<PAGE>
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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
For the fiscal year DECEMBER 31, 1997
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 (I.R.S. Employer
of incorporation or organization) Identification 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: (870) 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. Yes X 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 27, 1998 as quoted by the New
York Stock Exchange, was approximately $1,655,470,000.
Number of shares of Common Stock, $1.00 Par Value, outstanding at February 27,
1998, was 44,956,718.
Documents incorporated by reference:
The Registrant's definitive Proxy Statement relating to the Annual Meeting of
Stockholders on May 13, 1998 (Part III)
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<PAGE>
MURPHY OIL CORPORATION
TABLE OF CONTENTS - 1997 FORM 10-K REPORT
Page
Number
------
PART I
Item 1. Business 3
Item 2. Properties 3
Item 3. Legal Proceedings 8
Item 4. Submission of Matters to a Vote of Security Holders 8
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters 9
Item 6. Selected Financial Data 9
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operation 9
Item 8. Financial Statements and Supplementary Data 9
Item 9. Changes in and Disagreements With Accountants
on Accounting and Financial Disclosure 9
PART III
Item 10. Directors and Executive Officers of the Registrant 9
Item 11. Executive Compensation 9
Item 12. Security Ownership of Certain Beneficial Owners and
Management 9
Item 13. Certain Relationships and Related Transactions 9
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 10
Signatures 11
Exhibit Index 12
2
<PAGE>
PART I
ITEMS 1. AND 2. BUSINESS AND PROPERTIES.
SUMMARY
Murphy Oil Corporation is a worldwide oil and gas exploration and
production company with refining and marketing operations in the United
States and the United Kingdom as well as pipeline and crude oil trading
operations in Canada. As used in this report, the terms Murphy, Murphy
Oil, we, our, its and Company may refer to Murphy Oil Corporation or any
one or more of its consolidated subsidiaries.
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) "Exploration and Production,"
and (2) "Refining, Marketing and Transportation." Additionally,
"Corporate" activities include interest income, interest expense and
overhead not allocated to either of the business segments. On December 31,
1996, Murphy completed a spin-off to its stockholders of its wholly owned
farm, timber and real estate subsidiary, Deltic Farm & Timber Co., Inc.
(reincorporated as "Deltic Timber Corporation").
The information appearing in the 1997 Annual Report to Security Holders
(1997 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, 5, 6, 7, 8 and 14. A narrative of the
graphic and image information that appears in the paper format version of
Exhibit 13 is included in the electronic Form 10-K document as an appendix
(pages Ex. 13A-1 through Ex. 13A-8) to Exhibit 13.
In addition to the following information about each business segment, data
relative to Murphy's operations, properties and industry segments,
including revenues by class of products and financial information by
geographic area, are described on pages 1, 30 through 38, 45, 52, 53, 56
and 57 of the 1997 Annual Report, which is filed in this 10-K report
as Exhibit 13.
EXPLORATION AND PRODUCTION
During 1997, Murphy's principal exploration and/or production activities
were conducted in the United States and Ecuador by wholly owned Murphy
Exploration & Production Company (Murphy Expro) and its subsidiaries, in
western Canada and offshore eastern Canada by wholly owned Murphy Oil
Company Ltd. (MOCL) and its subsidiaries and in the U.K. North Sea and the
Atlantic Margin by wholly owned Murphy Petroleum Limited. Murphy's crude
oil and natural gas liquids production in 1997 was in the United States,
Canada, the U.K. North Sea and Ecuador; its natural gas was produced and
sold in the United States, Canada and the U.K. North Sea. MOCL also has a
five-percent interest in Syncrude Canada Ltd., which extracts synthetic
crude oil from oil sand deposits in northern Alberta. In addition,
subsidiaries of Murphy Expro conducted exploration activities in various
other areas including China, the Faroe Islands, Ireland, the Falkland
Islands, Venezuela, Bangladesh, Brazil, Pakistan, Denmark and the Caspian
Sea.
Murphy's estimated net quantities of proved oil and gas reserves and proved
developed oil and gas reserves at December 31, 1994, 1995, 1996 and 1997 by
geographic area are reported on page 55 of the 1997 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 U.S. Securities and Exchange Commission.
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 net proved reserves of such
properties are determined.
Net crude oil, condensate, and gas liquids production and net natural gas
sales by geographic area with weighted average sales prices for each year
in the five-year period ended December 31, 1997 are shown on page 59 of the
1997 Annual Report, which is filed in this 10-K report as Exhibit 13.
3
<PAGE>
EXPLORATION AND PRODUCTION (Contd.)
Production costs for the last three years 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 (6
MCF = 1 bbl.), are discussed on page 33 of the 1997 Annual Report, which is
filed in this 10-K report as Exhibit 13.
Supplemental disclosures about oil and gas producing activities are
reported on pages 54 through 58 of the 1997 Annual Report, which is filed
in this 10-K report as Exhibit 13.
At December 31, 1997, Murphy held leases, concessions, contracts or permits
on nonproducing and producing acreage as shown by geographic area in the
following table. Gross acres are those in which all or part of the working
interest is owned by Murphy; net acres are the portions of the gross acres
applicable to Murphy's working interest. All amounts shown are in
thousands of acres.
<TABLE>
<CAPTION>
Nonproducing Producing Total
---------------- ----------------- ----------------
Area Gross Net Gross Net Gross Net
---- ------ ------- ----- ------ ----- -----
<S> <C> <C> <C> <C> <C> <C>
United States - Onshore 10 5 38 20 48 25
- Gulf of Mexico 805 499 389 151 1,194 650
- Frontier 81 47 - - 81 47
------ ----- ----- ------ ------ -----
Total United States 896 551 427 171 1,323 722
------ ----- ----- ------ ------ -----
Canada - Onshore 954 632 396 166 1,350 798
- Offshore 109 15 2 - 111 15
- Oil sands 219 51 13 4 232 55
------ ----- ----- ------ ------ -----
Total Canada 1,282 698 411 170 1,693 868
------ ----- ----- ------ ------ -----
United Kingdom 1,186 312 66 9 1,252 321
Ecuador - - 494 99 494 99
China 563 253 - - 563 253
Falkland Islands 401 100 - - 401 100
Ireland 896 224 - - 896 224
Pakistan 9,545 7,850 - - 9,545 7,850
Peru 2,486 2,486 - - 2,486 2,486
Spain 434 136 - - 434 136
Tunisia 109 36 - - 109 36
------ ------ ----- ------ ------ ------
Totals 17,798 12,646 1,398 449 19,196 13,095
====== ====== ===== ====== ====== ======
</TABLE>
Oil and gas wells producing or capable of producing at December 31, 1997
are summarized in the following 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.
<TABLE>
<CAPTION>
Oil Wells Gas Wells
------------------- --------------------
Country Gross Net Gross Net
------- --------- -------- --------- ---------
<S> <C> <C> <C> <C>
United States 342 153.9 277 115.5
Canada 4,160 793.0 813 274.0
United Kingdom 85 11.3 21 1.5
Ecuador 47 9.4 - -
--------- -------- --------- ---------
Totals 4,634 967.6 1,111 391.0
========= ======== ========= =========
Wells included above with multiple
completions and counted as one well each 91 42.6 90 65.7
</TABLE>
4
<PAGE>
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>
1997
----
Exploratory 7.6 6.8 15.8 8.3 .5 .6 - - .4 1.0 24.3 16.7
Development 2.9 - 83.0 - .9 .3 1.6 - - - 88.4 .3
1996
----
Exploratory 13.8 3.9 5.3 4.0 - 1.1 - - .4 - 19.5 9.0
Development 4.6 - 70.2 2.5 1.0 .1 2.2 - - - 78.0 2.6
1995
----
Exploratory 4.6 1.9 6.0 4.3 .3 .1 - - - .5 10.9 6.8
Development 2.0 - 25.9 1.6 .8 - 2.8 - - - 31.5 1.6
</TABLE>
Murphy's drilling wells in progress at December 31, 1997 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 4 2.0 1 .5 5 2.5
Canada 2 2.0 - - 2 2.0
United Kingdom - - 2 .1 2 .1
China 1 .5 - - 1 .5
---- --- --- ------- ----- -------
Totals 7 4.5 3 .6 10 5.1
==== === === ======= ===== =======
</TABLE>
Additional information about current exploration and production activities
is reported on pages 2 through 19 of the 1997 Annual Report, which is filed
in this 10-K report as Exhibit 13.
REFINING, MARKETING AND TRANSPORTATION
Murphy Oil USA, Inc. (MOUSA), 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 fee
land and two leases that expire in 2010 and 2021, at which times the
Company has options to purchase the 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, 1997 are shown in the following table.
5
<PAGE>
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 20,500 16,500 87,000
Catalytic cracking - fresh feed 38,000 11,000 9,960 58,960
Pretreating cat-reforming feeds 22,000 9,000 5,490 36,490
Catalytic reforming 18,000 8,000 5,490 31,490
Distillate hydrotreating 15,000 7,800 20,250 43,050
Gas oil hydrotreating 27,500 - - 27,500
Solvent deasphalting 18,000 - - 18,000
Isomerization - 2,000 2,250 4,250
Production capacities - b/sd*
Alkylation 8,500 1,500 1,680 11,680
Asphalt - 7,500 - 7,500
Crude oil and product storage
capacities - bbls. 4,453,000 2,852,000 2,638,000 9,943,000
</TABLE>
*Barrels per stream day.
Murphy distributes refined products from 57 terminal locations in the
United States to retail and wholesale accounts in the United States (by
MOUSA) and in Canada (by a MOCL subsidiary) under the brand names SPUR(R)
and Murphy USA(R) and to unbranded wholesale accounts. Ten terminals are
wholly owned and operated by MOUSA, 16 are jointly owned and operated by
others and the remaining 31 are owned by others. Of the terminals wholly
owned or jointly owned, four are marine terminals, two are supplied by
truck, two are adjacent to MOUSA's refineries and 18 are supplied by
pipeline. MOUSA 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 1997, refined products were marketed at wholesale
and/or retail through 585 branded stations in 17 southeastern and upper-
midwestern states and six branded stations in the Thunder Bay area of
Ontario, Canada.
At the end of 1997, Murco distributed refined products in the United
Kingdom from the Milford Haven refinery; three wholly owned, rail-fed
terminals; seven terminals owned by others where products are received in
exchange for deliveries from the Company's wholly owned terminals; and 396
branded stations 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 deepwater 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 transported by that system to be shipped to the Meraux refinery.
6
<PAGE>
REFINING, MARKETING AND TRANSPORTATION (Contd.)
At December 31, 1997, MOCL operated the following Canadian crude oil
pipelines, with the ownership percentage, extent and capacity in barrels a
day of each as shown. MOCL also operated and owned all or most of several
short lateral connecting pipelines.
<TABLE>
<CAPTION>
Name Description Percent Miles Bbls./Day Route
---- ------------ ------- ----- --------- -----
<S> <C> <C> <C> <C> <C>
Manito Dual heavy oil 52.5 101 65,000 Dulwich to Kerrobert, Sask.
North-Sask Dual heavy oil 36.1 40 24,000 Paradise Hill to Dulwich, Sask.
Cactus Lake Dual heavy oil 13.1 40 55,000 Cactus Lake to Kerrobert, Sask.
Bodo Dual heavy oil 41.3 15 18,000 Bodo, Alta. to Cactus Lake, Sask.
Milk River Dual medium/light oil 100 10.5 118,000 Milk River, Alta. to U.S. border
Wascana Single light oil 100 108 45,000 Regina, Sask. to U.S. border
Eyehill Dual heavy 100 28 15,000 Eyehill to Unity, Sask.
</TABLE>
Additional information about current refining, marketing and transportation
activities and a statistical summary of key operating and financial
indicators for each year in the five-year period ended December 31, 1997
are reported on pages 2, 3, 5 through 7, 20 through 27 and 60 of the 1997
Annual Report, which is filed in this 10-K report as Exhibit 13.
EMPLOYEES
Murphy had 1,338 full-time employees at December 31, 1997.
COMPETITION AND OTHER CONDITIONS WHICH MAY AFFECT BUSINESS
Murphy operates in the oil industry and 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. 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. Additional information
concerning current conditions of the Company's business is reported under
the caption "Outlook" on page 37 of the 1997 Annual Report, which is filed
in this 10-K report as Exhibit 13.
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. 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 and/or remediation of the environment (See the
caption "Environmental" on page 36 of the 1997 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 known risks when insurance is
available at costs and terms Murphy considers reasonable. Certain existing
risks are insured by Murphy only through Oil Insurance Limited, which is
operated as a mutual insurance company by certain participating oil
companies including Murphy and was organized to insure against risks for
which commercial insurance is unavailable or for which the cost of
commercial insurance is prohibitive.
7
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
The age (at January 1, 1998), present corporate office and length of
service in office of each of the Company's executive officers and persons
chosen to become executive 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 40; 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 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 43; President and Chief Executive Officer since
October 1994 and Director and Member of the Executive Committee since
1993. In 1992, he became Executive Vice President and Chief Operating
Officer. Mr. Deming was President of MOUSA from 1989 to 1992.
Steven A. Cosse' - Age 50; Senior Vice President since October 1994 and
General Counsel since August 1991. Mr. Cosse' was elected Vice
President in 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.
Herbert A. Fox Jr. - Age 63; Vice President since October 1994. Mr. Fox
has also been President of MOUSA since 1992. He served with MOUSA as
Vice President, Manufacturing, from 1990 to 1992.
Bill H. Stobaugh - Age 46; Vice President since May 1995, when he joined
the Company. Prior to that, he had held various engineering, planning
and managerial positions, the most recent being with an engineering
consulting firm.
Odie F. Vaughan - Age 61; Treasurer since August 1991. From 1975 through
July 1991, he was with ODECO as Vice President of Taxes and Treasurer.
Ronald W. Herman - Age 60; Controller since August 1991. He was
Controller of ODECO from 1977 through July 1991.
Walter K. Compton - Age 35; Secretary since December 1996. He has been
an attorney with the Company since 1988 and became Manager, Law
Department, in November 1996.
ITEM 3. LEGAL PROCEEDINGS.
Murphy and its subsidiaries are engaged in a number of legal proceedings,
all of which Murphy considers routine and incidental to its business and
none of which is material as defined by the rules and regulations of the
U.S. Securities and Exchange Commission.
ITEM 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 1997.
8
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Company's Common Stock is traded on the New York Stock Exchange and the
Toronto Stock Exchange. Other information required by this item is
reported on page 38 of the 1997 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 30 of the 1997 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 31 through 37 of the
1997 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 38 through 58 of the
1997 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, page 8, 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 13, 1998, under the
caption "Election of Directors."
ITEM 11. EXECUTIVE COMPENSATION.
Information required by this item is incorporated by reference to the
Registrant's definitive Proxy Statement for the Annual Meeting of
Stockholders on May 13, 1998, under the captions "Compensation of
Directors," "Executive Compensation," "Option Exercises and Fiscal Year-End
Values," "Option Grants," "Compensation Committee Report for 1997,"
"Shareholder Return Performance Presentation" and "Retirement Plans."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information required by this item is incorporated by reference to the
Registrant's definitive Proxy Statement for the Annual Meeting of
Stockholders on May 13, 1998, under the caption "Certain Stock Ownerships."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required by this item is incorporated by reference to the
Registrant's definitive Proxy Statement for the Annual Meeting of
Stockholders on May 13, 1998, under the caption "Compensation Committee
Interlocks and Insider Participation."
9
<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 the 1997 Annual Report, which is filed in this 10-K
report as Exhibit 13.
<TABLE>
<CAPTION>
Exhibit 13
Page Nos.
-------------
<S> <C>
Independent Auditors' Report 39
Consolidated Statements of Income 40
Consolidated Balance Sheets 41
Consolidated Statements of Cash Flows 42
Consolidated Statements of Stockholders' Equity 43
Notes to Consolidated Financial Statements 44 through 53
</TABLE>
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.
3. EXHIBITS
The Exhibit Index on page 12 of this 10-K report lists the exhibits
that are hereby filed or incorporated by reference.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended December
31, 1997.
10
<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 26, 1998
------------------------------------------ -----------------------------
Claiborne P. Deming, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below on March 26, 1998 by the following persons on behalf of
the registrant and in the capacities indicated.
<TABLE>
<CAPTION>
<S> <C>
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
GEORGE S. DEMBROSKI LORNE C. WEBSTER
- - ---------------------------------------- -------------------------------------------
George S. Dembroski, Director Lorne C. Webster, Director
H. RODES HART STEVEN A. COSSE'
- - ---------------------------------------- -------------------------------------------
H. Rodes Hart, Director Steven A. Cosse', Senior Vice President
and General Counsel
(Principal Financial Officer)
VESTER T. HUGHES JR. RONALD W. HERMAN
- - ---------------------------------------- -------------------------------------------
Vester T. Hughes Jr., Director Ronald W. Herman, Controller
(Principal Accounting Officer)
C. H. MURPHY JR.
- - ----------------------------------------
C. H. Murphy Jr., Director
</TABLE>
11
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page Number or
No. Incorporation by Reference to
------- -------------------------------------------
<S> <C> <C>
3.1 Certificate of Incorporation of Murphy Oil Corporation as of Exhibit 3.1, Page Ex. 3.1-1, of Murphy's
September 25, 1986 Annual Report on Form 10-K for the year
ended December 31, 1996.
3.2 Bylaws of Murphy Oil Corporation at January 24, 1996 Page Ex. 3.2-1
4 Instruments Defining the Rights of Security Holders. Murphy
is party to several long-term debt instruments in addition to
the one in Exhibit 4.1, none of which authorizes securities
exceeding 10 percent of the total consolidated assets of
Murphy and its subsidiaries. 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 Credit Agreement among Murphy Oil Corporation and Page Ex. 4.1-0
certain subsidiaries and the Chase Manhattan Bank
et al as of November 13, 1997
4.2 Rights Agreement dated as of December 6, 1989 between Exhibit 4.1, Page Ex. 4.1-0, of Murphy's
Murphy Oil Corporation and Harris Trust Company of New Annual Report on Form 10-K for the year
York, as Rights Agent ended December 31, 1994
10.1 1987 Management Incentive Plan (adopted May 13, 1987, Exhibit 10.2, Page Ex. 10.2-0, of Murphy's
amended February 7, 1990 retroactive to February 3, 1988) Annual Report on Form 10-K for the
year ended December 31, 1994
10.2 1992 Stock Incentive Plan amended May 14, 1997 Exhibit 10.2, Page Ex. 10.2-1, of Murphy's
Report on Form 10-Q for the quarterly
period ended June 30, 1997
10.3 Employee Stock Purchase Plan Exhibit 99.01 of Murphy's Form S-8
Registration Statement under the Securities
Act of 1933 dated May 19, 1997
13 1997 Annual Report to Security Holders Page Ex. 13-0
Appendix - Narrative to Graphic and Image Material Page Ex. 13A-1 (only in electronic filing)
21 Subsidiaries of the Registrant Page Ex. 21-1
23 Independent Auditors' Consent Page Ex. 23-1
27.1 Financial Data Schedule for 1997 Only in electronic filing
27.2 Restated Financial Data Schedules for the year ended Only in electronic filing
December 31, 1995, six months ended June 30, 1997, and
nine months ended September 30, 1997
99.1 Undertakings Page Ex. 99.1-1
99.2 Form 11-K, Annual Report for the fiscal year ended To be filed as an amendment of this Annual
December 31, 1997 covering the Thrift Plan for Employees Report on Form 10-K not later than 180 days
of Murphy Oil Corporation after December 31, 1997
99.3 Form 11-K, Annual Report for the fiscal year ended To be filed as an amendment of this Annual
December 31, 1997 covering the Thrift Plan for Employees Report on Form 10-K not later than 180 days
of Murphy Oil USA, Inc. Represented by United Steelworkers after December 31, 1997
of America, AFL-CIO, Local No. 8363
99.4 Form 11-K, Annual Report for the fiscal year ended To be filed as an amendment of this Annual
December 31, 1997 covering the Thrift Plan for Employees Report on Form 10-K not later than
of Murphy Oil USA, Inc. Represented by International Union 180 days after December 31, 1997
of Operating Engineers, AFL-CIO, Local No. 305
99.5 Form 11-K, Annual Report for the fiscal year ended To be filed as an amendment of this Annual
December 31, 1997 covering the Thrift Plan for Hourly Report on Form 10-K not later than 180 days
Employees of Deltic Farm & Timber Co., Inc. after December 31, 1997
</TABLE>
Exhibits other than those listed above have been omitted since they either are
not required or are not applicable.
12
<PAGE>
EXHIBIT 3.2
BYLAWS
OF
MURPHY OIL CORPORATION
(A Delaware corporation)
As Amended January 24, 1996
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.
Ex. 3.2-1
<PAGE>
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 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
eleven, 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.
Ex. 3.2-2
<PAGE>
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 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.
Ex. 3.2-3
<PAGE>
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.
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.
Ex. 3.2-4
<PAGE>
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 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.
Ex. 3.2-5
<PAGE>
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.
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.
Ex. 3.2-6
<PAGE>
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.
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.
Ex. 3.2-7
<PAGE>
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.
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
Ex. 3.2-8
<PAGE>
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.
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
Ex. 3.2-9
<PAGE>
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 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.
Ex. 3.2-10
<PAGE>
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.
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. 3.2-11
<PAGE>
EXHIBIT 4.1
US $300,000,000
CREDIT AGREEMENT
among
MURPHY OIL CORPORATION,
as Borrower and Guarantor
MURPHY OIL USA, INC.,
MURPHY OIL COMPANY LTD.,
MURPHY EXPLORATION & PRODUCTION COMPANY,
MURPHY PETROLEUM LIMITED,
as Subsidiary Borrowers
and
THE CHASE MANHATTAN BANK,
as Domestic Administrative Agent
and
THE CHASE MANHATTAN BANK OF CANADA,
as Canadian Administrative Agent
and
THE LENDERS NAMED HEREIN,
as Lenders
AS OF NOVEMBER 13, 1997
CHASE SECURITIES, INC.,
as Arranger
Ex. 4.1-0
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS........................................ 1
1.1 Certain Defined Terms....................................... 1
1.2 Accounting Terms............................................ 15
1.3 Other References............................................ 15
SECTION 2
AMOUNTS AND TERMS OF THE ADVANCES....................................... 15
2.1 Commitments; Loans.......................................... 15
(a) Commitments........................................... 15
(b) Allocation of Commitments............................. 15
(c) Domestic Advances..................................... 16
(d) Canadian Advances..................................... 16
(e) Additional Limitations on Advances.................... 16
(f) Revolving Facility.................................... 16
(g) Currency Options...................................... 17
2.2 Making Advances............................................. 17
(a) Notice of Borrowing................................... 17
(b) Notices Irrevocable................................... 17
(c) Funding; Failure to Fund.............................. 17
(d) Obligations Several................................... 18
2.3 Conversion and Continuation of Borrowings................... 18
2.4 Loan Accounts............................................... 19
(a) By Each Lender........................................ 19
(b) By Agents............................................. 19
(c) Evidence of Amount.................................... 20
(d) Notes................................................. 20
2.5 Fees........................................................ 20
2.6 Optional Reduction of the Commitments....................... 20
2.7 Repayment of Advances; Prepayment........................... 21
(a) Termination Date...................................... 21
(b) Voluntary Prepayments................................. 21
(c) Mandatory Prepayments................................. 21
2.8 Interest.................................................... 21
(a) Rate on Advances...................................... 21
(b) Default Amounts....................................... 21
(c) Payment of Interest on Advances....................... 22
2.9 Limitation on Eurocurrency Rate Advances.................... 22
(a) Inadequacy............................................ 22
(b) Basis Unavailable..................................... 22
2.10 Increased Costs; Increased Capital; Prepayments............. 22
(a) Increased Costs....................................... 22
(b) Capital............................................... 23
(c) Funding Losses........................................ 23
2.11 Additional Interest on Eurocurrency Rate Advances........... 23
</TABLE>
Ex. 4.1-i
<PAGE>
<TABLE>
<S> <C> <C>
2.12 Change in Legality.......................................... 24
2.13 Payments and Computations................................... 24
(a) Payments.............................................. 24
(b) Computations.......................................... 24
(c) Interest Act (Canada)................................. 25
(d) Business Days......................................... 25
(e) Distribution of Payments.............................. 25
2.14 Taxes on Payments........................................... 25
(a) Withholding Taxes..................................... 25
(b) Tax Forms............................................. 26
(c) Credits............................................... 26
(d) Lending Office........................................ 27
(e) Effect of Participants................................ 27
2.15 Sharing of Payments, Etc.................................... 27
2.16 Bankers' Acceptances........................................ 27
(a) Creation.............................................. 27
(b) Drawing Notice........................................ 28
(c) Notice Irrevocable.................................... 28
(d) Drafts................................................ 28
(e) Acceptance of Drafts.................................. 28
(f) Funding............................................... 28
(g) Holding of Bankers' Acceptances....................... 29
(h) Repayment............................................. 29
(i) Number of Drafts...................................... 29
(j) Limitation on Bankers' Acceptances.................... 30
(k) Collateral Account.................................... 30
SECTION 3
CONDITIONS OF CLOSING AND LENDING....................................... 30
3.1 Conditions Precedent to Closing............................. 30
3.2 Conditions Precedent to Each Borrowing...................... 31
SECTION 4
REPRESENTATIONS AND WARRANTIES.......................................... 31
4.1 Existence; Qualification.................................... 31
4.2 Power....................................................... 31
4.3 Authorizations.............................................. 32
4.4 Enforceability.............................................. 32
4.5 Financial Information....................................... 32
4.6 Litigation, Judgments, Etc.................................. 32
4.7 Regulation U................................................ 32
4.8 ERISA....................................................... 32
4.9 Taxes....................................................... 33
4.10 Environmental Matters....................................... 33
4.11 Rights in Properties; Liens................................. 33
4.12 Solvency.................................................... 33
</TABLE>
Ex. 4.1-ii
<PAGE>
<TABLE>
<C> <S> <C>
SECTION 5
AFFIRMATIVE COVENANTS.................................................... 33
5.1 Reporting Requirements....................................... 33
5.2 Notices...................................................... 34
5.3 Maintenance of Existence, Books and Records, Properties,
and Insurance................................................ 34
5.4 Use of Proceeds.............................................. 34
5.5 Compliance with Legal Requirements; Authorizations........... 34
5.6 Payment of Obligations....................................... 34
SECTION 6
NEGATIVE COVENANTS....................................................... 35
6.1 Liens, Etc................................................... 35
6.2 Restriction on Fundamental Changes........................... 36
6.3 Sale of Assets............................................... 36
6.4 Transactions With Affiliates................................. 36
6.5 Fiscal Year and Accounting Methods........................... 36
6.6 Ratio of Maximum Total Debt to Total Capital................. 36
SECTION 7
EVENTS OF DEFAULT........................................................ 37
7.1 Events of Default............................................ 37
7.2 Remedies..................................................... 38
SECTION 8
AGENTS................................................................... 38
8.1 Appointment, Powers, and Immunities.......................... 38
8.2 Reliance by Agents........................................... 39
8.3 Notices; Defaults............................................ 39
8.4 Rights as a Lender........................................... 39
8.5 Indemnification.............................................. 40
8.6 Non-Reliance on Agents and other Lenders..................... 40
8.7 Action by Agents............................................. 40
8.8 Resignation or Removal of Agents............................. 41
8.9 Relationship of Lenders...................................... 41
8.10 Benefits of Agreement........................................ 41
SECTION 9
GUARANTY AGREEMENT....................................................... 41
9.1 Guaranty of Obligation....................................... 41
9.2 Guaranteed Debt Not Reduced by Offset........................ 41
9.3 Payment by Murphy............................................ 42
9.4 No Duty to Pursue Others..................................... 42
</TABLE>
Ex. 4.1-iii
<PAGE>
<TABLE>
<S> <C> <C>
9.5 Waiver of Notices, etc....................................... 42
9.6 Effect of Bankruptcy; Other Matters.......................... 42
9.7 Additional Events and Circumstances not Reducing or
Discharging Murphy's Obligations............................. 42
9.8 Subordination of Guarantor Claims............................ 43
9.9 Claims in Bankruptcy......................................... 43
9.10 Withholding Taxes............................................ 44
SECTION 10
MISCELLANEOUS............................................................ 44
10.1 Amendments, Etc.............................................. 44
10.2 Notices...................................................... 44
10.3 No Waiver; Remedies.......................................... 45
10.4 Costs, Expenses and Taxes.................................... 45
10.5 Right of Set-off............................................. 45
10.6 Binding Effect............................................... 45
10.7 Assignments and Participations............................... 45
10.8 GOVERNING LAW; SUBMISSION TO JURISDICTION.................... 47
10.9 Exceptions to Covenants...................................... 47
10.10 Survival..................................................... 47
10.11 Invalid Provisions........................................... 48
10.12 Maximum Rate................................................. 48
10.13 Execution in Counterparts.................................... 48
10.14 Not in Control............................................... 48
10.15 Indemnification.............................................. 48
10.16 Entirety..................................................... 49
</TABLE>
Ex. 4.1-iv
<PAGE>
SCHEDULES AND EXHIBITS
<TABLE>
<CAPTION>
<S> <C> <C>
Schedule 1 - Agents, Lenders, Lending Offices, Commitments, and Commitment
Allocations
Schedule 6.1 - Existing Liens
Exhibit A - Notice of Borrowing
Exhibit B - Assignment and Acceptance Agreement
Exhibit C-1 - Opinion of Borrower's Counsel
Exhibit C-2 - Opinion of Borrower's Canadian Counsel
Exhibit C-3 - Opinion of Borrower's UK Counsel
Exhibit D - Form of Draft
Exhibit E - Form of Notice of Allocation
Exhibit F - Form of Note
Exhibit G - Form of Drawing Notice
Exhibit H - Form of Compliance Certificate
</TABLE>
Ex. 4.1-v
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is entered into as of November 13, 1997, among MURPHY
OIL CORPORATION ("MURPHY"), MURPHY OIL USA, INC., MURPHY OIL COMPANY LTD.,
MURPHY EXPLORATION & PRODUCTION COMPANY, and MURPHY PETROLEUM LIMITED (each a
"SUBSIDIARY BORROWER" and collectively, the "SUBSIDIARY BORROWERS"), the Lenders
(hereinafter defined), THE CHASE MANHATTAN BANK, as Domestic Administrative
Agent (hereinafter defined), and THE CHASE MANHATTAN BANK OF CANADA, as Canadian
Administrative Agent (hereinafter defined).
