=================================================================
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, 1994
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, 1994, was 44,833,656.
=================================================================
<PAGE>
PART I - FINANCIAL INFORMATION
Murphy Oil Corporation and Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Thousands of dollars)
<TABLE>
<CAPTION>
(Unaudited)
September 30, December 31,
1994 1993
------------ -----------
<S> <C> <C>
ASSETS
Current assets
Cash and interest-bearing deposits $ 43,259 26,876
Marketable securities 82,892 114,349
--------- ---------
Cash and cash equivalents 126,151 141,225
Accounts receivable, less allowance
for doubtful accounts of $5,652 in
1994 and $5,379 in 1993 187,397 196,214
Inventories
Crude oil and raw materials 59,061 76,741
Finished products 46,508 42,959
Materials and supplies 38,829 32,323
Prepaid expenses 43,623 35,042
Deferred income taxes 18,611 18,497
--------- ---------
Total current assets 520,180 543,001
Investments and noncurrent receivables 26,812 42,518
Property, plant, and equipment, at
cost less accumulated depreciation,
depletion, and amortization of
$2,332,216 in 1994 and $2,180,732
in 1993 1,685,285 1,549,250
Deferred charges and other assets 38,870 34,090
--------- ---------
$ 2,271,147 2,168,859
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term
obligations $ 10,994 10,859
Accounts payable and accrued
liabilities 382,826 372,606
Income taxes 23,667 29,294
--------- ---------
Total current liabilities 417,487 412,759
Notes payable and other long-term
obligations 21,760 21,709
Nonrecourse debt of a subsidiary 118,981 87,509
Deferred income taxes 137,166 117,571
Reserve for dismantlement costs 136,791 123,107
Reserve for major repairs 25,372 26,023
Deferred credits and other liabilities 132,332 157,831
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 507,838 507,292
Retained earnings 816,975 772,172
Currency translation adjustments 11,991 (1,514)
Unamortized restricted stock awards (1,286) (660)
Treasury stock, 3,941,658 shares of
Common Stock in 1994, 3,967,631 shares
in 1993, at cost (103,035) (103,715)
--------- ---------
Total stockholders' equity 1,281,258 1,222,350
--------- ---------
$ 2,271,147 2,168,859
========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
The Exhibit Index is on page 12.
1
<PAGE>
Murphy Oil Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Thousands of dollars, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------ --------------------
1994 1993 1994 1993
------- ------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES
Sales $ 455,383 401,420 1,268,237 1,193,956
Other operating
revenues 12,098 8,909 31,215 28,801
Interest and other
revenues 25,281 9,649 37,608 26,067
------- ------- --------- ---------
Total revenues 492,762 419,978 1,337,060 1,248,824
------- ------- --------- ---------
COSTS AND EXPENSES
Crude oil, products,
and related operating
expenses 359,048 312,852 972,240 932,896
Exploration expenses,
including undeveloped
lease amortization 10,779 14,122 30,869 38,222
Selling and general
expenses 16,437 16,502 50,568 49,536
Depreciation, depletion,
and amortization 48,282 42,666 148,200 127,143
Interest expense 4,023 1,707 9,034 5,702
Interest capitalized (3,696) (1,676) (6,574) (3,963)
------- ------- --------- ---------
Total costs and
expenses 434,873 386,173 1,204,337 1,149,536
------- ------- --------- ---------
Income before income taxes
and cumulative effect of
changes in accounting
principles 57,889 33,805 132,723 99,288
Federal and state
income taxes 14,048 9,172 38,886 29,654
Foreign income taxes 6,572 4,454 5,364 2,925
------- ------- --------- ---------
Income before cumulative
effect of changes in
accounting principles 37,269 20,179 88,473 66,709
Cumulative effect of
changes in accounting
principles - - - 15,338
------- ------- --------- ---------
NET INCOME $ 37,269 20,179 88,473 82,047
======= ======= ========= =========
Average Common
shares outstanding 44,905,656 44,879,958 44,884,779 44,900,519
Per Common share
Income before
cumulative
effect of
changes in
accounting
principles $ .83 .45 1.97 1.49
