<PAGE>
================================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 [Fee Required]
For the fiscal year ended December 31, 1994
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
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 (I.R.S. Employer Identification
of incorporation or organization) Number)
200 Peach Street, P. O. Box 7000, El Dorado, Arkansas 71731-7000
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (501) 862-6411
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, $1.00 Par Value New York Stock Exchange
The Toronto Stock Exchange
Series A Participating Cumulative New York Stock Exchange
Preferred Stock Purchase Rights The Toronto Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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, and (2) has been subject to such filing requirements
for the past 90 days. [X] Yes [ ] No.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Aggregate market value of the voting stock held by non-affiliates of the
registrant, based on average price at February 28, 1995 as quoted by the New
York Stock Exchange, was approximately $1,408,598,000.
Number of shares of Common Stock, $1.00 Par Value, outstanding at February 28,
1995, was 44,832,515.
Documents incorporated by reference
The Registrant's definitive Proxy Statement relating to the Annual Meeting of
Stockholders on May 10, 1995 (Part III)
================================================================================
<PAGE>
TABLE OF CONTENTS - 1994 FORM 10-K REPORT
<TABLE>
<CAPTION>
Page
Numbers
-------
<S> <C> <C>
PART I
Item 1. Business 3
Item 2. Properties 3
Item 3. Legal Proceedings 9
Item 4. Submission of Matters to a Vote of Security
Holders 9
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters 10
Item 6. Selected Financial Data 10
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operation 10
Item 8. Financial Statements and Supplementary Data 10
Item 9. Changes in and Disagreements With Accountants
on Accounting and Financial Disclosure 10
PART III
Item 10. Directors and Executive Officers of the
Registrant 10
Item 11. Executive Compensation 10
Item 12. Security Ownership of Certain Beneficial
Owners and Management 10
Item 13. Certain Relationships and Related Transactions 10
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 11
Signatures 12
Exhibit Index 13
</TABLE>
2
<PAGE>
PART I
Items 1. and 2. BUSINESS AND PROPERTIES.
Murphy Oil Corporation is a natural resources company that operates through
subsidiaries in the United States and internationally to conduct the various
business activities of the enterprise. As used in this report, the terms
Murphy, we, our, its, and Company may refer to any one or more of the
consolidated subsidiaries as well as to Murphy Oil Corporation.
The Company was originally incorporated in Louisiana in 1950 as Murphy
Corporation; reincorporated in Delaware in 1964, at which time it adopted the
name Murphy Oil Corporation; and reorganized in 1983 to operate solely as a
holding company of its various businesses. Its activities are classified into
two business segments: (1) "Petroleum," which comprises its international
integrated oil and gas operations and is further subdivided into "Exploration
and Production" and "Refining, Marketing, and Transportation," and (2) "Farm,
Timber, and Real Estate," which has operations primarily in Arkansas and North
Louisiana. Additionally, "Corporate and Other" activities include interest
income, interest expense, and overhead not allocated to either of the business
segments.
The information appearing on pages 6 through 57 of the 1994 Annual Report to
Security Holders (1994 Annual Report) is incorporated in this Annual Report on
Form 10-K as Exhibit 13 and is deemed to be filed as part of this 10-K report as
indicated under Items 1, 2, 3, 5, 6, 7, 8, and 14. A narrative of the graphic
and image information that appears in the paper format version of Exhibit 13 on
pages 6 through 57 is included in the electronic Form 10-K document as an
appendix to Exhibit 13 (pages A-1 through A-9).
In addition to the following information about each business segment, data
relative to Murphy's continuing operations, properties, and industry segments,
including revenues by class of products and financial information by geographic
areas, are described on pages 25 through 33, 47, 48, 52, and 53 of the 1994
Annual Report, which is filed in this 10-K report as Exhibit 13.
PETROLEUM - EXPLORATION AND PRODUCTION
During 1994, Murphy's principal exploration and/or production activities were
conducted in the United States, Ecuador, Spain, Gabon, Peru, and China by wholly
owned Murphy Exploration & Production Company (Murphy Expro) and its
subsidiaries; in Canada by wholly owned Murphy Oil Company Ltd. (MOCL) and its
subsidiaries; and in the U.K. North Sea by wholly owned Murphy Petroleum
Limited. Murphy's crude oil and natural gas liquids production is in the United
States, Canada, the U.K. North Sea, Ecuador, Gabon, and Spain; its natural gas
is produced and sold in the United States, Canada, the United Kingdom, and
Spain. MOCL also has a five-percent interest in a project (Syncrude Canada Ltd.)
that extracts synthetic crude oil from oil sand deposits in northern Alberta.
Murphy's estimated net quantities of proved oil and gas reserves and proved
developed oil and gas reserves at January 1, 1992 and at December 31, 1992,
1993, and 1994 by geographic area are reported on pages 50 and 51 of the 1994
Annual Report, which is filed in this 10-K report as Exhibit 13. Murphy has not
filed, and is not required to file, any estimates of its total proved net oil or
gas reserves on a recurring basis with any federal or foreign governmental
regulatory authority or agency other than the SEC. Annually, Murphy reports
gross reserves of properties operated in the United States to the U.S.
Department of Energy; such reserves are derived from the same data from which
estimated total proved net reserves of such properties are determined.
In 1994, essentially all of Murphy's crude oil, condensate, and natural gas
liquids production in the United States was delivered, either directly or
indirectly through exchanges, to its own refineries. Net crude oil, condensate,
and gas liquids production and net natural gas sales by geographic area with
weighted average sales prices for each of the five years ended December 31, 1994
appear on page 55 of the 1994 Annual Report, which is filed in this 10-K report
as Exhibit 13.
Production costs in U.S. dollars per equivalent barrel produced, including
natural gas volumes converted to equivalent barrels of crude oil on the basis of
approximate relative energy content, are shown on page 28 of the 1994 Annual
Report, which is filed in this 10-K report as Exhibit 13.
3
<PAGE>
PETROLEUM - EXPLORATION AND PRODUCTION (Contd.)
Supplemental disclosures about oil and gas producing activities are reported on
pages 49 through 54 of the 1994 Annual Report, which is filed in this 10-K
report as Exhibit 13.
At December 31, 1994, Murphy held leases, concessions, contracts, or permits on
nonproducing and producing acreage in the following countries (thousands of
acres).
<TABLE>
<CAPTION>
Nonproducing Producing Total
-------------- -------------- ---------------
Country Gross Net Gross Net Gross Net
------- ------ ----- ----- ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
United States - Onshore 35 20 200 58 235 78
- Gulf of Mexico 597 360 437 159 1,034 519
- Frontier 180 101 - - 180 101
------ ----- ----- ------ ------ ------
Total United States 812 481 637 217 1,449 698
------ ----- ----- ------ ------ ------
Canada - Onshore 695 329 432 178 1,127 507
- Offshore 104 8 - - 104 8
- Oil sands 157 41 14 5 171 46
------ ----- ----- ------ ------ ------
Total Canada 956 378 446 183 1,402 561
------ ----- ----- ------ ------ ------
United Kingdom 629 133 80 13 709 146
Ecuador - - 494 99 494 99
Gabon 2 - 30 8 32 8
Spain 61 11 28 5 89 16
China 563 282 - - 563 282
Ireland 650 163 - - 650 163
Pakistan 6,720 6,720 - - 6,720 6,720
Peru 5,583 3,606 - - 5,583 3,606
Somalia 4,023 402 - - 4,023 402
Tunisia 165 42 - - 165 42
------ ------ ----- ----- ------- ------
Totals 20,164 12,218 1,715 525 21,879 12,743
====== ====== ===== ===== ======= ======
</TABLE>
Oil and gas wells producing or capable of producing at December 31, 1994 are
summarized as follows.
<TABLE>
<CAPTION>
Oil Wells Gas Wells
-------------- -------------
Country Gross Net Gross Net
------- ----- ------- ----- -----
<S> <C> <C> <C> <C>
United States 1,257 510.3 418 146.0
Canada 3,996 657.0 612 207.0
United Kingdom 80 10.9 19 1.4
Ecuador 23 4.6 - -
Gabon 3 1.1 - -
----- ------- ------ -----
Totals 5,359 1,183.9 1,049 354.4
===== ======= ====== =====
Wells included above with
multiple completions and
counted as one well each 124 53.2 115 65.8
===== ======= ====== =====
</TABLE>
Gross wells are those in which all or part of the working interest is owned by
Murphy. Net wells are the portions of the gross wells applicable to Murphy's
working interest.
4
<PAGE>
PETROLEUM - EXPLORATION AND PRODUCTION (Contd.)
Murphy's net wells drilled in the last three years are summarized in the
following table.
<TABLE>
<CAPTION>
United United
States Canada Kingdom Ecuador Other Totals
---------------- ---------------- ---------------- ---------------- --------------- ----------------
Pro- Pro- Pro- Pro- Pro- Pro-
ductive Dry ductive Dry ductive Dry ductive Dry ductive Dry ductive Dry
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994
----
Exploratory 6.1 4.0 5.4 5.0 .5 .5 - - - - 12.0 9.5
Development .5 .1 29.8 1.5 .6 - 2.0 - - - 32.9 1.6
1993
----
Exploratory 7.4 6.5 3.9 4.2 .1 - - - - .5 11.4 11.2
Development 4.1 - 24.5 2.7 .7 .1 1.2 - - - 30.5 2.8
1992
----
Exploratory 7.8 5.2 3.1 1.3 .5 1.0 - - - 1.0 11.4 8.5
Development 2.2 - 18.4 1.3 .3 - - - - - 20.9 1.3
</TABLE>
The wells being drilled by Murphy at December 31, 1994 are summarized as
follows.
<TABLE>
<CAPTION>
Exploratory Development Totals
----------- ----------- -----------
Country Gross Net Gross Net Gross Net
------- ----- --- ----- --- ----- ---
<S> <C> <C> <C> <C> <C> <C>
United States 9 1.9 1 .1 10 2.0
Canada 1 .5 1 .2 2 .7
United Kingdom 1 .3 3 .4 4 .7
----- --- ----- --- ----- ---
Totals 11 2.7 5 .7 16 3.4
===== === ===== === ===== ===
</TABLE>
Additional information about current exploration and production activities is
reported on pages 6 through 16 of the 1994 Annual Report, which is filed in this
10-K report as Exhibit 13.
PETROLEUM - REFINING, MARKETING, AND TRANSPORTATION
Murphy Oil USA, Inc. (Murphy USA), a wholly owned subsidiary, owns and operates
two refineries in the United States. The refinery at Superior, Wisconsin, is
located on fee land. The Meraux, Louisiana, refinery is located on both fee and
leased land; these leases expire at varying times from 2010 to 2022, and at such
times the Company has options to purchase all leased acreage at fixed prices.
Murco Petroleum Limited (Murco), a wholly owned U.K. subsidiary serviced by
Murphy Eastern Oil Company, has an effective 30-percent interest in a 108,000-
barrel-a-day refinery at Milford Haven, Wales. Refinery capacities at December
31, 1994 are shown in the following table.
5
<PAGE>
PETROLEUM - REFINING, MARKETING, AND TRANSPORTATION (Contd.)
<TABLE>
<CAPTION>
Milford Haven,
Meraux, Superior, Wales
Louisiana Wisconsin (Murco's 30%) Totals
--------- --------- ------------- ---------
<S> <C> <C> <C> <C>
Crude capacity - b/sd* 100,000 35,000 32,400 167,400
Process capacities - b/sd*
Vacuum distillation 50,000 20,000 16,500 86,500
Catalytic cracking - fresh
feed 40,000 11,000 9,960 60,960
Pretreating cat-reforming
feeds 26,000 9,000 5,490 40,490
Catalytic reforming 18,500 8,000 5,490 31,990
Distillate hydrotreating 15,000 5,800 9,000 29,800
Gas oil hydrotreating 28,000 - - 28,000
Solvent deasphalting 18,000 - - 18,000
Isomerization - 2,000 2,250 4,250
Production capacities - b/sd*
Alkylation 9,500 1,600 1,680 12,780
Asphalt - 13,500 - 13,500
Crude oil and product storage
capacities - bbls. 4,257,000 2,852,000 2,638,000 9,747,000
</TABLE>
*Barrels per stream day.
Murphy distributes refined products from 46 terminals in the United States to
retail and wholesale accounts in the United States (Murphy USA) and Canada
(MOCL) under the brand name SPUR and to unbranded wholesale accounts. Four of
these are marine terminals, two are supplied by truck, two are adjacent to the
refineries, and 38 are supplied by pipeline. Eight terminals are wholly owned
and operated by Murphy USA, 16 are jointly owned and operated by others, and the
remaining 22 are owned by others. Murphy USA receives products at the terminals
owned by others in exchange for deliveries from the Company's wholly owned and
jointly owned terminals. At the end of 1994, refined products were marketed at
wholesale and/or retail through 588 branded outlets in 14 southeastern and upper
midwestern states and eight branded outlets in the Thunder Bay area of Ontario,
Canada.
At the end of 1994, Murco distributed refined products in the United Kingdom
from the Milford Haven refinery; three wholly owned, rail-fed terminals; nine
terminals owned by others where products are received in exchange for deliveries
from the Company's wholly owned terminals; and 470 branded outlets under the
brand names MURCO and EP.
Murphy owns a 20-percent interest in a 120-mile, 165,000-barrel-a-day refined
products pipeline that transports products from the Meraux refinery to two
common carrier pipelines serving Murphy's marketing area in the southeastern
United States. The Company also owns a 22-percent interest in a 312-mile crude
oil pipeline in Montana and Wyoming with a capacity of 120,000 barrels a day and
a 3.2-percent interest in LOOP Inc., which provides deep-water off-loading
accommodations off the Louisiana coast for oil tankers and onshore facilities
for storage of crude oil. In addition, Murphy owns 29.4 percent of a 22-mile,
300,000-barrel-a-day crude oil pipeline between LOOP storage at Clovelly,
Louisiana, and Alliance, Louisiana, and 100 percent of a 24-mile, 200,000-
barrel-a-day crude oil pipeline from Alliance to the Meraux refinery. The
pipeline from Alliance to Meraux is also connected to another company's pipeline
system, allowing crude oil from wells serviced by that system to be shipped to
the refinery.
MOCL has a 52.5-percent interest in a 114-mile dual pipeline in Canada that
transports heavy crude oil from Blackfoot, Alberta, to Kerrobert, Saskatchewan,
where access to a major crude oil trunk line is available. In connection with
this pipeline, which has a throughput capacity of 50,000 barrels a day, MOCL
owns interests in two dual crude oil pipelines -- 100 percent of a two-mile,
2,500-barrel-a-day lateral line at Winter, Saskatchewan, and 52.5 percent of a
4.5-mile, 5,000-barrel-a-day lateral line at Neilburg, Saskatchewan. MOCL also
owns 13.1 percent of a 40-mile, 38,000-barrel-a-day dual heavy crude oil pipe-
line from Cactus Lake, Saskatchewan, to Kerrobert; 26.3 percent of a 15-mile,
9,000-barrel-a-day dual crude oil pipeline from Bodo, Alberta, to Cactus Lake;
100 percent of a 10.5-mile, 68,000-barrel-a-day dual crude oil pipeline from
6
<PAGE>
PETROLEUM - REFINING, MARKETING, AND TRANSPORTATION (Contd.)
Milk River, Alberta, to the U.S. border; 100 percent of a 108-mile, 36,000-
barrel-a-day crude oil pipeline from Regina, Saskatchewan, to the U.S. border;
and 100 percent of a 28-mile, 15,000-barrel-a-day heavy crude oil pipeline from
Eyehill, Saskatchewan, to Unity, Saskatchewan. MOCL is operator of these
pipelines.
Additional information about current refining, marketing, and transportation
activities and a statistical summary of key operating and financial indicators
for each of the five years ended December 31, 1994 are reported on pages 17
through 22 and 56 of the 1994 Annual Report, which is filed in this 10-K report
as Exhibit 13.
FARM, TIMBER, AND REAL ESTATE
Deltic Farm & Timber Co. Inc. (Deltic), a wholly owned subsidiary, is engaged in
farming and timber and land management in Arkansas and North Louisiana, lumber
manufacturing and marketing in Arkansas, and real estate development in Little
Rock, Arkansas.
Deltic owns sawmills at Ola in central Arkansas and at Waldo in southern
Arkansas. The mills have a combined annual capacity to produce 165 million
board feet of lumber. The Ola mill is equipped for maximum utilization of small
stem timber, while the Waldo mill can process both small and large diameter
timber.
Deltic owned 341,000 acres of timberland at year-end 1994. Its estimated
standing timber inventories on this acreage are calculated for each tract by
utilizing growth formulas based on representative sample tracts and tree counts
for various diameter classifications. The calculations of pine inventories are
subject to periodic adjustments based on sample cruises or actual volumes
harvested from related tracts. The hardwood inventories shown in the following
table are only approximations, so physical quantities of such timber may vary
significantly from these approximations. Estimated inventories of standing
timber at year-end for each of the last three years were as follows.
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Pine sawtimber - MBF* 812,212 810,162 805,260
Hardwood sawtimber - MBF* 105,460 113,290 114,000
Pine pulpwood - cords 991,440 962,563 940,477
Hardwood pulpwood - cords 396,420 417,293 448,100
======= ======= =======
</TABLE>
*Thousand board feet - Doyle scale.
At Deltic's farms, which comprise 36,000 acres in northeastern Louisiana and
southeastern Arkansas, the primary crops grown and harvested are cotton,
soybeans, corn, wheat, and rice. In recent years, Deltic has been developing in
stages a 4,300-acre planned community centered around an 18-hole golf course
(voted in 1991 by "Golf Digest" as being one of the three best new private
courses in the United States) and selling real estate, primarily residential
lots thus far, in this area of Little Rock, Arkansas. Ownership of the golf
course and associated country club is held by a nonprofit corporation not owned
by the Company.
Additional information about current farm, timber, and real estate activities
and a statistical summary of key operating and financial indicators for each of
the five years ended December 31, 1994 are reported on pages 23, 24, and 57 of
the 1994 Annual Report, which is filed in this 10-K report as Exhibit 13.
DISCONTINUED OPERATIONS
Prior to the sale effective January 1, 1992 of its wholly owned subsidiary Odeco
Drilling Inc., Murphy was engaged in contract drilling in offshore waters
throughout the world. Further information about the sale is reported in Note C
on page 41 of the 1994 Annual Report, which is filed in this 10-K report as
Exhibit 13.
EMPLOYEES
Murphy had 1,767 full-time employees at December 31, 1994.
7
<PAGE>
COMPETITION AND OTHER CONDITIONS WHICH MAY AFFECT BUSINESS
Murphy operates principally in the oil industry, in which it experiences intense
competition from other oil and gas companies, many of which have substantially
greater resources. In addition, the oil industry as a whole competes with other
industries in supplying energy requirements around the world. (Additional
information concerning current conditions of the business is reported under the
caption "Outlook" on page 33 of the 1994 Annual Report, which is filed in this
10-K report as Exhibit 13.) Murphy is a net purchaser of crude oil and other
refinery feedstocks and occasionally purchases refined products and may
therefore be required to respond to operating and pricing policies of others,
including producing country governments from whom it makes purchases.
The operations and earnings of Murphy have been and continue to be affected by
worldwide political developments. Many governments, including those that are
members of the Organization of Petroleum Exporting Countries (OPEC),
unilaterally intervene at times in the orderly market of crude oil and natural
gas produced in their countries through such actions as fixing prices and
determining rates of production and who may sell and buy the production. Until
1993, the United States also regulated prices for certain natural gas
production. In addition, prices and availability of crude oil, natural gas, and
refined products could be influenced by political unrest and by various
governmental policies to restrict or increase petroleum usage and supply. Other
governmental actions that could affect Murphy's operations and earnings include
tax changes and regulations concerning: currency fluctuations, protection of
the environment (See the caption "Environmental" on page 32 of the 1994 Annual
Report, which is filed in this 10-K report as Exhibit 13.), preferential and
discriminatory awarding of oil and gas leases, restraints and controls on
imports and exports, safety, and relationships between employers and employees.
Because these and other government-influenced factors too numerous to list are
subject to constant changes dictated by political considerations and are often
made in great haste in response to changing internal and worldwide economic
conditions and to actions of other governments or specific events, it is not
practical to attempt to predict the effects of such factors on Murphy's future
operations and earnings.
Murphy's policy is to insure against risks when insurance is available at costs
and terms Murphy considers reasonable. Certain existing risks are insured by
Murphy only through Oil Insurance Limited (OIL), which is operated as a mutual
insurance company by certain participating oil companies including Murphy. OIL
was organized to insure against risks for which commercial insurance is
unavailable or for which the cost of commercial insurance is prohibitive.
EXECUTIVE OFFICERS OF THE REGISTRANT
The age (at January 1, 1995), present corporate office, and length of service in
office of each of the Company's executive officers and persons chosen to become
officers are reported in the following listing. Executive officers are elected
annually but may be removed from office at any time by the Board of Directors.
R. Madison Murphy - Age 37; Chairman of the Board since October 1994. Mr.
Murphy had been Executive Vice President and Chief Financial and
Administrative Officer, Director, and Member of the Executive Committee since
February 1993. Prior to that, he was Executive Vice President and Chief
Financial Officer from 1992 to 1993; Vice President, Planning/Treasury, from
1991 to 1992; and Vice President, Planning, from 1988 to 1991, with additional
duties as Treasurer from 1990 until August 1991.
Claiborne P. Deming - Age 40; President and Chief Executive Officer since
October 1994 and Director and Member of the Executive Committee since February
1993. In March 1992, he became Executive Vice President and Chief Operating
Officer. Mr. Deming was President of Murphy USA from 1989 to 1992 and Vice
President, Petroleum Operations, for Murphy from 1988 to 1989.
Steven A. Cosse - Age 47; Senior Vice President since October 1994 and General
Counsel since August 1991. Mr. Cosse was elected Vice President in February
1993. For the eight years prior to August 1991, he was General Counsel for
Murphy Expro, at that time named Ocean Drilling & Exploration Company (ODECO),
a majority-owned subsidiary of Murphy.
8
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT (Contd.)
Herbert A. Fox Jr. - Age 60; Vice President since October 1994. Mr. Fox has
also been President of Murphy USA since 1992. He served with Murphy USA as
Vice President, Manufacturing, from 1990 to 1992 and as Manager of Crude
Supply from 1973 to 1990.
Clefton D. Vaughan - Age 53; Vice President since October 1994. He has also
been Vice President of Murphy Expro since 1992. Mr. Vaughan was Vice President
of Murphy from 1989 to 1992 and held various other positions with the Company
prior to that.
Odie F. Vaughan - Age 58; Treasurer since August 1991. From 1975 through July
1992, he was with ODECO as Vice President of Taxes and Treasurer.
Ronald W. Herman - Age 57; Controller since August 1991. He was Controller of
ODECO from 1977 through July 1991.
W. Bayless Rowe - Age 42; Secretary since 1988 and Manager of Law Department
since October 1994. He was General Attorney from 1988 to October 1994.
Item 3. LEGAL PROCEEDINGS.
Information related to legal proceedings contained in Note Q, page 47 of the
1994 Annual Report, which is filed in this 10-K report as Exhibit 13, is
incorporated herein. Also, Murphy Oil USA, Inc., which owns and operates two
oil refineries in the United States, 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.
In addition, Murphy and its subsidiaries are engaged in a number of other legal
proceedings, all of which Murphy considers routine and incidental to its
business and none of which is material as defined.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the fourth
quarter of 1994.
9
<PAGE>
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
Information required by this item is reported on pages 34 and 39 and in Notes H,
I, and J, pages 43 and 44, of the 1994 Annual Report, which is filed in this
10-K report as Exhibit 13.
Item 6. SELECTED FINANCIAL DATA.
Information required by this item appears on page 25 of the 1994 Annual Report,
which is filed in this 10-K report as Exhibit 13.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.
Information required by this item appears on pages 26 through 33 of the 1994
Annual Report, which is filed in this 10-K report as Exhibit 13.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Information required by this item appears on pages 34 through 54 of the 1994
Annual Report, which is filed in this 10-K report as Exhibit 13.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Certain information regarding executive officers of the Company is included in
Part I, pages 8 and 9, of this 10-K report. Other information required by this
item is incorporated by reference to the Registrant's definitive proxy statement
for the annual meeting of stockholders on May 10, 1995, under the caption
"Election of Directors."
Item 11. EXECUTIVE COMPENSATION.
Information is incorporated by reference to the Registrant's definitive proxy
statement for the annual meeting of stockholders on May 10, 1995, under the
captions "Compensation of Directors," "Executive Compensation," "Option
Exercises and Fiscal Year-End Values," "Option Grants," "Compensation Committee
Report for 1994," "Shareholder Return Performance Presentation," and "Retirement
Plans."
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information is incorporated by reference to the Registrant's definitive proxy
statement for the annual meeting of stockholders on May 10, 1995, under the
caption "Certain Stock Ownerships."
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information is incorporated by reference to the Registrant's definitive proxy
statement for the annual meeting of stockholders on May 10, 1995, under the
caption "Compensation Committee Interlocks and Insider Participation."
10
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) 1. FINANCIAL STATEMENTS
The following consolidated financial statements of Murphy Oil Corporation and
consolidated subsidiaries are included on the pages indicated of Exhibit 13 to
this 10-K report.
<TABLE>
<CAPTION>
Exhibit 13
Page Nos.
-------------
<S> <C>
Independent Auditors' Report 35
Consolidated Statements of Income 36
Consolidated Balance Sheets 37
Consolidated Statements of Cash Flows 38
Consolidated Statements of Stockholders' Equity 39
Notes to Consolidated Financial Statements 40 through 48
</TABLE>
(a) 2. FINANCIAL STATEMENT SCHEDULES
Financial statement schedules are omitted because either they are not
applicable or the required information is included in the consolidated
financial statements or notes thereto.
(a) 3. EXHIBITS
The Exhibit Index on page 13 of this 10-K report lists the exhibits that are
hereby filed.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended December 31, 1994.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
By CLAIBORNE P. DEMING Date: March 28, 1995
--------------------------------- ----------------------------------
Claiborne P. Deming, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below on March 28, 1995 by the following persons on behalf of
the registrant and in the capacities indicated.
R. MADISON MURPHY MICHAEL W. MURPHY
--------------------------------- ----------------------------------
R. Madison Murphy, Chairman and Director Michael W. Murphy, Director
CLAIBORNE P. DEMING WILLIAM C. NOLAN JR.
--------------------------------- ----------------------------------
Claiborne P. Deming, President and Chief William C. Nolan Jr., Director
Executive Officer and Director
(Principal Executive Officer)
B. R. R. BUTLER CAROLINE G. THEUS
--------------------------------- ----------------------------------
B. R. R. Butler, Director Caroline G. Theus, Director
H. RODES HART LORNE C. WEBSTER
--------------------------------- ----------------------------------
H. Rodes Hart, Director Lorne C. Webster, Director
VESTER T. HUGHES JR. STEVEN A. COSSE
--------------------------------- ----------------------------------
Vester T. Hughes Jr., Director Steven A. Cosse, Senior Vice President
and General Counsel
(Principal Financial Officer)
C. H. MURPHY JR. RONALD W. HERMAN
--------------------------------- ----------------------------------
C. H. Murphy Jr., Director Ronald W. Herman, Controller
(Principal Accounting Officer)
12
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page Number or Incorporation by
No. Reference to
------- -------------------------------
<S> <C> <C>
3.1 Certificate of Incorporation of Exhibit 3.1, Page Ex. 3.1-0 of
Murphy Oil Corporation as of Murphy's Annual Report on Form
September 25, 1986 10-K for the year ended
December 31, 1991
3.2 Bylaws of Murphy Oil Corporation Exhibit 3.3, Page 3.3-1 of
at February 2, 1994 Murphy's Annual Report on Form
10-K for the year ended
December 31, 1993
3.3 Bylaws of Murphy Oil Corporation Ex. 3.3-1
at February 1, 1995
4 Instruments Defining the Rights of
Security Holders. Murphy Oil
Corporation is party to several
long-term debt instruments, none of
which authorizes securities that
exceed 10 percent of the total
assets of Murphy Oil Corporation
and its subsidiaries on a
consolidated basis. Pursuant to
Regulation S-K, Item 601(b),
paragraph 4(iii)(A), Murphy agrees
to furnish a copy of each such
instrument to the Securities and
Exchange Commission upon request.
4.1 Rights Agreement dated as of Exhibit 4.1
December 6, 1989 between Murphy
Oil Corporation and Harris Trust
Company of New York, as Rights Agent
10.1 1982 Management Incentive Plan Exhibit 10.2, Page Ex. 10.2-0
of Murphy's Annual Report on
Form 10-K for the year ended
December 31, 1991
10.2 1987 Management Incentive Plan Exhibit 10.2
(adopted May 13, 1987, amended
February 7, 1990 retroactive to
February 3, 1988)
10.3 1992 Stock Incentive Plan Exhibit 10.3, Page 10.3-0 of
Murphy's Annual Report on
Form 10-K for the year ended
December 31, 1992
13 1994 Annual Report to Security Ex. 13-0 - pages 6 through 57
Holders
Appendix -- Narrative of A-1 (Electronic filing only)
Graphic and Image Material
21 Subsidiaries of the Registrant Ex. 21-1
23 Independent Auditors' Consent Ex. 23-1
27 Financial Data Schedule (Electronic filing only)
99.1 Undertakings Ex. 99.1-1
99.2 Form 11-K, Annual Report for the To be filed as an amendment of
fiscal year ended December 31, 1994 this Annual Report on Form 10-K
covering Combined Thrift Plans for not later than 180 days after
Employees of Murphy Oil Corporation, December 31, 1994.
Murphy Oil USA, Inc., and Deltic
Farm & Timber Co., Inc.
</TABLE>
Exhibits other than those listed above have been omitted since they either are
not required or are not applicable.
13
<PAGE>
EXHIBIT 3.3
BYLAWS
OF
MURPHY OIL CORPORATION
(A Delaware corporation)
ARTICLE I.
Offices.
Section 1. Offices. Murphy Oil Corporation (hereinafter called the
Company) may have, in addition to its principal office in Delaware, a principal
or other office or offices at such place or places, either within or without the
State of Delaware, as the board of directors may from time to time determine or
as shall be necessary or appropriate for the conduct of the business of the
Company.
ARTICLE II.
Meetings of Stockholders.
Section 1. Place of Meetings. The annual meeting of the stockholders
shall be held at the place therein determined by the board of directors and
stated in the notice thereof, and other meetings of the stockholders may be held
at such place or places, within or without the State of Delaware, as shall be
fixed by the board of directors and stated in the notice thereof.
Section 2. Annual Meetings. The annual meeting of stockholders for the
election of directors and the transaction of such other business as may come
before the meeting shall be held in each year on the second Wednesday in May.
If this date shall fall upon a legal holiday, the meeting shall be held on the
next succeeding business day. At each annual meeting the stockholders entitled
to vote shall elect a board of directors and they may transact such other
corporate business as shall be stated in the notice of the meeting.
Section 3. Special Meetings. Special meetings of the stockholders for any
purpose or purposes may be called by the Chairman of the Board or by order of
the board of directors and shall be called by the Chairman of the Board or the
Secretary upon the written request of stockholders holding of record at least a
majority of the outstanding shares of stock of the Company entitled to vote at
such meeting. Such written request shall state the purpose or purposes for
which such meeting is to be called.
Section 4. Notice of Meetings. Except as otherwise expressly required by
law, notice of each meeting of stockholders, whether annual or special, shall be
given at least 10 days before the date on which the meeting is to be held to
each stockholder of record entitled to
Ex. 3.3-1
<PAGE>
vote thereat by delivering a notice thereof to him personally, or by mailing
such notice in a postage prepaid envelope directed to him at his address as it
appears on the books of the Company, unless he shall have filed with the
Secretary of the Company a written request that notices intended for him be
directed to another address, in which case such notice shall be directed to him
at the address designated in such request. Notice of any meeting of
stockholders shall not be required to be given to any stockholder who shall
attend such meeting in person or by proxy; and if any stockholder shall in
person or by attorney thereunto authorized, in writing or by telegraph, cable,
radio or wireless and confirmed in writing, waive notice of any meeting of the
stockholders, whether prior to or after such meeting, notice thereof need not be
given to him. Notice of any adjourned meeting of the stockholders shall not be
required to be given except where expressly required by law.
Section 5. Quorum. At each meeting of the stockholders the holders of
record of a majority of the issued and outstanding stock of the Company entitled
to vote at such meeting, present in person or by proxy, shall constitute a
quorum for the transaction of business except where otherwise provided by law,
the certificate of incorporation or these bylaws. In the absence of a quorum,
any officer entitled to preside at or act as secretary of such meeting shall
have the power to adjourn the meeting from time to time until a quorum shall be
constituted. At any such adjourned meeting at which a quorum shall be present
any business may be transacted which might have been transacted at the meeting
as originally called.
Section 6. Voting. At every meeting of stockholders each holder of record
of the issued and outstanding stock of the Company entitled to vote at such
meeting shall be entitled to one vote in person or by proxy, but no proxy shall
be voted after three years from its date unless the proxy provides for a longer
period, and, except where the transfer books of the Company have been closed or
a date has been fixed as the record date for the determination of stockholders
entitled to vote, no share of stock shall be voted directly or indirectly. At
all meetings of the stockholders, a quorum being present, all matters shall be
decided by majority vote of those present in person or by proxy, except as
otherwise required by the laws of the State of Delaware or the certificate of
incorporation. The vote thereat on any question need not be by ballot unless
required by the laws of the State of Delaware.
ARTICLE III.
Board of Directors.
Section 1. General Powers. The property, business and affairs of the
Company shall be managed by the board of directors.
Section 2. Number and Term of Office. The number of directors shall be
ten, but may from time to time be increased or diminished to not less than three
by amendment of these bylaws. Directors need not be stockholders. Each
director shall hold office until the annual meeting of the stockholders next
following his election and until his successor shall have been elected and shall
qualify, or until his death, resignation or removal.
Section 3. Quorum and Manner of Acting. Unless otherwise provided by law
the presence of six members of the board of directors shall be necessary to
constitute a quorum for the transaction of business. In the absence of a
quorum, a majority of the directors present
Ex. 3.3-2
<PAGE>
may adjourn the meeting from time to time until a quorum shall be present.
Notice of any adjourned meeting need not be given. At all meetings of
directors, a quorum being present, all matters shall be decided by the
affirmative vote of a majority of the directors present, except as otherwise
required by the laws of the State of Delaware.
Section 4. Place of Meetings, etc. The board of directors may hold its
meetings and keep the books and records of the Company at such place or places
within or without the State of Delaware as the board may from time to time
determine.
Section 5. Annual Meeting. Promptly after each annual meeting of
stockholders for the election of directors and on the same day the board of
directors shall meet for the purpose of organization, the election of officers
and the transaction of other business. Notice of such meeting need not be
given. Such meeting may be held at any other time or place as shall be
specified in a notice given as hereinafter provided for special meetings of the
board of directors or in a consent and waiver of notice thereof signed by all
the directors.
Section 6. Regular Meetings. Regular meetings of the board of directors
may be held at such time and place, within or without the State of Delaware, as
shall from time to time be determined by the board of directors. After there
has been such determination and notice thereof has been once given to each
member of the board of directors, regular meetings may be held without further
notice being given.
Section 7. Special Meetings; Notice. Special meetings of the board of
directors shall be held whenever called by the Chairman of the Board or by a
majority of the directors. Notice of each such meeting shall be mailed to each
director, addressed to him at his residence or usual place of business, at least
10 days before the day on which the meeting is to be held, or shall be sent to
him at such place by telegraph, cable, radio or wireless, or be delivered
personally or by telephone, not later than the day before the day on which such
meeting is to be held. Each such notice shall state the time and place of the
meeting but need not state the purposes thereof. Notice of any meeting of the
board of directors need not be given to any director, however, if waived by him
in writing or by telegraph, cable, radio or wireless and confirmed in writing,
whether before or after such meeting, or if he shall be present at such meeting.
Any meeting of the board of directors shall be a legal meeting without any
notice thereof having been given if all the directors then in office shall be
present thereat.
Section 8. Resignation. Any director of the Company may resign at any
time by giving written notice to the Chairman of the Board or the Secretary of
the Company. The resignation of any director shall take effect upon receipt of
notice thereof or at such later time as shall be specified in such notice; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 9. Removal. Any director may be removed at any time, either with
or without cause, by the affirmative vote of the holders of record of a majority
of the issued and outstanding class of stock of the Company entitled to vote for
the election of such director, given at a special meeting of the stockholders
called for that purpose. The vacancy in the board of directors caused by any
such removal may be filled by the stockholders at such meeting.
Ex. 3.3-3
<PAGE>
Section 10. Vacancies. Any vacancy that shall occur in the board of
directors by reason of death, resignation, disqualification or removal or any
other cause whatever, unless filled as provided in Section 9 hereof, shall be
filled by the majority (even if that be only a single director) of the remaining
directors theretofore elected by the holders of the class of capital stock which
elected the directors whose office shall have become vacant. If any new
directorship is created by increase in the number of directors, a majority of
the directors then in office may fill such new directorship. The term of office
of any director so chosen to fill a vacancy or a new directorship shall
terminate upon the election and qualification of directors at any meeting of
stockholders called for the purpose of electing directors.
Section 11. Compensation of Directors. Directors may receive a fee, as
fixed by the Chairman of the Board, for their services, together with expenses
for attendance at regular or special meeting of the board. Members of
committees of the board of directors may be allowed compensation for attending
committee meetings. Nothing herein contained shall be construed to preclude any
director from serving the Company or any subsidiary thereof in any other
capacity and receiving compensation therefor.
ARTICLE IV.
Committees of the Board.
Section 1. Executive Committee. The board of directors shall elect from
the directors an executive committee.
The board of directors shall fill vacancies in the executive committee by
election from the directors.
The executive committee shall fix its own rules of procedure and shall meet
where and as provided by such rules or by resolution of the board of directors,
but in every case the presence of at least three members of the committee shall
be necessary to constitute a quorum for the transaction of business.
In every case the affirmative vote of a majority of all of the members of
the committee present at the meeting shall be necessary for the adoption of any
resolution.
Section 2. Membership and Powers. The executive committee shall consist
of five members in addition to the Chairman of the Board, who by virtue of his
office shall be a member of the executive committee and chairman thereof.
Unless otherwise ordered by the board of directors, each elected member of the
executive committee shall continue to be a member thereof until the expiration
of his term of office as a director.
The executive committee, subject to any limitations prescribed by the board
of directors, shall have special charge of all financial accounting, legal and
general administrative affairs of the Company. During the intervals between the
meetings of the board of directors the executive committee shall have all the
powers of the board in the management of the business and affairs of the
Company, including the power to authorize the seal of the Company to be affixed
to all papers which require it, except that said committee shall not have the
power of the board (i) to fill vacancies in the board, (ii) to amend the bylaws,
(iii) to
Ex. 3.3-4
<PAGE>
adopt a plan of merger or consolidation, (iv) to recommend to the stockholders
the sale, lease, exchange, mortgage, pledge or other disposition of all or
substantially all of the property and assets of the Company otherwise than in
the usual and regular course of its business, or (v) to recommend to the
stockholders a voluntary dissolution of the Company or a revocation thereof.
Section 3. Other Committees. The board of directors may, by resolution or
resolutions passed by a majority of the whole board, designate one or more other
committees, each committee to consist of two or more of the directors of the
Company, which, to the extent provided in said resolution or resolutions, shall
have and may exercise the powers of the board of directors in the management of
the business and affairs of the Company, and may have power to authorize the
seal of the Company to be affixed to all papers which may require it. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors.
ARTICLE V.
Officers.
Section 1. Number. The principal officers of the Company shall be a
Chairman of the Board, President, one or more Vice Presidents (which may be
designated as Executive or Senior Vice President(s)), a Secretary, a Treasurer,
and a Controller. No officers except the Chairman of the Board and President
need be directors. One person may hold the offices and perform the duties of
any two or more of said offices.
Section 2. Election and Term of Office. The principal officers of the
Company shall be chosen annually by the board of directors at the annual meeting
thereof. Each such officer shall hold office until his successor shall have
been chosen and shall qualify, or until his death or until he shall resign or
shall have been removed in the manner hereinafter provided.
Section 3. Subordinate Officers. In addition to the principal officers
enumerated in Section 1 of this Article V, the Company may have one or more
Assistant Vice Presidents, one or more Assistant Treasurers, one or more
Assistant Secretaries and such other officers, agents and employees as the board
of directors may deem necessary, each of whom shall hold office for such period,
have such authority, and perform such duties as the board or the President may
from time to time determine. The board of directors may delegate to any
principal officer the power to appoint and to remove any such subordinate
officers, agents or employees.
Section 4. Compensation of Principal Officers. The salaries of the
principal officers shall be fixed from time to time either by the board of
directors or by a committee of the board to which such power may be delegated.
The salaries of any other officers shall be fixed by the President or by a
committee or committees to which he may delegate such power.
Section 5. Removal. Any officer may be removed, either with or without
cause, at any time, by resolution adopted by the board of directors at any
regular meeting of the board or at any special meeting of the board called for
the purpose at which a quorum is present.
Ex. 3.3-5
<PAGE>
Section 6. Vacancies. A vacancy in any office may be filled for the
unexpired portion of the term in the manner prescribed in these bylaws for
election or appointment to such office for such term.
Section 7. Chairman of the Board. The Chairman of the Board shall preside
at all meetings of the stockholders and directors at which he may be present.
He shall have such other authority and responsibility and perform such other
duties as may be determined by the board of directors.
Section 8. President. The President shall be the chief executive officer
of the Company and as such shall have general supervision and management of the
affairs of the Company subject to the control of the board of directors. He may
enter into any contract or execute any deeds, mortgages, bonds, contracts or
other instruments in the name and on behalf of the Company except in cases in
which the authority to enter into such contract or execute and deliver such
instrument, as the case may be, shall be otherwise expressly delegated. In
general he shall perform all duties incident to the office of President as
herein defined and all such other duties as from time to time may be assigned to
him by the board of directors. In the absence of the Chairman of the Board, the
President shall preside at meetings of the stockholders and directors.
Section 9. Vice Presidents. The Vice Presidents, in order of their
seniority unless otherwise determined by the board of directors, shall in the
absence or disability of the President perform the duties and exercise the
powers of such offices. The Vice Presidents shall perform such other duties and
have such other powers as the President or the board of directors may from time
to time prescribe.
Section 10. Secretary. The Secretary shall attend all sessions of the
board and all meetings of the stockholders, and record all votes and the minutes
of all proceedings in a book to be kept for that purpose, and shall perform like
duties for the committees of the board of directors when required. He shall
give or cause to be given, notice of all meetings of the stockholders and of
special meetings of the board of directors, and shall perform such other duties
as may be prescribed by the board of directors, or the President, under whose
supervision he shall be. He shall keep in safe custody the seal of the Company
and, when authorized by the board of directors, affix the same to any instrument
requiring it, and when so affixed it shall be attested by his signature or by
the signature of the Treasurer or an Assistant Secretary.
Section 11. Treasurer. The Treasurer shall have custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in the books belonging to the Company, and shall deposit all
moneys and other valuable effects in the name and to the credit of the Company
in such depositories as may be designated from time to time by the Board of
Directors.
He shall disburse the funds of the Company as may be ordered by the board,
taking proper vouchers for such disbursements, and shall render to the President
and board of directors at the regular meetings of the board, or whenever they
may require it, an account of the financial condition of the Company.
Ex. 3.3-6
<PAGE>
If required by the board of directors, he shall give the Company a bond, in
such sum and with such surety or sureties as shall be satisfactory to the board,
for the faithful performance of the duties of his office, and for the
restoration to the Company, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the Company.