SECTION 1.
DEFINITIONS AND ACCOUNTING TERMS
1.1 CERTAIN DEFINED TERMS. As used in this Agreement, capitalized terms
used in this Agreement shall, unless otherwise indicated, have the respective
meanings set forth below:
"ADJUSTED CONSOLIDATED CAPITALIZATION" means, for Murphy, on a consolidated
basis, as of any date, (a) the aggregate amount of all Debt, plus (b) the
aggregate amount of paid-up capital, shareholders' capital, and retained
earnings (if any), minus (c) the aggregate amount of accumulated deficit (if
any), minus (d) the lesser of (i) the net equity investment in any asset
financed or encumbered by Non-Recourse Debt, and (ii) the amount of Non-Recourse
Debt related to such asset. In determining Adjusted Consolidated
Capitalization, the calculation set forth above shall be adjusted for any
amounts in such amount which are attributable to (A) assets that would be
treated as intangible assets such as goodwill, trademarks, trade names,
copyrights, patents, and unamortized debt discount, (B) deferred taxation, and
(C) any amount referred to in this definition that relates to a minority
interest. All determinations required by this definition shall be made in
accordance with GAAP.
"ADVANCE" means an advance by a Lender to a Borrower pursuant to SECTION
2.1 of this Agreement or the acceptance of a Draft by a Canadian Lender pursuant
to SECTION 2.16.
"AFFILIATE" of a Person means any other individual or entity who directly
or indirectly controls, is controlled by, or is under common control with that
Person. For purposes of such definition, "control," "controlled by," and "under
common control with" mean possession, directly or indirectly, of power to direct
or cause the direction of management or policies (whether through ownership of
voting securities or other interests, by contract, or otherwise).
"AGENTS" means Domestic Administrative Agent and Canadian Administrative
Agent, and "AGENT" means any one of the Agents.
"AGREEMENT" means this Agreement, as modified, amended, renewed, extended,
supplemented, and restated from time to time.
"ALTERNATE BASE RATE" means, for any day, a rate per annum equal to the
lesser of (a) the Maximum Rate and (b) the greater of (i) the Prime Rate in
effect on such day, and (ii) the Federal Funds Effective Rate in effect on such
day plus one half of one percent (.5%). For purposes hereof, "PRIME RATE" means
in the case of (A) any U.S. Dollar Base Rate Advance made or to be made by any
Domestic Lender, the rate of interest per annum publicly announced from time to
time by Domestic Administrative Agent as its prime rate in effect at its
principal office in New York City (which prime rate may not necessarily
represent the lowest or best rate actually charged by Domestic Administrative
Agent in connection with extensions of credit to debtors), and (B) any U.S.
Dollar Base Rate Advance made or to be made by any Canadian Lender, the rate
Ex. 4.1-1
<PAGE>
of interest quoted or announced from time to time by Canadian Administrative
Agent as its U.S. Dollar base rate in effect at its principal office in Toronto,
Canada (which base rate may not necessarily represent the lowest or best rate
actually charged by Canadian Administrative Agent in connection with extensions
of credit in U.S. Dollars to debtors); each change in the Prime Rate shall be
effective on the date such change is publicly announced as effective. For
purposes hereof, "FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/16 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average (rounded upwards, if
necessary, to the next 1/16 of 1%) of the quotations for the day of such
transactions received by Domestic Administrative Agent from three (3) Federal
funds brokers of recognized standing selected by it. If for any reason Domestic
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Federal
Funds Effective Rate for any reason, including the inability of Domestic
Administrative Agent to obtain sufficient quotations in accordance with the
terms hereof, then the Alternate Base Rate shall be determined without regard to
SUBSECTION (II)of the first sentence of this definition until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Maximum Rate, Prime Rate, or the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Maximum Rate, Prime Rate, or the Federal Funds Effective Rate, respectively.
"APPLICABLE AGENT" means (a) in the case of Domestic Advances or Borrowings
consisting of Domestic Advances, Domestic Administrative Agent, and (b) in the
case of Canadian Advances or Borrowings consisting of Canadian Advances,
Canadian Administrative Agent.
"APPLICABLE CANADIAN PENSION LEGISLATION" means, at any time, any pension
legislation then applicable to Canadian Borrower, including the Employment
Pension Plans Act (Alberta), and all regulations made thereunder, each as
amended from time to time.
"APPLICABLE COMMITMENT PERCENTAGE" means, for any Lender, (a) in the case
of a Borrowing to Canadian Borrower, the Canadian Commitment Percentage, and (b)
in the case of a Borrowing to a Domestic Borrower, the Domestic Commitment
Percentage.
"APPLICABLE CURRENCY" means (a) in the case of a U.S. Dollar Base Rate
Advance or a U.S. Dollar Eurocurrency Advance, U.S. Dollars, (b) in the case of
a Canadian Dollar Base Rate Advance or a Bankers' Acceptance, Canadian Dollars,
and (c) in the case of a Pounds Sterling Eurocurrency Rate Advance, Pounds
Sterling.
"APPLICABLE LENDERS" means (a) in the case of Domestic Advances or
Borrowings consisting of Domestic Advances, Domestic Lenders, and (b) in the
case of Canadian Advances or Borrowings consisting of Canadian Advances,
Canadian Lenders.
"APPLICABLE LENDING OFFICE" means, with respect to each Lender, (a) such
Lender's Domestic Lending Office in the case of a Domestic Advance that is a
Base Rate Advance, (b) such Lender's Eurocurrency Lending Office in the case of
a Domestic Advance that is a U.S. Dollar Eurocurrency Rate Advance, (c) such
Lender's U.K. Lending Office in the case of a Domestic Advance that is a Pounds
Sterling Eurocurrency Rate Advance, and (d) such Lender's Canadian Lending
Office in the case of a Canadian Advance.
"APPLICABLE MARGIN" means, on any date of determination of the interest
rate for any Eurocurrency Rate Advances, Facility Fees, and any BA Fees, the
applicable percentage set forth in the table below for Eurocurrency Rate
Borrowings, Facility Fees, or Bankers' Acceptances, as appropriate, which
corresponds to
Ex. 4.1-2
<PAGE>
the ratings (or implied ratings) established by both S&P and Moody's applicable
to Murphy's senior, unsecured, non-credit-enhanced, long-term indebtedness for
borrowed money ("INDEX DEBT") on such date of determination:
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------
APPLICABLE MARGIN FOR
EUROCURRENCY RATE BORROWINGS APPLICABLE
RATINGS AND BA FEE MARGIN FOR FACILITY FEES
======================================================================================
<S> <C> <C>
CATEGORY 1
Equal to or higher than A+ .13% .07%
by S&P;
Equal to or higher than A1
by Moody's
- - --------------------------------------------------------------------------------------
CATEGORY 2
A- by S&P; .145% .08%
A3 by Moody's
- - --------------------------------------------------------------------------------------
CATEGORY 3
BBB+ by S&P; .175% .10%
Baa1 by Moody's
- - --------------------------------------------------------------------------------------
CATEGORY 4
BBB by S&P; .215% .11%
Baa2 by Moody's
- - --------------------------------------------------------------------------------------
CATEGORY 5
BBB- by S&P; .25% .15%
Baa3 by Moody's
- - --------------------------------------------------------------------------------------
CATEGORY 6
Lower than BBB- by S&P; .30% .20%
Lower than Baa3 by
Moody's
- - --------------------------------------------------------------------------------------
</TABLE>
For purposes of the foregoing: (a) if neither Moody's nor S&P shall have in
effect a rating for Index Debt (other than by reason of the circumstances
referred to in the last sentence of this definition), then both such rating
agencies will be deemed to have established ratings for Index Debt in Category
6; (b) if only one of Moody's or S&P shall have in effect a rating for Index
Debt, then Murphy and Lenders will negotiate in good faith to agree upon another
rating agency to be substituted by an amendment to this Agreement for the rating
agency which shall not have a rating in effect, and in the absence of such
amendment the Applicable Margin will be determined by reference to the available
rating; (c) if the ratings established by Moody's and S&P shall fall within
different Categories, then the Applicable Margin shall be determined by
reference to the numerically lower Category (for example, if the rating from S&P
is in Category 1 and the rating from Moody's is in Category 2, then the
Applicable Margin shall be determined by reference to Category 1); and (d) if
any rating established by Moody's or S&P shall be changed (other than as a
result of a change in the rating system of either Moody's or S&P), then such
change shall be effective as of the date on which such change is first announced
by the rating agency making such change. Each change in the Applicable Margin
shall apply during the period commencing on the effective date of such change
and ending on the date immediately preceding the effective date of the next such
change. If the rating system of either Moody's or S&P shall change prior to the
Maturity Date, then Murphy and Lenders shall negotiate in good faith to amend
the references to specific ratings in this definition to reflect such changed
rating system. If both Moody's and
Ex. 4.1-3
<PAGE>
S&P shall cease to be in the business of rating corporate debt obligations, then
Murphy and Lenders shall negotiate in good faith to agree upon a substitute
rating agency and to amend the references to specific ratings in this definition
to reflect the ratings used by such substitute rating agency.
"APPLICABLE RATE" means:
(a) with respect to U.S. Dollar Base Rate Advances, the Alternate Base
Rate;
(b) with respect to Canadian Dollar Base Rate Advances, the Canadian Dollar
Base Rate;
(c) with respect to U.S. Dollar Eurocurrency Rate Advances, the
Eurocurrency Rate plus the Applicable Margin for Eurocurrency Rate Borrowings;
and
(d) with respect to Pounds Sterling Eurocurrency Rate Advances, the
Eurocurrency Rate plus the Applicable Margin for Eurocurrency Rate Borrowings.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered into
by a Lender and an assignee pursuant to SECTION 10.7, and accepted by Domestic
Administrative Agent, in substantially the form of EXHIBIT B hereto.
"AUTHORIZATIONS" means all filings, recordings, and registrations with, and
all validations or exemptions, approvals, orders, authorizations, consents,
franchises, licenses, certificates, and permits from, any Governmental
Authority.
"BA DISCOUNT RATE" means, in respect of a Bankers' Acceptance, the rate
quoted by Canadian Administrative Agent at or about 10:00 a.m. (Toronto, Canada
time) on the date of acceptance of such Bankers' Acceptance (based on a year of
365 days), as the discount rate at which it would purchase on such date its own
bankers' acceptances having terms and amounts similar to the terms and amounts
of such Bankers' Acceptance.
"BA FACILITY" means the bankers' acceptance facility established under
SECTION 2.16.
"BA FEE" means, in respect of a Bankers' Acceptance, a stamping fee
calculated on the Face Amount and duration of such Bankers' Acceptance at a rate
per annum equal to the Applicable Margin, payable on the date of creation of
such Bankers' Acceptance, calculated on the basis of a 365-day year.
"BA USAGE" means, as at any date of determination, the aggregate Face
Amount (in Dollar Equivalents) of all Bankers' Acceptances created by Canadian
Lenders pursuant to SECTION 2.16 that have not been repaid by Canadian Borrower,
whether or not due and whether or not held by any Canadian Lender. For purposes
of this definition, any Bankers' Acceptance that has been fully cash
collateralized in a manner satisfactory to Agents shall be deemed to have been
repaid.
"BANKERS' ACCEPTANCE" means a Draft that has been accepted by a Canadian
Lender as provided in SECTION 2.16.
"BANKERS' ACCEPTANCE PURCHASE PRICE" means, in respect of any Bankers'
Acceptance to be purchased by a Canadian Lender, the result (rounded to the
nearest whole cent, with one-half of one percent being rounded up) obtained by
dividing the Face Amount of such Bankers' Acceptance by the sum of one plus the
product of (a) the applicable BA Discount Rate multiplied by (b) a fraction, the
numerator of which is the term of maturity of such Bankers' Acceptance and the
denominator of which is 365.
Ex. 4.1-4
<PAGE>
"BORROWERS" means Murphy and Subsidiary Borrowers, and "BORROWER" means any
one of the Borrowers.
"BORROWING" means simultaneous Advances of the same Type made ratably by
all Domestic Lenders or Canadian Lenders, as the case may be, pursuant to
SECTION 2.1, or the acceptance of Drafts by all Canadian Lenders pursuant to
SECTION 2.16.
"BUSINESS DAY" means (a) for all purposes other than as covered by CLAUSES
(b) and (c), a day of the year on which banks are not required or authorized to
close in New York City, (b) with respect to all notices, determinations,
fundings, and payments in connection with any Eurocurrency Rate Advances, any
day that is a Business Day described in CLAUSE (a) above and that is also a day
for trading by and between banks in U.S. Dollar deposits in the London interbank
market, and (c) with respect to all notices, determinations, fundings and
payments in connection with Canadian Dollar Base Rate Advances and Bankers'
Acceptances, any day (i) that is a Business Day described in CLAUSE (a) above,
(ii) that is not a legal holiday in the Province of Ontario, Canada, and (iii)
that is not a day on which banking institutions located in such Province are
authorized or required by law or other governmental action to close.
"CANADIAN ADMINISTRATIVE AGENT" means The Chase Manhattan Bank of Canada
and its permitted successor or successors as an administrative agent for
Canadian Lenders under this Agreement.
"CANADIAN ADVANCE" means an Advance to Canadian Borrower.
"CANADIAN BORROWER" means Murphy Oil Company Ltd., a Canadian corporation.
"CANADIAN COMMITMENT PERCENTAGE" means, for any Canadian Lender as of any
date, the percentage equivalent of the ratio of (a) such Canadian Lender's
Maximum Canadian Commitment to (b) the Maximum Canadian Commitments.
"CANADIAN DOLLAR BASE RATE" means, with respect to any Canadian Dollar Base
Rate Advances as of any date of determination the lesser of (a) the Maximum
Rate, and (b) the greater of (i) the fluctuating interest rate per annum which
Canadian Administrative Agent has announced as its reference rate for
determining interest chargeable by it on loans denominated in Canadian Dollars
made in Canada, as in effect on such date of determination, and (ii) the BA
Discount Rate for such day for bankers' acceptances having an aggregate face
amount approximately equal to the aggregate amount of such Canadian Dollar Base
Rate Advances and a term of thirty (30) days plus 0.625%. As to any Canadian
Dollar Base Rate Advance, the Canadian Dollar Base Rate is a reference rate that
varies from time to time and does not necessarily represent the lowest or best
rate actually charged to any customer by Canadian Administrative Agent or any
Lender for loans denominated in Canadian Dollars. Canadian Administrative Agent
and Lenders may make commercial loans or other loans denominated in Canadian
Dollars at rates of interest at, above or below the Canadian Dollar Base Rate.
The Canadian Dollar Base Rate shall automatically change, without notice to any
Borrower, upon any date that Canadian Administrative Agent announces any change
in said reference rate or determines that the prevailing BA Discount Rate for
such thirty (30) day bankers' acceptances has changed to the extent necessary to
reflect any such change.
"CANADIAN DOLLAR BASE RATE ADVANCE" means an Advance denominated in
Canadian Dollars that bears interest based upon the Canadian Dollar Base Rate.
"CANADIAN DOLLARS" or "Cdn. $" means lawful currency of Canada.
Ex. 4.1-5
<PAGE>
"CANADIAN LENDERS" means the financial institutions (and their respective
Canadian Lending Offices) on SCHEDULE 1 having a Maximum Canadian Commitment and
their respective assigns who become parties to this Agreement pursuant to the
terms and conditions of SECTION 10.7.
"CANADIAN LENDING OFFICE" means, in relation to each Lender, the office or
Affiliate of such Lender specified as its "Canadian Lending Office" opposite its
name on SCHEDULE 1 or in the Assignment and Acceptance pursuant to which it
became a Lender or such other office or Affiliate of such Lender as such Lender
may from time to time specify to Murphy and Agents.
"CANADIAN USAGE" means, as of any date, the sum of (a) the aggregate
principal amount of all outstanding Canadian Advances, and (b) the BA Usage.
"CHANGE IN CONTROL" means either: (a) any Person or group of related
Persons (other than members of the Murphy Family) shall have acquired beneficial
ownership of more than thirty-five percent (35%) of the outstanding voting
shares of Murphy (within the meaning of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended, and the applicable rules and regulations
thereunder); or (b) during any period of twelve (12) consecutive calendar
months, individuals who were Directors of Murphy on the first (1st) day of such
period shall cease to constitute at least sixty-six and two-thirds percent (66-
2/3%) of the members of the Board of Directors of Murphy.
"CODE" means the Internal Revenue Code of 1986, as the same may be amended
from time to time.
"COMMITMENTS" means, for any Lender, such Lender's Global Commitment,
Domestic Commitment, Current Canadian Commitment, and Maximum Canadian
Commitment.
"COMPANIES" means Borrowers and their Material Subsidiaries, and "COMPANY"
means any one of the Companies.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form of
EXHIBIT H.
"CONSOLIDATED RECOURSE DEBT" means, as of any date, all Debt of Murphy, on
a consolidated basis, that is not Non-Recourse Debt.
"CONSTITUENT DOCUMENTS" means, for any Person, such Person's articles or
certificate of incorporation, articles or certificate of organization or
formation, certificate of limited partnership, bylaws, regulations, partnership
agreement, constitution, and other instruments or documents evidencing the
incorporation, organization, or formation of such Person.
"COST OF FUNDS RATE" means, with respect to any amounts payable by a
Canadian Lender to Canadian Administrative Agent pursuant to SECTION 2.2(c) or
SECTION 2.13(e), the rate of interest charged Canadian Administrative Agent in
respect of such amounts by its direct clearing bank in Canada.
"CURRENT CANADIAN COMMITMENT" means, for any Canadian Lender as of any
date, the product of (a) the Designated Canadian Commitment times (b) such
Canadian Lender's Canadian Commitment Percentage.
"CUSTOMARY PERMITTED LIENS" means (a) pledges or deposits made to secure
payment of worker's compensation (or to participate in any fund in connection
with worker's compensation insurance), unemployment insurance, pensions, or
social security programs, (b) encumbrances consisting of zoning restrictions,
easements, or other restrictions on the use of real property, provided that such
items do not materially impair the use of such property for the purposes
intended and none of which is violated in any
Ex. 4.1-6
<PAGE>
material respect by existing or proposed structures or land use, (c) Liens
imposed by mandatory provisions of any Legal Requirement such as for
materialmen's, mechanic's, warehousemen's, and other like Liens arising in the
ordinary course of business, securing payment of any liability whose payment is
not yet due or that is being contested in good faith by appropriate proceedings
diligently conducted, and for which reserves in accordance with GAAP or other
security have been provided, (d) Liens for taxes, assessments, and governmental
charges that are not yet due and payable or that are being contested in good
faith by appropriate proceedings diligently conducted, and for which reserves in
accordance with GAAP or other security have been provided, and (e) any Lien
arising pursuant to any order of attachment, distraint, or similar legal process
arising in connection with court proceedings so long as the execution or other
enforcement thereof is effectively stayed and the claims secured thereby are
being contested in good faith by appropriate proceedings diligently conducted,
and for which reserves in accordance with GAAP or other security have been
provided.
"CUSTOMARY RECOURSE EXCEPTIONS" means, with respect to any Non-Recourse
Debt, exclusions from the exculpation provisions with respect to such Non-
Recourse Debt for fraud, misapplication of cash, and other circumstances
customarily excluded by institutional lenders from exculpation provisions.
"DEBT" means (a) indebtedness for borrowed money, (b) obligations evidenced
by or pursuant to bonds, debentures, notes, bankers' acceptances, or other
similar instruments, (c) obligations to pay the deferred purchase price of
property (excluding obligations under agreements for the purchase of goods in
the normal course of business) (d) obligations as lessee under leases which
shall have been or should have been recorded as capital leases, (e) obligations
as account party under all drawn and unpaid drafts under letters of credit, and
(f) obligations under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in SUBSECTIONS (a) through (e)
above. Debt, as determined in (A) through (E) above, shall be reduced by any
portion of any amounts that relate to minority interests and shall be determined
in accordance with GAAP.
"DEBTOR RELIEF LAWS" means Title 11 of the United States Code, the
Bankruptcy and Insolvency Act (Canada), the Companies' Creditors Arrangement Act
(Canada), and all other applicable federal, state, provincial, or territorial
liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, suspension of payments, or similar
Legal Requirements affecting creditors' rights in effect from time to time.
"DESIGNATED CANADIAN COMMITMENT" means, as of any date, the amount
(denominated in U.S. Dollars) of the Global Commitments allocated by Murphy
pursuant to SECTION 2.1(b) to be available from Canadian Lenders to Canadian
Borrower in Canada.
"DOLLAR EQUIVALENT" means, on or as of a particular date, (a) in the case
of Pounds Sterling, the amount of U.S. Dollars, as conclusively determined by
Domestic Administrative Agent, that is required by Domestic Administrative Agent
to purchase the relevant amount of Pounds Sterling on or as of such date on the
basis of the spot exchange rate therefor in the interbank Eurocurrency market
where the foreign currency and exchange operations of Domestic Administrative
Agent's Applicable Lending Office are customarily conducted with respect to
Pounds Sterling at 11:00 a.m. (or as near thereto as may be practicable),
London, England time, on or as of such date, and (b) in the case of Canadian
Dollars, the amount of U.S. Dollars, as conclusively determined by Canadian
Administrative Agent, that is required by Canadian Administrative Agent to
purchase the relevant amount of Canadian Dollars on or as of such date on the
basis of the spot exchange rate therefor in the interbank Eurocurrency market
where the foreign currency and exchange operations of Canadian Administrative
Agent's Applicable Lending Office are customarily conducted with respect to
Canadian Dollars as of 11:00 a.m. (or as near thereto as may be practicable),
Toronto, Ontario time, on or as of such date.
Ex. 4.1-7
<PAGE>
"DOMESTIC ADMINISTRATIVE AGENT" means The Chase Manhattan Bank, and its
permitted successor or successors as an administrative agent for Lenders under
this Agreement.
"DOMESTIC ADVANCE" means an Advance to a Domestic Borrower.
"DOMESTIC BORROWERS" means all Borrowers other than Canadian Borrower.
"DOMESTIC COMMITMENT" means, for any Lender (in the aggregate for its
Domestic Lending Office and its U.K. Lending Office) as of any date, (a) such
Lender's Global Commitment, minus (b) such Lender's (and its Canadian Lending
Office) Current Canadian Commitment, and "DOMESTIC COMMITMENTS" means the
Domestic Commitment of all Lenders.
"DOMESTIC COMMITMENT PERCENTAGE" means, for any Domestic Lender as of any
date, the percentage equivalent of the ratio of (a) such Domestic Lender's
Domestic Commitment to (b) the Domestic Commitments.
"DOMESTIC LENDERS" means the financial institutions (and their respective
Domestic Lending Offices and U.K. Lending Offices) on SCHEDULE 1 having a
Domestic Commitment and their respective assigns who become parties to this
Agreement pursuant to the terms and conditions of SECTION 10.7.
"DOMESTIC LENDING OFFICE" means, with respect to each Lender, the office of
such Lender or an Affiliate of such Lender specified as its "Domestic Lending
Office" opposite its name on SCHEDULE 1 or in the Assignment and Acceptance
pursuant to which it became a Lender, or such other office of such Lender or an
Affiliate of such Lender as such Lender may from time to time specify to Murphy
and Domestic Administrative Agent.
"DOMESTIC USAGE" means, as of any date, the aggregate principal amount of
all outstanding Domestic Advances.
"DRAFT" means, at any time, a bill of exchange in substantially the form of
EXHIBIT D, or in substantially the form customarily used by Canadian
Administrative Agent, in each case drawn by Canadian Borrower on a Canadian
Lender and bearing such distinguishing letters and numbers as such Canadian
Lender may determine, but which at such time, except as otherwise provided
herein, has not been accepted by such Canadian Lender as a Bankers' Acceptance.
"DRAWING DATE" means any Business Day fixed pursuant to SECTION 2.16 for
the creation of Bankers' Acceptances.
"DRAWING NOTICE" has the meaning assigned to that term in SECTION 2.16.
"ENVIRONMENTAL LAWS" means any and all Legal Requirements pertaining to
health or the environment in effect in any and all jurisdictions in which any
Company is conducting or at any time has conducted business, or where any
property of any Company is located, including without limitation, the Oil
Pollution Act of 1990, as amended ("OPA"), the Clean Air Act, as amended, the
Comprehensive Environmental, Response, Compensation, and Liability Act of 1980,
as amended ("CERCLA"), the Federal Water Pollution Control Act, as amended, the
Occupational Safety and Health Act of 1970, as amended, the Resource
Conservation and Recovery Act of 1976, as amended ("RCRA"), the Safe Drinking
Water Act, as amended, the Toxic Substances Control Act, as amended, the
Superfund Amendments and Reauthorization Act of 1986, as amended, the Hazardous
Materials Transportation Act, as amended, the Canadian Environmental Protection
Act, as amended, the Transportation of Dangerous Goods Act (Canada), as amended,
the Canada Water Act, as amended, the National Energy Board Act, as amended, the
Ex. 4.1-8
<PAGE>
Canada Petroleum Resources Act, as amended, the Oil and Gas Operations Act
(Canada), as amended, the Hazardous Products Act (Canada), as amended, the
Environmental Protection and Enhancement Act (Alberta), as amended, the Water
Act (Alberta), as amended, the Natural Resources Conservation Board Act
(Alberta), as amended, and the Oil and Gas Conservation Act (Alberta), as
amended, and other environmental conservation or protection laws. The term
"oil" has the meaning specified in OPA, the terms "hazardous substance" and
"release" (or "threatened release") have the meanings specified in CERCLA, and
the terms "solid waste" and "disposal" (or "disposed") have the meanings
specified in RCRA; provided, however, that (a) in the event either OPA, CERCLA,
or RCRA is amended so as to broaden the meaning of any term defined thereby,
such broader meaning shall apply subsequent to the effective date of such
amendment, and (b) to the extent the laws of the state, province, or other
jurisdiction in which any property of any Company is located establish a meaning
for "oil," "hazardous substance," "release," "solid waste," or "disposal" which
is broader than that specified in either OPA, CERCLA or RCRA, such broader
meaning shall apply.
"ERISA" means the Employee Retirement Income Security Act of 1974 and all
regulations thereunder, as amended from time to time.
"ERISA AFFILIATE" means any trade or business (whether or not incorporated)
which is a member of a group of which any Borrower is a member and which is
under common control within the meaning of the regulations under Section 414 of
the Code or under any Applicable Canadian Pension Legislation, as the context
may require.
"EUROCURRENCY LIABILITIES" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System (or any
successor regulation), as in effect from time to time.
"EUROCURRENCY LENDING OFFICE" means, with respect to each Lender, the
office or Affiliate of such Lender specified as its "Eurocurrency Lending
Office" opposite its name on SCHEDULE 1 or in the Assignment and Acceptance
pursuant to which it became a Lender (or, if no such office or Affiliate is
specified, its Domestic Lending office), or such other office or Affiliate of
such Lender as such Lender may from time to time specify to Murphy and Domestic
Administrative Agent.
"EUROCURRENCY RATE" means, for each Eurocurrency Rate Advance comprising
part of the same Borrowing, an interest rate per annum equal to the lesser of
(a) the Maximum Rate and (b) in the case of (i) U.S. Dollar Eurocurrency Rate
Advances, the U.S. Eurocurrency Rate, and (ii) Pounds Sterling Eurocurrency Rate
Advances, the U.K. Eurocurrency Rate. Each determination of the Eurocurrency
Rate shall be conclusive and binding, absent manifest error, and may be computed
using any reasonable averaging and attribution method.
"EUROCURRENCY RATE ADVANCE" means any U.S. Dollar Eurocurrency Rate Advance
or Pounds Sterling Eurocurrency Rate Advance.
"EUROCURRENCY RATE RESERVE PERCENTAGE" of any Lender for any Eurocurrency
Rate Advance means the reserve percentage applicable to such Lender under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor) for determining the reserve requirement
(including, without limitation, any emergency, supplemental or other marginal
reserve requirement) under Regulation D promulgated by the Board of Governors of
the Federal Reserve System, or any successor or supplemental regulations,
applicable to such Lender on the later of (a) the first (1st) day of the
Interest Period then applicable to such Eurocurrency Rate Advance, and (b) the
effective date of any such reserve requirement under applicable regulations,
with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities having a term equal to such Interest Period.
Ex. 4.1-9
<PAGE>
"EVENT OF DEFAULT" has the meaning set forth in SECTION 7.1.