Cumulative effect
of changes in
accounting
principles - - - .34
------- ------- --------- --------
Net income $ .83 .45 1.97 1.83
======= ======= ========= ========
Cash dividends
per share of
Common Stock $ .325 .325 .975 .925
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
2
<PAGE>
Murphy Oil Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended September 30, 1994 and 1993
(Thousands of dollars)
<TABLE>
<CAPTION>
1994 1993
------- -------
<S> <C> <C>
OPERATING ACTIVITIES
Income before cumulative effect of
changes in accounting principles $ 88,473 66,709
Adjustments to reconcile above income
to net cash provided by operating
activities
Depreciation, depletion, and amortization 148,200 127,143
Expenditures for major repairs and
dismantlement costs (19,381) (9,733)
Exploratory expenditures charged
against income 22,637 28,808
Amortization of undeveloped leases 8,232 9,414
Deferred and noncurrent income tax charges 10,181 28,217
Gains from disposition of assets (1,112) (1,374)
Other - net 7,329 19,062
------- -------
264,559 268,246
Net (increase) decrease in operating
working capital other than cash and
cash equivalents 12,340 (38,165)
Cumulative effect of accounting changes
on working capital - 25,437
Net recoveries (expenditures) on insurance
claim to repair hurricane damage 16,224 (26,014)
Other adjustments related to operating
activities (10,233) (13,574)
------- -------
Net cash provided by operating
activities 282,890 215,930
------- -------
INVESTING ACTIVITIES
Capital expenditures requiring cash (290,612) (370,230)
Proceeds from sale of property, plant,
and equipment 4,143 4,131
Other - net (765) 2,346
------- -------
Net cash required by investing
activities (287,234) (363,753)
------- -------
FINANCING ACTIVITIES
Increase (decrease) in notes payable and
other long-term obligations 127 (275)
Increase in nonrecourse debt of a subsidiary 31,531 17,400
Decrease in short-term notes payable - (2,795)
Dividends paid (43,670) (41,397)
Purchase of Common Stock for treasury - (1,636)
------- -------
Net cash required by financing activities (12,012) (28,703)
------- -------
Effect of exchange rate changes on cash and
cash equivalents 1,282 (1,011)
------- -------
Net decrease in cash and cash equivalents (15,074) (177,537)
Cash and cash equivalents at January 1 141,225 377,845
------- -------
Cash and cash equivalents at September 30 $ 126,151 200,308
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES
Cash income taxes paid, net of refunds $ 26,706 43,872
======= =======
Interest paid, net of amounts capitalized $ (2,208) 1,667
======= =======
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
3
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
These notes are an integral part of the accompanying financial
statements of Murphy Oil Corporation and Consolidated
Subsidiaries (Murphy/the Company).
NOTE A - INTERIM FINANCIAL STATEMENTS
The consolidated financial statements of the Company presented
herein have not been audited by independent auditors, except for
the balance sheet at December 31, 1993. In the opinion of the
Company's management, the unaudited financial statements include
all adjustments (consisting only of normal, recurring accruals)
necessary to present fairly the Company's financial position at
September 30, 1994, and the results of operations and cash flows
for the three-month and nine-month periods ended September 30,
1994 and 1993, 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 1993 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, 1994
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 by the Company. 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 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. The Company has
provided for environmental liabilities, which are included in the
account "Deferred Credits and Other Liabilities." The sum
provided for environmental liabilities includes certain amounts
that are based on anticipated regulatory approval of proposed
remediation processes involving a land farm, formerly used for
disposal of refinery waste, and closure of water basins. 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 provided.