Section 12. Controller. The Controller shall be in charge of the accounts
of the Company and shall perform such duties as from time to time may be
assigned to him by the President or by the board of directors.
ARTICLE VI.
Shares and Their Transfer.
Section 1. Certificates for Stock. Certificates for shares of capital
stock of the Company shall be numbered, and shall be entered in the books of the
Company, in the order in which they are issued.
Section 2. Regulations. The board of directors may make such rules and
regulations as it may deem expedient, not inconsistent with the certificate of
incorporation or these bylaws, concerning the issue, transfer and registration
of certificates for shares of capital stock of the Company. It may appoint, or
authorize any principal officer or officers to appoint, one or more transfer
clerks or one or more transfer agents and one or more registrars, and may
require all such certificates to bear the signature or signatures of any of
them.
Section 3. Stock Certificate Signature. The certificates for shares of
the respective classes of such stock shall be signed by, or in the name of the
Company by, the Chairman of the Board, the President or any Vice President and
the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary, and where signed (a) by a transfer agent or an assistant transfer
agent or (b) by a transfer clerk acting on behalf of the Company and a
registrar, the signature of any such Chairman of the Board, President, Vice
President, Treasurer, Assistant Treasurer, Secretary or Assistant Secretary may
be facsimile. Each such certificate shall exhibit the name of the holder
thereof and number of shares represented thereby and shall not be valid until
countersigned by a transfer agent.
The board of directors may, if it so determines, direct that certificates
for shares of any class or classes of capital stock of the Company be registered
by a registrar, in which case such certificates will not be valid until so
registered.
In case any officer of the Company who shall have signed, or whose
facsimile signature shall have been used on, any certificate for shares of
capital stock of the Company shall cease to be such officer, whether because of
death, resignation or otherwise, before such certificate shall have been
delivered by the Company, such certificate shall nevertheless be deemed to have
been adopted by the Company and may be issued and delivered as though the person
who signed such certificate or whose facsimile signature shall have been used
thereon had not ceased to be such officer.
Ex. 3.3-7
<PAGE>
Section 4. Designations, Preferences, etc. on Certificates for Stock.
Certificates for shares of capital stock of the Company shall state on the face
or back thereof that the Company will furnish without charge to each stockholder
who so requests (which request may be addressed to the Secretary of the Company
or to a transfer agent) a statement of the designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof which the Company is authorized to issue and the
qualifications, limitations or restrictions of such preferences and/or rights.
Section 5. Stock Ledger. A record shall be kept by the Secretary or by
any other officer, employee or agent designated by the board of directors of the
name of the person, firm, or corporation holding the stock represented by such
certificates, the number of shares represented by such certificates,
respectively, and the respective dates thereof, and in case of cancellation the
respective dates of cancellation.
Section 6. Cancellation. Every certificate surrendered to the Company for
exchange or transfer shall be canceled, and no new certificate or certificates
shall be issued in exchange for any existing certificate until such existing
certificate shall have been so canceled.
Section 7. Transfers of Stock. Transfers of shares of the capital stock
of the Company shall be made only on the books of the Company by the registered
holder thereof or by his attorney thereunto authorized on surrender of the
certificate or certificates for such shares properly endorsed and the payment of
all taxes thereon. The person in whose name shares of stock stand on the books
of the Company shall be deemed the owner thereof for all purposes as regards the
Company; provided, however, that whenever any transfer of shares shall be made
for collateral security, and not absolutely, such fact, if known to the
Secretary or the transfer agent making such transfer, shall be so expressed in
the entry of transfer.
Section 8. Closing of Transfer Books. The board of directors may by
resolution direct that the stock transfer books of the Company be closed for a
period not exceeding 60 days preceding the date of any meeting of the
stockholders, or the date for the payment of any dividend, or the date for the
allotment of any rights, or the date when any change or conversion or exchange
of capital stock of the company shall go into effect, or for a period not
exceeding 60 days in connection with obtaining the consent of stockholders for
any purpose. In lieu of such closing of the stock transfer books, the board may
fix in advance a date, not exceeding 60 days preceding the date of any meeting
of stockholders, or the date for the payment of any dividend, or the date for
the allotment of rights, or the date when any change or conversion or exchange
of capital stock shall go into effect or a date in connection with obtaining
such consent, as a record date for the determination of the stockholders
entitled to notice of, and to vote at, such meeting, and any adjournment
thereof, or to receive payment of any such dividend, or to receive any such
allotment of rights, or to exercise the rights in respect of any such change,
conversion, or exchange of capital stock or to give such consent, as the case
may be, notwithstanding any transfer of any stock on the books of the Company
after any record date so fixed.
Ex. 3.3-8
<PAGE>
ARTICLE VII.
Miscellaneous Provisions.
Section 1. Corporate Seal. The board of directors shall provide a
corporate seal which shall be in the form of a circle and shall bear the name of
the Company and words and figures showing that it was incorporated in the State
of Delaware in the year 1964. The Secretary shall be the custodian of the seal.
The board of directors may authorize a duplicate seal to be kept and used by any
other officer.
Section 2. Fiscal Year. The fiscal year of the Company shall be fixed by
resolution of the board of directors.
Section 3. Voting of Stocks Owned by the Company. The board of directors
may authorize any person in behalf of the Company to attend, vote and grant
proxies to be used at any meeting of stockholders of any corporation in which
the Company may hold stock.
Section 4. Dividends. Subject to the provisions of the certificate of
incorporation, the board of directors may, out of funds legally available
therefor, at any regular or special meeting declare dividends upon the capital
stock of the Company as and when they deem expedient. Dividends may be paid in
cash, in property, or in shares of capital stock of the Company, subject to the
provisions of the certificate of incorporation. Before declaring any dividend
there may be set apart out of any funds of the Company available for dividends
such sum or sums as the directors from time to time in their discretion deem
proper for working capital or as a reserve fund to meet contingencies or for
equalizing dividends or for such other purposes as the directors shall deem
conducive to the interests of the Company.
ARTICLE VIII.
Indemnification of Officers, Directors,
Employees and Agents; Insurance.
Section 1. Indemnification.
(a) The Company may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including an action by or in the right of the Company) by reason of the fact
that he is or was a director, officer, employee or agent of the Company, or is
or was serving at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees) and, except for an
action by or in the right of the Company, judgments, fines and amounts paid in
settlement, actually and reasonably incurred by him in connection with such
action, suit or proceeding, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Except for an action by
or in the right of the Company, the termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or
Ex. 3.3-9
<PAGE>
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful. With respect to an action by or
in the right of the Company, no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
Company unless and only to the extent that the Delaware Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which such court shall deem proper.
(b) To the extent that a director, officer, employee or agent of the
Company has been successful on the merits or otherwise in defense of any action,
suit or proceeding referred to in subsection (a) or in defense of any claim,
issue or matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
(c) Any indemnification under subsection (a) (unless ordered by a court)
shall be made by the Company only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because he has met the applicable standard of
conduct set forth in subsection (a). Such determination shall be made (i) by
the board of directors by a majority vote of a quorum consisting of directors
who were not parties to such action, suit or proceeding, or (ii) if such a
quorum is not obtainable, or, even if obtainable a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, or
(iii) by the stockholders.
(d) Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the Company in advance of the final disposition of
such action, suit or proceeding as authorized by the board of directors in the
manner provided in subsection (c) upon receipt of an undertaking by or on behalf
of the director, officer, employee or agent to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the Company as
authorized in this section.
(e) The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in their official capacities and as to action in
other capacities while holding such offices, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
Section 2. Insurance. The Company may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the Company would have the power to indemnify him against such
liability under the provisions of either the General Corporation Law of the
State of Delaware or of these bylaws.
Ex. 3.3-10
<PAGE>
ARTICLE IX.
Amendments.
The bylaws of the Company may be altered, amended or repealed either by the
affirmative vote of a majority of the stock issued and outstanding and entitled
to vote in respect thereof and represented in person or by proxy at any annual
or special meeting of the stockholders, or by the affirmative vote of a majority
of the directors then in office given at any regular or special meeting of the
board of directors. Bylaws, whether made or altered by the stockholders or by
the board of directors, shall be subject to alteration or repeal by the
stockholders as in this Article provided.
Ex. 3.3-11
<PAGE>
EXHIBIT 4.1
RIGHTS AGREEMENT
dated as of
December 6, 1989
between
MURPHY OIL CORPORATION
and
HARRIS TRUST COMPANY OF NEW YORK,
as Rights Agent
Ex. 4.1-0
<PAGE>
TABLE OF CONTENTS*
Page
----
Section 1. Definitions.......................................... 1
Section 2. Appointment of Rights Agent.......................... 4
Section 3. Issue of Right Certificates.......................... 4
Section 4. Form of Right Certificates........................... 6
Section 5. Countersignature and Registration.................... 6
Section 6. Transfer and Exchange of Right
Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates.................. 7
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights.......................... 8
Section 8. Cancellation and Destruction of Right
Certificates....................................... 9
Section 9. Reservation and Availability of
Capital Stock...................................... 10
Section 10. Preferred Stock Record Date.......................... 11
Section 11. Adjustment of Purchase Price,
Number and Kind of Shares or Number
of Rights.......................................... 11
Section 12. Certificate of Adjusted Purchase
Price or Number of Shares.......................... 20
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power................ 20
Section 14. Fractional Rights and Fractional
Shares............................................. 22
Section 15. Rights of Action..................................... 24
Section 16. Agreement of Right Holders........................... 24
----------------------------------
*The Table of Contents is not a part of this Agreement.
Ex. 4.1-i
<PAGE>
Page
----
Section 17. Right Certificate Holder Not Deemed
a Stockholder....................................... 25
Section 18. Concerning the Rights Agent........................... 25
Section 19. Merger or Consolidation or Change of
Name of Rights Agent................................ 26
Section 20. Duties of Rights Agent................................ 26
Section 21. Change of Rights Agent................................ 28
Section 22. Issuance of New Right Certificates.................... 29
Section 23. Redemption............................................ 30
Section 24. Exchange.............................................. 30
Section 25. Notice of Proposed Actions............................ 31
Section 26. Notices............................................... 32
Section 27. Supplements and Amendments............................ 33
Section 28. Successors............................................ 33
Section 29. Determinations and Actions
by the Board of Directors, etc...................... 33
Section 30. Benefits of this Agreement............................ 34
Section 31. Severability.......................................... 34
Section 32. Governing Law......................................... 34
Section 33. Counterparts.......................................... 34
Section 34. Descriptive Headings.................................. 35
Exhibit A - Form of Certificate of Designation
of Preferred Stock
Exhibit B - Form of Right Certificate
Exhibit C - Summary Description of the
Stockholder Rights Plan
Ex. 4.1-ii
<PAGE>
RIGHTS AGREEMENT
AGREEMENT dated as of December 6, 1989, between Murphy Oil
Corporation, a Delaware corporation (the "Company"), and Harris Trust Company of
New York, as Rights Agent (the "Rights Agent"),
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, on December 6, 1989 the Board of Directors of the Company
authorized and declared a dividend of one preferred stock purchase right (a
"Right") for each share of Common Stock (as hereinafter defined) outstanding at
the close of business on December 20, 1989 (the "Record Date") and has
authorized the issuance, upon the terms and subject to the conditions
hereinafter set forth, of one Right in respect of each share of Common Stock
issued after the Record Date, each Right representing the right to purchase,
upon the terms and subject to the conditions hereinafter set forth, one one-
hundredth of a share of Preferred Stock (as hereinafter defined);
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. Definitions. The following terms, as used herein, have
the following meanings:
"Acquiring Person" means any Person (other than Charles H. Murphy,
Jr. and Affiliates of Charles H. Murphy, Jr.) who, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of
15% or more of the shares of Common Stock then outstanding, but shall not
include the Company, any of its Subsidiaries, any employee benefit plan of
the Company or any of its Subsidiaries or any Person organized, appointed
or established by the Company or any of its Subsidiaries for or pursuant to
the terms of any such plan.
"Affiliate" and "Associate" have the respective meanings ascribed to
such terms in Rule 12b-2 under the Exchange Act as in effect on the date
hereof.
A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own", any securities:
(a) which such Person or any of its Affiliates or Associates,
directly or indirectly, beneficially
Ex. 4.1-1
<PAGE>
owns (as determined pursuant to Rule 13d-3 under the Exchange Act as
in effect on the date hereof);
(b) which such Person or any of its Affiliates or Associates,
directly or indirectly, has
(i) the right to acquire (whether such right is exercisable
immediately or only upon the occurrence of certain events or the
passage of time or both) pursuant to any agreement, arrangement
or understanding (whether or not in writing) or otherwise (other
than pursuant to the Rights); provided that a Person shall not be
deemed the "Beneficial Owner" of or to "beneficially own"
securities tendered pursuant to a tender or exchange offer made
by or on behalf of such Person or any of its Affiliates or
Associates until such tendered securities are accepted for
payment or exchange; or
(ii) the right to vote (whether such right is exercisable
immediately or only upon the occurrence of certain events or the
passage of time or both) pursuant to any agreement, arrangement
or understanding (whether or not in writing) or otherwise;
provided that a Person shall not be deemed the "Beneficial Owner"
of or to "beneficially own" any security under this clause (ii)
as a result of an agreement, arrangement or understanding to vote
such security if such agreement, arrangement or understanding (A)
arises solely from a revocable proxy or consent given in response
to a public proxy or consent solicitation made pursuant to, and
in accordance with, the applicable rules and regulations under
the Exchange Act and (B) is not also then reportable by such
Person on Schedule 13D under the Exchange Act (or any comparable
or successor report); or
(c) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such
Person or any of its Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) for the
purpose of acquiring, holding, voting (except pursuant to a revocable
proxy as described in subparagraph (b)(ii) immediately above) or
disposing of any such securities.
"Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"Close of business" on any given date means 5:00 P.M., New York City
time, on such date; provided that if
Ex. 4.1-2
<PAGE>
such date is not a Business Day "close of business" means 5:00 P.M., New
York City time, on the next succeeding Business Day.
"Common Stock" means the Common Stock, par value $1.00 per share, of
the Company, except that, when used with reference to any Person other than
the Company, "Common Stock" means the capital stock of such Person with the
greatest voting power, or the equity securities or other equity interest
having power to control or direct the management, of such Person.
"Continuing Director" means any member of the Board of Directors of
the Company, while such Person is a member of the Board, who is not an
Acquiring Person or an Affiliate or Associate of an Acquiring Person or a
representative or nominee of an Acquiring Person or of any such Affiliate
or Associate and either (a) was a member of the Board immediately prior to
the time any Person becomes an Acquiring Person or (b) subsequently becomes
a member of the Board, if such Person's nomination for election or election
to the Board is recommended or approved by a majority of the Continuing
Directors.
"Distribution Date" means the close of business on the tenth day (or
such later day as may be designated by action of a majority of the
Continuing Directors) after the Stock Acquisition Date.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expiration Date" means the earlier of (a) the Final Expiration Date
and (b) the time at which all Rights are redeemed as provided in Section 23
or exchanged as provided in Section 24.
"Final Expiration Date" means the close of business on December 6,
1999.
"Person" means an individual, corporation, partnership, association,
trust or any other entity or organization.
"Preferred Stock" means the Series A Participating Cumulative
Preferred Stock, par value $100.00 per share, of the Company, having the
terms set forth in the form of certificate of designation attached hereto
as Exhibit A.
"Purchase Price" means the price (subject to adjustment as provided
herein) at which a holder of a Right may purchase one one-hundredth of a
share of Preferred Stock (subject to adjustment as provided herein) upon
exercise of a Right, which price shall initially be $130.00.
Ex. 4.1-3
<PAGE>
"Section 11(a)(ii) Event" means any event described in the first
clause of Section 11(a)(ii).
"Section 13 Event" means any event described in clauses (x), (y) or
(z) of Section 13(a).
"Securities Act" means the Securities Act of 1933, as amended.
"Stock Acquisition Date" means the date of the first public
announcement (including the filing of a report on Schedule 13D under the
Exchange Act (or any comparable or successor report)) by the Company or an
Acquiring Person indicating that an Acquiring Person has become such.
"Subsidiary" of any Person means any other Person of which securities
or other ownership interests having ordinary voting power, in the absence
of contingencies, to elect a majority of the board of directors or other
Persons performing similar functions are at the time directly or indirectly
owned by such first Person.
"Trading Day" means a day on which the principal national securities
exchange on which the shares of Common Stock are listed or admitted to
trading is open for the transaction of business or, if the shares of Common
Stock are not listed or admitted to trading on any national securities
exchange, a Business Day.
"Triggering Event" means any Section 11(a)(ii) Event or any Section 13
Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
in accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such Co-
Rights Agents as it may deem necessary or desirable. If the Company appoints
one or more Co-Rights Agents, the respective duties of the Rights Agent and any
Co-Rights Agents shall be as the Company shall determine.
Section 3. Issue of Right Certificates. (a) Prior to the
Distribution Date, (i) the Rights will be evidenced by the certificates for the
Common Stock and not by separate Right Certificates (as hereinafter defined) and
the registered holders of the Common Stock shall be deemed to be the registered
holders of the associated Rights, and (ii) the Rights will be transferable only
in connection with the transfer of the underlying shares of Common Stock. As
soon as practicable after the Record Date, the Company will send a summary of
the Rights substantially in the form of Exhibit C hereto, by first-class,
postage prepaid mail, to each record holder of the Common Stock as of the close
of business on the Record Date at the address of such holder shown on the
records of the Company.
Ex. 4.1-4
<PAGE>
(b) As soon as practicable after the Company has notified the Rights
Agent of the occurrence of the Distribution Date, the Rights Agent will send, by
first-class, insured, postage prepaid mail, to each record holder of the Common
Stock as of the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, one or more Right Certificates
evidencing one Right (subject to adjustment as provided herein) for each share
of Common Stock so held. If an adjustment in the number of Rights per share of
Common Stock has been made pursuant to Section 11(p), the Company shall, at the
time of distribution of the Right Certificates, make the necessary and
appropriate rounding adjustments (in accordance with Section 14(a)) so that
Right Certificates representing only whole numbers of Rights are distributed and
cash is paid in lieu of any fractional Rights. From and after the Distribution
Date, the Rights will be evidenced solely by such Right Certificates.
(c) Rights shall be issued in respect of all shares of Common Stock
outstanding as of the Record Date or issued (on original issuance or out of
treasury) after the Record Date but prior to the earlier of the Distribution
Date and the Expiration Date. In addition, in connection with the issuance or
sale of shares of Common Stock following the Distribution Date and prior to the
Expiration Date, the Company (i) shall, with respect to shares of Common Stock
so issued or sold (x) pursuant to the exercise of stock options or under any
employee plan or arrangement or (y) upon the exercise, conversion or exchange of
other securities issued by the Company prior to the Distribution Date and (ii)
may, in any other case, if deemed necessary or appropriate by the Board of
Directors of the Company, issue Right Certificates representing the appropriate
number of Rights in connection with such issuance or sale; provided that no such
Right Certificate shall be issued if, and to the extent that, (i) the Company
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the Person to whom such
Right Certificate would be issued or (ii) appropriate adjustment shall otherwise
have been made in lieu of the issuance thereof.
(d) Certificates for the Common Stock issued after the Record Date
but prior to the earlier of the Distribution Date and the Expiration Date shall
have impressed on, printed on, written on or otherwise affixed to them the
following legend:
This certificate also evidences certain Rights as set forth in a
Rights Agreement between Murphy Oil Corporation (the "Company") and
Harris Trust Company of New York dated as of December 6, 1989 (the
"Rights Agreement"), the terms of which are hereby incorporated herein
by reference and a copy of which is on file at the principal executive
offices of the Company. The Company will mail to the holder of this
certificate a copy of the Rights Agreement without charge promptly
after receipt of a written
Ex. 4.1-5
<PAGE>
request therefor. Under certain circumstances, as set forth in the
Rights Agreement, such Rights may be evidenced by separate
certificates and no longer be evidenced by this certificate, may be
redeemed or exchanged or may expire. As set forth in the Rights
Agreement, Rights issued to, or held by, any Person who is, was or
becomes an Acquiring Person or an Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement), whether currently
held by or on behalf of such Person or by any subsequent holder, may
be null and void.
Section 4. Form of Right Certificates. (a) The certificates
evidencing the Rights (and the forms of assignment, election to purchase and
certificates to be printed on the reverse thereof) (the "Right Certificates")
shall be substantially in the form of Exhibit B hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law, rule or regulation or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage. The Right Certificates, whenever distributed, shall be dated as of the
Record Date.
(b) Any Right Certificate representing Rights beneficially owned by
any Person referred to in clauses (i), (ii) or (iii) of the first sentence of
Section 7(d) shall (to the extent feasible) contain the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). This Right Certificate and the
Rights represented hereby may be or may become null and void in the
circumstances specified in Section 7(d) of such Agreement.
Section 5. Countersignature and Registration. (a) The Right
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its President or any Vice President, either manually or by facsimile
signature, and shall have affixed thereto the Company's seal or a facsimile
thereof which shall be attested by the Secretary or an Assistant Secretary of
the Company, either manually or by facsimile signature. The Right Certificates
shall be manually countersigned by the Rights Agent and shall not be valid for
any purpose unless so countersigned. In case any officer of the Company whose
manual or facsimile signature is affixed to the Right Certificates shall cease
to be such officer of the Company before countersignature by the Rights Agent
and issuance and delivery by the Company, such Right Certificates may,
nevertheless, be countersigned by the Rights Agent and issued and delivered with
the same force and effect as though the Person who signed such Right
Certificates had not ceased
Ex. 4.1-6
<PAGE>
to be such officer of the Company. Any Right Certificate may be signed on
behalf of the Company by any Person who, at the actual date of the execution of
such Right Certificate, shall be a proper officer of the Company to sign such
Right Certificate, although at the date of the execution of this Rights
Agreement any such Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the place for
surrender of Right Certificates upon exercise, transfer or exchange, books for
registration and transfer of the Right Certificates. Such books shall show with
respect to each Right Certificate the name and address of the registered holder,
the number of Rights indicated on the certificate and the certificate number.
Section 6. Transfer and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates. (a) At any time after the
Distribution Date and prior to the Expiration Date, any Right Certificate or
Certificates may, upon the terms and subject to the conditions set forth below
in this Section 6(a), be transferred or exchanged for another Right Certificate
or Certificates evidencing a like number of Rights as the Right Certificate or
Certificates surrendered. Any registered holder desiring to transfer or
exchange any Right Certificate or Certificates shall surrender such Right
Certificate or Certificates (with, in the case of a transfer, the form of
assignment and certificate on the reverse side thereof duly executed) to the
Rights Agent at the principal office or offices of the Rights Agent designated
for such purpose. Neither the Rights Agent nor the Company shall be obligated
to take any action whatsoever with respect to the transfer of any such
surrendered Right Certificate or Certificates until the registered holder of the
Rights has complied with the requirements of Section 7(e). Upon satisfaction of
the foregoing requirements, the Rights Agent shall, subject to Sections 4(b),
7(d), 14 and 24, countersign and deliver to the Person entitled thereto a Right
Certificate or Certificates as so requested. The Company may require payment of
a sum sufficient to cover any transfer tax or other governmental charge that may
be imposed in connection with any transfer or exchange of any Right Certificate
or Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will issue and deliver a new
Right Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Ex. 4.1-7
<PAGE>
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. (a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein, including
Sections 7(d) and (e), 9(c), 11(a)(iii) and 24) in whole or in part at any time
after the Distribution Date and prior to the Expiration Date upon surrender of
the Right Certificate, with the form of election to purchase and the certificate
on the reverse side thereof duly executed, to the Rights Agent at the principal
office or offices of the Rights Agent designated for such purpose, together with
payment (in lawful money of the United States of America by certified check or
bank draft payable to the order of the Company) of the aggregate Purchase Price
with respect to the Rights then to be exercised and an amount equal to any
applicable transfer tax or other governmental charge.
(b) Upon satisfaction of the requirements of Section 7(a) and subject
to Section 20(k), the Rights Agent shall thereupon promptly (i)(A) requisition
from any transfer agent of the Preferred Stock (or make available, if the Rights
Agent is the transfer agent therefor) certificates for the total number of one
one-hundredths of a share of Preferred Stock to be purchased (and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests) or (B) if the Company shall have elected to deposit the shares of
Preferred Stock issuable upon exercise of the Rights with a depositary agent,
requisition from the depositary agent depositary receipts representing such
number of one one-hundredths of a share of Preferred Stock as are to be
purchased (in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company will direct the depositary agent to comply
with such request, (ii) requisition from the Company the amount of cash, if any,
to be paid in lieu of issuance of fractional shares in accordance with Section
14 and (iii) after receipt of such certificates or depositary receipts and cash,
if any, cause the same to be delivered to or upon the order of the registered
holder of such Right Certificate (with such certificates or receipts registered
in such name or names as may be designated by such holder). If the Company is
obligated to deliver Common Stock, other securities or assets pursuant to this
Agreement, the Company will make all arrangements necessary so that such other
securities and assets are available for delivery by the Rights Agent, if and
when appropriate.
(c) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing the number of Rights remaining unexercised shall be issued by the
Rights Agent and delivered to, or upon the order of, the registered holder of
such Right Certificate, registered in such name or names as may be designated by
such holder, subject to the provisions of Section 14.
(d) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section
Ex. 4.1-8
<PAGE>
11(a)(ii) Event, any Rights beneficially owned by (i) an Acquiring Person or an
Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such or (iii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person (or any such Associate or Affiliate) to holders of equity
interests in such Acquiring Person (or in any such Associate or Affiliate) or to
any Person with whom the Acquiring Person (or any such Associate or Affiliate)
has any continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors of the Company
has determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(d) shall become null
and void without any further action, and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise. The Company shall use all reasonable efforts to
insure that the provisions of this Section 7(d) and Section 4(b) are complied
with, but shall have no liability to any holder of Right Certificates or other
Person as a result of its failure to make any determinations with respect to an
Acquiring Person or its Affiliates and Associates or any transferee of any of
them hereunder.
(e) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder of Rights upon the occurrence of any
purported transfer pursuant to Section 6 or exercise pursuant to this Section 7
unless such registered holder (i) shall have completed and signed the
certificate contained in the form of assignment or election to purchase, as the
case may be, set forth on the reverse side of the Right Certificate surrendered
for such transfer or exercise, as the case may be, (ii) shall not have indicated
an affirmative response to clause 1 or 2 thereof and (iii) shall have provided
such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for exercise, transfer or exchange shall, if
surrendered to the Company or to any of its agents, be delivered to the Rights
Agent for cancellation or in cancelled form, or, if surrendered to the Rights
Agent, shall be cancelled by it, and no Right Certificates shall be issued in
lieu thereof except as expressly permitted by this Agreement. The Company shall
deliver to the Rights Agent for cancellation, and the Rights Agent shall cancel,
any other Right Certificate purchased or acquired by the Company otherwise than
upon the exercise thereof. The Rights Agent shall deliver all cancelled Right
Ex. 4.1-9
<PAGE>
Certificates to the Company, or shall, at the written request of the Company,
destroy such cancelled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock. (a) The
Company covenants and agrees that it will cause to be reserved and kept
available a number of shares of Preferred Stock which are authorized but not
outstanding or otherwise reserved for issuance sufficient to permit the exercise
in full of all outstanding Rights as provided in this Agreement.
(b) So long as the Preferred Stock issuable upon the exercise of
Rights may be listed on any national securities exchange, the Company shall use
its best efforts to cause, from and after such time as the Rights become
exercisable, all securities reserved for such issuance to be listed on any such
exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts (i) to file, as soon as
practicable following the earliest date after the occurrence of a Section
11(a)(ii) Event as of which the consideration to be delivered by the Company
upon exercise of the Rights has been determined in accordance with Section
11(a)(iii), or as soon as is required by law following the Distribution Date, as
the case may be, a registration statement under the Securities Act with respect
to the securities issuable upon exercise of the Rights, (ii) to cause such
registration statement to become effective as soon as practicable after such
filing and (iii) to cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Securities Act) until
the earlier of (A) the date as of which the Rights are no longer exercisable for
such securities and (B) the Expiration Date. The Company will also take such
action as may be appropriate under, or to ensure compliance with, the securities
or blue sky laws of the various states in connection with the exercisability of
the Rights. The Company may temporarily suspend, for a period of time not to
exceed 90 days after the date set forth in clause (i) of the first sentence of
this Section 9(c), the exercisability of the Rights in order to prepare and file
such registration statement and permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any such provision of this Agreement to the contrary, the Rights
shall not be exercisable for securities in any jurisdiction if the requisite
qualification in such jurisdiction shall not have been obtained, such exercise
therefor shall not be permitted under applicable law or a registration statement
in respect of such securities shall not have been declared effective.
Ex. 4.1-10
<PAGE>
(d) The Company covenants and agrees that it will take all such
action as may be necessary to insure that all one one-hundredths of a share of
Preferred Stock issuable upon exercise of Rights shall, at the time of delivery
of the certificates for such securities (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and other
governmental charges which may be payable in respect of the issuance or delivery
of the Right Certificates and of any certificates for Preferred Stock upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax or other governmental charge which may be payable in respect of any
transfer involved in the issuance or delivery of any Right Certificates or of
any certificates for Preferred Stock to a Person other than the registered
holder of the applicable Right Certificate, and prior to any such transfer,
issuance or delivery any such tax or other governmental charge shall have been
paid by the holder of such Right Certificate or it shall have been established
to the Company's satisfaction that no such tax or other governmental charge is
due.
Section 10. Preferred Stock Record Date. Each Person (other than the
Company) in whose name any certificate for Preferred Stock is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of such Preferred Stock represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate evidencing such Rights
was duly surrendered and payment of the Purchase Price (and any transfer taxes
or other governmental charges) was made; provided that if the date of such
surrender and payment is a date upon which the transfer books of the Company
relating to the Preferred Stock are closed, such Person shall be deemed to have
become the record holder of such shares on, and such certificate shall be dated,
the next succeeding Business Day on which the applicable transfer books of the
Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Right Certificate shall not be entitled to any rights of a
stockholder of the Company with respect to shares for which the Rights shall be
exercisable, including the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights. (a)(i) If the Company shall at any time after the date of
this Agreement (A) pay a dividend on the Preferred Stock payable in shares of
Preferred Stock, (B) subdivide the outstanding Preferred Stock into a greater
number of shares, (C) combine the outstanding Preferred Stock into a smaller
number of shares or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such reclassification in
Ex. 4.1-11
<PAGE>
connection with a consolidation or merger involving the Company), the Purchase
Price in effect immediately prior to the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and the
number and kind of shares of Preferred Stock or other capital stock issuable on
such date shall be proportionately adjusted so that each holder of a Right shall
(except as otherwise provided herein, including Section 7(d)) thereafter be
entitled to receive, upon exercise thereof at the Purchase Price in effect
immediately prior to such date, the aggregate number and kind of shares of
Preferred Stock or other capital stock, as the case may be, which, if such Right
had been exercised immediately prior to such date and at a time when the
applicable transfer books of the Company were open, such holder would have been
entitled to receive upon such exercise and by virtue of such dividend,
subdivision, combination or reclassification. If an event occurs which requires
an adjustment under both this Section 11(a)(i) and Section 11(a)(ii), the
adjustment provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section 11(a)(ii).
(ii) If any Person, alone or together with its Affiliates and
Associates, shall, at any time after the date of this Agreement, become the
Beneficial Owner of 15% or more of the shares of Common Stock then outstanding,
then proper provision shall promptly be made so that each holder of a Right
shall (except as otherwise provided herein, including Section 7(d)) thereafter
be entitled to receive, upon exercise thereof at the Purchase Price in effect
immediately prior to the first occurrence of a Section 11(a)(ii) Event, in lieu
of Preferred Stock, such number of duly authorized, validly issued, fully paid
and nonassessable shares of Common Stock of the Company (such number of shares
being referred to herein as the "Adjustment Shares") as shall be equal to the
result obtained by dividing
(x) the product obtained by multiplying the Purchase Price in effect
immediately prior to the first occurrence of a Section 11(a)(ii) Event by
the number of one one-hundredths of a share of Preferred Stock for which a
Right was exercisable immediately prior to such first occurrence (such
product being thereafter referred to as the "Purchase Price" for each Right
and for all purposes of this Agreement) by
(y) 50% of the current market price (determined pursuant to Section
11(d)(i)) per share of Common Stock on the date of such first occurrence;
provided that if the transaction that would otherwise give rise to the foregoing
adjustment is also subject to the provisions of Section 13, then only the
provisions of Section 13 shall apply and no adjustment shall be made pursuant to
this Section 11(a)(ii).
(iii) If the number of shares of Common Stock which are authorized by
the Company's certificate of incorporation
Ex. 4.1-12
<PAGE>
but not outstanding or reserved for issuance other than upon exercise of the
Rights is not sufficient to permit the exercise in full of the Rights in
accordance with Section 11(a)(ii), the Company shall, with respect to each
Right, make adequate provision to substitute for the Adjustment Shares, upon
payment of the Purchase Price then in effect, (A) (to the extent available)
Common Stock and then, (B) (to the extent available) other equity securities of
the Company which the Board of Directors of the Company (or, if at such time
there is an Acquiring Person, a majority of the Continuing Directors) has
determined to be essentially equivalent to shares of Common Stock in respect to
dividend, liquidation and voting rights (such securities being referred to
herein as "common stock equivalents") and then, if necessary, (C) other equity
or debt securities of the Company, cash or other assets, a reduction in the
Purchase Price or any combination of the foregoing, having an aggregate value
(as determined by the Board of Directors of the Company based upon the advice of
a nationally recognized investment banking firm selected by the Board of
Directors of the Company) equal to the value of the Adjustment Shares; provided
that (x) the Company may, and (y) if the Company shall not have made adequate
provision as required above to deliver value within 30 days following the later
of the first occurrence of a Section 11(a)(ii) Event and the first date that the
right to redeem the Rights pursuant to Section 23 shall expire, then the Company
shall be obligated to, deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, (1) (to the extent available)
Common Stock and then (2) (to the extent available) common stock equivalents and
then, if necessary, (3) other debt or equity securities to the Company, cash or
other assets or any combination of the foregoing, having an aggregate value (as
determined by the Board of Directors of the Company based upon the advice of a
nationally recognized investment banking firm selected by the Board of Directors
of the Company) equal to the excess of the value of the Adjustment Shares over
the Purchase Price. If the Board of Directors of the Company shall determine in
good faith that it is likely that sufficient additional shares of Common Stock
could be authorized for issuance upon exercise in full of the Rights, the 30 day
period set forth above (such period, as it may be extended, being referred to
herein as the "Substitution Period") may be extended to the extent necessary,
but not more than 90 days following the first occurrence of a Section 11(a)(ii)
Event, in order that the Company may seek stockholder approval for the
authorization of such additional shares. To the extent that the Company
determines that some action is to be taken pursuant to the first and/or second
sentence of this Section 11(a)(iii), the Company (X) shall provide, subject to
Section 7(d), that such action shall apply uniformly to all outstanding Rights
and (Y) may suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional shares
and/or to decide the appropriate form and value of any consideration to be
delivered as referred to in such first and/or second sentence. If any such
suspension occurs, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily
Ex. 4.1-13
<PAGE>
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. For purposes of this Section 11(a)(iii), the value of the
Common Stock shall be the current market price per share of Common Stock (as
determined pursuant to Section 11(d)) on the later of the date of the first
occurrence of a Section 11(a)(ii) Event and the first date that the right to
redeem the Rights pursuant to Section 23 shall expire; any "common stock
equivalent" shall be deemed to have the same value as the Common Stock on such
date; and the value of other securities or assets shall be determined pursuant
to Section 11(d)(iii).
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them to
subscribe for or purchase (for a period expiring within 45 calendar days after
such record date) Preferred Stock (or securities having the same rights,
privileges and preferences as the shares of Preferred Stock ("equivalent
preferred stock")) or securities convertible into or exercisable for Preferred
Stock (or equivalent preferred stock) at a price per share of Preferred Stock
(or equivalent preferred stock) (in each case, taking account of any conversion
or exercise price) less than the current market price (as determined pursuant to
Section 11(d)) per share of Preferred Stock on such record date, the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock outstanding
on such record date, plus the number of shares of Preferred Stock which the
aggregate price (taking account of any conversion or exercise price) of the
total number of shares of Preferred Stock (and/or equivalent preferred stock) so
to be offered would purchase at such current market price and the denominator of
which shall be the number of shares of Preferred Stock outstanding on such
record date plus the number of additional shares of Preferred Stock (and/or
equivalent preferred stock) so to be offered. In case such subscription price
may be paid by delivery of consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be as determined in good
faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive for
all purposes. Shares of Preferred Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record date is fixed,
and if such rights, options or warrants are not so issued, the Purchase Price
shall be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of Preferred Stock (including any such distribution
made in connection with a consolidation or merger involving the Company) of
evidences of indebtedness, equity securities other than Preferred Stock, assets
(other than a regular periodic cash dividend out of the
Ex. 4.1-14
<PAGE>
earnings or retained earnings of the Company) or rights, options or warrants
(excluding those referred to in Section 11(b)), the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the current market price (as determined pursuant to
Section 11(d)) per share of Preferred Stock on such record date, less the value
(as determined pursuant to Section 11(d)(iii)) of such evidences of
indebtedness, equity securities, assets, rights, options or warrants so to be
distributed with respect to one share of Preferred Stock and the denominator of
which shall be such current market price per share of Preferred Stock. Such
adjustment shall be made successively whenever such a record date is fixed, and
if such distribution is not so made, the Purchase Price shall be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(d)(i) For the purpose of any computation hereunder other than
computations made pursuant to Section 11(a)(iii) or 14, the "current market
price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock for the 30
consecutive Trading Days immediately prior to such date; for purposes of
computations made pursuant to Section 11(a)(iii), the "current market price" per
share of Common Stock on any date shall be deemed to be the average of the daily
closing prices per share of such Common Stock for the 10 consecutive Trading
Days immediately following such date; and for purposes of computations made
pursuant to Section 14, the "current market price" per share of Common Stock for
any Trading Day shall be deemed to be the closing price per share of Common
Stock for such Trading Day; provided that if the current market price per share
of the Common Stock is determined during a period following the announcement by
the issuer of such Common Stock of (A) a dividend or distribution on such Common
Stock payable in shares of such Common Stock or securities exercisable for or
convertible into shares of such Common Stock (other than the Rights), or (B) any
subdivision, combination or reclassification of such Common Stock, and prior to
the expiration of the requisite 30 Trading Day or 10 Trading Day period, as set
forth above, after the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or reclassification, then, and
in each such case, the "current market price" shall be properly adjusted to take
into account ex-dividend trading. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the shares of Common Stock are not listed or admitted to trading on the New
York Stock Exchange, on the principal national securities exchange on which the
shares of Common Stock are listed or admitted to trading or, if the shares of
Common Stock are not listed or admitted to trading on any
Ex. 4.1-15
<PAGE>
national securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ") or such other system then in use or, if on any such
date the shares of Common Stock are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Common Stock selected by the Board of
Directors of the Company. If on any such date no market maker is making a
market in the Common Stock, the fair value of such shares on such date as
determined in good faith by the Board of Directors of the Company shall be used.
If the Common Stock is not publicly held or not so listed or traded, the
"current market price" per share means the fair value per share as determined in
good faith by the Board of Directors of the Company, or, if at the time of such
determination there is an Acquiring Person, by a majority of the Continuing
Directors, or if there are no Continuing Directors, by a nationally recognized
investment banking firm selected by the Board of Directors, which determination
shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the "current
market price" per share of Preferred Stock shall be determined in the same
manner as set forth above for the Common Stock in Section 11(d)(i) (other than
the last sentence thereof). If the current market price per share of Preferred
Stock cannot be determined in such manner, the "current market price" per share
of Preferred Stock shall be conclusively deemed to be an amount equal to 100 (as
such number may be appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock occurring after
the date of this Agreement) multiplied by the current market price per share of
Common Stock (as determined pursuant to Section 11(d)(i) (other than the last
sentence thereof)). If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, the "current market price" per share of
the Preferred Stock shall be determined in the same manner as set forth in the
last sentence of Section 11(d)(i). For all purposes of this Agreement, the
"current market price" of one one-hundredth of a share of Preferred Stock shall
be equal to the "current market price" of one share of Preferred Stock divided
by 100.
(iii) For the purpose of any computation hereunder, the value of any
securities or assets other than Common Stock or Preferred Stock shall be the
fair value as determined in good faith by the Board of Directors of the Company,
or, if at the time of such determination there is an Acquiring Person, by a
majority of the Continuing Directors then in office, or, if there are no
Continuing Directors, by a nationally recognized investment banking firm
selected by the Board of Directors, which determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all purposes.
Ex. 4.1-16
<PAGE>
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided that any
adjustments which by reason of this Section 11(e) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the nearest cent or to
the nearest ten-thousandth of a share of Common Stock or other share or one-
millionth of a share of Preferred Stock, as the case may be.
(f) If at any time, as a result of an adjustment made pursuant to
Section 11(a)(ii) or Section 13(a), the holder of any Right shall be entitled to
receive upon exercise of such Right any shares of capital stock other than
Preferred Stock, thereafter the number of such other shares so receivable upon
exercise of any Right and the Purchase Price thereof shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Stock contained in
Section 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m), and the
provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Stock
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made hereunder shall evidence the right to purchase, at the Purchase
Price then in effect, the then applicable number of one one-hundredths of a
share of Preferred Stock and other capital stock of the Company issuable from
time to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Section 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-hundredths of a
share of Preferred Stock (calculated to the nearest one-millionth) obtained by
(i) multiplying (x) the number of one one-hundredths of a share for which a
Right was exercisable immediately prior to this adjustment by (y) the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in lieu of any adjustment in
the number of one one-hundredths of a share of Preferred Stock issuable upon the
exercise of a Right. Each of the Rights outstanding after such adjustment of
the number of Rights shall be exercisable for the number of one one-hundredths
of a share of Preferred Stock for which such Right was exercisable immediately
prior
Ex. 4.1-17
<PAGE>
to such adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the nearest
ten-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 14, the additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-hundredths of a share of Preferred Stock issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price per one one-hundredth of a share and
the number of shares which were expressed in the initial Right Certificates
issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the par value, if any, of the number of one one-
hundredths of a share of Preferred Stock issuable upon exercise of the Rights,
the Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable such number of one one-hundredths of a share of
Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the number of one one-hundredths of a share of Preferred Stock or other capital
stock of the Company, if any,
Ex. 4.1-18
<PAGE>
issuable upon such exercise over and above the number of one one-hundredths of a
share of Preferred Stock or other capital stock of the Company, if any, issuable
upon such exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it, in its sole discretion, shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Stock, issuance
wholly for cash of any Preferred Stock at less than the current market price,
issuance wholly for cash of Preferred Stock or securities which by their terms
are convertible into or exercisable for Preferred Stock, stock dividends or
issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Company to the holders of its Preferred Stock, shall not
be taxable to such stockholders.