"FACE AMOUNT" means, in respect of a Draft or Bankers' Acceptance, as the
case may be, the amount payable to the holder thereof on its maturity.
"FACILITY FEE" means the fees payable pursuant to SECTION 2.5(a).
"FEDERAL FUNDS EFFECTIVE DATE" has the meaning set forth in the definition
of "Alternate Base Rate" in this SECTION 1.1.
"FINANCIAL OFFICER" of any Company means an officer of such Company who is
authorized to execute the Loan Documents on behalf of such Company as set forth
on a current incumbency certificate delivered to Domestic Administrative Agent.
"GAAP" means generally accepted accounting principles in the United States
of America in effect on the date of determination.
"GLOBAL COMMITMENT" means, for each Lender (in the aggregate for its
Domestic Lending Office, its U.K. Lending Office, and its Canadian Lending
Office), the amount set opposite such Lender's name on SCHEDULE 1 as its "Global
Commitment," as such amount may be reduced pursuant to SECTION 2.6 or SECTION
2.12, or reduced or increased as a result of an assignment permitted by SECTION
10.7, and "GLOBAL COMMITMENTS" means the Global Commitment for all Lenders in
the original amount of $300,000,000, as such amount may be reduced pursuant to
SECTION 2.6 or SECTION 2.12.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or other
political subdivision thereof, and any Person exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining to
government.
"GUARANTEED DEBT" means (a) the several Obligation of all Subsidiary
Borrowers, and (b) all costs, expenses, and fees, including, but not limited to,
court costs and attorneys' fees, arising in connection with the collection of
the several Obligation of all Subsidiary Borrowers.
"GUARANTY AGREEMENT" has the meaning set forth in SECTION 9.1.
"HAZARDOUS SUBSTANCE" means (a) any substance that is designated, defined,
or classified as a hazardous waste, hazardous material, pollutant, contaminant,
or toxic or hazardous substance under any Environmental Law, including without
limitation, any hazardous substance within the meaning of Section 101(14) of
CERCLA, (b) petroleum, oil, gasoline, natural gas, fuel oil, motor oil, waste
oil, diesel fuel, jet fuel, and other petroleum hydrocarbons, (c) regulated
asbestos and asbestos-containing materials in any form, (d) polychlorinated
biphenyls, or (e) urea formaldehyde foam.
"INDEX DEBT" has the meaning set forth in the definition of "Applicable
Margin" in this SECTION 1.1.
"INTEREST PERIOD" means, for each Advance comprising part of the same
Borrowing, the period commencing on the date of such Advance or on the last day
of the immediately preceding Interest Period applicable to such Advance, as the
case may be, and ending on the last day of the period selected by a Borrower
pursuant to the provisions below. The duration of each such Interest Period
shall be one (1) month or two (2), three (3), or six (6) months, as a Borrower
may select by notice to the Applicable Agent pursuant to SECTION 2.2(a) or 2.3;
provided, however, that whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day in New York City, London, and
Toronto, the last day of such Interest Period shall be extended to occur on the
next succeeding Business Day in all such cities;
Ex. 4.1-10
<PAGE>
provided that in the case of any Interest Period for a Eurocurrency Rate
Advance, that if such extension would cause the last day of such Interest Period
to occur in the next following calendar month, then the last day of such
Interest Period shall occur on the next preceding Business Day in all such
cities.
"LEGAL REQUIREMENT" means any law, statute, code, ordinance, order,
determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, Authorization, or other directive or requirement
(whether or not having the force of law), including, without limitation,
Environmental Laws, ERISA requirements, Applicable Canadian Pension Legislation,
energy regulations, and occupational, safety, and health standards or controls,
of any Governmental Authority.
"LIEN" means any mortgage, pledge, lien, encumbrance, charge, or security
interest of any kind, granted, assumed, or created to secure Debt.
"LENDERS" means Domestic Lenders and Canadian Lenders, and "LENDER" means
any one of the Lenders.
"LITIGATION" means any suit, action, or proceeding by or before any
Governmental Authority.
"LOAN DOCUMENTS" means (a) this Agreement and the EXHIBITS and SCHEDULES
thereto, (b) the notes, if any, Drafts, Bankers' Acceptances, certificates, and
other documents delivered pursuant to this Agreement, and (c) all modifications,
amendments, renewals, extensions, restatements, or supplements of any of the
foregoing.
"MATERIAL ADVERSE EVENT" means any set of one or more circumstances or
events which, individually or collectively, could reasonably be expected to
result in any (a) material impairment of the ability of Borrowers to perform any
of their payment or other material obligations under the Loan Documents or the
ability of any Agent or any Lender to enforce any such obligations or any of
their respective rights under the Loan Documents, (b) material and adverse
effect on the business, properties, condition (financial or otherwise), or
results of operations of Murphy, on a consolidated basis, or (c) Potential
Default or Event of Default. The phrase "could be a Material Adverse Event"
(and any similar phrase herein) means that there is a material probability of
such Material Adverse Event occurring, and the phrase "could not be a Material
Adverse Event" (and any similar phrase herein) means that there is not a
material probability of such Material Adverse Event occurring.
"MATERIAL PLAN" means, as of any date, a Plan having aggregate Unfunded
Liabilities in excess of ten million dollars ($10,000,000).
"MATERIAL SUBSIDIARY" means, as of any date, one or more Subsidiaries of
any Borrower having individually or in the aggregate assets equal to or greater
than five percent (5%) of the consolidated assets of Murphy.
"MATURITY DATE" means December 31, 2002.
"MAXIMUM AMOUNT" and "MAXIMUM RATE" means, for each Lender, the maximum
non-usurious amount and the maximum non-usurious rate of interest which, under
applicable law, such Lender is permitted to contract for, charge, take, reserve,
or receive on the Obligation owed to such Lender.
"MAXIMUM CANADIAN COMMITMENT" means, for any Lender, the amount
(denominated in U.S. Dollars) set forth opposite such Lender's name on SCHEDULE
1 as its "Maximum Canadian Commitment," as such amount may be reduced pursuant
to SECTION 2.6 or SECTION 2.12 or reduced or increased as a result of an
assignment permitted by SECTION 10.7, and "MAXIMUM CANADIAN DOLLAR COMMITMENTS"
means the
Ex. 4.1-11
<PAGE>
Maximum Canadian Commitment of all Lenders in the amount of $150,000,000, as
such amount may be reduced pursuant to SECTION 2.6 or SECTION 2.12.
"MOODY'S" means Moody's Investors Service, Inc. or any successor thereto.
"MULTI-EMPLOYER PLAN" means a "Multi-employer plan" as defined in Section
4001(a)(3) of ERISA or in any Applicable Canadian Pension Legislation to which
any Borrower or any ERISA Affiliate is making or accruing an obligation to make
contributions, or has within any of the preceding three (3) plan years made or
accrued an obligation to make contributions.
"MURPHY FAMILY" means (a) individuals related by blood or marriage to C. H.
Murphy, Jr., and (b) any trust controlled by or for the benefit of any such
individuals.
"NON-RECOURSE DEBT" means, for any Person, any Debt of such Person in
respect of which the holder of such Debt may not look to such Person personally
for repayment, other than pursuant to Customary Recourse Exceptions.
"NOTICE OF ALLOCATION" means a notice in the form of EXHIBIT E.
"NOTICE OF BORROWING" means a notice in substantially the form of EXHIBIT
A.
"OBLIGATION" means all present and future indebtedness, liabilities, and
obligations, and all renewals and extensions thereof, or any part thereof, now
or hereafter owed to any Agent or any Lender by Borrowers arising from, by
virtue of, or pursuant to any Loan Document, together with all interest accruing
thereon, and all fees, costs, and expenses payable under the Loan Documents.
"OECD" means the Organization for Economic Cooperation and Development.
"PBGC" means the Pension Benefit Guaranty Corporation, and any entity
succeeding to any or all of its functions under ERISA, and any pension
commission or similar Governmental Authority constituted under any Applicable
Canadian Pension Legislation, as the context may require.
"PERCENTAGE SHARE" means, when determined for any Lender, the proportion
(stated as a percentage) that such Lender's Global Commitment bears to the
Global Commitments, or, if the Global Commitments shall have been terminated,
then the proportion (stated as a percentage) that the Total Utilization of
Commitments owing to such Lender bears to the Total Utilization of Commitments
owing to all Lenders.
"PERSON" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, limited liability company, or other entity, or a government or any
political subdivision or agency thereof.
"PLAN" means an employee benefit plan (other than a Multi-employer Plan)
maintained for employees of any Borrower or any ERISA Affiliate and covered by
Title IV of ERISA or by any Applicable Canadian Pension Legislation, as the
context may require.
"POTENTIAL DEFAULT" means the occurrence of any event that would, upon
notice or lapse of time or both, become an Event of Default.
"POUNDS STERLING" and the sign "(Pounds)" mean lawful currency of the
United Kingdom.
EX. 4.1-12
<PAGE>
"POUNDS STERLING EUROCURRENCY RATE ADVANCE" means an Advance denominated in
Pounds Sterling that bears interest based upon the Eurocurrency Rate.
"PRIME RATE" has the meaning set forth in the definition of Alternate Base
Rate in this SECTION 1.1.
"REGISTER" has the meaning set forth in SECTION 10.7(c).
"REPORTABLE EVENT" means an event described in Section 4043(b) of ERISA or
in any Applicable Canadian Pension Legislation, as the context may require, with
respect to which any applicable notice requirement has not been waived by the
PBGC.
"REQUIRED LENDERS" means at any time Lenders that in the aggregate (a) hold
at least sixty-six and two-thirds (66-2/3%) of the Global Commitments, and (b)
after the expiry or termination of the Global Commitments, are owed at least
sixty-six and two-thirds percent (66-2/3%) of the Total Utilization of
Commitments.
"SOLVENT" means, as to a Person, that (a) the aggregate fair market value
of such Person's assets exceeds its liabilities (whether contingent,
subordinated, unmatured, unliquidated, or otherwise), (b) such Person has
sufficient cash flow to enable it to pay its liabilities as they mature, and (c)
such Person does not have unreasonably small capital to conduct such Person's
business. In computing the amount of contingent liabilities at any time; for
purposes of determining solvency, it is intended that such liabilities will be
computed at the amount which, in light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
"S&P" means Standard and Poor's Rating Group, a division of McGraw Hill,
Inc., a New York corporation, or any successor thereto.
"SUBSIDIARY" of a Person means any corporation or other similar entity of
which more than fifty percent (50%) of the outstanding capital stock having
ordinary voting power to elect a majority of the Board of Directors of such
corporation or entity (irrespective of whether or not at the time capital stock
of any other class or classes of such corporation or entity shall or might have
voting power upon the occurrence of any contingency) is at the time directly or
indirectly owned by such Person, by such Person and one or more other
Subsidiaries of such Person, or by one or more other Subsidiaries of such
Person.
"SUBSIDIARY BORROWERS" and "SUBSIDIARY BORROWER" have the meaning set forth
in the preamble.
"TAXES" means, for any Person, taxes, assessments, or other governmental
charges or levies imposed upon such Person, its income, or any of its
properties, franchises, or assets.
"TERMINATION DATE" means the Maturity Date or any earlier date of
termination in whole of the Global Commitments pursuant to SECTION 2.6 or 7.2.
"TERMINATION EVENT" means (a) a "Reportable Event" described in Section
4043 of ERISA and the regulations issued thereunder (other than a "Reportable
Event" not subject to the provision for 30-day notice to the PBGC under such
regulations), or (b) the withdrawal of any Borrower or any of its ERISA
Affiliates from a Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, or (c) the filing of a
notice of intent to terminate a Plan or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA, or (d) the institution of proceedings
to terminate a Plan by the PBGC, or (e) any other event or condition which might
constitute grounds under Section 4042 of ERISA or under any Applicable Canadian
Pension Legislation for the windup (in whole or in part) or termination of, or
the appointment of a trustee or administrator to administer, any Plan.
Ex. 4.1-13
<PAGE>
"TOTAL UTILIZATION OF COMMITMENTS" means, as at any date of determination,
the sum of (a) the Domestic Usage (valued in Dollar Equivalents), and (b) the
Canadian Usage (valued in Dollar Equivalents).
"TYPE", when used in respect of any Advance or Borrowing, refers to the
Rate by reference to which interest on such Advance or on the Advances
comprising such Borrowing is determined. For purposes hereof, "RATE" shall
include the Alternate Base Rate, the Canadian Dollar Base Rate, and the
Eurocurrency Rate.
"U.K. EUROCURRENCY RATE" means the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) equal to the rate at which Domestic
Administrative Agent is offered deposits in Pounds Sterling in the Paris
interbank market at or about 11:00 a.m. (Paris, France time) two (2) Business
Days prior to the first (1st) day of such Interest Period for a term comparable
to such Interest Period and in an amount equal to (or as nearly equal as may be)
to the Eurocurrency Rate Borrowing to which such Interest Period relates.
"U.K. LENDING OFFICE" means, with respect to each Lender, the office of
such Lender or an Affiliate of such Lender specified as its "U.K. Lending
Office" opposite its name on SCHEDULE 1 or in the Assignment and Acceptance
pursuant to which it became a Lender, or such other office of such Lender or an
Affiliate of such Lender as such Lender may from time to time specify to Murphy
and Domestic Administrative Agent.
"UNFUNDED LIABILITIES" means, with respect to any Plan at any time, the
amount (if any) by which (a) the value of all benefit liabilities under such
Plan, determined on a plan determination basis using the assumptions prescribed
by the PBGC for purposes of Section 4044 of ERISA, exceeds (b) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most-recent valuation for such Plan, but only to the extent that such excess
represents a potential liability of Borrower or an ERISA Affiliate to the PBGC
or any other Person under Title IV of ERISA, including, in the case of any Plan
governed by or subject to any Applicable Canadian Pension Legislation, any going
concern unfunded liability, past service unfunded liability, or solvency
deficiency for purposes of any such Applicable Canadian Pension Legislation.
"U.S. DOLLAR BASE RATE ADVANCE" means an Advance denominated in U.S.
Dollars that bears interest based upon the Alternate Base Rate.
"U.S. DOLLAR EUROCURRENCY RATE ADVANCE" means an Advance denominated in
U.S. Dollars that bears interest based upon the Eurocurrency Rate.
"U.S. DOLLARS and the sign "$" mean lawful currency of the United States of
America.
"U.S. EUROCURRENCY RATE" means, for each Eurocurrency Rate Advance
comprising part of the same Borrowing for any Interest Period, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Dow Jones Markets Page 3750 (or any successor page) as the London interbank
offered rate for deposits in U.S. Dollars at approximately 11:00 a.m. (London,
England time) two (2) Business Days prior to the first (1st) day of such
Interest Period for a term comparable to such Interest Period. If for any
reason any such rate is not available, then the term "U.S. Eurocurrency Rate"
means for any Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) quoted by the Applicable Agent at or
before 11:00 a.m. (London, England time) two (2) Business Days prior to the
first (1st) day of such Interest Period to be the arithmetic average of the
prevailing rates per annum at the time of determination in accordance with the
then existing practice in the applicable market for the offering to the
Applicable Agent by one (1) or more prime banks selected by the Applicable Agent
in its sole discretion, in the London interbank market of deposits in U.S.
Dollars for delivery on the first (1st) day of such Interest Period and having a
maturity equal (or as nearly equal as may be) to the length of such Interest
Period and in an amount equal (or as nearly equal as may be) to the U.S. Dollar
Eurocurrency Rate Borrowing to which
Ex. 4.1-14
<PAGE>
such Interest Period relates.
"WITHHOLDING TAXES" has the meaning set forth in SECTION 2.14.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. All financial reports
furnished to any Agent or any Lender hereunder shall be prepared in accordance
with GAAP. All comparative reports will have prior periods restated, if
necessary, to reflect any material differences in reported results of operations
or financial position.
1.3 OTHER REFERENCES. Unless otherwise specified in the Loan Documents:
(a) "or" is not exclusive; (b) a reference to a Legal Requirement includes any
amendment or modification to such Legal Requirement; (c) a reference to a Person
includes its permitted successors and permitted assigns; (d) except as provided
otherwise, all references to the singular shall include the plural and vice
versa; (e) except as provided in this Agreement, a reference to an agreement,
instrument, or document shall include such agreement, instrument, or document as
the same may be amended, modified, or supplemented from time to time in
accordance with its terms and as permitted by the Loan Documents; (f) all
references to SECTIONS, SCHEDULES, or EXHIBITS in a Loan Document shall be to
Sections, Schedules, or Exhibits of such Loan Document, unless otherwise
indicated; and (g) all EXHIBITS to this Agreement shall be incorporated into
this Agreement.
SECTION 2.
AMOUNTS AND TERMS OF THE ADVANCES
2.1 COMMITMENTS; LOANS.
(a) COMMITMENTS. Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties of Borrowers set forth
herein, each Lender hereby severally agrees to make Advances as described in
this SECTION 2.1 that are, pursuant to the terms of this SECTION 2.1, to be made
by such Lender. The commitments of Lenders to make such Advances consist of the
Domestic Commitments of Domestic Lenders and the Maximum Canadian Commitments of
Canadian Lenders.
(b) ALLOCATION OF COMMITMENTS. Murphy shall allocate the aggregate amount
of the Global Commitments so that the sum of Designated Canadian Commitment and
the Domestic Commitments, in each case in Dollar Equivalents, equals the Global
Commitments then in effect. The initial amount of the Designated Canadian
Commitment and the Domestic Commitments and of each Lender's Global Commitment,
Maximum Canadian Commitment, Current Canadian Commitment, and Domestic
Commitment are set forth opposite its name on SCHEDULE 1. Murphy shall,
effective as of the first (1st) day of each calendar quarter, commencing on
January 1, 1998, be entitled to change the amount of the Global Commitments
allocated in Dollar Equivalents to the Designated Canadian Commitment and the
Domestic Commitments by delivering a Notice of Allocation to Domestic
Administrative Agent at least ten (10) days prior to date upon which such
allocation is to be effective; provided that:
(i) the sum of (A) the Designated Canadian Commitment, plus (B) the
Domestic Commitments, shall always equal the amount of the Global
Commitments then in effect;
(ii) the Designated Canadian Commitment may not be reduced to an
amount that is less than the outstanding Canadian Usage;
(iii) the Domestic Commitments may not be reduced to an amount that
is less than the outstanding Domestic Usage;
Ex. 4.1-15
<PAGE>
(iv) the Designated Canadian Commitment shall not exceed the Maximum
Canadian Commitments then in effect.
Domestic Administrative Agent shall promptly notify each Lender of any change in
such Lender's Current Canadian Commitment and Domestic Commitment. If Murphy
shall request that the Designated Canadian Commitment be increased or decreased
at any other time, then Domestic Administrative Agent and Lenders agree to
consider such request within ten (10) Business Days of such request.
(c) DOMESTIC ADVANCES. Each Domestic Lender severally agrees, subject to
the limitations set forth herein, to make Advances in U.S. Dollars and/or Pounds
Sterling to Domestic Borrowers from time to time on any Business Day during the
period from the date hereof to but excluding the Termination Date.
(d) CANADIAN ADVANCES. Each Canadian Lender severally agrees, subject to
the limitations set forth herein, to make Advances in U.S. Dollars and/or
Canadian Dollars to Canadian Borrower from time to time on any Business Day
during the period from the date hereof to but excluding the Termination Date.
(e) ADDITIONAL LIMITATIONS ON ADVANCES. Anything contained in this
Agreement to the contrary notwithstanding, the Commitments, and the Advances
made pursuant thereto, shall be subject to the following limitations:
(i) each Borrowing by a Borrower shall be in an aggregate amount of
not less than the Dollar Equivalent of U.S. $7,500,000 (except as provided
in SECTION 2.16(A)) and shall consist of Advances of the same Type made on
the same day by Lenders ratably according to their Applicable Commitment
Percentage;
(ii) The amounts of the Global Commitments, the Maximum Canadian
Commitments, the Designated Canadian Commitment, and the Domestic
Commitments shall be reduced from time to time by the amount of any
reductions thereto made pursuant to SECTION 2.6;
(iii) Each Lender's Global Commitment, Maximum Canadian Commitment,
Current Canadian Commitment, and Domestic Commitment shall expire on the
Termination Date;
(iv) the Total Utilization of Commitments shall not at any time
exceed the Global Commitments then in effect;
(v) the sum of (A) each Lender's Canadian Commitment Percentage
times the Canadian Usage plus (B) such Lender's Domestic Commitment
Percentage times the Domestic Usage, shall not at any time exceed such
Lender's Global Commitment then in effect;
(vi) the product of each Canadian Lender's Canadian Commitment
Percentage times the Canadian Usage shall not exceed the lesser of such
Lender's (A) Maximum Canadian Commitment, and (B) Current Canadian
Commitment; and
(vii) the product of each Domestic Lender's Domestic Commitment
Percentage times the Domestic Usage shall not exceed such Lender's Domestic
Commitment.
(f) REVOLVING FACILITY. Within the limits and on the conditions set forth
in this Agreement, Borrowers may from time to time borrow under this SECTION
2.1, prepay under SECTION 2.7(b) and SECTION 2.7(c) or SECTION 2.16(h)(ii), and
reborrow under this SECTION 2.1.
Ex. 4.1-16
<PAGE>
(g) CURRENCY OPTIONS. The Advances may from time to time be (i) U.S.
Dollar Base Rate Advances, (ii) U.S. Dollar Eurocurrency Rate Advances, (iii)
Canadian Dollar Base Rate Advances, or (iv) Pounds Sterling Eurocurrency Rate
Advances, or a combination thereof, as determined by the applicable Borrower and
notified to the Applicable Agent in accordance with SECTIONS 2.1, 2.2, or 2.3.
2.2 MAKING ADVANCES.
(a) NOTICE OF BORROWING. Each Borrowing (other than Borrowings made
pursuant to SECTION 2.16 for the purpose of reimbursing any Lender for the Face
Amount of any matured Bankers' Acceptance) shall be made pursuant to a Notice of
Borrowing, given (i) in the case of a Borrowing consisting of U.S. Dollar Base
Rate Advances made or to be made by Domestic Lenders, not later than 11:00 a.m.
(New York City time) on the date of the proposed Borrowing, (ii) in the case of
a Borrowing consisting of U.S. Dollar Eurocurrency Rate Advances made or to be
made by Domestic Lenders, not later than 11:00 a.m. (New York City time) three
(3) Business Days prior to the date of the proposed Borrowing, (iii) in the case
of a Borrowing consisting of Canadian Dollar Base Rate Advances, not later than
11:00 a.m. (Toronto, Ontario time) on the date of the proposed Borrowing, (iv)
in the case of a Borrowing consisting of U.S. Dollar Base Rate Advances made or
to be made by Canadian Lenders, not later than 11:00 a.m. (Toronto, Ontario
time) on the date of the proposed Borrowing, (v) in the case of a Borrowing
consisting of U.S. Dollar Eurocurrency Rate Advances made or to be made by
Canadian Lenders, not later than 11:00 a.m. (Toronto, Ontario time) three (3)
Business Days prior to the date of the proposed Borrowing, and (vi) in the case
of a Borrowing consisting of Pounds Sterling Eurocurrency Rate Advances, not
later than 11:00 a.m. (London, England time) three (3) Business Days prior to
the date of the proposed Borrowing, by the requesting Borrower to the Applicable
Agent, which shall give to each Applicable Lender prompt notice thereof by cable
or telecopy. Each Notice of a Borrowing shall specify (A) the Borrower
requesting the Borrowing, (B) the date of such Borrowing, (C) whether such
Borrowing will be denominated in Canadian Dollars, U.S. Dollars, or, in the case
of a Domestic Borrower, Pounds Sterling, (D) the Type of Advances comprising
such Borrowing, (E) the amount of such Borrowing, and (F) if applicable, the
Interest Period. Each Domestic Lender shall, before 12:00 noon (New York City
time) on the date of any such Borrowing, make available for the account of its
Applicable Lending Office to Domestic Administrative Agent at its address
referred to in SECTION 10.2, in same day funds, such Domestic Lender's
Applicable Commitment Percentage of such Borrowing in the Applicable Currency.
Each Canadian Lender shall, before 12:00 noon (Toronto, Ontario time) on the
date of any such Borrowing, make available for the account of its Applicable
Lending Office to Canadian Administrative Agent at its address referred to in
SECTION 10.2, in same day funds, such Canadian Lender's Applicable Commitment
Percentage of such Borrowing in the Applicable Currency. Upon the Applicable
Agent's receipt of such funds and upon fulfillment of the conditions precedent
set forth in SECTION 3.2, the Applicable Agent will make such funds available to
the applicable Borrower at the Applicable Agent's aforesaid address.
(b) NOTICES IRREVOCABLE. Each Notice of Borrowing shall be irrevocable
and binding on the requesting Borrower. In the case of any Borrowing which the
related Notice of Borrowing specifies is to be comprised of Eurocurrency Rate
Advances, the requesting Borrower shall indemnify each Lender against any loss,
cost, or expense incurred by such Lender as a result of any failure by such
Borrower to complete such Borrowing, which losses, costs, and expenses include,
without limitation, any loss (including loss of anticipated profits), cost, or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Lender to fund the Advance to be made by such
Lender as part of such Borrowing when such Advance is not made on such date.
(c) FUNDING; FAILURE TO FUND. Unless the Applicable Agent shall have
received notice from a Lender prior to the date of any Borrowing that such
Lender will not make available to the Applicable Agent such Lender's Applicable
Commitment Percentage of such Borrowing in the Applicable Currency, the
Applicable Agent may assume that each Applicable Lender has made such portion
available to the Applicable
Ex. 4.1-17
<PAGE>
Agent on the date of such Borrowing in accordance with SECTION 2.2(a), and the
Applicable Agent may, in reliance upon such assumption, make available to the
requesting Borrower on such date a corresponding amount. If and to the extent
that any Applicable Lender shall not have so made such Applicable Commitment
Percentage available to the Applicable Agent, then such Applicable Lender and
the requesting Borrower (following such Applicable Lender's failure to pay
following demand by the Applicable Agent) severally agree to repay to the
Applicable Agent forthwith on demand such corresponding amount, together with
interest thereon, for each day from the date such amount is made available to
such Borrower until the date such amount is repaid to the Applicable Agent, at a
rate per annum equal to (i) in the case of such Borrower, the interest rate
applicable at the time to Advances comprising such Borrowing, (ii) in the case
of any Domestic Lender, an interest rate equal at all times to the Federal Funds
Effective Rate, and (iii) in the case of any Canadian Lender, an interest rate
equal at all times to the Cost of Funds Rate. If such Applicable Lender shall
advance to the Applicable Agent such corresponding amount, then such amount so
repaid shall constitute such Applicable Lender's Advance as part of such
Borrowing for purposes of this Agreement. If such Borrower shall repay such
corresponding amount, then the Applicable Lender shall remain liable to pay to
the Applicable Agent an amount equal to the difference, if any, between the
amount payable by such Applicable Lender pursuant to (ii) or (iii) of this
SECTION 2.2(c), as the case may be, and the amount so repaid by such Borrower.
The interest payable by any Lender to any Agent pursuant to this SECTION shall
not affect the interest otherwise payable by the applicable Borrower pursuant to
SECTION 2.8.
(d) OBLIGATIONS SEVERAL. The failure of any Lender to make the Advance to
be made by it as part of any Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Advance on the date of such Borrowing;
provided that no Lender shall be responsible for the failure of any other Lender
to make the Advance to be made by such other Lender on the date of any
Borrowing.
2.3 CONVERSION AND CONTINUATION OF BORROWINGS. Any Domestic Borrower
shall have the right at any time upon prior irrevocable notice to Domestic
Administrative Agent (a) not later than 12:00 noon (New York City time) on the
date of conversion, to convert any Borrowing consisting of U.S. Dollar
Eurocurrency Rate Advances into a Borrowing consisting of U.S. Dollar Base Rate
Advances, (b) not later than 11:00 a.m. (New York City time) three (3) Business
Days prior to conversion or continuation, to convert any Borrowing consisting of
U.S. Dollar Base Rate Advances into a Borrowing consisting of U.S. Dollar
Eurocurrency Rate Advances or to continue any Borrowing consisting of U.S.
Dollar Eurocurrency Rate Advances for an additional Interest Period, and (c) not
later than 11:00 a.m. (London, England time) three (3) Business Days prior to
continuation, to continue any Borrowing consisting of Pounds Sterling
Eurocurrency Rate Advances for an additional Interest Period. Canadian Borrower
shall have the right at any time upon prior irrevocable notice to Canadian
Administrative Agent (a) not later than 11:00 a.m. (Toronto, Ontario time) on
the date of conversion, to convert any Borrowing consisting of U.S. Dollar
Eurocurrency Rate Advances into a Borrowing consisting of U.S. Dollar Base Rate
Advances, and (b) not later than 11:00 a.m. (Toronto, Ontario time) three (3)
Business Days prior to conversion or continuation, to convert any Borrowing
consisting of U.S. Dollar Base Rate Advances into a Borrowing consisting of U.S.
Dollar Eurocurrency Rate Advances or continue any Borrowing consisting of U.S.
