fixed price forward sales | 15 | US$1.98 | 11/1/2024 | 12/31/2024 | [Forward-Looking Statements](index=30&type=section&id=Forward-Looking%20Statements) - The report contains forward-looking statements regarding future operating results, production, reserves, costs, cash flows, and capital allocation decisions, which are subject to inherent risks and uncertainties[146](index=146&type=chunk) - Key risk factors include macro conditions in the oil and gas industry, commodity price volatility, reduced customer demand, adverse foreign exchange movements, and political/regulatory instability[146](index=146&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Murphy Oil Corporation is exposed to market risks from interest rates, commodity prices, and foreign currency exchange rates, with no derivative contracts in place as of March 31, 2023 - The Company is exposed to market risks from interest rates, commodity prices (crude oil, natural gas, petroleum products), and foreign currency exchange rates[148](index=148&type=chunk) - As of March 31, 2023, there were no derivative commodity contracts or foreign exchange contracts in place[149](index=149&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) The Company's disclosure controls and procedures were effective as of March 31, 2023, with no material changes in internal control over financial reporting during the quarter - The Company's disclosure controls and procedures were effective as of March 31, 2023[151](index=151&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2023[152](index=152&type=chunk) PART II – OTHER INFORMATION [ITEM 1. LEGAL PROCEEDINGS](index=32&type=section&id=Item%201.%20Legal%20Proceedings) The Company is involved in routine legal proceedings, with no material adverse effect expected on net income, financial condition, or liquidity from their resolution - The Company is engaged in routine legal proceedings, including litigation related to climate change[154](index=154&type=chunk) - The ultimate resolution of these legal matters is not expected to materially adversely affect the Company's net income, financial condition, or liquidity[154](index=154&type=chunk) [ITEM 1A. RISK FACTORS](index=32&type=section&id=Item%201A.%20Risk%20Factors) The Company's oil and natural gas operations involve inherent risks and uncertainties, with no new risk factors identified beyond the 2022 Form 10-K disclosures - The Company's operations are subject to various risks and uncertainties inherent in the oil and natural gas business[155](index=155&type=chunk) - No new risk factors have been identified that were not previously disclosed in the 2022 Form 10-K report[155](index=155&type=chunk) [ITEM 6. EXHIBITS](index=32&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q report, including Sarbanes-Oxley Act certifications and Inline XBRL documents - The exhibit index includes certifications required by Rule 13a-14(a) pursuant to Section 302 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002[163](index=163&type=chunk) - Inline XBRL documents (Instance, Schema, Calculation, Definition, Labels, Presentation Linkbase) and the Cover Page Interactive Data File are also included[163](index=163&type=chunk) [SIGNATURE](index=33&type=section&id=Signature) - The report was duly signed on behalf of Murphy Oil Corporation by Paul D. Vaughan, Vice President and Controller (Chief Accounting Officer), on May 3, 2023[159](index=159&type=chunk)[160](index=160&type=chunk)

PART I [Item 1. Business](index=3&type=section&id=Item%201.%20BUSINESS) Murphy Oil Corporation is a global oil and natural gas E&P company committed to reducing GHG emissions and eliminating routine flaring by 2030 - Murphy Oil Corporation is a global oil and natural gas exploration and production company, with operations subdivided into the United States, Canada, and other countries[11](index=11&type=chunk)[12](index=12&type=chunk) - The company is committed to reducing its GHG emissions intensity by **15-20%** by 2030 (from 2019 levels, excluding Malaysia operations) and eliminating routine flaring by 2030[13](index=13&type=chunk)[69](index=69&type=chunk) - Worldwide 2022 production on a barrel of oil equivalent basis was **175,156 barrels of oil equivalent per day**, a **4.7%** increase compared to 2021[18](index=18&type=chunk) [Exploration and Production](index=3&type=section&id=Exploration%20and%20Production) Murphy's E&P activities are concentrated in the U.S. and Canada, with global exploration interests and winding down Australian operations - Primary E&P activities are conducted in the United States (Gulf of Mexico, Eagle Ford Shale) and Canada (Tupper Montney, Kaybob Duvernay, Hibernia, Terra Nova fields)[16](index=16&type=chunk)[17](index=17&type=chunk)[20](index=20&type=chunk)[25](index=25&type=chunk) - Exploration interests are held in Australia, Brazil, Brunei, Mexico, and Vietnam[17](index=17&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) - Murphy is in the process of winding down operations in Australia[17](index=17&type=chunk) [United States](index=3&type=section&id=United%20States) In 2022, U.S. operations produced **99,626 barrels** of crude oil/NGLs and **92 MMCF** of natural gas daily, with Gulf of Mexico contributing **70%** of U.S. hydrocarbon production 2022 U.S. Daily Production Volumes | Product | Daily Production (barrels/day or MMCF/day) | % of Worldwide Production | | :--------------- | :--------------------------------------- | :------------------------ | | Crude Oil & NGLs | 99,626 barrels/day | 92.2% | | Natural Gas | 92 MMCF/day | 23.0% | - Offshore Gulf of Mexico operations hold approximately **620 thousand gross acres** and contributed approximately **70%** of total U.S. hydrocarbon production in 2022. Key fields include Khaleesi, Mormont, Cascade, Chinook, Neidermeyer, Dalmatian, St. Malo, Kodiak, and Lucius, with the Khaleesi Mormont Samurai development project achieving first oil in 2022[22](index=22&type=chunk)[23](index=23&type=chunk) - Onshore Eagle Ford Shale holds approximately **133 thousand gross acres** and contributed approximately **30%** of total U.S. hydrocarbon production in 2022, with daily production of **29,556 barrels** of oil and liquids and **28.8 MMCF** of natural gas[24](index=24&type=chunk) [Canada](index=4&type=section&id=Canada) Canadian operations produced **4,908 barrels** of liquids and **310 MMCF** of natural gas daily in 2022, with Terra Nova production expected to resume in the first half of 2023 - Onshore Canada operations include Tupper Montney (**100%** owned, ~**142 thousand gross acres**), Kaybob Duvernay (**70%** operated), and Placid Montney (**30%** non-operated, ~**289 thousand gross acres**)[25](index=25&type=chunk)[26](index=26&type=chunk) - Daily production in onshore Canada averaged **4,908 barrels** of liquids and **310 MMCF** of natural gas in 2022[26](index=26&type=chunk) - Offshore Canada includes interests in Hibernia (**6.5%** in Main, **4.3%** in South Extension) and Terra Nova (**18%** working interest). Terra Nova did not produce in 2022 due to an asset life extension project, with production expected to resume in the first half of 2023 and asset life extended to 2032[28](index=28&type=chunk)[29](index=29&type=chunk) [Australia](index=5&type=section&id=Australia) Murphy holds one offshore exploration permit in Australia (**482 thousand gross acres**) without operator status or drilling commitment, and is winding down operations - Holds interest in approximately **482 thousand gross acres** in one offshore exploration permit in Australia[30](index=30&type=chunk) - Murphy is not the operator and the permit does not have a drilling commitment[30](index=30&type=chunk) - The company is in the process of winding down operations in Australia[17](index=17&type=chunk) [Brazil](index=5&type=section&id=Brazil) Murphy holds a **20%** working interest in nine offshore blocks in Brazil, transitioned to **100%** operator in three Potiguar Basin blocks in 2022, with **2.5 million gross acres** total - Holds a **20%** working interest in nine offshore blocks in the Sergipe-Alagoas Basin, with ExxonMobil as the operator[31](index=31&type=chunk) - Transitioned to **100%** operator in three Potiguar Basin blocks in 2022, previously holding a **30%** working interest[32](index=32&type=chunk) - Total acreage position in Brazil is approximately **2.5 million gross acres** as of December 31, 2022, with no well commitments[32](index=32&type=chunk) [Brunei](index=5&type=section&id=Brunei) As of