(n) The Company covenants and agrees that it will not at any time
after the Distribution Date (i) consolidate, merge or otherwise combine with or
(ii) sell or otherwise transfer (and/or permit any of its Subsidiaries to sell
or otherwise transfer), in one transaction or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries, taken as a whole, to any other Person or
Persons if (x) at the time of or immediately after such consolidation, merger,
combination or sale there are any rights, warrants or other instruments or
securities outstanding or any agreements or arrangements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or immediately after
such consolidation, merger, combination or sale, the stockholders of a Person
who constitutes, or would constitute, the "Principal Party" for the purposes of
Section 13 shall have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that after the Distribution
Date, it will not, except as permitted by Sections 23, 24 and 27, take (or
permit any Subsidiary to take) any action if at the time such action is taken it
is reasonably foreseeable that such action will substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Notwithstanding anything in this Agreement to the contrary, if at
any time after the date hereof and prior to the Distribution Date the Company
shall (i) pay a dividend on the outstanding shares of Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock into a
larger number of shares or (iii) combine the outstanding
Ex. 4.1-19
<PAGE>
Common Stock into a smaller number of shares, the number of Rights associated
with each share of Common Stock then outstanding, or issued or delivered
thereafter as contemplated by Section 3(c), shall be proportionately adjusted so
that the number of Rights thereafter associated with each share of Common Stock
following any such event shall equal the result obtained by multiplying the
number of Rights associated with each share of Common Stock immediately prior to
such event by a fraction the numerator of which shall be the total number of
shares of Common Stock outstanding immediately prior to the occurrence of the
event and the denominator of which shall be the total number of shares of Common
Stock outstanding immediately following the occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Sections 11 and 13, the
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent and with each transfer agent for the Preferred Stock
and the Common Stock a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Right Certificate (or, if prior to the Distribution
Date, to each holder of a certificate representing shares of Common Stock) in
the manner set forth in Section 26. The Rights Agent shall be fully protected
in relying on any such certificate and on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. (a) If, following the Stock Acquisition Date, directly or
indirectly,
(x) the Company shall consolidate with, merge into, or otherwise
combine with, any other Person, and the Company shall not be the continuing
or surviving corporation of such consolidation, merger or combination,
(y) any Person shall merge into, or otherwise combine with, the
Company, and the Company shall be the continuing or surviving corporation
of such merger or combination and, in connection with such merger or
combination, all or part of the outstanding shares of Common Stock shall be
changed into or exchanged for other stock or securities of the Company or
any other Person, cash or any other property, or
(z) the Company and/or one or more of its Subsidiaries shall sell or
otherwise transfer, in one transaction or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries, taken as a whole, to any other
Person or Persons,
then, and in each such case, proper provision shall promptly be made so that
Ex. 4.1-20
<PAGE>
(1) each holder of a Right shall (except as otherwise provided herein,
including Section 7(d)) thereafter be entitled to receive, upon exercise thereof
at the Purchase Price in effect immediately prior to the first occurrence of any
Triggering Event, such number of duly authorized, validly issued, fully paid and
nonassessable shares of freely tradeable Common Stock of the Principal Party (as
hereinafter defined), not subject to any rights of call or first refusal, liens,
encumbrances or other claims, as shall be equal to the result obtained by
dividing
(A) the product obtained by multiplying the Purchase Price in effect
immediately prior to the first occurrence of any Triggering Event by the
number of one one-hundredths of a share of Preferred Stock for which a
Right was exercisable immediately prior to such first occurrence (such
product being thereafter referred to as the "Purchase Price" for each Right
and for all purposes of this Agreement) by
(B) 50% of the current market price (determined pursuant to Section
11(d)(i)) per share of the Common Stock of such Principal Party on the date
of consummation of such consolidation, merger, combination, sale or
transfer;
(2) the Principal Party shall thereafter be liable for, and shall
assume, by virtue of such consolidation, merger, combination, sale or transfer,
all the obligations and duties of the Company pursuant to this Agreement;
(3) the term "Company" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of Section
11 shall apply only to such Principal Party following the first occurrence of a
Section 13 Event; and
(4) such Principal Party shall take such steps (including the
authorization and reservation of a sufficient number of shares of its Common
Stock to permit exercise of all outstanding Rights in accordance with this
Section 13(a)) in connection with the consummation of any such transaction as
may be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to the shares of its
Common Stock thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" means
(i) in the case of any transaction described in Section 13(a)(x) or
(y), the Person that is the issuer of any securities into which shares of
Common Stock of the Company are converted in such merger, consolidation or
combination, and if no securities are so issued, the Person that is the
other party to such merger, consolidation or combination; and
Ex. 4.1-21
<PAGE>
(ii) in the case of any transaction described in Section 13(a)(z),
the Person that is the party receiving the greatest portion of the assets
or earning power transferred pursuant to such transaction or transactions;
provided that in any such case, (A) if the Common Stock of such Person is not at
such time and has not been continuously over the preceding 12-month period
registered under Section 12 of the Exchange Act, and such Person is a direct or
indirect Subsidiary of another Person the Common Stock of which is and has been
so registered, "Principal Party" shall refer to such other Person; and (B) in
case such Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market value.
(c) The Company shall not consummate any such consolidation, merger,
combination, sale or transfer unless the Principal Party shall have a sufficient
number of authorized shares of its Common Stock which are not outstanding or
otherwise reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in Section 13(a) and
(b) and providing that, as soon as practicable after the date of any
consolidation, merger, combination, sale or transfer mentioned in Section 13(a),
the Principal Party will
(i) prepare and file a registration statement under the Securities
Act with respect to the securities issuable upon exercise of the Rights,
and will use its best efforts to cause such registration statement (A) to
become effective as soon as practicable after such filing and (B) to remain
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date and
(ii) deliver to holders of the Rights historical financial statements
for the Principal Party and each of its Affiliates which comply in all
respects with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers,
consolidations, combinations, sales or other transfers. If any Section 13 Event
shall occur at any time after the occurrence of a Section 11(a)(ii) Event, the
Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
Section 14. Fractional Rights and Fractional Shares. (a) The
Company shall not be required to issue fractions of Rights, except prior to the
Distribution Date as
Ex. 4.1-22
<PAGE>
provided in Section 11(p), or to distribute Right Certificates which evidence
fractional Rights. In lieu of any such fractional Rights, the Company shall pay
to the registered holders of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable an amount in cash equal to the
same fraction of the current market price of a whole Right. For purposes of
this Section 14(a), the current market price of a whole Right shall be the
closing price of a Right for the Trading Day immediately prior to the date on
which such fractional Rights would otherwise have been issuable. The closing
price of a Right for any day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Rights are not
listed or admitted to trading on the New York Stock Exchange, on the principal
national securities exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price, or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
NASDAQ or such other system then in use or, if on any such date the Rights are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date no such
market maker is making a market in the Rights, the current market price of the
Rights on such date shall be as determined in good faith by the Board of
Directors of the Company.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are multiples of one one-hundredth
of a share of Preferred Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Preferred Stock (other than
fractions which are multiples of one one-hundredth of a share of Preferred
Stock). In lieu of any such fractional shares of Preferred Stock, the Company
shall pay to the registered holders of Right Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market price of one one-hundredth of a share of
Preferred Stock. For purposes of this Section 14(b), the current market price
of one one-hundredth of a share of Preferred Stock shall be one one-hundredth of
the closing price of a share of Preferred Stock (as determined pursuant to
Section 11(d)) for the Trading Day immediately prior to the date of such
exercise.
(c) Following the occurrence of any Triggering Event or upon any
exchange pursuant to Section 24, the Company shall not be required to issue
fractions of shares of Common Stock upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Common Stock. In lieu of
fractional shares of Common Stock, the Company shall pay to the registered
holders of Right Certificates at
Ex. 4.1-23
<PAGE>
the time such Rights are exercised or exchanged as herein provided an amount in
cash equal to the same fraction of the current market price of a share of Common
Stock. For purposes of this Section 14(c), the current market price of a share
of Common Stock shall be the closing price of a share of Common Stock (as
determined pursuant to Section 11(d)(i)) for the Trading Day immediately prior
to the date of such exercise or exchange.
(d) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of
this Agreement are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
certificates representing Common Stock); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of any certificate representing
Common Stock), without the consent of the Rights Agent or of the holder of any
other Right Certificate (or, prior to the Distribution Date, of any certificate
representing Common Stock), may, in his own behalf and for his own benefit,
enforce, and may institute and maintain any suit, action or proceeding against
the Company to enforce, or otherwise act in respect of, his right to exercise
the Rights evidenced by such Right Certificate in the manner provided in such
Right Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of the obligations of, any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;
(c) subject to Sections 6 and 7, the Company and the Rights Agent may
deem and treat the Person in whose name a Right Certificate (or, prior to the
Distribution Date, a certificate representing shares of Common Stock) is
registered as the absolute owner thereof and of the Rights evidenced
Ex. 4.1-24
<PAGE>
thereby (notwithstanding any notations of ownership or writing on the Right
Certificate or the certificate representing shares of Common Stock made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(d), shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligation; provided that the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the shares of capital stock
which may at any time be issuable on the exercise of the Rights represented
thereby, nor shall anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate, as such, any of
the rights of a stockholder of the Company or any right to vote for the election
of directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting stockholders (except as provided
in Section 25), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by such Right Certificate shall have been
exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. (a) The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and disbursements and other disbursements incurred in
the execution or administration of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss, liability, or
expense, incurred without negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the administration of this Agreement or the exercise or
performance of its duties hereunder, including the costs and expenses of
defending against any claim of liability.
Ex. 4.1-25
<PAGE>
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with the administration of this Agreement or the exercise or performance of its
duties hereunder in reliance upon any Right Certificate or certificate for
Common Stock or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice,
instruction, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent. (a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust or stock transfer business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21. In
case at the time such successor Rights Agent shall succeed to the agency created
by this Agreement, any of the Right Certificates shall have been countersigned
but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
Ex. 4.1-26
<PAGE>
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any "Acquiring Person" and the
determination of "current market price") be proved or established by the Company
prior to taking, suffering or omitting to take any action hereunder, such fact
or matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by the Chairman of the Board, the President or any Vice
President and by the Treasurer or any Assistant Treasurer or the Secretary or
any Assistant Secretary of the Company and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent for any action
taken, suffered or omitted in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 7(d)) or any adjustment in the terms of
the Rights (including the manner, method or amount thereof) provided for in
Sections 3, 11, 13, 23 or 24, or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such adjustment); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any shares of Common Stock or
Preferred Stock to be issued pursuant to this Agreement or any Right Certificate
or as to whether any shares of Common Stock or Preferred Stock will, when
issued, be duly authorized, validly issued, fully paid and nonassessable.
Ex. 4.1-27
<PAGE>
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President or any Vice President or the Secretary or
any Assistant Secretary or the Treasurer or any Assistant Treasurer of the
Company, and to apply to such officers for advice or instructions in connection
with its duties, and it shall not be liable for any action taken, suffered or
omitted to be taken by it in good faith in accordance with instructions of any
such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company or to any holders of Rights resulting from
any such act, default, neglect or misconduct, provided that reasonable care was
exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the cases may be, has either not
been completed or indicates an affirmative response to clause 1 or 2 thereof,
the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be
Ex. 4.1-28
<PAGE>
discharged from its duties under this Agreement upon 30 days' notice in writing
mailed to the Company and to each transfer agent of the Common Stock and
Preferred Stock by registered or certified mail, and, subsequent to the
Distribution Date, to the holders of the Right Certificates by first-class mail.
The Company may remove the Rights Agent or any successor Rights Agent upon 30
days' notice in writing, mailed to the Rights Agent or successor Rights Agent,
as the case may be, and to each transfer agent of the Common Stock and Preferred
Stock by registered or certified mail, and, subsequent to the Distribution Date,
to the holders of the Right Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 30 days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the registered holder of any Right Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or
by such a court, shall be (a) a corporation organized and doing business under
the laws of the United States or of any state of the United States, in good
standing, having a principal office in the State of New York, which is
authorized under such laws to exercise stock transfer or corporate trust powers
and is subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000 or (b) an Affiliate of a corporation described
in clause (a) of this sentence. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and the Preferred Stock, and, subsequent to the Distribution
Date, mail a notice thereof in writing to the registered holders of the Right
Certificates. Failure to give any notice provided for in this Section 21, or
any defect therein, shall not affect the legality or validity of the resignation
or removal of the Rights Agent or the appointment of the successor Rights Agent,
as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares of
stock issuable upon exercise of the
Ex. 4.1-29
<PAGE>
Rights made in accordance with the provisions of this Agreement.
Section 23. Redemption. (a) The Board of Directors of the Company
may, at its option, at any time prior to the earlier of (i) the close of
business on the tenth day after the Stock Acquisition Date (or such later date
as a majority of the Continuing Directors may designate prior to such time as
the Rights are no longer redeemable) and (ii) the Final Expiration Date, redeem
all but not less than all the then outstanding Rights at a redemption price of
$.01 per Right, as such amount may be appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the "Redemption
Price"); provided that after any Person has become an Acquiring Person, any
redemption of the Rights shall be effective only if there are Continuing
Directors then in office, and such redemption shall have been approved by a
majority of such Continuing Directors. Notwithstanding anything in this
Agreement to the contrary, the Rights shall not be exercisable after the first
occurrence of a Section 11(a)(ii) Event until such time as the Company's right
of redemption hereunder has expired.
(b) Immediately upon the action of the Board of Directors of the
Company electing to redeem the Rights and without any further action and without
any notice, the right to exercise the Rights will terminate and thereafter the
only right of the holders of Rights shall be to receive the Redemption Price for
each Right so held. The Company shall promptly thereafter give notice of such
redemption to the Rights Agent and the holders of the Rights in the manner set
forth in Section 26; provided that the failure to give, or any defect in, such
notice shall not affect the validity of such redemption. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the
method by which the payment of the Redemption Price will be made. Neither the
Company nor any of its Affiliates or Associates may redeem, acquire or purchase
for value any Rights at any time in any manner other than that specifically set
forth in Section 23 or 24, and other than in connection with the purchase,
acquisition or redemption of shares of Common Stock prior to the Distribution
Date.
Section 24. Exchange. (a) The Board of Directors of the Company
may, at its option, at any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become void pursuant to Section 7(d)) for shares of
Common Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such exchange
at any time after any Person (other than the Company, any of its Subsidiaries,
any
Ex. 4.1-30
<PAGE>
employee benefit plan of the Company or any of its Subsidiaries or any Person
organized, appointed or established by the Company or any of its Subsidiaries
for or pursuant to the terms of any such plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
shares of Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company electing to exchange any Rights pursuant to Section 24(a) and without
any further action and without any notice, the right to exercise such Rights
will terminate and thereafter the only right of a holder of such Rights shall be
to receive that number of shares of Common Stock equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio. The Company shall
promptly thereafter give notice of such exchange to the Rights Agent and the
holders of the Rights to be exchanged in the manner set forth in Section 26;
provided that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the
exchange of the shares of Common Stock for Rights will be effected and, in the
event of any partial exchange, the number of Rights which will be exchanged.
Any partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become void pursuant to Section 7(d)) held by each
holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute common stock equivalents (as defined in Section
11(a)(iii)) for shares of Common Stock exchangeable for Rights, at the initial
rate of one common stock equivalent for each share of Common Stock, as
appropriately adjusted to reflect adjustments in dividend, liquidation and
voting rights of common stock equivalents pursuant to the terms thereof, so that
each common stock equivalent delivered in lieu of each share of Common Stock
shall have essentially the same dividend, liquidation and voting rights as one
share of Common Stock.
Section 25. Notice of Proposed Actions. (a) In case the Company
shall propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the Company), or
(ii) to offer to the holders of its Preferred Stock rights or warrants to
subscribe for or to purchase any additional shares of Preferred Stock or shares
of stock of any class or any other securities, rights or options, or (iii) to
effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision or combination of outstanding
shares of Preferred Stock) or (iv) to effect any consolidation or merger with
any other Person, or to effect and/or to permit one or more of its Subsidiaries
to effect any sale or other transfer,
Ex. 4.1-31
<PAGE>
in one transaction or a series of related transactions, of assets or earning
power aggregating more than 50% of the assets or earning power of the Company
and its Subsidiaries, taken as a whole, to any other Person or Persons, or (v)
to effect the liquidation, dissolution or winding up of the Company, then, in
each such case, the Company shall give to each holder of a Right, to the extent
feasible and in accordance with Section 26, a notice of such proposed action,
which shall specify the record date for the purposes of any such dividend,
distribution or offering of rights or warrants, or the date on which any such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up is to take place and the date of participation therein
by the holders of Preferred Stock, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by clause (i) or (ii)
above at least 20 days prior to the record date for determining holders of the
Preferred Stock entitled to participate in such dividend, distribution or
offering, and in the case of any such other action, at least 20 days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of Preferred Stock, whichever shall be the earlier. The
failure to give notice required by this Section or any defect therein shall not
affect the legality or validity of the action taken by the Company or the vote
upon any such action.
(b) Notwithstanding anything in this Agreement to the contrary, prior
to the Distribution Date a filing by the Company with the Securities and
Exchange Commission shall constitute sufficient notice to the holders of
securities of the Company, including the Rights, for purposes of this Agreement
and no other notice need be given to such holders.
(c) If a Triggering Event shall occur, then, in any such case, (1)
the Company shall as soon as practicable thereafter give to each holder of a
Right, in accordance with Section 26, a notice of the occurrence of such event,
which shall specify the event and the consequences of the event to holders of
Rights under Section 11(a)(ii) or 13, as the case may be, and (2) all references
in Section 25(a) to Preferred Stock shall be deemed thereafter to refer to
Common Stock or other capital stock, as the case may be.
Section 26. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right to or on
the Company shall be sufficiently given or made if sent by first-class mail
(postage prepaid) to the address of the Company indicated on the signature page
hereof or such other address as the Company shall specify in writing to the
Rights Agent. Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Right to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail (postage prepaid) to the address of the Rights Agent
indicated on the signature page hereof or such other address as the Rights Agent
shall specify in writing to the Company. Notices or demands authorized by this
Agreement to be given or made by
Ex. 4.1-32
<PAGE>
the Company or the Rights Agent to the holder of any Right Certificate (or,
prior to the Distribution Date, to the holder of any certificate representing
shares of Common Stock) shall be sufficiently given or made if sent by first-
class mail (postage prepaid) to the address of such holder shown on the registry
books of the Company.
Section 27. Supplements and Amendments. Prior to the Distribution
Date, the Company and the Rights Agent shall, if the Company so directs,
supplement or amend any provision of this Agreement without the approval of any
holders of certificates representing shares of Common Stock. From and after the
Distribution Date, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend this Agreement without the approval of any holders
of Right Certificates in order (a) to cure any ambiguity, (b) to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein or (c) to change or supplement the provisions
hereof in any manner which the Company may deem necessary or desirable and which
shall not adversely affect the interests of the holders of Rights (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person).
Notwithstanding the foregoing, after any Person has become an Acquiring Person,
any supplement or amendment shall be effective only if there are Continuing
Directors then in office, and such supplement or amendment shall have been
approved by a majority of such Continuing Directors. Upon the delivery of a
certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this
Section, the Rights Agent shall execute such supplement or amendment. Prior to
the Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of Directors,
etc. For all purposes of this Agreement, any calculation of the number of
shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) under the Exchange Act
as in effect on the date of this Agreement. The Board of Directors of the
Company (with, where specifically provided for herein, the concurrence of the
Continuing Directors) shall have the exclusive power and authority to administer
this Agreement and to exercise all rights and powers specifically granted to the
Board or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including the right and power to (i) interpret
the provisions of this Agreement and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including a
Ex. 4.1-33
<PAGE>
determination to redeem or exchange or not to redeem or exchange the Rights or
to amend the Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board (or, where
specifically provided for herein, by the Continuing Directors) in good faith
shall (x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties, and (y) not subject the Board of
Directors of the Company or the Continuing Directors to any liability to the
holders of the Rights.
Section 30. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the certificates representing the shares of Common Stock) any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the certificates representing the shares of Common Stock).
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided that, notwithstanding anything in this Agreement to the contrary, if
any such term, provision, covenant or restriction is held by such court or
authority to be invalid, void or unenforceable and the Board of Directors of the
Company determines in its good faith judgment that severing the invalid language
from this Agreement would adversely affect the purpose or effect of this
Agreement, the right of redemption set forth in Section 23 hereof shall be
reinstated and shall not expire until the close of business on the tenth day
following the date of such determination by the Board of Directors.
Section 32. Governing Law. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State, except that the rights and
obligations of the Rights Agent shall be governed by the law of the State of New
York.
Section 33. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
one and the same instrument.
Ex. 4.1-34
<PAGE>
Section 34. Descriptive Headings. The captions herein are included
for convenience of reference only, do not constitute a part of this Agreement
and shall be ignored in the construction and interpretation hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
MURPHY OIL CORPORATION
By: /s/ Clefton Vaughan
-------------------
Clefton Vaughan
Vice President
200 Peach Street
El Dorado, Arkansas 71730
Attention: W. Bayless Rowe
HARRIS TRUST COMPANY
OF NEW YORK
By: /s/ Vincent G. Marrone
----------------------
Vincent G. Marrone
Assistant Vice President
77 Water Street
New York, New York 10005
Attention: Vincent Marrone
Ex. 4.1-35
<PAGE>
Exhibit A
---------
FORM OF
CERTIFICATE OF DESIGNATION
OF
SERIES A PARTICIPATING CUMULATIVE
PREFERRED STOCK
OF
MURPHY OIL CORPORATION
Pursuant to Section 151 of the
General Corporation Law of the
State of Delaware
We, R. Madison Murphy, Vice President, Planning, and W. Bayless Rowe,
Secretary, of Murphy Oil Corporation, a corporation organized and existing under
the General Corporation Law of the State of Delaware ("Delaware Law"), in
accordance with the provisions thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation of the Corporation, the Board of Directors on
December 6, 1989, adopted the following resolution creating a series of
Preferred Stock in the amount and having the designation, voting powers,
preferences and relative, participating, optional and other special rights and
qualifications, limitations and restrictions thereof as follows:
Section 1. Designation and Number of Shares. The shares of such series
shall be designated as "Series A Participating Cumulative Preferred Stock" (the
"Series A Preferred Stock"), and the number of shares constituting such series
shall be 350,000.
Section 2. Dividends and Distributions.
(A) The holders of shares of Series A Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable on March 1, June 1,
September 1 and December 1 of each year (each such date being referred to herein
as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of any share or fraction of a
share of Series A Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $1.00 and (b) subject to the provision
for adjustment
Ex. 4.1-A1
<PAGE>
hereinafter set forth, 100 times the aggregate per share amount of all cash
dividends or other distributions and 100 times the aggregate per share amount of
all non-cash dividends or other distributions (other than (i) a dividend payable
in shares of Common Stock (as hereinafter defined) or (ii) a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise)), declared
on the Common Stock, par value $1.00 per share, of the Corporation (the "Common
Stock") since the immediately preceding Quarterly Dividend Payment Date, or,
with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Preferred Stock. If
the Corporation shall at any time after December 6, 1989 (the "Rights
Declaration Date") pay any dividend on Common Stock payable in shares of Common
Stock or effect a subdivision or combination of the outstanding shares of Common
Stock (by reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then in each such case the amount to which holders of
shares of Series A Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) The Corporation shall declare a dividend or distribution on the Series
A Preferred Stock as provided in paragraph (A) above immediately after it
declares a dividend or distribution on the Common Stock (other than as described
in clause (i) and (ii) of the first sentence of paragraph (A)); provided that if
no dividend or distribution shall have been declared on the Common Stock during
the period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date (or, with respect to the first Quarterly
Dividend Payment Date, the period between the first issuance of any share or
fraction of a share of Series A Preferred Stock and such first Quarterly
Dividend Payment Date), a dividend of $1.00 per share on the Series A Preferred
Stock shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Preferred Stock, unless
the date of issue of such shares is on or before the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue and be cumulative from the date of issue of such shares, or
unless the date of issue is a date after the record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive a quarterly
dividend and on or before such Quarterly Dividend Payment Date, in which case
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on shares
Ex. 4.1-A2
<PAGE>
of Series A Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of holders of
shares of Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall not be more than 60 days
prior to the date fixed for the payment thereof.
Section 3. Voting Rights. In addition to any other voting rights required
by law, the holders of shares of Series A Preferred Stock shall have the
following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Preferred Stock shall entitle the holder thereof to 100 votes
on all matters submitted to a vote of stockholders of the Corporation. If the
Corporation shall at any time after the Rights Declaration Date pay any dividend
on Common Stock payable in shares of Common Stock or effect a subdivision or
combination of the outstanding shares of Common Stock (by reclassification or
otherwise) into a greater or lesser number of shares of Common Stock, then in
each such case the number of votes per share to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of shares
of Series A Preferred Stock and the holders of shares of Common Stock shall vote
together as a single class on all matters submitted to a vote of stockholders of
the Corporation.
(C) (i) If at any time dividends on any Series A Preferred Stock shall be
in arrears in an amount equal to six quarterly dividends thereon, the occurrence
of such contingency shall mark the beginning of a period (herein called a
"default period") which shall extend until such time when all accrued and unpaid
dividends for all previous quarterly dividend periods and for the current
quarterly dividend period on all shares of Series A Preferred Stock then
outstanding shall have been declared and paid or set apart for payment. During
each default period, all holders of Preferred Stock and any other series of
Preferred Stock then entitled as a class to elect directors, voting together as
a single class, irrespective of series, shall have the right to elect two
Directors.
(ii) During any default period, such voting right of the holders of Series
A Preferred Stock may be exercised initially at a special meeting called
pursuant to
Ex. 4.1-A3
<PAGE>
subparagraph (iii) of this Section 3(C) or at any annual meeting of
stockholders, and thereafter at annual meetings of stockholders, provided that
neither such voting right nor the right of the holders of any other series of
Preferred Stock, if any, to increase, in certain cases, the authorized number of
Directors shall be exercised unless the holders of 10% in number of shares of
Preferred Stock outstanding shall be present in person or by proxy. The absence
of a quorum of holders of Common Stock shall not affect the exercise by holders
of Preferred Stock of such voting right. At any meeting at which holders of
Preferred Stock shall exercise such voting right initially during an existing
default period, they shall have the right, voting as a class, to elect Directors
to fill such vacancies, if any, in the Board of Directors as may then exist up
to two Directors or, if such right is exercised at an annual meeting, to elect
two Directors. If the number which may be so elected at any special meeting
does not amount to the required number, the holders of the Preferred Stock shall
have the right to make such increase in the number of Directors as shall be
necessary to permit the election by them of the required number. After the
holders of the Preferred Stock shall have exercised their right to elect
Directors in any default period and during the continuance of such period, the
number of Directors shall not be increased or decreased except by vote of the
holders of Preferred Stock as herein provided or pursuant to the rights of any
equity securities ranking senior to or "pari passu" with the Series A Preferred
Stock.
(iii) Unless the holders of Preferred Stock shall, during an existing
default period, have previously exercised their right to elect Directors, the
Board of Directors may order, or any stockholder or stockholders owning in the
aggregate not less than 10% of the total number of shares of Preferred Stock
outstanding, irrespective of series, may request, the calling of special meeting
of holders of Preferred Stock, which meeting shall thereupon be called by the
President, a Vice President or the Secretary of the Corporation. Notice of such
meeting and of any annual meeting at which holders of Preferred Stock are
entitled to vote pursuant to this paragraph (C)(iii) shall be given to each
holder of record of Preferred Stock by mailing a copy of such notice to him at
his last address as the same appears on the books of the Corporation. Such
meeting shall be called for a time not earlier than 20 days and not later than
60 days after such order or request or in default of the calling of such meeting
within 60 days after such order or request, such meeting may be called on
similar notice by any stockholder or stockholders owning in the aggregate not
less than 10% of the total number of shares of Preferred Stock outstanding,
irrespective of series. Notwithstanding the provisions of this paragraph
(C)(iii), no such special meeting shall be called during the period within 60
days immediately preceding the date fixed for the next annual meeting of
stockholders.
(iv) In any default period, the holders of Common Stock, and other
classes of stock of the Corporation if
Ex. 4.1-A4
<PAGE>
applicable, shall continue to be entitled to elect the whole number of Directors
until the holders of Preferred Stock shall have exercised their right to elect
two Directors voting as a class, after the exercise of which right (x) the
Directors so elected by the holders of Preferred Stock shall continue in office
until their successors shall have been elected by such holders or until the
expiration of the default period, and (y) any vacancy in the Board of Directors
may (except as provided in paragraph (C)(ii) of this Section 3) be filled by
vote of a majority of the remaining Directors theretofore elected by the holders
of the class of stock which elected the Director whose office shall have become
vacant. References in this paragraph (C) to Directors elected by the holders of
a particular class of stock shall include Directors elected by such Directors to
fill vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the right of
the holders of Preferred Stock as a class to elect Directors shall cease, (y)
the term of any Directors elected by the holders of Preferred Stock as a class
shall terminate, and (z) the number of Directors shall be such number as may be
provided for in the certificate of incorporation or bylaws irrespective of any
increase made pursuant to the provisions of paragraph (C)(ii) of this Section 3
(such number being subject, however, to change thereafter in any manner provided
by law or in the certificate of incorporation or bylaws). Any vacancies in the
Board of Directors effected by the provisions of clauses (y) and (z) in the
preceding sentence may be filled by a majority of the remaining Directors.
(D) The Certificate of Incorporation of the Corporation shall not be
amended in any manner (whether by merger or otherwise) so as to adversely affect
the powers, preferences or special rights of the Series A Preferred Stock
without the affirmative vote of the holders of a majority of the outstanding
shares of Series A Preferred Stock, voting separately as a class.
(E) Except as otherwise provided herein, holders of Series A Preferred
Stock shall have no special voting rights, and their consent shall not be
required for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on outstanding shares of Series A Preferred Stock shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends on, or make any other distributions on,
any shares of stock ranking junior (either as to dividends or upon
liquidation,
Ex. 4.1-A5
<PAGE>
dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on, or make any other distributions on,
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
other parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are
then entitled;
(iii) redeem, purchase or otherwise acquire for value any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock; provided that
the Corporation may at any time redeem, purchase or otherwise acquire
shares of any such junior stock in exchange for shares of stock of the
Corporation ranking junior (as to dividends and upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or
(iv) redeem, purchase or otherwise acquire for value any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of Series A Preferred Stock and all such other
parity stock upon such terms as the Board of Directors, after consideration
of the respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective
series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for value any shares of stock of
the Corporation unless the Corporation could, under paragraph (A) of this
Section 4, purchase or otherwise acquire such shares at such time and in such
manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
redeemed, purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock without designation as to series and may be
reissued as part of a new series of Preferred Stock to be created by resolution
or resolutions of the Board of Directors as permitted by the Certificate of
Incorporation or as otherwise permitted under Delaware Law.
Ex. 4.1-A6
<PAGE>
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $1.00 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment; provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of Common
Stock, or (2) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except distributions made ratably on the Series A Preferred
Stock and all such other parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. If the Corporation shall at any time after the
Rights Declaration Date pay any dividend on Common Stock payable in shares of
Common Stock or effect a subdivision or combination of the outstanding shares of
Common Stock (by reclassification or otherwise) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event under the proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. If the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash or any other property, then in any such case the shares of
Series A Preferred Stock shall at the same time be similarly exchanged for or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash or any other property, as the case may be, into which or for
which each share of Common Stock is changed or exchanged. If the Corporation
shall at any time after the Rights Declaration Date pay any dividend on Common
Stock payable in shares of Common Stock or effect a subdivision or combination
of the outstanding shares of Common Stock (by reclassification or otherwise)
into a greater or lesser number of shares of Common Stock, then in each such
case the amount set forth in the preceding sentence with respect to the exchange
or change of shares of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately
Ex. 4.1-A7
<PAGE>
after such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
Section 8. No Redemption. The Series A Preferred Stock shall not be
redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank junior (as
to dividends and upon liquidation, dissolution and winding up) to all other
series of the Corporation's preferred stock except any series that specifically
provides that such series shall rank junior to the Series A Preferred Stock.
Section 10. Fractional Shares. Series A Preferred Stock may be
issued in fractions of a share which shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
this __ day of December, 1989.
_________________________
R. Madison Murphy
Vice President
Attest:
______________________
W. Bayless Rowe
Secretary
Ex. 4.1-A8
<PAGE>
Exhibit B
---------
[Form of Right Certificate]
No. R- ____________Rights
NOT EXERCISABLE AFTER THE EARLIER OF DECEMBER 6, 1999 AND THE DATE ON WHICH THE
RIGHTS EVIDENCED HEREBY ARE REDEEMED OR EXCHANGED BY THE COMPANY AS SET FORTH IN
THE RIGHTS AGREEMENT. AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO,
OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY
SUBSEQUENT HOLDER, MAY BE NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHT
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). THIS RIGHT CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BE OR MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(d) OF THE RIGHTS AGREEMENT.]/1/
RIGHT CERTIFICATE
MURPHY OIL CORPORATION
This Right Certificate certifies that ______________________, or
registered assigns, is the registered holder of the number of Rights set forth
above, each of which entitles the holder (upon the terms and subject to the
conditions set forth in the Rights Agreement dated as of December 6, 1989 (the
"Rights Agreement") between Murphy Oil Corporation, a Delaware corporation (the
"Company"), and Harris Trust Company of New York (the "Rights Agent")) to
purchase from the Company, at any time after the Distribution Date and prior to
the Expiration
--------------------
/1/If applicable, insert this portion of the legend and delete the preceding
sentence.
Ex. 4.1-B1
<PAGE>
Date, ___ one-hundredth[s] of a fully paid, nonassessable share of Series A
Participating Cumulative Preferred Stock (the "Preferred Stock") of the Company
at a purchase price of $130.00 per one one-hundredth of a share (the "Purchase
Price"), payable in lawful money of the United States of America, upon surrender
of this Right Certificate, with the form of election to purchase and related
certificate duly executed, and payment of the Purchase Price at an office of the
Rights Agent designated for such purpose.
Terms used herein and not otherwise defined herein have the meanings
assigned to them in the Rights Agreement.
The number of Rights evidenced by this Right Certificate (and the
number and kind of shares issuable upon exercise of each Right) and the Purchase
Price set forth above are as of December 6, 1989, and may have been or in the
future be adjusted as a result of the occurrence of certain events, as more
fully provided in the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event, if the Rights
evidenced by this Right Certificate are beneficially owned by (a) an Acquiring
Person or an Associate or Affiliate of an Acquiring Person, (b) a transferee of
an Acquiring Person (or any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (c) under certain
circumstances specified in the Rights Agreement, a transferee of an Acquiring
Person (or any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such, such Rights shall become
null and void, and no holder hereof shall have any right with respect to such
Rights from and after the occurrence of such Section 11(a)(ii) Event.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Upon surrender at the principal office or offices of the Rights Agent
designated for such purpose and subject to the terms and conditions set forth in
the Rights Agreement, any Rights Certificate or Certificates may be transferred
or exchanged for another Rights Certificate or Certificates evidencing a like
number of Rights as the Rights Certificate or Certificates surrendered.
Ex. 4.1-B2
<PAGE>
Subject to the provisions of the Rights Agreement, the Board of
Directors of the Company may, at its option,
(a) at any time prior to the earlier of (i) the close of business on
the tenth day after the Stock Acquisition Date (or such later date as a
majority of the Continuing Directors may designate prior to such time as
the Rights are no longer redeemable) and (ii) the Final Expiration Date,
redeem all but not less than all the then outstanding Rights at a
redemption price of $.01 per Right; or
(b) at any time after any Person becomes an Acquiring Person (but
before such Person becomes the Beneficial Owner of 50% or more of the
shares of Common Stock then outstanding), exchange all or part of the then
outstanding Rights (other than Rights held by the Acquiring Person and
certain related Persons) for shares of Common Stock at an exchange ratio of
one share of Common Stock per Right. If the Rights shall be exchanged in
part, the holder of this Right Certificate shall be entitled to receive
upon surrender hereof another Right Certificate or Certificates for the
number of whole Rights not exchanged.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
multiples of one one-hundredth of a share of Preferred Stock, which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement. If
this Right Certificate shall be exercised in part, the holder shall be entitled
to receive upon surrender hereof another Right Certificate or Certificates for
the number of whole Rights not exercised.
No holder of this Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the shares of capital stock
which may at any time be issuable on the exercise hereof, nor shall anything
contained in the Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or, to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised as provided in the
Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
Ex. 4.1-B3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal by its authorized officers.
Dated as of ________________, 19__
MURPHY OIL CORPORATION
By______________________
Title:
[SEAL]
Attest:
______________________
Secretary
Countersigned:
HARRIS TRUST COMPANY
OF NEW YORK,
as Rights Agent
By____________________
Authorized Signature
Ex. 4.1-B4
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed if the registered holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED _____________________________________________________________
hereby sells, assigns and transfers unto _______________________________________
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ______________________ Attorney,
to transfer the within Right Certificate on the books of the within-named
Company, with full power of substitution.
Dated: _____________________, 19__
___________________________
Signature
Signature Guaranteed:
Ex. 4.1-B5
<PAGE>
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate ___are ___are not
being assigned by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
it ___did ___did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: __________, 19 __ ________________________
Signature
__________
The signatures to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
__________
Ex. 4.1-B6
<PAGE>
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if the registered holder desires to exercise Rights represented
by the Right Certificate.)
To: Murphy Oil Corporation
The undersigned hereby irrevocably elects to exercise ____________
Rights represented by this Right Certificate to purchase shares of Preferred
Stock issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such securities be issued in the name
of and delivered to:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance of such Rights shall
be registered in the name of and delivered to:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: ________________, 19__
___________________________
Signature
Signature Guaranteed:
Ex. 4.1-B7
<PAGE>
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate ___are ___are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
it ___did ___did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: __________, 19 __ ________________________
Signature
__________
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever.
__________
Ex. 4.1-B8
<PAGE>
Exhibit C
---------
MURPHY OIL CORPORATION
STOCKHOLDER RIGHTS PLAN
Summary of Terms
Form of Security: The Board of Directors has declared a dividend of one
preferred stock purchase right for each share of the
Company's Common Stock outstanding at the close of
business on December 20, 1989 (each a "Right" and
collectively, the "Rights").
Transfer: Prior to the Distribution Date,/1/ the Rights will be
evidenced by the certificates for and will trade with
the Common Stock, and the registered holders of the
Common Stock will be deemed to be the registered
holders of the Rights.
After the Distribution Date, the Rights Agent will mail
separate certificates evidencing the Rights to each
record holder of the Common Stock as of the close of
business on the Distribution Date, and thereafter the
Rights will be transferable separately from the Common
Stock.
Exercise: Prior to the Distribution Date, the
--------------------
/1/Distribution Date means the close of business on the 10th day after
public announcement that any person or group (an "Acquiring Person") has become
the beneficial owner of 15% or more of the Company's Common Stock subject to
extension by a majority of the directors not affiliated with the Acquiring
Person.
EX. 4.1-C1
<PAGE>
Rights will not be exercisable.
After the Distribution Date, each Right will be
exercisable to purchase, for $130.00 (the "Exercise
Price"), one one-hundredth of a share of Series A
Participating Cumulative Preferred Stock, par value
$100.00 per share, of the Company.
Flip-In: If any person or group (an "Acquiring Person")
becomes the beneficial owner of 15% or more of the
Company's Common Stock, then each Right (other than
Rights owned by the Acquiring Person and certain
related persons) will entitle the holder to purchase,
for the Exercise Price, a number of shares of the
Company's Common Stock having a market value of twice
the Exercise Price.
Flip-Over: If, after any person has become an Acquiring Person,
(1) the Company is involved in a merger or other
business combination in which the Company is not the
surviving corporation or its Common Stock is changed
into or exchanged for other securities or assets or (2)
the Company and/or one or more of its subsidiaries sell
or otherwise transfer assets or earning power
aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries, taken as a
whole, then each Right (other than Rights owned by the
Acquiring Person and certain related persons) will
entitle the holder to purchase, for the Exercise Price,
a number of shares of common stock of the other party
to such business combination or sale (or in certain
circumstances, an affiliate) having a market value of
twice the Exercise Price.
Redemption: The Board of Directors may redeem all of the Rights at
a price of $.01 per Right at any time prior to the
close of business on the 10th day after public
announcement that any person has become an Acquiring
Person (subject to extension by a majority of the
directors not
EX. 4.1-C2
<PAGE>
affiliated with the Acquiring Person).
After any person has become an Acquiring Person, the
Rights may be redeemed only with the approval of a
majority of the directors not affiliated with the
Acquiring Person.
Exchange: The Board of Directors may, at any time after any
person or group has become the beneficial owner of 15%
or more but less than 50% of the Company's Common
Stock, exchange all or part of the Rights (other than
Rights owned by the Acquiring Person and certain
related persons) for shares of Common Stock at an
exchange ratio of one share of Common Stock per Right.
Expiration: The Rights will expire on December 6, 1999, unless
earlier redeemed or exchanged.
Amendments: Prior to the Distribution Date, the Rights Agreement
may be amended in any respect.
After the Distribution Date, the Rights Agreement may
be amended in any respect that does not adversely
affect the Rights holders (other than any Acquiring
Person and certain related persons); provided that the
Rights Agreement may be amended to extend the
redemption period at any time prior to the expiration
of such period.
After any person has become an Acquiring Person, the
Rights Agreement may be amended only with the approval
of a majority of the directors not affiliated with the
Acquiring Person.
Voting Rights: The Rights have no voting power.
Antidilution The Rights Agreement includes antidilution provisions
Provisions: designed to prevent efforts to diminish the efficacy of
the Rights.
EX. 4.1-C3
<PAGE>
Taxes: Distribution of the Rights is designed to be tax-free
to the Company and the stockholders, although income
may be recognized by the holders of the Rights upon the
occurrence of certain subsequent events.
_______________
A copy of the Rights Agreement has been filed with the Securities and Exchange
Commission as an Exhibit to a Registration Statement on Form 8-A. A copy of the
Rights Agreement is available free of charge from the Company. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement.
EX. 4.1-C4
<PAGE>
EXHIBIT 10.2
MURPHY OIL CORPORATION
1987 MANAGEMENT INCENTIVE PLAN
(As Amended February 7, 1990
Retroactive to February 3, 1988)
Ex. 10.2-0
<PAGE>
EXHIBIT 10.2
MURPHY OIL CORPORATION
1987 MANAGEMENT INCENTIVE PLAN
SECTION I. DEFINITIONS
Unless the context otherwise indicates, the following definitions
shall be applicable for the purpose of this Management Incentive Plan:
"Company" means Murphy Oil Corporation, a Delaware corporation.
"Board of Directors" means the Board of Directors of the Company.
"Committee" means the Executive Compensation Committee appointed
by the Board of Directors and composed of not less than three directors of
the Company. A majority of the members of the Committee shall not be
employees.
"Subsidiary" means any company more than 50% of the voting stock
of which is owned directly or indirectly by the Company, except that for
the purposes of the Plan Ocean Drilling & Exploration Company (ODECO) shall
not be considered a Subsidiary and for the purpose of the Incentive Bonus
Plan portion of the Plan Murphy Oil Company Ltd. (MOCL) shall not be
considered a Subsidiary.
"Company and Consolidated Subsidiaries" means the Company and all
the Company's subsidiaries, the financial results of which for the year in
question are consolidated with those of the Company and so included in the
Company's Annual Report to its stockholders, with the exception of ODECO
and its subsidiaries and MOCL and its subsidiaries for purposes of the
Incentive Bonus Plan portion of the Plan.
"Employee" means regular employee, whether or not a director.
"Key Employee" means employee who is a director or officer or in
a managerial, professional or other key position.
"Eligible Employee" means Key Employee of the Company or of a
Subsidiary that does not have in effect for its personnel any plan similar
to the Plan. In addition to Key Employees the Committee may in any year
include any other Employee who has made some unusual contribution which
would not be expected of such Employee in the ordinary course of his work.
Ex. 10.2-1
<PAGE>
"Independent Auditors" means the independent auditors appointed
by the Board of Directors to examine and certify the financial statements
of the Company and Consolidated Subsidiaries.
