Murphy Oil(MUR) - 2025 Q2 - Quarterly Report

Part I Item 1. Financial Statements This section presents Murphy Oil Corporation's unaudited consolidated financial statements and detailed notes for the periods ended June 30, 2025 and 2024 Consolidated Balance Sheets - Total assets increased by $172 million from December 31, 2024, to June 30, 2025, primarily driven by an increase in property, plant, and equipment[7] - Long-term debt increased by $200.4 million, while total current liabilities decreased by $33.5 million[7] | (Thousands of dollars) | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | ASSETS | | | | Total current assets | $762,125 | $785,279 | | Total assets | $9,839,515 | $9,667,479 | | LIABILITIES AND EQUITY | | | | Total current liabilities | $909,297 | $942,814 | | Long-term debt | $1,474,959 | $1,274,502 | | Total liabilities | $4,482,335 | $4,325,636 | | Total equity | $5,357,180 | $5,341,843 | Consolidated Statements of Operations - Net income attributable to Murphy decreased significantly for both the three-month and six-month periods ended June 30, 2025, compared to 2024, primarily due to lower revenues and higher costs[8] - Cash dividends per common share increased from $0.300 to $0.325 for the three-month period and from $0.600 to $0.650 for the six-month period[8] | (Thousands of dollars, except per share amounts) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues and other income | $695,570 | $802,771 | $1,361,281 | $1,599,183 | | Total costs and expenses | $603,359 | $618,449 | $1,125,176 | $1,260,804 | | Operating income from continuing operations | $92,211 | $184,322 | $236,105 | $338,379 | | Net income attributable to Murphy | $22,280 | $127,739 | $95,316 | $217,741 | | Net income per common share – Basic | $0.16 | $0.84 | $0.66 | $1.43 | | Cash dividends per common share | $0.325 | $0.300 | $0.650 | $0.600 | Consolidated Statements of Comprehensive Income - Other comprehensive income saw a significant positive swing in 2025, primarily driven by net gains from foreign currency translation, contrasting with losses in 2024[9] | (Thousands of dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income including noncontrolling interest | $35,124 | $156,262 | $124,542 | $270,920 | | Other comprehensive income (loss) | $91,097 | $(15,910) | $90,294 | $(50,528) | | Comprehensive income attributable to Murphy | $113,377 | $111,829 | $185,610 | $167,213 | Consolidated Statements of Cash Flows - Net cash provided by continuing operations activities decreased by $207.7 million in the first six months of 2025 compared to 2024[10] - Net cash required by investing activities increased by $162.55 million, largely due to property additions and acquisition of oil and natural gas properties[10] | (Thousands of dollars) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------- | :----------------------------- | :----------------------------- | | Net cash provided by continuing operations activities | $658,731 | $866,443 | | Net cash required by investing activities | $(679,426) | $(516,876) | | Net cash required by financing activities | $(22,355) | $(334,271) | | Net (decrease) increase in cash and cash equivalents | $(43,938) | $16,545 | Consolidated Statements of Stockholders' Equity - Murphy Shareholders' Equity decreased by $125.194 million from June 30, 2024, to June 30, 2025, primarily due to treasury stock repurchases and cash dividends paid, partially offset by net income and foreign currency translation gains[12] | (Thousands of dollars) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------- | :----------------------------- | :----------------------------- | | Common Stock | $195,101 | $195,101 | | Capital in Excess of Par Value | $841,833 | $826,861 | | Retained Earnings | $6,775,193 | $6,672,275 | | Accumulated Other Comprehensive Loss | $(537,778) | $(571,645) | | Treasury Stock | $(2,075,823) | $(1,798,872) | | Murphy Shareholders' Equity | $5,198,526 | $5,323,720 | | Noncontrolling Interest | $158,654 | $178,828 | | Total Equity | $5,357,180 | $5,502,548 | Notes to Consolidated Financial Statements Note A – Basis of Presentation - The unaudited financial statements conform to U.S. GAAP, including all necessary adjustments for fair presentation as of June 30, 2025, and December 31, 2024, and for interim periods[15] - These interim financial statements should be read with the Company's 2024 Form 10-K report, and interim results are not necessarily indicative of future results[16] Note B – New Accounting Principles and Recent Accounting Pronouncements - The Company adopted ASU 2023-07 Segment Reporting in Q4 