=================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number 1-8590
MURPHY OIL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 71-0361522
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
200 PEACH STREET
P. O. Box 7000, El Dorado, Arkansas 71731-7000
(Address of principal executive offices) (Zip Code)
(501) 862-6411
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
/X/ Yes / / No
Number of shares of Common Stock, $1.00 par value, outstanding at
June 30, 1995 was 44,832,864.
=================================================================
<PAGE>
PART I - FINANCIAL INFORMATION
Murphy Oil Corporation and Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Thousands of dollars)
<TABLE>
<CAPTION>
(Unaudited)
June 30, December 31,
1995 1994
--------- -----------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 86,090 71,144
Accounts receivable, less allowance for
doubtful accounts of $5,653 in 1995
and $5,554 in 1994 184,732 244,241
Inventories
Crude oil and raw materials 79,037 71,541
Finished products 64,311 44,890
Materials and supplies 37,926 36,000
Prepaid expenses 38,924 36,357
Deferred income taxes 15,960 14,939
--------- ---------
Total current assets 506,980 519,112
Investments and noncurrent receivables 42,930 28,592
Property, plant, and equipment, at cost less
accumulated depreciation, depletion, and
amortization of $2,446,812 in 1995 and
$2,350,578 in 1994 1,735,563 1,722,661
Deferred charges and other assets 30,046 41,667
--------- ---------
$ 2,315,519 2,312,032
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term obligations $ 7,615 7,615
Accounts payable and accrued liabilities 373,230 403,553
Income taxes 31,163 28,350
--------- ---------
Total current liabilities 412,008 439,518
Notes payable and other long-term obligations 21,688 49,814
Nonrecourse debt of a subsidiary 150,348 122,638
Deferred income taxes 142,277 140,610
Reserve for dismantlement costs 146,670 138,894
Reserve for major repairs 3,714 3,244
Deferred credits and other liabilities 148,375 146,635
Stockholders' equity
Capital stock
Cumulative Preferred Stock, par $100, authorized
400,000 shares, none issued - -
Common Stock, par $1.00, authorized 80,000,000
shares, issued 48,775,314 shares 48,775 48,775
Capital in excess of par value 507,744 507,797
Retained earnings 828,027 820,568
Currency translation adjustments 9,739 (2,403)
Unamortized restricted stock awards (791) (993)
Treasury stock, 3,942,450 shares of Common Stock
in 1995, 3,942,868 shares in 1994, at cost (103,055) (103,065)
--------- ---------
Total stockholders' equity 1,290,439 1,270,679
--------- ---------
$ 2,315,519 2,312,032
========= =========
</TABLE>
See Notes to Consolidated Financial Statements, page 4.
The Exhibit Index is on page 12.
1
<PAGE>
Murphy Oil Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Thousands of dollars, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------- -------------------
1995 1994* 1995 1994*
------- ------- ------- -------
<S> <C> <C> <C> <C>
REVENUES
Sales $ 434,621 408,214 827,362 796,810
Other operating revenues 12,633 15,526 27,686 26,693
Interest, income from equity
companies, and other
nonoperating revenues 1,721 1,813 15,088 4,751
------- ------- ------- -------
Total revenues 448,975 425,553 870,136 828,254
------- ------- ------- -------
COSTS AND EXPENSES
Crude oil, products, and related
operating expenses 326,821 315,705 630,895 597,148
Exploration expenses, including
undeveloped lease amortization 6,408 8,175 17,003 20,090
Selling and general expenses 17,171 17,453 34,778 34,131
Depreciation, depletion, and
amortization 59,470 49,489 121,176 99,918
Interest expense 3,764 2,662 7,287 5,011
Interest capitalized (2,274) (1,647) (4,223) (2,878)
------- ------- ------- -------
Total costs and expenses 411,360 391,837 806,916 753,420
------- ------- ------- -------
Income before income taxes 37,615 33,716 63,220 74,834
Federal and state income taxes 9,265 7,516 12,165 24,838
Foreign income taxes (benefits) 7,787 (1,316) 14,465 (1,208)
------- ------- ------- -------
NET INCOME $ 20,563 27,516 36,590 51,204
======= ======= ======= =======
Average Common shares
outstanding 44,880,513 44,887,904 44,877,722 44,876,927
Net income per Common share $ .46 .61 .82 1.14
======= ======= ======= =======
Cash dividends per share of
Common Stock $ .325 .325 .65 .65
======= ======= ======= =======
*Restated to conform to 1995 presentation.
</TABLE>
See Notes to Consolidated Financial Statements, page 4.