The Company has received notices from the U.S. Environmental
Protection Agency that it is a Potentially Responsible Party
(PRP) at three Superfund sites and has been assigned
responsibility by defendants at another Superfund site. In
addition, the Company is aware of two other sites at which it
could be named as a PRP. The potential total cost to all parties
to perform 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. The Company has not determined either its
potential total remediation costs or its potentially assigned
responsibility percentage at the remaining site. The Company has
recorded a provision totaling $.1 million for Superfund sites,
and due to currently available information on the most recent
site and the minor percentages involved on 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 a requirement to bear a pro rata share of costs
attributable to nonparticipating PRP's or indications of
additional responsibility by the Company.
4
<PAGE>
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, the
issue is the subject of ongoing litigation and no assurance can
be given that the Company's position will be sustained.
Therefore, no insurance recoveries have been used to reduce the
environmental liabilities recorded at September 30, 1994.
NOTE C - OTHER CONTINGENCIES
The Company's operations and earnings have been and may be
affected by various other forms of governmental action by the
countries in which it operates. 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, shareholders, 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.
On February 19, 1987, the U.S. Department of Energy (DOE)
published a Proposed Remedial Order (PRO) alleging that the
Company received approximately $13.4 million for crude oil and/or
related transportation charges in excess of amounts allowed under
DOE regulations that were in effect from September 1973 through
January 1981. The PRO sought restitution of this amount, plus
interest. The Company contested the allegations of the PRO in
administrative litigation before the DOE Office of Hearings and
Appeals (OHA). On June 17, 1992, OHA sustained all allegations
of the PRO and issued a Remedial Order, which the Company
promptly appealed to the Federal Energy Regulatory Commission
(FERC). On January 24, 1994, the presiding FERC administrative
law judge issued a decision sustaining the position of the
Company on the material allegations. On July 14, 1994, DOE and
the Company entered into a settlement agreement pursuant to which
the Company agreed to pay $10.7 million inclusive of all
interest. The settlement agreement became final on September 15,
1994 and resolved all issues. As an offset to the $10.7 million
payment, the Company has received approximately $3.2 million from
certain interest owners in the affected properties, and is
seeking additional contribution from other interest owners. The
settlement resulted in an after-tax benefit of $13.9 million, which
was recorded in the three-month period ended September 30, 1994.
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, 1994, letters of credit outstanding totaled $61
million.
5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
NOTE D - BUSINESS SEGMENTS
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
September 30, 1994 September 30, 1993
------------------ ------------------
(Millions of Dollars) Revenues Income Revenues Income
-------- ------ -------- ------
<S> <C> <C> <C> <C>
Petroleum
Exploration and production*
United States ....... $ 45.8 .7 63.2 6.0
Canada .............. 35.7 6.2 18.0 2.9
United Kingdom ...... 24.0 1.0 11.8 .5
Other international . 8.1 1.9 2.9 (1.4)
----- ----- ----- -----
113.6 9.8 95.9 8.0
----- ----- ----- -----
Refining, marketing, and transportation
United States ....... 265.4 7.5 235.9 6.9
Western Europe....... 81.4 2.4 72.4 2.2
Canada .............. 6.8 2.0 7.4 2.1
----- ----- ----- -----
353.6 11.9 315.7 11.2
----- ----- ----- -----
467.2 21.7 411.6 19.2
Intrasegment transfers
elimination (20.3) (16.4)
----- ----- ----- -----
Total petroleum .. 446.9 21.7 395.2 19.2
Farm, timber, and real
estate--United States .. 20.6 3.1 15.1 2.1
Corporate and other ..... 4.3 (1.4) 9.7 (1.1)
----- ----- ----- -----
Revenues/income before unusual
or infrequently occurring
items .................. 471.8 23.4 420.0 20.2
Settlement of DOE