December 31, 2022, Murphy held an **8.051%** working interest in Block CA-1 (**1.4 million gross acres**), sold Block CA-2 interest, and reported **700 barrels per day** oil production - Holds an **8.051%** working interest in Block CA-1 (**1.4 million gross acres**) as of December 31, 2022[33](index=33&type=chunk) - Sold its **30%** working interest in Block CA-2 during 2022[33](index=33&type=chunk) - Oil production in 2022 was **700 barrels of oil per day** for Brunei[33](index=33&type=chunk) - Total proved reserves for Jagus East discovery in Block CA-1 at December 31, 2022, were approximately **0.5 million barrels** of liquids and **0.2 billion cubic feet** of natural gas[33](index=33&type=chunk) [Mexico](index=5&type=section&id=Mexico) Murphy operates Block 5 in Mexico's deepwater Salinas Basin (**40%** working interest, **640 thousand gross acres**), with a 2022 exploration well finding no commercial hydrocarbons - Operates Block 5 in the deepwater Salinas Basin with a **40%** working interest, covering approximately **640 thousand gross acres**[34](index=34&type=chunk) - An exploration well drilled in 2022 did not find commercial hydrocarbons, following a commitment well drilled in 2019[34](index=34&type=chunk) [Vietnam](index=5&type=section&id=Vietnam) Murphy holds interests in **7.3 million gross acres** across four blocks in Vietnam, operating all PSCs, with the LDV field development plan awaiting approval and an exploration well anticipated by 2024 - Holds interest in **7.3 million gross acres**, including **65%** working interest in blocks 144 and 145, and **40%** interest in Block 15-1/05 and Block 15-2/17, operating all three PSCs[35](index=35&type=chunk) - The Field Development Plan for the Lac Da Vang (LDV) discovered field is being progressed for final government approval[36](index=36&type=chunk) - An exploration commitment well for Block 15-2/17 is tentatively scheduled for 2024[37](index=37&type=chunk) [Proved Reserves](index=6&type=section&id=Proved%20Reserves) Murphy's total proved reserves were **715.4 MMBOE** at year-end 2022, a **1.5 MMBOE** decrease from 2021 due to production and price revisions, partially offset by extensions, improved recovery, and acquisitions Total Proved Reserves (December 31, 2022) | Category | All Products (MMBOE) | Crude Oil (MMBBL) | Natural Gas Liquids (MMBBL) | Natural Gas (BCF) | | :------------------ | :------------------- | :---------------- | :-------------------------- | :---------------- | | Proved Developed | 436.0 | 209.0 | 29.7 | 1,183.1 | | Proved Undeveloped | 279.4 | 94.6 | 12.0 | 1,036.8 | | **Total Proved Reserves** | **715.4** | **303.6** | **41.7** | **2,219.9** | Reconciliation of Proved Reserves (MMBOE) - 2022 | Metric | Total Proved Reserves (MMBOE) | Total Proved Undeveloped Reserves (MMBOE) | | :------------------------------ | :---------------------------- | :---------------------------------------- | | Beginning of year | 716.9 | 297.7 | | Revisions of previous estimates | (23.6) | (8.1) | | Extensions and discoveries | 80.1 | 79.4 | | Improved recovery | 5.3 | 5.3 | | Conversions to proved developed | — | (96.9) | | Purchases of properties | 5.0 | 2.0 | | Sale of properties | (4.4) | — | | Production | (63.9) | — | | **End of year** | **715.4** | **279.4** | - Total proved reserves decreased by **1.5 MMBOE** in 2022, primarily due to **63.9 MMBOE** of production and negative price revisions in Tupper Montney, offset by extensions (**58.5 MMBOE** in onshore Canada, **15.8 MMBOE** in offshore U.S. Gulf of Mexico and offshore Canada, **5.8 MMBOE** in Eagle Ford Shale), improved recovery, and acquisitions[40](index=40&type=chunk) - Proved undeveloped reserves decreased by **18.3 MMBOE** in 2022, with the majority migrating to the proved developed category due to drilling in Tupper Montney, Kaybob Duvernay, Gulf of Mexico, and Eagle Ford Shale. The Company spent approximately **$770 million** in 2022 to convert proved undeveloped reserves to proved developed reserves, and expects to spend **$350 million to $650 million** per year for the next three years[41](index=41&type=chunk)[42](index=42&type=chunk) [Murphy Oil's Reserves Processes and Policies](index=8&type=section&id=Murphy%20Oil's%20Reserves%20Processes%20and%20Policies) Murphy's proved reserves are estimated internally following SEC guidelines, reviewed by an independent Corporate Reserves group, and **98.0%** were third-party audited in 2022 within acceptable tolerance - Proved reserves estimates are prepared by Murphy's employees, following SEC guidelines, and are consolidated and reported through the Corporate Reserves group, which is independent of operational management[47](index=47&type=chunk)[49](index=49&type=chunk) - In 2022, **98.0%** of the Company's proved reserves were audited by third-party auditors (Ryder Scott Company, L.P. and McDaniel & Associates Consultants Ltd.) and found to be within the acceptable **10.0%** tolerance[49](index=49&type=chunk) - Qualified Reserve Estimators (QREs) with specific educational and experience requirements are responsible for estimating and evaluating reserves, supported by annual training on SEC requirements and best practices[50](index=50&type=chunk)[51](index=51&type=chunk) [Acreage and Well Count](index=10&type=section&id=Acreage%20and%20Well%20Count) As of December 31, 2022, Murphy held **13.66 million gross acres** (**7.03 million net acres**) worldwide, with **1,281 gross oil wells** and **443 gross natural gas wells**, completing **51.2 net development wells** in 2022 Acreage Held by Geographic Area (Thousands of acres) - December 31, 2022 | Area | Gross Developed | Net Developed | Gross Undeveloped | Net Undeveloped | Total Gross | Total Net | | :------------ | :-------------- | :------------ | :---------------- | :-------------- | :---------- | :---------- | | United States | 169 | 123 | 584 | 294 | 753 | 417 | | Canada | 253 | 127 | 307 | 196 | 560 | 323 | | Mexico | — | — | 636 | 254 | 636 | 254 | | Brazil | — | — | 2,453 | 1,110 | 2,453 | 1,110 | | Australia | — | — | 482 | 241 | 482 | 241 | | Brunei | 2 | — | 1,446 | 116 | 1,448 | 116 | | Vietnam | — | — | 7,324 | 4,571 | 7,324 | 4,571 | | Spain | — | — | 8 | 1 | 8 | 1 | | **Totals** | **424** | **250** | **13,240** | **6,783** | **13,664** | **7,033** | - Significant net acreage is scheduled to expire in the next three years: 2023 (**241k** Australia, **116k** Brunei, **75k** Brazil, **34k** onshore Canada, **16k** Gulf of Mexico, **5k** Mexico, **1k** Spain); 2024 (**4.5M** Vietnam, **47k** Gulf of Mexico, **17k** onshore Canada); 2025 (**249k** Mexico, **37k** Brazil, **7k** Gulf of Mexico, **5k** onshore Canada)[61](index=61&type=chunk)[62](index=62&type=chunk) Producing Wells (December 31, 2022) | Country | Gross Oil Wells | Net Oil Wells | Gross Natural Gas Wells | Net Natural Gas Wells | | :------------ | :-------------- | :------------ | :---------------------- | :-------------------- | | United States | 1,216 | 951 | 43 | 10 | | Canada | 65 | 18 | 400 | 338 | | **Totals** | **1,281** | **969** | **443** | **348** | Net Wells Drilled and Completed (Last Three Years) | Year | Productive (net wells) | Dry (net wells) | | :--- | :--------------------- | :-------------- | | 2022 | 51.2 | 0.6 | | 2021 | 42.5 | 0.1 | | 2020 | 30.4 | 0.4 | Drilling Wells in Progress (December 31, 2022) | Country | Gross Exploration | Net Exploration | Gross Development | Net Development | Total Gross | Total Net | | :------------ | :---------------- | :-------------- | :---------------- | :-------------- | :---------- | :---------- | | United States | 1.0 | 0.3 | 19.0 | 8.6 | 20.0 | 8.9 | | Canada | — | — | 5.0 | 5.0 | 5.0 | 5.0 | | **Totals** | **1.0** | **0.3** | **24.0** | **13.6** | **25.0** | **13.9** | [Sustainability](index=12&type=section&id=Sustainability) Murphy is committed to mitigating climate change risks, targeting **15-20%** GHG emissions intensity reduction and eliminating routine flaring by 2030, while maintaining a strong HSE culture and fostering DE&I - Murphy is committed to reducing GHG emissions, with a target of **15-20%** intensity reduction by 2030 (from 2019 levels) and eliminating routine flaring by 2030[69](index=69&type=chunk) - The company is subject to various international, foreign, national, state, provincial, and local environmental, health, and safety laws and regulations, including those related to GHG emissions, water discharges, and wildlife protection[71](index=71&type=chunk)[80](index=80&type=chunk) - Murphy strives for incident-free operations through its Health, Safety, Environment (HSE) Management System, continuous improvement processes, regular training, and targeted safety initiatives[81](index=81&type=chunk) - Human capital management strategy focuses on attracting, recruiting, developing, and engaging talent, with performance-based compensation, continuous training via 'My Murphy Learning,' and leadership development programs[85](index=85&type=chunk)[86](index=86&type=chunk)[88](index=88&type=chunk) - The company is committed to fostering work environments that value diversity, equity, and inclusion (DE&I), with the Board of Directors receiving regular DE&I updates[94](index=94&type=chunk) Female and Minority Representation (December 31, 2022) | Category | Female Representation (U.S. and International) | Minority Representation (U.S.