Dollar Eurocurrency Rate Advances for an additional Interest Period. Each
conversion or continuation described above is subject to the following:
(i) each conversion or continuation shall be made pro rata among
Lenders in accordance with the respective principal amounts of the Advances
comprising the converted or continued Borrowing;
(ii) if less than all the outstanding principal amount of any
Borrowing shall be converted or continued, the aggregate principal amount
of such Borrowing converted or continued shall be an amount equal to or
greater than $7,500,000;
Ex. 4.1-18
<PAGE>
(iii) accrued interest on an Advance being converted shall be paid by
such Borrower at the time of conversion;
(iv) if any Borrowing consisting of Eurocurrency Rate Advances is
converted at a time other than the end of the Interest Period applicable
thereto, then the applicable Borrower shall pay, upon demand, any amounts
due to Lenders pursuant to SECTION 2.10(C) as a result of such conversion;
(v) no Interest Period may be selected for any Borrowing
consisting of Eurocurrency Rate Advances that would end later than the
Maturity Date; and
(vi) no more than ten (10) Interest Periods shall be in effect with
respect to U.S. Dollar Eurocurrency Rate Advances to Domestic Borrowers, no
more than ten (10) Interest Periods shall be in effect with respect to U.S.
Dollar Eurocurrency Rate Advances to Canadian Borrower, and no more than
six (6) Interest Periods shall be in effect with respect to Pounds Sterling
Eurocurrency Rate Advances to Domestic Borrowers.
Each notice pursuant to this SECTION 2.3 shall be irrevocable and shall
refer to this Agreement and specify (A) the applicable Borrower, (B) the
identity and amount of the Borrowing that the applicable Borrower requests be
converted or continued, (C) whether such Borrowing is to be converted to or
continued as a Borrowing consisting of U.S. Dollar Base Rate Advances or
Eurocurrency Rate Advances, as the case may be, (D) if such notice requests a
conversion, the date of such conversion (which shall be a Business Day), and (E)
if such Borrowing is to be converted to or continued as a Borrowing consisting
of Eurocurrency Rate Advances, then the Interest Period with respect thereto.
If no Interest Period is specified in any such notice with respect to any
conversion to or continuation as a Borrowing consisting of Eurocurrency Rate
Advances, then such Borrower shall be deemed to have selected an Interest Period
of one (1) month's duration. The Applicable Agent shall advise Lenders of any
notice given pursuant to this SECTION 2.3 and of each Lender's Applicable
Commitment Percentage of any converted or continued Borrowing. If any Borrower
shall not have given notice in accordance with this SECTION 2.3 to continue any
Borrowing into a subsequent Interest Period (and shall not otherwise have given
notice in accordance with this SECTION 2.3 to convert such Borrowing), then (x)
in the case of U.S. Dollar Eurocurrency Rate Advances, such Borrowing shall, at
the end of the Interest Period applicable thereto (unless repaid pursuant to the
terms hereof), automatically be continued into a Borrowing consisting of U.S.
Dollar Base Rate Advances, and (y) in the case of Pounds Sterling Eurocurrency
Rate Advances, the applicable Borrower shall be deemed to have requested a U.S.
Dollar Base Rate Advance in an amount equal to the Dollar Equivalent of such
Pounds Sterling Eurocurrency Rate Advances, the proceeds of which shall, subject
to the conditions precedent in SECTION 3.2, be applied to the repayment of such
Pounds Sterling Eurocurrency Rate Advances at the end of the Interest Period
applicable thereto (unless otherwise repaid pursuant to the terms hereof).
2.4 LOAN ACCOUNTS.
(a) BY EACH LENDER. Each Lender shall maintain on its books loan accounts
in the name of each Borrower in which shall be recorded all Advances made by
such Lender to each Borrower, the interest rate, the currency, and the maturity
date of each such Advance and all payments of principal and interest made by
each Borrower with respect to such Advances.
(b) BY AGENTS. Domestic Administrative Agent shall maintain on its books
a set of accounts in which shall be recorded all Advances made by Domestic
Lenders to each Domestic Borrower, the interest rates, the currency, and
maturity dates of such Advances and all payments of principal and interest made
thereon. Canadian Administrative Agent shall maintain on its books a set of
accounts in which shall be recorded all Advances made by Canadian Lenders to
Canadian Borrower, the interest rates, the currency, and
Ex. 4.1-19
<PAGE>
maturity dates of such Advances and all payments of principal and interest made
thereon.
(c) EVIDENCE OF AMOUNT. The loan accounts or records maintained by Agents
and each Lender shall be conclusive evidence absent manifest error of the amount
of the Advances made by Lenders to Borrowers and the interest and payments
thereon. Any failure to so record or any error in doing so shall not, however,
limit or otherwise affect the obligation of any Borrower hereunder to pay any
amount owing by such Borrower with respect to the Advances received by such
Borrower.
(d) NOTES. Upon the request of any Lender made through the Applicable
Agent, the Advances made by such Lender may be evidenced by one or more notes in
substantially the form of EXHIBIT F, instead of or in addition to loan accounts.
Each such Lender shall endorse on the schedules annexed to its note(s) the date,
amount, and maturity of each Advance made by it and the amount of each payment
of principal made by Borrowers with respect thereto. Each such Lender is
irrevocably authorized by Borrowers to endorse its note(s) and each Lender's
record shall be conclusive absent manifest error; provided, however, that the
failure of a Lender to make, or an error by a Lender in making, a notation
thereon with respect to any Advance shall not limit or otherwise affect the
obligation of any Borrower hereunder or under any such Note to such Lender with
respect to any Advances received and not repaid.
2.5 FEES.
(a) FACILITY FEES. Murphy shall pay to Domestic Administrative Agent, for
the benefit of Domestic Lenders, a facility fee on the average daily amount of
the Domestic Commitments (whether used or unused) for the period from and
including the date hereof up to but excluding the Termination Date at a rate per
annum equal to the Applicable Margin for Facility Fees. Murphy (on behalf of
Canadian Borrower) shall pay to Canadian Administrative Agent, for the benefit
of Canadian Lenders, a facility fee on the average daily amount of the Current
Canadian Commitments (whether used or unused) for the period from and including
the date hereof up to but excluding the Termination Date at a rate per annum
equal to the Applicable Margin for Facility Fees. Accrued facility fees shall
be payable in arrears, commencing on December 31, 1997, and thereafter,
quarterly on the last day of each March, June, September, and December during
the term hereof and on the Termination Date.
(b) FEES OF DOMESTIC ADMINISTRATIVE AGENT AND ARRANGER. Murphy shall pay
to Domestic Administrative Agent and Arranger, solely for their own respective
accounts, the fees described in the separate letter agreement dated September
30, 1997 among Murphy, Domestic Administrative Agent, and Arranger on the dates
specified therein.
2.6 OPTIONAL REDUCTION OF THE COMMITMENTS. Murphy shall have the right,
upon at least two (2) Business Days' irrevocable notice to Agents, to terminate
in whole or reduce ratably in part the Global Commitments; provided, however,
that (a) each partial reduction shall be in the aggregate amount of $10,000,000
or a greater integral multiple of $1,000,000, (b) no such termination or
reduction shall be made which would reduce the Global Commitments to an amount
less than the Total Utilization of Commitments, and (c) any partial reduction of
the Global Commitments shall reduce the Maximum Canadian Commitments by an
amount equal to fifty percent (50%) of the amount of the reduction in the Global
Commitments. Agents shall promptly thereafter notify each Lender of such
termination or reduction. No reduction shall reduce the Maximum Canadian
Commitments to an amount that is less than the Canadian Usage, or the Domestic
Commitments to an amount that is less than the Domestic Usage. Murphy's notice
to Agents shall designate the date (which shall be a Business Day) of such
termination or reduction and the amount of any partial reduction. Any such
termination or reduction of the Global Commitments shall be effective on the
date specified in Murphy's notice and shall reduce the Global Commitment of each
Lender, the Domestic Commitment of each Domestic Lender, and, if necessary, the
Canadian Commitment of each Canadian Lender, ratably in accordance with its
Percentage Share.
Ex. 4.1-20
<PAGE>
2.7 REPAYMENT OF ADVANCES; PREPAYMENT.
(a) TERMINATION DATE. On the Termination Date, each Domestic Borrower
shall repay to Domestic Administrative Agent, in the Applicable Currency and for
the account of each Domestic Lender, the unpaid principal amount of each
Domestic Advance to such Domestic Borrower made by each Domestic Lender. On the
Termination Date, each Canadian Borrower shall repay to Canadian Administrative
Agent, in the Applicable Currency and for the account of each Canadian Lender,
the unpaid principal amount of each Canadian Advance to such Canadian Borrower
made by each Canadian Lender.
(b) VOLUNTARY PREPAYMENTS. Any Borrower may, on notice given to the
Applicable Agent (i) in the case of U.S. Dollar Base Rate Advances made by
Domestic Lenders, not later than 11:00 a.m. (New York City time) on the date of
the proposed prepayment, (ii) in the case of U.S. Dollar Eurocurrency Rate
Advances made by Domestic Lenders, not later than 11:00 a.m. (New York City
time) three (3) Business Days prior to the day of the proposed prepayment, (iii)
in the case of U.S. Dollar Base Rate Advances made by Canadian Lenders, not
later than 11:00 a.m. (Toronto, Ontario time) on the date of the proposed
prepayment, (iv) in the case of U.S. Dollar Eurocurrency Rate Advances made by
Canadian Lenders, not later than 11:00 a.m. (Toronto, Ontario time) three (3)
Business Days prior to the date of the proposed prepayment, (v) in the case of
Canadian Dollar Base Rate Advances, not later than 11:00 a.m. (Toronto, Ontario
time) on the date of the proposed prepayment, and (vi) in the case of Pounds
Sterling Eurocurrency Rate Advances, not later than 11:00 a.m. (New York City
time) three (3) Business Days prior to the day of the proposed prepayment,
stating the proposed date and aggregate principal amount of the prepayment, and
if such notice is given, then such Borrower shall prepay the outstanding
principal amounts of the Advances constituting part of the same Borrowing in
whole or ratably in part; provided, however, that any such partial prepayment
shall be in an aggregate principal amount not less than the Dollar Equivalent of
U.S. $7,500,000 (or, if less, the unpaid principal of such Advance), and
provided further, that any such prepayment of Eurocurrency Rate Advances shall
be subject to the provisions of SECTION 2.10(c). The Applicable Agent shall
promptly notify each Lender of any prepayments pursuant to this SECTION 2.7(b)
promptly after receipt of any such prepayment. Borrowers shall have no right to
prepay any principal amount of any Advance except as expressly set forth in this
SECTION 2.7(b) and as required by SECTION 2.7(c). If any Borrower shall repay
all or any portion of any Eurocurrency Rate Advance on the last day of the
Interest Period therefor, then such repayment shall be considered to be a
prepayment pursuant to this SECTION 2.7(b).
(c) MANDATORY PREPAYMENTS. If as of the last day of any calendar quarter
or the date of any Advance (i) the sum of (A) the outstanding amount of all
Borrowings (valued in Dollar Equivalents), plus (B) the BA Usage (valued in
Dollar Equivalents) exceeds the Global Commitments in effect on such date, (ii)
the Canadian Usage exceeds the Designated Canadian Commitment, or (iii) the
Domestic Usage exceeds the Domestic Commitments, then Borrowers shall prepay
Borrowings in an amount equal to any such excess.
2.8 INTEREST. Each Borrower shall pay interest on each Advance to such
Borrower made by each Lender from the date of such Advance until paid in full,
as follows:
(a) RATE ON ADVANCES. The unpaid principal of each Advance shall bear
interest from the date of Advance to the date of repayment thereof at a rate per
annum that shall be equal to the Applicable Rate.
(b) DEFAULT AMOUNTS. All past-due amounts of the principal of, and (to
the fullest extent permitted by law) interest on, any Advance or the Face Amount
of any Bankers' Acceptance not reimbursed in full on the maturity date of such
Bankers' Acceptance shall bear interest from the date such amount becomes due
until paid in full, payable on demand, at a rate per annum equal at all times to
the lesser of: (i) the Maximum Rate; and (ii) in the case of (A) Canadian Dollar
Base Rate Advances and the unreimbursed Face Amount of any Bankers' Acceptance,
the sum of the Canadian Dollar Base Rate in effect from time to time plus one
percent (1%), (B) Pounds Sterling Eurocurrency Rate Advances, the sum of the
Applicable
Ex. 4.1-21
<PAGE>
Rate plus one percent (1%), and (C) all other Advances, the sum of the Alternate
Base Rate in effect from time to time plus one percent (1%).
(c) PAYMENT OF INTEREST ON ADVANCES. Interest on each Eurocurrency Rate
Advance shall be due and payable as it accrues on the last day of its respective
Interest Period; provided that if any Interest Period is a period greater than
three (3) months, then accrued interest shall also be due and payable on the
date that is three (3) months after the commencement of such Interest Period.
Interest on each U.S. Dollar Base Rate Advance and each Canadian Dollar Base
Rate Advance shall be due and payable as it accrues on the last day of each
March, June, September, and December, commencing on December 31, 1997, and on
the Termination Date.
2.9 LIMITATION ON EUROCURRENCY RATE ADVANCES.
(a) INADEQUACY. If the Required Lenders shall notify the Applicable Agent
that the Eurocurrency Rate for any Eurocurrency Rate Borrowing will not
adequately reflect the cost to the Required Lenders of making or funding their
respective Eurocurrency Rate Advances for such Eurocurrency Rate Borrowing, then
the right of Borrowers to select Eurocurrency Rate Advances for any subsequent
Borrowing shall be suspended until the Applicable Agent notifies Murphy and
Lenders that the circumstances causing such suspension no longer exist, and any
request by any Borrower for a Eurocurrency Rate Advance shall be deemed to be a
request for a U.S. Dollar Base Rate Advance.
(b) BASIS UNAVAILABLE. If, on or prior to the determination of any
Eurocurrency Rate for any Interest Period, the Applicable Agent determines
(which determination shall be conclusive, absent manifest error) that quotations
of interest rates provided in the definition of "Eurocurrency Rate" in SECTION
1.1 are not being provided for the relevant maturities for purposes of
determining rates of interest for Eurocurrency Rate Advances as provided herein,
then the Applicable Agent shall give Murphy prompt notice thereof, and so long
as such condition remains in effect, the Applicable Lenders shall be under no
obligation to make additional Eurocurrency Rate Advances or continue or convert
into Eurocurrency Rate Advances.
2.10 INCREASED COSTS; INCREASED CAPITAL; PREPAYMENTS.
(a) INCREASED COSTS. If due to either (i) the passage of or any change
after the date hereof (other than any change by way of imposition or increase of
reserve requirements included in the Eurocurrency Rate Reserve Percentage) in or
in the interpretation of any Legal Requirement, or (ii) the compliance with any
guideline received from any central bank or other Governmental Authority after
the date hereof (whether or not having the force of law), there shall be any
increase in the cost to any Lender of agreeing to make or making, funding, or
maintaining Eurocurrency Rate Advances, then the applicable Borrowers shall from
time to time, upon demand by such Lender (with a copy of such demand to the
Applicable Agent), pay to the Applicable Agent for the account of such Lender
additional amounts sufficient to compensate such Lender for such increased cost.
Increased costs shall not include income, stamp, or other taxes, imposts,
duties, charges, fees, deductions, or withholdings imposed, levied, collected,
withheld, or assessed by the United States of America or Canada or any political
subdivision or taxing authority thereof or therein (including Puerto Rico) or of
the country in which any Lender's principal office or Applicable Lending office
may be located or any political subdivision or taxing authority thereof or
therein. Each Lender agrees that, upon the occurrence of any event giving rise
to a demand under this SECTION 2.10(a) with respect to the Eurocurrency Lending
Office of such Lender, it will, if requested by any Borrower and to the extent
permitted by law or the relevant Governmental Authority, endeavor in good faith
and consistent with its internal policies to avoid or minimize the increase in
costs resulting from such event by endeavoring to change its Eurocurrency
Lending Office; provided, however, that such avoidance or minimization can be
made in such a manner that such Lender, in its sole determination, incurs no
economic, legal, or regulatory disadvantage. A certificate as to the amount of
and specifying in reasonable detail the basis for such increased cost, submitted
to such Borrower and the Applicable Agent by such Lender, shall constitute such
demand and shall, in the absence of manifest error, be
Ex. 4.1-22
<PAGE>
conclusive and binding for all purposes.
(b) CAPITAL. If either (i) the passage of or any change after the date
hereof in or in the interpretation of, any Legal Requirement, or (ii) the
compliance by any Lender with any guideline received from any central bank or
other Governmental Authority after the date hereof (whether or not having the
force of law), affects or would affect the amount of capital required or
expected to be maintained by such Lender or any corporation controlling such
Lender and such Lender determines that the amount of such capital is increased
by or based upon the existence of its Advances or Commitment, then the
applicable Borrowers shall, from time to time, upon demand by such Lender (with
a copy of such demand to the Applicable Agent), immediately pay to the
Applicable Agent for the account of such Lender additional amounts sufficient to
compensate such Lender to the extent that such Lender determined such increase
in capital to be allocable to the existence of such Lender's Advances or
Commitment. Each Lender agrees that, upon the occurrence of any event giving
rise to a demand under this SECTION 2.10(b) with respect to the Applicable
Lending Office of such Lender, it will, if requested by any Borrower and to the
extent permitted by law or the relevant Governmental Authority, endeavor in good
faith and consistent with its internal policies to avoid or minimize the
increase in cost resulting from such event by endeavoring to change its
Applicable Lending Office; provided, however, that such avoidance or
minimization can be made in such a manner that such Lender, in its sole
determination, incurs no economic, legal, or regulatory disadvantage. A
certificate as to the amount of such increased capital and specifying in
reasonable detail the basis therefor, submitted to such Borrower and the
Applicable Agent by such Lender, shall constitute such demand and shall, in the
absence of manifest error, be conclusive and binding for all purposes.
(c) FUNDING LOSSES. If any payment of principal of any Eurocurrency Rate
Advance is made by a Borrower to or for the account of a Lender other than on
the last day of the Interest Period for a Eurocurrency Rate Advance or as a
result of a payment pursuant to SECTION 2.7(b) or SECTION 2.7(c), or as a result
of acceleration of the maturity of the Advances pursuant to SECTION 7.2, or for
any other reason, or if any Borrower fails to convert or continue any Advance
hereunder after irrevocable notice of such conversion or continuation has been
given pursuant to SECTION 2.3, Borrowers shall, upon demand by such Lender (with
a copy of such demand to the Applicable Agent), pay to the Applicable Agent for
the account of such Lender any amounts required to compensate such Lender for
any losses, costs, or expenses which it may reasonably incur as a result of such
payment or failure, including, without limitation, any loss (including loss of
anticipated profits), cost, or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund or
maintain such Advance. A certificate of such Lender setting forth the amount
demanded hereunder and the basis therefor shall, in the absence of manifest
error, be conclusive and binding for all purposes.
2.11 ADDITIONAL INTEREST ON EUROCURRENCY RATE ADVANCES. Each Borrower
shall pay to the Applicable Agent, for the account of each Lender, any costs
which such Lender determines are attributable to such Lender's compliance with
regulations of the Board of Governors of the Federal Reserve System requiring
the maintenance of reserves with respect to liabilities or assets consisting of
or including Eurocurrency Liabilities. Such costs shall be paid to the
Applicable Agent for the account of such Lender in the form of additional
interest on the unpaid principal amount of each Eurocurrency Rate Advance of
such Lender, from the later of (a) the date of such Advance, and (b) the
effective date of such reserve requirement under applicable regulations, until
such principal amount is paid in full, at an interest rate per annum equal at
all times to the remainder obtained by subtracting (i) the Eurocurrency Rate for
the applicable period for such Advance from (ii) the rate obtained by dividing
such Eurocurrency Rate by a percentage equal to one-hundred percent (100%) minus
the Eurocurrency Rate Reserve Percentage of such Lender for such period, payable
on each date on which interest is payable on such Advance. Such additional
interest shall be determined by such Lender and notified to the Applicable
Agent. A certificate setting forth the amount of such additional interest,
submitted to Borrowers and the Applicable Agent by such Lender, shall be
conclusive and binding for all purposes, absent manifest error.
Ex. 4.1-23
<PAGE>
2.12 CHANGE IN LEGALITY. If any Lender shall notify the Applicable Agent
that the passage of or any change after the date hereof in or in the
interpretation of any Legal Requirement makes it unlawful, or that any central
bank or other Governmental Authority asserts that it is unlawful, for such
Lender or any of its lending offices to perform its obligations hereunder to
make, fund, or maintain Eurocurrency Rate Advances hereunder, then the right of
any Borrower to select Eurocurrency Rate Advances from such Lender for any
Borrowing shall be suspended until such Lender shall notify the Applicable Agent
that the circumstances causing such suspension no longer exist. If the
obligation of any Lender to make, continue, or convert into Eurocurrency Rate
Advances shall be suspended, then (a) all U.S. Dollar Eurocurrency Rate Advances
that would otherwise be made by such Lender shall be made instead as U.S. Dollar
Base Rate Advances, and (b) Pounds Sterling Eurocurrency Rate Advances from such
Lender shall be unavailable. If such Lender so requests by notice to the
Applicable Agent, then (i) all U.S. Dollar Eurocurrency Rate Advances of such
Lender then outstanding shall be automatically converted into U.S. Dollar Base
Rate Advances on the date specified by such Lender in such notice, and, to the
extent that Eurocurrency Rate Advances are so made as (or converted into) U.S.
Dollar Base Rate Advances, all payments of principal which would otherwise be
applied to such Lender's Eurocurrency Rate Advances shall be applied instead to
its U.S. Dollar Base Rate Advances, and (ii) the applicable Borrower shall be
deemed to have requested U.S. Dollar Base Rate Advances in an amount equal to
the Dollar Equivalent of all outstanding Pounds Sterling Eurocurrency Rate
Advances, the proceeds of which shall be applied to the repayment of such Pounds
Sterling Eurocurrency Rate Advances. Notwithstanding the foregoing, if any
Lender shall notify the Applicable Agent of the occurrence of the circumstances
described in this SECTION 2.12, then, provided that (A) no Event of Default
exists, and (B) the circumstances resulting in such notice are not applicable to
all Lenders, Borrowers may terminate the Commitments of such Lender in whole but
not in part, by either (1) (x) giving such Lender and the Applicable Agent not
less than five (5) Business Days' written notice thereof, which notice shall be
irrevocable and effective only upon receipt thereof by such Lender and the
Applicable Agent and shall specify the date of such termination, and (y) paying
such Lender on such date the outstanding principal of, and interest on, all
Advances made by such Lender and any other Obligation owed to such Lender, if
any, or (2) pursuant to the provisions of SECTION 10.7, proposing the
introduction of a replacement Lender satisfactory to Domestic Administrative
Agent, or obtaining the agreement of one or more existing Lenders, to assume the
entire amount of the Commitments of the Lender whose Commitments are being
terminated, on the effective date of such termination. Upon the satisfaction of
all of the foregoing conditions, such Lender that is being terminated shall
cease to be a "Lender" for purposes of this Agreement, provided that Borrowers
shall continue to be obligated to such Lender under SECTION 10.15 with respect
to Indemnified Liabilities (as defined in such SECTION) arising prior to such
termination. If Borrowers terminate the Commitments of any Lender pursuant to
CLAUSE (1) above, then the Global Commitments and, as appropriate, the Maximum
Canadian Commitments shall be reduced accordingly.
2.13 PAYMENTS AND COMPUTATIONS.
(a) PAYMENTS. Domestic Borrowers shall make all payments in support of
any Borrowing denominated in any currency in the same currency and shall make
all payments not later than 11:00 a.m. (New York City time) on the date when due
to Domestic Administrative Agent, for the ratable benefit of Domestic Lenders,
at its address referred to in SECTION 10.2 in same-day funds. Canadian Borrower
shall make all payments in support of any Borrowing or Bankers' Acceptance
denominated in any currency in the same currency and shall make all payments not
later than 11:00 a.m. (Toronto, Ontario time) on the date when due to Canadian
Administrative Agent, for the ratable benefit of Canadian Lenders, at its
address referred in SECTION 10.2 in same-day funds. The Applicable Agent will
promptly thereafter cause to be distributed like funds to all Lenders entitled
thereto for the account of their respective Applicable Lending Offices, in each
case to be applied in accordance with the terms of this Agreement.
(b) COMPUTATIONS. All computations of (i) interest on U.S. Dollar Base
Rate Advances, Canadian Dollar Base Rate Advances, and Pounds Sterling
Eurocurrency Rate Advances, and (ii) Facility
Ex. 4.1-24
<PAGE>
Fees shall be made by the Applicable Agent on the basis of a year of 365 or 366
days, as the case may be, and all computations of interest on U.S. Dollar
Eurocurrency Rate Advances shall be made by the Applicable Agent on the basis of
a year of 360 days, in each case for the actual number of days (including the
first (1st) day but excluding the last day) occurring in the period for which
such interest or fees are payable. Each determination by the Applicable Agent of
an interest rate hereunder shall be conclusive and binding for all purposes,
absent manifest error.
(c) INTEREST ACT (CANADA). Whenever interest is calculated on the basis
of a year of 360 or 365 days, for the purposes of the Interest Act (Canada), the
yearly rate of interest which is equivalent to the rate payable hereunder is the
rate payable multiplied by the actual number of days in the year and divided by
360 or 365, as the case may be. All interest shall be calculated using the
nominal rate method and not the effective rate method and the deemed
reinvestment principle shall not apply to such calculations.
(d) BUSINESS DAYS. Whenever any payment hereunder shall be stated to be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall be included in the
computation of payment of interest or fees, as the case may be; provided,
however, that, if such extension would cause payment of interest on or principal
of Eurocurrency Rate Advances to be made in the next following calendar month,
then such payment shall be made on the next preceding Business Day.
(e) DISTRIBUTION OF PAYMENTS. Unless the Applicable Agent shall have
received notice from any Borrower prior to the date on which any payment is due
to Lenders hereunder that such Borrower will not make such payment in full, the
Applicable Agent may assume that such Borrower has made such payment in full to
the Applicable Agent on such date and the Applicable Agent may, in reliance upon
such assumption, cause to be distributed to each Lender on such due date an
amount equal to the amount then due such Lender. If and to the extent such
Borrower shall not have so made such payment in full to the Applicable Agent,
then (i) each Domestic Lender shall repay to Domestic Administrative Agent
forthwith on demand such amount distributed to such Domestic Lender together
with interest thereon, for each day from the date such amount is distributed to
such Domestic Lender until the date such Domestic Lender repays such amount to
Domestic Administrative Agent, at a per annum rate equal to the Federal Funds
Effective Rate, and (ii) each Canadian Lender shall repay to Canadian
Administrative Agent forthwith on demand such amount distributed to such
Canadian Lender together with interest thereon, for each day from the date such
amount is distributed to such Canadian Lender until the date such Canadian
Lender repays such amount to Canadian Administrative Agent, at a per annum
interest rate equal at all times to the Cost of Funds Rate. The interest
payable by any Lender to any Agent pursuant to this SECTION shall not affect the
interest otherwise payable by the applicable Borrower pursuant to SECTION 2.8.
2.14 TAXES ON PAYMENTS.
(a) WITHHOLDING TAXES. All payments made by Borrowers under this
Agreement shall be made free and clear of, and without reduction for or on
account of, any income, stamp, or other taxes, imposts, duties, charges, fees,
deductions, or withholdings, imposed, levied, collected, withheld, or assessed
by the United States of America or Canada (or by any political subdivision or
taxing authority thereof or therein) as a result of (i) the introduction after
the date hereof of any law, regulation, treaty, directive, or guideline (whether
or not having the force of law), or (ii) any change after the date hereof in any
law, regulation, treaty, directive, or guideline (whether or not having the
force of law), or (iii) any change after the date hereof in the interpretation
or application of any law, regulation, treaty, directive, or guideline (whether
or not having the force of law), or (iv) any such taxes, imposts, duties,
charges, fees, deductions, or withholdings being imposed, levied, collected,
withheld, or assessed at a greater rate than the rate that would have been
applicable had such an introduction or change not been made, but only to the
extent of the increase in such rate ("WITHHOLDING TAXES"). If any Withholding
Taxes are required to be withheld from any amounts payable to or for the account
of any Lender hereunder, then the amounts so payable to or for the account of
Ex. 4.1-25
<PAGE>
such Lender shall be increased to the extent necessary to yield to such Lender
(after payment of all Withholding Taxes including Withholding Taxes on all such
additional amounts) interest or any such other amounts payable hereunder at the
rates or in the amounts payable to or for the account of such Lender under this
Agreement prior to such introduction or change. Whenever any Withholding Taxes
are payable by any Borrower, as promptly as possible thereafter such Borrower
shall send to the Applicable Agent, for the account of such Lender, a certified
copy of an original official receipt showing payment thereof. If such Borrower
fails to pay any Withholding Taxes when due to the appropriate taxing authority
or fails to remit to the Applicable Agent the required receipts or other
required documentary evidence, then such Borrower shall indemnify such Lender or
the Applicable Agent for any incremental taxes, interest, or penalties that may
become payable by such Lender or the Applicable Agent as a result of any such
failure.
