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2022-03-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q  
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to
Commission file number 1-8590
https://cdn.kscope.io/ef83d8c5bedab208293715916757dcd9-murphyoilcorplogo.jpg
MURPHY OIL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware71-0361522
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)
9805 Katy Fwy, Suite G-20077024
Houston,Texas(Zip Code)
(Address of principal executive offices)
(281)
675-9000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
 Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $1.00 Par ValueMURNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes     No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  No
Number of shares of Common Stock, $1.00 par value, outstanding at April 28, 2023 was 156,098,234.



MURPHY OIL CORPORATION
TABLE OF CONTENTS
Page
1

Table of Contents
PART I – FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

(Thousands of dollars, except share amounts)March 31,
2023
December 31,
2022
ASSETS
Current assets
Cash and cash equivalents$312,383 $491,963 
Accounts receivable, net
394,936 391,152 
Inventories63,539 54,513 
Prepaid expenses30,983 34,697 
Total current assets801,841 972,325 
Property, plant and equipment, at cost less accumulated depreciation, depletion and amortization of $12,697,538 in 2023 and $12,489,970 in 2022
8,363,001 8,228,016 
Operating lease assets903,147 946,406 
Deferred income taxes74,060 117,889 
Deferred charges and other assets46,480 44,316 
Total assets$10,188,529 $10,308,952 
LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt, finance lease$697 $687 
Accounts payable516,855 543,786 
Income taxes payable24,772 26,544 
Other taxes payable28,185 22,819 
Operating lease liabilities239,374 220,413 
Other accrued liabilities218,130 443,585 
Total current liabilities1,028,013 1,257,834 
Long-term debt, including finance lease obligation1,822,979 1,822,452 
Asset retirement obligations830,358 817,268 
Deferred credits and other liabilities301,707 304,948 
Non-current operating lease liabilities679,909 742,654 
Deferred income taxes220,895 214,903 
Total liabilities$4,883,861 $5,160,059 
Equity
Cumulative Preferred Stock, par $100, authorized 400,000 shares, none issued
$ $ 
Common Stock, par $1.00, authorized 450,000,000 shares, issued 195,100,628 shares in 2023 and 195,100,628 shares in 2022
195,101 195,101 
Capital in excess of par value857,000 893,578 
Retained earnings6,204,217 6,055,498 
Accumulated other comprehensive loss(529,919)(534,686)
Treasury stock(1,588,841)(1,614,717)
Murphy Shareholders' Equity5,137,558 4,994,774 
Noncontrolling interest167,110 154,119 
Total equity5,304,668 5,148,893 
Total liabilities and equity$10,188,529 $10,308,952 
See Notes to Consolidated Financial Statements, page 7.
2

Table of Contents
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
March 31,
(Thousands of dollars, except per share amounts)20232022
Revenues and other income
Revenue from production$796,231 $834,528 
Sales of purchased natural gas43,737 36,846 
Total revenue from sales to customers839,968 871,374 
Loss on derivative instruments (320,777)
Gain on sale of assets and other income1,748 2,364 
Total revenues and other income841,716 552,961 
Costs and expenses
Lease operating expenses199,984 136,825 
Severance and ad valorem taxes11,440 14,635 
Transportation, gathering and processing53,922 46,923 
Costs of purchased natural gas32,269 33,665 
Exploration expenses, including undeveloped lease amortization10,182 47,566 
Selling and general expenses18,308 33,529 
Depreciation, depletion and amortization195,670 164,124 
Accretion of asset retirement obligations11,157 11,876 
Other operating expense11,988 105,942 
Total costs and expenses544,920 595,085 
Operating income (loss) from continuing operations296,796 (42,124)
Other income (loss)
Other expenses(73)(2,495)
Interest expense, net(28,855)(37,277)
Total other loss(28,928)(39,772)
Income (loss) from continuing operations before income taxes267,868 (81,896)
Income tax expense (benefit)53,833 (16,961)
Income (loss) from continuing operations214,035 (64,935)
Income (loss) from discontinued operations, net of income taxes279 (551)
Net income (loss) including noncontrolling interest214,314 (65,486)
Less: Net income attributable to noncontrolling interest22,670 47,850 
NET INCOME (LOSS) ATTRIBUTABLE TO MURPHY$191,644 $(113,336)
INCOME (LOSS) PER COMMON SHARE – BASIC
Continuing operations$1.23 $(0.73)
Discontinued operations  
Net income (loss)$1.23 $(0.73)
INCOME (LOSS) PER COMMON SHARE – DILUTED
Continuing operations$1.22 $(0.73)
Discontinued operations  
Net income (loss)$1.22 $(0.73)
Cash dividends per common share$0.275 $0.15 
Average common shares outstanding (thousands)
Basic155,857 154,916 
Diluted157,389 154,916 
See Notes to Consolidated Financial Statements, page 7.
3

Table of Contents
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)


Three Months Ended
March 31,
(Thousands of dollars)20232022
Net income (loss) including noncontrolling interest$214,314 $(65,486)
Other comprehensive income, net of tax
Net gain from foreign currency translation3,669 18,020 
Retirement and postretirement benefit plans1,098 3,336 
Other comprehensive income4,767 21,356 
Comprehensive income (loss) including noncontrolling interest219,081 (44,130)
Less: Comprehensive income attributable to noncontrolling interest22,670 47,850 
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO MURPHY$196,411 $(91,980)
See Notes to Consolidated Financial Statements, page 7.