-Based Only) | | :------------------------------ | :--------------------------------------------- | :---------------------------------------- | | Executive and Senior Level Managers | 16 % | 26 % | | First- and Mid-Level Managers | 23 % | 26 % | | Professionals | 35 % | 39 % | | Other (Administrative Support and Field) | 5 % | 30 % | | **Total** | **21 %** | **33 %** | [ESG Disclosure](index=16&type=section&id=ESG%20Disclosure) Murphy publishes an annual sustainability report adhering to internationally recognized ESG frameworks and standards, with its fourth report published in 2022 - Publishes an annual sustainability report according to internationally recognized ESG reporting frameworks and standards (SASB, TCFD, GRI: Core option, Ipieca, API)[98](index=98&type=chunk) - The fourth annual sustainability report was published in 2022[99](index=99&type=chunk) [Website Access to SEC Reports](index=16&type=section&id=Website%20Access%20to%20SEC%20Reports) Murphy Oil Corporation provides free access to its public disclosures (Form 10-K, 10-Q, and 8-K) on its Investor Relations website and the SEC's website - The Company's public disclosures (Form 10-K, 10-Q, 8-K, etc.) are available free of charge on its Investor Relations website (www.murphyoilcorp.com) and the SEC's website (www.sec.gov)[100](index=100&type=chunk)[101](index=101&type=chunk) [Item 1A. Risk Factors](index=17&type=section&id=Item%201A.%20RISK%20FACTORS) Murphy Oil Corporation faces various risks that could materially impact its operations and financial performance, including commodity price volatility, operational hazards, reserve replacement challenges, reliance on partners, and extensive environmental and regulatory compliance - The Board of Directors exercises oversight of the Company's enterprise risk management program, which includes strategic, operational, financial, compliance, and legal risks[102](index=102&type=chunk) - Significant variable factors impacting results include volatility in global prices of crude oil, natural gas liquids, and natural gas, which are influenced by supply/demand, geopolitical events, and governmental policies[104](index=104&type=chunk)[105](index=105&type=chunk) - Operational risks include competition, exploration drilling results (e.g., dry holes in Brazil and Mexico in 2022), the need to replace oil and natural gas reserves, reliance on joint venture partners, and exposure to operational hazards and severe weather events[112](index=112&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk)[121](index=121&type=chunk)[124](index=124&type=chunk) - Financial risks encompass the availability of capital financing, potential impacts of interest rates, foreign exchange rate fluctuations, and credit risks from customers, partners, and counterparties[138](index=138&type=chunk)[142](index=142&type=chunk)[146](index=146&type=chunk) [Price Risk Factors](index=17&type=section&id=Price%20Risk%20Factors) Volatility in crude oil and natural gas prices significantly impacts Murphy's operating results, cash flows, and financial condition, influenced by global supply/demand and geopolitical events, with derivative contracts used to hedge price exposure - Volatility in global crude oil, natural gas liquids, and natural gas prices significantly affects the Company's operating results, cash flows, and financial condition[104](index=104&type=chunk) - Factors influencing prices include epidemics/pandemics, worldwide supply/demand, OPEC+ actions, political instability (e.g., Russia-Ukraine conflict), climate change, natural disasters, alternative energy competition, conservation efforts, technological advances, activism against oil and gas, governmental regulations/taxes, and general economic conditions[105](index=105&type=chunk) Average Commodity Prices (2019-2022) | Commodity | 2022 | 2021 | 2020 | 2019 | | :------------------------ | :------ | :------ | :------ | :------ | | WTI Crude Oil (per barrel) | $94 | $68 | $39 | $57 | | NYMEX Natural Gas (per MMBTU) | $6.38 | $3.84 | $1.99 | N/A | | AECO Natural Gas (per MMBTU) | US$4.09 | US$2.89 | US$1.66 | N/A | - Lower prices can reduce cash flows and net income, lead to capital expenditure reductions, impairment charges, reductions in proved reserves, impact liquidity, and cause lower dividends[108](index=108&type=chunk)[111](index=111&type=chunk) - The Company uses derivative contracts (forwards, swaps, collars) to hedge commodity price exposure, which may limit the ability to fully benefit from future price increases[108](index=108&type=chunk)[110](index=110&type=chunk) [Operational Risk Factors](index=19&type=section&id=Operational%20Risk%20Factors) Murphy operates in a highly competitive oil and natural gas industry, facing challenges in securing acreage, licenses, and talent, with inherent exploration drilling risks, continuous reserve replacement needs, reliance on partners, exposure to hazards and severe weather, and extensive EHS regulations - Murphy operates in highly competitive environments, competing for acreage, exploration licenses, drilling equipment, and talent, which could adversely affect profitability and growth[112](index=112&type=chunk)[113](index=113&type=chunk) - Exploration drilling results can significantly affect operating results, with the Company participating in two unsuccessful exploration wells in Brazil and Mexico in 2022[114](index=114&type=chunk) - The Company's proved reserves are based on professional judgment and are subject to revision due to factors like oil and natural gas prices, operating/capital costs, reservoir performance, and governmental regulations[116](index=116&type=chunk)[117](index=117&type=chunk) - Approximately **31%** of crude oil, **29%** of natural gas liquids, and **47%** of natural gas proved reserves are undeveloped, requiring successful operations for reclassification[118](index=118&type=chunk) - Reliance on joint venture partners (**21%** of 2022 production from fields operated by others) and third-party transportation/processing facilities poses risks if partners cannot fund their share or facilities are unavailable[121](index=121&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk) - Operations are subject to operational hazards, severe weather events (especially in the U.S. Gulf of Mexico), and physical security risks, which could be exacerbated by climate change[124](index=124&type=chunk)[125](index=125&type=chunk) - The Company is subject to numerous environmental, health, and safety laws and regulations, which can result in material liabilities, costs, and operational restrictions, including those related to hydraulic fracturing[128](index=128&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk) [Financial Risk Factors](index=23&type=section&id=Financial%20Risk%20Factors) Murphy's capital financing is critical, with availability influenced by market conditions, performance, credit ratings, and investor sentiment regarding climate change, alongside foreign exchange rate fluctuations, credit risks, and supply chain costs - Capital financing may not always be available to fund activities, and interest rates could impact cash flows; the Company entered into an **$800 million** revolving credit facility (RCF) in November 2022, with no outstanding borrowings as of December 31, 2022[138](index=138&type=chunk) - The Company's ability to obtain additional financing is affected by market environment, operating/financial performance, investor sentiment, debt compliance, and credit ratings; a downgrade could increase borrowing costs[139](index=139&type=chunk) - Changes in investors' sentiment or view of risk of the exploration and production