"Incentive Award" means an award either paid currently or paid on
a deferred basis as a result of the operation of the Plan.
"Incentive Award Reserve" or "Reserve" means monies available for
distribution as Incentive Awards as the result of the operation of the
Plan.
"Shares," "Shares of Stock," or "Stock" means shares of the
Common Stock of the Company including shares which have been previously
issued and reacquired by the Company at such times as the Company may deed
advisable.
"Plan" means this Management Incentive Plan.
"Beneficiary" means the person designated by an Option Holder by
written notice to the Company as the person entitled to exercise an option
upon the death of the Option Holder.
"Normal Termination" means terminate (i) at normal retirement
time, (ii) for permanent and total disability, or (iii) with Employer
approval, and without being terminated for cause.
"Option Holder" or "Holder" means an Employee to whom an option
has been granted.
"Terminate" means cease to be an Employee of the Company or a
Subsidiary except by death, but a change of employment from the Company or
one Subsidiary to another Subsidiary or to the Company shall not be
considered a Termination. For this definition ODECO and MOCL shall be
considered Subsidiaries.
SECTION II. ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall
have the exclusive right to interpret provisions of the Plan, which
interpretation shall be binding and conclusive upon all persons. The Committee
may promulgate rules and regulations for the administration of the Plan. The
Committee shall also have the exclusive right to select Employees eligible for
participation in the Plan, and the amount and extent of such participation in
each individual case shall rest in the Committee's absolute discretion. No
member of the Committee, while he serves on the Committee, may be granted an
Incentive Award or a Stock Option under the Plan.
Ex. 10.2-2
<PAGE>
The Board of Directors may from time to time remove members from the
Committee or add members thereto, and vacancies in the Committee, however
caused, shall be filled by action of the Board of Directors. The Committee
shall select one of its members as chairman, and shall hold its meetings at such
times and places as it may determine. A majority of its members shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. The members of the Committee may receive such
compensation for their services as the Board of Directors may determine.
SECTION III. STOCK OPTION PLAN
1. Stock Subject to Plan
---------------------
Subject to adjustment as provided in subsection 2, the total number of
shares of Common Stock which may be acquired pursuant to options granted under
the Plan shall not exceed 300,000. Not more than 100,000 of such shares may be
optioned to directors and not more than 30,000 such shares may be optioned to
any one Employee. Shares optioned to an Employee who is not a director shall
not be counted against the limitations on grants to directors, even though such
Employee may have previously been a director or should later be elected a
director. All options granted under this Plan which are outstanding or have
been exercised shall be deducted from the foregoing totals in determining
whether further options may be granted hereunder. For this purpose options
which have expired or lapsed due to the death or Termination of an Option Holder
before the option becomes exercisable shall not be considered as outstanding.
2. Adjustments
-----------
The total number of shares which may be acquired pursuant to the Plan
and the total number of shares which may be acquired by directors or by any one
director, as well as the number of shares subject to any outstanding option and
the option price per share with respect to any outstanding option, shall be
appropriately adjusted to take into account any stock split, stock dividend, or
other relevant change in the capitalization of the Company which becomes
effective while this Plan is in effect of any option granted hereunder is
outstanding.
Ex. 10.2-3
<PAGE>
3. Provisions of Options
---------------------
Each option granted hereunder shall be evidenced by a written agreement
between the Company and the Option Holder and shall not be assignable except as
provided in case of death and shall not be subject in whole or in part to
attachment, execution or levy. Any option or portion thereof which is
exercisable shall be exercisable for the full amount or for any part thereof.
Each option shall be granted for an option price determined by the
Committee which shall not be less than the fair market value of the Common Stock
subject thereto on the date the option is granted.
Provided the Option Holder has not died or Terminated, each option shall
become exercisable as to one-half of the shares subject thereto beginning two
years from the date of grant and shall become exercisable as to all of the
shares subject thereto beginning three years from the date of grant provided
that each option shall become exercisable in full immediately if the Company
should propose or become a party to any form of corporate reorganization
requiring a vote of Common Stockholders of the Company, of if there should be a
tender offer for Common Stock of the Company which results in one person or
group of persons acting in concert becoming the owners of as much as 20% of the
outstanding Common Stock of the Company. Each option may be exercised only by
the Option Holder, except that in the event of his death after the option has
become exercisable the option may be exercised by his Beneficiary or, if no
Beneficiary has been designated, the option may be exercised by the executor or
administrator of his estate.
Each option shall expire and be no longer exercisable as follows:
A. If the Option Holder is then living, it shall expire at the
earliest of the following times:
(i) Ten years after it is granted.
(ii) Three months after Normal Termination, or
(iii) Any earlier time provided for in the option agreement.
B. If the Option Holder Terminates otherwise than normally, it shall
expire at the time of Termination.
Ex. 10.2-4
<PAGE>
C. If the Option Holder dies, it shall expire:
(i) One year after his death, or
(ii) Any earlier time provided for in the option agreement.
At the discretion of the Committee, options may be designated as either
"Stock Options" or "Incentive Stock Options." Options designated as Incentive
Stock options may not be granted to any employee which would result in Shares of
Stock having an aggregate fair market value at the time of grant in excess of
$100,000 first becoming exercisable in any one calendar year.
4. Grant of Options
----------------
The Committee shall select Eligible Employees to whom options are to be
granted under this Plan. Subject to the limitations expressed in subsection 1,
the Committee shall grant options under this Plan for such number of shares as
the Committee shall in its discretion determine to be appropriate.
5. Payment for Options Exercised
-----------------------------
Upon exercise of an option, the purchase price of Shares purchased shall
be paid either in cash or by delivery of Shares of Stock of the Company, which
Shares shall be valued at the fair market value on date of exercise.
6. Cancellation of Options
-----------------------
The Committee may in its discretion authorize payment, in cash or in
Shares, or partly in cash and partly in Shares, as the Committee may direct, of
an amount equal to the difference at the time between the fair market value of
all or part of the Shares subject to an option and the option price in
consideration of the cancellation of the option in whole or in part. In such an
event the Shares subject to the option so cancelled shall be charged against the
limitations set forth in subsection 1 of this Section III.
SECTION IV. INCENTIVE BONUS PLAN
1. Incentive Award Reserve
-----------------------
In each of the five calendar years after 1987 the Board of Directors may
cause to be credited to the Incentive Award Reserve an amount not exceeding 3%
of the amount by which the Net Income of the Company and Consolidated
Subsidiaries for that year, exclusive of ODECO and MOCL,
Ex. 10.2-5
<PAGE>
exceeds an amount equal to 7% of Capital Employed in the Business of the Company
and Consolidated Subsidiaries, exclusive of ODECO and MOCL. For the purpose of
determining the maximum amount creditable to the Reserve in each year as above
provided:
A. "Capital Employed in the Business of the Company and Consolidated
Subsidiaries" for any year means the amount of (i) Stockholders' Equity
(which includes Capital Stock, Capital in Excess of Par Value, and
Retaining Earnings) less the cost of shares reacquired, plus (ii) Long-
Term Debt having a maturity of more than one year, as reported in the
financial statements of the Company and Consolidated Subsidiaries
included in the Company's Annual Report to stockholders as of the end of
the previous year, exclusive of ODECO and MOCL, with an appropriate
adjustment for any significant change during the year in the amount of
issued capital or debt as well as in the amount of earnings reinvested
and employed in the business resulting from surplus adjustments.
B. "Net Income" for any year means the amount reported as "Net Income" in
the "Statement of Income of the Company and Consolidated Subsidiaries"
included in the Company's Annual Report to stockholders for that year,
after eliminating the accounts of ODECO and MOCL from the consolidation
and after giving effect to such adjustment for any unusual or
nonrecurring items of income or loss not arising in the ordinary course
of the business as the Committee in its sole discretion may determine,
plus (i) interest on long-term debt, reduced by interest attributable to
debt funds invested in or loaned or advanced to ODECO and MOCL, and (ii)
amounts credited to the Reserve during the year, and less (iii) any
dividends received from ODECO and MOCL (adjusted in each case by the
estimated tax effect applicable thereto). In determining the amount of
interest attributable to long-term debt funds invested in or loaned or
advanced to ODECO or MOCL, the Company's investments and loans or
advances to these companies after their elimination from the
consolidation shall be deemed to have been 40% long-term debt funds, and
the annual interest rate shall be deemed to be 7%.
Ex. 10.2-6
<PAGE>
As soon as practicable after the end of each fiscal year, the
Independent Auditors shall determine, in accordance with the Plan, and
report to the Board of Directors the maximum amount available for credit
to the Incentive Award Reserve for that year and the amount of any
balance in such Reserve credited thereto in prior years and currently
available for Incentive Awards, and the Board of Directors shall rely
upon and be bound by such reports. The Board of Directors will
determine the amount to be credited to the Reserve and advise the
Committee the total amount available for Incentive Awards. In making
such determination, the Board of Directors may reduce the amount to be
credited to the Reserve to adjust for the effect of any extraordinary or
unusual accounting adjustments, such as a writedown of asset values.
No amount shall be credited to the Reserve in any year in which no
dividends, either in cash, stock, or property, have been declared on the
Common Stock of the Company.
2. Allotments to Participants
--------------------------
In respect of any year the Committee shall select those Employees to
whom Incentive Awards shall be made and its determination of the amount and
method of payment of each such Incentive Award shall be final.
The Committee shall not be required to award the total amount creditable
to the Reserve for any particular year, and any amount of the Reserve for any
year which the Committee shall not have awarded shall be carried forward and may
be awarded in succeeding years or, if the Committee so determines, may be
restored to net income.
No allotment to an individual Employee shall exceed 50% of such
Employee's annual salary rate for that year as in effect on the date of the
Incentive Award.
3. Form of Allotments
------------------
Subject to the limitations of subsection 4, the Committee may in its
absolute discretion make allotments to Employees eligible for participation
wholly in cash or in Shares of Stock, or in a combination of cash or Shares of
Stock. The number of Shares shall be determined by reference to the closing
price on the New York Stock Exchange on the trading date next preceding the date
of allotment. Such number of Shares shall be adjusted to give effect to any
stock splits, stock dividends, or other relevant changes in capitalization
occurring after the date of allotment. Shares allotted under
Ex. 10.2-7
<PAGE>
the Plan may be freely transferable or may be subject to such terms and
conditions, including forfeiture, and to such restrictions against sale,
transfer or other disposition as may be determined by the Committee at the time
of making a bonus award. The Committee may in its discretion remove, modify or
accelerate the release of restrictions on any Shares in the event of hardship of
disability of the participant while employed, or for such other reasons as the
Committee may deem appropriate in the event that the participant ceases to be an
Employee of the Company or a Subsidiary (including ODECO and MOCL) as the result
of death or otherwise. In the event of the death of a participant following the
transfer of Shares to him subject to restrictions, the legal representatives of
the participant and the person receiving such Shares under his Will or under the
laws of descent and distribution shall take such Shares subject to the same
restrictions, conditions and provisions in effect at the time of his death, to
the extent applicable.
4. Settlement of Allotments
------------------------
A. Subject to the provisions of paragraph B of this subsection 4, all
allotments shall be settled as determined by the Committee in
individual cases at the time of allotment by payment of cash and
delivery of Shares either (i) in full as soon as practicable after the
date of allotment, or (ii) in not more than four equal annual
installments commencing as soon as practicable after date of
allotment.
B. If any allotment is payable after the death of the participant it
shall be payable (i) to his designated Beneficiary, or if there is no
designated Beneficiary, to his personal representative, and (ii)
either in the same installments as originally provided in the
allotment or otherwise as the Committee may determine in individual
cases.
5. Contribution by Subsidiaries
----------------------------
To the extent that Employees of Subsidiaries shall participate in the
Plan, each of such Subsidiaries will be charged with the total amount of
allotments made to its Employees in each fiscal year.
Ex. 10.2-8
<PAGE>
6. Forfeiture Provisions
---------------------
All allotments to participants, whether in cash or Shares of Stock,
shall be deemed to be provisional and, to the extent not actually paid to
participants, shall be subject to forfeiture under the following circumstances:
A. unless otherwise determined by the Committee, if a participant's
service is terminated for any reason other than by death, disability,
retirement at normal retirement age, early retirement for the
convenience of the Company, or
B. if after termination of employment a participant shall engage in
activities which would be detrimental to the interest of the Company
or its Subsidiaries.
A change in employment from the Company or one Subsidiary to another
Subsidiary of the Company shall not be considered a termination. For purposes
of the preceding sentence ODECO and MOCL shall be considered Subsidiaries.
Any amounts so forfeited (in the case of forfeited Stock, said amounts
being determined by reference to prices used to determine the amount of the
original allotment) shall be restored to net income in the year of forfeiture.
SECTION V. AMENDMENT AND TERMINATION OF THE PLAN
The Board of Directors may from time to time amend the Plan or any
provision thereof without the consent of the stockholders except that (i) the
number of shares which may be optioned under the Stock Option portion of the
Plan may not be increased nor may the number of shares which may be acquired by
members of the Board or any one member thereof be increased, (ii) the minimum
time provided for an option to become exercisable may not be decreased nor may
the maximum term for options be increased, (iii) the minimum price at which
options may be granted may not be decreased, (iv) the maximum amount which may
be credited to the Bonus Reserve may not be increased, (v) the maximum amount
which may be allotted in any year to any participant in the Incentive Bonus
portion of the Plan may not be increased, and (vi) the Plan may not be amended
to permit participation by members of the Committee.
Ex. 10.2-9
<PAGE>
The Board of Directors may terminate the Plan in whole or in part at any
time provided that no such termination shall alter the terms of options then
outstanding or of Bonus awards which have been allocated but remain unpaid.
SECTION VI. EFFECTIVE PERIOD
The Plan has been approved by the Board of Directors but will not become
effective unless and until approved by Common stockholders of the Company at the
annual meeting on May 13, 1987. If the 1987 Management Incentive Plan is then
approved by stockholders, (i) the Stock Option portion of the existing
Management Incentive Plan shall be terminated except with respect to options
previously granted, (ii) the Stock Option portion of the 1987 Management
Incentive Plan shall become effective immediately and shall remain in effect
until April 30, 1992, and (iii) the Incentive Bonus portion of the 1987
Management Incentive Plan shall be effective for the purposes of accruing
Reserves for the five calendar years 1988 through 1992 and shall continue
thereafter with respect to awards made from Reserves accrued during such years.
Ex. 10.2-10
<PAGE>
EXHIBIT 13
MURPHY OIL CORPORATION
1994 ANNUAL REPORT TO SECURITY HOLDERS
Ex. 13-0
<PAGE>
[GRAPH: Income Contribution -- Exploration and Production]
[GRAPH: Capital Expenditures -- Exploration and Production]
PETROLEUM
--------------------------------------------------------------------------------
EXPLORATION AND PRODUCTION
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
(Thousands of dollars) 1994 1993
--------------------------------------------------------------------------------
<S> <C> <C>
Income contribution* .................... $ 45,253 36,861
United States ....................... 18,128 32,701
International ....................... 27,125 4,160
Total assets ............................ 1,292,402 1,223,118
United States ....................... 386,830 461,087
International ....................... 905,572 762,031
Capital expenditures .................... 302,651 536,963
United States ....................... 79,451 92,912
International ....................... 223,200 444,051
--------------------------------------------------------------------------------
Crude oil and liquids produced --
barrels a day ......................... 51,328 34,311
United States ....................... 13,355 13,727
International ....................... 37,973 20,584
Natural gas sold -- MCF a day ........... 256,258 274,908
United States ....................... 195,555 215,471
International ....................... 60,703 59,437
--------------------------------------------------------------------------------
</TABLE>
*Before unusual or infrequently occurring items.
--------------------------------------------------------------------------------
WORLDWIDE OVERVIEW
Murphy is engaged in exploration and production operations throughout the
world. In the U.S., the Company is one of the largest operators in the Gulf of
Mexico and has substantial interests onshore, primarily in Louisiana, Texas, and
South Arkansas. The Gulf of Mexico provided over 40 percent of the Company's
production in 1994 and offers significant growth potential. In Canada, the
Company explores for and produces light oil, heavy oil, and natural gas in
western Canada, where a substantial ownership of heavy oil reserves is providing
an important and growing source of the Company's crude oil production. Murphy's
Canadian activities also include an interest in the world's largest synthetic
crude oil operation and interests in two oil fields offshore eastern Canada --
Hibernia, which is under development, and Terra Nova, where development
alternatives are under study. The Company has long been active in the U.K.
sector of the North Sea, where an ownership in the giant Ninian oil field has
provided an important source of crude oil production for a number of years. This
field has now been joined by three other oil properties in various stages of
production or development -- "T" Block, where Tiffany and Toni fields were
placed on stream in late 1993 and where the Thelma and Southeast Thelma fields
will commence production in late 1996; the Mungo and Monan fields, where
development is expected to begin in 1995; and an important new discovery west of
the Shetland Islands on Block 204/25a, now known as the Schiehallion field. The
Company also has producing properties in Spain, Gabon, and Ecuador, and conducts
an ongoing exploration program in other parts of the world, with Peru and
offshore China currently among the areas of particular interest.
Earnings from the Company's exploration and production activities, excluding
unusual or infrequently occurring items, totaled $45.2 million in 1994 compared
to $36.9 million a year ago. The increase was due primarily to higher crude oil
and liquids production and lower exploration expenses. These factors were
partially offset by lower natural gas production and sales prices in the U.S.
and by lower average crude oil prices. Production of crude oil and liquids
increased 50 percent to 51,328 barrels a day, with the increase attributable
primarily to properties acquired in 1993. Acquisition of an additional interest
in the Ninian field at the beginning of 1994 and commencement of production in
Ecuador in June 1994 also contributed to the increase. Total natural gas
production decreased seven percent to 256.3 million cubic feet a day, with the
U.S. accounting for the reduction. Voluntary production curtailments in
6
<PAGE>
[MAP: Gulf of Mexico]
response to declining sales prices were primarily responsible for reduced U.S.
production. Average sales price for natural gas in the U.S. was down nine
percent. Crude oil prices in the U.S. and U.K. were down seven percent and five
percent, respectively. Canadian light oil prices were down three percent, while
heavy oil prices were up seven percent. On an energy equivalent basis, the
Company's production was up 17 percent to 94,038 barrels a day.
The exploration and production function represents the Company's best
opportunity for extraordinary growth. Murphy's exploration program includes a
balance between drilling low-cost, low-risk wells and high-risk frontier
prospects that have potential for significant reserve additions. The Company has
the technical expertise to identify such prospects, along with the resources to
acquire significant ownership positions therein, and attempts to do so early in
the exploration cycle of emerging basins. Levering that ownership position to
fund exploratory drilling is an available option.
Capital expenditures for exploration and production, including exploration
expenditures charged to expense, totaled $302.6 million in 1994 compared to $537
million in 1993. The year-ago amount included $259.7 million for acquisition of
proved properties, while 1994 expenditures included $37.1 million. During 1994,
the Company participated in 145 wells. All but four of the 87 development wells
were successful, and 37 of the 58 exploratory wells were successful.
As shown in the schedules on pages 50 and 51, proved reserves of crude oil
and liquids increased 17.9 million barrels, while natural gas reserves declined
9.9 billion cubic feet. Reserve additions from extensions and discoveries in the
Gulf of Mexico totaled 5.1 million barrels of oil and 53.2 billion cubic feet of
natural gas. Additions from discoveries included Mobile Block 863, Mustang
Island Block 789, and West Delta Block 111. In the U.K., the purchase of an
additional interest in the Ninian field added 5.2 million barrels of oil.
Revisions to synthetic oil reserves totaled 18.3 million barrels as a result of
an extension of the license from the year 2018 to 2025. Other changes included a
2.1-million barrel upward revision in Ecuador because of higher oil prices at
year-end. On an energy equivalent basis, Murphy's reserves totaled 327.6 million
barrels at the end of 1994 compared to 311.3 million barrels at year-end 1993.
Details concerning the Company's exploration and production activities
are presented in
7
<PAGE>
[PHOTO APPEARS HERE]
[GRAPH: Crude Oil and NGL Production]
[GRAPH: Natural Gas Sales]
the sections that follow. The Company's working interest percentage is shown,
generally following the name of each field or block, and unless otherwise
indicated, average daily production rates are net to the Company after deduction
for royalty interests. The terms crude oil production and oil production include
natural gas liquids where applicable.
UNITED STATES
Average U.S. crude oil and liquids production totaled 13,355 barrels a day
in 1994, down three percent from 1993, and natural gas production totaled 195.6
million cubic feet a day, a decrease of nine percent from a year ago. Normal
declines were experienced for both crude oil and natural gas. In addition, the
Company voluntarily curtailed natural gas production during the last half of the
year in response to low sales prices. These reductions were offset in part by
the commencement of production from new areas, principally Viosca Knoll Block
783, Mustang Island Block 789, and South Timbalier Block 86.
Exploration activities were conducted primarily in the Gulf of Mexico and
onshore Louisiana and Texas. In the Gulf of Mexico, the Company participated in
20 exploratory wells, 15 of which were successful. The Company also participated
in 14 onshore exploratory wells, nine of which were successful.
Gulf of Mexico -- Ongoing interpretation of 3-D seismic data acquired in
prior years led to drilling nine wells in the Ship Shoal Block 113 field (50-
70%) during 1994, eight of which were successful. This field is one of the
Company's oldest properties and still our largest single source of oil
production in the U.S. To date, 38 of the 42 wells drilled from use of the 3-D
data have been successful, and the results achieved have more than offset normal
production declines. Additional wells are planned in 1995 for this important
field. Oil production averaged 4,239 barrels a day in 1994 compared to 4,103 in
1993, and natural gas production averaged 16.3 million cubic feet a day compared
to 14.5 million a year ago.
The Ship Shoal Block 113A field (100%) was again one of the Company's major
sources of natural gas production, and workover activity during 1994 helped
sustain production rates. The field did experience curtailments during the year,
and production averaged 38.5 million cubic feet a day in 1994, down from 45.9
million in 1993. Although performance of this field continues to be excellent,
it has been on stream since 1982, and deliverability is expected to decline in
1995 as workover opportunities diminish.
Increased production resulting from workover activity during 1994 has also
helped to sustain production rates in the South Pelto Block 20 field (50%). Oil
production averaged 1,457 barrels a day in 1994 compared to 1,408 in 1993.
Natural gas production averaged 5.4 million cubic feet a day in 1994 compared to
7.8 million a year ago.
Oil production from the South Timbalier Block 86 field (86.9%) averaged 430
barrels a day in 1994 compared to 441 in 1993. A 1990 sour gas discovery was
placed on stream in April 1994, and daily natural gas production averaged 2.7
million cubic feet in 1994. In the adjacent South Timbalier Block 63 (100%), oil
production averaged 197 barrels of oil a day in 1994 compared to 449 in 1993.
Natural gas production averaged 10.1 million cubic feet a day in 1994 compared
to 9.8 million in 1993. A 3-D seismic survey acquired over both blocks in 1993
was interpreted during 1994, and an exploratory drilling program is planned for
1995.
An interpretation of a 3-D seismic survey over the Ship Shoal Block 222
field (40-44.4%) was completed in 1994, and several well locations were
identified. The first of those wells was successfully completed shortly after
year-end. Additional drilling is planned for 1995. In addition, a workover
program that began in the third quarter of 1994 will continue in 1995. Oil
production averaged 554 barrels a day in 1994 compared to 595 in 1993.
8
<PAGE>
The Matagorda Island Block 604/589 area (62.7%), another major source of
natural gas production, currently has 10 wells on production. Production
averaged 23.6 million cubic feet of natural gas a day in 1994 compared to 40.4
million in 1993. Although affected by curtailments in 1994, production from this
field was also down due to natural decline.
The Company has an interest in four natural gas fields offshore Alabama. Two
wells in Mobile Blocks 952 and 953 (33.3%) and one well in Mobile Block 955
(50%) flow into the facilities of the four-block Mobile Block 864 unit (13.1%).
Production from these three fields averaged 7.1 million cubic feet a day in 1994
compared to 8.7 million in 1993. Production from the fourth field, Viosca Knoll
Blocks 203 and 204 (66.7%) commenced in October 1993, when a gas pipeline was
placed in service. Production from this field was also affected by curtailments
and averaged 17.4 million cubic feet of natural gas a day in 1994 compared to a
fourth quarter 1993 daily rate of 27.9 million cubic feet.
In January 1994, production commenced from Viosca Knoll Block 783 (30%), a
300-billion cubic feet natural gas field located in 1,500 feet of water. This
field is being developed in phases. The first phase included a subsea completion
of a previously drilled well and installation
[PHOTO APPEARS HERE]
9
<PAGE>
of two four-inch pipelines and a control umbilical from the subsea wellhead to
production facilities on a platform 12 miles to the north in 275 feet of water.
Production from the field averaged 9.5 million cubic feet of natural gas a day
and 359 barrels of oil a day in 1994. Production was limited by pipeline
capacity during the year, but in November the Viosca Knoll Gathering System was
completed, allowing an increase in production rates. Year-end production was
averaging 17 million cubic feet a day. Based on the success of the first phase
of development, the second phase is scheduled to commence in 1996.
A well drilled in 1993 on Mustang Island Block 789 (40%) was placed on
stream in October 1994 after installation of a 6.5-mile pipeline to existing
production facilities in an adjacent block. Production averaged 1.4 million
cubic feet of natural gas a day in 1994. The year-end rate was 6.8 million cubic
feet.
The Company holds a 33.3-percent interest in the Destin Dome Block 56 unit,
which includes 11 leases covering 63,360 acres located approximately 40 miles
south of Pensacola, Florida. A well tested near the end of 1990 confirmed a 1988
natural gas discovery in the Norphlet formation, the source of production from
several large natural gas fields in the Mobile Bay area, about 45 miles to the
west. These two wells have proven an accumulation of natural gas reserves at
depths between 22,000 and 23,000 feet, and 64 billion cubic feet of natural gas
attributable to these wells are included in the Company's reserves. A 3-D
seismic survey over the 11-block unit has been acquired and interpreted. A third
well, which will be drilled under an approved plan of exploration, is scheduled
to commence in mid-1995. Other prospective Norphlet structures have been
identified on several of the blocks.
As 1994 began, the Company had wells in progress on two high-potential
Norphlet prospects. A well on Mobile Block 863 (11.5%) was drilled to a total
depth of 23,310 feet, encountering over 250 feet of natural gas in the Norphlet
formation. Field development is expected to commence in 1995 and will include
fabrication of a processing facility. The facility will have capacity for 150
million cubic feet of natural gas a day and will be
[MAP: Canada]
10
<PAGE>
installed in the adjacent Mobile Block 864. The Company will have a five-percent
ownership in the facility, which will also be used to process Norphlet
production from nearby blocks. Commencement of production from Block 863 is
anticipated during the first half of 1996. The other well in progress at the
beginning of the year was drilled on Mobile Block 908. The well was temporarily
abandoned after reaching a total depth of 22,547 feet. Over 400 feet of Norphlet
gas-bearing formation was encountered, but completion was not attempted due to
low permeability and porosity in the interval. A sidetrack of the well is
scheduled to commence in the first quarter of 1995 and is designed to penetrate
the Norphlet formation away from the faulting that is believed to have affected
reservoir quality in the original well. The sidetrack well will be drilled under
a cost-participation agreement with a third party, resulting in Murphy having a
70-percent working interest in the prospect. The Company also holds working
interests in nine other leases in federal waters south of Mobile Bay, Alabama,
the majority of which are prospective for Norphlet gas reserves below 20,000
feet. Interpretation of 3-D seismic surveys is ongoing to identify well
locations.
Other development activity in 1994 resulted in new oil production from Ship
Shoal Block 101 (40%) and new natural gas production from Matagorda Island Block
710 (40%). Year-end production rates were at 220 barrels a day and 2.6 million
cubic feet a day, respectively. The Company also participated in eight other
exploratory wells in the Gulf of Mexico during 1994, five of which were
successful. One of the successful wells was drilled in West Delta Block 111 and
extended an oil discovery made in an adjacent field. Subsequent to drilling the
well, the Company entered into an arrangement that resulted in retention of an
overriding royalty interest in the field, which covers portions of four blocks
in the West Delta area. The field is scheduled to begin production in 1995. The
remaining successful wells were in existing producing gas fields and included
one well in Ship Shoal Block 247 (10%), two wells in Ship Shoal Block 248
(8.1%), and one well in Vermilion Block 17 (16.7%).
Murphy participated in the two 1994 federal lease sales held in the Gulf of
Mexico and acquired 33- to 100-percent interests in 18 blocks.
Onshore -- U.S. onshore exploration activity was principally in South
Louisiana. A well drilled to test a separate fault block in the East Riceville
field (33.3%), located in Vermilion Parish, Louisiana, was unsuccessful. Daily
production from the two existing wells in the field averaged eight million cubic
feet of natural gas and 180 barrels of oil in 1994. Production in 1993 averaged
9.6 million cubic feet of natural gas a day and 207 barrels of oil.
During 1994, the Company commenced a proposed 19,000-foot exploratory well
(50%) in Vermilion Parish, but encountered mechanical problems and abandoned the
well. A second attempt to reach the exploration objective was in progress at
year-end. Infield exploration drilling in 1994 included seven wells in Louisiana
and Texas, five of which were successful.
Alaska -- We currently have interests in 31 leases offshore Alaska, the
majority of which are located in the Beaufort Sea area. Included therein are
interests in the Sandpiper (57.6%) and Northstar (1.92%) units, where
development of hydrocarbons discovered in prior years is not justified under
current economic conditions.
CANADA
Production of crude oil and liquids in Canada increased 69 percent in 1994
to 21,428 barrels a day. The Company's acquisition of a five-percent interest
at the end of 1993 in a synthetic crude oil project (Syncrude) added 9,065
barrels a day to 1994 production levels. Light oil production increased five
percent to 5,523 barrels a day, while heavy oil production decreased eight
percent to 6,840 barrels a day. The decline in heavy oil production was due
primarily to shut-in of wells early in the year in response to low oil prices.
Natural gas production of 37.9 million cubic feet a day was up three percent
from a year ago. The 1994 production volumes for both oil and natural gas were
at record levels.
The Company conducted an active exploration and development program in 1994,
targeting high-margin development projects and high-reward exploratory plays.
Development of light oil in 1994 included the drilling of six successful wells
in Alberta at Kidney (20-25%) and four successful wells in northeastern British
Columbia at Umbach (50%) and at Elm and North Boundary (100%). In Saskatchewan,
five successful horizontal light oil wells were drilled at Parkman and Elswick
(13.5-18.5%). The heavy oil development program included 14 successful
horizontal wells. In Saskatchewan, three wells were drilled at Tangleflags
(50%), two at Cactus Lake (80.3%), three at Plover Lake (100%), and two at
Eyehill (33.3%). Four horizontal heavy oil wells were drilled in Alberta at
South Bodo (25%). The remainder of the year's heavy oil development program
consisted of seven vertical wells in Alberta at West Provost (25%) and three
wells at Cactus Lake (28.6%). Natural gas development drilling consisted of 18
successful vertical wells. In
11
<PAGE>
[PHOTO APPEARS HERE]
[MAP: Offshore Eastern Canada]
northeastern British Columbia, one well was drilled at Weasel (100%) and one at
Flatrock (12.5%). Fifteen wells were drilled in Alberta, including eight at
Princess (85-100%); two at Three Hills Creek (21%); two at Glendon (25-100%);
and one each at Heart Lake (58%), Wayne Rosedale (50%), and Fort Pitt (100%). In
Saskatchewan, one well was drilled at Dodsland (13%).
Murphy's exploration program in Canada during 1994 focused on high-potential
prospects for natural gas and light oil in northeastern British Columbia and
northern Alberta. The Company participated in 20 exploratory wells, 11 of which
were successful. Seven were successful light oil wells, which were drilled at
Loon and Evi (50-66.7%), Umbach (50%), and Tomahawk (33.3%). Four successful
natural gas wells were drilled at Umbach (50%), Bonanza (33.3%), and Klua (25%).
The Company continued to be selective in its land acquisition program. A
total of 57,756 gross acres were acquired, with our working interest averaging
63 percent. Natural gas prospects were acquired in northeastern British
Columbia, including prospects on the high-potential Devonian Foothills trend.
Light oil acreage continued to be enhanced with further acquisitions in Pembina,
Meander, Umbach, Loon, and Evi.
In December 1993, the Company acquired a five-percent interest in Syncrude,
the world's largest oil sands mining and synthetic crude oil upgrading
operation. This project is located on 108,718 acres leased from the province of
Alberta in the Athabasca oil sands area near Fort McMurray. Synthetic crude oil
is produced by a process that includes mining, extraction, and upgrading. The
deposits are mined by large draglines and moved to an extraction plant, where
the oil sands are mixed with hot water, steam, and caustic soda to produce a
slurry, from which the oil floats as a froth. The froth is treated to remove
water and solids and is fed into an upgrading process in the form of bitumen,
which is then "cracked" into naphtha, light gas oil, and heavy gas oil streams.
These streams are hydrotreated to remove sulfur and nitrogen impurities and
mixed to form synthetic crude oil.
Construction activity for the Hibernia oil field (6.5%) in the Grand Banks
area, offshore Newfoundland, continued throughout 1994. First production from
this field, discovered in 1979, is expected to occur in late 1997 or early 1998,
with peak production anticipated in 1999 at 125,000 gross barrels of oil a day.
Gross recoverable reserves are estimated to be 615 million barrels. The central
production facility for the Hibernia field is a Gravity Base Structure (GBS) --
the first GBS to be constructed to
12
<PAGE>
resist the impact of an iceberg. Following completion of the first stage of
construction in October, the GBS was towed to a nearby deep-water site where the
next stage of construction began. The main topside modules are being constructed
at various shipyards around the world and will be moved to the construction site
in mid-1995. These modules will then be mated to the GBS prior to towing the
completed structure to the production site. After mating, the total structure
will be 735 feet tall and will weigh in excess of 650,000 tons. Total
preproduction costs to be incurred by the Company, net of government grants, are
currently estimated at approximately $205 million, the majority of which will be
funded through nonrecourse government loans.
In December 1994, the Company acquired a 10.7-percent interest in the Terra
Nova oil field, located approximately 20 miles southeast of Hibernia. The
development plans under consideration by the owners incorporate floating
production systems, utilizing subsea completed wells produced to a floating
rather than fixed platform. Terra Nova was discovered in 1984 and has been
delineated by eight additional wells and two 3-D seismic surveys. Gross
recoverable reserves are in the range of 300-400 million barrels of oil.
Depending upon the specific floating production system selected,
[PHOTO APPEARS HERE]
13
<PAGE>
production could commence as early as 1999 and peak at 75,000 to 100,000 gross
barrels of oil a day.
UNITED KINGDOM
Production from the Ninian field (13.8%), one of the largest fields in the
North Sea, averaged 7,883 barrels of oil a day in 1994 compared to 5,780 barrels
a day in 1993. The increase was due to the acquisition of an additional 3.8-
percent interest in the field effective January 1, 1994. In October, the Ninian
field achieved cumulative production of one billion barrels of oil, becoming
only the third U.K. oil field to achieve this distinction. Construction of
facilities on the central and southern platforms to process production from
third-party fields was completed in 1994. Tariff income from five third-party
fields is making an important contribution to Ninian cash flow.
Production from "T" Block (11.3%) averaged 5,566 barrels of oil and gas
liquids a day in 1994 compared to 462 barrels a day in 1993, when production
commenced in November of that year. Production rates fluctuated throughout the
year, due in part to problems with reliability of the topside facilities. While
such problems were resolved at year-end and gross daily production rates were as
high as 80,000 barrels a day in the latter part of the year, sustainable
production levels from "T" Block are lower than originally anticipated. The
block contains four separate fields -- Tiffany, Toni, Thelma, and Southeast
Thelma. The first phase of development utilized a conventional steel platform in
the Tiffany field, with wells in the Toni field connected to the platform with a
subsea system. Initial production from Tiffany has been from four wells. A water
injection well was drilled in 1994, and three production wells and three
injection wells will be drilled from the platform in 1995 and 1996. Water
injection will commence in early 1995. The development of Toni involved two
subsea clusters, one for production and one for water injection. Four production
wells and two injection wells have been drilled, and a third injection well will
be drilled in 1995. Water injection commenced in the Toni field in December
1994. A 3-D seismic survey of the block was acquired in 1994. Interpretation of
the data is in progress to enhance understanding of the reservoirs in order to
select optimum well locations for 1995.
[MAP: North Sea]
Development of the Thelma and Southeast Thelma fields, which lie
approximately five miles south of the Tiffany field, will also incorporate a
subsea system connected to the Tiffany platform. Development drilling is
scheduled to commence in the second half of 1995, with first production expected
in late 1996. Initial production is projected at gross daily rates of 12,000
barrels of oil and 20 million cubic feet of natural gas, increasing to 24,000
barrels and 35 million cubic feet in 1998. Unlike the Tiffany and Toni fields,
where natural gas production is sold at below-market prices for injection in a
nearby field, the Company expects to receive a commercial price for natural gas
production from the Thelma fields.
Daily production from the Amethyst field averaged 10.1 million cubic feet of
natural gas and 92 barrels of condensate compared to 13.1 million cubic feet and
99 barrels in 1993. The reduction was due to reduced nominations by the
purchaser under the sales contract. The final redetermination of field equity
interests was negotiated during the year, with Murphy's interest increasing
from 6.78 percent to 7.40 percent effective June 30, 1994. Three successful
development wells were drilled during 1994, a gas compression project is
scheduled for start-up in October 1995, and three development wells are planned
in 1995.
Feasibility studies to develop the Mungo and Monan
14
<PAGE>
fields (12.7%) in Blocks 23/16a and 22/20 continued during 1994. One alternative
is participation in the Eastern Trough Area Project (ETAP), which provides for
joint development of several nearby fields. A central processing platform would
be located in one of the larger fields, and the other fields, including Mungo
and Monan, would be produced with satellite platforms or subsea facilities. The
Company is also participating in parallel studies to develop Mungo and Monan on
a stand-alone basis. A decision will be made in 1995. Gross recoverable reserves
are estimated to be in excess of 100 million barrels of oil equivalent. The
Company will record reserves when a plan of development is approved. First
production is expected in late 1998 or early 1999, with peak gross production
estimated at 55,000 barrels of oil a day.
Exploratory activity in the U.K. during 1994 was highlighted by an important
well west of the Shetland Islands on Block 204/25a (17.7%). The well tested at a
maximum gross daily rate of 5,304 barrels of oil a day and confirmed that a
significant oil discovery made by others on the adjacent Block 204/20 extends
onto Block 204/25a. That discovery is now known as the Schiehallion field. An
agreement was reached with the owners of Block 204/20 that provides for field-
wide appraisal drilling in 1995. The first well, which commenced shortly after
year-end, is being drilled on Block 204/25a and will be followed by a well on
Block 204/20 around mid-year. Gross recoverable reserve parameters are dependent
upon the results of the appraisal drilling. Current development plans call for
first oil in late 1997, using a floating production storage and offloading
system. A similar system is being utilized in the development of the Foinaven
field approximately nine miles to the west. In the southern North Sea, a
successful well was also drilled on Block 43/22 (28%), testing at a gross daily
rate of 34 million cubic feet of natural gas. This well and a well drilled on an
adjacent structure in 1992 have confirmed accumulations of natural gas, and
further appraisal is planned for 1995. Elsewhere in the North Sea, a dry hole
was drilled on Block 29/20b (30%), and a well on Block 3/3 (19.4%), drilled from
the Ninian northern platform, was also unsuccessful.
SPAIN
Production from the Gaviota field (18%) averaged 12.6 million cubic feet of
natural gas a day in 1994 compared to 9.6 million in 1993. This field, located
in the Bay of Biscay off the northern coast of Spain, has been converted into a
natural gas storage facility under an agreement with ENAGAS, the Spanish gas
distribution company. The project, known as ALGA, handles third-party natural
gas on a tariff basis, utilizing three injection/extraction wells and modified
offshore and onshore facilities of the Gaviota field.
Conversion of the Gaviota field to a long-term natural gas storage facility
improved the economics for development of the East Albatros field (18%), located
11 miles west of Gaviota. This field, discovered several years ago, contains
recoverable reserves of up to 50 billion cubic feet of natural gas and is being
developed using a single subsea well connected to the Gaviota platform. The
subsea flowline and control umbilical were laid in September, and remaining
operations to complete the well and connect it to the flowline and umbilical
will be conducted in the first half of 1995. First production from the East
Albatros field is scheduled for July 1995. During 1994, a well was drilled on a
separate structure approximately two miles to the west of the discovery well.
The well was suspended after achieving gross test rates of 8.8 million cubic
feet of natural gas a day. Further evaluation is required to determine if the
reservoir is commercial.
ECUADOR
The Company has a 20-percent interest in risk-service contracts (similar to
production-sharing contracts) covering Block 16 and the Tivacuno field in
Ecuador. In addition, the Capiron field has been unitized as part of Block 16.
Block 16 is a 494,000-acre license located east of the Andes mountains in the
Oriente Basin. The development plan, which is based on gross recoverable
reserves of approximately 200 million barrels of crude oil from multiple fields,
provides for construction of two central production facilities, an extensive
drilling program, and construction of a pipeline to connect with the existing
pipeline infrastructure. Construction and commissioning of the
[MAP: China]
15
<PAGE>
[MAP: Peru]
northern production facilities was completed in 1994, with production from the
northern fields -- Tivacuno, Capiron, and the Bogi field on Block 16 --
commencing at mid-year. Construction of a pipeline and roads to the southern
fields was completed during 1994, and production facilities are scheduled for
completion by mid-1996. Temporary facilities will allow production from the
southern fields, and production commenced from one of these, the Amo field, in
December. At the end of 1994, a total of 18 wells had been completed in Ecuador,
and two additional wells were drilled and are awaiting completion. Production in
Ecuador averaged 1,967 barrels of oil a day in 1994, and was averaging
approximately 6,000 barrels a day at year-end.
GABON
Virtually all of the production in Gabon is from the Breme field (45%).
Production quantities reported under Production Sharing Contracts include
entitlements for cost recovery and a share of the profit oil after cost
recovery. Entitlements for 1994 averaged 1,016 barrels of oil a day compared to
1,447 barrels a day in 1993. The Breme field permit expired in December, but
production is continuing under a temporary extension granted by the Gabonese
government. The Company's investment in Gabon is fully amortized, and we are
reviewing our participation in a renewal of the permit.
OTHER
During 1994, Murphy acquired three significant frontier exploration
concessions. Onshore Peru, a contract was negotiated for Block 71 (100%), which
covers 3.1 million acres in the Ucayali Basin. The Company has no drilling well
obligations, but has the obligation to perform certain seismic activity in the
first exploration period that expires in June 1996. In China, the Company
acquired an interest in a production-sharing contract on Block 4/36 (50%),
located in the Bohai Bay, offshore northeast China. The block covers 563,000
acres and carries a two-well obligation, which will likely be met in 1995.
During 1994, the Company was also awarded License 5/94 (25%), which consists of
an 11-block area covering 650,000 acres offshore northwest Ireland. A seismic
survey is planned in 1995 to identify drilling locations.
The Company also owns a 20-percent interest in Block 62 in the Maranon Basin
of Peru. During 1994, a second well drilled on the block to test the Arabella
prospect was unsuccessful, and no further exploratory activity is planned for
the block. In Somalia, Murphy has a 10-percent interest in onshore Block 35 and
offshore Block M10A, covering four million acres. The Company also has a 100-
percent interest in the 6.7-million acre Kharan concession in Pakistan. Both of
these concessions remained in a force majeure status during 1994; however, the
Company is pursuing discussions with the Pakistani government about lifting that
force majeure and commencing exploration activity.