4

Table of Contents
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
(Thousands of dollars)20232022
Operating Activities
Net income (loss) including noncontrolling interest$214,314 $(65,486)
Adjustments to reconcile net income (loss) to net cash provided by continuing operations activities
(Income) loss from discontinued operations(279)551 
Depreciation, depletion and amortization195,670 164,124 
Unsuccessful exploration well costs and previously suspended exploration costs 851 32,831 
Amortization of undeveloped leases2,653 4,198 
Accretion of asset retirement obligations11,157 11,876 
Deferred income tax (benefit) expense49,042 (20,253)
Contingent consideration payment(123,965) 
Mark to market loss on contingent consideration3,938 98,126 
Mark to market loss on derivative instruments 188,509 
Long-term non-cash compensation8,536 17,288 
Net increase in noncash working capital(75,031)(80,922)
Other operating activities, net(7,110)(12,512)
Net cash provided by continuing operations activities279,776 338,330 
Investing Activities
Property additions and dry hole costs(345,319)(244,908)
Net cash required by investing activities(345,319)(244,908)
Financing Activities
Borrowings on revolving credit facility 100,000  
Repayment of revolving credit facility (100,000) 
Distributions to noncontrolling interest(9,679)(39,884)
Contingent consideration payment(47,678)(55,169)
Cash dividends paid(42,925)(23,300)
Withholding tax on stock-based incentive awards(14,217)(15,421)
Capital lease obligation payments(139)(158)
Issue costs of debt facility(17) 
Net cash required by financing activities(114,655)(133,932)
Effect of exchange rate changes on cash and cash equivalents618 (87)
Net decrease in cash and cash equivalents(179,580)(40,597)
Cash and cash equivalents at beginning of period491,963 521,184 
Cash and cash equivalents at end of period$312,383 $480,587 


See Notes to Consolidated Financial Statements, page 7.
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MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)

Three Months Ended
March 31,
(Thousands of dollars except number of shares)20232022
Cumulative Preferred Stock – par $100, authorized 400,000 shares, none issued
$ $ 
Common Stock – par $1.00, authorized 450,000,000 shares, issued 195,100,628 shares at March 31, 2023 and 195,100,628 shares at March 31, 2022
Balance at beginning of period195,101 195,101 
Exercise of stock options  
Balance at end of period195,101 195,101 
Capital in Excess of Par Value
Balance at beginning of period893,578 926,698 
Exercise of stock options, including income tax benefits(184)(7,220)
Restricted stock transactions and other(39,910)(45,169)
Share-based compensation3,516 6,228 
Balance at end of period857,000 880,537 
Retained Earnings
Balance at beginning of period6,055,498 5,218,670 
Net income (loss) attributable to Murphy191,644 (113,336)
Cash dividends paid(42,925)(23,300)
Balance at end of period6,204,217 5,082,034 
Accumulated Other Comprehensive Loss
Balance at beginning of period(534,686)(527,711)
Foreign currency translation (loss) gain, net of income taxes3,669 18,020 
Retirement and postretirement benefit plans, net of income taxes1,098 3,336 
Balance at end of period(529,919)(506,355)
Treasury Stock
Balance at beginning of period(1,614,717)(1,655,447)
Awarded restricted stock, net of forfeitures 32,297 
Exercise of stock options25,876 4,672 
Balance at end of period – 39,002,553 shares of Common Stock in 2023 and 39,730,079 shares of Common Stock in 2022, at cost
(1,588,841)(1,618,478)
Murphy Shareholders’ Equity5,137,558 4,032,839 
Noncontrolling Interest
Balance at beginning of period154,119 163,485 
Net income attributable to noncontrolling interest22,670 47,850 
Distributions to noncontrolling interest owners(9,679)(39,884)
Balance at end of period167,110 171,451 
Total Equity$5,304,668 $4,204,290 
See Notes to Consolidated Financial Statements, page 7.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
These notes are an integral part of the financial statements of Murphy Oil Corporation and Consolidated Subsidiaries (the Company or Murphy) on pages 2 through 6 of this Form 10-Q report.
Note A – Nature of Business and Interim Financial Statements
NATURE OF BUSINESS – Murphy Oil Corporation is an international oil and natural gas exploration and production company that conducts its business through various operating subsidiaries. The Company primarily produces oil and natural gas in the United States (U.S.) and Canada and conducts oil and natural gas exploration activities worldwide.
In connection with the LLOG Exploration Offshore L.L.C. and LLOG Bluewater Holdings, L.L.C. (LLOG) acquisition, we hold a 0.5% interest in two variable interest entities (VIEs), Delta House Oil and Gas Lateral LLC and Delta House Floating Production System (FPS) LLC (collectively Delta House). These VIEs have not been consolidated as Murphy is not considered the primary beneficiary. These non-consolidated VIEs are not material to our financial position or results of operations. As of March 31, 2023, our maximum exposure to loss was $3.1 million (excluding operational impacts), which represents our net investment in Delta House. We have not provided any financial support to Delta House other than amounts previously required by our membership interest.
