================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
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
MURPHY OIL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 71-0361522
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
200 PEACH STREET
P. O. BOX 7000, EL DORADO, ARKANSAS 71731-7000
(Address of principal executive offices) (Zip Code)
(501) 862-6411
(Registrant's telephone number, including area code)
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.
/X/ Yes / / No
Number of shares of Common Stock, $1.00 par value, outstanding at
September 30, 1995 was 44,833,507.
=================================================================
PART I - FINANCIAL INFORMATION
Murphy Oil Corporation and Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Thousands of dollars)
(Unaudited)
September 30, December 31,
1995 1994
------------- ------------
ASSETS
Current assets
Cash and cash equivalents $ 59,684 71,144
Accounts receivable, less allowance for
doubtful accounts of $5,801 in 1995 and
$5,554 in 1994 198,495 244,241
Inventories
Crude oil and raw materials 85,373 71,541
Finished products 70,770 44,890
Materials and supplies 39,331 36,000
Prepaid expenses 42,594 36,357
Deferred income taxes 16,058 14,939
--------- ---------
Total current assets 512,305 519,112
Investments and noncurrent receivables 44,006 28,592
Property, plant, and equipment, at cost less
accumulated depreciation, depletion, and
amortization of $2,482,591 in 1995 and
$2,350,578 in 1994 1,721,503 1,722,661
Deferred charges and other assets 37,795 41,667
--------- ---------
$ 2,315,609 2,312,032
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term obligations $ 7,615 7,615
Accounts payable and accrued liabilities 352,568 403,553
Income taxes 33,645 28,350
--------- ---------
Total current liabilities 393,828 439,518
Notes payable and other long-term obligations 25,687 49,814
Nonrecourse debt of a subsidiary 172,850 122,638
Deferred income taxes 135,775 140,610
Reserve for dismantlement costs 148,568 138,894
Reserve for major repairs 5,138 3,244
Deferred credits and other liabilities 145,749 146,635
Stockholders' equity
Capital stock
Cumulative Preferred Stock, par $100, authorized
400,000 shares, none issued - -
Common Stock, par $1.00, authorized 80,000,000
shares, issued 48,775,314 shares 48,775 48,775
Capital in excess of par value 507,713 507,797
Retained earnings 821,077 820,568
Currency translation adjustments 14,178 (2,403)
Unamortized restricted stock awards (691) (993)
Treasury stock, 3,941,807 shares of Common Stock
in 1995, 3,942,868 shares in 1994, at cost (103,038) (103,065)
--------- ---------
Total stockholders' equity 1,288,014 1,270,679
--------- ---------
$ 2,315,609 2,312,032
========= =========
See Notes to Consolidated Financial Statements, page 4.
The Exhibit Index is on page 12.
1
Murphy Oil Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Thousands of dollars, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- ----------------------
1995 1994* 1995 1994*
------- ------- --------- ---------
REVENUES
Sales $ 400,592 431,789 1,227,954 1,228,599
Other operating revenues 19,706 14,536 47,392 41,229
Interest, income from
equity companies, and
other nonoperating
revenues 2,913 22,843 18,001 27,594
------- ------- --------- ---------
Total revenues 423,211 469,168 1,293,347 1,297,422
------- ------- --------- ---------
COSTS AND EXPENSES
Crude oil, products, and
related operating expenses 313,754 335,454 944,649 932,602
Exploration expenses,
including undeveloped
lease amortization 31,166 10,779 48,169 30,869
Selling and general expenses 16,253 16,437 51,031 50,568
Depreciation, depletion,
and amortization 59,372 48,282 180,548 148,200
Interest expense 3,562 4,023 10,849 9,034
Interest capitalized (2,200) (3,696) (6,423) (6,574)
------- ------- --------- ---------
Total costs and expenses 421,907 411,279 1,228,823 1,164,699
------- ------- --------- ---------
Income before income taxes 1,304 57,889 64,524 132,723
Federal and state income
taxes (benefits) (7,870) 14,048 4,295 38,886
Foreign income taxes 1,560 6,572 16,025 5,364
------- ------- --------- ---------
NET INCOME $ 7,614 37,269 44,204 88,473
======= ======= ========= =========
Average Common shares
outstanding 44,873,958 44,905,656 44,871,900 44,884,779
Net income per Common share $ .17 .83 .99 1.97
======= ======= ========= =========
Cash dividends per Common
share $ .325 .325 .975 .975
======= ======= ========= =========
*Restated to conform to 1995 presentation.