matters ................ 21.0 13.9 - -
----- ----- ----- -----
$492.8 37.3 420.0 20.2
===== ===== ===== =====
Nine Months Ended Nine Months Ended
September 30, 1994 September 30, 1993
------------------ ------------------
(Millions of Dollars) Revenues Income Revenues Income
-------- ------ -------- ------
Petroleum
Exploration and production*
United States ......$ 161.2 15.3 185.0 23.7
Canada ............. 92.4 11.0 53.5 6.2
United Kingdom ..... 68.1 2.4 37.5 2.0
Other international 16.3 4.4 13.0 (4.3)
------- ----- ------- -----
338.0 33.1 289.0 27.6
------- ----- ------- -----
Refining, marketing, and transportation
United States ...... 694.3 17.0 716.0 7.3
Western Europe ..... 228.2 3.6 198.5 5.9
Canada ............. 19.9 5.6 23.4 7.4
------- ----- ------- -----
942.4 26.2 937.9 20.6
------- ----- ------- -----
1,280.4 59.3 1,226.9 48.2
Intrasegment transfers
elimination (47.4) (51.7)
------- ----- ------- -----
Total petroleum . 1,233.0 59.3 1,175.2 48.2
Farm, timber, and real
estate--United States . 66.5 15.8 47.5 9.6
Corporate and other .... 16.6 (6.9) 26.1 (2.3)
------- ----- ------- -----
Revenues/income before
unusual or infrequently
occurring items ....... 1,316.1 68.2 1,248.8 55.5
Settlement of DOE
matters ............... 21.0 13.9 - -
Refund and settlement of
income tax matters .... - 6.4 - 11.3
Cumulative effect of
changes in accounting
principles for
Income taxes ......... - - - 31.8
Postretirement benefits
other than pensions,
net of taxes ........ - - - (16.5)
------- ----- ------- -----
$1,337.1 88.5 1,248.8 82.1
======= ===== ======= =====
</TABLE>
*Additional details are presented in the tables on page 11.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1994 COMPARED WITH THREE MONTHS
ENDED SEPTEMBER 30, 1993
Net income for the third quarter of 1994 totaled $37.3 million,
$.83 a share, compared to $20.2 million, $.45 a share, earned in
the third quarter a year ago. The current quarter included a
benefit of $13.9 million, $.31 a share, resulting from settlement
of a dispute with the U.S. Department of Energy (DOE) concerning
the price at which the Company could sell certain of its crude
oil production under regulations in effect from September 1973
through January 1981. Income before unusual items for the
quarter was $23.4 million, $.52 a share.
All operating segments contributed to the 16-percent improvement
in income before unusual items for the current quarter compared
to the corresponding quarter last year. Exploration and
production earnings improved 23 percent despite substantially
lower sales prices for U.S. natural gas and the effect of a
curtailment in sales in response to lower prices; offsets were
provided by a 53-percent increase in crude oil and gas liquids
production, higher sales prices for crude oil, and lower
exploration expenses. Downstream earnings were up six percent
compared to the third quarter of 1993. Unit margins in both the
U.S. and Western Europe were up, and sales of refined products
increased 10 percent in each of the areas. Earnings from farm,
timber, and real estate increased 48 percent compared to the
third quarter of 1993, with improved results from timber and
farming operations accounting for the increase. Results from
corporate activities were slightly unfavorable to last year.
Exploration and production operations earned $9.8 million in the
third quarter of 1994 compared to $8 million a year earlier.
U.S. operations earned $.7 million, down from $6 million a year
ago, while international operations earned $9.1 million compared
to $2 million. The Company's crude oil and gas liquids sales
prices averaged $16.20 a barrel in the U.S. and $16.28 in the
U.K., increases of three percent and two percent, respectively.
In Canada, sales prices averaged $15.12 a barrel for light oil
and $12.09 for heavy oil, up nine percent and 25 percent,
respectively. The average sales price for synthetic oil from a
five-percent interest in the Canadian Syncrude project, acquired
in late 1993, was $17.28 a barrel. Total crude oil and gas
liquids production averaged 53,340 barrels a day compared
to 34,937 in the third quarter of 1993. U.K. production more
than doubled, with production from "T" Block, which commenced in
late 1993, and an increased interest in the Ninian field
effective January 1, 1994, accounting for the increase.