INTERIM FINANCIAL STATEMENTS – In the opinion of Murphy’s management, the unaudited financial statements presented herein include all accruals necessary to present fairly the Company’s financial position at March 31, 2023 and December 31, 2022, and the results of operations, statements of operations, cash flows and changes in stockholders’ equity for the interim periods ended March 31, 2023 and 2022, in conformity with U.S generally accepted accounting principles (GAAP). In preparing the financial statements of the Company in conformity with GAAP, management has made a number of estimates and assumptions that affect the reporting of amounts of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities. Actual results may differ from the estimates.
Consolidated financial statements and notes to consolidated financial statements included in this Form 10-Q report should be read in conjunction with the Company’s 2022 Form 10-K report, as certain notes and other pertinent information have been abbreviated or omitted in this report. Financial results for the three-month period ended March 31, 2023 are not necessarily indicative of future results.
Note B – New Accounting Principles and Recent Accounting Pronouncements
Accounting Principles Adopted
None.
Recent Accounting Pronouncements
None affecting the Company.
Note C – Revenue from Contracts with Customers
Nature of Goods and Services
The Company explores for and produces crude oil, natural gas and natural gas liquids (collectively oil and natural gas) in select basins around the globe. The Company’s revenue from sales of oil and natural gas production activities are primarily subdivided into two key geographic segments: the U.S. and Canada. Additionally, revenue from sales to customers is generated from three primary revenue streams: crude oil and condensate, natural gas liquids, and natural gas.
For operated oil and natural gas production where the non-operated working interest owner does not take in kind its proportionate interest in the produced commodity, the Company acts as an agent for the working interest owner and recognizes revenue only for its own share of the commingled production. The exception to this is the reporting of the noncontrolling interest in MP Gulf of Mexico, LLC (MP GOM) as prescribed by ASC 810-10-45.
U.S. - In the U.S., the Company primarily produces oil and natural gas from fields in the Eagle Ford Shale area of South Texas and in the Gulf of Mexico. Revenue is generally recognized when oil and natural gas are transferred to the customer at the delivery point. Revenue recognized is largely index-based with price adjustments for floating market differentials.
Canada - In Canada, contracts include long-term floating commodity index priced and natural gas physical forward sales fixed-price contracts. For the offshore business in Canada, contracts are based on index prices and revenue is recognized at the time
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note C – Revenue from Contracts with Customers (Continued)
of vessel load, based on the volumes on the bill of lading and point of custody transfer. The Company also purchases natural gas in Canada to meet certain sales commitments.
Disaggregation of Revenue
The Company reviews performance based on two key geographical segments and between onshore and offshore sources of revenue within these geographies.
For the three-month periods ended March 31, 2023, and 2022, the Company recognized $840.0 million and $871.4 million, respectively, from total revenue from sales to customers, from sales of oil, natural gas liquids and natural gas.
Three Months Ended
March 31,
(Thousands of dollars)20232022
Net crude oil and condensate revenue
United States
Onshore$130,081 $171,696 
                     Offshore500,310 465,621 
Canada    
Onshore21,952 36,697 
Offshore16,130 28,832 
Other
3,644  
Total crude oil and condensate revenue672,117 702,846 
Net natural gas liquids revenue
United States
Onshore8,270 16,685 
 
Offshore14,629 13,979 
Canada
Onshore3,463 4,867 
Total natural gas liquids revenue26,362 35,531 
Net natural gas revenue
United States
Onshore5,450 11,369 
Offshore22,132 26,201 
Canada
Onshore70,170 58,581 
Total natural gas revenue97,752 96,151 
Revenue from production796,231 834,528 
Sales of purchased natural gas
Canada
Onshore43,737 36,846 
Total sales of purchased natural gas43,737 36,846 
Total revenue from sales to customers839,968 871,374 
Loss on derivative instruments (320,777)
Gain on sale of assets and other income1,748 2,364 
Total revenues and other income$841,716 $552,961 
Contract Balances and Asset Recognition
As of March 31, 2023, and December 31, 2022, receivables from contracts with customers, net of royalties and associated payables, on the balance sheets from continuing operations, were $205.2 million and $201.1 million, respectively. Payment terms for the Company’s sales vary across contracts and geographical regions, with the majority of the cash receipts required within 30 days of billing. Based on a forward-looking expected loss model in accordance with ASU 2016-13, the Company did not recognize any impairment losses on receivables or contract assets arising from customer contracts during the reporting periods.
The Company has not entered into any revenue contracts that have financing components as of March 31, 2023.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note C – Revenue from Contracts with Customers (Continued)
The Company does not employ sales incentive strategies such as commissions or bonuses for obtaining sales contracts. For the periods presented, the Company did not identify any assets to be recognized associated with the costs to obtain a contract with a customer.
Performance Obligations
The Company recognizes oil and natural gas revenue when it satisfies a performance obligation by transferring control over a commodity to a customer. Judgment is required to determine whether some customers simultaneously receive and consume the benefit of commodities. As a result of this assessment for the Company, each unit of measure of the specified commodity is considered to represent a distinct performance obligation that is satisfied at a point in time upon the transfer of control of the commodity.
For contracts with market or index-based pricing, which represent the majority of sales contracts, the Company has elected the allocation exception and allocates the variable consideration to each single performance obligation in the contract. As a result, there is no price allocation to unsatisfied remaining performance obligations for delivery of commodity product in subsequent periods.