2
<PAGE>
Murphy Oil Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended June 30, 1995 and 1994
(Thousands of dollars)
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 36,590 51,204
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation, depletion, and amortization 121,176 99,918
Expenditures for major repairs and dismantlement costs (10,890) (13,620)
Exploratory expenditures charged against income 11,443 14,704
Amortization of undeveloped leases 5,560 5,386
Deferred and noncurrent income tax charges (benefits) (5,720) 1,687
Gains from disposition of assets (632) (1,041)
Other - net 15,318 16,326
------- -------
172,845 174,564
Net increase in operating working capital other than
cash and cash equivalents (432) (17,374)
Net recoveries (expenditures) on insurance claim to
repair hurricane damage (158) 13,827
Other adjustments related to operating activities 2,191 (7,546)
------- -------
Net cash provided by operating activities 174,446 163,471
------- -------
INVESTING ACTIVITIES
Capital expenditures requiring cash (132,394) (196,843)
Proceeds from sale of property, plant, and equipment 1,307 2,426
Other - net 339 (778)
------- -------
Net cash required by investing activities (130,748) (195,195)
------- -------
FINANCING ACTIVITIES
Increase (decrease) in notes payable and other
long-term obligations (28,126) 105
Increase in nonrecourse debt of a subsidiary 27,710 20,631
Dividends paid (29,131) (29,108)
------- -------
Net cash required by financing activities (29,547) (8,372)
------- -------
Effect of exchange rate changes on cash and cash
equivalents 795 160
------- -------
Net increase (decrease) in cash and cash equivalents 14,946 (39,936)
Cash and cash equivalents at January 1 71,144 141,225
------- -------
Cash and cash equivalents at June 30 $ 86,090 101,289
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES
Cash income taxes paid, net of refunds $ 10,063 29,232
======= =======
Interest paid, net of amounts capitalized $ 908 (529)
======= =======
</TABLE>
See Notes to Consolidated Financial Statements, page 4.
3
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
These notes are an integral part of the financial statements of Murphy Oil
Corporation and Consolidated Subsidiaries (Murphy/the Company) on pages 1
through 3 of this report on Form 10-Q.
NOTE A - INTERIM FINANCIAL STATEMENTS
The consolidated financial statements of the Company presented herein have not
been audited by independent auditors, except for the Consolidated Balance Sheet
at December 31, 1994. In the opinion of the Company's management, the
unaudited financial statements presented herein include all adjustments
(consisting only of normal, recurring accruals) necessary to present fairly
the Company's financial position at June 30, 1995, and the results of
operations and cash flows for the three-month and six-month periods ended
June 30, 1995 and 1994, in conformity with generally accepted accounting
principles.
Financial statements and notes to consolidated financial statements included in
this report on Form 10-Q should be read in conjunction with the Company's 1994
Annual Report on Form 10-K, as certain notes and other pertinent information
have been abbreviated in or omitted from this report.
Financial results for the six months ended June 30, 1995 are not necessarily
indicative of future results.
NOTE B - ENVIRONMENTAL CONTINGENCIES
The Company's worldwide operations are subject to numerous laws and regulations
designed to protect the environment and/or impose remediation obligations. In
addition, the Company may be involved in personal injury claims, allegedly
caused by exposure to materials manufactured or used in the Company's
operations. The Company currently operates or has previously operated certain
sites or facilities, including refineries, oil and gas fields, service
stations, and terminals, for which known or potential obligations for
environmental remediation exist.
Under the Company's accounting policies, liabilities for environmentally
related obligations are recorded when such obligations are probable and the
cost can be reasonably estimated. In instances where there is a range of
reasonably estimated costs, the Company will record the most likely amount, or
if no amount is most likely, the minimum of the range. Amounts recorded as
liabilities are reviewed quarterly and adjusted as needed. Actual cash
expenditures often occur a number of years following recognition of the
liabilities.
The Company's reserve for remediation obligations, which is included in
"Deferred Credits and Other Liabilities" in the Consolidated Balance Sheets,
contains certain amounts that are based on anticipated regulatory approval of
proposed remediation processes involving refinery water basins and a land farm,
formerly used for disposal of refinery waste. If regulatory authorities
require more costly alternatives than the proposed processes, future
expenditures could increase by up to an estimated $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 is aware of one other site at which it could be named as
a PRP. The potential total cost to all parties of performing necessary
remediation work at these sites is substantial. However, based on information
currently available, the Company is a "de minimus" party, with assigned or
potentially assigned responsibility of less than one percent at all but one of
the sites. At that site, the Company has not determined either its potentially
assigned responsibility percentage or its potential total remediation cost.
The Company has recorded a reserve totaling $.1 million for Superfund sites,
and due to currently available information on one site and the minor
percentages involved at the other sites, the Company does not expect that its
related remediation costs will be material to its financial condition.