industry, including concerns over climate change, could adversely impact the availability of future financing[140](index=140&type=chunk) - Murphy's operations could be adversely affected by changes in foreign exchange rates, particularly with the Canadian dollar as a functional currency for Canadian operations[142](index=142&type=chunk) - The Company is exposed to credit risks associated with sales to customers, joint venture partners, and other counterparties, which are mitigated by monitoring creditworthiness[146](index=146&type=chunk)[151](index=151&type=chunk) - Supply chain costs are subject to pressure during periods of strong crude oil and natural gas prices and wider economic inflation, leading to higher demand and costs for goods and services[144](index=144&type=chunk) [General Risk Factors](index=25&type=section&id=General%20Risk%20Factors) Murphy faces general risks including health epidemics, changes in tax rules, cybersecurity threats, political developments, governmental interventions, and non-governmental activism, all impacting market conditions, regulations, and the fossil fuels business model, with potentially inadequate insurance coverage - Health epidemics, pandemics, and similar outbreaks (e.g., COVID-19) may have material adverse effects on business, financial position, results of operations, and cash flows, causing commodity price volatility and supply chain disruptions[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[152](index=152&type=chunk) - Changes in U.S. and international tax rules and regulations, such as the Inflation Reduction Act of 2022, may materially and adversely affect cash flows, results of operations, and financial condition[153](index=153&type=chunk) - The Company's Information Technology environment is exposed to cyber threats, which could halt business operations, impair reputation, and adversely impact financial condition; mitigation focuses on people, process, and technology[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk) - Domestic and worldwide political developments, including governmental interventions (e.g., U.S. presidential administration's approach to oil and gas leasing/permitting) and non-governmental activism, can affect operations and earnings[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk)[163](index=163&type=chunk) - The SEC's proposed climate disclosure rules could be costly and time-consuming to implement[160](index=160&type=chunk) - Murphy's insurance may not be adequate to offset costs associated with certain events, and future coverage availability on favorable terms is not assured[166](index=166&type=chunk) - The fossil fuels business model faces long-term challenges from changing environmental and social trends, global demands for non-fossil fuel energy sources, and initiatives to reduce GHG emissions (e.g., Paris Agreement, COP27)[167](index=167&type=chunk)[168](index=168&type=chunk) - Lawsuits against Murphy and its subsidiaries, including those related to climate change, are considered routine and not expected to have a material adverse effect on operating results[169](index=169&type=chunk) [Item 1B. Unresolved Staff Comments](index=28&type=section&id=Item%201B.%20UNRESOLVED%20STAFF%20COMMENTS) As of December 31, 2022, Murphy Oil Corporation had no unresolved comments from the staff of the U.S. Securities and Exchange Commission - The Company had no unresolved comments from the staff of the U.S. Securities and Exchange Commission as of December 31, 2022[171](index=171&type=chunk) [Item 2. Properties](index=28&type=section&id=Item%202.%20PROPERTIES) Descriptions of Murphy Oil Corporation's oil and natural gas properties are provided in Item 1 of this Form 10-K report, with additional details available in the Supplemental Oil and Gas Information section and Note D to the financial statements - Descriptions of the Company's oil and natural gas properties are included in Item 1 of this Form 10-K report, with additional information in the Supplemental Oil and Gas Information section (pages 110-125) and Note D (page 80)[172](index=172&type=chunk) [Item 3. Legal Proceedings](index=28&type=section&id=Item%203.%20LEGAL%20PROCEEDINGS) A comprehensive discussion of Murphy Oil Corporation's legal proceedings is presented in Note R of the financial statements - Discussion of the Company's legal proceedings is included in Note R, beginning on page 103[173](index=173&type=chunk) [Item 4. Mine Safety Disclosures](index=28&type=section&id=Item%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to Murphy Oil Corporation - This item is not applicable[174](index=174&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=30&type=section&id=Item%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY,%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) Murphy Oil Corporation's Common Stock is traded on the NYSE under "MUR"; as of December 31, 2022, there were **2,063** stockholders of record, with cash dividends of **$0.825** per common share in 2022 - The Company's Common Stock is traded on the New York Stock Exchange under the trading symbol "**MUR**"[3](index=3&type=chunk) - There were **2,063** stockholders of record as of December 31, 2022[185](index=185&type=chunk) Cash Dividends per Common Share | Year | Cash Dividends per Common Share | | :--- | :------------------------------ | | 2022 | $0.825 | | 2021 | $0.50 | Cumulative Five-Year Shareholder Returns (2017-2022, $100 Investment) | Year | Murphy Oil Corporation | Peer Group | S&P 500 Index | XOP Index | | :-------------------- | :--------------------- | :--------- | :------------ | :-------- | | 2017 | 100 | 100 | 100 | 100 | | 2018 | 78 | 72 | 96 | 81 | | 2019 | 93 | 79 | 126 | 90 | | 2020 | 44 | 62 | 149 | 58 | | 2021 | 97 | 110 | 192 | 109 | | **2022** | **164** | **169** | **157** | **173** | [Item 6. Reserved](index=32&type=section&id=Item%206.%20RESERVED) This item is reserved and contains no information - This item is reserved[190](index=190&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2022, Murphy Oil Corporation achieved significant financial and operational milestones, including **$965 million** net income and **$650 million** debt reduction, driven by higher commodity prices despite H2 decline, while managing inflationary cost pressures - In 2022, crude oil and natural gas benchmark prices increased due to demand recovery from the COVID-19 pandemic, geopolitical uncertainty (Russia/Ukraine conflict), and lack of investment in the E&P sector, though prices declined in the second half of the year[191](index=191&type=chunk) - The Company is observing higher costs for goods and services due to overall inflation in the wider economy and is managing these input costs through its dedicated procurement department[192](index=192&type=chunk) 2022 Significant Company Operating and Financial Highlights | Highlight | Value | | :---------------------------------------- | :---------------------------------- | | Net income | $965 million | | Net cash provided by operating activities | $2,180.2 million | | Adjusted cash flow | $1,070.8 million | | Production | 175 thousand BOE per day | | Debt reduction | ~$650 million (26% reduction) | | Cash dividend (annualized) | $1.00 per share | | Total proved reserve replacement | 98% | | Year-end proved reserves | 715.4 million BOE | - Liquids from continuing operations represented approximately **62%** of total hydrocarbons produced in 2022, expected to be **63%** in 2023[194](index=194&type=chunk) - The sales price of West Texas Intermediate (WTI) crude oil averaged **$94.23** in 2022 (up **39%** from **$67.91** in 2021), and NYMEX natural gas averaged **$6.38** per MMBTU in 2022 (up from **$3.84** in 2021)[195](index=195&type=chunk)[197](index=197&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) Murphy Oil Corporation reported a net income attributable to Murphy of **$965.0 million** in 2022, a significant improvement from prior losses, driven by higher commodity prices, volumes, and lower impairment charges, with Adjusted EBITDA reaching **$2,096.1 million** Net Income (Loss) Attributable to Murphy and Diluted EPS (2020-2022) | Year | Net Income (Loss) Attributable to Murphy (Millions of dollars) | Diluted EPS | | :--- | :------------------------------------------------------------- | :---------- | | 2022 | $965.0 | $6.13 | | 2021 | $(73.7) | $(0.48) | | 2020 | $(1,148.8) | $(7.48) | Adjusted EBITDA Attributable to Murphy (Non-GAAP) (2020-2022) | Year | Adjusted EBITDA Attributable