The Company has entered into several long-term, fixed-price contracts in Canada. The underlying reason for entering a fixed price contract is generally unrelated to anticipated future prices or other observable data and serves a particular purpose in the Company’s long-term strategy.
As of March 31, 2023, the Company had the following sales contracts in place which are expected to generate revenue from sales to customers for a period of more than 12 months starting at the inception of the contract:
Current Long-Term Contracts Outstanding at March 31, 2023
LocationCommodityEnd DateDescriptionApproximate Volumes
U.S.Natural Gas and NGLQ2 2023Deliveries from dedicated acreage in Eagle FordAs produced
CanadaNatural GasQ4 2023Contracts to sell natural gas at USD index pricing25 MMCFD
CanadaNatural GasQ4 2023Contracts to sell natural gas at CAD fixed prices38 MMCFD
CanadaNatural GasQ4 2024Contracts to sell natural gas at USD index pricing31 MMCFD
CanadaNatural GasQ4 2024Contracts to sell natural gas at CAD fixed prices100 MMCFD
CanadaNatural GasQ4 2024Contracts to sell natural gas at CAD fixed prices34 MMCFD
CanadaNatural GasQ4 2024Contracts to sell natural gas at USD index fixed prices15 MMCFD
CanadaNatural GasQ4 2024Contracts to sell natural gas at CAD index prices28 MMCFD
CanadaNatural GasQ4 2026Contracts to sell natural gas at USD index pricing49 MMCFD
CanadaNatural GasQ4 2027Contracts to sell natural gas at CAD index prices10 MMCFD
CanadaNGLQ3 2023Contracts to sell natural gas liquids at CAD prices952 BOEPD
Fixed price contracts are accounted for as normal sales and purchases for accounting purposes.

Note D – Property, Plant and Equipment
Exploratory Wells
Under Financial Accounting Standards Board guidance, exploratory well costs should continue to be capitalized when the well has found a sufficient quantity of reserves to justify its completion as a producing well and the Company is making sufficient progress assessing the reserves and the economic and operating viability of the project.
As of March 31, 2023, the Company had total capitalized exploratory well costs for continuing operations pending the determination of proved reserves of $196.5 million. The following table reflects the net changes in capitalized exploratory well costs during the three-month periods ended March 31, 2023 and 2022.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note D – Property, Plant and Equipment (Continued)

(Thousands of dollars)20232022
Beginning balance at January 1$171,860 $179,481 
Additions pending the determination of proved reserves24,685 3,698 
Capitalized exploratory well costs charged to expense (10,473)
Balance at March 31$196,545 $172,706 
Capital well additions of $24.7 million are primarily related to Oso-1 well (Atwater Valley 138) in the Gulf of Mexico. In the first quarter of 2023, drilling of the Oso-1 well was temporarily suspended prior to reaching the objective. The Company plans to return to the well in the third quarter of 2023. There were no capitalized well costs charged to expense for the three months ended March 31, 2023.
The following table provides an aging of capitalized exploratory well costs based on the date the drilling was completed for each individual well and the number of projects for which exploratory well costs have been capitalized. The projects are aged based on the last well drilled in the project.
March 31,
20232022
(Thousands of dollars)AmountNo. of WellsNo. of ProjectsAmountNo. of WellsNo. of Projects
Aging of capitalized well costs:
Zero to one year$40,236 2 2 $2,810 2 2 
One to two years13,171 2 2    
Two to three years   23,667 3 3 
Three years or more143,138 5 4 146,229 8 2 
$196,545 9 8 $172,706 13 7 
Of the $156.3 million of exploratory well costs capitalized more than one year at March 31, 2023, $97.2 million was in Vietnam, $37.0 million was in the U.S., $14.7 million was in Mexico, $4.7 million was in Canada, and $2.7 million was in Brunei. In all geographical areas, either further appraisal or development drilling is planned and/or development studies/plans are in various stages of completion. 
Impairments
There were no impairments in the three months ended March 31, 2023 or 2022.
Note E – Financing Arrangements and Debt
As of March 31, 2023, the Company had an $800 million revolving credit facility (RCF). The RCF is a senior unsecured guaranteed facility which expires on November 17, 2027, unless the outstanding principal amount of the
Company’s 5.75% senior notes due 2025 (2025 Notes) as at February 15, 2025 exceeds $50.0 million, in which case, the RCF will expire on that date. At March 31, 2023, the Company had no outstanding borrowings under the RCF and $30.3 million of outstanding letters of credit, which reduce the borrowing capacity of the RCF. At March 31, 2023, the interest rate in effect on borrowings under the RCF would have been 7.40%. At March 31, 2023, the Company was in compliance with all covenants related to the RCF.
The Company also has a shelf registration statement on file with the U.S. Securities and Exchange Commission (SEC) that permits the offer and sale of debt and/or equity securities through October 15, 2024.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note F – Other Financial Information
Additional disclosures regarding cash flow activities are provided below.
Three Months Ended
March 31,
(Thousands of dollars)20232022
Net (increase) decrease in operating working capital, excluding cash and cash equivalents:
(Increase) in accounts receivable $(3,976)$(117,928)
(Increase) decrease in inventories(9,296)(4,541)
(Increase) decrease in prepaid expenses3,813 (515)
Increase (decrease) in accounts payable and accrued liabilities ¹(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)
Supplementary disclosures:
Cash income taxes paid, net of refunds$3,342 $103 
Interest paid, net of amounts capitalized of $3.3 million in 2023 and $5.3 million in 2022
19,358 40,181 
Non-cash investing activities:
Asset retirement costs capitalized$2,396 $3,889 
(Increase) decrease in capital expenditure accrual15,973 (49,352)
1 Excludes payable balances relating to mark-to-market of derivative instruments and contingent consideration relating to acquisitions.