2024, requiring additional segment disclosures for interim periods, with no material impact on consolidated financial statements[17] - New ASUs on Expense Disaggregation and Income Tax Disclosures are expected to impact disclosures only, with no impact on results of operations, cash flows, or financial condition[18][19] Note C – Revenue from Contracts with Customers - Murphy explores and produces crude oil, natural gas, and natural gas liquids in the U.S. and Canada, with revenue primarily from these three streams[20][22][23] - The Company holds long-term fixed-price natural gas contracts in Canada and dedicated acreage contracts for natural gas and NGLs in the U.S. Eagle Ford Shale, extending up to Q2 2030[31] Total Revenue from Sales to Customers (Thousands of dollars) | (Thousands of dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenue from sales to customers | $683,065 | $801,007 | $1,355,795 | $1,595,855 | Note D – Property, Plant and Equipment - Capitalized exploratory well costs increased significantly to $110.5 million at June 30, 2025, from $43.0 million in 2024, with major additions in Vietnam and the Gulf of America[33][34] - Murphy purchased a Floating Production Storage and Offloading (FPSO) vessel for $125.0 million in Q1 2025 to support Gulf of America operations[39] - No asset impairments were recorded in the three or six months ended June 30, 2025, contrasting with a $34.5 million impairment in Q1 2024 related to the Calliope field[40] Capitalized Exploratory Well Costs (Thousands of dollars) | (Thousands of dollars) | 2025 | 2024 | | :--------------------- | :--------- | :--------- | | Beginning balance at January 1 | $72,055 | $49,118 | | Additions pending proved reserves | $38,469 | $20,391 | | Charged to expense | — | $(26,471) | | Balance at June 30 | $110,524 | $43,038 | Note E – Financing Arrangements and Debt - As of June 30, 2025, Murphy had a $1.35 billion revolving credit facility (RCF) expiring in October 2029, with $200.0 million outstanding borrowings and $0.4 million in letters of credit[42] - The interest rate on RCF borrowings was 6.67% at June 30, 2025, and the Company was in compliance with all RCF covenants[42] Note F – Other Financial Information Net Decrease in Non-Cash Working Capital (Thousands of dollars) | (Thousands of dollars) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------- | :----------------------------- | :----------------------------- | | Net decrease in non-cash working capital | $7,905 | $1,126 | Supplementary Disclosures (Thousands of dollars) | (Thousands of dollars) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------- | :----------------------------- | :----------------------------- | | Net cash income taxes paid | $423 | $3,236 | | Interest paid, net | $44,577 | $38,262 | | Asset retirement costs capitalized | $9,427 | $16,175 | | (Increase) decrease in capital expenditure accrual | $22,748 | $(24,780) | Note G – Asset Retirement Obligations - Asset retirement obligations (ARO) relate to estimated costs to dismantle and abandon oil and natural gas properties[45] - Total ARO increased to $1,050.2 million at June 30, 2025, from $949.3 million at June 30, 2024, with a significant increase in the current portion of liability[46] Asset Retirement Obligations Reconciliation (Thousands of dollars) | (Thousands of dollars) | June 30, 2025 | June 30, 2024 | | :--------------------- | :------------ | :------------ | | Balance at beginning of year | $1,008,884 | $914,763 | | Accretion | $28,477 | $25,827 | | Liabilities incurred | $5,428 | $14,199 | | Revisions of previous estimates | $3,999 | $1,995 | | Liabilities settled | $(6,359) | $(2,925) | | Changes due to translation of foreign currencies | $9,784 | $(4,541) | | Balance at end of period | $1,050,213 | $949,318 | | Current portion of liability | $(70,104) | $(25,622) | | Non-current portion of liability | $980,109 | $923,696 | Note H – Employee and Retiree Benefit Plans - Murphy sponsors mostly funded defined benefit pension plans and unfunded other postretirement benefits for U.S. employees[47] - The Company contributed $18.6 million to its defined benefit pension and postretirement plans in the first six months of 2025, with an anticipated $12.3 million remaining for the year[50] Total Net Periodic Benefit Expense (Thousands of dollars) | (Thousands of dollars) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------- | :----------------------------- | :----------------------------- | | Pension Benefits | $7,332 | $9,468 | | Other Postretirement Benefits | $(795) | $(56) | | Total Net Periodic Benefit Expense | $6,537 | $9,412 | Note I – Incentive Plans - Shareholders approved the 2025 Long-Term Incentive Plan in May 2025, replacing the 2020 plan and authorizing up to 3.885 million shares for stock-based awards[53][54] Awards Granted Under 2020 Long-Term Plan (Six Months Ended June 30, 2025) | Type of Award | Number of Awards Granted | | :------------------------ | :----------------------- | | Performance-based RSUs (TSR) | 520,150 | | Performance-based RSUs (ROACE) | 129,990 | | Time-based RSUs (Stock-Settled) | 470,440 | | Time-based RSUs (Cash-Settled) | 771,390 | Compensation Charged Against Income (Six Months Ended June 30) (Thousands of dollars) | (Thousands of dollars) | 2025 | 2024 | | :--------------------- | :------ | :------ | | Compensation charged against income before tax benefit | $20,758 | $19,987 | Note J – Net Income (Loss) Per Common Share - Net income attributable to Murphy serves as the numerator for both basic and diluted EPS calculations[60] - Both basic and diluted weighted-average shares outstanding decreased significantly in 2025 compared to 2024, indicating share repurchases[61] Weighted-Average Shares Outstanding (Weighted-average shares) | (Weighted-average shares) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic method | 142,720,904 | 152,153,401 | 143,502,425 | 152,408,912 | | Diluted method | 143,215,614 | 153,143,584 | 144,143,851 | 153,479,678 | Note K – Income Taxes - The effective tax rate for Q2 2025 was 3.0%, significantly lower than 17.2% in Q2 2024, primarily due to noncontrolling interest income tax exclusion, a Canada tax credit, and Canadian tax losses[63] - The effective tax rate for the six months ended June 30, 2025, was 21.4%, above the U.S. statutory rate, due to higher foreign tax rates, U.S. state tax, and stock-based compensation, partially offset by noncontrolling interest tax exclusion and Canada tax credit[65] - The 'One Big Beautiful Bill Act' (OBBBA) was signed into law on July 4, 2025, reinstating bonus depreciation and immediate expensing of R&E expenditures, with the Company evaluating its financial statement impact[68] Effective Income Tax Rates | Period | 2025 | 2024 | | :--------------------- | :---- | :---- | | Three months ended June 30, | 3.0% | 17.2% | | Six months ended June 30, | 21.4% | 18.7% | Note L – Financial Instruments and Risk Management - Murphy uses derivative instruments to manage commodity price, foreign currency, and interest rate risks, not for speculative purposes, and does not designate them as accounting hedges[69][70] - The Company recognized a gain of $10.8 million on derivative instruments for the three months ended June 30, 2025, compared to no gain or loss in the prior year[74] Outstanding Natural Gas Derivative Contracts (June 30, 2025) | Area | Commodity | Volumes MMCF/d | Price/MCF | Start Date | End Date | | :------------ | :---------- | :------------- | :-------- | :--------- | :--------- | | United States | Natural Gas | 60 | $3.65 | 7/1/2025 | 9/30/2025 | | United States | Natural Gas | 60 | $3.74 | 10/1/2025 | 12/31/2025 | Fair Value of Derivative Instruments (Thousands of dollars) | Type of Derivative Contract | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Commodity swaps | $(337) | $(1,707) | Note M – Accumulated Other Comprehensive Loss - Accumulated other comprehensive loss improved by $90.294 million during the six months ended June 30, 2025, primarily due to foreign currency translation gains[86] Changes in Accumulated Other Comprehensive Loss (Thousands of dollars) | (Thousands of dollars) | Foreign Currency Translation Gains (Losses) | Retirement and Postretirement Benefit Plan Adjustments | Total | | :--------------------- | :------------------------------------------ | :----------------------------------------------------- | :---------- | | Balance at December 31, 2024 | $(516,324) | $(111,748) | $(628,072) | | Net other comprehensive income (loss) | $88,555 | $1,739 | $90,294 | | Balance at June 30, 2025 | $(427,769) | $(110,009) | $(537,778) | Note N – Environmental and Other Contingencies - Murphy's operations are subject to extensive federal, state, local, and foreign environmental, health, and safety laws and regulations, including those related to climate change and GHG emissions[87][88][89] - The U.S. EPA published final rules in 2024 regulating methane and VOC emissions, though a methane waste charge rule was disapproved by Congress in March 2025[91] - The Company believes costs related to known environmental and legal matters will not materially adversely affect its net income, financial condition, or liquidity in future periods[92][95] Note