Additional information may become known in the future that would alter this
assessment, including any requirement to bear a pro rata share of costs
attributable to nonparticipating PRP's or indications of additional
responsibility by the Company.
4
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTD.)
NOTE B - ENVIRONMENTAL CONTINGENCIES (CONTD.)
Although the Company is not aware of any environmental matters that might have
a material effect on its financial condition, there is the possibility that
additional expenditures could be required at currently unidentified sites, and
new or revised regulatory requirements could necessitate additional
expenditures at known sites. Such expenditures could have a material impact on
the results of operations in a future period.
The Company believes that certain of its environmental remediation obligations
are covered by insurance; however, 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 June 30, 1995
have not been reduced for any possible insurance recoveries.
NOTE C - OTHER CONTINGENCIES
The Company's operations and earnings have been and may be affected by various
other forms of governmental action both in the U.S. and throughout the world.
Examples of such governmental action include, but are by no means limited to:
tax increases and retroactive tax claims; restrictions on production; import
and export controls; price controls; currency controls; allocation of supplies
of crude oil and petroleum products and other goods; expropriation of property;
restrictions and preferences affecting issuance of oil and gas or mineral
leases; laws and regulations intended for the promotion of safety; and laws and
regulations affecting the Company's relationships with employees, suppliers,
customers, stockholders, and others. Because governmental actions are often
motivated by political considerations, may be taken without full consideration
of their consequences, and may be taken in response to actions of other
governments, it is not practical to attempt to predict the likelihood of such
actions, the form which such actions may take, or the effect such actions may
have on the Company.
In the normal course of its business activities, the Company is required under
certain contracts with various governmental authorities and others to provide
letters of credit that may be drawn upon if the Company fails to perform under
those contracts. At June 30, 1995, the Company had contingent liabilities of
$24.6 million on outstanding letters of credit. A contingent liability of $15
million existed at June 30, 1995 under a guaranty and pipeline throughput
agreement.
5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTD.)
NOTE D - BUSINESS SEGMENTS
<TABLE>
<CAPTION>
Three Mos. Ended Three Mos. Ended
June 30, 1995 June 30, 1994
-----------------------------------------------------------------------------
(Millions of dollars) Revenues Income Revenues* Income
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Petroleum
Exploration and production**
United States. . . . . . . . . . . . . . $ 53.2 5.8 57.5 6.9
Canada . . . . . . . . . . . . . . . . . 37.4 7.1 31.4 5.4
United Kingdom . . . . . . . . . . . . . 27.9 1.4 23.6 .8
Other international. . . . . . . . . . . 9.5 (.6) 5.3 1.6
-----------------------------------------------------------------------------
128.0 13.7 117.8 14.7
-----------------------------------------------------------------------------
Refining, marketing, and transportation
United States. . . . . . . . . . . . . . 278.9 6.4 221.2 .8
Western Europe . . . . . . . . . . . . . 64.6 - 79.7 .5
Canada . . . . . . . . . . . . . . . . . 5.5 1.3 6.6 1.9
-----------------------------------------------------------------------------
349.0 7.7 307.5 3.2
-----------------------------------------------------------------------------
477.0 21.4 425.3 17.9
Intrasegment transfers elimination (49.2) (24.7)
-----------------------------------------------------------------------------
Total petroleum. . . . . . . . . . . . 427.8 21.4 400.6 17.9
Farm, timber, and real estate--United States 19.4 2.6 23.1 5.4
Corporate and other. . . . . . . . . . . . . 1.7 (3.4) 1.9 (2.2)
-----------------------------------------------------------------------------
Revenues/income before unusual or infrequently
occurring items . . . . . . . . . . . . . . 448.9 20.6 425.6 21.1
Settlement of income tax matters . . . . . . - - - 6.4
-----------------------------------------------------------------------------
$448.9 20.6 425.6 27.5
=============================================================================
Six Mos. Ended Six Mos. Ended
June 30, 1995 June 30, 1994
-----------------------------------------------------------------------------
(Millions of dollars) Revenues Income Revenues* Income
-----------------------------------------------------------------------------
Petroleum
Exploration and production**
United States. . . . . . . . . . . . . . $101.8 8.3 119.5 14.6
Canada . . . . . . . . . . . . . . . . . 69.6 11.7 57.1 4.8
United Kingdom . . . . . . . . . . . . . 62.8 3.9 44.1 1.4
Other international. . . . . . . . . . . 21.8 2.9 8.2 2.5
-----------------------------------------------------------------------------
256.0 26.8 228.9 23.3
-----------------------------------------------------------------------------
Refining, marketing, and transportation
United States. . . . . . . . . . . . . . 508.2 (.2) 431.2 9.5
Western Europe . . . . . . . . . . . . . 121.8 (2.0) 146.9 1.2
Canada . . . . . . . . . . . . . . . . . 11.5 3.1 13.1 3.6
-----------------------------------------------------------------------------
641.5 .9 591.2 14.3
-----------------------------------------------------------------------------
897.5 27.7 820.1 37.6
Intrasegment transfers elimination (83.9) (43.1)
-----------------------------------------------------------------------------
Total petroleum. . . . . . . . . . . . 813.6 27.7 777.0 37.6
Farm, timber, and real estate--United States 41.4 7.3 46.5 12.7
Corporate and other. . . . . . . . . . . . . 4.1 (5.4) 4.8 (5.5)
-----------------------------------------------------------------------------
Revenues/income before unusual or infrequently
occurring items . . . . . . . . . . . . . . 859.1 29.6 828.3 44.8
Adjustment of estimates for self-insured
liabilities, net of taxes . . . . . . . . . 11.0 7.0 - -
Settlement of income tax matters . . . . . . - - - 6.4
-----------------------------------------------------------------------------
$870.1 36.6 828.3 51.2
=============================================================================
*Restated to conform to 1995 presentation.