See Notes to Consolidated Financial Statements, page 4.
2
Murphy Oil Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended September 30, 1995 and 1994
(Thousands of dollars)
1995 1994
------- -------
OPERATING ACTIVITIES
Net income $ 44,204 88,473
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation, depletion, and amortization 180,548 148,200
Provision for major repairs 18,997 16,522
Expenditures for major repairs and dismantlement costs (13,425) (19,381)
Exploratory expenditures charged against income 40,021 22,637
Amortization of undeveloped leases 8,148 8,232
Deferred and noncurrent income tax charges (credits) (15,714) 10,181
Gains from disposition of assets (3,160) (1,112)
Other - net 2,391 (9,193)
------- -------
262,010 264,559
Net (increase) decrease in operating working capital
other than cash and cash equivalents (50,343) 12,340
Net recoveries (expenditures) on insurance claim to
repair hurricane damage (755) 16,224
Other adjustments related to operating activities (2,114) (10,233)
------- -------
Net cash provided by operating activities 208,798 282,890
------- -------
INVESTING ACTIVITIES
Capital expenditures requiring cash (203,896) (290,612)
Proceeds from sale of property, plant, and equipment 8,342 4,143
Other - net (7,932) (765)
------- -------
Net cash required by investing activities (203,486) (287,234)
------- -------
FINANCING ACTIVITIES
Increase (decrease) in notes payable and other
long-term obligations (24,127) 127
Increase in nonrecourse debt of a subsidiary 50,212 31,531
Dividends paid (43,694) (43,670)
------- -------
Net cash required by financing activities (17,609) (12,012)
------- -------
Effect of exchange rate changes on cash and cash
equivalents 837 1,282
------- -------
Net decrease in cash and cash equivalents (11,460) (15,074)
Cash and cash equivalents at January 1 71,144 141,225
------- -------
Cash and cash equivalents at September 30 $ 59,684 126,151
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES
Cash income taxes paid, net of refunds $ 23,189 26,706
======= =======
Interest paid, net of amounts capitalized $ 1,129 (2,208)
======= =======
See Notes to Consolidated Financial Statements, page 4.
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
These notes are an integral part of the financial statements of Murphy Oil
Corporation and Consolidated Subsidiaries (Murphy/the Company) on pages 1
through 3 of this report on Form 10-Q.
NOTE A - INTERIM FINANCIAL STATEMENTS
The consolidated financial statements of the Company presented herein have not
been audited by independent auditors, except for the Consolidated Balance
Sheet at December 31, 1994. In the opinion of the Company's management,
the unaudited financial statements presented herein include all adjustments
(consisting only of normal, recurring accruals) necessary to present fairly
the Company's financial position at September 30, 1995, and the results of
operations and cash flows for the three-month and nine-month periods ended
September 30, 1995 and 1994, in conformity with generally accepted accounting
principles.
Financial statements and notes to consolidated financial statements included
in this report on Form 10-Q should be read in conjunction with the Company's
1994 Annual Report on Form 10-K, as certain notes and other pertinent
information have been abbreviated in or omitted from this report.
Financial results for the nine months ended September 30, 1995 are not
necessarily indicative of future results.
NOTE B - ENVIRONMENTAL CONTINGENCIES
The Company's worldwide operations are subject to numerous laws and
regulations designed to protect the environment and/or impose remediation
obligations. In addition, the Company may be involved in personal injury
claims, allegedly caused by exposure to materials manufactured or used in the
Company's operations. The Company currently operates or has previously
operated certain sites or facilities, including refineries, oil and gas
fields, service stations, and terminals, for which known or potential
obligations for environmental remediation exist.
Under the Company's accounting policies, liabilities for environmentally
related obligations are recorded when such obligations are probable and the
cost can be reasonably estimated. In instances where there is a range of
reasonably estimated costs, the Company will record the most likely amount, or
if no amount is most likely, the minimum of the range. Amounts recorded as
liabilities are reviewed quarterly and adjusted as needed. Actual cash
expenditures often occur a number of years following recognition of the
liabilities.
The Company's reserve for remediation obligations, which is included in
"Deferred Credits and Other Liabilities" in the Consolidated Balance Sheets,
contains certain amounts that are based on anticipated regulatory approval of
proposed remediation processes involving refinery water basins and a land
farm, formerly used for disposal of refinery waste. If regulatory authorities
require more costly alternatives than the proposed processes, future
expenditures could increase by up to an estimated $6 million above the amount
reserved.