to Murphy (Millions of dollars) | | :--- | :----------------------------------------------------------- | | 2022 | $2,096.1 | | 2021 | $1,252.6 | | 2020 | $907.3 | Adjusted EBITDA per Barrel of Oil Equivalent Sold (2020-2022) | Year | Adjusted EBITDA per Barrel of Oil Equivalent Sold | | :--- | :------------------------------------------------ | | 2022 | $34.45 | | 2021 | $21.79 | | 2020 | $15.07 | Total Oil and Natural Gas Revenues (2020-2022) | Year | Total Oil and Natural Gas Revenues (Millions of dollars) | | :--- | :------------------------------------------------------- | | 2022 | $4,038.4 | | 2021 | $2,801.1 | | 2020 | $1,751.6 | - Exploration and production (E&P) from continuing operations recorded earnings of **$1,579.1 million** in 2022, a **$862.4 million** favorable change compared to **$716.7 million** in 2021, primarily due to higher commodity prices and volumes, lower impairment charges, and lower DD&A expense[210](index=210&type=chunk) - Corporate activities reported a loss of **$438.3 million** in 2022, a **$229.7 million** favorable variance compared to a loss of **$668.0 million** in 2021, principally due to lower net losses on derivative instruments, lower interest expense, and higher foreign exchange gains[230](index=230&type=chunk) [Production Volumes and Prices](index=43&type=section&id=Production%20Volumes%20and%20Prices) Total hydrocarbon production from continuing operations averaged **175,156 BOEPD** in 2022, a **5%** increase from 2021, driven by new projects and wells, with significantly higher average realized prices across all regions - Total hydrocarbon production from all E&P continuing operations averaged **175,156 BOEPD** in 2022, a **5%** increase from 2021, primarily due to the Khaleesi, Mormont, Samurai field development project and new wells at Tupper Montney[233](index=233&type=chunk) - Average crude oil and condensate production increased by **1,660 barrels per day** in 2022 to **97,365 barrels per day**, mainly from increased production in the Gulf of Mexico[234](index=234&type=chunk) - Natural gas sales volumes averaged **403 MMCFD** in 2022, an increase of **35 MMCFD**, primarily from higher volumes in Canada due to new wells[236](index=236&type=chunk) Weighted Average E&P Sales Prices (2022 vs 2021) | Product | Region | 2022 Price ($/unit) | 2021 Price ($/unit) | | :------------------------ | :---------------- | :------------------ | :------------------ | | Crude oil and condensate | U.S. Onshore | $96.00/barrel | $66.90/barrel | | | U.S. Gulf of Mexico | $94.21/barrel | $66.93/barrel | | | Canada Onshore | $89.88/barrel | $61.79/barrel | | | Canada Offshore | $107.47/barrel | $71.39/barrel | | Natural gas liquids | U.S. Onshore | $33.85/barrel | $26.97/barrel | | | U.S. Gulf of Mexico | $36.01/barrel | $29.14/barrel | | | Canada Onshore | $55.65/barrel | $40.18/barrel | | Natural gas | U.S. Onshore | $6.04/MCF | $3.83/MCF | | | U.S. Gulf of Mexico | $6.97/MCF | $3.67/MCF | | | Canada Onshore | $2.76/MCF | $2.43/MCF | Hydrocarbons Produced (Barrels per day, including NCI) (2020-2022) | Product | 2022 (barrels/day or MCFD) | 2021 (barrels/day or MCFD) | 2020 (barrels/day or MCFD) | | :--------------------------- | :------------------------- | :------------------------- | :------------------------- | | Net crude oil and condensate | 97,365 | 95,705 | 103,966 | | Net natural gas liquids | 10,681 | 10,385 | 11,541 | | Net natural gas (MCFD) | 402,660 | 367,595 | 354,773 | | **Total net hydrocarbons** | **175,156** | **167,356** | **174,636** | [Financial Condition](index=47&type=section&id=Financial%20Condition) Murphy's liquidity is primarily derived from cash on hand, operating activities, and its **$800 million** senior unsecured revolving credit facility (RCF), which had no outstanding borrowings at year-end 2022, with long-term debt reduced by **$643.0 million** - Net cash provided by continuing operating activities increased by **$758.0 million** to **$2,180.2 million** in 2022, primarily due to higher revenue from sales from production driven by higher commodity prices[252](index=252&type=chunk) - Net cash required by investing activities was **$1,109.5 million** in 2022, including **$128.5 million** for additional working interests in the Kodiak and Lucius fields in the Gulf of Mexico[255](index=255&type=chunk) Total Capital Expenditures (Accrual Basis) (2020-2022) | Year | Total Capital Expenditures (Millions of dollars) | | :--- | :----------------------------------------------- | | 2022 | $1,183.2 | | 2021 | $711.2 | | 2020 | $826.6 | - Net cash required by financing activities was **$1,081.6 million** in 2022, principally due to the early redemption of **$647.7 million** in notes, distributions to noncontrolling interest (**$183.0 million**), dividends paid (**$128.2 million**), and contingent consideration payments (**$81.7 million**)[260](index=260&type=chunk) - The Company has an **$800 million** senior unsecured revolving credit facility (RCF) expiring in November 2027, with no outstanding borrowings and approximately **$742 million** available at December 31, 2022[261](index=261&type=chunk)[274](index=274&type=chunk) - Working capital amounted to a net liability of **$285.5 million** at year-end 2022, a decrease of **$13.4 million** from 2021, primarily due to higher accounts receivable and lower accounts payable[263](index=263&type=chunk)[264](index=264&type=chunk) Capital Employed (December 31, 2022) | Category | Amount (Millions of dollars) | % | | :------------------------ | :--------------------------- | :----- | | Long-term debt | $1,822.4 | 26.7 % | | Murphy shareholders' equity | $4,994.8 | 73.3 % | | **Total capital employed** | **$6,817.2** | **100.0 %** | - Long-term debt decreased by **$643.0 million** to **$1,822.4 million** at December 31, 2022, due to early redemptions of various notes[268](index=268&type=chunk) [Environmental, Health and Safety Matters](index=53&type=section&id=Environmental,%20Health%20and%20Safety%20Matters) Murphy manages inherent EHS risks through a robust governance program with board oversight, allocating capital and G&A budget for compliance with extensive EHS laws and regulations, where violations can lead to significant penalties and liabilities - Murphy has established a robust health, safety, and environmental governance program, including a worldwide policy, guiding principles, annual goals, and a management system with oversight at all levels[276](index=276&type=chunk) - The Company allocates a portion of both its capital expenditures and G&A budget toward compliance with existing and anticipated EHS laws and regulations, which increase overall business costs[277](index=277&type=chunk) - EHS laws and regulations address matters such as hazardous materials, GHG emissions, water protection, equipment operation/decommissioning, and employee/community health and safety; violations can result in significant civil and criminal penalties[278](index=278&type=chunk) [Climate Change and Emissions](index=53&type=section&id=Climate%20Change%20and%20Emissions) Murphy acknowledges the link between global energy demand and increasing GHG emissions, assessing its governance, strategy, risk identification, management, and measurement of climate risks and opportunities in alignment with TCFD core elements, with disclosures in its 2022 Sustainability Report - Murphy recognizes that increasing energy demand may generate increasing amounts of GHG, raising climate change concerns[280](index=280&type=chunk) - The Company assesses its governance, strategy, risk identification, management, and measurement of climate risks and opportunities in alignment with the Task Force on Climate-related Financial Disclosures (TCFD) core elements[280](index=280&type=chunk) - Murphy's disclosures related to its alignment with the TCFD are included in the Company's 2022 Sustainability Report[280](index=280&type=chunk) [Other Matters (Impact of inflation)](index=53&type=section&id=Other%20Matters%20(Impact%20of%20inflation)) In 2022, global inflation led to higher costs for goods and services in the oil and gas industry; Murphy mitigates these pressures through its dedicated procurement department and long-term contracts, though commodity price volatility makes future cost prediction challenging - In 2022, global inflation led to higher costs for goods and services in the oil and gas industry, influenced by supply constraints and increasing demand post-COVID-19[281](index=281&type=chunk)[282](index=282&type=chunk) - Murphy