**Additional details are presented in the tables on page 11.
</TABLE>
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1995 COMPARED TO THREE MONTHS ENDED JUNE 30, 1994
Net income for the second quarter of 1995 totaled $20.6 million, $.46 a share.
Income for the second quarter of 1994 was $21.1 million, $.47 a share, before a
benefit of $6.4 million, $.14 a share, for settlement of certain income tax
matters in the U.K. Including the unusual item, net income for the year-ago
second quarter totaled $27.5 million, $.61 a share.
A 20-percent increase in earnings from petroleum operations in the second
quarter of 1995 was more than offset by a 52-percent decrease in earnings from
farm, timber, and real estate and an increased loss from corporate functions.
The increase in earnings from petroleum operations was primarily the result of
a substantial improvement in U.S. downstream operations and a strong
performance from Canadian exploration and production operations, which more
than offset an 18-percent decline in U.S. natural gas prices.
Earnings from Murphy's exploration and production segment totaled $13.7 million
in the current quarter, down seven percent from earnings a year ago of $14.7
million. A 13-percent increase in crude oil and gas liquids production, higher
crude oil prices, and lower exploration expenses were more than offset by the
decline in U.S. natural gas prices. U.S. exploration and production operations
earned $5.8 million, down from $6.9 million in the second quarter of 1994.
Operations in Canada earned $7.1 million compared to $5.4 million a year ago,
and U.K. operations earned $1.4 million in the current quarter, up from $.8
million. Other international operations reported a loss of $.6 million
compared to earnings of $1.6 million a year earlier. The Company's crude oil
and condensate sales prices averaged $17.46 a barrel in the U.S. and $17.61 in
the U.K., increases of nine percent and 10 percent, respectively. In Canada,
sales prices averaged $17.87 a barrel for light oil and $14.18 for heavy oil,
up 17 percent and 27 percent. The average sales price for synthetic oil in
Canada was $18.25 a barrel, up 10 percent from a year ago. Total crude oil and
gas liquids production averaged 55,265 barrels a day compared to 48,904 in the
second quarter of 1994. U.S. production increased seven percent; U.K.
production was basically unchanged. In Canada, light oil production declined
17 percent, while heavy oil production increased 33 percent. Production of
synthetic oil in Canada averaged 9,457 barrels a day compared to 8,050 in the
second quarter of 1994, which was affected by a planned shutdown of processing
facilities for maintenance. Production from Ecuador, which commenced in the
second quarter of 1994, averaged 4,630 barrels a day in the current period
compared to 783 last year. Murphy's average natural gas sales price in the
U.S. was $1.62 a thousand cubic feet (MCF) in the current quarter compared to
$1.97 a year ago. The average natural gas sales price in Canada declined from
$1.51 an MCF to $1.00, down 34 percent. Sales prices averaged $2.49 an MCF in
the U.K. and $3.01 in Spain, increases of four percent and 24 percent. Total
natural gas sales averaged 260 million cubic feet a day compared to 263 million
a year ago. Sales volume of natural gas in the U.S. was basically unchanged
and averaged 204 million cubic feet a day. Exploration expenses totaled $6.4
million in the current quarter compared to $8.2 million a year ago. The tables
on page 11 provide additional details of the results of exploration and
production operations for the second quarter of each year. During 1994, the
Company logged and cored a potentially producible natural gas accumulation in
a well drilled in the Gulf of Mexico on Mobile Block 908. A sidetrack well,
commenced during the second quarter of 1995, encountered mechanical problems.