(b) TAX FORMS. Within thirty (30) days after the date of execution of
this Agreement, each Lender that is organized outside the United States agrees
that it will deliver to Murphy and Agents two (2) duly completed copies of
United States Internal Revenue Service Form 1001 (or such other documentation or
information as may, under applicable United States federal income tax statutes
or regulations, be required in order to claim an exemption or reduction from
United States income tax withholding by reason of an applicable treaty with the
United States, such documentation or other information being hereafter referred
to as "FORM 1001") or Form 4224 (or such other documentation or information as
may, under applicable United States federal income tax statutes or regulations,
be required in order to claim an exemption from United States income tax
withholding for income that is effectively connected with the conduct of a trade
or business within the United States, such documentation or other information
being hereafter referred to as "FORM 4224"), as the case may be, indicating in
each case that such Lender is either entitled to receive payments under this
Agreement without deduction or withholding of any United States federal income
taxes or, as the case may be, is subject to such limited deduction or
withholding as it is capable of recovering in full from a source other than
Borrower. Each Lender which delivers to Murphy and Agents a Form 1001 or Form
4224 pursuant to the next preceding sentence further undertakes to deliver to
Murphy and Agents two (2) further copies of the said Form 1001 or 4224, or
successor applicable form or certificate, as the case may be, as and when the
previous form filed by it hereunder shall expire or shall become incomplete or
inaccurate in any respect, unless in any of such cases an event has occurred
prior to the date on which any such delivery would otherwise be required which
renders such form inapplicable.
(c) CREDITS. If at any time any Lender by reason of payment by any
Borrower of any Withholding Taxes obtains a credit against, or return or
reduction of, any tax payable by it, or any other currently realized tax
benefit, which it would not have enjoyed but for such payment ("TAX BENEFIT"),
such Lender shall thereupon pay to such Borrower the amount which such Lender
shall certify to be the amount that, after payment, will leave such Lender in
the same economic position it would have been in had it received no such Tax
Benefit ("EQUALIZATION AMOUNT"); provided, however, that if such Lender shall
subsequently determine that it has lost the benefit of all or a portion of such
Tax Benefit, then such Borrower shall promptly remit to such Lender the amount
certified by such Lender to be the amount necessary to restore such Lender to
the position it would have been in if no payment had been made pursuant to this
SECTION 2.14(c); provided, further, however, that if such Lender shall be
prevented by applicable law from paying Borrower all or any portion of the
Equalization Amount owing to such Borrower, then such payment need not be made
to the extent such Lender is so prevented and the amount not paid shall be
credited to the extent lawful against future payment owing to such Lender;
provided, further, however, that the aggregate of all Equalization Amounts paid
by any Lender shall in no event exceed the aggregate of all amounts paid by such
Borrower to such Lender in respect of Withholding Taxes plus, in the case of a
Tax Benefit that occurs by reason of a refund, interest actually received from
the relevant taxing authority with respect to such refund. A certificate
submitted to the Applicable Agent and Murphy by such Lender pursuant to this
SECTION 2.14(c) shall be conclusive and binding for all purposes, absent
manifest error.
Ex. 4.1-26
<PAGE>
(d) LENDING OFFICE. In the event a Lender shall become aware that any
Borrower is required to pay any additional amount to it pursuant to SECTION
2.14(a), such Lender shall promptly notify Agents and Murphy of such fact and
shall use reasonable efforts, consistent with legal and regulatory restrictions,
to change the jurisdiction of its Applicable Lending Office if the making of
such change (i) would avoid the need for, or reduce the amount of, any such
additional amounts that may thereafter accrue, (ii) would not, in the good faith
determination of such Lender, be disadvantageous for regulatory or competitive
reasons to such Lender, and (iii) would not require such Lender to incur any
cost or forego any economic advantage for which such Borrower shall not have
agreed to reimburse and indemnify such Lender.
(e) EFFECT OF PARTICIPANTS. Notwithstanding the foregoing provisions of
this SECTION 2.14, in the event any Lender grants a participation in any Advance
pursuant to SECTION 10.7, no Borrower shall be obligated to pay any taxes,
imposts, duties, charges, fees, deductions, or withholdings to the extent that
the aggregate amount thereof exceeds the aggregate amount for which such
Borrower would have been obligated if such Lender had not granted such
participation.
2.15 SHARING OF PAYMENTS, ETC. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of setoff, or
otherwise) on account of the Advances by it (other than pursuant to SECTIONS
2.10, 2.11, 2.14, or 10.4) in excess of its Applicable Commitment Percentage of
payments on account of the Advances or reimbursements on account of matured
Bankers' Acceptances obtained by all relevant Lenders, then such Lender shall
forthwith purchase from the other relevant Lenders through the Applicable Agent
such participations in the Advances made by them as shall be necessary to cause
such purchasing Lender to share the excess payment ratably with each of them,
such purchases to be made first of Advances in the same Type and currency as the
payment received by such Lender, and thereafter in such Types and currencies as
selected by such purchasing Lender; provided, however, that, if all or any
portion of such excess payment is thereafter recovered from such purchasing
Lender, then such purchase from each Lender shall be rescinded, and such Lender
shall repay to the purchasing Lender the purchase price to the extent of such
recovery, together with an amount equal to such Lender's ratable share
(according to the proportion that the (i) the amount of such Lender's required
repayment bears to (ii) the total amount so recovered from the purchasing
Lender) of any interest or other amount paid or payable by the purchasing Lender
in respect of the total amount so recovered. Borrowers agree that any Lender so
purchasing a participation from another Lender pursuant to this SECTION 2.15
may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of setoff) with respect to such participation as fully as
if such Lender were the direct creditor of the applicable Borrower in the amount
of such participation.
2.16 BANKERS' ACCEPTANCES.
(a) CREATION. Canadian Borrower may request pursuant to this SECTION
2.16, from time to time during the period from the date hereof to but excluding
the Termination Date, that each Canadian Lender create Bankers' Acceptances by
accepting Drafts from Canadian Borrower in an aggregate amount not exceeding
such Canadian Lender's Canadian Commitment Percentage of the aggregate Face
Amount of the Bankers' Acceptances to be created on any Drawing Date; provided
that Canadian Borrower shall not request the creation of any Bankers' Acceptance
if, after giving effect thereto, the Canadian Usage would exceed the Designated
Canadian Commitment then in effect. Subject to the provisions of this SECTION
2.16 and the conditions precedent set forth in SECTION 3.2, each Canadian Lender
shall accept and purchase Bankers' Acceptances created by it as more
particularly specified in this SECTION 2.16 if such Bankers' Acceptances are not
purchased by a third party on the relevant Drawing Date. The aggregate Face
Amount of the Bankers' Acceptances to be created on any Drawing Date shall be
equal to or greater than Cdn. $7,500,000. If apportionment of Bankers'
Acceptances among all Lenders cannot be made on a ratable basis in even
multiples of Cdn.$100,000, then Administrative Agent shall round the allocations
among all Lenders up or down to the nearest Cdn.$100,000.
Ex. 4.1-27
<PAGE>
(b) DRAWING NOTICE. Bankers' Acceptances shall be created on not less
than two (2) Business Days' prior written notice given not later than 11:00 a.m.
(Toronto, Ontario time), by Canadian Borrower to Canadian Administrative Agent,
which shall give each Canadian Lender prompt notice thereof and of such Lender's
Canadian Commitment Percentage of the aggregate Face Amount of the Drafts to be
accepted (and purchased) by such Canadian Lender. Each such notice (a "DRAWING
NOTICE") shall be in substantially the form of EXHIBIT G or by telephone
confirmed promptly in writing, containing the same information as would be
contained in a Drawing Notice, and shall specify (i) the Drawing Date, (ii) the
aggregate Face Amount of the Drafts to be accepted (and purchased), and (iii)
the maturity date for such Drafts (it being agreed and understood that Canadian
Borrower shall not be entitled to request a maturity date for Drafts which would
be subsequent to the Maturity Date).
(c) NOTICE IRREVOCABLE. Neither Canadian Administrative Agent nor any
Canadian Lender shall incur any liability to Canadian Borrower in acting on any
telephonic notice referred to above that Canadian Administrative Agent believes
in good faith to have been given by a duly authorized officer or other person
authorized to borrow on behalf of Canadian Borrower or for otherwise acting in
good faith under this SECTION 2.16, and upon the creation and purchase of
Bankers' Acceptances pursuant to any such telephonic notice, Canadian Borrower
shall be liable with respect thereto as provided herein. Each Drawing Notice
shall be irrevocable and binding on Canadian Borrower. Canadian Borrower shall
indemnify each Canadian Lender against any loss or expense incurred by such
Canadian Lender as a result of any failure by Canadian Borrower to fulfill or
honor before the applicable Drawing Date the applicable conditions set forth in
this SECTION 2.16 or SECTION 3.2 if, as a result of such failure, the requested
Bankers' Acceptances are not created and/or purchased on such Drawing Date.
(d) DRAFTS. Each Draft presented by Canadian Borrower shall: (i) be an
integral multiple of Cdn. $100,000; (ii) be dated the date of acceptance thereof
by the applicable Canadian Lender; (iii) mature and be payable by Canadian
Borrower on a Business Day which occurs 30, 60, 90, or, if available, 180 days
after the date thereof; (iv) be substantially in the form of EXHIBIT D; and (iv)
be otherwise consistent with the provisions of this Agreement relating to the
amounts and maturity dates thereof. The acceptance endorsed by Canadian Lender
on any Draft shall be substantially in the form as may be agreed by Canadian
Borrower and such Canadian Lender.
(e) ACCEPTANCE OF DRAFTS. Not later than 11:00 a.m. (Toronto, Ontario
time) on an applicable Drawing Date, each Canadian Lender shall complete Drafts,
dated such Drawing Date, with the maturity date and denominations specified in
the applicable Drawing Notice, and following fulfillment of the applicable
conditions as set forth in SECTION 3.2 and as specified in the applicable
Drawing Notice, shall accept such Drafts and purchase the Bankers' Acceptances
thereby created for the applicable Bankers' Acceptance Purchase Price. Canadian
Borrower hereby authorizes each Canadian Lender to deduct from the amount to be
remitted by it to Canadian Administrative Agent in respect of the Bankers'
Acceptance Purchase Price of any Bankers' Acceptance created by it the BA Fee in
respect of such Bankers' Acceptance. The failure of any Canadian Lender to
create and purchase or deliver Bankers' Acceptances shall not relieve such
Canadian Lender of its obligation, if any, to create and purchase or deliver
Bankers' Acceptances hereunder, but a Canadian Lender shall not be responsible
for the failure of any other Canadian Lender to create and purchase or deliver
Bankers' Acceptances on any Drawing Date.
(f) FUNDING. Subject to this SECTION 2.16, each Canadian Lender shall,
(i) before 12:00 noon (Toronto time) on the applicable Drawing Date in the case
of the Bankers' Acceptance Purchase Price for each Bankers' Acceptance purchased
by it, or (ii) upon receipt by it on the applicable Drawing Date of the purchase
price payable by a third party in respect of any Bankers' Acceptance created by
it and purchased by such third party, make available to Canadian Administrative
Agent at its address referred to in SECTION 10.2, in same day funds, such amount
(less the applicable BA Fee as aforesaid). Upon Canadian Administrative Agent's
receipt of such funds and upon fulfillment of the applicable conditions set
forth in SECTION 3.2,
Ex. 4.1-28
<PAGE>
Canadian Administrative Agent will make such funds available to Canadian
Borrower at Canadian Administrative Agent's aforesaid address.
(g) HOLDING OF BANKERS' ACCEPTANCES. Bankers' Acceptances purchased by a
Canadian Lender hereunder may be held by it for its own account until maturity
or sold by it at any time prior thereto in any relevant market therefor in
Canada, in such Canadian Lender's sole discretion.
(h) REPAYMENT.
(i) REFUNDING. So long as no Potential Default or Event of Default
exists, Canadian Borrower may give irrevocable telephonic (followed by
written confirmation electronically transmitted to Canadian Administrative
Agent on the same day) or written notice (or such other method of
notification as may be agreed to by Canadian Administrative Agent and
Canadian Borrower) to Canadian Administrative Agent at or before 11:00 a.m.
(Toronto, Ontario time) two (2) Business Days prior to the maturity date of
any Bankers' Acceptance of Canadian Borrower's intention to issue one or
more Bankers' Acceptances on such maturity date (each a "REFUNDING BANKERS'
ACCEPTANCE") to provide for the payment of such maturing Bankers'
Acceptance (it being understood that the payment by Canadian Borrower and
fundings by Canadian Lenders in respect of each maturing Bankers'
Acceptance and each related Refunding Bankers' Acceptance shall be made on
a net basis reflecting the difference between the face amount of such
maturing Bankers' Acceptance and the Bankers' Acceptance Purchase Price
(less the applicable BA Fee) of such Refunding Bankers' Acceptance).
(ii) REPAYMENT. Canadian Borrower shall pay to Canadian
Administrative Agent, for the account of the applicable Canadian Lender,
and there shall become due and payable, at 12:00 noon (Toronto, Ontario
time) on the maturity date for each Bankers' Acceptance, an amount in
Canadian Dollars in same day funds equal to the Face Amount of such
Bankers' Acceptance. The obligation of Canadian Borrower to make such
payment shall not be prejudiced by the fact that the holder of any such
Bankers' Acceptance is the Canadian Lender that accepted such Bankers'
Acceptance. Canadian Borrower hereby renounces, and shall not claim, any
days of grace for the payment of any Bankers' Acceptances. Bankers'
Acceptances may not be prepaid.
(iii) FAILURE TO REPAY. If Canadian Borrower fails to pay to
Canadian Administrative Agent, for the account of the applicable Canadian
Lender, the Face Amount of any Bankers' Acceptance as required by the
preceding paragraph, then Canadian Borrower shall be deemed to have given a
Notice of Borrowing to Canadian Administrative Agent requesting that such
Canadian Lender make a Canadian Dollar Base Rate Advance on the date that
such payment is due and payable, and thereupon such Lender shall, subject
to the fulfillment of the applicable conditions set forth in SECTION 3.2,
as of such date, make such Canadian Dollar Base Rate Advance to Canadian
Borrower, the proceeds of which shall be applied directly to reimburse such
Canadian Lender for the Face Amount of such Bankers' Acceptance paid by it.
Canadian Administrative Agent will give to Canadian Borrower notice of any
such action promptly after any such action; provided, however, that the
failure to give such notice shall not limit or otherwise affect the
obligations of Canadian Borrower under this Agreement or any other Loan
Document.
(i) NUMBER OF DRAFTS. To enable Canadian Lenders to complete Drafts and
create and purchase Bankers' Acceptances in the manner specified in this SECTION
2.16, Canadian Borrower shall supply each Canadian Lender with such number of
Drafts as such Canadian Lender may reasonably request, duly endorsed and
executed on behalf of Canadian Borrower. Each Canadian Lender shall exercise
such care in the custody and safekeeping of Drafts as it would exercise in the
custody and safekeeping of similar property
Ex. 4.1-29
<PAGE>
owned by it. Each Canadian Lender will, upon request by Canadian Borrower,
promptly advise Canadian Borrower of the number and designations, if any, of the
Drafts then held by it. The signatures of any officers of Canadian Borrower may
be mechanically reproduced in facsimile, and Drafts and Bankers' Acceptances
bearing such facsimile signatures shall be binding upon Canadian Borrower as if
they had been manually signed by such officers. Notwithstanding that any of the
individuals whose manual or facsimile signature appears on any Draft or Bankers'
Acceptance as one of such officers may no longer hold office at the date thereof
or at the date of its acceptance by a Canadian Lender hereunder or at any time
thereafter, any Draft or Bankers' Acceptance so signed shall be valid and
binding upon Canadian Borrower.
(j) LIMITATION ON BANKERS' ACCEPTANCES. If Canadian Administrative Agent
determines in good faith, which determination shall be final, conclusive, and
binding upon Borrowers, and notifies Murphy and each Canadian Lender that, by
reason of circumstances affecting the money market (i) there is no market for
Bankers' Acceptances, or (ii) the demand for Bankers' Acceptances is
insufficient to allow the sale or trading of the Bankers' Acceptances created
and purchased hereunder; then:
(i) the right of Canadian Borrower to request that Bankers'
Acceptances be created hereunder shall be suspended until Canadian
Administrative Agent determines that the circumstances causing such
suspension no longer exist and Canadian Administrative Agent so notifies
Murphy; and
(ii) any Drawing Notice which is outstanding shall be canceled and the
Bankers' Acceptances requested therein shall not be created.
(k) COLLATERAL ACCOUNT. Canadian Borrower agrees that, if the Obligation
is accelerated pursuant to SECTION 7.2, then if requested by Canadian
Administrative Agent or by the Required Lenders (through any Agent), it will pay
to Canadian Administrative Agent an amount in immediately available funds equal
to the BA Usage, which funds shall be held by Canadian Administrative Agent in
an interest bearing collateral account and are hereby collaterally assigned to
Canadian Administrative Agent, for the ratable benefit of Canadian Lenders until
the BA Usage shall have been fully satisfied or no Event of Default exists, at
which time all funds in such collateral account (including all interest on
amounts held therein) shall be released to Canadian Borrower.
SECTION 3.
CONDITIONS OF CLOSING AND LENDING
3.1 CONDITIONS PRECEDENT TO CLOSING. The obligation of each Lender to
execute and deliver this Agreement and the other Loan Documents is subject to
the conditions precedent that Domestic Administrative Agent shall have received,
on or before the date hereof (unless otherwise indicated), the following, each
dated the same day (unless otherwise indicated), in form and substance
satisfactory to Domestic Administrative Agent and in sufficient copies for each
Lender:
(a) Receipt by Domestic Administrative Agent of a Certificate of the
Secretary or an Assistant Secretary of each Borrower setting forth (i)
resolutions of its board of directors with respect to the authorization of such
Borrower to execute and deliver the Loan Documents to which it is a party and to
enter into the transactions contemplated in those documents, (ii) the officers
of such Borrower (A) who are authorized to sign the Loan Documents to which such
Borrower is a party, and (B) who will, until replaced by another officer or
officers duly authorized for that purpose, act as its representative for the
purposes of signing documents and giving notices and other communications in
connection with this Agreement and the transactions contemplated hereby, (iii)
specimen signatures of the authorized officers of such Borrower, and (iv) the
Constituent Documents of such Borrower, certified as being true, correct, and
complete. Agents and Lenders may conclusively rely on each such certificate
until Domestic Administrative Agent receives notice in writing from Murphy to
the contrary.
Ex. 4.1-30
<PAGE>
(b) Copies of the currently-effective Constituent Documents of each
Borrower, and all amendments thereto, accompanied by certificates that such
copies are true, correct, and complete, dated a date not more than thirty (30)
days prior to the date of this Agreement, issued by the appropriate Governmental
Authority of the jurisdiction of incorporation, organization, or formation of
such Borrower.
(c) Favorable opinions of counsel of each Borrower, substantially in the
forms of EXHIBIT C-1 through EXHIBIT C-3 respectively, and as to such matters as
any Lender through Domestic Administrative Agent may reasonably request.
(d) Executed copies of this Agreement and all other Loan Documents.
(e) Evidence that all fees payable on or prior to the Closing Date have
been paid to Domestic Administrative Agent and Arranger as provided for in
SECTION 2.5(b).
3.2 CONDITIONS PRECEDENT TO EACH BORROWING. The obligation of each Lender
to make an Advance to any Borrower in connection with any Borrowing shall be
subject to the conditions precedent that on the date of such Borrowing: (a) all
of the conditions precedent to closing set forth in SECTION 3.1 have been
satisfied; (b) the Applicable Agent shall have received a Notice of Borrowing or
Drawing Notice, as the case may be, executed and completed by a Financial
Officer of such Borrower; and (c) the following statements shall be true and
correct (and each of the giving of the applicable Notice of Borrowing or Drawing
Notice, as the case may be, and the acceptance by such Borrower of the proceeds
of such Borrowing shall constitute a representation and warranty by such
Borrower that on the date of such Borrowing such statements are true): (i) the
representations and warranties contained in SECTIONS 4.1, 4.2, 4.3, and 4.4 are
true and correct on and as of the date of such Borrowing, before and after
giving effect to such Borrowing and to the application of the proceeds
therefrom, as though made on and as of such date; and (ii) no Potential Default
or Event of Default exists or would result from such Borrowing or from the
application of the proceeds therefrom.
SECTION 4.
REPRESENTATIONS AND WARRANTIES
To induce Lenders to enter into this Agreement, Borrowers represent and
warrant as of the date hereof (except for SECTIONS 4.1, 4.2, 4.3, and 4.4, which
are as of the date hereof and as of the date of each Advance hereunder) to
Agents and Lenders as follows:
4.1 EXISTENCE; QUALIFICATION. Each Company is duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation, formation, or organization. Each Company is duly qualified to do
business in each jurisdiction in which any such failure to so qualify could be a
Material Adverse Event.
4.2 POWER. The execution, delivery, and performance by each Borrower of
this Agreement and the other Loan Documents to which such Borrower is a party
are within such Borrower's corporate powers, have been duly authorized by all
necessary corporate action, and do not contravene (a) any Borrower's Constituent
Documents, or (b) any Legal Requirement or contractual restriction binding on or
affecting any Borrower.
Ex. 4.1-31
<PAGE>
4.3 AUTHORIZATIONS. No Authorization or other action by, and no notice to
or filing with, any Governmental Authority or other Person is required for the
due execution, delivery, and performance by Borrowers of this Agreement and the
other Loan Documents, except for such Authorizations that have been duly
obtained or made and that are in full force and effect.
4.4 ENFORCEABILITY. This Agreement and the other Loan Documents are the
legal, valid, and binding obligation of each Borrower enforceable against each
Borrower in accordance with their respective terms.
4.5 FINANCIAL INFORMATION. The consolidated financial statements of
Murphy dated as of June 30, 1997, are complete and correct and fairly present
the financial condition of Murphy, on a consolidated basis, as of said date and
the results of operations and cash flows of Murphy, on a consolidated basis, for
the stated periods then-ended, all in accordance with GAAP. As of the date
hereof, no Material Adverse Event has occurred since June 30, 1997, and no
Company has any material direct or contingent liabilities which are not
disclosed by or reserved against in the financial statements referred to above
or otherwise disclosed in writing to Domestic Administrative Agent.
4.6 LITIGATION, JUDGMENTS, ETC. No Company is subject to, or aware of the
threat of, any Litigation which is reasonably likely to be determined adversely
to any Company, and, if so adversely determined, could (individually or
collectively with other Litigation) be a Material Adverse Event. There are no
outstanding orders or judgments for the payment of money in excess of
$35,000,000 (individually or collectively) or any warrant of attachment,
sequestration, or similar proceeding against any Company's assets having a value
(individually or collectively) of $35,000,000 or more which is not either (a)
stayed on appeal, or (b) being diligently contested in good faith by appropriate
proceedings and adequate reserves have been set aside on the books of such
Company in accordance with GAAP. There are no formal complaints, suits, claims,
investigations, or proceedings initiated at or by any Governmental Authority
pending or, to any Borrower's knowledge, threatened by or against any Company
which could be a Material Adverse Event, nor any judgments, decrees, or orders
of any Governmental Authority outstanding against any Company that could be a
Material Adverse Event.
4.7 REGULATION U.
(a) After applying the proceeds of each Advance, not more than twenty-five
percent (25%) of the value of the assets of Murphy, on a consolidated basis, (as
determined in good faith by Murphy) that are subject to SECTION 6.1 or 6.2 will
consist of or be represented by margin stock (within the meaning of Regulation U
issued by the Board of Governors of the Federal Reserve System).
(b) No Borrower is engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of Regulation
U issued by the Board of Governors of the Federal Reserve System), and no
proceeds of any Advance will be used for any purpose which violates the
provisions of the regulations of said Board. If requested by Domestic
Administrative Agent or any Lender, Borrowers will furnish to Domestic
Administrative Agent and each Lender a statement in conformity with the
requirements of Federal Reserve Form U-1 referred to in Regulation U, the
statements made in which shall be such, in the opinion of each Lender, as to
permit the transactions contemplated hereby in accordance with Regulation U.
4.8 ERISA. No Termination Event has occurred nor is reasonably expected
to occur with respect to any Material Plan. No Company or any ERISA Affiliate
has incurred nor reasonably expects to incur any withdrawal liability under
ERISA or any Applicable Canadian Pension Legislation to any Multi-employer Plan
which could be a Material Adverse Event. Schedule B (Actuarial Information) to
the 1996 annual report (Form 5500 Series) with respect to each Plan, copies of
which have been filed with the Internal Revenue Service and furnished to
Domestic Administrative Agent, is complete and accurate in all material
Ex. 4.1-32
<PAGE>
respects and in all material respects fairly presents the funding status of each
Plan as of the date of such schedule.
4.9 TAXES. All tax returns of each Company required to be filed have been
filed (or extensions have been granted) prior to delinquency, except for any
such returns for which the failure to so file could not be a Material Adverse
Event, and all Taxes imposed upon each Company which are due and payable have
been paid prior to delinquency, other than Taxes for which non-payment thereof
could not be a Material Adverse Event. The charges, accruals, and reserves on
the books of the Companies in respect of Taxes or other governmental charges
are, in the opinion of Borrowers, adequate.
4.10 ENVIRONMENTAL MATTERS. No (a) environmental condition or
circumstance, such as the presence or release of any Hazardous Substance, exists
on any property presently or previously owned by any Company that could be a
Material Adverse Event, (b) violation by any Company of any Environmental Law
has occurred, except for such violations that could not be a Material Adverse
Event, or (c) Company is under any obligation to remedy any violation of any
Environmental Law, except for such obligations that could not be a Material
Adverse Event. Each Company has (i) in full force and effect all environmental
permits, licenses, and approvals required to conduct its operations and is
operating in substantial compliance thereunder, and (ii) taken prudent steps to
determine that its properties and operations are not in violation of any
Environmental Law.
4.11 RIGHTS IN PROPERTIES; LIENS. Each Company has good and indefeasible
title to or valid leasehold interests in their respective material properties
and assets, real and personal, including the properties, assets, and leasehold
interests reflected in the financial statements described in SECTION 4.5, and
none of the material properties, assets, or leasehold interests of any Borrower
is subject to any Lien, except as permitted by SECTION 6.1.
4.12 SOLVENCY. On the Closing Date (and after giving effect to the
transactions contemplated by the Loan Documents), each Borrower is Solvent.
4.13 FULL DISCLOSURE. There is no material fact or condition relating to
the Loan Documents or the financial condition, business, or property of any
Company which could be a Material Adverse Event and which has not been related,
in writing, to Domestic Administrative Agent. All information heretofore
furnished by any Borrower to any Lender or any Agent in connection with the Loan
Documents was, and all such information hereafter furnished by any Company to
any Lender or any Agent will be, true, correct, and complete in all material
respects or based on reasonable estimates on the date as of which such
information is stated or certified.
4.14 NO POTENTIAL DEFAULT. No event has occurred and is continuing which
constitutes a Potential Default or an Event of Default.
SECTION 5.
AFFIRMATIVE COVENANTS
So long as any Obligation shall remain unpaid or any Lender shall have any
Global Commitment hereunder, unless Required Lenders shall otherwise consent in
writing:
5.1 REPORTING REQUIREMENTS. Murphy shall deliver, or cause to be
delivered, to Domestic Administrative Agent (with copies for each Lender):
(a) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in any event
within sixty (60) days after the last day of each of the first three (3) fiscal
quarters of each fiscal year of Murphy, a statement
Ex. 4.1-33
<PAGE>
of the consolidated financial condition of Murphy, on a consolidated basis, as
of the last day of such fiscal quarter and the related statements of income and
retained earnings of Murphy, on a consolidated basis, for the period commencing
at the end of the previous fiscal year and ending with the end of such quarter,
accompanied by a certificate executed by a Financial Officer of Murphy stating
that such statements are true and correct and have been prepared in accordance
with GAAP, subject to year-end audit adjustments.
(b) ANNUAL FINANCIAL STATEMENTS. As soon as available and in any event
within one hundred and twenty (120) days after the last day of each fiscal year
of Murphy, a copy of the annual report for such fiscal year for Murphy, on a
consolidated basis, containing the audited consolidated financial statements of
Murphy, on a consolidated basis, for such year and accompanied by an unqualified
opinion of a firm of nationally-recognized independent certified public
accountants, based on an audit using generally accepted auditing standards, that
such financial statements were prepared in accordance with GAAP and present
fairly the consolidated financial condition and results of operations of Murphy,
on a consolidated basis.
(c) COMPLIANCE CERTIFICATE. Concurrently with the delivery of the
financial statements referred to in SECTIONS 5.1(A) and (B), a Compliance
Certificate of a Financial Officer of Murphy, stating that, to the best of such
officer's knowledge, the Companies during such period have observed or performed
all of their covenants and other agreements, and satisfied every condition,
contained in this Agreement and the other Loan Documents to be observed,
performed, or satisfied by them, and that such officer has obtained no knowledge
of any Potential Default or Event of Default, except as specified in such
Compliance Certificate.
(d) OTHER REPORTS. Promptly after the sending or filing thereof, copies
of all reports which Murphy sends to its stockholders generally, and copies of
any material report, registration statement, and prospectus that Murphy files
with the Securities and Exchange Commission or any national securities exchange.
(e) ERISA REPORTS. Promptly after the filing or receiving thereof, copies
of any notices (with respect to a Material Plan) of any of the events set forth
in Section 4043(b) of ERISA or in any Applicable Canadian Pension Legislation,
or the regulations thereunder which any Company files with the PBGC, or which
any Borrower receives from the PBGC to the effect that proceedings or other
action by the PBGC is to be instituted.
(f) OTHER INFORMATION. Such other information respecting the condition or
operations, financial or otherwise, of any Company as any Lender through
Domestic Administrative Agent may from time to time reasonably request.