The Company has received notices from the U.S. Environmental Protection Agency
that it is a Potentially Responsible Party (PRP) at five Superfund sites and
has been assigned responsibility by defendants at another Superfund site. The
potential total cost to all parties of performing necessary remediation work
at these sites is substantial. However, based on information currently
available, the Company is a "de minimus" party, with assigned or potentially
assigned responsibility of less than one percent at all but one of the sites.
At that site, the Company has not determined either its potentially assigned
responsibility percentage or its potential total remediation cost. The
Company has recorded a reserve totaling $.1 million for Superfund sites, and
due to currently available information on one site and the minor percentages
involved at the other sites, the Company does not expect that its related
remediation costs will be material to its financial condition. Additional
information may become known in the future that would alter this assessment,
including any requirement to bear a pro rata share of costs attributable to
nonparticipating PRP's or indications of additional responsibility by the
Company.
4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTD.)
NOTE B - ENVIRONMENTAL CONTINGENCIES (CONTD.)
Although the Company is not aware of any environmental matters that might have
a material effect on its financial condition, there is the possibility that
additional expenditures could be required at currently unidentified sites, and
new or revised regulatory requirements could necessitate additional
expenditures at known sites. Such expenditures could have a material impact
on the results of operations in a future period.
The Company believes that certain of its environmental remediation obligations
are covered by insurance; however, this issue is the subject of ongoing
litigation and no assurance can be given that the Company's position will be
sustained. Therefore, the environmental liabilities recorded at September 30,
1995 have not been reduced for any possible insurance recoveries.
NOTE C - OTHER CONTINGENCIES
The Company's operations and earnings have been and may be affected by various
other forms of governmental action both in the U.S. and throughout the world.
Examples of such governmental action include, but are by no means limited to:
tax increases and retroactive tax claims; restrictions on production; 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 issuance of oil and gas or
mineral leases; laws and regulations intended for the promotion of safety; and
laws and regulations affecting the Company's relationships with employees,
suppliers, customers, stockholders, and others. Because governmental actions
are often motivated by political considerations, may be taken without full
consideration of their consequences, and may be taken in response to actions
of other governments, it is not practical to attempt to predict the likelihood
of such actions, the form which such actions may take, or the effect such
actions may have on the Company.
In the normal course of its business activities, the Company is required under
certain contracts with various governmental authorities and others to provide
letters of credit that may be drawn upon if the Company fails to perform under
those contracts. At September 30, 1995, the Company had contingent
liabilities of $19.3 million on outstanding letters of credit. A contingent
liability of $14.2 million existed at September 30, 1995 under a guaranty and
pipeline throughput agreement.
5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTD.)
NOTE D - BUSINESS SEGMENTS
Three Months Ended Three Months Ended
September 30, 1995 September 30, 1994
- -----------------------------------------------------------------------------
(Millions of dollars) Revenues Income Revenues* Income
- -----------------------------------------------------------------------------
Petroleum
Exploration and production**
United States .................... $ 49.3 (8.9) 46.0 .7
Canada ........................... 37.4 6.3 35.7 6.2
United Kingdom ................... 28.3 .9 24.1 1.0
Other international .............. 9.4 (3.3) 8.1 1.9
- -----------------------------------------------------------------------------
124.4 (5.0) 113.9 9.8
- -----------------------------------------------------------------------------
Refining, marketing, and transportation
United States .................... 249.8 2.0 267.6 7.5
Western Europe ................... 64.1 .6 81.3 2.4
Canada ........................... 6.1 1.6 6.8 2.0
- -----------------------------------------------------------------------------
320.0 4.2 355.7 11.9
- -----------------------------------------------------------------------------
444.4 (.8) 469.6 21.7
Intrasegment transfers elimination (43.4) (43.9)
- -----------------------------------------------------------------------------
Total petroleum ................ 401.0 (.8) 425.7 21.7
Farm, timber, and real estate--United
States .............................. 19.3 1.3 20.6 3.1
Corporate and other .................. 1.8 (1.0) 1.8 (1.4)
- -----------------------------------------------------------------------------
Revenues/income (loss) before unusual
or infrequently occurring items ..... 422.1 (.5) 448.1 23.4
Settlement of tax matters............. 1.1 8.1 - -
Settlement of DOE matters, net of taxes - - 21.0 13.9
- -----------------------------------------------------------------------------