O – Common Stock Issued and Outstanding - The Company repurchased 3.6 million shares for $100.0 million during the six months ended June 30, 2025, under its $1.1 billion share repurchase program, with $550.1 million remaining available[98] Common Stock Outstanding Activity (Number of shares) | (Number of shares outstanding) | June 30, 2025 | June 30, 2024 | | :----------------------------- | :------------ | :------------ | | Beginning of period | 145,845,124 | 152,748,642 | | Restricted stock awards | 494,071 | 1,102,501 | | Treasury shares purchased | (3,613,450) | (2,634,595) | | End of period | 142,725,745 | 151,216,548 | Note P – Business Segments - Murphy's business segments are categorized by geographic operations: United States, Canada, and Other, with revenues attributed to the country of sale[99] - U.S. E&P segment income decreased significantly in both periods, while Canada E&P segment income increased[101][102][103][104] Segment Income (Loss) - Including NCI (Millions of dollars) | (Millions of dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States | $86.5 | $185.7 | $194.4 | $320.2 | | Canada | $10.5 | $8.9 | $52.0 | $28.3 | | Other | $(7.3) | $(10.1) | $(18.5) | $(20.9) | | Total E&P | $89.7 | $184.5 | $227.9 | $327.6 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of Murphy Oil Corporation's financial condition and results of operations for the periods ended June 30, 2025 and 2024 Overview - Murphy is an independent oil and natural gas company with onshore and offshore operations, focusing on value creation and exploration globally[106] - Net income from continuing operations for Q2 2025 decreased by $123.1 million YoY to $33.8 million, primarily due to lower revenues and higher DD&A, partially offset by lower lease operating and exploration expenses[107][108] - Total hydrocarbon production increased by 5% to 196,315 BOE per day in Q2 2025, driven by higher production in Eagle Ford Shale and Tupper Montney, despite lower offshore production[109] - WTI crude oil price was $65.11 per barrel at June 30, 2025, and increased to $69.26 by end of July 2025[116] Results of Operations - E&P segment income decreased by $94.8 million for the three months and $99.7 million for the six months ended June 30, 2025, compared to 2024[117] Net Income Attributable to Murphy (Millions of dollars) | (Millions of dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Exploration and production | $89.7 | $184.5 | $227.9 | $327.6 | | Corporate and other | $(55.9) | $(27.7) | $(104.1) | $(55.2) | | Net income attributable to Murphy | $22.3 | $127,7 | $95.3 | $217.7 | E&P Continuing Operations Summary (Millions of dollars) | (Millions of dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues and other income | $684.7 | $802.8 | $1,359.9 | $1,599.2 | | Total Cost and Expenses | $577.4 | $577.9 | $1,075.1 | $1,191.4 | | Results of operations before taxes | $107.3 | $224.9 | $284.8 | $405.4 | Pricing - Crude oil and condensate prices decreased across all regions for both three-month and six-month periods in 2025 compared to 2024, while natural gas prices generally increased[119] Weighted Average Sales Prices (Crude oil and condensate – dollars per barrel) | Area | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States - Onshore | $64.00 | $80.71 | $66.84 | $78.76 | | United States - Offshore | $64.48 | $81.67 | $68.23 | $79.61 | | Canada - Onshore | $59.94 | $72.25 | $61.73 | $70.24 | | Canada - Offshore | $64.76 | $84.34 | $70.39 | $85.25 | Weighted Average Sales Prices (Natural gas – dollars per thousand cubic feet) | Area | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States - Onshore | $2.75 | $1.59 | $3.03 | $1.77 | | United States - Offshore | $3.47 | $2.00 | $3.89 | $2.32 | | Canada - Onshore | $1.65 | $1.37 | $1.96 | $1.68 | Production Volumes - Total net crude oil and condensate production decreased for both periods in 2025 compared to 2024, primarily in U.S. Offshore[121] - Total net natural gas production increased for both periods in 2025, largely driven by Canada Onshore and U.S. Onshore[121] Total Net Hydrocarbons Produced (BOE per day, including NCI) | Period | 2025 | 2024 | | :-------------------- | :------ | :------ | | Three Months Ended June 30, | 196,315 | 187,847 | | Six Months Ended June 30, | 179,935 | 182,259 | Sales Volumes - Total net crude oil and condensate sales volumes decreased for the six-month period but slightly increased for the three-month period in 2025 compared to 2024[123] - Total net natural gas sales volumes increased for both periods in 2025, primarily from Canada Onshore[123] Total Net