16
<PAGE>
--------------------------------------------------------------------------------
REFINING, MARKETING, AND TRANSPORTATION
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
(Thousands of dollars) 1994 1993
--------------------------------------------------------------------------------
<S> <C> <C>
Income contribution* ..................... $ 30,203 31,541
United States ........................ 17,674 11,188
International ........................ 12,529 20,353
Total assets ............................. 712,929 589,202
United States ........................ 500,467 378,405
International ........................ 212,462 210,797
Capital expenditures ..................... 94,697 86,885
United States ........................ 80,272 71,363
International ........................ 14,425 15,522
--------------------------------------------------------------------------------
Crude oil processed - barrels a day....... 140,882 137,081
United States ........................ 108,844 109,090
International ........................ 32,038 27,991
Products sold - barrels a day ............ 161,130 153,595
United States ........................ 120,618 120,842
International ........................ 40,512 32,753
--------------------------------------------------------------------------------
Average gross margin on products sold -
dollars a barrel
United States......................... $ 1.07 .82
Western Europe........................ 2.17 3.08
--------------------------------------------------------------------------------
</TABLE>
*Before unusual or infrequently occurring items.
--------------------------------------------------------------------------------
WORLDWIDE OVERVIEW
Murphy is engaged in downstream activities in the United States, Western
Europe, and Canada. In the U.S., operations are conducted in two separate
regions. A 100,000-barrel-a-day refinery on the Mississippi River at Meraux,
Louisiana, produces refined petroleum products for distribution over an 11-state
area in the southeastern part of the U.S. that is generally referred to as the
Gulf Coast market. A five-state area in the upper-Midwest is served by a 35,000-
barrel-a-day refinery at Superior, Wisconsin. Operations in Western Europe are
centered around a 108,000-barrel-a-day refinery, in which the Company has an
effective 30-percent interest, at Milford Haven, Wales. Refined products are
sold at 1,066 branded outlets -- 588 in the U.S. and eight in Canada under the
SPUR/(R)/ brand, and 470 in the U.K. primarily under the MURCO/(R)/ brand.
Murphy also has varying interests in four crude oil pipeline systems in western
Canada, including two of the six systems that export crude oil from Canada to
the U.S.; these systems offer crude oil trading opportunities in addition to
providing tariff income.
Worldwide earnings from the Company's downstream activities, excluding
unusual or infrequently occurring items, totaled $30.2 million in 1994 compared
to $31.5 million in 1993. Operations in the U.S. earned $17.7 million compared
to $11.2 million a year ago. Earnings from operations in Western Europe totaled
$5.2 million, down from $11.7 million in 1993. The earnings contribution from
Canadian operations totaled $7.3 million in 1994 compared to $8.6 million a year
ago. The Company's composite average gross margin on product sales in the U.S.
was up 30 percent. Margins in the Southeast were generally higher throughout
most of 1994 compared to the prior year. In the upper-Midwest, margins continued
to benefit from a strong asphalt market in the summer months, but were down
slightly from 1993 levels. Average margin in Western Europe was down 30 percent
compared to 1993. Sales volumes were essentially unchanged in the U.S. and
Canada at 120,864 barrels a day. Sales in Western Europe totaled 40,266 barrels
a day compared to 32,519 in 1993. The decline in Canadian earnings was due
primarily to lower crude oil trading volumes.
A key element of Murphy's strategy for its downstream business is a
commitment to maintain modern, efficient, and competitive refining and
distribution systems. The Company also recognizes its responsibility to operate
in an environmentally safe manner. These objectives have required investment of
substantial sums in recent years, particularly in the U.S., where a long-term
expansion
[GRAPH: Income Contribution -- Refining, Marketing, and Transportation]
[GRAPH: Capital Expenditures -- Refining, Marketing, and Transportation]
[GRAPH: Refined Products Sold]
17
<PAGE>
[MAP: United States]
[PHOTO APPEARS HERE]
and upgrade program at the Meraux refinery was completed during the year. World-
wide downstream capital expenditures in 1994 totaled $94.7 million compared to
$86.9 million in 1993. The 1994 expenditures included nearly $25 million to
increase sour crude processing capabilities at the Meraux refinery. Capital
expenditures addressing environmental concerns totaled $37.3 million in the
current year.
UNITED STATES REFINING
The expansion and upgrade program at the Meraux refinery was designed to
improve the Company's position in the highly competitive Gulf Coast market. In
addition to adding crude processing capacity, the refinery will now have
significant cost reduction opportunities, with the ability to run a 60-percent
light sour crude slate and a wider array of heavier crudes. The program also
provides the refinery with the capability to produce 24,000 barrels a day of
low-sulfur diesel fuel and 15,000 barrels a day of reformulated gasoline.
Capital expenditures at the Meraux refinery are projected to decline
substantially in 1995 compared to levels in recent years.
Despite an extensive refinery turnaround in the fourth quarter that involved
most of the major units, crude oil processed at the Meraux refinery averaged
78,252 barrels per day in 1994, essentially unchanged from the level a year ago.
Input of other feedstocks averaged 5,373 barrels per day compared to 6,398
barrels in 1993. Crude oil for the Meraux refinery is supplied through our own
production of domestic crude and purchase of third-party domestic and foreign-
source crudes. As planned, we were able to increase the light-sour/heavy-sweet
component of our crude slate from 60 percent in 1993 to 68 percent in 1994,
displacing more expensive light-sweet crudes. We will continue taking advantage
of our crude slate flexibility in 1995 to the extent allowed by the relative
values of the available crudes.
Capital expenditures at the Superior refinery in 1994 were primarily to meet
environmental concerns, and included $15.8 million for control of emissions and
treatment of waste water. It is expected that when this project is completed
near mid-1995, the quality of the treated water will be as high as in any other
U.S. refinery.
Crude runs at the Superior refinery were 30,592 barrels a day, also
essentially unchanged from the prior year level. Canadian-source crude oil
accounted for 78 percent of the 1994 runs, and included 7,018 barrels a day of
heavy oil and 7,523 barrels a day of synthetic crude oil.
UNITED STATES MARKETING
Refined products in the Southeast are moved from the Meraux refinery through
an
18
<PAGE>
[PHOTO APPEARS HERE]
efficient system of 28 terminals, 21 of which are either wholly or jointly
owned. The terminals are supplied by barge or pipeline, including a jointly
owned line to the Collins, Mississippi, terminal. This system, combined with the
refinery's strategic location on the Mississippi River, provides the flexibility
to maximize margins by shifting products between terminals or the most
profitable cargo markets as conditions dictate. In the upper-Midwest, 10
terminals serving markets in North Dakota, Minnesota, and western Wisconsin are
supplied from the Superior refinery by pipeline. Markets in southeastern
Wisconsin and western Michigan are served from five terminals supplied by
pipeline from Chicago, where products are received from others in exchange for
deliveries at Superior. Asphalt terminals at Crookston, Minnesota, and
Rhinelander, Wisconsin, are supplied by truck. Of the 120,864 barrels a day of
refined products sold in the U.S. and Canada in 1994, 90,978 were sold in the
Southeast and 29,886 in the upper-Midwest. Products sold, with a further
breakdown as to point of sale, are shown in the following table.
<TABLE>
<CAPTION>
-------------------------------------------------------------
(Barrels a day) Terminals Cargo
-------------------------------------------------------------
<S> <C> <C>
Gasoline................................ 42,204 18,354
Kerosine................................ 1,894 10,021
Diesel/heating oil...................... 20,920 9,263
Residuals............................... - 10,454
Asphalt/other........................... 4,073 3,681
-------------------------------------------------------------
69,091 51,773
=============================================================
</TABLE>
Terminal sales in the preceding table include daily sales by SPUR/(R)/ branded
outlets as follows: gasoline, 15,847 barrels; kerosine, 607 barrels; and diesel
and home heating oil, 4,636 barrels.
During 1994, the Company's U.S. marketing efforts
[GRAPH: Meraux Refinery Crude Charge]
[GRAPH: Meraux Refinery Yields]
19
<PAGE>
[MAP: United Kingdom]
[PHOTO APPEARS HERE]
included the opening of a station in Covington, Louisiana, that combines the
familiar fuel dispensers and convenience store with a full-size Burger King/(R)/
restaurant that seats 60 people and offers a complete menu. We also continued a
program of consolidation that emphasized retaining quality stations in our
primary market areas. Particular attention is being paid to expanding
convenience stores and offering our customers spacious fueling lanes equipped
with multiproduct dispensers under large, well-lit canopies.
UNITED KINGDOM REFINING
Environmental concerns within the European Union continue to influence
investment decisions. Construction of import and storage facilities for methyl
tertiary butyl ether was completed in the second quarter of 1994. The facilities
will be used in meeting requirements to reduce gasoline volatility levels and in
the production of higher-value unleaded gasoline. Unleaded gasoline production
should also increase following catalyst changes in both the cat cracker and the
smaller of the refinery's two naphtha reformer units.
Construction of a high-pressure distillate hydrotreater unit commenced in
June 1994. This unit, which is being built under a capital lease arrangement,
will enable the refinery to meet low-sulfur diesel fuel regulations scheduled to
take effect
20
<PAGE>
in the fourth quarter of 1996. Design studies commenced at the end of the year
for a project to modify the cat cracker to meet regulations that reduce the
amount of sulfur allowed in gasoline. The refinery's capability to process less
expensive medium-sulfur crudes will be greatly enhanced upon completion of these
sulfur-reduction projects.
During 1994, Murphy processed an average of 32,038 barrels of crude oil a
day at the Milford Haven refinery compared to 27,991 in 1993. Intermediate
feedstocks processed declined from 3,638 barrels a day in 1993 to 3,028 barrels
in the current year. The refinery is supplied by North Sea crude oil purchased
in the spot market or, alternatively, with proprietary Brent or Forties Blend.
Exposure to price volatility is reduced to the extent possible by pricing each
spot purchase over the same period of time that crude is processed and products
are sold. Additional feedstocks for the cat cracker and alkylation units are
purchased in the spot market when required. Transportation of crude to the
refinery is provided by tankers chartered at spot rates.
UNITED KINGDOM MARKETING
The distribution system for refined products in the U.K. includes three
highly efficient, rail-fed terminals owned by the Company and nine terminals
owned by
[PHOTO APPEARS HERE]
21
<PAGE>
[MAP: Western Crude Oil Pipeline Systems]
[GRAPH: Canadian Pipeline Throughputs]
others, where products are received in exchange for deliveries from the Com-
pany's terminals.
Sales through the Company's branded outlets increased by eight percent from
8,119 barrels a day in 1993 to 8,740 in 1994, with gasoline accounting for 88
percent of the sales in 1994 compared to 87 percent a year ago. Gross margin
from branded sales was down from the previous year, as competition with
supermarkets intensified. The Company added 42 branded outlets in 1994, with
much of the growth in southern Wales, where we now have 28 stations. We made our
initial entry in the Devon and Cornwall area and had 11 stations in the area at
the end of 1994.
Most of the remainder of the Company's Milford Haven production is sold into
the bulk cargo markets; these sales totaled 31,214 barrels a day in 1994
compared to 23,881 a year ago. Gasoline sales accounted for 29 percent of bulk
sales in 1994 compared to 25 percent a year ago.
CANADA
Murphy's pipeline operations in western Canada include two systems that
deliver heavy oil into the Interprovincial Pipe Line (IPL) at Kerrobert,
Saskatchewan, and two systems that transport crude oil to U.S. pipelines that
supply PADD IV refineries in Montana, Wyoming, and Colorado.
Total pipeline throughputs averaged 159,517 barrels a day, up five percent
from 1993. The Wascana system (100%), one of the cross-border pipelines, set a
record with an average throughput of 35,204 barrels a day, up 23 percent from
1993. The other cross-border pipeline is the Milk River system (100%), which
also had record throughputs at 53,443 barrels a day, 13 percent higher than last
year. The increases reflect the growing demand for Canadian crude oil to offset
declining U.S. production in the Rocky Mountain states. The Manito system
(52.5%) and the Cactus Lake/Bodo system (13.1%/26.3%), are Murphy-operated heavy
oil pipelines, and the combined total throughput was down seven percent from a
year ago, with Manito averaging 41,228 barrels a day and Cactus Lake/Bodo
averaging 29,642 barrels a day. The decline was primarily due to lower
production levels in the area and the impact of IPL apportionment, which has
restricted crude oil deliveries into Kerrobert.
Crude oil trading earnings were down 23 percent, primarily as a result of
lower trading volumes. The Company also operates a fleet of trucks that
transport crude oil and natural gas liquids. Earnings from these activities were
near 1993 levels as were sales of refined products in Thunder Bay, Ontario,
which is supplied from our Superior refinery.
22
<PAGE>
[GRAPH: Income Contribution -- Farm, Timber, and Real Estate]
[GRAPH: Capital Expenditures -- Farm, Timber, and Real Estate]
[GRAPH: Sales of Finished Lumber]
FARM, TIMBER, AND REAL ESTATE
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
(Thousands of dollars) 1994 1993
--------------------------------------------------------------------------------
<S> <C> <C>
Income contribution ................... $ 17,470 13,154
Total assets .......................... 155,583 150,261
Capital expenditures .................. 11,403 9,674
--------------------------------------------------------------------------------
Lumber sales - thousand board feet..... 138,377 115,136
Residential lots sold ................. 99 147
Land owned - acres
Farm............................... 36,000 36,000
Timber ............................ 341,000 341,000
Real estate ....................... 10,000 10,000
--------------------------------------------------------------------------------
</TABLE>
Through its wholly owned subsidiary, Deltic Farm & Timber Co., Inc., the
Company owns 36,000 acres of farmland in South Arkansas and North Louisiana,
341,000 acres of southern pine timberland, and two state-of-the-art sawmills in
Arkansas, and is developing the premier residential community in Little Rock,
Arkansas. Those activities produced record earnings in 1994 of $17.5 million, an
increase of 34 percent from the $13.1 million earned in 1993. Operating results
for farming and timber were up sharply compared to 1993, while real estate
earnings were down.
Earnings from farming operations of $1.1 million in 1994 represented a
substantial turnaround from a weather-related loss of $.1 million reported in
1993. Deltic's ecologically sound no-till and minimum tillage practices allowed
an early start for the 1994 planting season, which contributed to improved
yields and positive margins for all crops. In spite of an extended period of
rainfall late in the harvesting season, soybean yields increased 67 percent to a
record 40 bushels per acre. Cotton yields increased 34 percent to 883 pounds
per acre in 1994, and corn yields were up 61 percent to 113 bushels per acre.
Deltic's timber operations turned in another record year. Earnings for 1994
were $14.7 million, up 30 percent over the $11.3 million earned in 1993.
Combined finished lumber production from both mills was a record 136.7 million
board feet, an increase of 22 percent from the 112.4 million board feet produced
in 1993. The average sales price for finished lumber also set a record at $363
per thousand board feet, an increase of eight percent. Pretax mill margins were
$87 per thousand board feet in 1994 compared to $82 a year ago. An $8.3 million
expansion of the Waldo, Arkansas, mill was nearing completion at the end
[PHOTO APPEARS HERE]
23
<PAGE>
[PHOTO APPEARS HERE]
[PHOTO APPEARS HERE]
of 1994 and should be fully operational early in the second quarter of 1995. The
expansion included two additional steam-dry kilns, two boilers, and a bandmill.
The bandmill will provide enhanced product flexibility and allow Deltic to
maximize the value of each log processed. Harvest curtailments on federal lands
continue to add value to Deltic's timberland. Sales of pine sawtimber increased
eight percent to 40.6 million board feet in 1994. The average sales price
increased 20 percent to a record of $372 per thousand board feet. Hardwood
sawtimber sales were 1.9 million board feet in 1994 compared to 2.8 million in
1993. Pine pulpwood sales were up slightly from 1993 levels and totaled 12,988
cords.
Additional value will be added to timber operations by a 50-percent interest
in a 130 million board-feet-a-day medium-density fiberboard plant; construction
will commence in late 1995.
Real estate operations earned $1.9 million in 1994, down 20 percent from the
$2.4 million earned in 1993. Lot sales at Chenal Valley, Deltic's 4,300-acre
planned community in Little Rock, Arkansas, were adversely affected by rising
interest rates in 1994, as sales declined from 147 lots a year ago to 99 in
1994. Two new residential areas, Bretagne Court and The Oaks, were opened in the
second quarter of 1994. The Oaks is the first development in which Deltic is
participating in the construction of homes, and a model home was opened in the
fourth quarter. A home buyer may select from an approved set of plans, and
Deltic will provide a finished home on the lot chosen by the buyer. It is now
believed that the number of homes in Chenal has reached the level that will
support commercial development, and the sale of commercial acreage will be
actively pursued in 1995.
24
<PAGE>
FINANCIAL REVIEW
SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
(Thousands of dollars except per share data) 1994 1993 1992 1991 1990
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS FOR THE YEAR/1/
Sales and other operating revenues/2/.......... $1,738,152 1,654,623 1,631,284 1,608,568 1,922,674
Net cash provided by operations................ 337,283 362,973 284,159 213,635 284,431
Income (loss) from continuing operations....... 106,628 86,798 62,761 (9,607) 113,524
Income (loss) before extraordinary item
and cumulative effect of changes in
accounting principles........................ 106,628 86,798 86,616 (11,157) 98,746
Net income (loss).............................. 106,628 102,136 105,565 (11,157) 114,009
Per Common share
Income (loss) from continuing operations.... 2.37 1.94 1.40 (.24) 3.34
Income (loss) before extraordinary item
and cumulative effect of changes in
accounting principles.................... 2.37 1.94 1.93 (.28) 2.91
Net income (loss)........................... 2.37 2.28 2.35 (.28) 3.36
Dividends................................... 1.30 1.25 1.20 1.20 1.00
Percentage return on
Average stockholders' equity................ 8.6 8.4 8.8 (1.1) 13.8
Average borrowed and invested capital....... 8.0 8.4 9.7 1.5 13.2
Average total assets........................ 4.8 5.0 5.3 (.6) 6.5
--------------------------------------------------------------------------------------------------------------------------
CAPITAL EXPENDITURES FOR THE YEAR
Exploration and production/3/.................. $ 302,651 536,963 159,998 155,017 146,679
Refining, marketing, and transportation........ 94,697 86,885 68,073 63,143 59,056
Farm, timber, and real estate.................. 11,403 9,674 6,017 2,858 10,375
Corporate and other............................ 4,876 4,034 1,477 2,203 4,039
--------------------------------------------------------------------------------------------------------------------------
$ 413,627 637,556 235,565 223,221 220,149
==========================================================================================================================
FINANCIAL CONDITION AT YEAR-END
Current ratio.................................. 1.18 1.32 1.87 1.30 1.17
Working capital................................ $ 79,594 130,242 371,682 156,204 106,518
Net property................................... 1,722,661 1,549,250 1,073,179 1,128,641 1,040,825
Total assets................................... 2,312,032 2,168,859 1,936,514 2,174,626 2,126,719
Long-term obligations/4/....................... 172,452 109,218 24,929 193,152 207,867
Minority interest.............................. - - - - 180,516
Stockholders' equity........................... 1,270,679 1,222,350 1,200,088 1,200,819 873,163
Per share................................... 28.34 27.28 26.76 26.71 25.76
Long-term obligations/4/ -- percent of
capital employed............................. 11.9 8.2 2.0 13.9 16.5
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
/1/Includes effects on income of unusual or infrequently occurring items in
1994, 1993, and 1992 that are detailed in Management's Discussion and
Analysis, page 26. Also, unusual or infrequently occurring items in 1991 and
1990 resulted in an increase (decrease) to net income of $(67,333), $(1.71) a
share, and $17,923, $.53 a share, respectively.
/2/Prior year amounts have been restated to conform to 1994 presentation.
/3/Includes amounts expensed and cost of assets acquired by assuming directly
related liabilities.
/4/Includes nonrecourse debt of $122,638 in 1994 and $87,509 in 1993, 8.5
percent and 6.6 percent, respectively, of capital employed.
[GRAPH: Income Excluding Unusual Items]
[GRAPH: Cash Provided by Continuing Operations]
[GRAPH: Stockholders' Equity at Year-End]
25
<PAGE>
[GRAPH: Income Contribution by Operating Function]
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Consolidated net income for 1994 was $106.6 million, $2.37 a share,
compared to $102.1 million, $2.28 a share, in 1993. In 1992, the Company earned
$105.6 million, $2.35 a share. As reviewed in Note C to the consolidated
financial statements, the Company sold its contract drilling business effective
January 1, 1992. This activity has been accounted for as discontinued
operations, and net income for 1992 included a net gain of $23.9 million, $.53 a
share, from disposal of the contract drilling business. Results of operations
for the three years ended December 31, 1994 also included other unusual or
infrequently occurring items that resulted in net gains of $20.3 million, $.45 a
share, in 1994; $25.7 million, $.57 a share, in 1993; and $26.8 million, $.60 a
share, in 1992. The 1993 net gain included $15.3 million, $.34 a share, from
adoption of new accounting standards.
Income from continuing operations before unusual or infrequently
occurring items totaled $86.3 million in 1994, an increase of $9.9 million,
or 13 percent, compared to 1993. Earnings from the Company's exploration and
production operations increased $8.3 million, while income from the refining,
marketing, and transportation function declined $1.3 million. Income from
farm, timber, and real estate operations increased $4.4 million, and the cost
of corporate activities increased $1.5 million compared to 1993.
In 1993, income from continuing operations before unusual or
infrequently occurring items was $76.4 million, an increase of $21.5 million
compared to 1992. Earnings from exploration and production operations
improved by $1 million. Refining, marketing, and transportation profits
improved $23.5 million compared to 1992, and earnings from farm, timber, and
real estate operations increased $4.7 million. The cost of corporate
functions increased $7.7 million compared to 1992.
In the following table, the Company's results of operations for the three
years ended December 31, 1994 are presented by segment. Unusual or infrequently
occurring items, which can obscure underlying trends of operating results and
affect comparability between years, are set out separately. A review of the
information presented follows the table.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
(Millions of dollars) 1994 1993 1992*
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Exploration and production
United States ................................................ $18.1 32.7 42.2
Canada........................................................ 15.1 6.3 1.2
United Kingdom................................................ 6.0 3.5 (1.6)
Other international........................................... 6.0 (5.6) (5.9)
------------------------------------------------------------------------------------------------------------------------------------
45.2 36.9 35.9
------------------------------------------------------------------------------------------------------------------------------------
Refining, marketing, and transportation
United States................................................. 17.7 11.2 (6.0)
Western Europe................................................ 5.2 11.7 4.6
Canada........................................................ 7.3 8.6 9.4
------------------------------------------------------------------------------------------------------------------------------------
30.2 31.5 8.0
------------------------------------------------------------------------------------------------------------------------------------
Farm, timber, and real estate..................................... 17.5 13.1 8.4
Corporate and other............................................... (6.6) (5.1) 2.6
------------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations before
unusual or infrequently occurring items......................... 86.3 76.4 54.9
Settlement of DOE matters......................................... 13.9 - -
Refund and settlement of income tax matters....................... 6.4 14.4 33.7
Provision for environmental remediation matters................... - (4.0) (6.9)
------------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations................................. 106.6 86.8 81.7
Cumulative effect of changes in accounting principles for
Income taxes ................................................. - 31.8 -
Postretirement benefits other than pensions, net of taxes..... - (16.5) -
Gain on disposal of discontinued contract drilling segment........ - - 23.9
------------------------------------------------------------------------------------------------------------------------------------
Net income $106.6 102.1 105.6
====================================================================================================================================
</TABLE>
*The tax benefit of utilizing a financial net operating loss carryforward of
$18.9, reported in the 1992 Consolidated Statement of Income as an
extraordinary item, is allocated in this summary.
26
<PAGE>
EXPLORATION AND PRODUCTION -- Earnings from exploration and production
operations before unusual or infrequently occurring items were $45.2 million
in 1994, $36.9 million in 1993, and $35.9 million in 1992. A 50-percent
increase in crude oil and liquids production and a seven-percent reduction in
exploration expenses contributed to the increase in 1994 earnings. Partial
offsets were a seven-percent reduction in natural gas sales, primarily in the
U.S., and a nine-percent decline in the average sales price for U.S. natural
gas. Average crude oil sales prices were also lower in most of the Company's
producing areas. The increase in 1993 was due to an 11-percent increase in
crude oil and liquids production, a 10-percent increase in natural gas sales,
and a 26-percent decline in exploration expenses. These improvements were
essentially offset by lower average crude oil sales prices.
The results of operations for oil and gas producing activities for each
of the last three years are shown by major operating area on pages 52 and 53.
A summary of oil and gas revenues reflected therein is presented in the
following table.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
(Millions of dollars) 1994 1993 1992
--------------------------------------------------------------------------------
<S> <C> <C> <C>
United States
Crude oil .................. $ 73.7 81.7 90.9
Natural gas................. 136.1 165.8 122.0
Canada
Crude oil .................. 54.3 54.1 48.8
Natural gas ................ 19.7 16.4 11.2
Synthetic oil............... 52.7 - -
United Kingdom
Crude oil .................. 77.7 38.4 41.0
Natural gas ................ 9.0 11.0 13.4
Ecuador -- crude oil........... 7.9 - -
Other.......................... 17.6 17.2 28.3
--------------------------------------------------------------------------------
Total $448.7 384.6 355.6
================================================================================
</TABLE>
Daily production rates and weighted average sales prices are shown in
the statistical summary on page 55.
Worldwide crude oil and liquids production averaged 51,328 barrels a
day in 1994, 34,311 in 1993, and 30,820 in 1992. Crude oil and liquids
production in the U.S. declined three percent in 1994, with production from
new drilling nearly offsetting normal reservoir depletion. In 1993, a
three-percent increase in production was attributable to restoration of
production from certain fields damaged by Hurricane Andrew in August 1992.
Canadian production increased 69 percent in the current year following a
25-percent increase in 1993. The Company's acquisition near the end of 1993 of a
five-percent interest in a synthetic crude oil project contributed 9,065 barrels
a day to Canadian production in 1994. Production of heavy oil declined eight
percent in 1994 following a 39-percent increase in 1993 as the result of an
accelerated program to develop the Company's heavy oil reserves. A continuation
of this program was deferred in early 1994 in response to weak crude oil prices.
Resumption of the program is planned for early 1995. Murphy's average production
from the U.K. more than doubled in 1994, and included 5,566 barrels a day as a
result of the 1993 acquisition of an 11.26-percent interest in Block 16/17 ("T"
Block) in the North Sea. This block commenced production in November 1993 and
was averaging approximately 7,000 barrels a day at the end of 1994. Production
from the Ninian field in the North Sea was up over the prior year by 36 percent
in 1994 and one percent in 1993. The increase in 1994 was due to the acquisition
of an additional 3.82-percent interest in the field at the beginning of the
year. Production in Ecuador commenced in June 1994 from the three northern
fields in the concession and in December 1994 from one of the southern fields.
Production averaged 1,967 barrels a day in 1994 and was averaging approximately
6,000 barrels a day by the end of the year.
Worldwide sales of natural gas averaged 256.3 million cubic feet a day
in 1994, 274.9 million in 1993, and 250.6 million in 1992. Sales of natural
gas in the U.S. declined nine percent in 1994, primarily due to voluntary
production curtailments in response to low sales prices, as normal production
declines were nearly offset by incremental production from new fields placed
on stream during 1993 and 1994. Low sales prices for U.S. natural gas in
early 1995 have resulted in further production curtailments. Natural gas
sales for 1994 were at record levels in Canada, increasing three percent.
Natural gas sales were down 22 percent in the U.K., primarily as a result of
contractual restrictions on volumes available for sale. While natural gas
sales in Spain increased 32 percent in 1994, such sales were all from the
Gaviota field and will cease when the field becomes only a storage facility
for third-party natural gas in the second quarter of 1995. As a partial
offset, sales from the Albatros field are expected to commence in the third
quarter of 1995. In 1993, sales of natural gas increased 15 percent
[GRAPH: Range of U.S. Crude Oil Sales Prices]
[GRAPH: Range of U.S. Natural Gas Sales Prices]
27
<PAGE>
[GRAPH: Exploration Expenses]
in the U.S. Restoration of production shut in by Hurricane Andrew damage and
production from a new field accounted for the increase. Natural gas sales in
1993 increased 21 percent in Canada and two percent in the U.K., but declined 51
percent in Spain.
As previously indicated, worldwide crude oil prices were under pressure
throughout most of 1994. In the U.S., Murphy's 1994 average monthly sales
prices for crude oil ranged from $12.71 a barrel to $17.58, and averaged
$15.36 for the year, a seven-percent decline compared to 1993. In Canada, the
average sales price for light oil was $14.61 a barrel in 1994, a decrease of
three percent, while the average price for heavy oil ran counter to the trend
and increased seven percent to $10.56. The average sales price for synthetic
crude oil was $15.92 in 1994. U.K. sales prices ranged from $13.38 a barrel
to $17.63 and averaged $15.77 in 1994, a decrease of five percent from 1993.
Average crude oil prices in 1993 were 12 percent lower in both the U.S. and
the U.K. In Canada, average sales prices were down 10 percent for light oil
and 11 percent for heavy oil when compared to 1992.
In 1994, natural gas sales prices in the U.S. ranged from $1.42 an MCF
to $2.40. Prices for the year averaged $1.91 an MCF compared to $2.10 a year
ago. Subsequent to the end of the year, the average sales price for U.S. natural
gas has declined as much as 10 percent below the lowest price that occurred
during 1994. In Canada, the average 1994 sales price for natural gas increased
16 percent despite a strengthening U.S. dollar in relation to the Canadian
dollar. Sales prices in early 1995 are also on a downward trend in Canada.
Prices for 1994 increased five percent in the U.K. but decreased three percent
in Spain. Average natural gas sales prices in 1993 were up 20 percent in the
U.S., 21 percent in Canada, and two percent in Spain. The U.K. price declined 19
percent.
Based on 1994 volumes and deducting taxes at marginal rates, each $1 a
barrel and $.10 an MCF fluctuation in price would have affected annual
exploration and production earnings by $11.1 million and $6.1 million,
respectively. Consolidated net income could have been affected differently
because of contrary or corollary effects on other business segments.
Production costs were $164.8 million in 1994, $114.4 million in 1993, and
$110 million in 1992. These amounts are shown by major operating area on pages
52 and 53. Costs per equivalent barrel of production during the last three years
were as follows.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
(Dollars per
(equivalent barrel) 1994 1993 1992
--------------------------------------------------------------------------------
<S> <C> <C> <C>
United States.................. $ 3.31 3.21 3.00
Canada
Excluding syn-
thetic oil.............. 3.56 3.70 4.18
Synthetic oil............. 12.09 - -
United Kingdom................. 6.00 6.80 8.73
Ecuador........................ 8.21 - -
Worldwide -- exclud-
ing synthetic oil............ 4.02 3.91 4.14
================================================================================
</TABLE>
The increase in the cost per equivalent barrel in the U.S. in 1994 was
due primarily to lower production volumes resulting from curtailment of
natural gas sales. The increase in 1993 was due to higher insurance costs as
a result of Hurricane Andrew, partially offset by an increase in production
volumes. Reductions in Canada were due to strengthening of the U.S. dollar in
relation to the Canadian dollar, and in 1993, higher production volumes. The
U.K. cost per equivalent barrel was down in 1994 primarily as a result of
production from "T" Block. The reduction in 1993 was due to a successful cost
reduction program in the Ninian field, higher production volumes, and a
strengthening of the U.S. dollar in relation to the pound sterling.
Exploration expenses for each of the last three years are shown in
total in the following table, and amounts are reported by major operating
area on pages 52 and 53. Certain of the expenses are included in the capital
expenditure totals for exploration and production activities.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
(Millions of dollars) 1994 1993 1992
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Included in capital
expenditures
Dry hole costs.................... $16.6 21.5 29.9
Geological and
geophysical costs............... 9.5 7.6 8.9
Other costs....................... 5.6 4.9 5.9
--------------------------------------------------------------------------------
31.7 34.0 44.7
Undeveloped lease
amortization........................ 11.0 12.1 17.4
--------------------------------------------------------------------------------
Total $42.7 46.1 62.1
================================================================================
</TABLE>
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 expected to
occur during the second quarter of 1995.
Depreciation, depletion, and amortization
28
<PAGE>
totaled $169.8 million in 1994, $141.2 million in 1993, and $129.7 million in
1992. The increase in 1994 was primarily due to higher production volumes. The
increase in 1993 was mainly due to adoption of Statement of Financial Accounting
Standards No. 109 (SFAS No. 109), Accounting for Income Taxes. As reviewed in
Note B to the consolidated financial statements, SFAS No. 109 resulted in an
addition to net property, plant, and equipment, representing the tax effect of
prior business combinations originally recorded net of tax. Depreciation,
depletion, and amortization in 1993 was increased by $10.9 million attributable
to that adjustment; the amount was essentially offset by additional deferred
income tax benefits.
REFINING, MARKETING, AND TRANSPORTATION -- Earnings from refining, marketing,
and transportation operations before unusual or infrequently occurring items
were $30.2 million in 1994, $31.5 million in 1993, and $8 million in 1992.
Operations in the U.S. earned $17.7 million in 1994 compared to $11.2 million
in 1993. U.S. operations lost $6 million in 1992. Operations in Western
Europe earned $5.2 million in 1994 compared to $11.7 million in 1993 and $4.6
million in 1992. Canadian operations contributed $7.3 million to 1994
earnings compared to $8.6 million in 1993 and $9.4 million in 1992.
Unit margins (sales realizations less crude and other feedstocks,
refining, and costs to point of delivery) averaged $1.07 a barrel in the U.S.
in 1994, $.82 in 1993, and $.48 in 1992. U.S. product sales were down
slightly in 1994 following a six-percent increase in 1993. Although the
Company's southeastern marketing area remained highly competitive in 1994,
margins were generally higher throughout most of the year compared to 1993.
While continuing to benefit from a strong asphalt market during the summer
months, margins in the upper-midwest area were down slightly from 1993
levels. Both areas experienced a significant weakness in margins at the end
of 1994, and in early 1995, the Company was incurring losses in its U.S.
downstream operations. Margins improved in 1993 as the U.S. economy began to
recover from the depressed levels of 1992.
Margins in Western Europe averaged $2.17 a barrel in 1994, $3.08 in
1993, and $2.67 in 1992. Sales of petroleum products increased 24 percent in
1994 and three percent in 1993. Most of the 1994 increase related to
low-margin cargo sales. West European margins fluctuated widely in 1994, but
were generally below levels of a year ago and were declining late in the
year. Losses were also being incurred in Western Europe in early 1995.
Margins were up in 1993 due to an improvement in economic activity.
Based on sales volumes for 1994 and deducting taxes at marginal rates,
each $.42 a barrel ($.01 a gallon) fluctuation in unit margins would have
affected annual refining and marketing profits by $14.9 million. Consolidated
net income could have been affected differently because of contrary or corollary
effects on other business segments.
The earnings decline in 1994 from purchasing, transporting, and reselling
crude oil in Canada was due to lower crude trading volumes and a strengthening
of the U.S. dollar in relation to the Canadian dollar more than offsetting
higher pipeline throughputs. The decline in 1993 was due to lower crude trading
volumes and increased pipeline operating costs, offset in part by an increase in
throughput volumes.
FARM, TIMBER, AND REAL ESTATE -- Earnings from farm, timber, and real estate
operations were $17.5 million in 1994, $13.1 million in 1993, and $8.4 million
in 1992. The increase in 1994 was due to a strong performance from timber
operations, which earned $14.7 million, a $3.4 million improvement. Pine
sawtimber harvested from Company lands increased eight percent, and the average
sales price increased 20 percent to $372 per thousand board feet. Sales of
finished lumber increased 20 percent, and the average sales price increased
eight percent to $363 per thousand board feet. The earnings contribution from
real estate operations totaled $1.9 million, down $.5 million. Lot sales
declined 33 percent as higher interest rates began to adversely affect
construction of single-family homes. Farming operations earned $1.1 million
compared to an approximate break-even level in 1993. The improvement in 1993
earnings was primarily from timber operations, a $5.5 million increase, and real
estate operations, a $.6 million increase. Timber earnings were up as a result
of an increase in sales of pine sawtimber and lumber, combined with higher sales
prices. The improvement in earnings from real estate operations was due to an
increase in lot sales. The farms were hampered by adverse weather throughout
1993 and were down $1.2 million compared to 1992.
[GRAPH: Average Sales Price of U.S. Refined Products]
[GRAPH: Average Sawmill Margin]
29
<PAGE>
[GRAPH: Selling and General Expenses]
CORPORATE -- This segment includes interest income and expense and corporate
overhead not allocated to operating functions, and ordinarily results in a
net burden as in 1994 and 1993. The contribution to earnings of $2.6 million
in 1992 was due to use of proceeds from sale of the contract drilling
business, which resulted in a significant increase in interest income from
invested funds. A substantial portion of the invested funds has been used to
acquire oil and gas properties, resulting in lower interest income for 1993
and 1994.
UNUSUAL OR INFREQUENTLY OCCURRING ITEMS -- Net income for each of the three
years ended December 31, 1994 included certain unusual or infrequently
occurring items reviewed below. The information presented indicates the
quarter in which the item occurred. Certain other quarterly information is
presented on page 34.
* Settlement of DOE matters -- An after-tax gain of $13.9 million was
recorded in the third quarter of 1994 upon settlement of a dispute with the
U.S. Department of Energy (DOE) concerning the price at which the Company
sold certain of its crude oil production under regulations in effect from
September 1973 through January 1981. The pretax amount of the gain, $21
million, was included in "Interest, Income from Equity Companies, and other
Nonoperating Revenues" (see Note Q to the consolidated financial
statements).
* Refund and settlement of income tax matters -- A gain of $6.4 million for
settlement of income tax matters in the U.K. was recorded in the second
quarter of 1994. Gains of $11.3 million and $3.1 million were recorded in
the first and fourth quarters, respectively, of 1993, for refund and
settlement of income tax matters in the U.K. A $21.5 million gain for
refund of U.S. income taxes was recorded in the second quarter of 1992, and
a $12.2 million gain for settlement of income tax matters in the U.K. and
Gabon was recorded in the third quarter of 1992. The foregoing gains were
reflected primarily as reductions of income taxes.
* Provision for environmental remediation matters -- An after-tax provision
of $4 million was recorded in the fourth quarter of 1993 for environmental
remediation matters. After-tax provisions of $3.6 million and $3.3 million
were recorded in the second and fourth quarters, respectively, of 1992.
Pretax amounts of $6.2 million in 1993 and $8.7 million in 1992 were
included in "Crude Oil, Products, and Related Operating Expenses."
* Cumulative effect of changes in accounting principles -- The first quarter
of 1993 included a net benefit of $15.3 million for the cumulative effect
of accounting changes that were adopted effective January 1, 1993 (see Note
B to the consolidated financial statements).
* Gain on disposal of discontinued contract drilling segment -- The first
quarter of 1992 included a net gain of $20.3 million from sale of the
contract drilling business; the fourth quarter included a $3.6 million
adjustment to increase that gain, primarily related to a benefit from
curtailment of a pension plan (see Notes C and K to the consolidated
financial statements).
Excluding the cumulative effect of changes in accounting principles in
1993 and gain on disposal of discontinued contract drilling segment in 1992,
the income (loss) effects of unusual or infrequently occurring items are
summarized by segment in the following table for the three years ended
December 31, 1994.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
(Millions of dollars) 1994 1993 1992
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Exploration and
production
United States............... $ - - (.2)
United Kingdom.............. 6.4 14.4 3.3
Other international......... - - 4.2
--------------------------------------------------------------------------------
6.4 14.4 7.3
--------------------------------------------------------------------------------
Refining, marketing,
and transportation
United States............... - (3.9) (5.9)
Western Europe.............. - (.1) (2.8)
--------------------------------------------------------------------------------
- (4.0) (8.7)
--------------------------------------------------------------------------------
Corporate and other 13.9 - 28.2
--------------------------------------------------------------------------------
Total $20.3 10.4 26.8
================================================================================
</TABLE>
Certain of the unusual or infrequently occurring items had a significant
effect on the Company's consolidated effective income tax rates, which were 32
percent in 1994, 35 percent in 1993, and nine percent in 1992 (see Note G to the
consolidated financial statements).
IMPACT OF INFLATION
General inflation was moderate during the last three years in most
countries where the Company operates; however, Murphy's revenues and costs do
not necessarily correlate to changes in the general inflation rate. The
Company's capital and operating costs are
30
<PAGE>
influenced to a larger extent by specific price changes in the oil and gas and
allied industries. Crude oil and petroleum product prices generally reflect the
balance between supply and demand, with crude oil prices being particularly
sensitive to OPEC production levels and/or attitudes of traders concerning
supply/demand balance in the near future. Natural gas prices are affected by
supply and demand (which to a significant extent is weather-related) and by the
fact that delivery of natural gas is generally restricted to specific
geographical areas. Lumber and farm commodities reflect the balance between
supply and demand, while real estate sales respond to changes in the general
economy and interest rates.
CAPITAL EXPENDITURES
As shown in the selected financial information on page 25, capital
expenditures were $413.6 million in 1994 compared to $637.6 million in 1993
and $235.6 million in 1992. These amounts included $31.7 million, $34
million, and $44.7 million of exploration expenditures that were expensed.
Also included were $37.1 million in 1994 and $259.7 million in 1993 for
acquisition of proved oil and gas properties. Capital expenditures for
exploration and production activities totaled $302.6 million in 1994, 73
percent of the Company's total capital expenditures for 1994. Excluding
acquisition of proved properties, exploration and production activities
accounted for 71 percent of 1994 capital expenditures and totaled $265.5
million--$9.3 million for acquisition of undeveloped leases, $76.9 million
for exploration activities, and $179.3 million for development projects.
Development expenditures included $52.8 million for oil fields in Ecuador and
$52.2 million for the Hibernia oil field, offshore Newfoundland. The
expenditures for acquisitions of proved properties in 1994 included $14.9
million for an additional 3.82-percent interest in the Ninian oil field in
the North Sea and $21.6 million for a 10.7-percent interest in the Terra Nova
oil field, offshore Newfoundland. Exploration and production capital
expenditures are shown by major operating area on pages 52 and 53. Amounts shown
under "Other" in 1994 included $11.9 million for offshore Spain--primarily
$5 million for development of the Albatros field and $4.2 million for facilities
to store third-party natural gas.
Refining, marketing, and transportation expenditures, detailed in the
following table, were $94.7 million in 1994, or 23 percent of total capital
expenditures, compared to $86.9 million in 1993 and $68.1 million in 1992.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
(Millions of dollars) 1994 1993 1992
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Refining
United States............ $72.4 64.3 36.9
United Kingdom........... 2.1 2.1 11.1
--------------------------------------------------------------------------------
Total refining 74.5 66.4 48.0
--------------------------------------------------------------------------------
Marketing
United States............ 6.8 6.9 6.8
United Kingdom .......... 10.1 9.9 6.5
Canada................... .1 .1 .8
--------------------------------------------------------------------------------
Total marketing 17.0 16.9 14.1
--------------------------------------------------------------------------------
Transportation
United States............ 1.0 .2 .6
Canada................... 2.2 3.4 5.4
--------------------------------------------------------------------------------
Total transportation 3.2 3.6 6.0
--------------------------------------------------------------------------------
Total $94.7 86.9 68.1
================================================================================
</TABLE>
Refining expenditures of $74.5 million included $24.7 million at Meraux,
Louisiana, for sour crude processing facilities. Expenditures related to
environmental regulations totaled $34.3 million, of which $15.8 million was at
Superior, Wisconsin, for treatment of waste water and control of emissions.
Marketing expenditures of $17 million included the costs of sites and new
service stations, acquisition of stations, and improvements and replacements at
existing stations and terminals.