$ 423.2 7.6 469.1 37.3
=============================================================================
Nine Months Ended Nine Months Ended
September 30, 1995 September 30, 1994
- -----------------------------------------------------------------------------
(Millions of dollars) Revenues Income Revenues* Income
- -----------------------------------------------------------------------------
Petroleum
Exploration and production**
United States .................... $ 151.1 (.6) 165.5 15.3
Canada ........................... 107.0 18.0 92.8 11.0
United Kingdom ................... 91.1 4.8 68.2 2.4
Other international .............. 31.2 (.4) 16.3 4.4
- -----------------------------------------------------------------------------
380.4 21.8 342.8 33.1
- -----------------------------------------------------------------------------
Refining, marketing, and transportation
United States .................... 758.0 1.8 698.8 17.0
Western Europe ................... 185.9 (1.4) 228.2 3.6
Canada ........................... 17.6 4.7 19.9 5.6
- -----------------------------------------------------------------------------
961.5 5.1 946.9 26.2
- -----------------------------------------------------------------------------
1,341.9 26.9 1,289.7 59.3
Intrasegment transfers elimination (127.3) (87.0)
- -----------------------------------------------------------------------------
Total petroleum ................ 1,214.6 26.9 1,202.7 59.3
Farm, timber, and real estate--United
States .............................. 60.7 8.6 67.1 15.8
Corporate and other .................. 5.9 (6.4) 6.6 (6.9)
- -----------------------------------------------------------------------------
Revenues/income before unusual or
infrequently occurring items ........ 1,281.2 29.1 1,276.4 68.2
Settlement of tax matters ............ 1.1 8.1 - 6.4
Adjustment of estimates for self-insured
liabilities, net of taxes ........... 11.0 7.0 - -
Settlement of DOE matters, net of taxes - - 21.0 13.9
- -----------------------------------------------------------------------------
$1,293.3 44.2 1,297.4 88.5
=============================================================================
*Restated to conform to 1995 presentation.
**Additional details are presented in the tables on page 11.
6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1994
Net income for the third quarter of 1995 totaled $7.6 million, $.17 a share,
compared to $37.3 million, $.83 a share, earned in the third quarter a year
ago. The current quarter included a benefit of $8.1 million, $.18 a share,
resulting from settlement of tax matters in the U.S. and U.K., while the third
quarter of 1994 included a benefit of $13.9 million, $.31 a share, from
settlement of a U.S. Department of Energy (DOE) Proposed Remedial Order.
Excluding the unusual items, results for the third quarter of 1995 reflected a
loss of $.5 million, $.01 a share, compared to earnings of $23.4 million, $.52
a share, in the same period of 1994, with each operating segment down from a
year ago. Exploration and production operations for the 1995 quarter were
adversely affected by a $13.6 million after-tax charge for an unsuccessful
well in Mobile Block 908, generally lower crude oil sales prices, lower U.S.
and Canadian natural gas sales prices, and an increase in international
exploration activity. Partial offsets were provided by a 12-percent increase
in crude oil and gas liquids production and a 10-percent increase in natural
gas production. The decline in earnings from refining, marketing, and
transportation operations was primarily due to lower unit margins and a
decrease in sales of refined products in the U.S., while the decline in farm,
timber, and real estate activities was primarily due to lower income from
timber operations.
Worldwide exploration and production operations had a loss of $5 million in
the third quarter of 1995 compared to earnings of $9.8 million a year ago.
Operations in the U.S., which included the $13.6 million after-tax charge for
the Mobile Block 908 well, had a loss of $8.9 million compared to earnings of
$.7 million in the third quarter of 1994. Operations in Canada earned $6.3
million in the current quarter, up from $6.2 million a year ago, and U.K.
operations earned $.9 million compared to $1 million. Other international
operations reported a loss of $3.3 million compared to earnings of $1.9
million a year earlier; the current quarter included a loss of $2.5 million
related to exploration activity offshore China. The Company's crude oil and
condensate sales prices averaged $15.89 a barrel in the U.S., a decrease of
three percent. In Canada, sales prices averaged $16.54 a barrel for synthetic
oil, a decline of four percent. The average sales price for heavy oil in
Canada was $12.56 a barrel, up four percent from a year ago, while the average
price of light oil at $16.04 a barrel was basically unchanged. Total crude
oil and gas liquids production averaged 59,582 barrels a day compared to
53,340 in the third quarter of 1994. U.S. production increased two percent,
and U.K. production increased 20 percent. In Canada, light oil production
declined four percent, heavy oil production increased 37 percent, and
production of synthetic oil declined five percent. Production from Ecuador
averaged 5,080 barrels a day compared to 2,501 a year ago. Murphy's average
natural gas sales price in the U.S. was $1.48 a thousand cubic feet (MCF) in
the current quarter compared to $1.78 a year ago, a decrease of 17 percent.