Production of synthetic oil in Canada averaged 9,897 barrels a
day in the third quarter of 1994. Murphy's average natural gas
sales price in the U.S. was $1.78 an MCF in the third quarter of
1994 compared to $2.15 a year ago, a decrease of 17 percent.
The average natural gas sales price in Canada increased from
$1.20 an MCF a year ago to $1.25, up four percent. In Spain, the
average price increased from $2.56 an MCF to $2.65. Total
natural gas sales averaged 208,956 MCF a day in the current
quarter compared to 264,250 in the third quarter of 1993. Sales
of natural gas in the U.S. were affected by voluntary
curtailments in response to lower prices, and averaged 159,380
MCF a day compared to 214,072 a year ago. Exploration expenses
totaled $10.8 million in the current quarter compared to $14.1
million a year ago, including $1.8 million and $3.6 million,
respectively, in international operations. Supporting tables on
page 11 provide additional details of the results of exploration
and production operations for the third quarter of each year.
Earnings from refining, marketing, and transportation operations
totaled $11.9 million in the third quarter of 1994, up from $11.2
million a year ago. U.S. operations earned $7.5 million compared
to $6.9 million in the third quarter of 1993. Operations in
Western Europe earned $2.4 million, up from $2.2 million a year
ago. Profits from purchasing, transporting, and reselling crude
oil in Canada were $2 million in the current quarter compared to
$2.1 million in the third quarter of 1993. Refinery crude runs
were 157,056 barrels a day compared to 135,079 in the third
quarter of 1993. Refined product sales were 174,549 barrels a
day, up 10 percent from 159,231 a year ago.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTD.)
RESULTS OF OPERATIONS (CONTD.)
Earnings from farm, timber, and real estate operations increased
from $2.1 million in the third quarter of 1993 to $3.1 million in
the current quarter. Lumber sales increased 23 percent, and
average prices were up 15 percent from a year ago. Twenty lots
were sold at the Chenal Valley real estate development in western
Little Rock during the third quarter of 1994 compared to 18 a
year ago.
Corporate functions reflected a loss of $1.4 million in the
current quarter compared to $1.1 million in the third quarter of
1993.
NINE MONTHS ENDED SEPTEMBER 30, 1994 COMPARED WITH NINE MONTHS
ENDED SEPTEMBER 30, 1993
For the first nine months of 1994, income before unusual items
totaled $68.2 million, $1.52 a share, compared with $55.5
million, $1.24 a share, for the nine months ended September 30,
1993. Including unusual items, earnings for the nine months
ended September 30, 1994 totaled $88.5 million, $1.97 a share,
compared to $82.1 million, $1.83 a share, in 1993. In addition
to the DOE settlement, the Company's net income for the nine
months ended September 30, 1994 included a benefit of $6.4
million, $.14 a share, for settlement of certain income tax
matters in the U.K. Results for the first nine months of 1993
included benefits of $11.3 million, $.25 a share, from refund of
U.K. income taxes, and a net $15.3 million, $.34 a share, from
recording the cumulative effect of accounting changes adopted
effective January 1, 1993.
For the first nine months of 1994, all operating segments
registered improved earnings over those for the prior year. The
largest increase both in absolute dollars and on a percentage
basis was in farm, timber, and real estate operations, which were
up $6.2 million or 65 percent due to higher sales volumes and
prices for both timber and lumber. Earnings from refining,
marketing, and transportation increased 27 percent, as the
effects of higher unit margins and increased sales volume in the
U.S. more than offset lower unit margins in Western Europe and
lower earnings from crude oil trading activities in Canada.