Note G – Employee and Retiree Benefit Plans
The Company has defined benefit pension plans that are noncontributory and cover most full-time employees. All pension plans are funded except for the U.S. and Canadian nonqualified supplemental plan and the U.S. director’s plan. All U.S. tax qualified plans meet the funding requirements of federal laws and regulations. Contributions to foreign plans meet the requirements of local laws and tax regulations. The Company also sponsors health care and life insurance benefit plans, which are not funded, that cover most retired U.S. employees. The health care benefits are contributory; the life insurance benefits are noncontributory.
The table that follows provides the components of net periodic benefit expense for the three-month periods ended March 31, 2023 and 2022.
Three Months Ended March 31,
Pension BenefitsOther Postretirement Benefits
(Thousands of dollars)2023202220232022
Service cost$1,650 $2,129 $132 $292 
Interest cost8,507 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 components of net periodic benefit expense, other than the service cost, are recorded in “Other expenses” in the Consolidated Statements of Operations.
During the three-month period ended March 31, 2023, the Company made contributions of $9.5 million to its defined benefit pension and postretirement benefit plans. Remaining funding in 2023 for the Company’s defined benefit pension and postretirement plans is anticipated to be $27.6 million.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note H – Incentive Plans
The costs resulting from all share-based and cash-based incentive plans are recognized as an expense in the Consolidated Statements of Operations using a fair value-based measurement method over the periods that the awards vest.
The Annual Incentive Plan (AIP) authorizes the Compensation Committee (the Committee) to establish specific performance goals associated with annual cash awards that may be earned by officers, executives and certain other employees. Cash awards under the AIP are determined based on the Company’s actual financial and operating results as measured against the performance goals established by the Committee.
The 2020 Long-Term Incentive Plan (2020 Long-Term Plan) authorizes the Committee to make grants of the Company’s Common Stock to employees. These grants may be in the form of stock options (nonqualified or incentive), stock appreciation rights (SAR), restricted stock, restricted stock units (RSU), performance units, performance shares, dividend equivalents and other stock-based incentives. The 2020 Long-Term Plan expires in 2030. A total of five million shares are issuable during the life of the 2020 Long-Term Plan. Shares issued pursuant to awards granted under the Plan may be shares that are authorized and unissued or shares that were reacquired by the Company, including shares purchased in the open market. Share awards that have been canceled, expired, forfeited or otherwise not issued under an award shall not count as shares issued under the Plan.
During the three months ended March 31, 2023, the Committee granted the following awards from the 2020 Long-Term Plan:
2020 Long-Term Incentive Plan
Type of AwardNumber of Awards GrantedGrant DateGrant Date Fair ValueValuation Methodology
Performance Based RSUs 1
409,160 January 31, 2023$60.46 Monte Carlo
Time Based RSUs 2
499,220 January 31, 202343.27 Average Stock Price
Cash Settled RSUs 3
123,230 January 31, 202343.27 Average Stock Price
1 Performance based RSUs are scheduled to vest over a three year performance period.
2 Time based RSUs are generally scheduled to vest over three years from the date of grant.
3 Cash settled RSUs are generally scheduled to vest over three years from the date of grant.
The Company also has a Stock Plan for Non-Employee Directors that permits the issuance of restricted stock, restricted stock units and stock options or a combination thereof to the Company’s Non-Employee Directors.
The Company currently has outstanding incentive awards issued to Directors under the 2021 Stock Plan for Non-Employee Directors (2021 NED Plan) and the 2018 Stock Plan for Non-Employee Directors. All awards on or after May 12, 2021, were made under the 2021 NED Plan.
During the three months ended March 31, 2023, the Committee granted the following awards to Non-Employee Directors:
2021 Stock Plan for Non-Employee Directors
Type of AwardNumber of Awards GrantedGrant DateGrant Date Fair ValueValuation Methodology
Time Based RSUs 1
56,880 February 1, 2023$42.20 Closing Stock Price
1 Non-employee directors time-based RSUs are scheduled to vest in February 2024.
All stock option exercises are non-cash transactions for the Company. The employee receives net shares, after applicable withholding obligations, upon each stock option exercise. The actual income tax benefit realized from the tax deductions related to stock option exercises of the share-based payment arrangements were immaterial for the three-month period ended March 31, 2023.
Amounts recognized in the financial statements with respect to share-based plans are shown in the following table:
Three Months Ended
March 31,
(Thousands of dollars)20232022
Compensation charged against income before tax benefit$11,196 $13,962 
Related income tax benefit recognized in income1,581 2,272 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note H – Incentive Plans (Continued)
Certain incentive compensation granted to the Company’s named executive officers, to the extent their total compensation exceeds $1.0 million per executive per year, is not eligible for a U.S. income tax deduction under the Tax Cuts and Jobs Act (2017 Tax Act).
Note I – Earnings Per Share
Net income (loss) attributable to Murphy was used as the numerator in computing both basic and diluted income per Common share for the three-month periods ended March 31, 2023 and 2022. The following table reports the weighted-average shares outstanding used for these computations.