The average natural gas sales price in Canada declined from $1.25 an MCF to
$.87, down 30 percent. The average sales price in Spain was $3.00 an MCF, an
increase of 13 percent. Total natural gas sales averaged 230 million cubic
feet a day compared to 209 million a year ago. Sales of natural gas in the
U.S. averaged 179 million cubic feet a day, up from 159 million. Exploration
expenses totaled $31.2 million in the current quarter compared to $10.8
million a year ago. The current quarter included $21.3 million of dry hole
cost for the well at Mobile Block 908. The tables on page 11 provide
additional details of the results of exploration and production operations
for the third quarter of each year.
Earnings from worldwide refining, marketing, and transportation operations
totaled $4.2 million in the current quarter compared to $11.9 million a year
ago. Operations in the U.S. earned $2 million, down from $7.5 million a
year ago, while those in Western Europe earned $.6 million in the current
quarter compared to $2.4 million in the third quarter of 1994. Earnings from
purchasing, transporting, and reselling crude oil in Canada were $1.6 million
in the current quarter compared to $2 million a year ago. Refinery crude runs
were 155,728 barrels a day compared to 157,056 in the third quarter of 1994.
Refined product sales were 162,400 barrels a day, down from 174,549 a year
ago.
7
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTD.)
RESULTS OF OPERATIONS (CONTD.)
Earnings from farm, timber, and real estate totaled $1.3 million, a decrease
of 58 percent compared to the third quarter of 1994; the decrease was mainly
due to earnings from timber operations declining 46 percent. Finished lumber
prices were down 11 percent, and the average margin of the sawmills was down
74 percent, reflecting higher log costs and lower lumber prices. Partial
offsets were provided by an increase in the pine sawtimber harvest from 4.1
million board feet to 5.8 million in the current quarter and a 22-percent
increase in the average sales price for sawtimber. Eighteen lots were sold at
the Chenal Valley development in western Little Rock during the third quarter
of 1995 compared to 20 a year ago.
Corporate functions reflected losses of $1 million in the current quarter
compared to $1.4 million in the third quarter of 1994.
NINE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1994
Earnings for the nine months ended September 30, 1995 totaled $44.2 million,
$.99 a share, compared to $88.5 million, $1.97 a share, in 1994. In addition
to the $8.1 million, $.18 a share, from settlement of tax matters in the
current quarter referred to previously, the nine months ended September 30,
1995 also included a benefit of $7 million, $.16 a share, from adjusting
amounts previously reserved for matters in which the Company is self-insured.
Results of the first nine months of 1994 reflected a benefit of $6.4 million,
$.14 a share, for settlement of tax matters in the U.K. as well as the
DOE settlement of $13.9 million, $.31 a share, referred to previously.
Excluding the unusual items, earnings for the first nine months of 1995
totaled $29.1 million, $.65 a share, compared to $68.2 million, $1.52 a share,
for the 1994 period; earnings declined significantly in each of the operating
segments. Earnings from exploration and production activities decreased 34
percent because the effects of higher crude oil and gas liquids volumes and
prices and higher natural gas volumes were more than offset by the effects of
the after-tax charge for the Mobile Block 908 well and lower natural gas
prices in the U.S. and Canada; and earnings from refining, marketing,
and transportation operations were down 81 percent, primarily because of lower
unit margins. Farm, timber, and real estate operations were down 46 percent
as the effects of lower sawtimber volume harvested, lumber prices, sawmill
margins, and lot sales were only partially offset by a higher average price
for sawtimber and increased lumber sales volume.
Earnings from exploration and production for the nine months ended September
30, 1995 were $21.8 million, down from $33.1 million in 1994. U.S. operations
were adversely affected by the charge for the Mobile Block 908 well, dropping
from income of $15.3 million in 1994 to a loss of $.6 million, and other
international operations dropped from income of $4.4 million to a loss of $.4
million, primarily the result of a higher level of exploration activity.