manages supply chain and input costs through its dedicated procurement department and is partly protected by long-term contracts for transportation, processing, and production handling services[282](index=282&type=chunk) - The overall volatility of oil and natural gas prices makes it impossible to predict the Company's future cost of oil field goods and services[285](index=285&type=chunk) [Critical Accounting Estimates](index=55&type=section&id=Critical%20Accounting%20Estimates) The preparation of Murphy's consolidated financial statements requires significant estimates and assumptions, particularly concerning oil and natural gas proved reserves, impairment of long-lived assets, income taxes, and retirement/postretirement benefit plans, which are subjective and subject to future revisions - Management must make significant estimates and assumptions for reporting assets, liabilities, revenues, and expenses, particularly for oil and natural gas proved reserves, impairment of long-lived assets, income taxes, and retirement/postretirement benefit plans[287](index=287&type=chunk) - Estimates are subjective and based on projected future events, and actual results may differ, leading to potential future revisions that could be substantial[289](index=289&type=chunk)[290](index=290&type=chunk) [Oil and natural gas proved reserves](index=55&type=section&id=Oil%20and%20natural%20gas%20proved%20reserves) Proved oil and natural gas reserves are estimated with reasonable certainty based on geoscience and engineering data, economic conditions, and SEC guidelines, but are subjective and subject to future revisions due to new information, price changes, and operational decisions - Proved reserves are defined by the SEC as quantities of oil and natural gas estimated with reasonable certainty to be economically producible under existing conditions, using an unweighted average of monthly prices for the year[288](index=288&type=chunk)[289](index=289&type=chunk) - Estimation is a subjective process involving professional judgment and is subject to future revision based on additional information, technological advancements, price changes, and other economic factors, which can lead to adjustments in depreciation rates and impairment expense[290](index=290&type=chunk) - Murphy's estimations integrate geoscience, engineering, and economic data, utilizing industry-accepted methods and reliable geologic and engineering technology to establish 'reasonable certainty' of economic producibility[291](index=291&type=chunk)[292](index=292&type=chunk) [Property, Plant and Equipment - impairment of long-lived assets](index=56&type=section&id=Property,%20Plant%20and%20Equipment%20-%20impairment%20of%20long-lived%20assets) Murphy continually monitors its long-lived assets for impairment, recognized when estimated undiscounted future net cash flows are less than carrying value, involving significant judgment; no impairments were recognized in 2022, but **$196.3 million** in 2021 - The Company evaluates its property, plant and equipment for potential impairment when circumstances indicate that the carrying value may not be recoverable from future cash flows[294](index=294&type=chunk) - Impairment evaluations involve significant judgment based on estimated future events, including projections of future oil and natural gas sales prices, production estimates, future costs, and regulatory changes[295](index=295&type=chunk)[296](index=296&type=chunk) - No impairments were recognized in 2022. In 2021, the Company recognized pretax noncash impairment charges of **$196.3 million**, including **$171.3 million** for Terra Nova and **$25.0 million** for assets held for sale[300](index=300&type=chunk) [Income taxes](index=56&type=section&id=Income%20taxes) Income tax expense requires estimates due to filing delays, audit uncertainties, future events, and regulatory interpretations; Murphy assesses deferred tax assets for realizability and had a U.S. net operating loss of **$2.1 billion** at year-end 2022 - Income tax expense requires estimates due to factors such as filing delays, audit uncertainties, future events impacting recognition, and changes to regulations subject to interpretation[302](index=302&type=chunk) - The Company accounts for income taxes using the asset and liability method, routinely assessing the realizability of deferred tax assets and recording a valuation allowance if it is more likely than not that some portion will not be realized[304](index=304&type=chunk)[402](index=402&type=chunk) - As of December 31, 2022, the Company had a U.S. net operating loss of **$2.1 billion** with a corresponding deferred tax asset of **$442.7 million**, which is believed to be utilized in future periods prior to expirations in 2036 and 2037[305](index=305&type=chunk)[306](index=306&type=chunk)[470](index=470&type=chunk) Net Deferred Tax Assets and Liabilities (Thousands of dollars) - December 31, 2022 | Category | Amount | | :-------------------------------- | :--------- | | Total gross deferred tax assets | $925,788 | | Less valuation allowance | $(136,008) | | **Net deferred tax assets** | **$789,780** | | Total gross deferred tax liabilities | $(886,794) | | **Net deferred tax (liabilities) assets** | **$(97,014)** | [Accounting for retirement and postretirement benefit plans](index=57&type=section&id=Accounting%20for%20retirement%20and%20postretirement%20benefit%20plans) Murphy maintains defined benefit retirement plans and postretirement health care and life insurance benefit plans, with expenses estimated based on actuarial assumptions; a higher weighted average discount rate of **5.42%** at year-end 2022 decreased recorded liabilities, and higher net periodic benefit expense is expected in 2023 with lower cash contributions - The Company maintains defined benefit retirement plans and sponsors health care and life insurance benefit plans, with expenses estimated based on actuarial assumptions including discount rates, expected long-term rate of return on plan assets, and health care cost trend rates[307](index=307&type=chunk)[499](index=499&type=chunk)[500](index=500&type=chunk) - A weighted average discount rate of **5.42%** at year-end 2022 (**2.6%** higher than prior year) decreased the Company's recorded liabilities for retirement plans[308](index=308&type=chunk) - Retirement and postretirement plan expenses in 2023 are expected to be **$6.4 million** higher than 2022, primarily due to the increase in the discount rate assumption for the U.S. pension plan, while cash contributions to all plans are anticipated to be **$6.2 million** lower in 2023[308](index=308&type=chunk)[309](index=309&type=chunk) Funded Status and Net Plan Liability (Thousands of dollars) - December 31, 2022 | Category | Pension Benefits | Other Postretirement Benefits | | :------------------------------ | :--------------- | :---------------------------- | | Obligation at December 31 | $663,073 | $67,679 | | Fair value of plan assets at December 31 | $450,944 | — | | **Net plan liability recognized** | **$(212,129)** | **$(67,679)** | [Recent Accounting Pronouncements](index=57&type=section&id=Recent%20Accounting%20Pronouncements) Murphy Oil Corporation adopted several accounting standards in 2020 and 2021 related to retirement benefits, financial instruments, fair value measurement, and income taxes, none of which had a material impact on its consolidated financial statements, and no recent pronouncements are expected to affect the Company - The Company adopted ASU 2018-14 (Retirement Benefits), ASU 2016-13 (Financial Instruments – Credit Losses), ASU 2018-13 (Fair Value Measurement), and ASU 2019-12 (Income Taxes) in 2020 and 2021[412](index=412&type=chunk)[413](index=413&type=chunk)[414](index=414&type=chunk)[415](index=415&type=chunk) - None of the adopted accounting standards had a material impact on the Company's consolidated financial statements[412](index=412&type=chunk)[413](index=413&type=chunk)[414](index=414&type=chunk)[415](index=415&type=chunk) - There are no recent accounting pronouncements affecting the Company[416](index=416&type=chunk) [Contractual obligations and guarantees](index=58&type=section&id=Contractual%20obligations%20and%20guarantees) Murphy Oil Corporation has total future cash payment obligations of **$6.84 billion** after 2022, stemming from debt arrangements, operating leases, and purchase obligations, plus **$232.4 million** in outstanding letters of credit and certain off-balance