Three Months Ended
March 31,
(Weighted-average shares)20232022
Basic method155,856,509 154,916,004 
Dilutive stock options and restricted stock units ¹1,532,057  
Diluted method157,388,566 154,916,004 
1 Due to a net loss recognized by the Company for the three-month period ended March 31, 2022, no unvested stock awards were included in the computation of diluted earnings per share because the effect would have been antidilutive.
Note J – Income Taxes
The Company’s effective income tax rate is calculated as the amount of income tax expense (benefit) divided by income (loss) from continuing operations before income taxes. For the three-month periods ended March 31, 2023 and 2022, the Company’s effective income tax rates were as follows:
20232022
Three months ended March 31,20.1%20.7%
The effective tax rate for the three-month period ended March 31, 2023, was below the U.S. statutory tax rate of 21% primarily due to no tax applied to the pre-tax income of the noncontrolling interest in MP GOM, offset by the effects of income generated in foreign tax jurisdictions, certain of which have income tax rates higher than the U.S. Federal rate and certain expenses, including exploration and other expenses in certain foreign jurisdictions, for which no income tax benefits are currently available.
The effective tax rate for the three-month period ended March 31, 2022, was below the statutory tax rate of 21% primarily due to exploration expenses in certain foreign jurisdictions in which no income tax benefit is currently available, offset by no tax applied to the pre-tax income of the noncontrolling interest in MP GOM.
The Company’s tax returns in multiple jurisdictions are subject to audit by taxing authorities. These audits often take years to complete and settle. Although the Company believes that recorded liabilities for unsettled issues are adequate, additional gains or losses could occur in future years from resolution of outstanding unsettled matters. Additionally, the Company has paid amounts into escrow, and may from time to time pay more amounts into escrow, in order to continue tax disputes with the relevant taxing authorities. As of March 31, 2023, the earliest years remaining open for audit and/or settlement in our major taxing jurisdictions are as follows: U.S. – 2016; Canada – 2016; and Malaysia – 2016. Following the sale in 2019, the Company has retained certain possible liabilities and rights to income tax receivables relating to the divested Malaysia business for the years prior to 2019. The Company believes current recorded liabilities are adequate.
Note K – Financial Instruments and Risk Management
Murphy, at times, uses derivative instruments, to manage certain risks related to commodity prices, foreign currency exchange rates and interest rates. The use of derivative instruments for risk management is covered by operating policies and is closely monitored by the Company’s senior management. The Company does not hold any derivatives for speculative purposes, and it does not use derivatives with leveraged or complex features. Derivative instruments are traded with creditworthy major financial institutions or over national exchanges such as the New York Mercantile Exchange (NYMEX). The Company has a risk management control system to monitor commodity price risks and any derivatives obtained to manage a portion of such risks. For accounting purposes, the Company has not designated commodity and foreign currency derivative contracts as
13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note K – Financial Instruments and Risk Management (Continued)
hedges, and therefore, it recognizes all gains and losses on these derivative contracts in its Consolidated Statements of Operations. 
Commodity Price Risks
During the first quarter of 2023, the Company did not have any outstanding crude oil derivative contracts.
During the first quarter of 2022, the Company had crude oil swaps and collar contracts. Under the swaps contracts, which matured monthly, the Company paid the average monthly price in effect and received the fixed contract price on a notional amount of sales volume, thereby fixing the price for the commodity sold. Under the collar contracts, which also matured monthly, the Company purchased a put option and sold a call option with no net premiums paid to or received from counterparties. Upon maturity, collar contracts required payments by the Company if the NYMEX average closing price was above the ceiling price or payments to the Company if the NYMEX average closing price was below the floor price.
Foreign Currency Exchange Risks
The Company is subject to foreign currency exchange risk associated with operations in countries outside the U.S. The Company had no foreign currency exchange derivatives outstanding at March 31, 2023 and 2022.
For the three-month periods ended March 31, 2023 and 2022, the gains and losses recognized in the Consolidated Statements of Operations for derivative instruments not designated as hedging instruments are presented in the following table.
Gain (Loss)
(Thousands of dollars)Statement of Operations LocationThree Months Ended March 31,
Type of Derivative Contract20232022
Commodity swapsLoss on derivative instruments$ $(156,359)
Commodity collarsLoss on derivative instruments (164,418)
Fair Values – Recurring
The Company carries certain assets and liabilities at fair value in its Consolidated Balance Sheets. The fair value hierarchy is based on the quality of inputs used to measure fair value, with Level 1 being the highest quality and Level 3 being the lowest quality. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are observable inputs other than quoted prices included within Level 1. Level 3 inputs are unobservable inputs which reflect assumptions about pricing by market participants.
The carrying value of assets and liabilities recorded at fair value on a recurring basis at March 31, 2023 and December 31, 2022, are presented in the following table.
March 31, 2023December 31, 2022
(Thousands of dollars)Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Liabilities:
Nonqualified employee savings plan15,069   15,069 15,135   15,135 
$15,069 $ $ $15,069 $15,135 $ $ $15,135 
The nonqualified employee savings plan is an unfunded savings plan through which participants seek a return via phantom investments in equity securities and/or mutual funds. The fair value of this liability was based on quoted prices for these equity securities and mutual funds. The income effect of changes in the fair value of the nonqualified employee savings plan is recorded in “Selling and general expenses” in the Consolidated Statements of Operations.