Exploration and production income was up 20 percent; the effects
of higher crude oil and gas liquids production, higher Canadian
and U.K. natural gas prices, and lower exploration expenses more
than offset decreases in crude oil prices, natural gas volumes,
and U.S. and Spanish natural gas prices. Results from corporate
activities were unfavorable.
Earnings from exploration and production for the first nine
months of 1994 were $33.1 million compared to $27.6 million a
year earlier. U.S. operations earned $15.3 million, down from
$23.7 million in 1993, and international operations earned $17.8
million compared to $3.9 million a year ago. Total crude oil and
gas liquids production averaged 49,729 barrels a day compared to
33,983 in the first nine months of 1993. Production of synthetic
oil from Murphy's interest in the Canadian Syncrude project,
acquired in late 1993, averaged 9,104 barrels a day in the 1994
period. U.K. crude production of 13,068 barrels a day in 1994
more than doubled that of the first nine months of 1993; the
increase was due to production from the "T" Block, which began
operations in late 1993, and the acquisition of an additional
3.82-percent interest in the Ninian field effective January 1,
1994. Crude production decreased 794 barrels a day in the U.S.
and 440 in other Canadian areas, while increasing 671 in other
international areas. The Company's crude oil and gas liquids
sales prices averaged $15.00 a barrel in the U.S. and $15.44 in
the U.K., decreases of 12 percent and 11 percent, respectively.
In Canada, sales prices averaged $13.64 a barrel for light oil,
down eight percent, but were unchanged for heavy oil at $10.25.
The sales price for Canadian synthetic oil averaged $15.69 a
barrel in 1994. Murphy's average natural gas sales price in the
U.S. was $2.03 an MCF in the first nine months of 1994 compared
to $2.07 a year ago, a decrease of two percent. Natural gas
sales prices averaged $1.45 an MCF in Canada and $2.39 in the
U.K., increases of 25 percent and five percent, respectively.
In Spain, the price averaged $2.50 an MCF, a decrease of six
percent from a year ago. Total natural gas sales decreased six
percent to 252,214 MCF a day, primarily due to U.S. sales being
down seven percent as a result of the voluntary curtailment
during the third quarter in response to lower prices.
Exploration expenses totaled $30.9 million, down $7.3 million
from the first nine months of 1993.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTD.)
RESULTS OF OPERATIONS (CONTD.)
During 1994, the Company logged and cored a potentially
producible natural gas accumulation in a well drilled on Mobile
Block 908. The cost of the well, $14.4 million, has been
capitalized pending further evaluation. 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 $26.2
million in the first nine months of 1994 compared to $20.6
million a year earlier. U.S. operations improved from $7.3
million in the first nine months of 1993 to $17 million as lower
crude costs resulted in better margins. Operations in Western
Europe earned $3.6 million, down from $5.9 million a year ago;
the average unit product margin declined 22 percent and marketing
costs increased, while sales volume was up 32 percent. Profits
from purchasing, transporting, and reselling crude oil in Canada
were $5.6 million in the first nine months of 1994 compared to
$7.4 million in 1993; the reduction was caused primarily by lower
crude oil trading margins and volume. Refinery crude runs were
150,148 barrels a day compared to 133,868 for the same period
last year. Refined product sales were 165,092 barrels a day, up
from 150,159 a year ago.
Earnings from farm, timber, and real estate operations increased
from $9.6 million in the first nine months of 1993 to $15.8
million in the current nine months. Timber operations
contributed $13.6 million, an increase of 72 percent over the
prior year. Harvested sawtimber increased from 27.8 million
board feet in the first nine months of 1993 to 38.3 million in
1994, and the average sales price was up 17 percent. Lumber
sales volumes and prices and sawmill margins were also up.
Ninety-five lots were sold at the Chenal Valley development in
western Little Rock during the first nine months of 1994 compared
to 113 a year ago.