Canadian earnings increased from $11 million to $18 million, while U.K.
earnings doubled from $2.4 million to $4.8 million. The Company's crude
oil and condensate sales prices averaged $16.64 a barrel in the U.S. and
$17.00 in the U.K., an increase of 10 percent over 1994 in each area. In
Canada, 1995 sales prices averaged $16.72 a barrel for light oil, $13.07 for
heavy oil, and $17.34 for synthetic oil, reflecting increases of 16 percent,
28 percent, and 11 percent, respectively. The average price for Ecuadoran
crude rose 14 percent from last year to $13.58 a barrel. Natural gas prices
for the first nine months of 1995 averaged $1.54 an MCF in the U.S., down 24
percent, and $.97 in Canada, down 33 percent. On the favorable side, natural
gas prices were $2.92 an MCF in Spain, up 17 percent, and $2.47 in the U.K.,
up three percent. Total crude oil and gas liquids production in the first
nine months of 1995 averaged 57,018 barrels a day compared to 49,729 in the
same period of 1994. Ecuadoran production, which commenced in June 1994,
averaged 5,034 barrels a day, up from 1,104 last year. In other areas, crude
oil and gas liquids production averaged 15,034 barrels a day in the U.K., up
15 percent; 13,896 in the U.S., up five percent; 8,840 for Canadian synthetic
oil, down three percent; 8,795 for Canadian heavy oil, up 32 percent; 5,262
for Canadian light oil, down six percent; and 157 in other international
areas, down 85 percent. Natural gas sales volumes averaged 258 million cubic
feet a day in the first nine months of 1995, up two percent from a year ago.
Natural gas volumes were virtually unchanged in the U.S., but increased 13
percent in Canada and 29
8
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTD.)
RESULTS OF OPERATIONS (CONTD.)
percent in the U.K. while decreasing eight percent in Spain. Exploration
expenses, including $21.3 million of dry hole cost for the well at Mobile
Block 908, totaled $48.2 million, up $17.3 million from the first nine months
of 1994. Supporting tables on page 11 provide additional details of the
results of exploration and production operations for the first nine months of
each year.
Refining, marketing, and transportation operations earned $5.1 million in the
first nine months of 1995 compared to $26.2 million a year earlier; the
unfavorable change was primarily because competitive market conditions did not
allow higher crude oil costs to be completely passed on to customers through
higher product prices. Operations in the U.S. recorded earnings of $1.8
million in the 1995 period compared to $17 million in the first nine months of
1994, and operations in Western Europe recorded a loss of $1.4 million
compared to earnings of $3.6 million in the prior period. Profits from
purchasing, transporting, and reselling crude oil in Canada were $4.7 million
in the first nine months of 1995 compared to $5.6 million in 1994, with the
decline due mostly to lower income from crude trading activities. Refinery
crude runs were 154,032 barrels a day compared to 150,148 a year ago.
Petroleum product sales were 159,495 barrels a day, down from 165,092 in 1994.
Although sawtimber prices showed continued strength, earnings from farm,
timber, and real estate operations dropped from $15.8 million in the first
nine months of 1994 to $8.6 million. Results in 1995 were adversely affected
by a reduction in the amount of sawtimber harvested, lower sawmill margins,
and the sale of fewer lots in the Chenal Valley development in western Little
Rock. Harvested sawtimber declined from 38.3 million board feet in the first
nine months of 1994 to 31.1 million in the current year, but the average sales
price was up 14 percent. Lumber prices were down 10 percent, and sawmill
margins were down 76 percent because of lower lumber prices and higher log
costs. During the first nine months of 1995, 43 lots were sold at Chenal
Valley compared to 95 a year ago.
Financial results from corporate functions improved slightly, reflecting
losses of $6.4 million in the first nine months of 1995 and $6.9 million a
year ago.
FINANCIAL CONDITION
Cash provided by operating activities was $208.8 million for the nine months
ended September 30, 1995 compared to $282.9 million for the same period in
1994. The 1995 amount included benefits of $8.1 million for settlement of tax
matters and $7 million for adjustment of estimates for self-insured
liabilities, while the 1994 amount included $5.3 million from the settlement
of DOE matters. Changes in operating working capital other than cash and cash
equivalents required cash of $50.3 million for the first nine months of 1995
while providing cash of $12.3 million in the 1994 period. The first nine
months of 1994 also benefited from net recoveries of $16.2 million on an
insurance claim to repair 1992 hurricane damage. Cash provided by operating
activities was reduced by expenditures for refinery turnarounds and
abandonment of oil and gas properties totaling $13.4 million in the current
year and $19.4 million in 1994. Predominant uses of cash in both years were
for capital expenditures (which, including amounts expensed, are summarized in
the following table) and payment of dividends.