A second sidetrack operation is under way and is expected to be completed by
late August. The cost of the original well and both sidetracks is projected
to total $20 million for the Company's share. Such cost has been and will
continue to be capitalized pending evaluation of the current sidetrack well.
Earnings from worldwide refining, marketing, and transportation operations of
$7.7 million in the second quarter of 1995 more than doubled from $3.2 million
in the 1994 period. U.S. operations earned $6.4 million compared to $.8
million a year ago, primarily the result of higher unit margins, although sales
of refined products increased 13 percent compared to the second quarter of
1994, when the Superior refinery was down most of May for a planned turnaround.
Operations in Western Europe were at a break-even level in the current quarter
compared to earning $.5 million in the second
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTD.)
RESULTS OF OPERATIONS (CONTD.)
quarter of 1994. Earnings from purchasing, transporting, and reselling crude
oil in Canada were $1.3 million in the current quarter compared to $1.9 million
in the second quarter of 1994. Refinery crude runs were 155,858 barrels a day
compared to 141,933 in the same period of last year. Refined product sales
were 162,454 barrels a day, up from 161,378 a year ago.
Earnings from farm, timber, and real estate operations totaled $2.6 million,
down from $5.4 million in the second quarter of 1994. Earnings from timber
operations declined 43 percent compared to the second quarter of 1994.
Sawtimber harvest dropped from 13.7 million board feet to 10.1 million in the
current quarter, while the average sales price was up nine percent. Finished
lumber prices declined nine percent, and sawmill margins, reflecting higher log
costs and lower lumber prices, were down 93 percent. Twelve lots were sold at
the Chenal Valley development in western Little Rock during the second quarter
of 1995 compared to 32 a year ago.
Corporate functions reflected a loss of $3.4 million in the current quarter
compared to $2.2 million in the second quarter of 1994.
SIX MONTHS ENDED JUNE 30, 1995 COMPARED TO SIX MONTHS ENDED JUNE 30, 1994
The Company's net income for the six months ended June 30, 1995 totaled $36.6
million, $.82 a share, compared to $51.2 million, $1.14 a share, in 1994.
Earnings for the first six months of 1995 included a benefit of $7 million,
$.16 a share, from an adjustment of previously reserved amounts relating to
matters for which the Company is self-insured. Results for the first six
months of 1994 reflected the previously mentioned benefit of $6.4 million, $.14
a share, for settlement of certain income tax matters in the U.K.
Excluding the unusual items, earnings for the first half of 1995 were $29.6
million, $.66 a share, compared to $44.8 million, $1.00 a share, for the 1994
period. Earnings from refining, marketing, and transportation operations were
down 94 percent, primarily because of lower unit margins; and earnings from
farm, timber, and real estate operations were down 43 percent as timber
volumes, lumber prices, sawmill margins, and lot sales were all lower.
Earnings from exploration and production activities increased 15 percent
because the effects of higher crude oil and gas liquids volumes and prices and
lower exploration expenses more than offset the effect of lower natural gas
prices in the U.S. and Canada.
Earnings from exploration and production for the first six months of 1995 were
$26.8 million, up from $23.3 million in 1994. Canadian operations increased
from $4.8 million to $11.7 million, U.K. operations also more than doubled from
$1.4 million to $3.9 million, and other international operations rose from $2.5
million to $2.9 million. Earnings in the U.S. dropped from $14.6 million to
$8.3 million. The Company's crude oil and condensate sales prices averaged
$17.00 a barrel in the U.S. and $17.28 in the U.K., increases of 17 percent and
15 percent, respectively, over 1994. In Canada, 1995 sales prices averaged
$17.08 a barrel for light oil, $13.38 for heavy oil, and $17.79 for synthetic
oil, reflecting increases of 27 percent, 46 percent, and 20 percent,
respectively. The average price for Ecuadoran crude rose 26 percent from last
year to $13.98 a barrel. Natural gas prices for the first six months of 1995
averaged $1.56 an MCF in the U.S., down 27 percent, and $1.02 in Canada, down
34 percent. On the favorable side, natural gas prices were $2.47 an MCF in
the U.K., up three percent, and $2.90 in Spain, up 21 percent. Total crude oil
and gas liquids production in the first half of 1995 averaged 55,715 barrels a
day compared to 47,893 in the first six months of 1994. Ecuadoran production,
which commenced in June 1994, averaged 5,011 barrels a day, up from 394 last
year. In other areas, crude oil and gas liquids production averaged 14,561
barrels a day in the U.K., up 13 percent; 13,972 in the U.S., up seven percent;
8,563 for Canadian synthetic oil, down two percent; 8,167 for Canadian heavy
oil, up 29 percent; 5,205 for Canadian light oil, down seven percent; and 236
in other international areas, down 74 percent. Natural gas sales volumes
averaged 273 million cubic feet a day in the first half of 1995, down slightly
from a year ago. U.S. natural gas volume
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTD.)