5.2 NOTICES. Murphy shall promptly give to Domestic Administrative Agent
notice of (a) the occurrence of any Potential Default or Event of Default, (b)
the commencement of any Litigation, inves tigation, or proceeding affecting any
Company before any Governmental Authority, court, or arbitrator which could, if
adversely determined, be a Material Adverse Event, (c) the occurrence of any
Reportable Event or Termination Event. Each notice pursuant to this SECTION 5.2
shall be accompanied by a statement of Murphy, setting forth details of the
occurrence referred to therein and stating what action the appropriate Company
has taken and proposes to take with respect thereto.
5.3 MAINTENANCE OF EXISTENCE, BOOKS AND RECORDS, PROPERTIES, AND
INSURANCE. Each Company shall: (a) preserve and keep in full force and effect
its existence, and preserve and keep in full force and effect its licenses,
rights, and franchises to the extent it deems necessary to carry on its
business; (b) keep proper books of record and account, all in accordance with
GAAP and permit representatives of Domestic Administrative Agent and each Lender
to examine its books and records of account and to discuss its affairs,
finances, and accounts with its officers and employees, all upon reasonable
notice and at such reasonable times and as often as may reasonably be requested;
(c) maintain and keep, or cause to be maintained and kept,
Ex. 4.1-34
<PAGE>
its properties in good repair, working order, and condition, and from time to
time make or cause to be made all needful and proper repairs, renewals,
replacements, and improvements, in each case to the extent it deems necessary to
carry on its business; and (d) at its cost and expense, maintain insurance with
financially sound and reputable insurers, in such amounts, and covering such
risks, as shall be ordinary and customary for similar companies in the industry.
5.4 USE OF PROCEEDS. Each Borrower shall use the proceeds of Advances
and Bankers' Acceptances solely for general corporate purposes and in a manner
that does not violate SECTION 4.7.
5.5 COMPLIANCE WITH LEGAL REQUIREMENTS; AUTHORIZATIONS. Each Company
shall comply in all material respects with all applicable Legal Requirements of
all Governmental Authorities in respect of the conduct of its business and the
ownership of its properties. Each Company shall do all things necessary to
obtain, renew, extend, and continue in effect all Authorizations issued by any
Governmental Authorities that may at any time and from time to time be necessary
for each Company to operate its business in compliance with all Legal
Requirements, where the failure to so renew, extend, or continue in effect could
be a Material Adverse Event.
5.6 PAYMENT OF OBLIGATIONS. Each Borrower shall pay the Obligation
payable by such Borrower in accordance with the terms and provisions of the Loan
Documents. Each Company shall promptly pay all of its material obligations as
the same become due, except where the failure to pay such obligations could not
be a Material Adverse Event.
5.7 TAXES. Each Company shall timely file all tax returns prior to
delinquency and promptly pay when due any and all Taxes other than (a) Taxes the
applicability, amount, or validity of which is being contested in good faith by
appropriate proceedings diligently conducted and for which reserves in
accordance with GAAP or other security have been provided, and in respect of
which levy and execution of any Lien securing same have been and continue to be
stayed, and (b) Taxes in respect of which the failure to pay when due could not
be a Material Adverse Event.
5.8 PRESERVATION AND PROTECTION OF RIGHTS. Each Company shall perform the
acts and duly authorize, execute, acknowledge, deliver, file, and record any
additional writings as any Agent may reasonably deem necessary or appropriate to
preserve and protect the rights of Agents and Lenders under any Loan Document.
SECTION 6.
NEGATIVE COVENANTS
So long as any Obligation shall remain unpaid or any Lender shall have any
Global Commitment hereunder, without the written consent of Required Lenders:
6.1 LIENS, ETC. No Company shall create, incur, or suffer to exist any
Lien upon any of its property, except:
(a) Liens existing on the date of execution of this Agreement and
described on SCHEDULE 6.1;
(b) Customary Permitted Liens;
(c) Liens created in favor of any Agent and/or Lenders to secure all or
any part of the Obligation;
Ex. 4.1-35
<PAGE>
(d) Liens upon property owned or leased by any Person existing at the time
such Person becomes a Subsidiary of any Company, so long as such Lien covers the
assets so encumbered immediately prior to the acquisition of such Subsidiary and
was not incurred in anticipation of such acquisition;
(e) Liens upon property existing at the time of acquisition thereof or to
secure the payment of all or any part of the purchase price thereof or to secure
any Debt incurred prior to, at the time of, or within one hundred and twenty
(120) days after, the acquisition of such property for the purpose of financing
all or any part of the purchase price thereof, so long as such Lien is limited
to the property so acquired and the Debt secured thereby is not increased after
the incurrence thereof or at the time of any refinancing thereof;
(f) any extension, renewal, or replacement (or successive extensions,
renewals, or replacements) in whole or in part of any Lien referred to in the
foregoing SUBSECTIONS (a) to (e); provided, however, that the principal amount
of Debt secured thereby shall not exceed the principal amount of Debt so secured
at the time of such extension, renewal, or replacement; and provided further,
that such Lien shall be limited to all or such part of the property which
secured the Lien so extended, renewed, or replaced; and
(g) additional Liens securing Debt so long as (i) no Potential Default or
Event of Default exists on the date any such Lien is granted or created, and
(ii) the aggregate amount of all Debt secured by all such additional Liens does
not at any time exceed $35,000,000.
6.2 RESTRICTION ON FUNDAMENTAL CHANGES. No Company will, directly or
indirectly, merge or consolidate with any other Person, other than (a) mergers
or consolidations involving a Company if such Company is the surviving entity so
long as no Event of Default exists or arises as a result of such merger or
consolidation, (b) mergers of any Borrower (other than Murphy) into another
Borrower, (c) mergers of any Subsidiary of a Borrower into another Subsidiary of
a Borrower. No Borrower may sell, assign, lease, transfer, or otherwise dispose
of the capital stock (or other ownership interests) of any other Borrower,
except for (i) sales, leases, transfers, or other such distributions to another
Company, and (ii) a Subsidiary Borrower who has no outstanding Obligation
payable by it hereunder and who agrees in writing that such Subsidiary Borrower
no longer has any right to any Advances hereunder.
6.3 SALE OF ASSETS. Murphy shall not sell, assign, transfer, or otherwise
dispose of all or substantially all of its consolidated assets.
6.4 TRANSACTIONS WITH AFFILIATES. No Company shall enter into any
transaction with any of its Affiliates, other than transactions in the ordinary
course of business and upon fair and reasonable terms not materially less
favorable than such Company could obtain or could become entitled to in an
arm's-length transaction with a Person that was not its Affiliate.
6.5 FISCAL YEAR AND ACCOUNTING METHODS. No Company shall change its
fiscal year or its method of accounting (other than immaterial changes in
methods or as required by GAAP).
6.6 RATIO OF MAXIMUM TOTAL DEBT TO TOTAL CAPITAL. Murphy shall not
permit, as of the last day of any fiscal quarter during the term hereof, the
ratio of (a) the aggregate amount of Consolidated Recourse Debt, to (b) Adjusted
Consolidated Capitalization, to exceed sixty percent (60%).
Ex. 4.1-36
<PAGE>
SECTION 7.
EVENTS OF DEFAULT
7.1 EVENTS OF DEFAULT. One or more of the following events shall
constitute an "EVENT OF DEFAULT":
(a) any Borrower shall fail to pay any principal of or interest on any
Advance or any fee payable hereunder or under any other Loan Document, in any
case when the same becomes due and payable and such failure shall continue for
five (5) days after such payment became due; or
(b) any representation or warranty made by any Borrower herein or in any
of the other Loan Documents or by any Borrower (or any of its officers) in
connection with this Agreement proves to have been incorrect in any material
respect when made; or
(c) any Borrower, that has a requirement to perform or observe, shall
fail to perform or observe (i) the covenant contained in SECTION 6.6, (ii) any
term, covenant, or agreement contained in SECTIONS 5.1, 5.2, or 6.3, or (iii)
any other term, covenant, or agreement contained in this Agreement or any other
Loan Document and, in the case of (II), such failure shall continue unremedied
for ten (10) days after such failure occurred, and in the case of (III), such
failure shall continue unremedied for ten (10) days after written notice thereof
shall have been given to Murphy by Domestic Administrative Agent; or
(d) the failure to pay, when due, all or any portion of any Debt of any
Company or Companies in excess of $35,000,000 (individually or in the
aggregate); or
(e) any default shall occur with respect to any Debt of any Company or
Companies in excess of $35,000,000 (individually or in the aggregate) and such
default shall result in the acceleration of any such Debt; or
(f) any Company (i) is not Solvent, (ii) fails to pay its liabilities
generally as they become due, (iii) voluntarily seeks, consents to, or
acquiesces in the benefit of any Debtor Relief Law, (iv) becomes a party to or
is made the subject of any proceeding provided for by any Debtor Relief Law,
other than as a creditor or claimant, that could suspend or otherwise adversely
affect the rights of any Agent or any Lender granted in the Loan Documents
(unless, if the proceeding is involuntary, the applicable petition is dismissed
within forty-five (45) days after its filing), or (v) is adjudicated bankrupt or
an interim receiver or receiver is appointed in respect of such Company or all
or substantially all of its property or assets; or
(g) a Material Plan shall fail to maintain the minimum funding standards
required by Section 412 of the Code or by any Applicable Canadian Pension
Legislation for any plan year or a waiver of such standard is sought or granted
with respect to a Material Plan under Section 412(d) or under any Applicable
Canadian Pension Legislation, or a Material Plan is, shall have been, or will be
wound up or terminated or the subject of winding up or termination proceedings
under ERISA or any Applicable Canadian Pension Legislation, or any Company or
any ERISA Affiliate has incurred or will incur a liability to or on account of a
Material Plan under Sections 4062, 4063, or 4064 of ERISA or under any
Applicable Canadian Pension Legislation, and there shall result from any such
event either a liability or a material risk of incurring a liability to the PBGC
or a Material Plan (or a related trust) which could be a Material Adverse Event;
or
(h) any Company or any ERISA Affiliate shall have incurred withdrawal
liability to a Multi-employer Plan in an amount which, when aggregated with all
other amounts required to be paid to Multi-employer Plans in connection with
withdrawal liabilities (determined as of the date of such incurrence), could be
a Material Adverse Event; or
Ex. 4.1-37
<PAGE>
(i) one or more judgments or orders for payment of money in excess of
$35,000,000 (individually or in the aggregate) shall be rendered against any
Company and such judgments or orders shall continue unsatisfied and unstayed for
ten (10) days after such judgments or orders are rendered; or
(j) any Loan Document (including the Guaranty Agreement in SECTION 9) at
any time after its execution and delivery ceases to be in full force and effect
in any material respect, or its validity or enforceability is contested by any
Company, or any Company denies that it has any further liability or obligations
under any Loan Document (including the Guaranty Agreement in SECTION 9) to which
it is a party; or
(k) any Borrower shall be prevented or relieved by any Governmental
Authority from performing or observing any material term, covenant, or covenant,
or condition of this Agreement (including the Guaranty Agreement in SECTION 9)
or any other Loan Document and such event continues remedied for thirty (30)
days; or
(l) Murphy ceases to own, legally and beneficially, one hundred percent
(100%) of the issued and outstanding capital stock of all Subsidiary Borrowers,
(i) except as a result of a merger permitted by SECTION 6.2, and (ii) except for
a Subsidiary Borrower who has no outstanding Obligation payable by it hereunder
and who agrees in writing that such Subsidiary Borrower no longer has any right
to any Advances hereunder; or
(m) a Change in Control occurs.
7.2 REMEDIES. Upon the occurrence of an Event of Default, Domestic
Administrative Agent shall at the request of Required Lenders (a) declare the
obligation of each Lender to make Advances to be terminated, whereupon the same
shall forthwith terminate, (b) declare the Obligation to be forthwith due and
payable, whereupon the Obligation shall become and be forthwith due and payable,
without presentment, demand, protest, notice of intention to accelerate, notice
of acceleration, or further notice of any kind, all of which are hereby
expressly waived by Borrowers, and (c) exercise any and all other legal and
equitable rights afforded by the Loan Documents, applicable law, or in equity,
including, but not limited to, the right to bring suit or other proceedings for
specific performance or otherwise in aid of any right granted to any Agent or
any Lender hereunder; provided, however, that in the event of an actual or
deemed entry of an order for relief with respect to any Company under any Debtor
Relief Law, (i) the obligation of each Lender to make Advances shall
automatically be terminated, and (ii) the Obligation shall automatically become
and be due and payable, without presentment, demand, protest, notice of
intention to accelerate, notice of acceleration, or further notice of any kind,
all of which are hereby expressly waived by Borrowers.
SECTION 8.
AGENTS
8.1 APPOINTMENT, POWERS, AND IMMUNITIES. Each Lender hereby irrevocably
appoints and authorizes The Chase Manhattan Bank, as Domestic Administrative
Agent and The Chase Manhattan Bank of Canada, as Canadian Administrative Agent,
to act as its agents hereunder and under the other Loan Documents with such
powers as are specifically delegated to such Agents by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Arranger, in such capacity, shall not have any
duties or responsibilities or incur any liabilities under the Loan Documents.
Each Agent: (a) shall have no duties or responsibilities except those expressly
set forth in this Agreement, and shall not by reason of this Agreement be a
trustee or fiduciary for any Lender; (b) makes no representation or warranty to
any Lender and shall not be responsible to any Lender for any recitals,
Ex. 4.1-38
<PAGE>
statements, representations, or warranties contained in this Agreement, any
other Loan Document, or in any certificate or other document referred to or
provided for in, or received by any of them under, this Agreement or any other
Loan Document, or for the value, validity, effectiveness, genuineness,
execution, effectiveness, legality, enforceability, or sufficiency of this
Agreement or any other Loan Document, or any other document referred to or
provided for herein or for any failure by any Borrower or any other Person
(other than such Agent) to perform any of its obligations hereunder or
thereunder or for the existence, value, perfection, or priority of any
collateral security, or the financial or other condition of any Borrower or any
other obligor or guarantor; (c) except pursuant to SECTION 8.7, shall not be
required to initiate or conduct any litigation or collection proceedings
hereunder; and (d) shall not be responsible for any action taken or omitted to
be taken by it hereunder or under any other Loan Document, including its own
ordinary negligence, except for its own gross negligence or willful misconduct.
Each Agent may employ agents, accountants, attorneys, and experts and shall not
be responsible for the negligence or misconduct of any such agents, accountants,
attorneys, or experts selected by it in good faith or any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
agents, accountants, attorneys, or experts. Each Agent may deem and treat the
payee of any Advance as the holder thereof for all purposes hereof unless and
until a written notice of the assignment or transfer thereof permitted hereunder
shall have been filed with Domestic Administrative Agent (who shall provide
notice to Canadian Administrative Agent).
8.2 RELIANCE BY AGENTS. Each Agent shall be entitled to rely upon any
certification, notice, or other communication (including any thereof by
telephone, telex, telecopier, telegram, or cable) believed by it to be genuine
and correct and to have been signed or sent by or on behalf of the proper Person
or Persons, and upon advice and statements of legal counsel, independent
accountants, and other experts selected by such Agent.
8.3 NOTICES; DEFAULTS. Each Agent agrees to give the other Agent and each
Lender prompt notice of each notice and a copy of each document, certificate, or
instrument given to such Agent by each Borrower pursuant to this Agreement or
the other Loan Documents. No Agent shall be deemed to have knowledge of the
occurrence of any Potential Default or any Event of Default (other than such
Agent's notice of the non-payment of principal of, or interest on, the
Obligation or of fees). In the event that any Agent receives a notice of the
occurrence of a Potential Default or an Event of Default specifying such
Potential Default or Event of Default and stating that such notice is a "Notice
of Default," such Agent shall give prompt notice thereof to the other Agent and
Lenders. In the event of a payment default, each Agent shall give each Lender
prompt notice of each such payment default.
8.4 RIGHTS AS A LENDER.
(a) AGENTS AS LENDERS. With respect to its Commitments and the Advances
made by it, each Agent (and any successor acting as an Agent) in its capacity as
a Lender hereunder shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not acting as an Agent, and
the term "Lender" or "Lenders" shall, unless the context otherwise indicates,
include each Agent in its individual capacity.
(b) OTHER ACTIVITIES. Each Agent (and any successor acting as an Agent)
and its Affiliates may (without having to account therefor to any Lender) accept
deposits from, lend money to, and generally engage in any kind of banking,
trust, or other business with any Borrower (and any of their Affiliates) as if
it were not acting as an Agent, and each Agent and its Affiliates may accept
fees and other consideration from any Borrower for services in connection with
this Agreement or otherwise without having to account for the same to Lenders.
Each Agent may now or hereafter be engaged in one or more loan, letter of
credit, leasing, or other financing transactions with any Borrower, act as
trustee or depository for any Borrower, or otherwise be engaged in other
transactions with any Borrower (collectively, the "OTHER ACTIVITIES") not the
subject of the Loan Documents. Without limiting the rights of Lenders
specifically set forth in the Loan Documents, no Agent shall be responsible to
account to Lenders for such Other Activities, and no Lender shall have any
Ex. 4.1-39
<PAGE>
interest in any Other Activities, any present or future guaranties by or for the
account of any Borrower which are not contemplated or included in the Loan
Documents, any present or future offset executed by any Agent in respect of such
Other Activities, any present or future property taken as security for any such
Other Activities, or any property now or hereafter in the possession or control
of any Agent which may be or become security for the obligations of any Borrower
arising under the Loan Documents by reason of the general description of debt
secured or of property contained in any other agreements, documents, or
instruments relating to any such Other Activities; provided that if any payments
in respect of such guaranties or such property or the proceeds thereof shall be
applied to the reduction of the obligations of any Borrower arising under the
Loan Documents, then each Lender shall be entitled to share in such application
ratably.
8.5 INDEMNIFICATION. EACH LENDER AGREES TO INDEMNIFY EACH AGENT AND EACH OF
ITS AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, REPRESENTATIVES, AGENTS,
ATTORNEYS, ACCOUNTANTS, AND EXPERTS (THE "AGENT PARTIES"), RATABLY IN ACCORDANCE
WITH SUCH LENDER'S PERCENTAGE SHARE FOR THE INDEMNITY MATTERS AS DESCRIBED IN
SECTION 10.15 TO THE EXTENT NOT INDEMNIFIED OR REIMBURSED BY BORROWERS AS
REQUIRED UNDER SECTION 10.15, (BUT WITHOUT LIMITING THE OBLIGATIONS OF BORROWERS
UNDER SECTION 10.15) AND FOR ANY AND ALL OTHER LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES, OR DISBURSEMENTS
OF ANY KIND AND NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR
ASSERTED AGAINST ANY AGENT PARTY IN ANY WAY RELATING TO OR ARISING OUT OF THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR ANY OTHER DOCUMENTS CONTEMPLATED BY OR
REFERRED TO HEREIN OR THEREIN OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY; PROVIDED THAT NO LENDER SHALL BE LIABLE FOR ANY OF THE FOREGOING TO THE
EXTENT THEY ARISE FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY AGENT
PARTY.
8.6 NON-RELIANCE ON AGENTS AND OTHER LENDERS. Each Lender acknowledges
and agrees that it has, independently and without reliance on any Agent (or any
Agent's Affiliates, officers, directors, employees, attorneys, accountants,
experts, representatives, or agents) or any other Lender, and based on such
documents and information as it has deemed appropriate, made its own credit
analysis of Borrowers and its decision to enter into this Agreement, and that it
shall, independently and without reliance upon any Agent or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own analysis and decisions in taking or not taking
action under this Agreement. No Agent shall be required to keep itself informed
as to the performance or observance by Borrowers of this Agreement, the other
Loan Documents, or any other document referred to or provided for herein or to
inspect the properties or books of Borrowers. Except for notices, reports, and
other documents and information expressly required to be furnished to Lenders by
an Agent hereunder or provided to an Agent with copies for Lenders, no Agent
shall have any duty or responsibility to provide any Lender with any credit or
other information concerning the affairs, financial condition, or business of
Borrowers (or any of their Affiliates) which may come into the possession of any
Agent or any of its Affiliates.
8.7 ACTION BY AGENTS. Except for action or other matters expressly
required of an Agent hereunder, each Agent shall in all cases be fully justified
in failing or refusing to act hereunder unless it shall (a) receive written
instructions from Required Lenders (or if this Agreement requires, all Lenders)
specifying the action to be taken, and (b) be indemnified to its satisfaction by
Lenders against any and all liability and expenses which may be incurred by it
by reason of taking or continuing to take any such action, except for such
Agent's gross negligence or willful misconduct. The instructions of Required
Lenders (or if this Agreement requires, all Lenders) and any action taken or
failure to act pursuant thereto by any Agent shall be binding on all Lenders.
If an Event of Default exists, then each Agent shall take such action with
respect to such Event of Default as shall be directed by Required Lenders (or if
this Agreement requires, all Lenders) in the written instructions (with
indemnities) described in this SECTION 8.7; provided that, unless and until an
Agent shall have received such directions, such Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Event of Default as it shall deem advisable in the best interests of
Lenders. In no event, however, shall any Agent be required to take any action
which exposes such
Ex. 4.1-40
<PAGE>
Agent to personal liability or which is contrary to this Agreement and the other
Loan Documents or applicable law.
8.8 RESIGNATION OR REMOVAL OF AGENTS. Subject to the appointment and
acceptance of a successor as provided below, each Agent may resign at any time
by giving notice thereof to Lenders and Murphy, and any Agent may be removed at
any time with cause by Required Lenders. Upon any such resignation or removal,
Required Lenders shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by Required Lenders and shall have
accepted such appointment within thirty (30) days after the retiring Agent's
giving of notice of resignation or Required Lenders' removal of the retiring
Agent, then the retiring Agent may, on behalf of Lenders, appoint a respective
successor Administrative Agent. Upon the acceptance of such appointment
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges, and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation or removal
hereunder as an Agent, the provisions of this SECTION 8 and SECTION 10.4 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as an Agent.
8.9 RELATIONSHIP OF LENDERS. Nothing herein shall be construed as
creating a partnership or joint venture among any Agent and any Lender or among
any Agent or Lenders.
8.10 BENEFITS OF AGREEMENT. None of the provisions of this SECTION 8 shall
inure to the benefit of any Borrower or any other Person other than Agents and
Lenders; consequently, no Borrower nor any other Person shall be entitled to
rely upon, or to raise as a defense, in any manner whatsoever, the failure of
any Lender to comply with such provisions.
SECTION 9.
GUARANTY AGREEMENT
9.1 GUARANTY OF OBLIGATION. Murphy hereby irrevocably and unconditionally
guarantees to Agents and Lenders and their respective successors and permitted
assigns the due and punctual payment and performance of the Guaranteed Debt.
Murphy hereby irrevocably and unconditionally covenants and agrees that it is
liable for the Guaranteed Debt as primary obligor. The agreement of Murphy in
this SECTION 9 (the "GUARANTY AGREEMENT") is intended to be an irrevocable,
absolute, continuing guaranty of payment and is not a guaranty of collection.
This Guaranty Agreement may not be revoked by Murphy. This Guaranty Agreement
may be enforced by any Agent or any Lender and any subsequent holder of the
Guaranteed Debt and shall not be discharged by the assignment or negotiation of
all or part of the Guaranteed Debt.
9.2 GUARANTEED DEBT NOT REDUCED BY OFFSET. The Guaranteed Debt and the
liabilities and obligations of Murphy to Agents and Lenders hereunder, shall not
be reduced, discharged, or released because or by reason of any existing or
future offset, claim, or defense of any Subsidiary Borrower, or any other party,
against any Agent or any Lender, or against payment of the Guaranteed Debt,
whether such offset, claim, or defense arises in connection with the Guaranteed
Debt (or the transactions creating the Guaranteed Debt) or otherwise. Without
limiting the foregoing or Murphy's liability hereunder, to the extent that any
Agent or any Lender advances funds or extends credit to any Subsidiary Borrower,
and does not receive payments or benefits thereon in the amounts and at the
times required or provided by applicable agreements or laws, Murphy is
absolutely liable to make such payments to (and confer such benefits on) Agents
and Lenders on a timely basis.
Ex. 4.1-41
<PAGE>
9.3 PAYMENT BY MURPHY. If all or any part of the Guaranteed Debt shall
not be punctually paid when due, whether at maturity or earlier by acceleration
or otherwise, Murphy shall, immediately upon demand by the Applicable Agent, and
without presentment, protest, notice of protest, notice of nonpayment, notice of
intention to accelerate or acceleration, or any other notice whatsoever, pay in
the Applicable Currency, the amount due on the Guaranteed Debt to the Applicable
Agent, for the benefit of the Applicable Agent and Lenders.
9.4 NO DUTY TO PURSUE OTHERS. It shall not be necessary for any Agent or
any Lender (and Murphy hereby waives any rights which Murphy may have to require
any Agent or any Lender), in order to enforce such payment by Murphy, first to
(a) institute suit or exhaust its remedies against any Subsidiary Borrower or
others liable on the Guaranteed Debt or any other Person, (b) join any
Subsidiary Borrower or any others liable on the Guaranteed Debt in any action
seeking to enforce this Guaranty Agreement, or (c) resort to any other means of
obtaining payment of the Guaranteed Debt.
9.5 WAIVER OF NOTICES, ETC. Murphy hereby waives notice of (a) any
Advance or other loans made by any Agent or any Lender to any Subsidiary
Borrower, (b) acceptance of this Guaranty Agreement, (c) the execution and
delivery by any Subsidiary Borrower and any Agent or any Lender of any other
loan or credit agreement or of any Subsidiary Borrower's execution and delivery
of any promissory notes or other documents in connection therewith, (d) except
for notices required in SECTION 10.7, any Lender's assignment of or granting of
a participation in the Guaranteed Debt, or any part thereof, (e) any protest,
proof of nonpayment, or default by any Subsidiary Borrower, or (f) any other
action at any time taken or omitted by any Agent or any Lender, and, generally,
all demands and notices of every kind in connection with this Guaranty
Agreement, this Agreement, and any other Loan Documents and the obligations
hereby guaranteed.
9.6 EFFECT OF BANKRUPTCY; OTHER MATTERS. If, pursuant to any Debtor
Relief Law, or any judgment, order, or decision thereunder, or for any other
reason, (a) any Agent or any Lender must rescind or restore any payment, or any
part thereof, received by such Agent or such Lender in satisfaction of the
Guaranteed Debt, as set forth herein, any prior release or discharge from the
terms of this Guaranty Agreement given to Murphy by such Agent or such Lender
shall be without effect, and this Guaranty Agreement shall remain in full force
and effect, or (b) any Subsidiary Borrower shall cease to be liable to any Agent
or any Lender for any of the Guaranteed Debt (other than by reason of the
indefeasible payment in full thereof by such Subsidiary Borrower), then the
obligations of Murphy under this Guaranty Agreement shall remain in full force
and effect. It is the intention of Agents, Lenders, and Murphy that Murphy's
obligations hereunder shall not be discharged except by Murphy's performance of
such obligations and then only to the extent of such performance. Without
limiting the generality of the foregoing, it is the intention of Agents, Lenders
and Murphy that the filing under any Debtor Relief Law by or against any
Subsidiary Borrower or any other person or party obligated on any portion of the
Guaranteed Debt shall not affect the obligations of Murphy under this Guaranty
Agreement or the rights of any Agent or any Lender under this Guaranty
Agreement, including, without limitation, the right or ability of any Agent or
any Lender to pursue or institute suit against Murphy for the entire Guaranteed
Debt.
9.7 ADDITIONAL EVENTS AND CIRCUMSTANCES NOT REDUCING OR DISCHARGING
MURPHY'S OBLIGATIONS. Murphy hereby consents and agrees to each of the
following, and agrees that Murphy's obligations under this Guaranty Agreement
shall not be released, diminished, impaired, reduced, or adversely affected by
any of the following, and waives any common law, equitable, statutory, or other
rights (including without limitation rights to notice) which Murphy might
otherwise have as a result of or in connection with any of the following: (a)
any renewal, waiver, or amendment of all or any part of the Guaranteed Debt,
this Agreement, or the other Loan Documents; (b) any adjustment, indulgence,
forbearance, or compromise that might be granted or given by any Agent or any
Lender to any Subsidiary
Ex. 4.1-42
<PAGE>
Borrower or Murphy; (c) the insolvency, bankruptcy, arrangement, adjustment,
composition, structure, liquidation, disability, dissolution, or lack of power
of any Subsidiary Borrower under any Debtor Relief Law; (d) any dissolution of
any Subsidiary Borrower or Murphy, or any sale, lease, or transfer of any or all
of the assets of any Subsidiary Borrower or Murphy, or any changes in name,
business, location, composition, structure, or changes in the shareholders,
partners, or members (whether by accession, secession, cessation, death,
dissolution, transfer of assets, or other matter) of any Subsidiary Borrower or
Murphy; (e) the invalidity, illegality, or unenforceability of all or any part
of the Guaranteed Debt or Loan Document, for any reason whatsoever; (f) any full
or partial release of the liability of any Subsidiary Borrower on the Guaranteed
Debt or any part thereof, or Murphy or any other person or entity now or
hereafter liable, whether directly or indirectly, jointly, severally, or jointly
and severally, to pay, perform, guarantee, or assure the payment of the
Guaranteed Debt or any part thereof; (g) the failure of any Agent or any Lender
to exercise diligence or reasonable care or act, fail to act or comply with any
duty in the administration, preservation, enforcement, or other handling or
treatment of all or any part of Guaranteed Debt; (h) any existing or future
right of offset, claim, or defense of any Subsidiary Borrower against any Agent
or any Lender, or any other party, or against payment of the Guaranteed Debt,
whether such right of offset, claim, or defense arises in connection with the
Guaranteed Debt (or the transactions creating the Guaranteed Debt) or otherwise;
(i) the reorganization, merger, or consolidation of any Subsidiary Borrower or
Murphy into or with any other corporation or entity; or (j) any payment by any
Subsidiary Borrower to any Agent or any Lender is held to constitute a
preference under any Debtor Relief Laws, or for any reason any Agent or any
Lender is required to refund such payment or pay such amount to such Subsidiary
Borrower or someone else.