Hydrocarbons Sold (BOE per day, including NCI) | Period | 2025 | 2024 | | :-------------------- | :------ | :------ | | Three Months Ended June 30, | 198,230 | 186,898 | | Six Months Ended June 30, | 181,179 | 183,024 | Revenues from Production - Total production revenues decreased by $114.4 million (QoQ) and $236.3 million (YoY) primarily due to lower crude oil prices and decreased oil production in the Gulf of America[125][126] - These decreases were partially offset by higher natural gas prices and increased production from new wells in the Eagle Ford Shale and Gulf of America[125][126] Revenues from Production (Millions of dollars) | (Millions of dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States - Oil | $509.2 | $647.6 | $971.0 | $1,270.6 | | Canada - Oil | $58.3 | $62.9 | $147.5 | $131.6 | | United States - Natural gas | $24.8 | $13.9 | $52.7 | $31.0 | | Canada - Natural gas | $68.1 | $50.6 | $142.4 | $116.8 | | Total revenue from production | $683.0 | $797.5 | $1,355.8 | $1,592.1 | Lease Operating and Transportation, Gathering and Processing Expenses - Lease operating expenses decreased by $44.1 million (QoQ) and $73.3 million (YoY) due to lower workover expenses, cost-savings initiatives, and lower operating costs from the FPSO purchase[127][128] Total Lease Operating Expenses (Millions of dollars) | Period | 2025 | 2024 | | :-------------------- | :------ | :------ | | Three Months Ended June 30, | $215.5 | $259.6 | | Six Months Ended June 30, | $420.6 | $493.9 | Total Transportation, Gathering and Processing Expenses (Millions of dollars) | Period | 2025 | 2024 | | :-------------------- | :------ | :------ | | Three Months Ended June 30, | $54.0 | $53.5 | | Six Months Ended June 30, | $102.9 | $110.0 | Depreciation, Depletion and Amortization Expenses - DD&A increased by $44.7 million (QoQ) and $28.2 million (YoY), primarily due to higher sales volumes in U.S. and Canada Onshore areas and higher rates in U.S. Offshore[130][131] Total DD&A (Millions of dollars) | Period | 2025 | 2024 | | :-------------------- | :------ | :------ | | Three Months Ended June 30, | $257.6 | $212.9 | | Six Months Ended June 30, | $449.4 | $421.2 | Impairment of Assets - No asset impairments were recorded in the three or six months ended June 30, 2025, or the three months ended June 30, 2024[132] - A $34.5 million impairment was recorded in the six months ended June 30, 2024, related to the Calliope field due to operational issues and reserve reduction[132] Exploration Expenses - Exploration expenses decreased by $32.4 million (QoQ) and $62.3 million (YoY), primarily due to lower dry hole costs in 2025, contrasting with significant dry hole costs in 2024 for Gulf of America exploration wells[133][134][135] Total Exploration Expenses (Millions of dollars) | Period | 2025 | 2024 | | :-------------------- | :------ | :------ | | Three Months Ended June 30, | $10.4 | $42.8 | | Six Months Ended June 30, | $24.9 | $87.2 | Income Taxes - Income taxes decreased by $22.8 million (QoQ) and $20.9 million (YoY) for the periods ended June 30, 2025, primarily due to lower net income[136] Corporate - The Corporate segment reported a loss of $55.9 million in Q2 2025, an unfavorable variance of $28.2 million YoY, mainly due to higher unrealized foreign exchange losses of $39.8 million related to the Canadian subsidiary[138] - For the six months ended June 30, 2025, the Corporate segment loss was $104.1 million, an unfavorable variance of $48.9 million YoY, primarily due to higher unrealized foreign exchange losses of $50.0 million[139] Financial Condition - Murphy's primary liquidity sources are cash on hand, net cash from continuing operations, and available borrowing capacity under its senior unsecured RCF[140] - The Company believes these sources will be adequate to fund liquidity needs for the next 12 months and foreseeable future, including capital expenditures, debt service, working capital, dividends, and share repurchases[140] Cash Flows Net Cash Provided (Required) by Activities (Millions of dollars) | (Millions of dollars) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash provided by continuing operations activities | $658.7 | $866.4 | | Net cash required by investing activities | $(679.4) | $(516.9) | | Net cash required by financing activities | $(22.4) | $(334.3) | | Net (decrease) increase in cash and cash equivalents | $(43.9) | $16.5 | Cash Provided by Continuing Operations Activities - Net cash provided by continuing operations activities decreased by $207.7 million for the six months ended June 30, 2025, primarily due to lower revenue from