sheet arrangements Contractual Obligations and Arrangements (Millions of dollars) - Payments Due After 2022 | Category | Total | 2023 | 2024 - 2025 | 2026 - 2027 | After 2027 | | :---------------------------------------- | :--------- | :----- | :---------- | :---------- | :--------- | | Debt, excluding interest | $1,833.6 | $— | $248.7 | $543.2 | $1,041.7 | | Operating leases and other leases | $1,268.6 | $271.9 | $323.6 | $123.6 | $549.5 | | Capital expenditures, drilling rigs and other | $1,230.5 | $552.3 | $245.9 | $151.2 | $281.1 | | Other long-term liabilities, including debt interest | $2,508.4 | $124.4 | $362.6 | $430.2 | $1,591.2 | | **Total** | **$6,841.1** | **$948.6** | **$1,180.8** | **$1,248.2** | **$3,463.5** | - Total outstanding letters of credit were **$232.4 million** as of December 31, 2022[315](index=315&type=chunk) - Material off-balance sheet arrangements include U.S. transportation contracts requiring minimum monthly payments through 2045 and onshore Canada processing contracts through 2051[316](index=316&type=chunk) [Outlook](index=59&type=section&id=Outlook) Murphy anticipates continued volatility in commodity prices, with 2023 capital expenditure projected between **$875 million** and **$1025 million**, and average daily production expected to be **182,700 to 190,700 BOE per day**, utilizing surplus cash according to its capital allocation framework - Prices for the Company's primary products are often volatile; NYMEX WTI forward curve prices for the remainder of 2023 and 2024 were **$75.05** and **$71.85 per barrel**, respectively, as of February 23, 2023[318](index=318&type=chunk) - Capital expenditure for 2023 is expected to be between **$875 million** and **$1025 million** (excluding noncontrolling interest), primarily funded by operating cash flow and available cash[319](index=319&type=chunk) - Average daily production in 2023 is expected to be between **182,700** and **190,700 BOE per day** (including noncontrolling interest of **7,200 BOEPD**)[320](index=320&type=chunk) - The Company plans to utilize surplus cash in accordance with its capital allocation framework[321](index=321&type=chunk) Natural Gas Derivative Contracts (Canada) | Area | Commodity | Type | Volumes (MMcf/d) | Price/MCF | Start Date | End Date | | :----- | :---------- | :------------------------ | :--------------- | :-------- | :--------- | :--------- | | Canada | Natural Gas | Fixed price forward sales | 269 | C$2.36 | 1/1/2023 | 3/31/2023 | | Canada | Natural Gas | Fixed price forward sales | 250 | C$2.35 | 4/1/2023 | 12/31/2023 | | Canada | Natural Gas | Fixed price forward sales | 162 | C$2.39 | 1/1/2024 | 12/31/2024 | | Canada | Natural Gas | Fixed price forward sales | 25 | US$1.98 | 1/1/2023 | 10/31/2024 | | Canada | Natural Gas | Fixed price forward sales | 15 | US$1.98 | 11/1/2024 | 12/31/2024 | [Forward-Looking Statements](index=59&type=section&id=Forward-Looking%20Statements) This Form 10-K contains forward-looking statements regarding future operating results, production, reserves, costs, cash flows, debt, ESG targets, and dividends, which are subject to inherent risks, uncertainties, and assumptions, and Murphy undertakes no duty to update these statements except as required by law - Forward-looking statements are identified by words such as "anticipate," "expect," "plan," "will," and similar expressions, and relate to future operating results, activities, returns, reserve replacement, production, cost control, cash flows, debt, ESG matters, and dividends[323](index=323&type=chunk) - These statements are subject to inherent risks, uncertainties, and assumptions, including macro conditions in the oil and gas industry, exploration success rates, reduced customer demand, adverse foreign exchange movements, political and regulatory instability, health pandemics (e.g., COVID-19), natural hazards, regulatory approvals, and capital market conditions[324](index=324&type=chunk) - Murphy undertakes no duty to publicly update or revise any forward-looking statements, except as required by law[324](index=324&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=61&type=section&id=Item%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Murphy Oil Corporation is exposed to market risks associated with prices of crude oil, natural gas, and petroleum products, foreign currency exchange rates, and interest rates, utilizing derivative instruments to manage these risks, with long-term debt at **$1,822.4 million** at year-end 2022 - The Company is exposed to market risks associated with prices of crude oil, natural gas, and petroleum products, foreign currency exchange rates, and interest rates[325](index=325&type=chunk) - Murphy uses derivative financial and commodity instruments to manage these risks[325](index=325&type=chunk) - There were no outstanding crude oil derivative contracts or foreign exchange contracts as of December 31, 2022[325](index=325&type=chunk)[326](index=326&type=chunk) - At December 31, 2022, long-term debt was **$1,822.4 million**, with fixed-rate notes having a weighted average coupon of **6.2%**[326](index=326&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=61&type=section&id=Item%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This item refers to the consolidated financial statements and supplementary data, which are located on pages 63 through 127 of this Form 10-K report - Information required by this item appears on pages 63 through 127 of this Form 10-K report[327](index=327&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=61&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There were no changes in or disagreements with accountants on accounting and financial disclosure for Murphy Oil Corporation - None[328](index=328&type=chunk) [Item 9A. Controls and Procedures](index=62&type=section&id=Item%209A.%20Controls%20and%20Procedures) Murphy's management concluded that the company's disclosure controls and procedures were effective as of December 31, 2022, and internal control over financial reporting was effective, a conclusion independently audited by KPMG LLP - The principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures were effective as of December 31, 2022[330](index=330&type=chunk) - Management concluded that the Company's internal control over financial reporting was effective as of December 31, 2022, based on the COSO framework[331](index=331&type=chunk) - KPMG LLP, an independent registered public accounting firm, expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting[331](index=331&type=chunk) - There were no changes in the Company's internal controls over financial reporting that materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the fourth quarter of 2022[332](index=332&type=chunk) [Item 9B. Other Information](index=62&type=section&id=Item%209B.%20Other%20Information) This item states that there is no other information to report - None[333](index=333&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=62&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item states that there is no disclosure regarding foreign jurisdictions that prevent inspections - None[333](index=333&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=63&type=section&id=Item%2010.%20DIRECTORS,%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) Information regarding Murphy Oil Corporation's executive officers is provided on page 29; other required information is incorporated by reference from the May 10, 2023 Proxy Statement, and Murphy has adopted a Code of Ethical Conduct - Certain information regarding executive officers is included on page 29 of this Form 10-K report[335](index=335&type=chunk) - Other required information is incorporated by reference to the Registrant's definitive Proxy Statement relating to the Annual Meeting of Stockholders on May 10, 2023[335](index=335&type=chunk) - Murphy Oil has adopted a Code of Ethical Conduct for Executive Management, available under the Corporate Governance tab at www.murphyoilcorp.com[335](index=335&type=chunk) [Item 11. Executive Compensation](index=63&type=section&id=Item%2011.