9.8 SUBORDINATION OF GUARANTOR CLAIMS. As used herein, the term
"GUARANTOR CLAIMS" shall mean all debts and liabilities of each Subsidiary
Borrower to Murphy, whether such debts and liabilities now exist or are
hereafter incurred or arise, or whether the obligations of any Subsidiary
Borrower thereon be direct, contingent, primary, secondary, several, joint and
several, or otherwise, and irrespective of whether such debts or liabilities be
evidenced by note, contract, open account, or otherwise, and irrespective of the
person or persons in whose favor such debts or liabilities may, at their
inception, have been, or may hereafter be created, or the manner in which they
have been or may hereafter be acquired by Murphy. Guarantor Claims shall
include, without limitation, all rights and claims of Murphy against each
Subsidiary Borrower (arising as a result of subrogation or otherwise) as a
result of Murphy's payment of all or a portion of the Guaranteed Debt. Until
the Guaranteed Debt shall be paid and satisfied in full and Murphy shall have
performed all of its obligations hereunder, Murphy shall not receive or collect,
directly or indirectly, from any Subsidiary Borrower or any other party any
amount upon Guarantor Claims. In the event that, notwithstanding the terms of
this Guaranty Agreement, Murphy should receive any funds, payment, claim, or
distribution which is prohibited by this Guaranty Agreement, Murphy agrees to
hold in trust for Agents and Lenders, in kind, all funds, payments, claims, or
distributions so received, and agrees that it shall have absolutely no dominion
over such funds, payments, claims, or distributions so received except to pay
them promptly to Domestic Administrative Agent, for the benefit of Agents and
Lenders, and Murphy covenants promptly to pay the same to Domestic
Administrative Agent, for the benefit of Agents and Lenders.
9.9 CLAIMS IN BANKRUPTCY. In the event of receivership, bankruptcy,
reorganization, arrangement, debtor's relief, or other insolvency proceedings
under any Debtor Relief Law involving any Subsidiary Borrower as debtor, Agents
and Lenders shall have the right to prove its claim in any such proceeding so as
to establish its rights hereunder and receive directly from the receiver,
trustee, or other court custodian dividends and payments which would otherwise
be payable upon Guarantor Claims. Murphy hereby assigns such dividends and
payments to Agents and Lenders. Should any Agent or any Lender receive, for
application upon the Guaranteed Debt, any such dividend or payment which is
otherwise payable to Murphy, and which, as between any Subsidiary Borrower and
Murphy, shall constitute a credit upon Guarantor Claims, then upon payment to
Agents and Lenders in full of the Guaranteed Debt, Murphy shall become
subrogated to the rights of Agents and Lenders to the extent that such payments
to Agents and Lenders on Guarantor Claims have contributed toward the
liquidation of the Guaranteed Debt, and such subrogation shall be with respect
to that proportion of the Guaranteed Debt which would have been unpaid if Agents
and Lenders had not received dividends or payments upon Guarantor Claims.
Ex. 4.1-43
<PAGE>
9.10 WITHHOLDING TAXES. All payments made or to be made by Murphy under
this Guaranty Agreement shall be made free and clear of, and without reduction
for or on account of, any Withholding Taxes. If any Withholding Taxes are
required to be withheld from any amount payable to or for the account of any
Agent or any Lender under this Guaranty Agreement, including any further amount
payable by Murphy pursuant to this SECTION 9.10, then the amount so payable to
or for the account of the Applicable Agent or the Applicable Lender shall be
increased to the extent necessary to yield to the Applicable Agent or the
Applicable Lender (after payment of all Withholding Taxes including Withholding
Taxes on all such additional amounts) the full amount payable to or for the
account of the Applicable Agent or the Applicable Lender under this Guaranty
Agreement. Whenever any Withholding Tax is payable by Murphy, as promptly as
possible thereafter Murphy shall send to Domestic Administrative Agent, for the
account of the Applicable Agent or the Applicable Lender, a certified copy of an
original official receipt showing payment thereof. If Murphy fails to pay any
Withholding Taxes when due to the appropriate taxing authority or fails to remit
to the Domestic Administrative Agent the required receipts or other required
documentary evidence, then Murphy shall indemnify the Applicable Agent or the
Applicable Lender for any incremental taxes, interest, or penalties that may
become payable by the Applicable Agent or the Applicable Lender as a result of
any such failure. The provisions of SECTION 2.14(c) apply to this SECTION 9.10
to the same extent that they apply to the provisions of SECTION 2.14(a).
SECTION 10.
MISCELLANEOUS
10.1 AMENDMENTS, ETC. No amendment or waiver of any provision of this
Agreement, nor consent to any departure by any Borrower therefrom, shall in any
event be effective, unless the same shall be in writing and signed by Required
Lenders, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however, that
no amendment, waiver, or consent shall, unless in writing and signed by all
Lenders, do any of the following: (a) waive any of the conditions specified in
SECTION 3.1 or 3.2 (if and to the extent that the Borrowing which is the subject
of such waiver would involve an increase in the Total Utilization of Commitments
over the Total Utilization of Commitments outstanding immediately prior to such
Borrowing); (b) increase the Global Commitment or Maximum Canadian Commitment of
any Lender or subject Lenders to any additional obligations; (c) reduce the
principal of, or interest on, the Advances or change the BA Discount Rate or the
BA Fees, or reduce any other fees or other amounts payable hereunder; (d)
postpone any date fixed for any payment of principal of, or interest on, the
Advances or any fees or other amounts payable hereunder; (e) make any change
which would alter the percentage of the Global Commitments or of the Total
Utilization of Commitments, or the number of Lenders, which shall otherwise be
required for Lenders or any of them to take any action hereunder; (f) amend this
SECTION 10.1; or (g) release Murphy from any of its obligations under the
Guaranty Agreement; and provided further, that no amendment, waiver, or consent
affecting the rights or duties of any Agent under this Agreement shall be
effective unless in writing and signed by such Agent in addition to Lenders
required to take such action.
10.2 NOTICES. All notices and other communications provided for herein
and in the other Loan Documents (including, without limitation, any
modifications of, or waivers or consents under, this Agreement or the other Loan
Documents) shall be given or made by telex, telecopy, telegraph, cable, courier,
or U.S. Mail or Canada Post in writing and telexed, telecopied, telegraphed,
cabled, mailed, or delivered to the intended recipient at the "Address for
Notices" specified on SCHEDULE 1 or in the other Loan Documents or, as to any
party, at such other address as shall be designated by such party in a notice to
each other party. Except as otherwise provided in this Agreement or in the other
Loan Documents, all such communications shall be deemed to have been duly given
when transmitted by telex or telecopier, delivered to the telegraph or cable
office or personally delivered, or, in the case of a mailed notice, when
actually received.
Ex. 4.1-44
<PAGE>
10.3 NO WAIVER; REMEDIES. No failure on the part of any Lender or any
Agent to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
10.4 COSTS, EXPENSES AND TAXES. Each Borrower hereby agrees to pay on
demand: (a) all reasonable costs and expenses of each Agent and Arranger in
connection with the preparation, negotiation, syndication, execution, and
delivery of this Agreement and the other Loan Documents including, without
limitation, the reasonable legal fees and expenses of legal counsel for each
Agent; (b) all reasonable costs and expenses of each Agent in connection with
any and all amendments, modifications, renewals, extensions, and supplements of
any of the Loan Documents; (c) all reasonable costs and expenses of each Agent
and Lenders in connection with any Potential Default or Event of Default and the
enforcement of this Agreement or any other Loan Document, including, without
limitation, the fees and expenses of legal counsel for each Agent and Lenders;
and (d) all transfer, stamp, documentary, or other similar taxes, assessments,
or charges levied by any Governmental Authority in respect of this Agreement or
any of the other Loan Documents (other than costs, expenses, taxes, assessments,
or charges levied with regard to any Assignment or Participation).
10.5 RIGHT OF SET-OFF. Upon (a) the occurrence and during the continuance
of any Event of Default, and (b) the making of the request specified by SECTION
7.2 to authorize Domestic Administrative Agent to declare the Obligation due and
payable pursuant to the provisions of SECTION 7.2, each Lender is hereby
authorized at any time and from time to time, to the fullest extent permitted by
applicable law, to set-off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by such Lender to or for the credit or the account of any
Borrower against any and all of the Obligation of such Borrower now or hereafter
existing under this Agreement and the Advances made by such Lender, irrespective
of whether or not such Lender shall have made any demand under this Agreement
and although such obligations may be unmatured. Each Lender agrees promptly to
notify such Borrower and the Applicable Agent after any such set-off and
application made by such Lender; provided that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of
each Lender under this SECTION 10.5 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which such Lender may
have.
10.6 BINDING EFFECT. This Agreement shall become effective when it shall
have been executed by Borrowers and Agents and when Domestic Administrative
Agent shall have been notified by each Lender that such Lender has executed it
and thereafter shall be binding upon and inure to the benefit of Borrowers,
Agents, and each Lender and their respective successors and assigns.
10.7. ASSIGNMENTS AND PARTICIPATIONS.
(a) Each Lender may assign to one or more banks or other entities all or
a portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitments and the Advances owing to it);
provided, however, that (i) each such assignment shall be of a constant, and not
a varying, percentage of all of the rights and obligations of Lenders under this
Agreement, (ii) the amount of the Commitments of the assigning Lender being
assigned pursuant to each such assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in no event be
less than $10,000,000 and shall be an integral multiple of $1,000,000 (or, if
less, the unpaid Obligation to such Lender), (iii) each such assignment shall be
to an assignee approved in writing by Domestic Administrative Agent and, so long
as no Event of Default exists, Murphy, and (iv) the parties to each such
assignment shall execute and deliver to Domestic Administrative Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance, together
with a processing fee of $2,500. Upon such execution, delivery, acceptance, and
recording, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least (3) three Business Days after
the execution thereof, (A) the assignee thereunder shall be a party hereto and,
to the extent that rights and obligations hereunder have been assigned
Ex. 4.1-45
<PAGE>
to it pursuant to such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder, and (B) the assigning Lender thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto).
(b) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, the assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties, or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency, or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of any Borrower or the performance or observance by any Borrower of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) the assignee confirms that it has received a copy of this
Agreement, together with copies of the financial statements referred to in
SECTION 4.5 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) the assignee will, independently and without
reliance upon any Agent, the assigning Lender, or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) the assignee appoints and authorizes each Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to each Agent by the terms hereof, together with such powers as
are reasonably incidental thereto; and (vi) the assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.
(c) Domestic Administrative Agent shall maintain at its address referred
to in SECTION 10.2 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
each Lender and the Commitments of, and principal amount of the Advances owing
to, each Lender from time to time (the "REGISTER"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and
Borrowers, Agents, and Lenders may treat each Person whose name is recorded in
the Register as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by Murphy or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee, Domestic Administrative Agent shall, if such
Assignment and Acceptance has been completed and is in substantially the form of
EXHIBIT B hereto, and if the processing fees required by this SECTION 10.7 have
been paid to Domestic Administrative Agent, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register, (iii)
give prompt notice thereof to Murphy, and (iv) send a copy thereof to Murphy.
(e) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitments
and the Advances owing to it); provided, however, that (i) such Lender's
obligations under this Agreement (including, without limitation, its Commitments
to Borrowers hereunder) shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) Borrowers, Agents, and each other Lender shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement, and (iv) after giving effect to
such participation, the aggregate amount of all participations of such Lender
does not exceed fifty percent (50%) of such Lender's Commitments or Obligation,
or if the Commitments have been
Ex. 4.1-46
<PAGE>
terminated, then of the aggregate amount of the Obligation payable to such
Lender; and provided further, however, that such Lender shall not agree with any
such bank or other financial institution to permit such bank or other financial
institution to enforce the obligations of Borrowers relating to the Obligation
or to approve of any amendment, modification, or waiver of any provision of this
Agreement (other than amendments, modifications, or waivers with respect to any
decrease in any fees payable hereunder or the amount of principal or rate of
interest which is payable in respect of the Obligation or any extension of the
dates fixed for the payment thereof).
(f) Any Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this SECTION 10.7, disclose
to the assignee or participant or proposed assignee or participant, any
information relating to Borrowers furnished to such Lender by or on behalf of
Borrowers; provided that, prior to any such disclosure, the assignee or
participant or proposed assignee or participant shall agree to preserve the
confidentiality of any confidential information relating to Borrowers received
by it from such Lender .
(g) Notwithstanding the foregoing, any Lender may assign all or any
portion of its rights and obligations under this Agreement to an Affiliate of
such Lender. In addition, any Lender may at any time assign as collateral all
or any portion of its rights under this Agreement to a Federal Reserve Bank or
to Bank of Canada or the Canada Deposit Insurance Corporation; provided that no
such assignment shall release a Lender from any of its obligations hereunder.
In connection with any such assignment or proposed assignment to a Federal
Reserve Bank or to Bank of Canada or the Canada Deposit Insurance Corporation,
each Borrower will, promptly upon the request of any Lender, execute and deliver
to such Lender a note in substantially the form of EXHIBIT F.
(h) This SECTION 10.7 sets forth the exclusive manner by which a Lender
may assign its rights and obligations hereunder or sell participations in or to
its rights and obligations hereunder.
(i) No Borrower may assign or delegate any rights or obligations
hereunder without the prior written consent of each Lender.
10.8 GOVERNING LAW; SUBMISSION TO JURISDICTION.
(A) THIS AGREEMENT AND ANY NOTES AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT AND ANY NOTES SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(B) THE PARTIES AGREE THAT NEW YORK, NEW YORK SHALL BE A PROPER PLACE OF
VENUE FOR ALL SUITS TO ENFORCE PERFORMANCE OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS, AND EACH PARTY EXPRESSLY AGREES TO THE EXERCISE OF PERSONAL
JURISDICTION OVER IT IN ANY COURT OF APPROPRIATE SUBJECT MATTER JURISDICTION IN
NEW YORK, NEW YORK IN ANY SUCH SUIT.
10.9 EXCEPTIONS TO COVENANTS. Borrower may not take or fail to take any
action that is permitted as an exception to any of the covenants contained in
any Loan Document if that action or omission would result in the breach of any
other covenant contained in any Loan Document.
10.10 SURVIVAL. All covenants, agreements, undertakings, representations,
and warranties made in any of the Loan Documents survive all closings under the
Loan Documents until payment in full of the Obligation and termination of this
Agreement, except that SECTIONS 2.10, 2.11, 2.14, 8.5, 10.4, and 10.15 (together
with any other provisions in the Loan Documents which expressly provides that it
shall survive termination of this Agreement as to matters arising or accruing
prior to termination of this Agreement) shall
Ex. 4.1-47
<PAGE>
survive termination of this Agreement; and such covenants, agreements,
undertakings, representations, and warranties, except as otherwise indicated,
are not affected by any investigation made by any party.
10.11 INVALID PROVISIONS. Any provision in any Loan Document held to be
illegal, invalid, or unenforceable is fully severable; the appropriate Loan
Document shall be construed and enforced as if that provision had never been
included; and the remaining provisions shall remain in full force and effect and
shall not be affected by the severed provision. Each Agent, each Lender, and
each Borrower party to the affected Loan Document agree to negotiate, in good
faith, the terms of a replacement provision as similar to the severed provision
as may be possible and be legal, valid, and enforceable.
10.12 MAXIMUM RATE. Regardless of any provision contained in any Loan
Document, no Lender shall ever be entitled to contract for, charge, take,
reserve, receive, or apply, as interest on the Obligation, or any part thereof,
any amount in excess of the Maximum Rate, and, if any Lender ever does so, then
any excess shall be deemed a partial prepayment of principal and treated
hereunder as such and any remaining excess shall be refunded to Borrowers. In
determining if the interest paid or payable exceeds the Maximum Rate, Borrowers
and Lenders shall, to the maximum extent permitted under applicable law, (a)
treat all Borrowings as but a single extension of credit (and Lenders and
Borrowers agree that such is the case and that provision herein for multiple
Borrowings is for convenience only), (b) characterize any non-principal payment
as an expense, fee, or premium rather than as interest, (c) exclude voluntary
prepayments and the effects thereof, and (d) amortize, prorate, allocate, and
spread the total amount of interest throughout the entire contemplated term of
the Obligation; provided that if the Obligation is paid and performed in full
prior to the end of the full contemplated term thereof, and if the interest
received for its actual period of existence thereof exceeds the Maximum Amount,
then Lenders shall refund any excess (and Lenders shall not, to the extent
permitted by law, be subject to any penalties provided by any laws for
contracting for, charging, taking, reserving, or receiving interest in excess of
the Maximum Amount).
10.13 EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
10.14 NOT IN CONTROL. Nothing in any Loan Document gives or may be deemed
to give to any Agent or any Lender the right to exercise control over any
Company, assets, affairs, or management or to preclude or interfere with any
Company's compliance with any Legal Requirement or require any act or omission
by any Company that may be harmful to Persons or property. Any materiality or
substantiality qualifier of any representation, warranty, covenant, agreement,
or other provision of any Loan Document is included for credit documentation
purposes only and does not imply, and shall not be deemed to mean, that any
Agent or any Lender acquiesces in any non-compliance by any Company with any
Legal Requirement, document, or otherwise or does not expect any Company to
promptly, diligently, and continuously carry out all appropriate removal,
remediation, compliance, closure, or other activities required or appropriate in
accordance with all Legal Requirements, including all Environmental Laws.
10.15 INDEMNIFICATION. EACH BORROWER SHALL INDEMNIFY, PROTECT, AND HOLD
EACH AGENT, ARRANGER, EACH LENDER, AND THEIR RESPECTIVE AFFILIATES, PARENTS, AND
SUBSIDIARIES, AND EACH OF THE FOREGOING PARTIES' RESPECTIVE DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS, SUCCESSORS, AND ASSIGNS (COLLECTIVELY, THE "INDEMNIFIED
PARTIES") HARMLESS FROM AND AGAINST ANY AND ALL PRESENT AND FUTURE, KNOWN AND
UNKNOWN, FIXED AND CONTINGENT, LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, CLAIMS, AND PROCEEDINGS AND ALL REASONABLE
AND NECESSARY COSTS, EXPENSES (INCLUDING, WITHOUT LIMITATION, ALL REASONABLE
ATTORNEYS' FEES AND LEGAL EXPENSES, AND AMOUNTS PAID IN SETTLEMENT WHETHER OR
NOT SUIT IS BROUGHT), AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER (THE
"INDEMNIFIED LIABILITIES") WHICH MAY AT ANY TIME BE IMPOSED ON, INCURRED BY, OR
ASSERTED AGAINST THE INDEMNIFIED PARTIES, IN ANY WAY RELATING TO OR ARISING OUT
OF ANY LOAN DOCUMENT OR TRANSACTION CONTEMPLATED BY ANY LOAN
Ex. 4.1-48
<PAGE>
DOCUMENT, OR ANY TRANSACTION CONTEMPLATED BY ANY LOAN DOCUMENT; PROVIDED THAT
BORROWERS SHALL HAVE NO OBLIGATION HEREUNDER TO ANY INDEMNIFIED PARTY WITH
RESPECT TO ANY INDEMNIFIED LIABILITY ARISING FROM THE FRAUD, GROSS NEGLIGENCE,
OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PARTY OR ANY ASSOCIATED PERSON OF SUCH
INDEMNIFIED PARTY. AS USED IN THIS PARAGRAPH, THE TERM "ASSOCIATED PERSON"
MEANS, WITH RESPECT TO ANY PERSON, THE AFFILIATES, PARENTS, SUBSIDIARIES,
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, SUCCESSORS, AND ASSIGNS OF SUCH PERSON,
OR OF ANOTHER PERSON OF WHICH SUCH PERSON IS ALSO AN ASSOCIATED PERSON. THE
PROVISIONS OF AND UNDERTAKINGS AND INDEMNIFICATION SET FORTH IN THIS SECTION
SHALL SURVIVE THE SATISFACTION AND PAYMENT OF THE OBLIGATION AND TERMINATION OF
THIS AGREEMENT.
10.16 ENTIRETY. THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
BORROWERS, LENDERS, AND ADMINISTRATIVE AGENT AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY SUCH
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN SUCH PARTIES.
[Remainder of Page Intentionally Blank. Signature Pages Follow.]
Ex. 4.1-49
<PAGE>
SIGNATURE PAGE TO CREDIT AGREEMENT
DATED AS OF NOVEMBER 13, 1997
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
MURPHY OIL CORPORATION,
as a Borrower and Guarantor
By:
-------------------------------------
Odie F. Vaughan
Treasurer
MURPHY OIL USA, INC.,
as a Subsidiary Borrower
By:
-------------------------------------
Odie F. Vaughan
Treasurer
MURPHY OIL COMPANY LTD.,
as a Subsidiary Borrower
By:
-------------------------------------
Odie F. Vaughan
Treasurer
MURPHY EXPLORATION & PRODUCTION COMPANY,
as a Subsidiary Borrower
By:
-------------------------------------
Odie F. Vaughan
Treasurer
Ex. 4.1-50
<PAGE>
SIGNATURE PAGE TO CREDIT AGREEMENT
DATED AS OF NOVEMBER 13, 1997
MURPHY PETROLEUM LIMITED,
as a Subsidiary Borrower
By:
-------------------------------------
Odie F. Vaughan
Authorized Officer
Ex. 4.1-51
<PAGE>
SIGNATURE PAGE TO CREDIT AGREEMENT
DATED AS OF NOVEMBER 13, 1997
THE CHASE MANHATTAN BANK,
as Domestic Administrative Agent and a
Domestic Lender
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
Ex. 4.1-52
<PAGE>
SIGNATURE PAGE TO CREDIT AGREEMENT
DATED AS OF NOVEMBER 13, 1997
THE CHASE MANHATTAN BANK OF CANADA,
as Canadian Administrative Agent and a
Canadian Lender
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
Ex. 4.1-53
<PAGE>
SIGNATURE PAGE TO CREDIT AGREEMENT
DATED AS OF NOVEMBER 13, 1997
NATIONSBANK OF TEXAS, N.A.,
as a Domestic Lender
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
Ex. 4.1-54
<PAGE>
SIGNATURE PAGE TO CREDIT AGREEMENT
DATED AS OF NOVEMBER 13, 1997
SUNTRUST BANK, NASHVILLE, N.A.,
as a Domestic Lender
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
Ex. 4.1-55
<PAGE>
SIGNATURE PAGE TO CREDIT AGREEMENT
DATED AS OF NOVEMBER 13, 1997
ROYAL BANK OF CANADA,
as a Domestic Lender and a Canadian Lender
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
Ex. 4.1-56
<PAGE>
SIGNATURE PAGE TO CREDIT AGREEMENT
DATED AS OF NOVEMBER 13, 1997
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as a Domestic Lender
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
Ex. 4.1-57
<PAGE>
SIGNATURE PAGE TO CREDIT AGREEMENT
DATED AS OF NOVEMBER 13, 1997
J.P. MORGAN CANADA,
as a Canadian Lender
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
Ex. 4.1-58
<PAGE>
SIGNATURE PAGE TO CREDIT AGREEMENT
DATED AS OF NOVEMBER 13, 1997
THE BANK OF NOVA SCOTIA, ATLANTA AGENCY,
as the Domestic Lending Office of a
Domestic Lender
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
Ex. 4.1-59
<PAGE>
SIGNATURE PAGE TO CREDIT AGREEMENT
DATED AS OF NOVEMBER 13, 1997
THE BANK OF NOVA SCOTIA,
as the Canadian Lending Office of a
Canadian Lender
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
Ex. 4.1-60
<PAGE>
SIGNATURE PAGE TO CREDIT AGREEMENT
DATED AS OF NOVEMBER 13, 1997
THE BANK OF NOVA SCOTIA,
as the U.K. Lending Office of a Domestic
Lender
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
Ex. 4.1-61
<PAGE>
SCHEDULE 1
AGENTS, LENDERS, LENDING OFFICES, COMMITMENTS, AND COMMITMENT ALLOCATIONS
AGENTS
- - --------------------------------------------------------------------------------
AGENT ADDRESS FOR NOTICE
================================================================================
DOMESTIC ADMINISTRATIVE AGENT The Chase Manhattan Bank
One Chase Plaza, Third Floor
New York, New York 10081
Attention: Ms. Martha Fetner
Telecopy No.: 212-552-1687
With a Copy to:
Loan and Agency Services Group
One Chase Plaza, 8th Floor
New York, New York 10081
Attention: Ms. Sandra Miklave
Telecopy No.: 212-552-5658
- - --------------------------------------------------------------------------------
CANADIAN ADMINISTRATIVE AGENT The Chase Manhattan Bank of Canada
1 First Canadian Place
100 King Street West, Suite 6900
Toronto, Ontario M5X 1A4
CANADA
Attention: Funding Officer
Telecopy No.: 416-216-4162
- - --------------------------------------------------------------------------------
Ex. 4.1-SE1
<PAGE>
LENDERS
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------
LENDER GLOBAL MAXIMUM CURRENT DOMESTIC
COMMITMENT CANADIAN CANADIAN COMMITMENT
COMMITMENT COMMITMENT
- - ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
THE CHASE MANHATTAN BANK $60,000,000
. Domestic Lending Office and $0 $0 $54,166,666.67
U.K. Lending Office
. Canadian Lending Office $35,000,000 $5,833,333.33 $0
ADDRESS FOR NOTICE:
The Chase Manhattan Bank
One Chase Plaza, Third Floor
New York, New York 10081
Attention: Ms. Martha Fetner
Telecopy No.: 212-552-1687
DOMESTIC LENDING OFFICE:
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
EUROCURRENCY LENDING OFFICE:
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
U.K. LENDING OFFICE:
Chase Manhattan International Limited
International Loans Services Group
Trinity Tower
9 Thomas More Street
London, E1 9YT
CANADIAN LENDING OFFICE:
The Chase Manhattan Bank of Canada
1 First Canadian Place
100 King Street West, Suite 6900
Toronto, Ontario M5X 1A4
- - ----------------------------------------------------------------------------------------------------
</TABLE>
Ex. 4.1-SE2
<PAGE>
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------
LENDER GLOBAL MAXIMUM CURRENT DOMESTIC
COMMITMENT CANADIAN CANADIAN COMMITMENT
COMMITMENT COMMITMENT
- - ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ROYAL BANK OF CANADA $50,000,000 $40,000,000 $6,666,666,67 $43,333,333.33
ADDRESS FOR NOTICE:
Royal Bank of Canada
1 Financial Square
23rd Floor
New York, New York 10005-3531
Telecopy No.: 212-428-2372
WITH A COPY TO:
Royal Bank of Canada
12450 Greenspoint Drive, Suite 1450
Houston, Texas 77060
Attention: Ms. Linda M. Stephens
Telecopy No.: 281-874-0081
DOMESTIC LENDING OFFICE:
Royal Bank of Canada
1 Financial Square
23rd Floor
New York, New York 10005-3531
EUROCURRENCY LENDING OFFICE:
Royal Bank of Canada
1 Financial Square
23rd Floor
New York, New York 10005-3531
U.K. LENDING OFFICE:
Royal Bank of Canada
71 Queen Victoria Street
London EC4D 4DE
CANADIAN LENDING OFFICE:
Royal Bank of Canada
180 Wellington Street West
Toronto, Ontario M5J 1J1
- - ----------------------------------------------------------------------------------------------------
</TABLE>
Ex. 4.1-SE3
<PAGE>
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------
LENDER GLOBAL MAXIMUM CURRENT DOMESTIC
COMMITMENT CANADIAN CANADIAN COMMITMENT
COMMITMENT COMMITMENT
- - ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MORGAN GUARANTY TRUST COMPANY $50,000,000
OF NEW YORK
. Domestic Lending Office and $0 $0 $44,166,666.67
U.K. Lending Office
. Canadian Lending Office $35,000,000 $5,833,333.33 $0
ADDRESS FOR NOTICE:
Morgan Guaranty Trust Company of
New York
60 Wall Street
New York, New York 10260-0060
Attention: Mr. John Kowalczuk
Telecopy No.: 212-648-5014
DOMESTIC LENDING OFFICE:
Morgan Guaranty Trust Company of
New York
60 Wall Street
New York, New York 10260-0060
EUROCURRENCY LENDING OFFICE:
Morgan Guaranty Trust Company of
New York
c/o J.P. Morgan Services
Loan Operations -3rd Floor
500 Stanton Christiana Road
Newark, Delaware 19713
CANADIAN LENDING OFFICE:
J.P. Morgan Canada
Suite 1800, South Tower
Royal Bank Plaza
Toronto, Ontario M5J 2J2
U.K. LENDING OFFICE:
Morgan Guaranty Trust Company of
New York
60 Victoria Embankment
London EC4Y 0JP
- - ----------------------------------------------------------------------------------------------------
</TABLE>
Ex. 4.1-SE4
<PAGE>
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------
LENDER GLOBAL MAXIMUM CURRENT DOMESTIC
COMMITMENT CANADIAN CANADIAN COMMITMENT
COMMITMENT COMMITMENT
- - ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
THE BANK OF NOVA SCOTIA $50,000,000
. Domestic Lending Office and $0 $0 $43,333,333.33
U.K. Lending Office
. Canadian Lending Office $40,000,000 $6,666,666.67 $0
ADDRESS FOR NOTICE:
The Bank of Nova Scotia, Atlanta
Agency
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308
Attention: Mr. Jeff Lents
Telecopy No.: 404-888-8998
DOMESTIC LENDING OFFICE:
The Bank of Nova Scotia, Atlanta
Agency
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308
EUROCURRENCY LENDING OFFICE:
The Bank of Nova Scotia, Atlanta
Agency
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308
U.K. LENDING OFFICE:
The Bank of Nova Scotia
London Banking Division
Scotia House
33 Finsbury Square
London England
CANADIAN LENDING OFFICE:
The Bank of Nova Scotia
Scotia Centre, Suite 3820
700-2nd Street S.W.