--------------------------------------------------------
(Millions of dollars) 1995 1994
--------------------------------------------------------
Exploration and production . . . . . . . $166.7 216.9
Refining, marketing, and transportation 30.9 62.4
Farm, timber, and real estate. . . . . . 5.2 7.3
Corporate and other . . . . . . . . . . 1.1 4.0
--------------------------------------------------------
$203.9 290.6
========================================================
Working capital at September 30, 1995 was $118.5 million, up $38.9 million
from December 31, 1994. This level of working capital does not fully reflect
the Company's liquidity position, because the lower historical costs assigned
to inventories under LIFO accounting were $68.4 million below current costs at
September 30, 1995.
9
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTD.)
FINANCIAL CONDITION (CONTD.)
At September 30, 1995, nonrecourse debt of a subsidiary was $172.8 million;
the increase of $50.2 million during the first nine months of 1995 was
attributable to financing the Company's share of development cost for the
period that related to the Hibernia oil field, offshore Newfoundland. This
increase was partially offset by a decrease of $24.1 million in notes payable
and other long-term obligations. A summary of capital employed at September
30, 1995 and December 31, 1994 follows.
-----------------------------------------------------------------
1995 1994
-----------------------------------------------------------------
(Millions of dollars) Amount % Amount %
-----------------------------------------------------------------
Notes payable and other long-term
obligations....................... $ 25.7 2 49.8 3
Nonrecourse debt of a subsidiary... 172.8 11 122.6 9
Stockholders' equity............... 1,288.0 87 1,270.7 88
-----------------------------------------------------------------
$1,486.5 100 1,443.1 100
=================================================================
10
OIL AND GAS OPERATING RESULTS*
- -----------------------------------------------------------------------------
United Synthetic
United King- Sub- Oil -
(Millions of dollars) States Canada dom Other total Canada Total
- -----------------------------------------------------------------------------
THREE MONTHS ENDED
SEPTEMBER 30, 1995
Oil and gas sales and
operating revenues $ 49.3 22.5 28.3 9.4 109.5 14.9 124.4
Production costs 13.0 7.5 10.7 3.7 34.9 10.2 45.1
Depreciation, depletion,
and amortization 21.7 5.8 14.9 4.3 46.7 1.3 48.0
Exploration expenses
Dry hole costs 21.2 .3 .1 1.3 22.9 - 22.9
Geological and
geophysical costs 2.2 - .5 1.6 4.3 - 4.3
Other costs .6 .1 .3 .4 1.4 - 1.4
- -----------------------------------------------------------------------------
24.0 .4 .9 3.3 28.6 - 28.6
Undeveloped lease
amortization 1.6 .5 - .5 2.6 - 2.6
- -----------------------------------------------------------------------------
Total exploration
expenses 25.6 .9 .9 3.8 31.2 - 31.2
- -----------------------------------------------------------------------------
Selling and general expenses 3.2 1.6 .9 .5 6.2 - 6.2
Income tax provisions
(benefits) (5.3) 2.6 - .4 (2.3) 1.2 (1.1)
- -----------------------------------------------------------------------------
Results of operations
(excluding corporate
overhead and interest) $ (8.9) 4.1 .9 (3.3) (7.2) 2.2 (5.0)
=============================================================================
THREE MONTHS ENDED
SEPTEMBER 30, 1994**
Oil and gas sales and
operating revenues $ 46.0 20.0 24.1 8.1 98.2 15.7 113.9
Production costs 12.3 6.3 8.9 3.8 31.3 10.9 42.2
Depreciation, depletion,
and amortization 19.7 4.7 11.7 1.5 37.6 1.4 39.0
Exploration expenses
Dry hole costs 5.0 .2 - - 5.2 - 5.2
Geological and
geophysical costs 1.0 .1 - .4 1.5 - 1.5
Other costs .9 .1 .2 .1 1.3 - 1.3
- -----------------------------------------------------------------------------
6.9 .4 .2 .5 8.0 - 8.0
Undeveloped lease
amortization 2.1 .7 - - 2.8 - 2.8
- -----------------------------------------------------------------------------
Total exploration
expenses 9.0 1.1 .2 .5 10.8 - 10.8
- -----------------------------------------------------------------------------
Selling and general expenses 3.4 1.2 .8 .4 5.8 - 5.8
Income tax provisions .9 2.7 1.5 - 5.1 1.2 6.3