Corporate activities for the first nine months reflected losses
of $6.9 million in 1994 and $2.3 million in 1993. The
unfavorable variance was primarily due to lower interest income,
as the level of funds available for investment early in 1993 was
reduced later in the year by acquisitions of oil and gas
properties.
FINANCIAL CONDITION
Cash provided by operating activities was $282.9 million for the
first nine months of 1994 compared to $215.9 million for the same
period in 1993. Such amounts included net changes in operating
working capital other than cash and cash equivalents that
increased cash by $12.3 million in 1994 while reducing cash by
$38.2 million in 1993. The 1994 amount also reflected net
recoveries of $16.2 million on an insurance claim to repair 1992
hurricane damage, whereas the 1993 amount was reduced by net
expenditures of $26 million to repair the damage. Predominant
uses of funds in both years were for capital expenditures (which,
including amounts expensed, are summarized in the following
table) and payment of dividends. Capital expenditures for
exploration and production in 1993 included $100 million for the
acquisition of an 8.52-percent interest in the U.K. North Sea "T"
Block.
<TABLE>
<CAPTION>
-----------------------------------------------------------
(Millions of dollars) 1994 1993
-----------------------------------------------------------
<S> <C> <C>
Exploration and production. . . . . . $216.9 295.8
Refining. . . . . . . . . . . . . . . 51.5 50.8
Marketing . . . . . . . . . . . . . . 9.5 10.4
Transportation. . . . . . . . . . . . 1.4 2.9
Farm, timber, and real estate . . . . 7.3 7.3
Other . . . . . . . . . . . . . . . . 4.0 3.0
----- -----
$290.6 370.2
===== =====
</TABLE>
Working capital at September 30, 1994 was $102.7 million, down
$27.5 million from December 31, 1993. 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 $54.2 million below current costs at
September 30, 1994.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTD.)
FINANCIAL CONDITION (CONTD.)
At September 30, 1994, nonrecourse debt of a subsidiary was $119
million, with the increase of $31.5 million that occurred during
the first nine months of 1994 attributable to financing the
development of the Hibernia oil field, offshore Newfoundland.
Notes payable and other long-term obligations of $21.8 million
remained virtually unchanged. A summary of capital employed at
September 30, 1994 and December 31, 1993 follows.
<TABLE>
<CAPTION>
------------------------------------------------------------
1994 1993
------------------------------------------------------------
(Millions of dollars) Amount % Amount %
------------------------------------------------------------
<S> <C> <C> <C> <C>
Notes payable and other
long-term obligations.......... $ 21.8 2 21.7 2
Nonrecourse debt of a
subsidiary..................... 119.0 8 87.5 6
Stockholders' equity............ 1,281.2 90 1,222.4 92
------- --- ------- ---
$1,422.0 100 1,331.6 100
======= === ======= ===
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
OIL AND GAS OPERATING RESULTS*
- -----------------------------------------------------------------
United Synthetic
(Millions of United King- Sub- Oil -
dollars) States Canada dom Other total Canada Total
- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
THREE MONTHS ENDED
SEPTEMBER 30, 1994
- -----------------------------------------------------------------
Revenues $ 45.8 20.0 24.0 8.1 97.9 15.7 113.6
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
- -----------------------------------------------------------------
General expenses
and other, net 3.2 1.2 .7 .4 5.5 - 5.5
Income tax
provision .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
=================================================================
THREE MONTHS ENDED
SEPTEMBER 30, 1993
- -----------------------------------------------------------------
Revenues $ 63.2 18.0 11.8 2.9 95.9 - 95.9
Production costs 14.9 6.2 4.9 1.9 27.9 - 27.9