RESULTS OF OPERATIONS (CONTD.)
was down five percent due to voluntary curtailments because of low prices;
natural gas volumes were up 10 percent in Canada, 29 percent in the U.K., and
13 percent in Spain. Exploration expenses totaled $17 million, down $3.1
million from the first six months of 1994. Supporting tables on page 11
provide additional details of the results of exploration and production
operations for the first six months of each year.
Refining, marketing, and transportation operations earned $.9 million in the
first six months of 1995 compared to $14.3 million a year earlier; the
unfavorable change was primarily the result of higher crude oil costs and the
inability of the market to absorb all of the higher costs primarily due to an
unusually mild winter. Operations in the U.S. recorded a loss of $.2 million
in the first half of 1995 compared to earning $9.5 million in 1994, and
operations in Western Europe lost $2 million compared to earning $1.2 million
in the prior period. Profits from purchasing, transporting, and reselling
crude oil in Canada were $3.1 million in the first half of 1995 compared to
$3.6 million in 1994, with the decline due mostly to lower income from crude
trading activities. Refinery crude runs were 153,170 barrels a day compared to
146,637 a year ago. Petroleum product sales averaged 158,019 barrels a day,
down from 160,285 in 1994.
Although sawtimber prices showed continued strength, earnings from farm,
timber, and real estate operations dropped from $12.7 million in the first six
months of 1994 to $7.3 million. Results in 1995 were adversely affected by a
reduction in the amount of sawtimber harvested; lower sawmill margins,
reflecting a decline in the sales prices for finished lumber and higher cost of
logs; and the sale of fewer lots in the Chenal Valley development in western
Little Rock. Harvested sawtimber declined from an accelerated pace of 34.1
million board feet in the first half of 1994 to 25.4 million in the current
year, but the average sales price was up 16 percent. Lumber prices were down
11 percent, and sawmill margins were down 78 percent because of the lower
lumber prices and higher log costs. Twenty-five lots were sold at Chenal
Valley during the first six months of 1995 compared to 75 a year ago.
Financial results from corporate functions were essentially unchanged,
reflecting a loss of $5.4 million in the first half of 1995 compared to $5.5
million a year ago.
FINANCIAL CONDITION
Cash provided by operating activities was $174.4 million for the first six
months of 1995 compared to $163.5 million for the same period in 1994. The
1995 amount included a benefit of $7 million for adjustment of estimates for
self-insured liabilities. Changes in operating working capital other than cash
and cash equivalents required cash of $.4 million for the first six months of
1995 and $17.4 million for the 1994 period. The first six months of 1994
benefited from net recoveries of $13.8 million on an insurance claim to repair
1992 hurricane damage. Cash provided by operating activities was reduced by
expenditures for refinery turnarounds and abandonment of oil and gas properties
totaling $10.9 million in the current year and $13.6 million in 1994.
Predominant uses of cash in both years were for capital expenditures (which,
including amounts expensed, are summarized in the following table) and payment
of dividends.
<TABLE>
<CAPTION>
-------------------------------------------------------
(Millions of dollars) 1995 1994
-------------------------------------------------------
<S> <C> <C>
Exploration and production. . . . . . . $101.9 147.7
Refining, marketing, and transportation 25.9 42.3
Farm, timber, and real estate . . . . . 3.7 3.7
Corporate and other . . . . . . . . . . .9 3.1
----- -----
$132.4 196.8
===== =====
</TABLE>
Working capital at June 30, 1995 was $95 million, up $15.4 million from
December 31, 1994. This level of working capital does not fully reflect the
Company's liquidity position, because the lower historical costs assigned to
inventories under LIFO accounting were $68.5 million below current costs at
June 30, 1995.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTD.)
FINANCIAL CONDITION (CONTD.)
At June 30, 1995, nonrecourse debt of a subsidiary was $150.3 million; the
increase of $27.7 million during the first six months of 1995 was attributable
to financing the Company's share of development cost for the period that
related to the Hibernia oil field, offshore Newfoundland. This increase was
more than offset by a decrease of $28.1 million in notes payable and other
long-term obligations. A summary of capital employed at June 30, 1995 and
December 31, 1994 follows.