- -----------------------------------------------------------------------------
Results of operations
(excluding corporate
overhead and interest) $ .7 4.0 1.0 1.9 7.6 2.2 9.8
=============================================================================
NINE MONTHS ENDED
SEPTEMBER 30, 1995
Oil and gas sales and
operating revenues $151.1 64.5 91.1 31.2 337.9 42.5 380.4
Production costs 39.7 19.7 28.9 10.7 99.0 28.6 127.6
Depreciation, depletion,
and amortization 69.9 16.3 45.4 12.0 143.6 3.5 147.1
Exploration expenses
Dry hole costs 22.0 1.5 .7 1.3 25.5 - 25.5
Geological and
geophysical costs 4.5 1.4 .9 2.7 9.5 - 9.5
Other costs 2.0 .4 1.0 1.6 5.0 - 5.0
- -----------------------------------------------------------------------------
28.5 3.3 2.6 5.6 40.0 - 40.0
Undeveloped lease
amortization 5.1 1.9 - 1.2 8.2 - 8.2
- -----------------------------------------------------------------------------
Total exploration
expenses 33.6 5.2 2.6 6.8 48.2 - 48.2
- -----------------------------------------------------------------------------
Selling and general expenses 10.3 4.1 2.7 1.2 18.3 .1 18.4
Income tax provisions
(benefits) (1.8) 7.7 6.7 .9 13.5 3.8 17.3
- -----------------------------------------------------------------------------
Results of operations
(excluding corporate
overhead and interest) $ (.6) 11.5 4.8 (.4) 15.3 6.5 21.8
=============================================================================
NINE MONTHS ENDED
SEPTEMBER 30, 1994**
Oil and gas sales and
operating revenues $165.5 53.8 68.2 16.3 303.8 39.0 342.8
Production costs 39.9 17.8 24.4 7.3 89.4 30.2 119.6
Depreciation, depletion,
and amortization 68.9 14.7 31.5 2.3 117.4 3.8 121.2
Exploration expenses
Dry hole costs 7.7 1.9 1.9 - 11.5 - 11.5
Geological and
geophysical costs 4.2 1.4 .7 .8 7.1 - 7.1
Other costs 2.3 .5 .9 .4 4.1 - 4.1
- -----------------------------------------------------------------------------
14.2 3.8 3.5 1.2 22.7 - 22.7
Undeveloped lease
amortization 6.2 2.0 - - 8.2 - 8.2
- -----------------------------------------------------------------------------
Total exploration
expenses 20.4 5.8 3.5 1.2 30.9 - 30.9
- -----------------------------------------------------------------------------
Selling and general expenses 10.2 3.5 2.4 1.1 17.2 .1 17.3
Income tax provisions 10.8 4.2 4.0 - 19.0 1.7 20.7
- -----------------------------------------------------------------------------
Results of operations
(excluding corporate
overhead and interest) $ 15.3 7.8 2.4 4.4 29.9 3.2 33.1
=============================================================================
*Excludes unusual or infrequently occurring items.
**Restated to conform to 1995 presentation.
11
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
(a) One of the Company's subsidiaries, Murphy Oil USA, Inc., owns and
operates two oil refineries in the U.S. This subsidiary is a
defendant in two governmental actions that (1) seek monetary
sanctions of $100,000 or more, and (2) arise under enacted provisions
that regulate the discharge of materials into the environment or have
the purpose of protecting the environment. These actions are not
material to the financial condition of the Company either
individually or in the aggregate.
(b) The Company and its subsidiaries are engaged in a number of other
legal proceedings, all of which the Company considers routine and
incidental to its business and none of which is material as defined
by the rules and regulations of the U.S. Securities and Exchange
Commission.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit index - Exhibits other than the one listed below have been
omitted since they either are not required or are not applicable.
Exhibit 27 - Financial Data Schedule - included only in electronic
filing.
(b) No reports on Form 8-K have been filed for the quarter covered by
this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MURPHY OIL CORPORATION
(Registrant)
By /s/ Ronald W. Herman
--------------------
Ronald W. Herman, Controller
(Chief Accounting Officer and Duly
Authorized Officer)
November 10, 1995
(Date)
12
5
1000
9-MOS
DEC-31-1995
SEP-30-1995
59,684
0
204,296
5,801
195,474
512,305
4,204,094
2,482,591
2,315,609
393,828
198,537
48,775
0
0
1,239,239
2,315,609
1,227,954
1,293,347
1,125,197
1,125,197
48,169
0
4,426
64,524
20,320
44,204
0
0
0
44,204
.99
.99