Capital expenditures for farm, timber, and real estate operations totaled
$11.4 million in 1994 compared to $9.7 million in 1993 and $6 million in 1992.
Expenditures in 1994 included $7.2 million for sawmill upgrades and other timber
operations, $3.9 million for real estate development, and $.3 million for the
farms.
CASH FLOWS
Cash provided by continuing operations was $337.3 million in 1994, $363
million in 1993, and $284.2 million in 1992. Such amounts included cash
provided from unusual or infrequently occurring items of $5.3 million in
1994, $11.8 million in 1993, and $41.5 million in 1992. Changes in operating
working capital other than cash and cash equivalents required cash of $16.2
million in 1994 and $30.9 million in 1992. In 1993, those changes provided
$.4 million of cash. Cash provided by continuing operations was reduced by
expenditures for refinery turnarounds and abandonment of oil and gas
properties totaling $55.3 million in
[GRAPH: Capital Expenditures in 1994]
31
<PAGE>
[GRAPH: Sources of Cash and Cash Equivalents in 1994]
[GRAPH: Uses of Cash and Cash Equivalents in 1994]
1994, $13.4 million in 1993, and $3.5 million in 1992. Additions to debt
provided $71 million of cash in 1994, including $42.8 million from nonrecourse
debt arrangements. Nonrecourse debt arrangements provided $27.7 million of cash
in 1993. Disposition of assets provided $365.4 million in 1992, primarily from
sale of the contract drilling business.
Capital expenditures required $413.6 million of cash in 1994, $570.2
million in 1993, and $235.6 million in 1992. The 1993 amount excludes $67.4
million of noncash, seller-financed capital expenditures. Other significant
cash outlays during the three years included $11.1 million in 1994 and $217
million in 1992 for reductions of debt. Cash used for dividends to
stockholders was $58.2 million in 1994, $55.9 million in 1993, and $53.8
million in 1992. The Company also repurchased 48,400 shares of its Common
Stock in 1993 and 161,100 shares in 1992 for costs of $1.6 million and $5.4
million, respectively.
FINANCIAL CONDITION
Year-end working capital totaled $79.6 million in 1994, $130.2 million
in 1993, and $371.7 million in 1992. The changes during the two most recent
years primarily reflect expenditures to expand the Company's oil and gas
business following the 1992 cash sale of the Company's contract drilling
business for $372 million. The current level of working capital does not
fully reflect the Company's liquidity position, as the relatively low
historical costs assigned to inventories under LIFO accounting were $57.4
million below current costs at December 31, 1994. Cash and equivalents at the
end of 1994 totaled $71.1 million compared to $141.2 million a year ago and
$377.8 million at year-end 1992.
Long-term obligations increased $63.2 million and were $172.5 million
at year-end, 12 percent of total capital employed, and included $122.6
million of nonrecourse debt incurred in connection with acquisition and
development of proved properties. Long-term obligations totaled $109.2
million at the end of 1993 compared to $24.9 million at year-end 1992.
Stockholders' equity was $1.27 billion at the end of 1994 compared to $1.22
billion a year ago. A summary of transactions in the equity accounts is
presented on page 39.
The primary sources of the Company's liquidity are internally generated
funds, access to outside financing, and working capital. The Company relies
on internally generated funds to finance the major portion of its capital and
other expenditures, but maintains lines of credit with banks and borrows as
necessary to meet spending requirements. Current financing arrangements are set
forth in Note E to the consolidated financial statements. At the end of 1994,
the Company also had a shelf registration on file with the SEC that would permit
the offer and sale of $250 million of debt securities. Because of the Company's
current financial position, no problem is anticipated in meeting future
requirements for funds.
The Company had commitments of $224 million for capital projects in
progress at December 31, 1994.
ENVIRONMENTAL
The Company's worldwide operations are subject to numerous laws and
regulations designed to protect the environment and/or impose remedial
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 after 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 a land farm, formerly used for disposal
of refinery waste, and closure of refinery water basins. If regulatory
authorities require more costly alternatives than the proposed processes, future
expenditures could increase by up to an estimated $8 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 four Superfund
sites and has been assigned responsibility by defendants at another Superfund
site. In addition, the Company
32
<PAGE>
is aware of one other site 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. 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 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 any requirement to bear a pro rata share of
costs attributable to nonparticipating PRP's or indications of additional
responsibility by the Company.
Although the Company is not aware of any environmental matters that might
have a material effect on the Company's 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 the 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
December 31, 1994 have not been reduced for any possible insurance recoveries.
The Company's refineries also incur costs to handle and dispose of
hazardous wastes and other chemical substances on a recurring basis. These costs
are generally expensed as incurred and amounted to $3.3 million in 1994.
In addition to remediation and other recurring expenditures, Murphy
commits a substantial amount of its capital expenditure program for compliance
with environmental laws and regulations. Such capital expenditures were
approximately $55 million in 1994 and are expected to be $48 million in 1995.
OTHER MATTERS
The effects of exchange rate fluctuations on net income and the Company's
use of derivative financial instruments are reviewed in Notes H and M,
respectively, to the consolidated financial statements.
The Financial Accounting Standards Board is expected to issue an
accounting standard in early 1995 that would be effective for fiscal years
beginning after December 15, 1995 and address the accounting for impairment of
long-lived assets. The standard will establish guidance for recognizing and
measuring impairment losses and require that the carrying amount of an impaired
asset be reduced to fair value. The standard will require a review for
impairment when events or changed circumstances indicate that the carrying
amount may not be recoverable. Recoverability would generally be determined by
future cash flows expected to result from use and eventual disposition of the
asset. The Company has not determined the impact that adoption of the standard
will have on its financial statements.
OUTLOOK
In planning for 1995, prices for the Company's products remain an
uncertainty. U.S. and Canadian natural gas prices dropped sharply in late
1994 and continued to decline in early 1995. In addition, the Company's three
downstream systems were incurring losses subsequent to year-end. In such an
environment, constant reassessment of spending plans is required. The
Company's capital expenditure budget for 1995 was prepared during the fall of
1994 and provides for expenditures of $368 million. A major portion of this
amount, $271 million or 74 percent, is allocated for exploration and
production. Geographically, about 42 percent of the exploration and
production money is designated for the U.S., with primary emphasis in the
Gulf of Mexico, 33 percent for Canada, including $46 million for further
development of the Hibernia oil field (most of which will be funded by
additional nonrecourse debt), 13 percent for the U.K., seven percent for
further development of oil fields in Ecuador, and the remaining five percent
for other overseas operations. Capital expenditures for refining, marketing,
and transportation are budgeted at $73 million, including $11 million for
environmental compliance projects at the Superior refinery. Budgeted
marketing capital expenditures total $11 million in the U.S. and $14 million
in the U.K. Other budgeted expenditures include $16 million for farm, timber,
and real estate operations, about equally divided between real estate and
sawmills, and $8 million for miscellaneous items. Capital and other expenditures
are under constant review, and these budgeted amounts may be adjusted to reflect
changes in estimated cash flow.
33
<PAGE>
QUARTERLY INFORMATION
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
1994/1/
------------------------------------------------------------------------------------------------------------------------------------
FIRST SECOND THIRD FOURTH
(Millions of dollars except per share amounts) QUARTER QUARTER QUARTER QUARTER YEAR
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales and other operating revenues/2/............. $406.6 432.9 470.0 428.7 1,738.2
Income before income taxes........................ 41.1 33.7 57.9 24.2 156.9
Net income........................................ 23.7 27.5 37.3 18.1 106.6
Per Common share/3/
Net income.................................... .53 .61 .83 .40 2.37
Dividends..................................... .325 .325 .325 .325 1.30
Market price
High.......................................... 44 3/4 46 47 3/8 49 1/8 49 1/8
Low........................................... 37 7/8 40 42 1/8 40 1/2 37 7/8
------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1993/1/
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales and other operating revenues/2/............ $394.3 423.5 417.7 419.1 1,654.6
Income before income taxes and cumulative
effect of changes in accounting principles...... 23.3 42.2 33.8 34.3 133.6
Income before cumulative effect of changes
in accounting principles........................ 23.9 22.7 20.2 20.0 86.8
Cumulative effect of changes in accounting
principles...................................... 15.3 - - - 15.3
Net income........................................ 39.2 22.7 20.2 20.0 102.1
Per Common share/3/
Income before cumulative effect of changes in
accounting principles....................... .53 .51 .45 .45 1.94
Cumulative effect of changes in accounting
principles.................................. .34 - - - .34
Net income.................................... .87 .51 .45 .45 2.28
Dividends..................................... .30 .30 .325 .325 1.25
Market price
High.......................................... 42 3/8 45 1/8 47 3/4 47 7/8 47 7/8
Low........................................... 33 38 7/8 39 1/2 37 5/8 33
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/1/The effects of unusual or infrequently occurring gains (losses) on quarterly
net income are reviewed in Management's Discussion and Analysis. Quarterly
totals, in millions of dollars, and the effect per Common share of these
unusual or infrequently occurring items are reported in the following table.
/2/Each quarterly period in 1993 and the first three quarters of 1994 have
been restated to conform to 1994 presentation.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
First Second Third Fourth
(Millions of dollars except per share amounts) Quarter Quarter Quarter Quarter Year
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1994
Quarterly totals..................................... $ - 6.4 13.9 - 20.3
Per Common share/3/.................................. - .14 .31 - .45
------------------------------------------------------------------------------------------------------------------------------------
1993
Quarterly totals..................................... $11.3 - - (.9) 10.4
Per Common share/3/.................................. .25 - - (.02) .23
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/3/Based on average number of Common and Common equivalent shares outstanding
during the respective periods.
Market prices of Common Stock are as quoted on the New York Stock Exchange.
There were 4,778 stockholders of record at December 31, 1994.
34
<PAGE>
REPORT OF MANAGEMENT
Preparation and integrity of the accompanying consolidated financial
statements and other financial data are the responsibility of management. The
statements were prepared in conformity with generally accepted accounting
principles appropriate in the circumstances and include some amounts based on
informed estimates and judgments, with consideration given to materiality.
Management is also responsible for maintaining a system of internal
accounting controls designed to provide reasonable assurance (but not
absolute) that financial information is objective and reliable by ensuring
that all transactions are properly recorded in the Company's accounts and
records, written policies and procedures are followed, and assets are
safeguarded. The system is also supported by careful selection and training
of qualified personnel. When establishing and maintaining such a system,
judgment is required to weigh relative costs against expected benefits.
Effectiveness of the controls is monitored by the Company's audit staff,
which independently and systematically evaluates and formally reports on the
adequacy and effectiveness of components of the system.
Our independent auditors, KPMG Peat Marwick LLP, have audited the
consolidated financial statements. Their audit was conducted in accordance
with generally accepted auditing standards and provides an independent
opinion about the fair presentation of the consolidated financial statements.
When performing their audit, KPMG Peat Marwick LLP considers the Company's
internal control structure to the extent they deem necessary to issue their
opinion on the financial statements. The Board of Directors appoints the
independent auditors; ratification of the appointment is solicited annually
from the shareholders.
Annually the Board of Directors appoints an Audit Committee to
perform an oversight role for the financial statements. This Committee is
composed solely of directors who are not employees of the Company. The
Committee meets periodically with representatives of management, the
Company's audit staff, and the independent auditors to review the Company's
internal controls, the quality of its financial reporting, and the scope and
results of audits. The independent auditors and the Company's audit staff have
unrestricted access to the Committee, without management's presence, to
discuss audit findings and other financial matters.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Murphy Oil Corporation:
We have audited the accompanying consolidated balance sheets of
Murphy Oil Corporation and Consolidated Subsidiaries as of December 31, 1994
and 1993, and the related consolidated statements of income, stockholders'
equity and cash flows for each of the years in the three-year period ended
December 31, 1994. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Murphy Oil Corporation and Consolidated Subsidiaries as of December 31, 1994
and 1993, and the results of their operations and their cash flows for each
of the years in the three-year period ended December 31, 1994, in conformity
with generally accepted accounting principles.
As discussed in Note B to the consolidated financial statements, the
Company adopted the provisions of Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 106, Employers' Accounting
for Postretirement Benefits Other Than Pensions, and Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes, in 1993.
KPMG PEAT MARWICK LLP
Shreveport, Louisiana
March 3, 1995
35
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
(Thousands of dollars except per share amounts)
-----------------------------------------------------------------------------------------------------------------------------
Years Ended December 31 1994 1993* 1992*
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Sales....................................................................... $1,679,198 1,599,833 1,596,394
Other operating revenues.................................................... 58,954 54,790 34,890
Interest, income from equity companies, and other nonoperating revenues..... 30,341 16,514 54,131
-----------------------------------------------------------------------------------------------------------------------------
Total revenues 1,768,493 1,671,137 1,685,415
-----------------------------------------------------------------------------------------------------------------------------
COSTS AND EXPENSES
Crude oil, products, and related operating expenses......................... 1,292,558 1,247,831 1,301,485
Exploration expenses, including undeveloped lease amortization.............. 42,741 46,071 62,097
Selling and general expenses................................................ 66,579 65,195 72,861
Depreciation, depletion, and amortization................................... 207,154 176,213 164,822
Interest expense............................................................ 12,403 7,614 17,079
Interest capitalized........................................................ (9,842) (5,414) (2,254)
-----------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 1,611,593 1,537,510 1,616,090
-----------------------------------------------------------------------------------------------------------------------------
Income from continuing operations before income taxes....................... 156,900 133,627 69,325
Federal and state income taxes ............................................. 37,536 40,383 19,018
Foreign income taxes (benefits)............................................. 12,736 6,446 (12,454)
-----------------------------------------------------------------------------------------------------------------------------
Income from continuing operations........................................... 106,628 86,798 62,761
Discontinued operations -- gain on disposal of contract drilling segment.... - - 23,855
-----------------------------------------------------------------------------------------------------------------------------
Income before extraordinary item and cumulative
effect of changes in accounting principles................................ 106,628 86,798 86,616
Extraordinary tax benefit from utilization of financial
net operating loss carryforward........................................... - - 18,949
Cumulative effect of changes in accounting principles....................... - 15,338 -
-----------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 106,628 102,136 105,565
=============================================================================================================================
PER COMMON SHARE
Income from continuing operations........................................... $ 2.37 1.94 1.40
Income from discontinued operations......................................... - - .53
-----------------------------------------------------------------------------------------------------------------------------
Income before extraordinary item and cumulative
effect of changes in accounting principles................................ 2.37 1.94 1.93
Extraordinary item.......................................................... - - .42
Cumulative effect of changes in accounting principles....................... - .34 -
-----------------------------------------------------------------------------------------------------------------------------
Net income $ 2.37 2.28 2.35
=============================================================================================================================
Average Common shares outstanding 44,882,182 44,856,635 44,931,208
=============================================================================================================================
</TABLE>
*Restated to conform to 1994 presentation.
See notes to consolidated financial statements, page 40.
36
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
(Thousands of dollars)
------------------------------------------------------------------------------------------------------------------------------------
December 31 1994 1993
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents................................................................ $ 71,144 141,225
Accounts receivable, less allowance for doubtful accounts
of $5,554 in 1994 and $5,379 in 1993................................................... 244,241 196,214
Inventories
Crude oil and raw materials.......................................................... 71,541 76,741
Finished products.................................................................... 44,890 42,959
Materials and supplies............................................................... 36,000 32,323
Prepaid expenses......................................................................... 36,357 35,042
Deferred income taxes.................................................................... 14,939 18,497
------------------------------------------------------------------------------------------------------------------------------------
Total current assets............................................................. 519,112 543,001
Investments and noncurrent receivables....................................................... 28,592 42,518
Property, plant, and equipment, at cost less accumulated depreciation,
depletion, and amortization of $2,350,578 in 1994 and $2,180,732 in 1993................... 1,722,661 1,549,250
Deferred charges and other assets............................................................ 41,667 34,090
------------------------------------------------------------------------------------------------------------------------------------
$2,312,032 2,168,859
====================================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term obligations.............................................. $ 7,615 10,859
Accounts payable......................................................................... 295,052 255,332
Accrued taxes other than taxes on income................................................. 36,297 33,303
Accrued insurance obligations............................................................ 23,105 28,420
Other accrued liabilities................................................................ 49,099 55,551
Income taxes............................................................................. 28,350 29,294
------------------------------------------------------------------------------------------------------------------------------------
Total current liabilities........................................................ 439,518 412,759
Notes payable and other long-term obligations................................................ 49,814 21,709
Nonrecourse debt of a subsidiary............................................................. 122,638 87,509
Deferred income taxes........................................................................ 140,610 117,571
Reserve for dismantlement costs.............................................................. 138,894 123,107
Reserve for major repairs.................................................................... 3,244 26,023
Deferred credits and other liabilities....................................................... 146,635 157,831
Stockholders' equity
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........................................................... 507,797 507,292
Retained earnings........................................................................ 820,568 772,172
Currency translation adjustments......................................................... (2,403) (1,514)
Unamortized restricted stock awards...................................................... (993) (660)
Treasury stock........................................................................... (103,065) (103,715)
------------------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 1,270,679 1,222,350
------------------------------------------------------------------------------------------------------------------------------------
$2,312,032 2,168,859
====================================================================================================================================
</TABLE>
See notes to consolidated financial statements, page 40.
37
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
(Thousands of dollars)
-------------------------------------------------------------------------------------------------------------------------
Years Ended December 31 1994 1993 1992
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Income from continuing operations............................................ $106,628 86,798 62,761
Adjustments to reconcile above income to net cash provided
by operating activities
Depreciation, depletion, and amortization................................ 207,154 176,213 164,822
Expenditures for major repairs and dismantlement costs................... (55,284) (13,391) (3,455)
Exploratory expenditures charged against income.......................... 31,696 33,945 44,701
Amortization of undeveloped leases....................................... 11,045 12,126 17,396
Deferred and noncurrent income tax charges (credits)..................... 21,328 36,970 (21,740)
Charge equivalent to federal income tax benefit of
operating loss carryforward............................................ - - 18,949
Gains from disposition of assets......................................... (1,575) (1,474) (1,709)
Other -- net............................................................. 15,404 32,422 39,399
-------------------------------------------------------------------------------------------------------------------------
336,396 363,609 321,124
(Increase) decrease in operating working capital other than cash
and cash equivalents................................................... (16,189) 418 (30,917)
Cumulative effect of accounting changes on working capital............... - 25,437 -
Net recoveries (expenditures) on insurance claim
to repair hurricane damage............................................. 14,673 (18,172) (11,560)
Other adjustments related to operating activities........................ 2,403 (8,319) 5,512
-------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 337,283 362,973 284,159
-------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Capital expenditures requiring cash.......................................... (413,627) (570,186) (235,565)
Proceeds from sale of property, plant, and equipment......................... 5,506 5,721 3,716
Other continuing operations -- net........................................... (1,243) 2,481 (2,847)
Sale of discontinued operations.............................................. - - 361,673
-------------------------------------------------------------------------------------------------------------------------
Net cash provided (required) by investing activities (409,364) (561,984) 126,977
-------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Additions to notes payable and other long-term obligations................... 28,248 161 236
Reductions of notes payable and other long-term obligations.................. (3,437) (3,738) (182,355)
Additions to nonrecourse debt of a subsidiary................................ 42,793 27,693 -
Reduction of nonrecourse debt of a subsidiary................................ (7,614) - -
Decrease in short-term notes payable......................................... - (2,795) (34,885)
Dividends paid............................................................... (58,232) (55,945) (53,821)
Purchase of Common Stock for treasury........................................ - (1,636) (5,440)
-------------------------------------------------------------------------------------------------------------------------
Net cash provided (required) by financing activities 1,758 (36,260) (276,265)
-------------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash equivalents 242 (1,349) (7,230)
-------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents......................... (70,081) (236,620) 127,641
Decrease applicable to discontinued operations............................... - - 8,139
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
OF CONTINUING OPERATIONS................................................... (70,081) (236,620) 135,780
Cash and cash equivalents of continuing operations at January 1.............. 141,225 377,845 242,065
-------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT DECEMBER 31 $ 71,144 141,225 377,845
=========================================================================================================================
</TABLE>
See notes to consolidated financial statements, page 40.
38
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
(Thousands of dollars)
------------------------------------------------------------------------------------------------------------------------------------
Years Ended December 31 1994 1993 1992
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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 at beginning and end of year 48,775 48,775 48,775
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL IN EXCESS OF PAR VALUE
Balance at beginning of year................................................ 507,292 506,962 506,559
Exercise and surrender of stock options..................................... 226 224 115
Restricted stock transactions............................................... 279 106 288
------------------------------------------------------------------------------------------------------------------------------------
Capital in excess of par value at end of year 507,797 507,292 506,962
------------------------------------------------------------------------------------------------------------------------------------
RETAINED EARNINGS
Balance at beginning of year................................................ 772,172 725,981 674,237
Net income for the year..................................................... 106,628 102,136 105,565
Cash dividends -- $1.30 a share in 1994, $1.25 a share in 1993, and
$1.20 a share in 1992..................................................... (58,232) (55,945) (53,821)
------------------------------------------------------------------------------------------------------------------------------------
Retained earnings at end of year 820,568 772,172 725,981
------------------------------------------------------------------------------------------------------------------------------------
CURRENCY TRANSLATION ADJUSTMENTS
Balance at beginning of year................................................ (1,514) 21,595 69,223
Translation losses during the year.......................................... (889) (23,109) (47,628)
------------------------------------------------------------------------------------------------------------------------------------
Currency translation adjustments at end of year (2,403) (1,514) 21,595
------------------------------------------------------------------------------------------------------------------------------------
UNAMORTIZED RESTRICTED STOCK AWARDS
Balance at beginning of year................................................ (660) (835) -
Stock awards................................................................ (800) - (1,180)
Amortization, forfeitures, and changes in price of Common Stock............. 467 175 345
------------------------------------------------------------------------------------------------------------------------------------
Unamortized restricted stock awards at end of year (993) (660) (835)
------------------------------------------------------------------------------------------------------------------------------------
TREASURY STOCK
Balance at beginning of year................................................ (103,715) (102,390) (97,975)
Shares purchased............................................................ - (1,635) (5,440)
Exercise and surrender of stock options..................................... 308 359 269
Awarded restricted stock, net of forfeitures................................ 342 (49) 756
------------------------------------------------------------------------------------------------------------------------------------
Treasury stock at end of year - 3,942,868 shares of Common Stock
in 1994, 3,967,631 shares in 1993, and 3,931,076 shares in 1992, at
cost (103,065) (103,715) (102,390)
------------------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY $1,270,679 1,222,350 1,200,088
====================================================================================================================================
</TABLE>
See notes to consolidated financial statements, page 40.
39
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A -- SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation -- The consolidated financial statements include the
accounts of Murphy Oil Corporation and all majority-owned subsidiaries.
Investments in 20- to 50-percent owned companies are accounted for by the equity
method. Other investments are generally carried at cost. The contract drilling
business segment, which was sold effective January 1, 1992, is accounted for as
discontinued operations. All significant intercompany accounts and transactions
have been eliminated.
Cash Equivalents -- Short-term investments (which include government securities
or other securities with government securities as collateral) that have a
maturity of three months or less from the date of purchase are classified as
cash equivalents.
Inventories -- Inventories of crude oil and refined products are generally
valued at cost applied on a last-in, first-out (LIFO) basis, which in the
aggregate is lower than market. Raw materials and lumber are stated at the lower
of average cost or market. Materials and supplies are valued at the lower of
average cost or estimated value.
Property, Plant, and Equipment -- The Company uses the successful efforts method
of accounting for exploration and development expenditures.
Leasehold acquisition costs are capitalized. When proved reserves are found on
an undeveloped property, leasehold cost is reclassified to proved properties.
Significant undeveloped leases are reviewed periodically, and a valuation
allowance is provided for any estimated decline in value. Cost of all other
undeveloped leases is amortized over the estimated average holding period of the
leases.
Costs of exploratory drilling are initially capitalized, but if proved reserves
are not found, the costs are subsequently expensed. All other exploratory costs
are charged to expense as incurred. Development costs are capitalized, including
the cost of unsuccessful development wells.
Worldwide undiscounted future net cash flows are compared annually to net
capitalized cost of proved properties to determine if an impairment has occurred
in the amount capitalized. As warranted by events, significant, high-cost
properties are assessed for permanent impairment based on discounted future net
cash flows.
Depreciation and depletion of producing oil and gas properties are provided
under the unit-of-production method. Developed reserves are used to compute
unit rates for unamortized tangible and intangible development costs, and
proved reserves are used for unamortized leasehold costs. Estimated
dismantlement, abandonment, and site restoration costs, net of salvage value,
are considered in determining depreciation and depletion provisions.
Depreciation of refining and marketing facilities is calculated using the
composite straight-line method. Depletion of timber is based on board feet
cut. Other properties are depreciated by individual unit based on the
straight-line method.
Gains and losses on disposals or retirements that are significant or include
an entire depreciable or depletable property unit are included in income.
Costs of dismantling oil and gas production facilities and site restoration
are charged against the related reserve. All other dispositions, retirements,
or abandonments are reflected in accumulated depreciation, depletion, and
amortization.
Provisions are made for refinery turnarounds by monthly charges to expense.
Costs incurred are charged against the reserve. All other maintenance and
repair costs are charged to expense. Renewals and betterments are
capitalized.
Environmental Liabilities -- A provision for environmentally related obligations
is recorded by a charge to expense when it is determined that the Company's
liability for an environmental assessment and/or cleanup is probable and the
cost can be reasonably estimated. Related expenditures are charged against the
reserve. Environmental expenditures that have future economic benefit are
capitalized.
Income Taxes -- Effective January 1, 1993, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes.
Under the asset and liability method required by SFAS No. 109, deferred tax
assets and liabilities are based on differences between the financial
statement carrying amounts and the tax bases of existing assets and
liabilities, and are measured using the enacted tax rates that are assumed
will be in effect when the differences reverse. The effect on deferred taxes
of a tax rate change is recognized in the statement of income for the period
covering the enactment date. Provision for petroleum revenue taxes payable to
the U.K. government is based on the estimated effective tax rate over the
life of certain U.K. properties.
Prior to 1993, the Company accounted for income taxes using the deferred
method prescribed by Accounting Principles Board Opinion No. 11. Under this
method, deferred income taxes were recognized for certain revenues and
expenses that affected financial and taxable income in different years, were
recorded using the tax rates applicable for the year of calculation, and were
not adjusted for subsequent tax rate changes.
Foreign Currency Translation -- Local currency is the "functional currency" used
for recording operations in Canada and Spain and the majority of activities in
the U.K. and Gabon. The U.S. dollar is the functional currency used to record
all other operations. Gains or losses that result from translating accounts from
foreign functional currencies into U.S. dollars are included in "Currency
Translation Adjustments" in stockholders' equity. Gains or losses that
40
<PAGE>
result from specific transactions in a currency other than the functional
currency are included in income.
Derivatives -- Unrealized gains and losses under oil swap and buy/sell
agreements are deferred unless the projected cost of future oil purchases,
including settlement costs, exceeds the projected realizable value of related
finished products. Realized gains and losses are included in the cost of
crude oil inventory when the related crude is purchased. Unrealized gains and
losses related to foreign currency contracts are deferred and recognized in
income or as adjustments to the carrying amounts when the hedged transactions
occur.
Excise Taxes on Refined Products -- Taxes collected on the sales of refined
products and remitted to governmental agencies are not included in revenues
or costs and expenses.
Net Income per Common Share -- This amount is computed by dividing net income
for each reporting period by the weighted average number of Common and Common
equivalent (stock options when dilutive) shares outstanding during the
period.
NOTE B -- ACCOUNTING CHANGES -- Effective January 1, 1993, the Company elected
the immediate recognition basis for implementing SFAS No. 106, Employers'
Accounting for Postretirement Benefits Other Than Pensions. This accounting
standard requires that these costs (supplemental health care and life
insurance) be accrued over the service lives of employees. Previously, the
Company expensed these costs when paid. The cumulative effect upon adoption
was a charge against income of $16,502,000, $.37 a share, after an income tax
effect of $8,500,000. Excluding the cumulative effect, adoption of the
standard did not significantly affect 1993 net income.
Effective January 1, 1993, the Company also adopted SFAS No. 109, Accounting
for Income Taxes, without restating prior years' results. The cumulative
effect of the change on 1993 net income was a benefit of $31,840,000, $.71 a
share. In addition, net property, plant, and equipment was increased
$82,092,000, and a corresponding increase was recorded in deferred income tax
liability, representing the tax effect of prior business combinations
originally recorded net of tax. As a result of adopting SFAS No. 109, 1993
income from continuing operations before income taxes was reduced
$10,916,000. This reduction was primarily due to increased depreciation,
depletion, and amortization expense caused by the adjustment for prior
business combinations. The increased expense was essentially offset by
additional deferred tax benefits.
NOTE C -- DISCONTINUED OPERATIONS -- Effective January 1, 1992, the Company
sold its contract drilling business for $372,127,000 in cash and reported a
net gain in 1992 of $23,855,000 from disposal of these operations.
NOTE D -- PROPERTY, PLANT, AND EQUIPMENT
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
INVESTMENT Investment
(Thousands of dollars) DECEMBER 31, 1994 December 31, 1993
--------------------------------------------------------------------------------
COST NET Cost Net
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Exploration and
production.................... $3,095,037 1,175,681* 2,858,996 1,075,655*
Refining....................... 562,101 278,629 484,043 221,455
Marketing...................... 156,501 104,832 140,478 94,558
Transportation................. 63,013 33,296 61,708 34,082
Farm, timber, and
real estate................... 166,061 112,217 158,740 107,834
Corporate and other............ 30,526 18,006 26,017 15,666
--------------------------------------------------------------------------------
$4,073,239 1,722,661 3,729,982 1,549,250
================================================================================
</TABLE>
*Includes $17,277 in 1994 and $18,021 in 1993 related to administrative
assets and support equipment.
The Company leases land, service stations, and other facilities under
operating leases. Future minimum rental commitments under noncancelable
operating leases are not material.
Commitments for capital expenditures including capital leases were
approximately $224,000,000 at December 31, 1994. This includes $104,000,000
applicable to the Hibernia oil field, most of which will be financed with
additional nonrecourse debt.
In 1994, the Company logged and cored a potentially producible natural gas
accumulation in a well drilled on Mobile Block 908. Cost of the well,
$14,445,000, was included in property, plant, and equipment at year-end
pending further evaluation expected to occur in the second quarter of 1995.
NOTE E -- FINANCING ARRANGEMENTS -- At December 31, 1994, the Company had three
committed credit facilities with major banks totaling $300,000,000 that provide
for a combination of U.S. dollar and Canadian dollar borrowings. Depending upon
the credit facility, borrowings bear interest at prime or various cost of funds
options. Facility fees are due at varying rates on certain of the commitments.
At December 31, 1994, outstanding debt under two of the facilities totaled US
$97,862,000, of which $69,862,000 was classified as long-term nonrecourse debt
of a subsidiary and $28,000,000 as long-term notes payable. The facilities
expire at dates ranging from 1995 through 1999. In addition, the Company had
lines of credit with banks totaling an equivalent US $69,961,000 for a
combination of U.S. dollar and Canadian dollar borrowings. These lines could be
withdrawn at any time, and no amounts were outstanding at December 31, 1994.
During 1994, the Company filed a shelf registration statement with the
Securities and Exchange Commission for $250,000,000 in debt securities. The
statement was declared effective September 30, 1994. No securities had been
issued as of December 31, 1994.
41
<PAGE>
NOTE F -- LONG-TERM OBLIGATIONS
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
(Thousands of dollars)
-----------------------------------------------------------------------------
December 31 1994 1993
-----------------------------------------------------------------------------
<S> <C> <C>
Notes payable
Note payable to bank, 10.1%, due 2004......... $ 20,000 20,000
Notes payable to bank, 6.3125%* to 6.75%*,
due 1999.................................... 28,000 -
Other notes due 1995-2000..................... 170 3,356
-----------------------------------------------------------------------------
Subtotal 48,170 23,356
-----------------------------------------------------------------------------
Capitalized lease obligations due 1995-2022,
6% and 8% 1,655 1,658
-----------------------------------------------------------------------------
Nonrecourse debt of a subsidiary
Guaranteed credit facility with bank, 6.1875%
to 7.455%, due 1996.......................... 69,862 27,100
Promissory note, 6.25%, due 1995-1998,
payable in Canadian dollars.................. 60,380 67,963
-----------------------------------------------------------------------------
Subtotal 130,242 95,063
-----------------------------------------------------------------------------
Total.................................... 180,067 120,077
Current maturities............................... (7,615) (10,859)
-----------------------------------------------------------------------------
Total long-term obligations $172,452 109,218
=============================================================================
</TABLE>
*Interest rates fluctuate in relation to bank's cost of funds.
Amounts becoming due for the four years after 1995 are: 1996, $10,640,000;
1997, $13,644,000; 1998, $28,530,000; and 1999, $28,015,000.
The nonrecourse guaranteed credit facility was incurred to finance expenditures
for the Hibernia oil field, in which the Company owns a 6.5-percent interest.
The government of Canada has provided, subject to certain conditions and
limitations, an unconditional guarantee of repayment of amounts drawn under the
credit facility to lenders possessing Participation Certificates issued by the
guarantee's trustee. The Company's maximum eligible borrowing available under
the guarantee is Cdn $154,885,000 (US $110,418,000 at December 31, 1994 currency
exchange rate). The Company also received other commitments from the Canadian
government, including grants and additional guarantees and loans. The amount
guaranteed declines quarterly beginning the earlier of January 1, 2000 or two
years after cumulative production reaches 25 million barrels; no guaranteed
financing is available after January 1, 2016. A guarantee fee of .5 percent is
payable annually in arrears to the Canadian government. The guaranteed credit
facility is not reflected as becoming due in 1996, since the Company intends to
refinance the debt.
The 6.25-percent promissory note of Cdn $79,970,000 (US $60,380,000 at a hedged
exchange rate) is payable to the province of Alberta and is secured by a
debenture, which mortgages the Company's five-percent interest in the Syncrude
project and its share of production therefrom. The province's right to recover
the principal and interest on the note is limited to the mortgaged property and
funds available from that production.
NOTE G -- INCOME TAXES -- The Company adopted SFAS No. 109, Accounting for
Income Taxes, effective January 1, 1993 without restating prior years. Total
income tax expense of $38,329,000 for 1993 included $46,829,000 allocated to
income from continuing operations, partially offset by a benefit of
$8,500,000 allocated to the cumulative effect of a change in accounting for
postretirement benefits.
The components of income from continuing operations before income taxes and
income tax expense (benefit) attributable thereto were as follows.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
(Thousands of dollars) 1994 1993 1992
-----------------------------------------------------------------------------
<S> <C> <C> <C>
Income from continuing operations
before income taxes
United States............................ $105,695 84,563 60,105
Foreign.................................. 51,205 49,064 9,220
-----------------------------------------------------------------------------
$156,900 133,627 69,325
=============================================================================
Income tax expense (benefit)
Federal - Current*....................... $ 6,010 29,941 17,213
Deferred....................... 23,682 97 (6,565)
Noncurrent..................... 3,708 4,977 (15,282)
Charge equivalent to income
tax benefit of net operating
loss carryforward............ - - 18,949
-----------------------------------------------------------------------------
33,400 35,015 14,315
-----------------------------------------------------------------------------
State - Current 4,136 5,368 4,703
-----------------------------------------------------------------------------
Foreign - Current........................ 15,398 (32,029) (12,561)
Deferred....................... 183 28,154 (6,363)
Noncurrent..................... (2,845) 10,321 6,470
-----------------------------------------------------------------------------
12,736 6,446 (12,454)
-----------------------------------------------------------------------------
$ 50,272 46,829 6,564
=============================================================================
</TABLE>
*Net of benefits in 1994 of $1,923 for alternative minimum tax credit and
in 1993 of $8,079 for net operating loss carryforward and $5,757 for
alternative minimum tax credit.
Noncurrent taxes relate to petroleum revenue taxes payable to the U.K.
government ($24,461,000 and $26,034,000 at December 31, 1994 and 1993 and
classified in the Consolidated Balance Sheet as "Deferred Credits and Other
Liabilities") and to matters not resolved with various taxing authorities. The
significant components of deferred income tax expense attributable to income
from continuing operations for the years ended December 31, 1994 and 1993 were
as follows.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
(Thousands of dollars) 1994 1993
--------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax expense (exclusive of the effects of
components listed below on deferred tax assets
and liabilities at the beginning of each year)... $23,883 18,270
Adjustments for enacted changes in tax laws
and rates........................................ - 190
Estimated net operating loss and tax credit
carryforwards used or adjusted................... (18) 9,791
--------------------------------------------------------------------------------
Total deferred tax expense $23,865 28,251
================================================================================
</TABLE>
Prior to adoption of SFAS No. 109, deferred income taxes (benefits) resulted
from recognizing income and expenses in different financial and tax reporting
periods. Timing differences and the tax effect of each were as follows for the
year ended December 31, 1992.
42
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
(Thousands of dollars) 1992
--------------------------------------------------------------------------------
<S> <C>
Petroleum revenue tax................................................ $ (1,827)
Alternative minimum tax.............................................. (9,078)
Other, net........................................................... (2,023)
--------------------------------------------------------------------------------
$(12,928)
================================================================================
</TABLE>
A reconciliation of the U.S. statutory income tax rates to the Company's
effective rates on income from continuing operations follows.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
1994 1993 1992
------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. statutory income tax rates............... 35% 35% 34%
Settlement of prior years' U.S. federal
tax audits................................. - - (10)
Adjustment of prior years' U.S.
noncurrent tax provisions.................. (2) - -
Foreign income (losses) subject to foreign
taxes at greater than U.S. statutory rates. 2 7 (8)
State income taxes............................ 2 3 -
Amortization of fair value in excess of
book value of properties acquired.......... - - 7
Refund and settlement of foreign tax matters.. (4) (11) (15)
Other, net.................................... (1) 1 1
------------------------------------------------------------------------------
Effective income tax rates 32% 35% 9%
==============================================================================
</TABLE>
An analysis of the Company's deferred tax assets and deferred tax liabilities at
December 31, 1994 and 1993 showing the tax effects of significant temporary
differences follows.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
(Thousands of dollars) 1994 1993
--------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets
Property and leasehold costs................... $ 64,700 58,673
Reserves for dismantlement
costs and major repairs...................... 47,372 51,305
Federal alternative minimum
tax credit carryforward*..................... 3,916 3,898
Postretirement and other employee benefits..... 16,902 16,290
Other deferred tax assets...................... 34,237 46,816
--------------------------------------------------------------------------------
Total gross deferred tax assets........... 167,127 176,982
Less valuation allowance....................... (39,315) (33,080)
--------------------------------------------------------------------------------
Net deferred tax assets 127,812 143,902
--------------------------------------------------------------------------------
Deferred tax liabilities
Property, plant, and equipment................. (56,689) (65,841)
Accumulated depreciation,
depletion, and amortization.................. (167,388) (151,483)
Other deferred tax liabilities................. (29,685) (25,887)
--------------------------------------------------------------------------------
Total gross deferred tax liabilities (253,762) (243,211)
--------------------------------------------------------------------------------
Net deferred tax liabilities $(125,950) (99,309)
================================================================================
</TABLE>
*Available to reduce future U.S. federal income taxes over an indefinite period.
In management's judgment, the net deferred tax assets in the preceding table
will more likely than not be realized as reductions of future taxable income
or by utilizing available tax planning strategies. The valuation allowance
for deferred tax assets at December 31, 1994 and 1993 increased $6,235,000
and $6,410,000, respectively, (the same as the increase in certain deferred
tax assets) from the amount determined as of January 1 of each year. Any
subsequent reductions of the valuation allowance will be reported as
reductions of income tax expense assuming no offsetting change in the
deferred tax asset.
The Company had undistributed earnings in certain foreign subsidiaries of
$23,783,000 for which no deferred tax provision has been made because the
earnings are considered permanently invested. Determination of the
unrecognized tax liability on these earnings is not practicable.
Income tax returns are subject to audit by the Internal Revenue Service (IRS)
and tax authorities of other countries. In 1994, 1993, and 1992, the Company
recorded benefits to income of $6,365,000, $14,409,000, and $33,686,000,
respectively, from settlement of various U.S. and foreign tax issues related
to prior years. The Company believes that adequate accruals have been made
for unsettled issues.
NOTE H -- CURRENCY TRANSLATION -- Cumulative translation gains and losses are
included as a separate component of stockholders' equity. At December 31, 1994,
components of the net cumulative reduction of $2,403,000 were: a $28,227,000
reduction for Canadian dollars, mostly offset by additions of $24,834,000 for
pounds sterling, $671,000 for Spanish pesetas, and $319,000 for Gabonese francs.
Most of the amounts translated into U.S. dollars are from transactions
denominated in Canadian dollars or pounds sterling. Net income was not
significantly affected in 1994, 1993, or 1992 by exchange rate fluctuations.
NOTE I -- INCENTIVE PLANS -- At December 31, 1994, the Company had a Stock
Incentive Plan, approved by the stockholders in 1992, that permits annual awards
of shares of the Company's Common Stock to executives and other key employees.
Under the Plan, the Executive Compensation Committee (the Committee) is
authorized to grant: (1) stock options (nonqualified or incentive), (2) stock
appreciation rights (SAR), and (3) restricted stock awards. Total shares granted
in a year may not exceed .5 percent of shares issued and outstanding at the end
of the preceding year. There were outstanding options for 109,230 shares at
December 31, 1994 under two prior plans that have expired.
* Stock options -- Option price for an incentive option is fair market
value on date of grant; for a nonqualified option, the Committee may
establish a price at no less than fair market on the date of grant. For
each option, the Committee fixes the term, not to exceed 10 years from
date of grant, and determines the earliest date the option may be
exercised.
* SAR -- SAR may be granted in conjunction with or independent of stock
options; the Committee determines when SAR may be exercised and the price.
No SAR have been granted under the Plan.
* Restricted stock awards -- Shares are awarded contingent upon the
Company's achieving specific financial objectives at the end of a
performance period. To date, 52,000 restricted shares have been awarded
and 11,489 shares have been forfeited, leaving 40,511 shares outstanding at
December 31, 1994. Costs of restricted shares charged against income were
$433,000 in 1994, $347,000 in 1993, and $313,000 in 1992.
43
<PAGE>
Changes in options outstanding under the Company's plans, excluding restricted
stock awards, were as follows.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Number Average
of Shares Price
--------------------------------------------------------------------------------
<S> <C> <C>
Outstanding January 1, 1992........... 298,375 $35.42
Granted............................... 115,750 35.94
Exercised............................. (800) 30.46
Surrendered........................... (52,015) 29.82
Expired............................... (20,274) 45.25
----------------------------------------------------------
Outstanding December 31, 1992......... 341,036 35.87
Granted............................... 81,000 36.31
Surrendered........................... (45,019) 29.58
----------------------------------------------------------
Outstanding December 31, 1993......... 377,017 36.72
Granted............................... 69,500 39.94
Surrendered........................... (54,950) 34.86
Expired............................... (51,837) 41.18
----------------------------------------------------------
Outstanding December 31, 1994 339,730 37.31
================================================================================
Exercisable December 31, 1993......... 137,517 $37.26
Exercisable December 31, 1994......... 147,480 36.32
================================================================================
</TABLE>
Cost of options reported in the preceding table is accrued over the vesting
periods and adjusted for subsequent changes in fair market value of the
shares. Charges against income were $1,024,000 in 1994, $1,190,000 in 1993,
and $276,000 in 1992.