%20EXECUTIVE%20COMPENSATION) Information concerning executive compensation for Murphy Oil Corporation is incorporated by reference from the company's definitive Proxy Statement for the Annual Meeting of Stockholders on May 10, 2023 - Information required by this item is incorporated by reference to Murphy's definitive Proxy Statement for the Annual Meeting of Stockholders on May 10, 2023[336](index=336&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=63&type=section&id=Item%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) Information regarding security ownership of certain beneficial owners and management, as well as related stockholder matters, is incorporated by reference from Murphy Oil Corporation's definitive Proxy Statement for the Annual Meeting of Stockholders on May 10, 2023 - Information required by this item is incorporated by reference to Murphy's definitive Proxy Statement for the Annual Meeting of Stockholders on May 10, 2023[337](index=337&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=63&type=section&id=Item%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS,%20AND%20DIRECTOR%20INDEPENDENCE) Information pertaining to certain relationships and related transactions, along with director independence, is incorporated by reference from Murphy Oil Corporation's definitive Proxy Statement for the Annual Meeting of Stockholders on May 10, 2023 - Information required by this item is incorporated by reference to Murphy's definitive Proxy Statement for the Annual Meeting of Stockholders on May 10, 2023[338](index=338&type=chunk) [Item 14. Principal Accounting Fees and Services](index=63&type=section&id=Item%2014.%20PRINCIPAL%20ACCOUNTING%20FEES%20AND%20SERVICES) KPMG LLP serves as Murphy Oil Corporation's independent registered public accounting firm; information regarding principal accounting fees and services is incorporated by reference from the company's definitive Proxy Statement for the Annual Meeting of Stockholders on May 10, 2023 - Our independent registered public accounting firm is KPMG LLP, Houston, TX, Auditor Firm ID: 185[338](index=338&type=chunk) - Information required by this item is incorporated by reference to Murphy's definitive Proxy Statement for the Annual Meeting of Stockholders on May 10, 2023[339](index=339&type=chunk) PART IV [Item 15. Exhibits, Financial Statement Schedules](index=64&type=sectio

Murphy Oil Corporation (NYSE:MUR) Q4 2022 Earnings Conference Call January 26, 2022 9:00 AM ET Company Participants Kelly Whitley - Vice President, Investor Relations & Communications Roger Jenkins - President & Chief Executive Officer Tom Mireles - Executive Vice President & Chief Financial Officer Eric Hambly - Executive Vice President of Operations Conference Call Participants Arun Jayaram - JPMorgan Charles Meade - Johnson Rice Leo Mariani - MKM Paul Cheng - Scotiabank Neal Dingmann - Truist Securities ...

Murphy Oil Corporation (NYSE:MUR) Q3 2022 Earnings Conference Call November 3, 2022 10:00 AM ET Company Participants Kelly Whitley - Vice President, Investor Relations & Communications Roger Jenkins - President & Chief Executive Officer Tom Mireles - Executive Vice President & Chief Financial Officer Eric Hambly - Executive Vice President, Operations Conference Call Participants Neal Dingmann - Truist Securities Leo Mariani - MKM Paul Cheng - Scotiabank Charles Meade - Johnson Rice Operator Good morning la ...

0 www.murphyoilcorp.com NYSE: MUR 2022 THIRD QUARTER EARNINGS CONFERENCE CALL & WEBCAST NOVEMBER 3, 2022 ROGER W. JENKINS PRESIDENT & CHIEF EXECUTIVE OFFICER Cautionary Statement and Investor Relations Contacts Cautionary Note to US Investors – The United States Securities and Exchange Commission (SEC) requires oil and natural gas companies, in their filings with the SEC, to disclose proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and leg ...

0 www.murphyoilcorp.com NYSE: MUR INVESTOR UPDATE SEPTEMBER 2022 SECURING SHARED VALUES delever execute explore Cautionary Statement and Investor Relations Contacts Cautionary Note to US Investors – The United States Securities and Exchange Commission (SEC) requires oil and natural gas companies, in their filings with the SEC, to disclose proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and op ...

Financial Data and Key Metrics Changes - In Q2 2022, the company reported net income of $351 million, or $2.23 per diluted share, marking the highest quarterly earnings from continuing operations in nearly a decade [18] - Adjusted net income was $305 million, or $1.93 per diluted share, with cash from operations totaling $621 million for the quarter [19][21] - The company achieved positive adjusted cash flow of $267 million after accounting for net property additions and acquisitions [19] Business Line Data and Key Metrics Changes - The company produced 164,000 barrels of oil equivalent per day in Q2 2022, with 62% being liquids, exceeding production guidance due to strong performance in the Gulf of Mexico and Eagle Ford shale [14] - In the Eagle Ford Shale, production reached 36,000 barrels of oil equivalent per day, with 86% being liquids, and 23 operated wells were brought online [24] - The Tupper Montney produced 275 million cubic feet per day, achieving a record high gross production peak of 415 million cubic feet per day across the entire asset [27] Market Data and Key Metrics Changes - Realized prices for oil were $109 per barrel, with NGLs at $41 per barrel and natural gas net back nearly $4 per thousand cubic feet [14] - The company is targeting a production range of 180,000 to 188,000 barrels equivalent per day for Q3 2022, accounting for downtime [38] Company Strategy and Development Direction - The company focuses on three strategic priorities: delever, execute, and explore, with a goal of reducing long-term debt by $600 million to $650 million in 2022 [7][42] - A new capital allocation framework was introduced, allowing for additional shareholder returns through share repurchases and potential dividend increases tied to debt levels [42][46] - The company aims to achieve a long-term debt target of $1 billion, with a multi-tier capital allocation strategy based on adjusted free cash flow [42][45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to sustain operations and return capital to shareholders while maintaining a strong balance sheet [74] - The company anticipates continued strong performance in the Gulf of Mexico and Eagle Ford, with plans to maintain capital spending levels despite inflation [66][68] - Management highlighted the importance of operational execution and the potential for increased production as new wells come online [81] Other Important Information - The company has made significant progress in emissions reduction, achieving a 20% reduction in greenhouse gas emissions and a 49% reduction in flaring intensity from 2019 to 2021 [16] - The company announced a 100% increase in its annualized dividend to $1 per share, restoring it to pre-2020 levels [12] Q&A Session Summary Question: Debt repayment strategy as it approaches $1.8 billion - Management indicated that the timing of debt repayment will depend on the price environment, with a preference for tender offers to manage longer-dated maturities [54] Question: Steps to achieve investment grade rating - Management noted that operational execution and continued debt reduction are key to achieving an investment grade rating, which would lower the cost of capital [55] Question: Capital spending outlook in light of commodity prices - Management confirmed that there are no changes to the capital plan for onshore projects, with a focus on maintaining spending levels [66] Question: Acquisition environment in the Gulf of Mexico - Management expressed confidence in their competitive advantage in M&A, focusing on high-return, accretive deals [60][62] Question: Future capital allocation and M&A opportunities - Management stated that attractive M&A opportunities would be evaluated against the capital allocation framework, with a high bar for acquisitions [89] Question: Production profile expectations for Khaleesi Mormont Samurai fields - Management expects to approach facility capacity with new wells coming online, anticipating a strong exit rate for Q4 2022 [97] Question: Timeline for the Tulum exploration well - The Tulum well is expected to spud in October 2022, with results anticipated approximately two months later [93]

0 www.murphyoilcorp.com NYSE: MUR 2022 SECOND QUARTER EARNINGS CONFERENCE CALL & WEBCAST AUGUST 4, 2022 ROGER W. JENKINS PRESIDENT & CHIEF EXECUTIVE OFFICER Cautionary Statement and Investor Relations Contacts Cautionary Note to US Investors – The United States Securities and Exchange Commission (SEC) requires oil and natural gas companies, in their filings with the SEC, to disclose proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and lega ...