As of March 31, 2023, there were no outstanding commodity (WTI crude oil) swaps and collars contracts subject to fair value measurement.
As of December 31, 2022, there were no outstanding commodity (WTI crude oil) swaps and collars contracts subject to fair value measurement. The liabilities associated with these contracts have been finalized as of December 31, 2022 and were based on realized WTI pricing. The commodity swaps and collars liability as of December 31, 2022 was $19.6 million and $2.3 million, respectively, and recorded as “Accounts payable” in the Consolidated Balance Sheet.
In 2019, the Company acquired strategic deepwater Gulf of Mexico assets from LLOG Exploration Offshore L.L.C. and LLOG Bluewater Holdings, L.L.C. (LLOG). Under the terms of the transaction, in addition to the consideration paid, Murphy had an
14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note K – Financial Instruments and Risk Management (Continued)
obligation to pay additional contingent consideration of up to $200 million in the event that certain revenue thresholds were exceeded between 2019 and 2022; and $50 million following first oil from certain development projects. The revenue threshold was not exceeded for 2019 or 2020; however, the threshold was met in 2021 and 2022. The obligation period related to LLOG revenue-related contingent consideration ended in 2022, with final payments being made in the first half of 2023.
In 2018, the Company, through a subsidiary, acquired Gulf of Mexico producing assets from Petrobras America Inc. (PAI), a subsidiary of Petróleo Brasileiro S.A. Under the terms of the transaction, in addition to the consideration paid, Murphy had an obligation to pay additional contingent consideration of up to $150 million if certain price and production thresholds were exceeded beginning in 2019 through 2025; and $50 million carry for PAI development costs in the St. Malo Field if certain enhanced oil recovery projects are undertaken. The price and production thresholds were not exceeded for 2019 and 2020; however, the thresholds were met in 2021 and 2022. As of December 31, 2021, Murphy had completely funded the carried interest. As of December 31, 2022, the $150 million obligation limit was achieved.
As at March 31, 2023 and December 31, 2022, the Company’s liabilities with PAI and LLOG were based on realized inputs of volumes and pricing as a result of contractual thresholds or reaching time limitations which ended in 2022. As a result, the related liabilities as at March 31, 2023 and December 31, 2022, of $25.0 million and $192.7 million, respectively, were no longer subject to fair value measurement. The liability remaining is included in “Other accrued liabilities” in the Consolidated Balance Sheets. During the three months ended March 31, 2023, the Company paid a total of $171.7 million in contingent consideration payments, thereby reducing the liability balance. In the Consolidated Statement of Cash Flows, $124.0 million is shown in operating activities and $47.7 million is shown in financing activities. The remaining $25.0 million of contingent consideration liability at March 31, 2023, balance was paid in April 2023.
The Company offsets certain assets and liabilities related to derivative contracts when the legal right of offset exists. There were no offsetting positions recorded at March 31, 2023 and December 31, 2022.
The following table presents the carrying amounts and estimated fair values of financial instruments held by the Company at March 31, 2023 and December 31, 2022. The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties. The table excludes cash and cash equivalents, trade accounts receivable, trade accounts payable and accrued expenses, all of which had fair values approximating carrying amounts. The fair value of current and long-term debt was estimated based on rates offered to the Company at that time for debt of the same maturities. The Company has off-balance sheet exposures relating to certain letters of credit. The fair value of these, which represents fees associated with obtaining the instruments, was nominal.
March 31,December 31,
20232022
(Thousands of dollars)Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Financial assets (liabilities):
Current and long-term debt$(1,823,676)(1,725,190)$(1,823,139)(1,668,216)


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note L – Accumulated Other Comprehensive Loss
The components of “Accumulated other comprehensive loss” on the Consolidated Balance Sheets at December 31, 2022 and March 31, 2023 and the changes during the three-month period ended March 31, 2023, are presented net of taxes in the following table.
(Thousands of dollars)Foreign
Currency
Translation
Gains (Losses)
Retirement
and
Postretirement
Benefit Plan
Adjustments
Total
Balance at December 31, 2022$(418,230)$(116,456)$(534,686)
Components of other comprehensive income (loss):
Before reclassifications to income3,669  3,669 
Reclassifications to income ¹ 1,098 1,098 
Net other comprehensive income (loss)3,669 1,098 4,767 
Balance at March 31, 2023$(414,561)$(115,358)$(529,919)
1  Reclassifications before taxes of $1,334 thousand are included in the computation of net periodic benefit expense for the three-month period ended March 31, 2023. See Note G for additional information. Related income taxes of $236 thousand are included in Income tax expense (benefit) for the three-month period ended March 31, 2023.
Note M – Environmental and Other Contingencies
The Company’s operations and earnings have been and may be affected by various forms of governmental action both in the United States and throughout the world. Examples of such governmental action include, but are by no means limited to: tax legislation changes, including tax rate changes, and retroactive tax claims; royalty and revenue sharing increases; import and export controls; price controls; currency controls; allocation of supplies of crude oil and petroleum products and other goods; expropriation of property; restrictions and preferences affecting the issuance of oil and natural gas or mineral leases; restrictions on drilling and/or production; laws, regulations and government action intended for the promotion of safety and the protection and/or remediation of the environment including in connection with the purported causes or potential impacts of climate change; governmental support for other forms of energy; and laws and regulations affecting the Company’s relationships with employees, suppliers, customers, stockholders and others. Given the factors involved in various government actions, including political considerations, it is difficult to predict their likelihood, the form they may take, or the effect they may have on the Company.