<TABLE>
<CAPTION>
-----------------------------------------------------------------
1995 1994
-----------------------------------------------------------------
(Millions of dollars) Amount % Amount %
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Notes payable and other long-term
obligations....................... $ 21.7 2 49.8 3
Nonrecourse debt of a subsidiary... 150.3 10 122.6 9
Stockholders' equity............... 1,290.4 88 1,270.7 88
------- --- ------- ---
$1,462.4 100 1,443.1 100
======= === ======= ===
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
OIL AND GAS OPERATING RESULTS*
-------------------------------------------------------------------------------
United Synthetic
United King- Sub- Oil -
(Millions of dollars) States Canada dom Other total Canada Total
-------------------------------------------------------------------------------
THREE MONTHS ENDED
JUNE 30, 1995
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 53.2 21.7 27.9 9.5 112.3 15.7 128.0
Production costs 12.7 6.4 9.5 3.6 32.2 10.2 42.4
Depreciation, depletion,
and amortization 24.3 5.3 13.1 4.4 47.1 1.2 48.3
Exploration expenses
Dry hole costs - - (.1) - (.1) - (.1)
Geological and geophysical
costs 1.0 .3 .2 .6 2.1 - 2.1
Other costs .8 .1 .3 .5 1.7 - 1.7
-------------------------------------------------------------------------------
1.8 .4 .4 1.1 3.7 - 3.7
Undeveloped lease
amortization 1.7 .7 - .3 2.7 - 2.7
-------------------------------------------------------------------------------
Total exploration
expenses 3.5 1.1 .4 1.4 6.4 - 6.4
-------------------------------------------------------------------------------
Selling and general expenses 3.6 1.2 .9 .3 6.0 .1 6.1
Income tax provisions 3.3 3.2 2.6 .4 9.5 1.6 11.1
-------------------------------------------------------------------------------
Results of operations
(excluding corporate
overhead and interest) $ 5.8 4.5 1.4 (.6) 11.1 2.6 13.7
===============================================================================
THREE MONTHS ENDED
JUNE 30, 1994**
-------------------------------------------------------------------------------
Revenues $ 57.5 19.2 23.6 5.3 105.6 12.2 117.8
Production costs 14.4 5.5 8.1 2.4 30.4 9.0 39.4
Depreciation, depletion,
and amortization 23.2 5.1 10.7 .6 39.6 1.1 40.7
Exploration expenses
Dry hole costs 1.5 .2 - - 1.7 - 1.7
Geological and geophysical
costs .7 .6 .7 .3 2.3 - 2.3
Other costs .8 .2 .3 .1 1.4 - 1.4
-------------------------------------------------------------------------------
3.0 1.0 1.0 .4 5.4 - 5.4
Undeveloped lease
amortization 2.1 .7 - - 2.8 - 2.8
-------------------------------------------------------------------------------
Total exploration
expenses 5.1 1.7 1.0 .4 8.2 - 8.2
-------------------------------------------------------------------------------
Selling and general expenses 3.4 1.1 .9 .3 5.7 .1 5.8
Income tax provisions 4.5 1.7 2.1 - 8.3 .7 9.0
-------------------------------------------------------------------------------
Results of operations
(excluding corporate
overhead and interest) $ 6.9 4.1 .8 1.6 13.4 1.3 14.7
===============================================================================
SIX MONTHS ENDED
JUNE 30, 1995
-------------------------------------------------------------------------------
Revenues $101.8 42.0 62.8 21.8 228.4 27.6 256.0
Production costs 26.7 12.2 18.2 7.0 64.1 18.4 82.5
Depreciation, depletion,
and amortization 48.2 10.5 30.5 7.7 96.9 2.2 99.1
Exploration expenses
Dry hole costs .8 1.2 .6 - 2.6 - 2.6
Geological and
geophysical costs 2.3 1.4 .4 1.1 5.2 - 5.2
Other costs 1.4 .3 .7 1.2 3.6 - 3.6
-------------------------------------------------------------------------------
4.5 2.9 1.7 2.3 11.4 - 11.4
Undeveloped lease
amortization 3.5 1.4 - .7 5.6 - 5.6
-------------------------------------------------------------------------------
Total exploration
expenses 8.0 4.3 1.7 3.0 17.0 - 17.0
-------------------------------------------------------------------------------
Selling and general expenses 7.1 2.5 1.8 .7 12.1 .1 12.2
Income tax provisions 3.5 5.1 6.7 .5 15.8 2.6 18.4
-------------------------------------------------------------------------------
Results of operations
(excluding corporate
overhead and interest) $ 8.3 7.4 3.9 2.9 22.5 4.3 26.8
===============================================================================
SIX MONTHS ENDED
JUNE 30, 1994**
-------------------------------------------------------------------------------
Revenues $119.5 33.8 44.1 8.2 205.6 23.3 228.9
Production costs 27.6 11.5 15.5 3.5 58.1 19.3 77.4
Depreciation, depletion,
and amortization 49.2 10.0 19.8 .8 79.8 2.4 82.2
Exploration expenses
Dry hole costs 2.7 1.7 1.9 - 6.3 - 6.3
Geological and
geophysical costs 3.2 1.3 .7 .4 5.6 - 5.6
Other costs 1.4 .4 .7 .3 2.8 - 2.8
-------------------------------------------------------------------------------
7.3 3.4 3.3 .7 14.7 - 14.7
Undeveloped lease
amortization 4.1 1.3 - - 5.4 - 5.4
-------------------------------------------------------------------------------
Total exploration
expenses 11.4 4.7 3.3 .7 20.1 - 20.1
-------------------------------------------------------------------------------
Selling and general expenses 6.8 2.3 1.6 .7 11.4 .1 11.5
Income tax provisions 9.9 1.5 2.5 - 13.9 .5 14.4
-------------------------------------------------------------------------------
Results of operations
(excluding corporate
overhead and interest) $ 14.6 3.8 1.4 2.5 22.3 1.0 23.3
===============================================================================
*Excludes unusual or infrequently occurring items.