production, partially offset by lower lease operating expenses[142][143] Cash Required by Investing Activities - Net cash required by investing activities increased by $162.6 million for the six months ended June 30, 2025, mainly due to the $125.0 million FPSO purchase and higher development drilling in Eagle Ford Shale[144] - 2025 capital expenditures primarily focus on development drilling and field development in the Gulf of America ($248.1 million), Eagle Ford Shale ($230.2 million), Tupper Montney/Kaybob Duvernay ($92.0 million), and Vietnam ($29.6 million), with $57.2 million for exploration[148] Total Capital Expenditures (Millions of dollars) | (Millions of dollars) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Exploration and production | $671.4 | $556.3 | | Corporate | $7.0 | $8.4 | | Total capital expenditures | $678.4 | $564.7 | Cash Required by Financing Activities - Net cash required by financing activities decreased by $311.9 million for the six months ended June 30, 2025, primarily due to net borrowings on the RCF ($200.0 million), offsetting share repurchases ($102.6 million), dividends ($93.4 million), and noncontrolling interest distributions ($18.2 million)[149] - In 2024, financing activities included $105.9 million for share repurchases, $91.5 million for dividends, $61.2 million for noncontrolling interest distributions, and $50.0 million for debt repurchases[150] Liquidity - As of June 30, 2025, Murphy had approximately $1.5 billion in liquidity, comprising $379.6 million in cash and cash equivalents and $1,149.6 million available on its $1.35 billion senior unsecured RCF[151][152] - Approximately $112.4 million of cash and cash equivalents were held outside the U.S., mainly in Canada, Vietnam, Mexico, and the U.K., which could incur repatriation taxes[153] Working Capital - Net working capital liability improved by $10.4 million as of June 30, 2025, primarily due to lower current operating lease obligations and other accrued liabilities, and higher prepaid expenses[154][155] - This improvement was partially offset by lower cash and equivalents, higher accounts payable, and higher current asset retirement obligations[154][155] Working Capital (Millions of dollars) | (Millions of dollars) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total current assets | $762.1 | $785.3 | | Total current liabilities | $909.3 | $942.8 | | Net working capital liability | $(147.2) | $(157.5) | Capital Employed - Total capital employed increased by $204.7 million, with long-term debt increasing by $200.5 million due to RCF drawdowns, and Murphy shareholders' equity increasing by $4.2 million[157][158] Capital Employed (Millions of dollars) | (Millions of dollars) | June 30, 2025 | % | December 31, 2024 | % | | :-------------------- | :------------ | :---- | :---------------- | :---- | | Long-term debt | $1,475.0 | 22.1% | $1,274.5 | 19.7% | | Murphy shareholders' equity | $5,198.5 | 77.9% | $5,194.3 | 80.3% | | Total capital employed | $6,673.5 | 100.0% | $6,468.8 | 100.0% | Critical Accounting Estimates - No significant changes to critical accounting estimates have occurred since the Annual Report on Form 10-K for the year ended December 31, 2024[159] Accounting Changes and Recent Accounting Pronouncements - Refer to Note B for details on the impact or potential impact of recent accounting pronouncements on financial position and results of operations[160] Other Key Performance Metrics - Management uses non-GAAP financial measures like adjusted net income, EBITDA, and EBITDAX to evaluate operational performance and trends, excluding certain items for comparability[162] Adjusted Net Income from Continuing Operations Attributable to Murphy (Non-GAAP, Millions of dollars) | (Millions of dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income from continuing operations attributable to Murphy (GAAP) | $21.0 | $128.3 | $94.6 | $219.2 | | Total adjustments, after taxes | $17.5 | $(4.1) | $24.6 | $35.8 | | Adjusted net income from continuing operations attributable to Murphy (Non-GAAP) | $38.5 | $124.2 | $119.2 | $255.0 | Adjusted EBITDAX Attributable to Murphy (Non-GAAP, Millions of dollars) | (Millions of dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | EBITDAX attributable to Murphy (Non-GAAP) | $309.6 | $431.4 | $640.7 | $818.6 | | Adjusted EBITDAX attributable to Murphy (Non-GAAP) | $345.2 | $438.3 | $698.3 | $861.8 | Adjusted Free Cash Flow (Non-GAAP, Millions of dollars) | (Millions of dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Free cash flow (Non-GAAP) | $17.8 | $174.4 | $(27.2) | $348.4 | | Adjusted free cash