ENVIRONMENTAL MATTERS – Murphy and other companies in the oil and natural gas industry are subject to numerous federal, state, local and foreign laws and regulations dealing with the environment and protection of health and safety. The principal environmental, health and safety laws and regulations to which Murphy is subject address such matters as the generation, storage, handling, use, disposal and remediation of petroleum products, wastewater and hazardous materials; the emission and discharge of such materials to the environment, including GHG emissions; wildlife, habitat and water protection; the placement, operation and decommissioning of production equipment; and the health and safety of our employees, contractors and communities where our operations are located. These laws and regulations also generally require permits for existing operations, as well as the construction or development of new operations and the decommissioning facilities once production has ceased.
Violation of federal or state environmental, health and safety laws, regulations and permits can result in the imposition of significant civil and criminal penalties, injunctions and construction bans or delays. A discharge of hazardous substances into the environment could, to the extent such event is not adequately insured, subject the Company to substantial expense, including both the cost to comply with applicable regulations and claims by neighboring landowners and other third parties for any personal injury and property damage that might result. In addition, Item 103 of SEC Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that the Company reasonably believes will exceed a specified threshold. Pursuant to this item, the Company will be using a threshold of $1.0 million for such proceedings and the Company is not aware of environment legal proceedings likely to exceed this $1.0 million threshold.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note M– Environmental and Other Contingencies (Continued)

There continues to be an increase in regulatory oversight of the oil and gas industry at the federal level, with a focus on climate change and GHG emissions (including methane emissions). For example, the Inflation Reduction Act of 2022 contains provisions that impose fees for excess methane emissions from petroleum and natural gas facilities. In addition, there have been a number of executive orders issued that address climate change, including creation of climate-related task forces, directives to federal agencies to procure carbon-free electricity, and a goal of a carbon pollution-free power sector by 2035 and a net-zero emissions U.S. economy by 2050. Executive orders have also been issued related to oil and gas activities on federal lands, infrastructure and environmental justice. In addition, an international climate agreement (the Paris Agreement) was agreed to at the 2015 United Nations Framework Convention on Climate Change in Paris, France. The Paris Agreement entered into force in November 2016. Although the U.S. officially withdrew from the Paris Agreement on November 4, 2020, the U.S. has since rejoined the Paris Agreement, which became effective for the U.S. on February 19, 2021.
The Company currently owns or leases, and has in the past owned or leased, properties at which hazardous substances have been or are being handled. Hazardous substances may have been disposed of or released on or under the properties owned or leased by the Company or on or under other locations where these wastes have been taken for disposal. In addition, many of these properties have been operated by third parties whose treatment and disposal or release of hydrocarbons or other wastes were not under Murphy’s control. Under existing laws, the Company could be required to investigate, remove or remediate previously disposed wastes (including wastes disposed of or released by prior owners or operators), to investigate and clean up contaminated property (including contaminated groundwater) or to perform remedial plugging operations to prevent future contamination. Certain of these historical properties are in various stages of negotiation, investigation, and/or cleanup, and the Company is investigating the extent of any such liability and the availability of applicable defenses. The Company has retained certain liabilities related to environmental matters at formerly owned U.S. refineries that were sold in 2011. The Company also obtained insurance covering certain levels of environmental exposures related to past operations of these refineries. Murphy USA Inc. has retained any environmental exposure associated with Murphy’s former U.S. marketing operations that were spun-off in August 2013. The Company believes costs related to these sites will not have a material adverse effect on Murphy’s net income, financial condition or liquidity in a future period.
There is the possibility that environmental expenditures could be required at currently unidentified sites, and additional expenditures could be required at known sites. However, based on information currently available to the Company, the amount of future investigation and remediation costs incurred at known or currently unidentified sites is not expected to have a material adverse effect on the Company’s future net income, cash flows or liquidity.
LEGAL MATTERS – Murphy and its subsidiaries are engaged in a number of other legal proceedings (including litigation related to climate change), all of which Murphy considers routine and incidental to its business. Based on information currently available to the Company, the ultimate resolution of environmental and legal matters referred to in this note is not expected to have a material adverse effect on the Company’s net income, financial condition or liquidity in a future period.
Note N – Business Segments
Information about business segments and geographic operations is reported in the following table. For geographic purposes, revenues are attributed to the country in which the sale occurs. Corporate, including interest income, other gains and losses (including foreign exchange gains/losses and realized and unrealized gains/losses on commodity price derivatives), interest expense and unallocated overhead, is shown in the table to reconcile the business segments to consolidated totals. The Company has accounted for its former United Kingdom (U.K.) and U.S. refining and marketing operations as discontinued operations for all periods presented.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note N - Business Segments (Continued)
Total Assets at March 31, 2023Three Months Ended March 31, 2023Three Months Ended March 31, 2022
(Millions of dollars)External
Revenues
Income
(Loss)
External
Revenues
Income
(Loss)
Exploration and production ¹
United States$6,995.8 $682.3 $226.0 $707.4 $252.9 
Canada2,146.8