Depreciation,
depletion, and
amortization 24.7 5.1 3.9 .8 34.5 - 34.5
Exploration expenses
Dry hole costs 7.6 .1 - .8 8.5 - 8.5
Geological and
geophysical
costs .3 .2 .8 .2 1.5 - 1.5
Other costs .4 .2 .3 .2 1.1 - 1.1
- -----------------------------------------------------------------
8.3 .5 1.1 1.2 11.1 - 11.1
Undeveloped lease
amortization 2.2 .7 - .1 3.0 - 3.0
- -----------------------------------------------------------------
Total
exploration
expenses 10.5 1.2 1.1 1.3 14.1 - 14.1
- -----------------------------------------------------------------
General expenses
and other, net 2.3 .7 1.0 .3 4.3 - 4.3
Income tax
provision 4.8 1.9 .4 - 7.1 - 7.1
- -----------------------------------------------------------------
Results of operations
(excluding corporate
overhead and
interest) $ 6.0 2.9 .5 (1.4) 8.0 - 8.0
=================================================================
NINE MONTHS ENDED
SEPTEMBER 30, 1994
- -----------------------------------------------------------------
Revenues $161.2 53.4 68.1 16.3 299.0 39.0 338.0
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
- -----------------------------------------------------------------
General expenses
and other, net 5.9 3.1 2.3 1.1 12.4 .1 12.5
Income tax
provision 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
=================================================================
NINE MONTHS ENDED
SEPTEMBER 30, 1993
- -----------------------------------------------------------------
Revenues $185.0 53.5 37.5 13.0 289.0 - 289.0
Production costs 42.7 18.5 15.5 6.9 83.6 - 83.6
Depreciation,
depletion, and
amortization 70.3 15.9 11.6 3.5 101.3 - 101.3
Exploration expenses
Dry hole costs 14.2 1.9 - 4.4 20.5 - 20.5
Geological and
geophysical
costs 2.0 1.3 1.4 .3 5.0 - 5.0
Other costs 1.4 .5 .7 .7 3.3 - 3.3
- -----------------------------------------------------------------
17.6 3.7 2.1 5.4 28.8 - 28.8
Undeveloped
lease
amortization 6.8 2.1 - .5 9.4 - 9.4
- -----------------------------------------------------------------
Total
exploration
expenses 24.4 5.8 2.1 5.9 38.2 - 38.2
- -----------------------------------------------------------------
General expenses
and other, net 7.8 3.1 2.9 1.0 14.8 - 14.8
Income tax
provision 16.1 4.0 3.4 - 23.5 - 23.5
- -----------------------------------------------------------------
Results of operations
(excluding corporate
overhead and
interest) $ 23.7 6.2 2.0 (4.3) 27.6 - 27.6
=================================================================
</TABLE>
*Excludes unusual or infrequently occurring items.
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
(a) The information contained in Note C to the
Consolidated Financial Statements, page 5 of this
report, concerning a certain legal proceeding in
which the Company is involved, is incorporated
herein by reference.
(b) 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
individually or in the aggregate are not material
to the financial condition of the Company.
(c) 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.
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, 1994
(Date)
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1994, AND THE CONSOLIDATED
STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994, OF MURPHY
OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 43,259
<SECURITIES> 82,892
<RECEIVABLES> 193,049
<ALLOWANCES> 5,652
<INVENTORY> 144,398
<CURRENT-ASSETS> 520,180
<PP&E> 4,017,501
<DEPRECIATION> 2,332,216
<TOTAL-ASSETS> 2,271,147
<CURRENT-LIABILITIES> 417,487
<BONDS> 140,741
<COMMON> 48,775
0
0
<OTHER-SE> 1,232,483
<TOTAL-LIABILITY-AND-EQUITY> 2,271,147
<SALES> 1,268,237
<TOTAL-REVENUES> 1,337,060
<CGS> 1,120,440
<TOTAL-COSTS> 1,120,440
<OTHER-EXPENSES> 30,869
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,460
<INCOME-PRETAX> 132,723
<INCOME-TAX> 44,250
<INCOME-CONTINUING> 88,473
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 88,473
<EPS-PRIMARY> 1.97
<EPS-DILUTED> 1.97
</TABLE>