In addition to the above plans, the Company has an Incentive Compensation Plan
that provides for annual cash awards to officers, directors, and key employees
based on actual results for a year compared to measurable financial performance
objectives established at the beginning of that year. The Plan is administered
by the Committee. Provisions of $1,200,000, $1,732,000, and $1,500,000 were
recorded in 1994, 1993, and 1992, respectively, in anticipation of future
awards.
NOTE J -- STOCKHOLDER RIGHTS PLAN -- The Company has a Stockholder Rights Plan,
which provides for each Common stockholder at the close of business on December
20, 1989 and each certificate issued thereafter to receive a dividend of one
Right for each share of the Company's Common Stock held. The Rights will expire
on December 6, 1999, unless earlier redeemed or exchanged. The Rights will
detach from the Common Stock and become exercisable following a specified period
of time, subject to extension, after the date of the first public announcement
that a person or group of affiliated or associated persons (other than certain
persons) has become the beneficial owner of 15 percent or more of the Company's
Common Stock.
The Rights have certain antitakeover effects and will cause substantial
dilution to a person or group that attempts to acquire the Company without
conditioning the offer on a substantial number of Rights being acquired.
However, the Rights are not intended to prevent a takeover, but rather are
designed to enhance the ability of the Board of Directors to negotiate with
an acquiror on behalf of all shareholders.
Other terms of the Rights are set forth in, and the foregoing description is
qualified in its entirety by, the Rights Agreement between the Company and
Harris Trust Company of New York, as Rights Agent.
NOTE K -- EMPLOYEE AND RETIREE BENEFITS
Retirement Plans -- The Company has defined benefit retirement plans that
cover substantially all employees. Benefits are based on years of service and
final-pay or career-average-pay formulas as defined by the plans. All plans
are noncontributory. The Company also has a nonqualified supplemental plan
for directors and supplemental plans that provide benefits to employees whose
defined benefits under their retirement plan formula cannot be fully funded
because of statutory limitations on the amount of benefits that may be paid
from qualified plans.
Retirement expense (expense reduction) and its components for 1994, 1993, and
1992 are shown in the following table except for a net expense reduction of
$2,969,000 in 1992 that relates to Plan curtailments and special termination
benefits included in the 1992 Consolidated Statement of Income under
"Discontinued Operations."
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
U.S. Plans Non-U.S. Plans
-----------------------------------------------------------------------------------------------------------------------------
(Thousands of dollars) 1994 1993 1992 1994 1993 1992
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Service cost - benefits earned during the year........ $ 3,736 3,780 4,422 1,537 1,478 2,174
Interest accrued on benefits earned in prior years.... 10,465 10,295 9,995 2,404 2,326 2,282
Actual return on plan assets.......................... (3,761) (8,564) (15,996) (894) (4,466) (2,458)
Net amortization and deferral......................... (10,900) (6,402) (1,659) (2,323) 1,463 (1,357)
-----------------------------------------------------------------------------------------------------------------------------
Retirement expense (expense reduction)*.......... (460) (891) (3,238) 724 801 641
Special termination benefits.......................... - 1,316 - - - -
Curtailment gain...................................... - - (1,091) - - -
-----------------------------------------------------------------------------------------------------------------------------
Net retirement expense (expense reduction) $ (460) 425 (4,329) 724 801 641
=============================================================================================================================
</TABLE>
*Major assumptions for the respective years 1994, 1993, and 1992 for U.S.
plans were discount rates of 6.75%, 6.75%, and 7.25% and long-term rates of
return on plan assets of 8.50%, 8.50%, and 9.00%. Major assumptions for non-
U.S. plans were discount rates of 6.50%-7.50% in 1994 and 7.50%-8.50% in 1993
and 1992; assumed long-term rates of return on plan assets were 6.50%-7.50% in
1994, 7.50%-8.50% in 1993, and 7.50%-9.00% in 1992.
44
<PAGE>
Amounts contributed to U.S. funded plans are actuarially determined and are
at least the minimum required by the Employee Retirement Income Security Act
of 1974. Amounts contributed to non-U.S. plans are based on local laws. The
supplemental plans are unfunded, and accumulated benefits exceeded assets in
one funded plan in 1994 and 1993. Accumulated benefits in excess of assets in
these plans were $5,916,000 in 1994 and $4,468,000 in 1993; these amounts
have been netted in the following table, which sets forth the combined funded
status of plans and amounts recognized in the Consolidated Balance Sheets.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
U.S. Plans Non-U.S. Plans
--------------------------------------------------------------------------------------------------------------------------------
(Thousands of dollars) 1994 1993 1994 1993
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Present value of accumulated benefits based on years of
service, applicable pay formula, and present pay levels
Vested............................................................... $124,154 130,872 26,104 27,428
Nonvested............................................................ 4,890 5,098 164 222
--------------------------------------------------------------------------------------------------------------------------------
Accumulated benefit obligation/1/................................. 129,044 135,970 26,268 27,650
Provision for future pay increases....................................... 19,569 20,671 5,677 4,918
--------------------------------------------------------------------------------------------------------------------------------
Projected benefit obligation/1/................................... 148,613 156,641 31,945 32,568
Plan assets -- at market value/2/........................................ 158,540 163,319 34,495 36,338
--------------------------------------------------------------------------------------------------------------------------------
Plan assets in excess of projected benefit obligation............. 9,927 6,678 2,550 3,770
Unrecognized net asset from transition to SFAS No. 87/3/................. (17,668) (19,669) (2,521) (2,737)
Unrecognized net loss (gain) from unfavorable (favorable) actuarial
experience.............................................................. 18,908 25,671 (5,102) (5,699)
Unrecognized prior service cost.......................................... 2,152 (130) 2,864 2,892
Additional minimum liability............................................. (1,658) (825) - -
--------------------------------------------------------------------------------------------------------------------------------
Prepaid (accrued) retirement cost $ 11,661 11,725 (2,209) (1,774)
================================================================================================================================
</TABLE>
/1/Major assumptions were discount rates of 6.50%-9.50% in 1994 and
6.50%-7.50% in 1993 and future pay rate increases of 5.00%-7.00% in 1994 and
5.00%-6.00% in 1993.
/2/Primarily includes listed stocks and bonds, government securities, U.S.
agency bonds, corporate bonds, and group annuity contracts.
/3/Being amortized over periods of 14 to 19.2 years.
Thrift Plans -- Most employees of the Company in the U.S. and Canada may
participate in thrift plans by allotting up to a specified percentage of their
base pay. The Company makes matching contributions at a stated percentage of
each employee's allotment based on length of participation in the plans.
Aggregate Company contributions to these plans for 1994, 1993, and 1992 were
$2,707,000, $2,631,000, and $2,502,000, respectively.
Postretirement Benefits -- The Company sponsors plans that provide comprehensive
health care benefits (as a supplement to Medicare benefits for those eligible)
and life insurance benefits for most U.S. retired employees. Retirees contribute
the same amounts to the self-funded cost of health care benefits as do active
employees, with the Company contributing the remainder. The Company pays
premiums for life insurance coverage, which is arranged through an insurance
company. The health care plan is funded on a pay-as-you-go basis. The Company
has the right to modify the benefits and/or cost-sharing provisions. No
postretirement benefits are provided by the Company for foreign employees.
Under SFAS No. 106, which was adopted January 1, 1993, the Company's 1994 and
1993 postretirement expense, based on actuarial computations, was $3,975,000 and
$2,854,000 in the respective years and is further detailed in the following
table. The cash cost of these benefits in 1992 was $1,295,000, which was
expensed as paid.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Health Life
--------------------------------------------------------------------------------
(Thousands of dollars) 1994 1993 1994 1993
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Service cost.......................... $ 858 581 37 23
Amortization of net actuarial loss.... 308 - 39 -
Interest cost......................... 2,516 1,989 217 261
--------------------------------------------------------------------------------
Postretirement expense $3,682 2,570 293 284
================================================================================
</TABLE>
The following table summarizes the postretirement benefit obligations
recorded in the Consolidated Balance Sheets at December 31, 1994 and 1993
that are classified as "Deferred Credits and Other Liabilities." Calculation
of the amount of accumulated unfunded postretirement benefit obligations (APBO)
was based on discount rates of 7.75 percent and 7.25 percent in 1994 and 1993.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Health Life
--------------------------------------------------------------------------------
(Thousands of dollars) 1994 1993 1994 1993
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
APBO
Retirees............................ $23,845 14,229 2,328 2,857
Fully eligible active participants.. 2,527 3,095 263 361
Other active participants........... 10,376 13,115 528 586
--------------------------------------------------------------------------------
Total unfunded APBO............... 36,748 30,439 3,119 3,804
Unrecognized net actuarial (loss) gain.. (11,293) (7,183) 64 (772)
--------------------------------------------------------------------------------
Accrued APBO obligations $25,455 23,256 3,183 3,032
================================================================================
</TABLE>
For measurement purposes, health care inflation cost for 1994 was determined
assuming an annual increase of nine percent, gradually decreasing to a rate
of six percent in 2003 and
45
<PAGE>
thereafter. An increase of one percent in the assumed health care cost trend in
each year would increase the postretirement benefit expense by 19.5 percent and
the APBO at December 31, 1994 by 14.5 percent.
NOTE L -- SUPPLEMENTAL CASH FLOWS DISCLOSURES -- Cash income taxes paid, net of
refunds, were $29,999,000, $14,802,000, and $(20,347,000) in 1994, 1993, and
1992. Interest paid, net of amounts capitalized, was $1,873,000, $1,575,000,
and $14,714,000 in 1994, 1993, and 1992. A noncash investing and financing
activity excluded from the Consolidated Statements of Cash Flows was the
assumption of $67,370,000 of nonrecourse debt in 1993 upon acquisition of a
five-percent interest in the Syncrude project.
(Increases) decreases in noncash operating working capital for each of the three
years ended December 31, 1994 were as follows.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
(Thousands of dollars) 1994 1993 1992
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Accounts receivable.......................... $(48,027) 45,183 48,865
Inventories.................................. (408) (15,166) (17,107)
Prepaid expenses............................. (1,315) 7,467 (23,813)
Deferred income tax assets................... 3,558 (18,497) -
Accounts payable and accrued liabilities..... 30,947 (5,922) (41,409)
Current income tax liabilities............... (944) (12,647) 2,547
--------------------------------------------------------------------------------
$(16,189) 418 (30,917)
================================================================================
</TABLE>
NOTE M -- DERIVATIVE FINANCIAL INSTRUMENTS -- The Company utilizes derivative
transactions on a limited basis to manage well-defined risks related to
commodity prices and foreign currency exchange rates. The Company does not
hold any derivatives for trading purposes.
Occasionally the Company uses derivative agreements to reduce the financial
exposure of its U.S. refinery operations to unfavorable market movements
related to crude oil inventories and/or anticipated crude oil purchases.
Under each agreement, the Company receives or pays a cash settlement at
maturity based on the differential between the agreement price and a future
crude oil price as specified in the agreement. At December 31, 1994, the
Company had swap agreements for 4,500,000 barrels and buy/sell agreements for
875,000 barrels. Maturity dates on these agreements range from the first
quarter of 1995 to the third quarter of 1997. Estimated settlement costs
under the agreements using December 31, 1994 oil prices exceeded projected
revenues by $1,368,000, which was recorded as a reduction of pretax income in
the 1994 Consolidated Statement of Income.
The Company has foreign exchange contracts to manage certain foreign exchange
risks. At December 31, 1994, the Company had hedging contracts to buy
Cdn $79,970,000, fixing the U.S. dollar costs for the Company's Canadian dollar
nonrecourse debt. The Company also had a hedging contract to sell
US $5,000,000, fixing the Canadian dollar revenues from the sale of Canadian
crude in U.S. dollars.
NOTE N -- FAIR VALUE OF FINANCIAL INSTRUMENTS -- The following table presents
the carrying amounts and estimated fair values of financial instruments held
by the Company at December 31, 1994 and 1993. 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, and trade accounts payable, all of
which had fair values approximating carrying values.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
1994 1993
-----------------------------------------------------------------------------------------------
Carrying or Estimated Carrying or Estimated
Notional Fair Notional Fair
(Thousands of dollars) Amount Value Amount Value
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Financial assets
Investments and
noncurrent receivables.......... $ 10,625 10,625 9,783 9,783
Financial liabilities
Long-term obligations
including current
maturities...................... (180,067) (178,355) (120,077) (125,172)
Payables (derivatives)............ (1,368) (4,828) - (2,400)
Off-balance-sheet exposures
Financial guarantees and
letters of credit............... (45,164) (45,164) (83,888) (83,888)
===============================================================================================
</TABLE>
The carrying amounts of financial assets and financial liabilities shown in
the preceding table are included in the Consolidated Balance Sheets under the
indicated captions.
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate
that value.
* Investments and noncurrent receivables -- Fair value of investments carried
on an equity basis and insurance receivables are not required to be
included in the table. The carrying value of the remainder approximates
fair value.
* Long-term obligations including current maturities -- The fair value is
estimated based on current rates offered the Company for debt of the same
maturities.
* Payables (derivatives) -- The amounts relate to the Company's oil swap
and buy/sell agreements. The negative fair value is an estimate of the
amount, which is based on quotes from brokers, that the Company would be
required to pay at the reporting date to cancel the agreements.
* Financial guarantees and letters of credit -- The fair value is based on
the estimated cost to terminate or otherwise settle these obligations with
the counterparties.
NOTE O -- CONCENTRATION OF CREDIT RISKS -- The Company's primary credit risk is
from trade accounts receivable. These receivables arise mainly from sales of
crude oil, natural gas, and petroleum products to a large number of customers
in the U.S., Canada, and Western Europe. The credit history and financial
condition of potential customers are reviewed before credit is extended,
security may be obtained then or later, routine follow-up evaluations are
made, and an allowance for doubtful accounts is maintained, generally based
upon a risk
46
<PAGE>
evaluation of specific customers. The Company also has certain off-balance-sheet
financial instruments (see Note N to the consolidated financial statements); the
Company controls the credit risks on these instruments through credit approvals
and monitoring procedures and believes such risks are minimal. Historically, the
Company has not incurred any significant credit-related losses, and at December
31, 1994, the Company had no significant concentration of credit risk outside
the oil and gas industry.
NOTE P -- OTHER FINANCIAL INFORMATION -- Inventories valued at cost under the
LIFO method totaled $90,515,000 at December 31, 1994 and $89,721,000 at December
31, 1993. These amounts were $57,389,000 and $46,255,000, respectively, less
than such inventories would have been valued using the FIFO method.
Net gains (losses) from foreign currency transactions were $51,000 in 1994,
$10,000 in 1993, and $(214,000) in 1992.
NOTE Q -- CONTINGENCIES -- The Company's operations and earnings have been and
may be affected by various 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 protection
and/or remediation of the environment; 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.
DOE Matters -- In 1994 the Company and the U.S. Department of Energy (DOE)
entered into a Consent Order that settled a long-outstanding Proposed Remedial
Order (PRO), under which DOE alleged that the Company had received amounts for
crude oil and/or related transportation charges in excess of amounts allowed
under DOE regulations that were in effect from 1973 through 1981. Pursuant to
the Consent Order, the Company paid $10,700,000 inclusive of interest. As an
offset to the settlement payment, the Company received approximately $3,200,000
from certain interest owners in the affected properties and is seeking
additional contributions from other interest owners. The settlement resulted in
a $21,034,000 benefit ($13,871,000 after tax) to the Company, and it was
recorded in "Interest, Income from Equity Companies, and Other Nonoperating
Revenues" in the Consolidated Statement of Income for 1994.
Environmental Matters -- The Company's environmental contingencies are reviewed
in Management's Discussion and Analysis under the section entitled
"Environmental" on page 32.
Other Matters -- 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. 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 December 31, 1994, the Company had contingent liabilities of
$30,122,000 on outstanding letters of credit. Contingent liability under a
guaranty and pipeline throughput agreement was $15,042,000 at December 31, 1994.
NOTE R -- BUSINESS SEGMENTS -- Information about business segments and
geographic operations is summarized in the following tables. Excise taxes on
petroleum products of $524,464,000, $391,177,000, and $358,968,000 for the years
1994, 1993, and 1992 were excluded from revenues and costs and expenses.
Intracompany and affiliated company transfers are at market prices. Companies
accounted for by the equity method are primarily engaged in the transportation
of crude oil and petroleum products.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
(Thousands of dollars) 1994 1993* 1992*
------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES FOR THE YEAR
Petroleum
Exploration and production
United States.................... $ 215,533 253,257 216,546
Canada........................... 127,122 71,447 61,102
United Kingdom................... 99,767 53,567 56,548
Other international.............. 26,289 16,606 20,850
------------------------------------------------------------------------------
468,711 394,877 355,046
------------------------------------------------------------------------------
Refining, marketing,
and transportation
United States.................... 908,705 950,907 969,084
Canada........................... 26,885 29,601 29,286
Western Europe................... 306,297 274,898 287,880
------------------------------------------------------------------------------
1,241,887 1,255,406 1,286,250
------------------------------------------------------------------------------
1,710,598 1,650,283 1,641,296
Intrasegment transfers elimination. (60,306) (65,041) (69,660)
------------------------------------------------------------------------------
Total petroleum............... 1,650,292 1,585,242 1,571,636
Farm, timber, and real estate --
United States....................... 87,860 69,381 59,648
Corporate and other.................. 30,341 16,514 54,131
------------------------------------------------------------------------------
$1,768,493 1,671,137 1,685,415
==============================================================================
</TABLE>
*Restated to conform to 1994 presentation.
47
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
(Thousands of dollars) 1994 1993/1//2/ 1992/1//3/
---------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING INCOME FOR THE YEAR
Petroleum
Exploration and production.......... $ 68,386 68,637 23,702
Refining, marketing, and
transportation..................... 50,642 45,539 9,038
---------------------------------------------------------------------------
Total petroleum................. 119,028 114,176 32,740
Farm, timber, and real estate.......... 28,710 21,170 13,532
---------------------------------------------------------------------------
Operating income................ 147,738 135,346 46,272
Nonoperating (charges) credits
Income of equity companies.......... 1,129 973 2,180
Income taxes........................ (50,272) (46,829) (6,564)
Corporate and other revenues
(expenses) -- net.................. 8,033 (2,692) 20,873
Gain from discontinued operations,
net of minority interest and
income taxes....................... - - 23,855
Extraordinary item.................. - - 18,949
Cumulative effect of accounting
changes............................ - 15,338 -
---------------------------------------------------------------------------
Net income $106,628 102,136 105,565
===========================================================================
NET INCOME (LOSS) FOR THE YEAR
Petroleum
Exploration and production
United States..................... $ 18,128 32,701 42,044
Canada............................ 15,097 6,304 1,181
United Kingdom.................... 12,409 17,931 1,692
Other international............... 5,984 (5,666) (1,676)
---------------------------------------------------------------------------
51,618 51,270 43,241
---------------------------------------------------------------------------
Refining, marketing, and
transportation
United States.................... 17,674 7,246 (11,954)
Canada........................... 7,298 8,628 9,377
Western Europe................... 5,231 11,625 1,895
---------------------------------------------------------------------------
30,203 27,499 (682)
---------------------------------------------------------------------------
Total petroleum................ 81,821 78,769 42,559
Farm, timber, and real estate --
United States......................... 17,470 13,154 8,362
Corporate and other.................... 7,337 (5,125) 30,789
---------------------------------------------------------------------------
Income from continuing
operations.................... 106,628 86,798 81,710
Gain from discontinued operations...... - - 23,855
Cumulative effect of changes in
accounting principles................. - 15,338 -
---------------------------------------------------------------------------
$106,628 102,136 105,565
===========================================================================
</TABLE>
/1/Operating income has been restated to conform to 1994 presentation.
/2/As set forth in Note B to the consolidated financial statements, the
effect on operating income for the exploration and production segment
of petroleum from adoption of SFAS No. 109, Accounting for Income
Taxes, was a reduction of $10,916; adoption of SFAS No. 106, Employers'
Accounting for Postretirement Benefits Other Than Pensions, had no
significant effect on operating income.
/3/The tax benefit of utilizing a financial net operating loss carryforward
of $18,949 in 1992, reported in the Consolidated Statement of Income as an
extraordinary item, is allocated to the applicable segments in the net
income (loss) summary.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
(Thousands of dollars) 1994 1993 1992
-----------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS AT YEAR-END
Petroleum
Exploration and production
United States................. $ 386,830 461,087 426,231
Canada........................ 415,318 343,880 162,888
United Kingdom................ 320,143 306,248 133,499
Other international........... 170,111 111,903 66,876
-----------------------------------------------------------------------------
1,292,402 1,223,118 789,494
-----------------------------------------------------------------------------
Refining, marketing, and
transportation
United States................ 500,467 378,405 346,151
Canada....................... 55,578 63,353 67,599
Western Europe............... 156,884 147,444 161,311
-----------------------------------------------------------------------------
712,929 589,202 575,061
-----------------------------------------------------------------------------
Total petroleum............ 2,005,331 1,812,320 1,364,555
Farm, timber, and real estate --
United States................... 155,583 150,261 141,784
Corporate and other............... 151,118 206,278 430,175
-----------------------------------------------------------------------------
$2,312,032 2,168,859 1,936,514
=============================================================================
ADDITIONS TO PROPERTY, PLANT, AND
EQUIPMENT FOR THE YEAR
Petroleum
Exploration and production
United States................ $ 59,847 71,883 56,038
Canada....................... 105,355 172,838 15,988
United Kingdom............... 41,151 190,269 33,037
Other international.......... 64,602 68,028 10,233
-----------------------------------------------------------------------------
270,955 503,018 115,296
-----------------------------------------------------------------------------
Refining, marketing, and
transportation
United States................ 80,272 71,363 44,198
Canada....................... 2,234 3,474 6,225
Western Europe............... 12,191 12,048 17,650
-----------------------------------------------------------------------------
94,697 86,885 68,073
-----------------------------------------------------------------------------
Total petroleum............ 365,652 589,903 183,369
Farm, timber, and real estate --
United States.................. 11,403 9,674 6,017
Corporate and other............... 4,876 4,034 1,477
-----------------------------------------------------------------------------
$ 381,931 603,611 190,863
=============================================================================
DEPRECIATION, DEPLETION, AND
AMORTIZATION EXPENSE FOR THE YEAR
Petroleum
Exploration and production
United States................. $ 93,057 97,196 81,935
Canada........................ 25,088 21,062 19,058
United Kingdom................ 46,787 18,276 20,294
Other international........... 4,837 4,651 8,409
-----------------------------------------------------------------------------
169,769 141,185 129,696
-----------------------------------------------------------------------------
Refining, marketing, and
transportation
United States................. 19,928 20,144 20,741
Canada........................ 1,573 1,466 1,298
Western Europe................ 9,589 8,562 8,503
-----------------------------------------------------------------------------
31,090 30,172 30,542
-----------------------------------------------------------------------------
Total petroleum............ 200,859 171,357 160,238
Farm, timber, and real estate --
United States..................... 3,886 3,488 3,152
Corporate and other................ 2,409 1,368 1,432
-----------------------------------------------------------------------------
$ 207,154 176,213 164,822
=============================================================================
</TABLE>
48
<PAGE>
SUPPLEMENTAL OIL AND GAS INFORMATION (unaudited)
The following schedules are presented in accordance with Statement of
Financial Accounting Standards No. 69 (SFAS No. 69), Disclosures about Oil
and Gas Producing Activities. The schedules provide users with a common base
for preparing estimates of future cash flows and comparing reserves among
companies. Additional background information follows concerning four of the
schedules.
SCHEDULES 1 AND 2 -- ESTIMATED NET PROVED OIL AND GAS RESERVES
Reserves of crude oil, condensate, and natural gas liquids and natural gas
are estimated by Company engineers and adjusted to reflect contractual
arrangements and royalty rates in effect at the end of each year. Many
assumptions and judgmental decisions are required to estimate reserves.
Quantities reported are considered reasonable, but they are subject to future
revisions, some of which may be substantial, as additional information
becomes available. Such additional knowledge may be gained as the result of:
reservoir performance, new geological and geophysical data, additional
drilling, technological advancements, price changes, and other economic
factors.
Regulations published by the Securities and Exchange Commission define proved
reserves as those volumes of crude oil, condensate, and natural gas liquids and
natural gas that geological and engineering data demonstrate with reasonable
certainty are recoverable from known reservoirs under existing economic and
operating conditions. Proved developed reserves are those volumes expected to be
recovered through existing wells with existing equipment and operating methods.
Proved undeveloped reserves are those volumes expected to be recovered as a
result of making additional investments by drilling new wells on acreage
offsetting productive units, recompleting existing wells, and/or installing
facilities to collect and transport volumes produced.
Production quantities shown are net volumes withdrawn from reservoirs. These
generally differ from quantities sold due to inventory changes and,
especially in the case of natural gas, volumes consumed for fuel and/or
shrinkage from extraction of natural gas liquids. Such differences were
insignificant for crude oil and liquids. For natural gas, they amounted to
approximately .7 billion cubic feet in 1994, .9 billion cubic feet in 1993,
and .7 billion cubic feet in 1992. Crude oil and natural gas liquids reserves
reported under the heading "Other" were located in Spain and Gabon.
The Company has no proved reserves attributable to either long-term supply
agreements with foreign governments or investees accounted for by the equity
method.
Reserves of synthetic crude oil in Canada are attributable to the Syncrude
project and are based on an estimated average gross production rate through
the year 2025 of 191,800 barrels a day less estimated royalty. Proved
reserves will change if the future average production rate varies from the
current estimated rate, which is based on the actual rate in 1994, or the
operating permit is extended beyond 2025.
SCHEDULE 5 -- RESULTS OF OPERATIONS FOR OIL AND GAS PRODUCING ACTIVITIES
Results of operations from exploration and production activities by
geographic area are reported on this schedule as if these activities were a
separate corporate entity rather than part of an integrated operation that will
ultimately refine crude oil and sell refined products. Results of oil and gas
producing activities should be considered in conjunction with the Company's
overall performance.
SCHEDULE 6 -- STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS
RELATING TO PROVED OIL AND GAS RESERVES
SFAS No. 69 requires calculation of future net cash flows using a 10-percent
annual discount factor and year-end (1994 and 1993) prices, costs, and
statutory tax rates, except for known future changes such as contracted
prices and legislated tax rates. Future net cash flows from the Company's
interest in synthetic oil are excluded.
The calculated value of proved reserves is not necessarily indicative of
either fair market value or present value of future cash flows because
prices, costs, and governmental policies do not remain static; appropriate
discount rates may vary; and extensive judgment is required to estimate the
timing of production. Other logical assumptions would likely have resulted in
significantly different amounts. Average crude oil prices at year-end 1994 used
for this calculation were $15.35 a barrel for the United States, $14.04 for
Canadian light, $10.96 for Canadian heavy, $16.28 for Hibernia, $16.02 for the
United Kingdom, and $12.23 for Ecuador. Average natural gas prices were $1.65 an
MCF for the United States, $1.13 for Canada, $2.46 for the United Kingdom, and
$2.66 for Spain.
Schedule 6 also presents a summary of the principal reasons for change in the
standardized measure of discounted future net cash flows for each of the three
years ended December 31, 1994.
49
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 1 -- ESTIMATED NET PROVED OIL RESERVES
-----------------------------------------------------------------------------------------------------------------------------------
Crude Oil, Condensate, and Natural Gas Liquids
----------------------------------------------------------- Synthetic
United United Oil --
(Millions of barrels) States Canada* Kingdom Ecuador Other Total Canada Total
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PROVED
JANUARY 1, 1992................................. 22.8 21.8 14.7 33.5 .2 93.0 - 93.0
Revisions of previous estimates................. 1.9 1.7 .7 2.1 2.1 8.5 - 8.5
Purchases of minerals in place.................. 1.5 .2 - - - 1.7 - 1.7
Extensions, discoveries, and other additions.... 1.9 2.5 - - - 4.4 - 4.4
Production...................................... (4.9) (3.7) (2.3) - (.5) (11.4) - (11.4)
Sales of minerals in place...................... - (.2) - - - (.2) - (.2)
-----------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1992............................... 23.2 22.3 13.1 35.6 1.8 96.0 - 96.0
Revisions of previous estimates................. .3 .8 (.5) (2.0) .7 (.7) - (.7)
Purchases of minerals in place.................. - 14.8 16.5 - - 31.3 83.8 115.1
Extensions, discoveries, and other additions.... 1.5 3.2 - - - 4.7 - 4.7
Production...................................... (5.0) (4.6) (2.4) - (.6) (12.6) - (12.6)
Sales of minerals in place...................... - (.1) - - - (.1) - (.1)
-----------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1993............................... 20.0 36.4 26.7 33.6 1.9 118.6 83.8 202.4
REVISIONS OF PREVIOUS ESTIMATES................. 4.3 2.8 (2.5) 2.1 (1.5) 5.2 18.3 23.5
PURCHASES OF MINERALS IN PLACE.................. - .5 5.2 - - 5.7 - 5.7
EXTENSIONS, DISCOVERIES, AND OTHER ADDITIONS.... 5.1 2.7 - - - 7.8 - 7.8
PRODUCTION...................................... (4.9) (4.5) (4.9) (.7) (.4) (15.4) (3.3) (18.7)
SALES OF MINERALS IN PLACE...................... - (.4) - - - (.4) - (.4)
-----------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1994............................... 24.5 37.5 24.5 35.0 - 121.5 98.8 220.3
===================================================================================================================================
PROVED DEVELOPED
January 1, 1992................................. 16.9 21.8 13.0 - .2 51.9 - 51.9
December 31, 1992............................... 16.3 22.2 11.7 - 1.8 52.0 - 52.0
December 31, 1993............................... 13.2 22.4 20.8 - 1.9 58.3 83.8 142.1
DECEMBER 31, 1994............................... 15.2 23.6 19.2 3.8 - 61.8 80.5 142.3
==================================================================================================================================
</TABLE>
*Excludes 24.7 million barrels of crude oil to be added to proved reserves
subsequent to start-up of production from the Hibernia oil field.
[GRAPH: Estimated Net Proved Oil Reserves]
[GRAPH: Estimated Net Proved Gas Reserves]
[GRAPH: Net Hydrocarbons Production]
50
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 2 -- ESTIMATED NET PROVED GAS RESERVES
--------------------------------------------------------------------------------------------------------------
United United
(Billions of cubic feet) States Canada Kingdom Spain Total
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PROVED
JANUARY 1, 1992...................................... 396.2 204.9 41.1 16.6 658.8
Revisions of previous estimates...................... 11.4 1.2 (1.0) (5.4) 6.2
Purchases of minerals in place....................... 91.9 3.4 - - 95.3
Extensions, discoveries, and other additions......... 15.4 8.9 - - 24.3
Production........................................... (69.5) (11.1) (4.7) (7.1) (92.4)
Sales of minerals in place........................... - (6.9) - - (6.9)
--------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1992.................................... 445.4 200.4 35.4 4.1 685.3
Revisions of previous estimates...................... 48.0 (10.5) .6 4.1 42.2
Purchases of minerals in place....................... .3 .9 - - 1.2
Extensions, discoveries, and other additions......... 14.8 5.5 - 5.9 26.2
Production........................................... (79.5) (13.4) (4.8) (3.5) (101.2)
Sales of minerals in place........................... - (.2) - - (.2)
--------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1993.................................... 429.0 182.7 31.2 10.6 653.5
REVISIONS OF PREVIOUS ESTIMATES...................... 20.2 (2.9) 2.1 1.2 20.6
PURCHASES OF MINERALS IN PLACE....................... - .5 - - .5
EXTENSIONS, DISCOVERIES, AND OTHER ADDITIONS......... 53.2 11.0 - - 64.2
PRODUCTION........................................... (72.1) (13.8) (3.7) (4.6) (94.2)
SALES OF MINERALS IN PLACE........................... (.2) (.8) - - (1.0)
--------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1994 430.1 176.7 29.6 7.2 643.6
==============================================================================================================
PROVED DEVELOPED
January 1, 1992...................................... 230.5 172.5 25.5 16.6 445.1
December 31, 1992.................................... 217.0 164.0 32.3 4.1 417.4
December 31, 1993.................................... 239.1 158.0 28.1 10.6 435.8
DECEMBER 31, 1994.................................... 221.6 165.0 29.6 7.2 423.4
==============================================================================================================
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE 3 -- CAPITALIZED COSTS RELATING TO OIL AND GAS PRODUCING ACTIVITIES
-----------------------------------------------------------------------------------------------------------------------------------
Synthetic
United United Oil --
(Millions of dollars) States Canada Kingdom Ecuador Other Subtotal Canada Total
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DECEMBER 31, 1994
UNPROVED OIL AND GAS PROPERTIES........... $ 109.2 27.5 21.0 - 9.8 167.5 - 167.5
PROVED OIL AND GAS PROPERTIES............. 1,397.7 517.6/1/ 603.9 149.6 114.1 2,782.9 108.9 2,891.8
-----------------------------------------------------------------------------------------------------------------------------------
GROSS CAPITALIZED COSTS............... 1,506.9 545.1 624.9 149.6 123.9 2,950.4 108.9 3,059.3
ACCUMULATED DEPRECIATION,
DEPLETION, AND AMORTIZATION
UNPROVED OIL AND GAS PROPERTIES......... (55.0) (15.3) (.8) - (5.9) (77.0) - (77.0)
PROVED OIL AND GAS PROPERTIES/2/........ (1,136.1) (239.5) (339.6) (3.8) (100.5) (1,819.5) (4.4) (1,823.9)
-----------------------------------------------------------------------------------------------------------------------------------
NET CAPITALIZED COSTS $ 315.8 290.3 284.5 145.8 17.5 1,053.9 104.5 1,158.4
===================================================================================================================================
December 31, 1993
Unproved oil and gas properties........... $ 92.3 29.1 13.5 - 11.0 145.9 - 145.9
Proved oil and gas properties............. 1,377.9 457.1/1/ 541.3 96.7 94.4 2,567.4 109.9 2,677.3
-----------------------------------------------------------------------------------------------------------------------------------
Gross capitalized costs............... 1,470.2 486.2 554.8 96.7 105.4 2,713.3 109.9 2,823.2
Accumulated depreciation,
depletion, and amortization
Unproved oil and gas properties......... (50.6) (15.8) (.7) - (5.9) (73.0) - (73.0)
Proved oil and gas properties/2/........ (1,069.8) (246.6) (284.4) - (91.8) (1,692.6) - (1,692.6)
-----------------------------------------------------------------------------------------------------------------------------------
Net capitalized costs $ 349.8 223.8 269.7 96.7 7.7 947.7 109.9 1,057.6
===================================================================================================================================
</TABLE>
/1/Includes costs of $107.5 in 1994 and $37.4 in 1993 related to oil fields
offshore Newfoundland not yet developed.
/2/Does not include reserve for dismantlement costs of $138.9 in 1994 and
$123.1 in 1993.
51
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 4 -- COSTS INCURRED IN OIL AND GAS PROPERTY ACQUISITION, EXPLORATION, AND DEVELOPMENT ACTIVITIES
-----------------------------------------------------------------------------------------------------------------------------------
1994
-----------------------------------------------------------------------------------------------------------------------------------
United Synthetic
United King- Ecua- Sub- Oil--
(Millions of dollars) States Canada dom dor Other total Canada Total
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Property acquisition costs
Unproved.................................... $ 6.8 2.5 - - - 9.3 - 9.3
Proved...................................... - 22.2 14.9 - - 37.1 - 37.1
-----------------------------------------------------------------------------------------------------------------------------------
Total acquisition costs................ 6.8 24.7 14.9 - - 46.4 - 46.4
Exploration costs.............................. 49.2 11.7 11.6 - 4.4 76.9 - 76.9
Development costs.............................. 23.4 68.7 19.8 52.8 9.3 174.0 5.3 179.3
-----------------------------------------------------------------------------------------------------------------------------------
Total capital expenditures 79.4 105.1 46.3 52.8 13.7 297.3 5.3 302.6
-----------------------------------------------------------------------------------------------------------------------------------
Charged to expense
Dry hole expense............................ 11.4 2.4 2.8 - - 16.6 - 16.6
Geophysical and other costs................. 8.2 2.6 2.4 - 1.9 15.1 - 15.1
-----------------------------------------------------------------------------------------------------------------------------------
Total charged to expense 19.6 5.0 5.2 - 1.9 31.7 - 31.7
-----------------------------------------------------------------------------------------------------------------------------------
Expenditures capitalized $59.8 100.1 41.1 52.8 11.8 265.6 5.3 270.9
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE 5 -- RESULTS OF OPERATIONS FOR OIL AND GAS PRODUCING ACTIVITIES
-----------------------------------------------------------------------------------------------------------------------------------
1994
-----------------------------------------------------------------------------------------------------------------------------------
United Synthetic
United King- Ecua- Sub- Oil--
(Millions of dollars) States Canada dom dor Other total Canada Total
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Crude oil and natural gas liquids
Transfers to consolidated operations...... $ 60.3 - - - - 60.3 - 60.3
Sales to unaffiliated enterprises......... 13.4 54.2 77.8 7.9 5.9 159.2 52.7 211.9
Natural gas................................. 136.1 19.7 9.0 - 11.7 176.5 - 176.5
---------------------------------------------------------------------------------------------------------------------------------
Total oil and gas revenues............. 209.8 73.9 86.8 7.9 17.6 396.0 52.7 448.7
Other operating............................. 5.7 .5 13.0 - .8 20.0 - 20.0
---------------------------------------------------------------------------------------------------------------------------------
Total revenues 215.5 74.4 99.8 7.9 18.4 416.0 52.7 468.7
---------------------------------------------------------------------------------------------------------------------------------
Costs and deductions
Production costs............................ 55.5 24.3 33.3 5.9 5.8 124.8 40.0 164.8
Exploration expenses........................ 19.6 5.0 5.2 - 1.9 31.7 - 31.7
Undeveloped lease amortization.............. 8.2 2.8 - - - 11.0 - 11.0
Depreciation, depletion, and amortization... 93.1 19.9 46.8 3.8 1.0 164.6 5.2 169.8
Selling and general expenses................ 13.8 4.6 3.1 .1 1.3 22.9 .1 23.0
---------------------------------------------------------------------------------------------------------------------------------
Total costs and deductions 190.2 56.6 88.4 9.8 10.0 355.0 45.3 400.3
---------------------------------------------------------------------------------------------------------------------------------
25.3 17.8 11.4 (1.9) 8.4 61.0 7.4 68.4
Income tax provisions (benefits) 7.2 7.8 (1.0) - .5 14.5 2.3 16.8
---------------------------------------------------------------------------------------------------------------------------------
Results of operations/2/ $ 18.1 10.0 12.4 (1.9) 7.9 46.5 5.1 51.6
=================================================================================================================================
</TABLE>
/1/Restated to conform to 1994 presentation.
/2/Excludes corporate overhead and interest.
52
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 4 -- COSTS INCURRED IN OIL AND GAS PROPERTY ACQUISITION, EXPLORATION, AND DEVELOPMENT ACTIVITIES (Contd.)
-----------------------------------------------------------------------------------------------------------------------------------
1993
-----------------------------------------------------------------------------------------------------------------------------------
United Synthetic
United King- Ecua- Sub- Oil--
(Millions of dollars) States Canada dom dor Other total Canada Total
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Property acquisition costs
Unproved.................................... 2.2 1.9 - - .3 4.4 - 4.4
Proved...................................... 1.4 5.0 144.3 - - 150.7 109.0 259.7
-----------------------------------------------------------------------------------------------------------------------------------
Total acquisition costs................ 3.6 6.9 144.3 - .3 155.1 109.0 264.1
Exploration costs.............................. 39.9 9.2 5.0 - 6.1 60.2 - 60.2
Development costs.............................. 49.4 52.7 42.9 67.7 - 212.7 - 212.7
-----------------------------------------------------------------------------------------------------------------------------------
Total capital expenditures 92.9 68.8 192.2 67.7 6.4 428.0 109.0 537.0
-----------------------------------------------------------------------------------------------------------------------------------
Charged to expense
Dry hole expense............................ 15.2 2.4 (.5) - 4.4 21.5 - 21.5
Geophysical and other costs................. 5.8 2.6 2.5 - 1.6 12.5 - 12.5
-----------------------------------------------------------------------------------------------------------------------------------
Total charged to expense 21.0 5.0 2.0 - 6.0 34.0 - 34.0
-----------------------------------------------------------------------------------------------------------------------------------
Expenditures capitalized 71.9 63.8 190.2 67.7 .4 394.0 109.0 503.0
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
1992
-------------------------------------------------------------------------------------------------------------
United
United King- Ecua-
(Millions of dollars) States Canada dom dor Other Total
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Property acquisition costs
Unproved.................................... 2.1 2.4 - - 3.5 8.0
Proved...................................... 12.5 1.4 - - - 13.9
-------------------------------------------------------------------------------------------------------------
Total acquisition costs................ 14.6 3.8 - - 3.5 21.9
Exploration costs.............................. 44.5 7.6 16.5 .1 10.7 79.4
Development costs.............................. 13.8 10.4 28.0 5.7 .8 58.7
-------------------------------------------------------------------------------------------------------------
Total capital expenditures 72.9 21.8 44.5 5.8 15.0 160.0
-------------------------------------------------------------------------------------------------------------
Charged to expense
Dry hole expense............................ 11.3 2.7 8.6 - 7.3 29.9
Geophysical and other costs................. 5.6 3.1 2.9 .1 3.1 14.8
-------------------------------------------------------------------------------------------------------------
Total charged to expense 16.9 5.8 11.5 .1 10.4 44.7
-------------------------------------------------------------------------------------------------------------
Expenditures capitalized 56.0 16.0 33.0 5.7 4.6 115.3
=============================================================================================================
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE 5 -- RESULTS OF OPERATIONS FOR OIL AND GAS PRODUCING ACTIVITIES (Contd.)
-----------------------------------------------------------------------------------------------------------------------------------
1993/1/
-----------------------------------------------------------------------------------------------------------------------------------
United Synthetic
United King- Ecua- Sub- Oil--
(Millions of dollars) States Canada dom dor Other total Canada Total
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Crude oil and natural gas liquids
Transfers to consolidated operations...... 65.1 - - - - 65.1 - 65.1
Sales to unaffiliated enterprises......... 16.6 54.1 38.4 - 8.0 117.1 - 117.1
Natural gas................................. 165.8 16.4 11.0 - 9.2 202.4 - 202.4
-----------------------------------------------------------------------------------------------------------------------------------
Total oil and gas revenues............. 247.5 70.5 49.4 - 17.2 384.6 - 384.6
Other operating............................. 5.8 .9 4.2 - (.6) 10.3 - 10.3
-----------------------------------------------------------------------------------------------------------------------------------
Total revenues 253.3 71.4 53.6 - 16.6 394.9 - 394.9
-----------------------------------------------------------------------------------------------------------------------------------
Costs and deductions
Production costs............................ 58.1 25.4 21.2 - 9.7 114.4 - 114.4
Exploration expenses........................ 21.0 5.0 2.0 - 6.0 34.0 - 34.0
Undeveloped lease amortization.............. 8.9 2.5 - - .7 12.1 - 12.1
Depreciation, depletion, and amortization... 97.2 21.1 18.3 - 4.6 141.2 - 141.2
Selling and general expenses................ 14.3 5.7 3.3 .1 1.1 24.5 - 24.5
-----------------------------------------------------------------------------------------------------------------------------------
Total costs and deductions 199.5 59.7 44.8 .1 22.1 326.2 - 326.2
-----------------------------------------------------------------------------------------------------------------------------------
53.8 11.7 8.8 (.1) (5.5) 68.7 - 68.7
Income tax provisions (benefits) 21.1 5.4 (9.1) - - 17.4 - 17.4
-----------------------------------------------------------------------------------------------------------------------------------
Results of operations/2/ 32.7 6.3 17.9 (.1) (5.5) 51.3 - 51.3
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
1992/1/
--------------------------------------------------------------------------------------------------------------
United
United King- Ecua-
(Millions of dollars) States Canada dom dor Other Total
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Crude oil and natural gas liquids
Transfers to consolidated operations...... 62.6 - 7.1 - - 69.7
Sales to unaffiliated enterprises......... 28.3 48.8 33.9 - 10.0 121.0
Natural gas................................. 122.0 11.2 13.4 - 18.3 164.9
--------------------------------------------------------------------------------------------------------------
Total oil and gas revenues............. 212.9 60.0 54.4 - 28.3 355.6
Other operating............................. 3.6 1.1 2.1 - (7.4) (.6)
--------------------------------------------------------------------------------------------------------------
Total revenues 216.5 61.1 56.5 - 20.9 355.0
--------------------------------------------------------------------------------------------------------------
Costs and deductions
Production costs............................ 49.1 23.3 25.8 - 11.8 110.0
Exploration expenses........................ 16.9 5.8 11.5 .1 10.4 44.7
Undeveloped lease amortization.............. 10.3 3.8 - - 3.3 17.4
Depreciation, depletion, and amortization... 81.9 19.1 20.3 - 8.4 129.7
Selling and general expenses................ 16.8 6.2 5.1 .1 1.3 29.5
--------------------------------------------------------------------------------------------------------------
Total costs and deductions 175.0 58.2 62.7 .2 35.2 331.3
--------------------------------------------------------------------------------------------------------------
41.5 2.9 (6.2) (.2) (14.3) 23.7
Income tax provisions (benefits) (.5) 1.7 (7.9) - (12.8) (19.5)
--------------------------------------------------------------------------------------------------------------
Results of operations/2/ 42.0 1.2 1.7 (.2) (1.5) 43.2
==============================================================================================================
</TABLE>
/1/ Restated to conform to 1994 presentation.