flow (Non-GAAP) | $(39.8) | $90.4 | $(147.9) | $170.4 | Outlook - Production for Q3 2025 is expected to average 185.0 to 193.0 thousand BOE per day (excluding NCI)[175] - Capital expenditures for 2025 are projected between $1,135 million and $1,285 million (excluding NCI), including $104 million for the BW Pioneer FPSO acquisition[176] - Upcoming exploration and development activities include drilling Cello 1 and Banjo 1 in the Gulf of America (Q3/Q4 2025), a three-well exploration program in Côte d'Ivoire (Q4 2025), and an appraisal well in Vietnam (Q3 2025)[176] - The Company plans to fund its capital program primarily through operating cash flow and available cash, allocating surplus cash to shareholder returns and debt reduction, favoring share repurchases under current market conditions[177][178] Forward Fixed Price Delivery Contracts (Natural Gas) | Area | Commodity | Type | Volumes (MMCF/d) | Price/MCF | Start Date | End Date | | :------------ | :---------- | :----------------------- | :--------------- | :-------- | :--------- | :--------- | | Canada | Natural Gas | Fixed price forward sales | 40 | C$2.75 | 7/1/2025 | 12/31/2025 | | Canada | Natural Gas | Fixed price forward sales | 50 | C$3.03 | 1/1/2026 | 12/31/2026 | | United States | Natural Gas | Fixed price derivative swap | 60 | $3.65 | 7/1/2025 | 9/30/2025 | | United States | Natural Gas | Fixed price derivative swap | 60 | $3.74 | 10/1/2025 | 12/31/2025 | Forward-Looking Statements - This section contains forward-looking statements regarding future operating results, production, reserves, costs, cash flows, and capital allocation, which are subject to inherent risks and uncertainties[183] - Factors that could cause actual results to differ materially include macro conditions in the oil and natural gas industry, geopolitical concerns, exploration success rates, customer demand, foreign exchange movements, political and regulatory instability, and adverse developments in capital markets or economies[183] Item 3. Quantitative and Qualitative Disclosures About Market Risk Murphy Oil Corporation is exposed to market risks from commodity prices, foreign currency, and interest rates, managed with derivatives, with specific sensitivities outlined - Murphy is exposed to market risks from crude oil, natural gas, petroleum product prices, foreign currency exchange rates, and interest rates, using derivatives to manage these risks[185] - A 10% increase in benchmark commodity prices for outstanding natural gas derivative contracts would increase the net payable by approximately $4.1 million[186] - A 10% increase in the average interest rate on the $200.0 million outstanding RCF borrowings would increase quarterly interest expense by approximately $0.3 million[188] Item 4. Controls and Procedures The Company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The principal executive and financial officers concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[190] - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting during the quarter ended June 30, 2025[191] Part II – Other Information Item 1. Legal Proceedings Murphy Oil Corporation is involved in routine legal proceedings, including climate change litigation, not expected to materially impact financial condition - Murphy is engaged in routine legal proceedings, including litigation related to climate change[192] - The ultimate resolution of these legal matters is not expected to materially adversely affect the Company's net income, financial condition, or liquidity[192] Item 1A. Risk Factors The Company's oil and natural gas operations involve inherent risks, with no new factors identified beyond the 2024 Form 10-K report - The Company's oil and natural gas operations are subject to various risks and uncertainties[193] - No new risk factors have been identified beyond those previously disclosed in the 2024 Form 10-K report[193] Item 5. Other Information No director or officer adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2025 - No director or officer adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the three months ended June 30, 2025[194] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, incentive plans, and certifications - Exhibits include corporate governance documents (Certificate of Incorporation, By-Laws), the 2025 Long-Term Incentive Plan, and Sarbanes-Oxley Act certifications[196] - The filing also includes Inline XBRL documents for interactive data[196] Signature - The report was duly signed on behalf of Murphy Oil Corporation by Paul D. Vaughan, Vice President and Controller, on August 6, 2025[198][199]