**Restated to conform to 1995 presentation.
</TABLE>
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
(a) The information contained in Note C to the Consolidated Financial
Statements, page 5 of this report, concerning certain legal
proceedings in which the Company is involved, is incorporated herein
by reference.
(b) One of the Company's subsidiaries, Murphy Oil USA, Inc., owns and
operates two oil refineries in the U.S. This subsidiary is a
defendant in two governmental actions that (1) seek monetary sanctions
of $100,000 or more, and (2) arise under enacted provisions that
regulate the discharge of materials into the environment or have the
purpose of protecting the environment. These actions are not material
to the financial condition of the Company either individually or in
the aggregate.
(c) The Company and its subsidiaries are engaged in a number of other
legal proceedings, all of which the Company considers routine and
incidental to its business and none of which is material as defined.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the annual meeting of security holders on May 10, 1995, the
directors proposed by management were elected with a tabulation of
shares as shown below.
<TABLE>
<CAPTION>
For Withheld
---------- --------
<S> <C> <C>
B. R. R. Butler 38,241,597 62,093
Claiborne P. Deming 38,240,089 63,601
H. Rodes Hart 38,241,317 62,373
Vester T. Hughes Jr. 38,235,751 67,939
C. H. Murphy Jr. 38,240,454 63,236
Michael W. Murphy 38,239,826 63,864
R. Madison Murphy 38,241,508 62,182
William C. Nolan Jr. 38,240,696 62,994
Caroline G. Theus 38,241,676 62,014
Lorne C. Webster 38,241,589 62,101
</TABLE>
In addition, the earlier appointment of KPMG Peat Marwick LLP by the
Board of Directors as independent auditors for 1995 was ratified with
38,268,669 shares voted in favor, 11,160 shares voted in opposition,
and 23,861 shares not voted.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit index - Exhibits other than the one listed below have been
omitted since they either are not required or are not applicable.
Exhibit 27 - Financial Data Schedule - included only in electronic
filing.
(b) No reports on Form 8-K have been filed for the quarter covered by
this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MURPHY OIL CORPORATION
(Registrant)
By /s/ Ronald W. Herman
--------------------
Ronald W. Herman, Controller
(Chief Accounting Officer and Duly
Authorized Officer)
August 10, 1995
(Date)
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY UNAUDITED FINANCIAL INFORMATION
EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AT JUNE 30, 1995, AND THE
CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1995, OF
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 86,090
<SECURITIES> 0
<RECEIVABLES> 190,385
<ALLOWANCES> 5,653
<INVENTORY> 181,274
<CURRENT-ASSETS> 506,980
<PP&E> 4,182,375
<DEPRECIATION> 2,446,812
<TOTAL-ASSETS> 2,315,519
<CURRENT-LIABILITIES> 412,008
<BONDS> 172,036
<COMMON> 48,775
0
0
<OTHER-SE> 1,241,664
<TOTAL-LIABILITY-AND-EQUITY> 2,315,519
<SALES> 827,362
<TOTAL-REVENUES> 870,136
<CGS> 752,071
<TOTAL-COSTS> 752,071
<OTHER-EXPENSES> 17,003
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,064
<INCOME-PRETAX> 63,220
<INCOME-TAX> 26,630
<INCOME-CONTINUING> 36,590
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,590
<EPS-PRIMARY> .82
<EPS-DILUTED> .82
</TABLE>