/2/ Excludes corporate overhead and interest.
53
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 6 -- STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED OIL AND GAS RESERVES/1/
------------------------------------------------------------------------------------------------------------------------------------
United United
(Millions of dollars) States Canada/2/ Kingdom Ecuador Other Total
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DECEMBER 31, 1994
FUTURE CASH INFLOWS............................................. $1,071.3 714.4 453.5 387.2 21.1 2,647.5
FUTURE PRODUCTION AND DEVELOPMENT COSTS......................... (518.9) (505.6) (259.7) (186.9) (3.6) (1,474.7)
FUTURE INCOME TAXES............................................. (147.0) (50.1) 11.8 (18.0) (3.6) (206.9)
------------------------------------------------------------------------------------------------------------------------------------
FUTURE NET CASH FLOWS......................................... 405.4 158.7 205.6 182.3 13.9 965.9
10% ANNUAL DISCOUNT FOR ESTIMATED TIMING OF CASH FLOWS.......... (139.1) (98.6) (29.8) (85.7) (1.1) (354.3)
------------------------------------------------------------------------------------------------------------------------------------
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS $ 266.3 60.1 175.8 96.6 12.8 611.6
====================================================================================================================================
December 31, 1993
Future cash inflows............................................. $1,284.2 617.2 410.5 220.1 49.1 2,581.1
Future production and development costs......................... (505.7) (466.4) (248.0) (220.1) (49.0) (1,489.2)
Future income taxes............................................. (217.5) (67.9) - (3.0) - (288.4)
------------------------------------------------------------------------------------------------------------------------------------
Future net cash flows......................................... 561.0 82.9 162.5 (3.0) .1 803.5
10% annual discount for estimated timing of cash flows.......... (184.4) (59.3) (18.3) (16.4) 4.2 (274.2)
------------------------------------------------------------------------------------------------------------------------------------
Standardized measure of discounted future net cash flows $ 376.6 23.6 144.2 (19.4) 4.3 529.3
====================================================================================================================================
</TABLE>
Following are the principal sources of change in the standardized measure of
discounted future net cash flows for the years shown.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
(Millions of dollars) 1994 1993 1992
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net changes in prices, production costs, and development costs.................. $(225.7) (282.6) 112.1
Sales and transfers of oil and gas produced, net of production costs............ (161.1) (167.0) (186.3)
Net change due to extensions, discoveries, and improved recovery................ 86.1 47.8 30.8
Net change due to purchases and sales of minerals in place...................... 35.9 26.5 100.0
Development costs incurred during the period.................................... 173.9 150.6 58.7
Accretion of discount........................................................... 73.3 82.2 60.2
Revisions of previous quantity estimates........................................ 46.3 53.4 44.1
Net change in income taxes...................................................... 53.6 53.8 (92.1)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)...................................................... 82.3 (35.3) 127.5
Standardized measure at January 1............................................... 529.3 564.6 437.1
------------------------------------------------------------------------------------------------------------------------------------
Standardized measure at December 31 $611.6 529.3 564.6
====================================================================================================================================
</TABLE>
/1/Excludes future net cash flows from synthetic oil.
/2/Excludes future net cash flows attributable to 24.7 million barrels of
crude oil to be added to proved reserves subsequent to start-up of
production from the Hibernia oil field.
54
<PAGE>
STATISTICAL SUMMARY
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
EXPLORATION AND PRODUCTION
Net crude oil and condensate production -- barrels a day
United States............................................ 12,503 12,864 12,586 12,565 12,490
Canada -- light oil...................................... 4,775 4,546 3,972 4,305 4,674
heavy oil...................................... 6,840 7,449 5,366 4,744 4,921
synthetic oil.................................. 9,065 - - - -
United Kingdom........................................... 13,389 6,342 5,931 7,607 12,324
Other international...................................... 3,005 1,550 1,350 2,985 3,063
Net natural gas liquids production -- barrels a day
United States............................................ 852 863 768 761 959
Canada................................................... 748 697 847 368 336
United Kingdom........................................... 151 - - 160 271
-------------------------------------------------------------------------------------------------------------------
Total 51,328 34,311 30,820 33,495 39,038
===================================================================================================================
Net natural gas sold -- MCF a day
United States............................................ 195,555 215,471 188,068 151,157 195,017
Canada................................................... 37,945 36,792 30,328 25,679 25,598
United Kingdom........................................... 10,138 13,074 12,802 9,354 3,716
Spain.................................................... 12,620 9,571 19,402 22,207 22,977
-------------------------------------------------------------------------------------------------------------------
Total 256,258 274,908 250,600 208,397 247,308
===================================================================================================================
Total hydrocarbons produced -- equivalent barrels/1/ a day 94,038 80,129 72,587 68,228 80,256
-------------------------------------------------------------------------------------------------------------------
Weighted average sales prices/2/
Crude oil and condensate -- dollars a barrel
United States.......................................... $15.36 16.60 18.85 19.80 22.85
Canada/3/ -- light oil................................. 14.61 15.01 16.69 17.47 21.41
heavy oil................................. 10.56 9.84 11.02 9.09 14.56
synthetic oil............................. 15.92 - - - -
United Kingdom......................................... 15.77 16.63 18.86 19.86 21.50
Other international.................................... 13.01 14.14 18.85 16.57 17.70
Natural gas liquids -- dollars a barrel
United States.......................................... 12.19 13.36 14.71 15.65 15.32
Canada/3/.............................................. 9.21 9.59 9.74 13.91 13.39
United Kingdom......................................... 12.16 - - 15.35 13.86
Natural gas -- dollars an MCF
United States.......................................... 1.91 2.10 1.75 1.62 1.81
Canada/3/.............................................. 1.42 1.22 1.01 1.12 1.24
United Kingdom/3/...................................... 2.43 2.31 2.86 3.00 2.94
Spain/3/............................................... 2.55 2.64 2.58 2.87 3.05
-------------------------------------------------------------------------------------------------------------------
Net wells completed
Oil wells -- United States............................... 2.6 3.0 4.9 5.7 8.0
Canada...................................... 20.7 24.3 19.1 10.0 5.6
United Kingdom.............................. .7 .8 .3 .4 .5
Other international......................... 2.0 1.2 - - -
Gas wells -- United States............................... 4.0 8.5 5.1 9.4 10.7
Canada...................................... 14.5 4.1 2.4 1.4 10.6
United Kingdom.............................. .4 - .5 .2 .4
Other international......................... - - - .3 -
Dry holes -- United States............................... 4.1 6.5 5.2 5.9 10.5
Canada...................................... 6.5 6.9 2.6 6.9 6.2
United Kingdom.............................. .5 .1 1.0 1.1 .5
Other international......................... - .5 1.0 .3 -
-------------------------------------------------------------------------------------------------------------------
Total 56.0 55.9 42.1 41.6 53.0
===================================================================================================================
Net undeveloped acreage at year-end -- thousands of acres 12,218 9,306 8,389 10,114 9,935
-------------------------------------------------------------------------------------------------------------------
</TABLE>
/1/ Natural gas converted on an energy equivalent basis of 6:1.
/2/ Includes intracompany and affiliated company transfers at market prices.
/3/ U.S. dollar equivalent.
55
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REFINING
Crude capacity* of refineries -- barrels per stream day 167,400 167,400 167,400 167,400 167,400
-------------------------------------------------------------------------------------------------------------------
Inputs/yields at refineries -- barrels a day
Crude - Meraux, Louisiana.................................. 78,252 78,732 80,842 75,059 74,962
Superior, Wisconsin................................ 30,592 30,358 26,207 26,916 26,350
Milford Haven, Wales............................... 32,038 27,991 24,245 25,969 22,628
Other feedstocks........................................... 8,731 10,350 12,857 11,310 13,243
-------------------------------------------------------------------------------------------------------------------
Total inputs 149,613 147,431 144,151 139,254 137,183
===================================================================================================================
Gasoline................................................... 67,746 66,460 67,710 60,491 62,469
Kerosine................................................... 16,989 16,024 13,338 15,662 15,885
Diesel and home heating oils............................... 35,553 34,356 32,848 32,055 30,462
Residuals.................................................. 15,444 16,441 18,474 17,237 16,155
Asphalt, LPG, and other.................................... 10,077 9,627 7,133 9,838 8,258
Fuel and loss.............................................. 3,804 4,523 4,648 3,971 3,954
-------------------------------------------------------------------------------------------------------------------
Total yields 149,613 147,431 144,151 139,254 137,183
===================================================================================================================
Average cost of crude inputs to refineries -- dollars a barrel
United States.............................................. $15.81 16.81 18.93 19.72 23.60
United Kingdom............................................. 16.32 17.44 19.84 20.74 24.06
-------------------------------------------------------------------------------------------------------------------
MARKETING
Products sold -- barrels a day
United States -- Gasoline.................................. 60,327 61,577 59,128 50,075 52,922
Kerosine.................................. 11,911 11,682 10,855 12,156 12,964
Diesel and home heating oils.............. 30,172 29,252 26,446 24,626 23,838
Residuals................................. 10,454 11,812 12,339 11,926 10,823
Asphalt, LPG, and other................... 7,754 6,519 5,611 5,228 6,021
-------------------------------------------------------------------------------------------------------------------
120,618 120,842 114,379 104,011 106,568
-------------------------------------------------------------------------------------------------------------------
Western Europe -- Gasoline................................. 16,601 13,270 13,549 13,030 11,546
Kerosine................................. 6,044 4,660 2,724 3,147 2,989
Diesel and home heating oils............. 9,200 7,525 7,112 7,593 6,262
Residuals................................ 5,157 5,068 6,245 5,383 6,075
LPG and other............................ 3,264 1,996 1,861 4,213 3,422
-------------------------------------------------------------------------------------------------------------------
40,266 32,519 31,491 33,366 30,294
-------------------------------------------------------------------------------------------------------------------
Canada 246 234 172 129 76
-------------------------------------------------------------------------------------------------------------------
Total products sold 161,130 153,595 146,042 137,506 136,938
===================================================================================================================
Average gross margin on products sold -- dollars a barrel
United States.............................................. $1.07 .82 .48 1.59 1.49
Western Europe............................................. 2.17 3.08 2.67 3.52 3.72
-------------------------------------------------------------------------------------------------------------------
Branded retail outlets*
United States.............................................. 588 606 643 622 643
Canada..................................................... 8 8 7 6 4
United Kingdom............................................. 470 428 391 370 345
-------------------------------------------------------------------------------------------------------------------
TRANSPORTATION
Pipeline throughputs of crude oil -- barrels a day -- Canada 159,517 151,722 118,050 90,660 62,844
-------------------------------------------------------------------------------------------------------------------
</TABLE>
*At December 31.
56
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FARM, TIMBER, AND REAL ESTATE
Acres owned/1/ -- Farmland.................................... 36,000 36,000 36,000 36,000 36,000
Timberland.................................. 341,000 341,000 342,000 341,000 341,000
Real estate................................. 10,000 10,000 10,000 10,000 10,000
-------------------------------------------------------------------------------------------------------------------
Acres harvested
Cotton...................................................... 3,972 4,839 4,518 4,099 2,919
Soybeans.................................................... 14,318 14,863 12,798 15,584 14,993
Wheat....................................................... 1,405 1,482 1,209 6,391 7,889
Corn........................................................ 5,567 3,717 4,586 4,162 4,313
Rice........................................................ 491 330 622 1,019 1,499
-------------------------------------------------------------------------------------------------------------------
Yields per acre
Cotton -- pounds............................................ 883 661 831 969 908
Soybeans -- bushels......................................... 40 24 39 30 23
Wheat -- bushels............................................ 59 40 59 21 36
Corn -- bushels............................................. 113 70 118 87 114
Rice -- bushels............................................. 124 107 107 112 107
-------------------------------------------------------------------------------------------------------------------
Estimated standing pine timber inventories/1/
Sawtimber -- thousand board feet -- Doyle scale (MBF-DS).... 812,212 810,162 805,260 766,130 729,473
Pulpwood -- cords........................................... 991,440 962,563 940,477 988,790 972,089
-------------------------------------------------------------------------------------------------------------------
Company-owned pine timber harvested
Average sawtimber price/2/ -- $ per MBF-DS.................. $ 372 310 274 202 211
Sawtimber -- MBF-DS......................................... 40,616 37,635 30,177 32,956 44,595
Pulpwood -- cords........................................... 12,988 12,536 8,767 15,038 10,004
-------------------------------------------------------------------------------------------------------------------
Sawmills
Production
Finished lumber -- thousand board feet (MBF).............. 136,713 112,365 101,203 92,846 108,209
Pine chips -- tons........................................ 227,506 193,618 236,180 229,105 368,631
Annual capacity/1/ -- MBF................................. 165,000 122,600 100,100 100,100 120,600
Sales of finished lumber
Thousand board feet (MBF)................................. 138,377 115,136 105,619 95,024 108,204
Average price -- $ per MBF................................ $ 363 335 259 215 209
Average margin -- $ per MBF............................... 87 82 34 13 2
-------------------------------------------------------------------------------------------------------------------
Real estate
Residential lots sold....................................... 99 147 120 98 53
Average price -- $ per lot................................ $60,400 48,200 53,200 49,700 74,000
Commercial acres sold....................................... - - - 17 11
Average price -- $ per acre............................... $ - - - 32,700 37,000
-------------------------------------------------------------------------------------------------------------------
STOCKHOLDER AND EMPLOYEE DATA
Common shares outstanding/1/ (thousands)...................... 44,832 44,808 44,844 44,966 33,897
Number of stockholders of record/1/........................... 4,778 5,265 6,522 5,826 4,584
Number of employees/1/........................................ 1,767 1,803 1,787 3,991 4,029
Average number of employees................................... 1,778 1,787 1,857 4,001 4,213
Salaries, wages, and benefits (thousands)..................... $93,216 90,734 92,486 166,883 158,009
-------------------------------------------------------------------------------------------------------------------
</TABLE>
/1/At December 31.
/2/Includes intracompany transfers at market prices.
57
<PAGE>
Appendix to Electronically Filed Exhibit 13
(1994 Annual Report to Security Holders, Which is Incorporated in This
Form 10-K)
Providing a Narrative of Graphic and Image Material Appearing on
Pages 6 Through 57 of Paper Format
<TABLE>
<CAPTION>
Exhibit 13
Page No. Map Narrative
---------- -------------
<S> <C>
7 Gulf of Mexico - The location and areal extent of acreage under lease by the
Company in the Gulf of Mexico (offshore Texas, Louisiana, Mississippi,
Alabama, and Florida) are shown. Additionally, each lease is categorized as
either: (1) producing or producible; (2) discovery - commerciality to be
determined/facilities to be installed; (3) unexplored, dry hole(s), or
noncommercial shows; or (4) unexplored - acquired in 1994.
10 Canada - The location and areal extent of acreage under lease by the Company
in British Columbia, Alberta, Saskatchewan, and Manitoba are shown.
Additionally, specific areas of production are identified along with the types
of production - natural gas, light oil, heavy oil, and oil sands.
12 Offshore Eastern Canada - Depicted are the locations in the North Atlantic
Ocean east of Newfoundland of the Hibernia and Terra Nova oil fields, in
which the Company holds interests, and the location where the production
platform for the Hibernia field is being constructed.
14 North Sea - The location and areal extent of producing and nonproducing
acreage under license by the Company, primarily in the United Kingdom
(U.K.) sector of the North Sea, are shown. Highlighted are four blocks in
in which the Company has varying interests and where oil is either being
produced, oil field development is under way, or appraisal drilling is planned
following recent exploratory drilling success.
15 China - The location and areal extent are shown of acreage in which the
Company was awarded an interest in 1994 under a production-sharing contract
in the Bohai Bay, offshore northeast China.
16 Peru - Depicted are the areal extent and location of acreage in the Ucayali
Basin onshore Peru in which the Company negotiated an exploration
concession in 1994.
18 United States - The locations of the Company's two refineries are identified
along with a depiction of the predominant routes and means of moving crude
oil to the refineries, the routes and means of moving finished products from
the refineries into marketing areas, the terminal facilities used to store and/or
distribute products to wholesalers and consumers, and the areal extent of the
Company's marketing territories in 11 states in the Southeast and five states in
the upper-Midwest.
</TABLE>
A-1
<PAGE>
Appendix to Electronically Filed Exhibit 13 (Contd.)
<TABLE>
<CAPTION>
Exhibit 13
Page No. Map Narrative (Continued)
---------- -------------
<S> <C>
20 United Kingdom - The location of the Company's jointly owned refinery is
identified along with a depiction of the normal route and means of moving
crude oil to the refinery, the routes and means of moving finished products
from the refinery into U.K. marketing areas, locations of the terminal facilities
used to store and/or distribute products to wholesalers and consumers, and the
areal extent of the Company's marketing territory, which covers most of
England and southern Wales.
22 Western Crude Oil Pipeline Systems - The locations are shown in southern
Alberta and Saskatchewan of major Canadian crude oil pipelines and two
pipeline systems that are partially owned and operated by the Company and
deliver heavy oil into one of the major pipelines. In addition, the locations
are shown of two pipelines owned by the Company that transport crude oil to
the U.S. border for further movement to refining centers in Montana,
Wyoming, and Colorado through pipelines owned by others and a pipeline
system in Montana and Wyoming in which the Company has an ownership.
Picture Narrative
-----------------
8 A view is shown of the Syncrude Canada Ltd. bitumen extraction and upgrading
facility, which produces high-quality synthetic crude oil near Fort McMurray
in northern Alberta. The facility is part of the operations of a joint venture in
which the Company owns a five-percent interest.
9 At Matagorda Island Block 710, offshore Texas, a well-protector
platform to facilitate production of a new natural gas stream is
shown being installed by a derrick barge.
12 An aerial view is shown at Bull Arm, Newfoundland, of the tow-out to a nearby
deep-water site of the first stage of a concrete Gravity Base Structure, which
is being constructed for use as a fixed production platform for the Hibernia oil
field, offshore Newfoundland. The second phase of construction will be
carried out at the new location.
13 A view is shown of a semi-submersible drilling rig testing the producing
capability of a well in which the Company has a 17.7- percent interest on
Block 204/25a west of the Shetland Islands. The well tested at a rate of 5,304
barrels a day of crude oil.
18 A newly constructed sulfur recovery unit is shown shortly after it began
operations in 1994 at the Company's refinery at Meraux, Louisiana. The unit
has the capacity to remove 80 long-tons of sulfur per day from crude oil
being processed, and when the effect of the sulfur unit is combined with the
simultaneous upgrading of two other units, the Company has a much higher
level of flexibility for selecting crudes to be processed at the refinery.
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit 13
Page No. Picture Narrative (Continued)
---------- -----------------
<S> <C>
19 A recently opened combination of a Company convenience store and a full-size
franchise restaurant of an internationally known fast food chain is pictured;
this represents a new type of marketing initiative for the Company.
20 The Milford Haven, Wales, refinery, in which the Company has a 30-percent
ownership; the town of Milford Haven; a jetty; and a moored tanker are
viewed from the south shore of the Haven estuary. Construction began at
mid-year on a high-pressure distillate hydrotreater unit, which will enable the
refinery to produce low-sulfur diesel fuel.
21 The Company continued an aggressive program during the year to increase its
retail sales in the U.K.; pictured is a newly constructed station on the
Surrey/Hampshire border.
23 Shown is cotton as it is transferred from a picker into a module builder, which
will compress the cotton before it is transported to a gin. Yields per acre for
all crops were up from the prior year.
24 A view is shown looking across a golf course fairway and at adjacent houses,
illustrating one of the many amenities of living at the Company's planned
community in Little Rock, Arkansas. Lot sales were down from the record
high established in 1993, with rising interest rates being a major factor.
24 Shown are a recently constructed boiler house and electrostatic precipitators that
will lower fuel costs and control emissions at the Waldo, Arkansas, sawmill by
utilizing bark and sawdust as fuel to generate heat that will be used to kiln-
dry lumber. In conjunction with a simultaneous expansion of the sawmill and
installation of a computer-controlled bandmill, this equipment will
significantly improve lumber yields and strengthen the economic
competitiveness of the mill.
</TABLE>
Graph Narrative
---------------
6 Income Contribution* - Exploration and Production
Scale - 0 to 75 (millions of dollars).
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Income* 66.3 23.4 35.9 36.9 45.2
==== ==== ==== ==== ====
*Before unusual or infrequently occurring items.
This is a vertical bar graph with each year's value printed above the
appropriate bar.
</TABLE>
A-3
<PAGE>
Appendix to Electronically Filed Exhibit 13 (Contd.)
Exhibit 13
Page No. Graph Narrative (Continued)
---------- ---------------
6 Capital Expenditures - Exploration and Production
Scale - 0 to 600 (millions of dollars).
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Proved Property Acquisitions (top) 3.5 .3 13.9 259.7 37.1
Development Costs 54.2 52.7 58.7 212.7 179.3
Exploration Costs (bottom) 89.0 102.0 87.4 64.6 86.2
----- ----- ----- ----- -----
Totals 146.7 155.0 160.0 537.0 302.6
===== ===== ===== ===== =====
This is a stacked vertical bar graph with each year's total
printed above the appropriate bar.
</TABLE>
8 Crude Oil and NGL Production
Scale 0 to 60 (thousands of barrels a day).
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Other International (top) 3.1 3.0 1.3 1.6 3.0
United Kingdom 12.6 7.8 5.9 6.3 13.5
Canada - Synthetic Oil - - - - 9.1
Canada - Other Oil 9.9 9.4 10.2 12.7 12.4
United States (bottom) 13.4 13.3 13.4 13.7 13.3
---- ---- ---- ---- ----
Totals 39.0 33.5 30.8 34.3 51.3
==== ==== ==== ==== ====
This is a stacked vertical bar graph with each year's total printed above the
appropriate bar.
</TABLE>
8 Natural Gas Sales
Scale 0 to 320 (millions of cubic feet a day).
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Spain (top) 23.0 22.2 19.4 9.5 12.6
United Kingdom 3.7 9.3 12.8 13.1 10.1
Canada 25.6 25.7 30.3 36.8 38.0
United States (bottom) 195.0 151.2 188.1 215.5 195.6
----- ----- ----- ----- -----
Totals 247.3 208.4 250.6 274.9 256.3
===== ===== ===== ===== =====
This is a stacked vertical bar graph with each year's total printed above the
appropriate bar
</TABLE>
17 Income Contribution* - Refining, Marketing, and Transportation
Scale 0 to 50 (millions of dollars).
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Income* 40.7 43.3 8.0 31.5 30.2
==== ==== ==== ==== ====
*Before unusual or infrequently occurring items.
This is a vertical bar graph with each year's value printed above the
appropriate bar.
</TABLE>
A-4
<PAGE>
Appendix to Electronically Filed Exhibit 13 (Contd.)
Exhibit 13
Page No. Graph Narrative (Continued)
---------- ---------------
17 Capital Expenditures - Refining, Marketing, and Transportation
Scale 0 to 120 (millions of dollars).
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Transportation (top) 3.3 3.3 6.0 3.6 3.2
Marketing 24.9 15.2 14.1 16.9 17.0
Refining (bottom) 30.9 44.6 48.0 66.4 74.5
---- ---- ---- ---- ----
Total 59.1 63.1 68.1 86.9 94.7
==== ==== ===== ===== =====
This is a stacked vertical bar graph with each year's total printed above the
appropriate bar.
</TABLE>
17 Refined Products Sold
Scale 0 to 200 (thousands of barrels a day).
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Western Europe (top) 30.3 33.4 31.5 32.5 40.3
United States (bottom) 106.6 104.1 114.5 121.1 120.8
----- ----- ----- ----- -----
Totals 136.9 137.5 146.0 153.6 161.1
===== ===== ===== ===== =====
This is a stacked vertical bar graph with each year's total printed above the
appropriate bar.
</TABLE>
19 Meraux Refinery Crude Charge
Scale 0 to 100 (percentages of total).
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Light Sour (top) 25.3 26.1 25.5
Heavy Sweet 23.5 29.0 42.0
Light Sweet (bottom) 51.2 44.9 32.5
----- ----- -----
Totals 100.0 100.0 100.0
===== ===== =====
This is a stacked vertical bar graph.
</TABLE>
19 Meraux Refinery Yields
Scale 0 to 100 (percentages of total).
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Fuel and Other (top) 5.5 6.4 5.8
Residuals 13.3 11.7 10.0
Middle Distillates 31.6 33.6 34.2
Gasoline (bottom) 49.6 48.3 50.0
----- ----- -----
Totals 100.0 100.0 100.0
===== ===== =====
This is a stacked vertical bar graph.
</TABLE>
22 Canadian Pipeline Throughputs
Scale 0 to 200 (thousands of barrels a day).
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994
---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C>
Throughputs 62.8 90.7 118.1 151.7 159.5
===== ===== ===== ===== =====
This is a vertical bar graph with each year's value printed above
the appropriate bar.
</TABLE>
A-5
<PAGE>
Appendix to Electronically Filed Exhibit 13 (Contd.)
Exhibit 13
Page No. Graph Narrative (Continued)
---------- ---------------
23 Income Contribution - Farm, Timber, and Real Estate
Scale 0 to 20 (millions of dollars).
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Income 6.2 4.8 8.4 13.1 17.5
==== ==== ==== ==== ====
This is a vertical bar graph with each year's value printed above the
appropriate bar.
</TABLE>
23 Capital Expenditures - Farm, Timber, and Real Estate
Scale 0 to 14 (millions of dollars).
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994
---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C>
Capital Expenditures 10.4 2.9 6.0 9.7 11.4
==== ==== ==== ==== =====
This is a vertical bar graph with each year's value printed above the appropriate bar.
</TABLE>
23 Sales of Finished Lumber
Scale 0 to 160 (millions of board feet).
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Lumber Sales 108.2 95.0 105.6 115.1 138.4
===== ===== ===== ===== =====
This is a vertical bar graph with each year's value printed above
the appropriate bar.
</TABLE>
25 Income Excluding Unusual Items
Scale 0 to 120 (millions of dollars).
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Income Excluding Unusual Items 96.1 57.7 54.9 76.4 86.3
==== ==== ==== ==== =====
This is a vertical bar graph with each year's value printed above
the appropriate bar.
</TABLE>
25 Cash Provided by Continuing Operations
Scale 0 to 420 (millions of dollars).
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Cash Provided 284.4 213.6 284.2 363.0 337.3
===== ===== ===== ===== =====
This is a vertical bar graph with each year's value printed above
the appropriate bar.
</TABLE>
25 Stockholders' Equity at Year-End
Scale 0 to 1,500 (millions of dollars).
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Stockholders' Equity 873 1,201 1,200 1,222 1,271
==== ===== ===== ===== =====
This is a vertical bar graph with each year's value printed above
the appropriate bar.
</TABLE>
A-6
<PAGE>
Appendix to Electronically Filed Exhibit 13 (Contd.)
Exhibit 13
Page No. Graph Narrative (Continued)
---------- ---------------
26 Income Contribution by Operating Function*
Scale 0 to 120 (millions of dollars).
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Farm, Timber, and Real Estate (top) 8.4 13.1 17.5
Refining, Marketing, and Transportation 8.0 31.5 30.2
Exploration and Production (bottom) 35.9 36.9 45.2
---- ---- ----
Totals 52.3 81.5 92.9
==== ==== ====
*Excludes Corporate and unusual or infrequently occurring items.
This is a stacked vertical bar graph with the value for each element printed
within the element.
</TABLE>
27 Range of U.S. Crude Oil Sales Prices
Scale 10 to 24 (dollars a barrel).
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
High monthly crude oil price (top of bar) 20.67 18.42 17.58
Average crude oil price (colored line) 18.85 16.60 15.36
Low monthly crude oil price (bottom of bar) 17.34 12.52 12.71
This is a floating vertical bar graph with a contrasting-color line between the
top and bottom each year and highs printed above bars, averages printed above
colored lines, and lows printed below bars.
</TABLE>
27 Range of U.S. Natural Gas Sales Prices
Scale 1.00 to 2.75 (dollars a thousand cubic feet).
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
High monthly natural gas price (top of bar) 2.60 2.51 2.40
Average natural gas price (colored line) 1.75 2.10 1.91
Low monthly natural gas price (bottom of bar) 1.16 1.63 1.42
This is a floating vertical bar graph with a contrasting-color line between the
top and bottom each year and highs printed above bars, averages printed above
colored lines, and lows printed below bars.
</TABLE>
28 Exploration Expenses
Scale 0 to 70 (millions of dollars).
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Undeveloped Lease Amortization (top) 17.4 12.1 11.0
Geological, Geophysical, and Other Costs 14.8 12.5 15.1
Dry Hole Costs (bottom) 29.9 21.5 16.6
---- ---- ----
Totals 62.1 46.1 42.7
===== ===== =====
This is a stacked vertical bar graph with each year's total printed above the
appropriate bar.
</TABLE>
A-7
<PAGE>
Appendix to Electronically Filed Exhibit 13 (Contd.)
Exhibit 13
Page No. Graph Narrative (Continued)
---------- ---------------
Average Sales Price of U.S. Refined Products
Scale 0 to 28 (dollars a barrel).
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Average Sales Price 23.25 21.44 20.56
===== ===== =====
This is a vertical bar graph with each year's value printed above the
appropriate bar.
</TABLE>
29 Average Sawmill Margin
Scale 0 to 100 (dollars a thousand board feet).
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Average Margin 34 82 87
==== ==== ====
This is a vertical bar graph with each year's value printed above the
appropriate bar.
</TABLE>
30 Selling and General Expenses
Scale 0 to 80 (millions of dollars)
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Selling and General Expenses 72.9 65.2 66.6
===== ======= =====
This is a vertical bar graph with each year's value printed above the
appropriate bar.
</TABLE>
31 Capital Expenditures in 1994
Scale 0 to 500 (millions of dollars).
<TABLE>
<CAPTION>
Percent
-------
<S> <C>
Other - $4.9 (top) 1
Farm, Timber, and Real Estate - $11.4 3
Refining, Marketing, and Transportation - $94.7 23
Exploration and Production - $302.6 (bottom) 73
This is a stacked vertical bar graph with a line from each component to its
respective percentage and "Total - $413.6" printed below graph.
</TABLE>
32 Sources of Cash and Cash Equivalents in 1994
Scale 0 to 500 (millions of dollars).
<TABLE>
<CAPTION>
Percent
-------
<S> <C>
Sale of Property and Other - $4.5 (top) 1
Tax Settlements - $6.4 2
Additions to Other Long-Term Obligations - $28.2 7
Additons to Nonrecourse Debt - $42.8 10
Operations - $330.9 (bottom) 80
This is a stacked vertical graph with a line from each component to its
respective percentage and "Total - $412.8" printed below graph.
</TABLE>
A-8
<PAGE>
Appendix to Electronically Filed Exhibit 13 (Contd.)
Exhibit 13
Page No. Graph Narrative (Continued)
---------- ---------------
32 Uses of Cash and Cash Equivalents in 1994
Scale 0 to 585 (millions of dollars).
<TABLE>
<CAPTION>
Percent
-------
<S> <C>
Reduction of Other Long-Term Obligations - $3.5 (top) 1
Reduction of Nonrecourse Debt - $7.6 2
Dividends - $58.2 12
Capital Expenditures - $413.6 (bottom) 85
This is a stacked vertical bar graph with a line from each component to its
respective percentage and "Total - $482.9" printed below graph.
</TABLE>
50 Estimated Net Proved Oil Reserves
Scale 0 to 250 (millions of barrels).
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Other International (top) .3 .2 1.8 1.9 -
Ecuador - 33.5 35.6 33.6 35.0
United Kingdom 18.8 14.7 13.1 26.7 24.5
Canada 24.6 21.8 22.3 120.2 136.3
United States (bottom) 23.9 22.8 23.2 20.0 24.5
----- ----- ----- ----- -----
Totals 67.6 93.0 96.0 202.4 220.3
===== ===== ===== ===== =====
This is a stacked vertical bar graph with each year's total printed above the
appropriate bar.
</TABLE>
50 Estimated Net Proved Gas Reserves
Scale 0 to 800 (billions of cubic feet).
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Spain (top) 32.6 16.6 4.1 10.6 7.2
United Kingdom 40.9 41.1 35.4 31.2 29.6
Canada 201.6 204.9 200.4 182.7 176.7
United States (bottom) 378.5 396.2 445.4 429.0 430.1
----- ----- ----- ----- -----
Totals 653.6 658.8 685.3 653.5 643.6
===== ===== ===== ===== =====
This is a stacked vertical bar graph with each year's total printed above the
appropriate bar.
</TABLE>
50 Net Hydrocarbons Production
Scale 0 to 120 (thousands of barrels a day on an energy equivalent
basis).
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Other International (top) 6.9 6.7 4.6 3.2 5.1
United Kingdom 13.2 9.3 8.1 8.5 15.2
Canada 14.2 13.7 15.2 18.8 27.8
United States (bottom) 46.0 38.5 44.7 49.6 45.9
---- ---- ----- ---- ----
Totals 80.3 68.2 72.6 80.1 94.0
==== ==== ==== ==== ====
This is a stacked vertical bar graph with each year's total printed above the
appropriate bar.
</TABLE>
A-9
<PAGE>
EXHIBIT 21
MURPHY OIL CORPORATION
PARENTS AND SUBSIDIARIES AS OF DECEMBER 31, 1994
Percentage
of Voting
Securities
State or Other Owned by
Jurisdiction Immediate
Name of Company of Incorporation Parent
--------------------------------------- ---------------- ----------
Murphy Oil Corporation (REGISTRANT)
A. Deltic Farm & Timber Co., Inc. Arkansas 100.0
1. Chenal Properties, Inc. Arkansas 100.0
2. Deltic Timber Purchasers, Inc. Arkansas 100.0
B. El Dorado Engineering Inc. Delaware 100.0
1. El Dorado Contractors Inc. Delaware 100.0
C. Murphy Eastern Oil Company Delaware 100.0
D. Murphy Exploration & Production Company
(formerly Ocean Drilling & Exploration Company) Delaware 100.0
1. Canam Offshore A. G.(Switzerland) Switzerland 100.0
2. Canam Offshore Limited Bahamas 100.0
a. Odeco Drilling Limited Bahamas 100.0
(1) Odeco Drilling (Africa) Limited S.A. Panama 100.0
b. Rimrock Offshore Limited Bahamas 100.0
3. El Dorado Exploration, S.A. Delaware 100.0
4. Mentor Holding Corporation Delaware 100.0
a. Mentor Excess and Surplus Lines
Insurance Company Delaware 100.0
b. Mentor Insurance and Reinsurance Company Louisiana 100.0
c. Mentor Insurance Limited Bermuda 99.993
(1) Mentor Insurance Company (U.K.)
Limited England 100.0
(2) Mentor Underwriting Agents (U.K.)
Limited England 100.0
5. MEPCO Venezuela, Ltd. Bahamas 100.0
6. Murphy Building Corporation Delaware 100.0
7. Murphy Denmark Oil Company Delaware 100.0
8. Murphy Ecuador Oil Company Ltd. Bermuda 100.0
9. Murphy Equatorial Guinea Oil Company Delaware 100.0
10. Murphy France Oil Company Delaware 100.0
11. Murphy Ireland Oil Company Delaware 100.0
12. Murphy Italy Oil Company Delaware 100.0
13. Murphy Myanmar Oil Company S.A. Panama 100.0
14. Murphy New Zealand Oil Company Delaware 100.0
15. Murphy Overseas Ventures Inc. Delaware 100.0
16. Murphy Pacific Rim, Ltd. Bahamas 100.0
17. Murphy Pakistan Oil Company Delaware 100.0
18. Murphy Peru Oil Company, S.A. Panama 100.0
19. Murphy Somali Oil Company Delaware 100.0
20. Murphy-Spain Oil Company Delaware 100.0
21. Murphy Western Oil Company Delaware 100.0
22. Murphy Yemen Oil Company Delaware 100.0
23. Norske Murphy Oil Company Delaware 100.0
24. Norske Ocean Exploration Company Delaware 100.0
25. Ocean Exploration Company Delaware 100.0
26. Ocean France Oil Company Delaware 100.0
27. Ocean Gabon Oil Company Delaware 100.0
28. Ocean International Finance Corporation Delaware 100.0
29. Ocean Spain Oil Company Delaware 100.0
Ex. 21-1
<PAGE>
EXHIBIT 21 (Contd.)
MURPHY OIL CORPORATION
PARENTS AND SUBSIDIARIES AS OF DECEMBER 31, 1994 (Contd.)
Percentage
of Voting
Securities
State or Other Owned by
Jurisdiction Immediate
Name of Company of Incorporation Parent
--------------------------------------- ---------------- ----------
Murphy Oil Corporation (REGISTRANT) - Contd.
D. Murphy Exploration & Production Company -
Contd.
30. Odeco Gabon Oil Company Delaware 100.0
31. Odeco International Corporation Panama 100.0
32. Odeco Italy Oil Company Delaware 100.0
33. Sub Sea Offshore (M) Sdn. Bhd. Malaysia 50.0
E. Murphy Oil Company, Ltd. Canada 100.0
1. 340236 Alberta Ltd. Canada 100.0
2. Manito Pipelines Ltd. Canada 52.5
3. Murphy Atlantic Offshore Oil Company Ltd. Canada 100.0
4. Wascana Pipe Line Ltd. Canada 100.0
F. Murphy Oil USA, Inc. Delaware 100.0
1. Arkansas Oil Company Delaware 100.0
2. Murphy Gas Gathering Inc. Delaware 100.0
3. Murphy Latin America Refining & Marketing,
Inc. Delaware 100.0
4. Murphy LOOP, Inc. Delaware 100.0
5. Murphy Oil Trading Company (Eastern) Delaware 100.0
6. Spur Oil Corporation Delaware 100.0
G. Murphy Ventures Corporation Delaware 100.0
H. New Murphy Oil (UK) Corporation Delaware 100.0
1. Murphy Petroleum Limited England 100.0
a. Murco Petroleum Limited England 100.0
(1) Alnery No. 166 Ltd. England 100.0
(2) European Petroleum Distributors Ltd. England 100.0
(3) H. Hartley (Doncaster) Ltd. England 100.0
(4) Murco Petroleum (Ireland) Ltd. Ireland 100.0
Ex. 21-2
<PAGE>
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
-----------------------------
The Board of Directors
Murphy Oil Corporation:
We consent to incorporation by reference in the Registration Statements (Nos.
2-82818, 2-86749, and 2-86760) on Form S-8 and (No. 33-55161) on Form S-3 of
Murphy Oil Corporation of our report dated March 3, 1995, relating to the
consolidated balance sheets of Murphy Oil Corporation and Consolidated
Subsidiaries as of December 31, 1994 and 1993, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the years
in the three-year period ended December 31, 1994, which report is included in
the December 31, 1994, annual report on Form 10-K of Murphy Oil Corporation. Our
report refers to changes in the methods of accounting for income taxes and
postretirement benefits other than pensions in 1993.
KPMG PEAT MARWICK LLP
Shreveport, Louisiana
March 28, 1995
Ex. 23-1
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE AUDITED CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 1994, AND THE
AUDITED CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1994,
OF MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 71,144
<SECURITIES> 0
<RECEIVABLES> 249,795
<ALLOWANCES> 5,554
<INVENTORY> 152,431
<CURRENT-ASSETS> 519,112
<PP&E> 4,073,239
<DEPRECIATION> 2,350,578
<TOTAL-ASSETS> 2,312,032
<CURRENT-LIABILITIES> 439,518
<BONDS> 172,452
<COMMON> 48,775
0
0
<OTHER-SE> 1,221,904
<TOTAL-LIABILITY-AND-EQUITY> 2,312,032
<SALES> 1,679,198
<TOTAL-REVENUES> 1,768,493
<CGS> 1,499,712
<TOTAL-COSTS> 1,499,712
<OTHER-EXPENSES> 42,741
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,561
<INCOME-PRETAX> 156,900
<INCOME-TAX> 50,272
<INCOME-CONTINUING> 106,628
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 106,628
<EPS-PRIMARY> 2.37
<EPS-DILUTED> 2.37
</TABLE>
<PAGE>
EXHIBIT 99.1
UNDERTAKINGS
To be incorporated by reference into Form S-8 Registration Statements No.
2-82818, 2-86749 and 2-86760, and Form S-3 Registration Statement No. 2-82818.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represents
a fundamental change in the information set forth in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes:
(1) To deliver or cause to be delivered with the prospectus to each
employee to whom the prospectus is sent or given a copy of the registrant's
annual report to stockholders for its last fiscal year, unless such employee
otherwise has received a copy of such report, in
Ex. 99.1-1
<PAGE>
which case the registrant shall state in the prospectus that it will promptly
furnish, without charge, a copy of such report on written request of the
employee. If the last fiscal year of the registrant has ended within 120 days
prior to the use of the prospectus, the annual report of the registrant for the
preceding fiscal year may be so delivered, but within such 120 day period the
annual report for the last fiscal year will be furnished to each such employee.
(2) To transmit or cause to be transmitted to all employees participating
in the plan who do not otherwise receive such material as stockholders of the
registrant, at the time and in the manner such material is sent to its
stockholders, copies of all reports, proxy statements and other communications
distributed to its stockholders generally.
Where interests in a plan are registered herewith, the undersigned
registrant and plan hereby undertake to transmit or cause to be transmitted
promptly, without charge, to any participant in the plan who makes a written
request, a copy of the then latest annual report of the plan filed pursuant to
section 15(d) of the Securities Exchange Act of 1934 (Form 11-K). If such
report is filed separately on Form 11-K, such form shall be delivered upon
written request. If such report is filed as a part of the registrant's annual
report on Form 10-K, that entire report (excluding exhibits) shall be delivered
upon written request. If such report is filed as a part of the registrant's
annual report to stockholders delivered pursuant to paragraph (1) or (2) of this
undertaking, additional delivery shall not be required.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Ex. 99.1-2