Calgary, Alberta T2P 2n7
- - ----------------------------------------------------------------------------------------------------
</TABLE>
Ex. 4.1-SE5
<PAGE>
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------
LENDER GLOBAL MAXIMUM CURRENT DOMESTIC
COMMITMENT CANADIAN CANADIAN COMMITMENT
COMMITMENT COMMITMENT
- - ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NATIONSBANK OF TEXAS, N.A. $50,000,000 $0 $0 $50,000,000
ADDRESS FOR NOTICE:
NationsBank of Texas, N.A.
Energy Finance Division
303 West Wall
Midland, Texas 79701-4761
Attention: Mr. Dale T. Wilson
Telecopy No.: 915-685-2009
DOMESTIC LENDING OFFICE:
NationsBank of Texas, N.A.
303 West Wall
Midland, Texas 79701-4761
EUROCURRENCY LENDING OFFICE:
NationsBank of Texas, N.A.
901 Main Street
Dallas, Texas 75202
U.K. LENDING OFFICE:
NationsBank of Texas, N.A.
901 Main Street
Dallas, Texas 75202
- - ----------------------------------------------------------------------------------------------------
</TABLE>
Ex. 4.1-SE6
<PAGE>
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------
LENDER GLOBAL MAXIMUM CURRENT DOMESTIC
COMMITMENT CANADIAN CANADIAN COMMITMENT
COMMITMENT COMMITMENT
- - ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SUNTRUST BANK, NASHVILLE, N.A. $40,000,000 $0 $0 $40,000,000
ADDRESS FOR NOTICE:
SunTrust Bank, Nashville, N.A.
201 Fourth Avenue North
Nashville, Tennessee 37219
P.O. Box 305110
Nashville, Tennessee 37230-5110
Attention: Mr. James L. Mosby
Telecopy No.: 615-259-4119
DOMESTIC LENDING OFFICE:
SunTrust Bank, Nashville, N.A.
201 Fourth Avenue North
Nashville, Tennessee 37219
EUROCURRENCY LENDING OFFICE:
SunTrust Bank, Nashville, N.A.
25 Park Place - 14th Floor
Atlanta, Georgia 30303
U.K. LENDING OFFICE:
SunTrust Bank, Nashville, N.A.
25 Park Place - 14th Floor
Atlanta, Georgia 30303
- - ----------------------------------------------------------------------------------------------------
Total $300,000,000 $150,000,000 $25,000,000 $275,000,000
- - ----------------------------------------------------------------------------------------------------
</TABLE>
Ex. 4.1-SE7
<PAGE>
SCHEDULE 6.1
EXISTING LIENS
1. Lien to the Province of Alberta, Canada on Murphy Oil Company Ltd.'s five
percent (5%) interest in Syncrude. This lien secures a non-recourse loan
given at the time of purchase of the interest. The outstanding balance
payable on the debt as of September 30, 1997, was U.S. $42,148,000. Final
payment on the debt is due December, 1998.
2. Lien to National Trust Company on Murphy Oil Company Ltd.'s six and one
quarter percent (6 1/4%) interest in the Hibernia field offshore
Newfoundland. This lien secures a non-recourse Canadian Government's
guarantee of Murphy Oil Company Ltd.'s borrowing to finance the development
of the field. The amount of debt secured by the lien fluctuates due to
additional facilities available, payment on facilities and the rate of
exchange between the Cdn$ and the U.S.$. As of September 30, 1997, the
outstanding balance payable was U.S. $157,378,000. The retirement schedule
of the guarantee varies but will not extend beyond 2008.
3. No attempt has been made to list liens related to capital leases which have
resulted in assets being recorded in the consolidated financial statements.
These assets consist of various items ranging from computer equipment to
refinery land. The outstanding balance of this imputed debt as of
September 30, 1997, was U.S. $872,000. It is Murphy Oil Corporation's
position that even though a legal document may exist, if use and enjoyment
of our assets can not be interrupted by the enforcement of the document for
non-payment of recorded debt, then a reportable lien does not exist under
this Agreement.
Ex. 4.1-SE8
<PAGE>
EXHIBIT A
FORM OF NOTICE OF BORROWING
_________________, 199_
____________________, a _______________ (the "COMPANY"), pursuant to the
Credit Agreement dated as of November 13, 1997, among the Company, the other
Borrowers defined therein, The Chase Manhattan Bank, as Domestic Administrative
Agent, The Chase Manhattan Bank of Canada, as Canadian Administrative Agent, and
the Lenders defined therein (together with all amendments or supplements
thereto, the "CREDIT AGREEMENT"), hereby makes the requests indicated below in
connection with Advances to the Company. Unless otherwise defined herein,
capitalized terms shall have the meanings set forth in the Credit Agreement.
[ ] 1. New Borrowing:
(a) Amount of Borrowing to be $___________________;
(b) Requested funding date is ______________, 199_;
(c) Type of Advances (check one):______ U.S. Dollar Base Rate Advances
________ U.S. Dollar Eurocurrency Rate
Advances
________ Pounds Sterling Eurocurrency
Rate Advances
________ Canadian Dollar Base Rate
Advances
(d) Length of Interest Period for Eurocurrency Rate Advances is: _____.
[ ] 2. Continuation of Eurocurrency Rate Advances maturing on ____________
for a successive Interest Period:
(a) Aggregate amount to be continued as Eurocurrency Rate Advances is $
_______________;
(b) Length of Interest Period for Eurocurrency Rate Advances is ______.
[ ] 3. Conversion of outstanding U.S. Dollar Base Rate Advances to U.S.
Dollar Eurocurrency Rate Advances:
Convert $_______________ of outstanding U.S. Dollar Base Rate
Advances to U.S. Dollar Eurocurrency Rate Advances on ___________
with an Interest Period of _______.
[ ] 4. Conversion of outstanding U.S. Dollar Eurocurrency Rate Advances to
U.S. Dollar Base Rate Advances:
Convert $______________ of the outstanding U.S. Dollar Eurocurrency
Rate Advances with Interest Period maturing on ______________,
199_, to U.S. Dollar Base Rate Advances.
Ex. 4.1-SE9
<PAGE>
The undersigned is authorized to execute this request on behalf of the
Company. The undersigned further represents and warrants that no Potential
Default or Event of Default exists either before or after the Borrowing,
Continuation, or Conversion, as the case may be, requested hereby.
----------------------------------------
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
Ex. 4.1-SE10
<PAGE>
EXHIBIT B
FORM OF ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT (this "AGREEMENT") dated as of __________, 199__,
is executed by and between ________________ ("ASSIGNOR") and ______________
("ASSIGNEE").
R E C I T A L S
A. Assignor is a party to the Credit Agreement dated as of November 13,
1997, among Murphy Oil Corporation ("MURPHY"), Murphy Oil USA, Inc., Murphy Oil
Company Ltd., Murphy Exploration & Production Company, and Murphy Petroleum
Limited (collectively, "BORROWERS"), The Chase Manhattan Bank, as Domestic
Administrative Agent, The Chase Manhattan Bank of Canada, as Canadian
Administrative Agent, and the Lenders defined therein (as modified, amended,
renewed, extended, or restated from time to time, the "CREDIT AGREEMENT").
B. Assignor proposes to sell, assign, and transfer to Assignee, and
Assignee proposes to purchase and assume from Assignor, [all][a portion] of
Assignor's Commitments and outstanding Advances, all on the terms and conditions
of this Agreement.
C. In consideration of the foregoing and the mutual agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1
DEFINITIONS
1.1 DEFINITIONS. All capitalized terms used but not defined herein have
the respective meanings given to such terms in the Credit Agreement.
1.2 OTHER DEFINITIONS. As used herein, the following terms have the
following respective meanings:
"ASSIGNED INTEREST" shall mean all of Assignor's (in its capacity as a
"Lender") rights and obligations (a) under the Credit Agreement and the other
Loan Documents in respect of the Global Commitment of Assignor in the principal
amount equal to $______________, (b) to make Advances under the Commitments, (c)
any right to receive payments of the U.S. Dollar Base Rate Advances outstanding
under the Commitments assigned hereby of $_____________, (d) any right to
receive payments of U.S. Dollar Eurocurrency Rate Advances outstanding under the
Commitments assigned hereby of $________________, (e) any right to receive
payments of Pounds Sterling Eurocurrency Rate Advances outstanding under the
Commitments assigned hereby of $________________, (f) any right to receive
payments of Canadian Dollar Base Rate Advances outstanding under the Commitments
assigned hereby of $_______________, and (g) any right to receive payments in
respect of Bankers' Acceptances outstanding under the Commitments assigned
hereby of Cdn. $_______________, plus in each case the interest and fees thereon
which will accrue from and after the Assignment Date.
"ASSIGNMENT DATE" shall mean _____________________, 199_.
Ex. 4.1-SE11
<PAGE>
SECTION 2
SALE AND ASSIGNMENT
2.1 SALE AND ASSIGNMENT. On the terms and conditions set forth herein,
effective on and as of the Assignment Date, Assignor hereby sells, assigns, and
transfers to Assignee, and Assignee hereby purchases and assumes from Assignor,
all of the right, title, and interest of Assignor in and to, and all of the
obligations of Assignor in respect of, the Assigned Interest. Such sale,
assignment, and transfer is without recourse to and, except as expressly
provided in this Agreement, without representation or warranty by Assignor.
2.2 ASSUMPTION OF OBLIGATIONS. Assignee agrees with Assignor (for the
express benefit of Assignor and Borrowers) that Assignee will, from and after
the Assignment Date, perform all of the obligations of Assignor in respect of
the Assigned Interest. From and after the Assignment Date: (a) Assignor shall
be released from Assignor's obligations in respect of the Assigned Interest; and
(b) except as provided in the Credit Agreement Assignee shall be entitled to all
of Assignor's rights, powers, and privileges under the Credit Agreement and the
other Loan Documents in respect of the Assigned Interest.
2.3 CONSENT BY THE COMPANY. By executing this Agreement as provided
below, in accordance with SECTION 10.7 of the Credit Agreement, Murphy hereby
acknowledges notice of the transactions contemplated by this Agreement and
consents to such transactions.
SECTION 3
PAYMENTS
3.1 PAYMENTS. As consideration for the sale, assignment, and transfer
contemplated by SECTION 2.1 hereof, Assignee shall, on the Assignment Date,
assume Assignor's obligations in respect of the Assigned Interest and pay to
Assignor an amount equal to $______________ in U.S. Dollars, $_________________
in Canadian Dollars, and (Pounds)__________________ in Pounds Sterling. An
amount equal to all accrued and unpaid interest and fees shall be paid to
Assignor as provided in SECTION 3.2(C) below. Except as otherwise provided in
this Agreement, all payments hereunder shall be made in the Applicable Currency
and in immediately available funds, without setoff, deduction, or counterclaim.
3.2 ALLOCATION OF PAYMENTS. Assignor and Assignee agree that (a) Assignor
shall be entitled to any payments of principal with respect to the Assigned
Interest made prior to the Assignment Date, together with any interest and fees
with respect to the Assigned Interest accrued prior to the Assignment Date, (b)
Assignee shall be entitled to any payments of principal with respect to the
Assigned Interest made from and after the Assignment Date, together with any and
all interest and fees with respect to the Assigned Interest accruing from and
after the Assignment Date, and (c) each Agent is authorized and instructed to
allocate payments received by it for account of Assignor and Assignee as
provided in the foregoing clauses. Each party hereto agrees that it will hold
any interest, fees, or other amounts that it may receive to which the other
party hereto shall be entitled pursuant to the preceding sentence for account of
and in trust for such other party and pay, in like money and funds, any such
amounts that it may receive to such other party promptly upon receipt.
3.3 FURTHER ASSURANCES. Assignor and Assignee hereby agree to execute and
deliver such other instruments, and take such other actions, as either party may
reasonably request in connection with the transactions contemplated by this
Agreement.
Ex. 4.1-SE12
<PAGE>
SECTION 4
CONDITIONS PRECEDENT
4.1 CONDITIONS PRECEDENT. The effectiveness of the sale, assignment, and
transfer contemplated hereby is subject to the satisfaction of each of the
following conditions precedent:
(a) the execution and delivery of this Agreement by Assignor and Assignee;
(b) the receipt by Assignor of the payment required to be made by Assignee
under SECTION 3.1 hereof; and
(c) the acknowledgment and consent by Murphy contemplated by SECTION 2.3
hereof.
SECTION 5
REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS AND WARRANTIES OF ASSIGNOR. Assignor represents and
warrants to Assignee as follows:
(a) it has all requisite power and authority, and has taken all action
necessary, to execute and deliver this Agreement and to fulfill its obligations
under, and consummate the transactions contemplated by, this Agreement;
(b) the execution, delivery, and compliance with the terms hereof by
Assignor and the delivery of all instruments required to be delivered by it
hereunder do not and will not violate any Legal Requirement applicable to it;
(c) this Agreement has been duly executed and delivered by it and
constitutes the legal, valid, and binding obligation of Assignor, enforceable
against it in accordance with its terms;
(d) all Authorizations of, all filings with, and all actions by any
Governmental Authority necessary for the validity or enforceability of its
obligations under this Agreement have been obtained;
(e) Assignor has good title to, and is the sole legal and beneficial owner
of, the Assigned Interest, free and clear of all Liens, claims, participations,
or other charges or interest of any nature whatsoever; and
(f) the transactions contemplated by this Agreement are commercial banking
transactions entered into in the ordinary course of the banking business of
Assignor.
5.2 DISCLAIMER. Except as expressly provided in SECTION 5.1 hereof,
Assignor does not make any representation or warranty, nor shall it have any
responsibility to Assignee, with respect to the accuracy of any recitals,
statements, representations, or warranties contained in the Credit Agreement or
in any certificate or other document referred to or provided for in, or received
by any Lender under, the Credit Agreement, or for the value, validity,
effectiveness, genuineness, execution, effectiveness, legality, enforceability,
or sufficiency of the Credit Agreement, or any certificate or other document
referred to or provided for therein or for any failure by any Borrower or any
other Person (other than Assignor) to perform any of its obligations thereunder
or for the existence, value, perfection, or priority of any collateral security
or the financial or other condition of any Company or any other matter relating
to the Credit Agreement, any other Loan Documents, or any extension of credit
thereunder.
Ex. 4.1-SE13
<PAGE>
5.3 REPRESENTATIONS AND WARRANTIES OF ASSIGNEE. Assignee represents and
warrants to Assignor as follows:
(a) it has all requisite power and authority, and has taken all action
necessary, to execute and deliver this Agreement and to fulfill its obligations
under and consummate the transactions contemplated by, this Agreement;
(b) the execution, delivery, and compliance with the terms hereof by
Assignee and the delivery of all instruments required to be delivered by it
hereunder do not and will not violate any Legal Requirement applicable to it;
(c) this Agreement has been duly executed and delivered by it and
constitutes the legal, valid, and binding obligation of Assignee, enforceable
against it in accordance with its terms;
(d) all Authorizations of, all filings with and all action by, any
Governmental Authority necessary for the validity or enforceability of its
obligations under this Agreement have been obtained;
(e) Assignee has fully reviewed the terms of the Credit Agreement and the
other Loan Documents and has independently and without reliance upon Assignor or
any other Lender, and based on such information as Assignee has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement; and
(f) the transactions contemplated by this Agreement are commercial banking
transactions entered into in the ordinary course of the banking business of
Assignee.
SECTION 6
MISCELLANEOUS
6.1 NOTICES. All notices and other communications provided for herein
(including, without limitation, any modifications of, or waivers, requests, or
consents under, this Agreement) shall be given or made in writing (including,
without limitation, by telex or telecopy) to the intended recipient at its
"Address for Notices" specified below its name on the signature pages hereof or,
as to either party, at such other address as shall be designated by such party
in a notice to the other party.
6.2 AMENDMENT, MODIFICATION OR WAIVER. No provision of this Agreement may
be amended, modified, or waived except by an instrument in writing signed by
Assignor and Assignee, and consented to by Domestic Administrative Agent.
6.3 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. The representations and warranties made herein by Assignee
are also made for the benefit of Agents and Borrowers, and Assignee agrees that
Agents and Borrowers are entitled to rely upon such representations and
warranties.
6.4 ASSIGNMENTS. Neither party hereto may assign any of its rights or
obligations hereunder except in accordance with the terms of the Credit
Agreement.
6.5 CAPTIONS. The captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
Ex. 4.1-SE14
<PAGE>
6.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be identical and all of which, taken together,
shall constitute one and the same instrument and each of the parties hereto may
execute this Agreement by signing any such counterpart.
6.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
6.8 EXPENSES. Assignor and Assignee shall bear their own expenses in
connection with the execution, delivery, and performance of this Agreement.
6.9 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
Ex. 4.1-SE15
<PAGE>
ASSIGNOR:
[NAME]
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address for Notice:
---------------------------------------
---------------------------------------
---------------------------------------
ASSIGNEE:
[NAME]
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address for Notice:
---------------------------------------
---------------------------------------
---------------------------------------
ACKNOWLEDGED AND CONSENTED TO:
MURPHY OIL CORPORATION
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ACKNOWLEDGED BY:
THE CHASE MANHATTAN BANK, as Domestic Administrative Agent
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Ex. 4.1-SE16
<PAGE>
EXHIBIT C-1
FORM OF OPINION OF BORROWERS' ARKANSAS COUNSEL
Walter K. Compton, General Counsel to Borrowers, is to opine to Agents
and Lenders as to the following matters, which opinion
may only be based upon assumptions and subject to exceptions
and qualifications, and must otherwise be in form and substance, as may
be acceptable to Agents (based upon advice of their counsel).
Capitalized terms used herein shall, unless otherwise indicated, have the
respective meanings set forth in the Credit Agreement.
1. Murphy Oil Corporation, Murphy Oil USA, Inc., and Murphy Exploration &
Production Company (the "U.S. BORROWERS") are each a corporation duly
incorporated, validly existing, and in good standing under the laws of the State
of Delaware with corporate power to own and operate its business and properties
and to carry on its business as presently conducted and to execute and perform
the Credit Agreement, as amended, and to borrow thereunder, and, in the case of
Murphy, to guaranty the obligations of the Subsidiary Borrowers referred to in
the Credit Agreement.
2. Murphy is the owner, either directly or through a wholly-owned
subsidiary, of all of the outstanding Common Stock of each of the Subsidiary
Borrowers and all of such Common Stock is fully paid and non-assessable; none of
the Subsidiary Borrowers has any class of stock outstanding other than Common
Stock.
3. The Credit Agreement (including the Guaranty referred to therein) has
been duly authorized, approved, and adopted by all necessary corporate action of
the U.S. Borrowers.
4. The execution, delivery, and performance by Murphy and the Subsidiary
Borrowers of the Credit Agreement and borrowing thereunder will not contravene
any applicable provision of law, and will not conflict with or result in the
breach of or accelerate the performance required by any of the terms,
conditions, or provisions of the Certificate of Incorporation or Bylaws of the
U.S. Borrowers or any covenant, agreement, or understanding known to me to which
Murphy or any of the Subsidiary Borrowers is a party or any order, ruling,
decree, judgment, arbitration award, or stipulation known to me to which Murphy
or any of the Subsidiary Borrowers is subject.
5. The Loan Documents to which each U.S. Borrower is a party have been
duly executed, presented, and delivered.
6. No Authorization of any Governmental Authority or of any other Person
is required in connection with the execution, delivery, and performance of the
Loan Documents or the borrowing and repayment of money by each U.S. Borrower
thereunder.
7. The Loan Documents constitute the legal and binding obligations of
each Borrower, enforceable against each Borrower in accordance with their
respective terms (except as enforcement may be subject to any applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally).
8. There are no actions, suits, or proceedings pending or threatened
against any Borrower, which, if adversely determined, could be a Material
Adverse Event.
9. An Arkansas court or a federal court in the State of Arkansas, in a
case properly presented, would uphold the New York choice of law provisions in
the Loan Documents.
Ex. 4.1-SE17
<PAGE>
10. The submission in the Credit Agreement by Borrowers to the
nonexclusive jurisdiction of the courts of the State of New York is binding and
enforceable against Borrowers.
11. To the best of my knowledge, no Borrower is an "investment company" or
a company "controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended, or subject to regulation under
the Public Utility Holding Company Act of 1935, as amended, the Federal Power
Act, as amended, the Interstate Commerce Act, as amended, or any federal or
state Legal Requirement limiting its ability to incur Debt or to create Liens on
any of its properties or assets to secure such Debt.
12. The Obligation of each U.S. Borrower will rank at least pari passu
with the claims of all other unsecured and unsubordinated creditors of each U.S.
Borrower.
Ex. 4.1-SE18
<PAGE>
EXHIBIT C-2
FORM OF OPINION OF BORROWERS' CANADIAN COUNSEL
Bennett Jones Verchere, Special Canadian Counsel to Canadian Borrower,
is to opine to Agents
and Lenders as to the following matters, which opinion
may only be based upon assumptions and subject to exceptions
and qualifications, and must otherwise be in form and substance, as may
be acceptable to Agents (based upon advice of their counsel).
Capitalized terms used herein shall, unless otherwise indicated, have the
respective meanings set forth in the Credit Agreement.
1. Canadian Borrower is a corporation duly created by amalgamation and
validly existing under the laws of Canada with corporate power to own and
operate its business and properties, to carry on its business as presently
conducted in the Provinces of Alberta and Saskatchewan, to execute, deliver, and
perform the Credit Agreement and to borrow monies from you thereunder.
2. Murphy is the owner of record of all outstanding common shares of
Canadian Borrower, all such common shares are fully paid and non-assessable and
there are no other outstanding shares of any class of Canadian Borrower.
3. The Credit Agreement has been duly authorized, approved, and adopted
by all necessary corporate action of Canadian Borrower, and has been duly
executed and delivered, and the Credit Agreement constitutes a valid and legally
binding obligation of Canadian Borrower, enforceable in accordance with its
terms.
4. The execution, delivery, and performance by Canadian Borrower of the
Credit Agreement and borrowings by Canadian Borrower thereunder will not
contravene any applicable provision of Alberta law or the laws of Canada
applicable in Alberta, and will not conflict with or result in the breach of or
accelerate the performance required by any of the terms, conditions, or
provisions of the constating documents of Canadian Borrower, being its articles
of amalgamation, any articles of amendment and its by-laws, or any covenant,
agreement, or understanding known to us to which Canadian Borrower is a party or
any order, ruling, decree, judgment, arbitration award, or stipulation known to
us to which Canadian Borrower is subject.
5. Neither the execution and delivery by Canadian Borrower of the Credit
Agreement, nor the performance by Canadian Borrower of its obligations
thereunder, nor compliance by Canadian Borrower with the terms and provisions
thereof will require the payment of any taxes, fees, or other governmental
charges in Alberta.
6. No Authorization of any Governmental Authority or of any other Person
is required in connection with the execution, delivery, and performance by
Canadian Borrower of the Credit Agreement or the borrowing and repayment of
money by Canadian Borrower thereunder.
7. There are no actions, suits, or proceedings pending or threatened
against Canadian Borrower in the Judicial District of Calgary, Province of
Alberta, which, if adversely determined, could be a Material Adverse Event.
8. A court in Alberta, if it assumed jurisdiction to render judgment in
respect of the Credit Agreement, would uphold the New York choice of law
provisions in the Credit Agreement.
Ex. 4.1-SE19
<PAGE>
9. A final and conclusive judgment in personam granted by a court of
competent jurisdiction in the State of New York, which is not impeachable as
void or voidable under the internal laws of New York, may be enforced in a court
in Alberta by an action or counterclaim for the sum certain under such judgment.
10. The submission in the Credit Agreement by Canadian Borrower to the
nonexclusive jurisdiction of the courts of the State of New York is binding and
enforceable against Canadian Borrower.
11. The Obligation of Canadian Borrower will rank at least pari passu in
the terms of payment with all indebtedness which is not secured or the subject
of any statutory trust or preference or which is not expressly and effectively
subordinated in right of payment to any other indebtedness of Canadian Borrower.
12. Canadian Borrower is not entitled to claim immunity from legal process
of the enforcement of any judgment of a court of competent jurisdiction, whether
generally or in relation to any specific assets.
Ex. 4.1-SE20
<PAGE>
EXHIBIT C-3
FORM OF OPINION OF BORROWERS' UK COUNSEL
J. N. Copeland, Special U.K. Counsel to U.K. Borrower, is to opine to Agents
and Lenders as to the following matters, which opinion
may only be based upon assumptions and subject to exceptions
and qualifications, and must otherwise be in form and substance, as may
be acceptable to Agents (based upon advice of their special counsel).
Capitalized terms used herein shall, unless otherwise indicated, have the
respective meanings set forth in the Credit Agreement.
1. U.K. Borrower is a company duly incorporated, validly existing, and in
good standing under the laws of England, and has all power and authority
required to own its property and carry on its business as presently conducted
and proposed to be conducted. U.K. Borrower is duly qualified or licensed to do
business in each jurisdiction where the nature of the business in which it is
engaged makes such qualification or licensing necessary, including England.
2. U.K. Borrower has the requisite corporate power to execute, deliver,
and perform the terms and provisions of the Loan Documents, and all other
documents and instruments delivered pursuant to the terms of such Loan
Documents, and has taken all appropriate corporate action necessary to duly
authorize (a) the execution, delivery, and performance by U.K. Borrower of the
terms and provisions of the Loan Documents, and (b) the performance by U.K.
Borrower of its obligations under the Loan Documents.
3. The Loan Documents to which U.K. Borrower is a party have been duly
executed and delivered by U.K. Borrower.
4. Neither the execution and delivery by U.K. Borrower of the Loan
Documents, nor the performance by U.K. Borrower of its obligations thereunder,
nor compliance by U.K. Borrower with the terms and provisions thereof, will (a)
contravene any provision of any Legal Requirement of England, to which U.K.
Borrower is subject, or to the best of my knowledge, after due inquiry, conflict
with, or result in any breach of, any material agreement, mortgage, indenture,
deed of trust, or other instrument known to me to which U.K. Borrower may be
subject, or result in the creation of any Lien in respect of any property of
U.K. Borrower (other than Liens in your favor), (b) contravene any English
Authorization, judgment, or decree applicable to U.K. Borrower, (c) violate any
provision of the Constituent Documents of U.K. Borrower, or (d) require the
payment of any taxes, fees, or other governmental charges.
5. No Authorization of any English Governmental Authority or of any other
English Person is required in connection with the execution, delivery, and
performance by U.K. Borrower of the Loan Documents or the borrowing and
repayment of money by U.K. Borrower thereunder.
6. To the best of my knowledge, after due inquiry, there are no actions,
suits, or proceedings pending or threatened against U.K. Borrower, which, if
adversely determined, could be a Material Adverse Event.
7. The choice of the laws of the State of New York as the law expressed
to govern the Loan Documents is a valid choice of governing law, which would
normally be applied by English courts.
8. On the assumption that the Loan Documents create valid and binding
obligations under the laws of the State of New York, the provisions of the Loan
Documents whereby U.K. Borrower submits to
Ex. 4.1-SE21
<PAGE>
the non-exclusive jurisdiction of the courts of the State of New York are
binding and enforceable against U.K. Borrower.
9. The Obligation of U.K. Borrower will rank at least pari passu with the
claims of all other unsecured and unsubordinated creditors of U.K. Borrower not
being indebtedness of a preferential creditor.
10. U.K. Borrower is not entitled to claim immunity from legal process of
the enforcement of any judgement of a court of competent jurisdiction, whether
generally or in relation to any specific assets.
11. A final and conclusive judgment for a debt or sum of money (not being
a sum payable in respect of taxes or other charges of a like nature or in
respect of a fine or other penalty) properly obtained against U.K. Borrower by a
court of competent jurisdiction in the State of New York being recognized by the
English courts as having jurisdiction to give that judgment in respect of any
suit, action, or proceeding arising out of or in relation to the Loan Documents
may be enforced against U.K. Borrower in the courts of England without re-
examination or re-litigation of the merits of the substantive matters
adjudicated upon.
Ex. 4.1-SE22
<PAGE>
EXHIBIT D
FORM OF DRAFT
BANKERS' ACCEPTANCE Due _______________ 19__
BA No: _______________________
____________________, 19__
On __________________, 19__ (without grace) for value received, pay to the
order of the undersigned drawer the sum of $_________________ Dollars.
To [Name of Lender] _______________________________, Canada
MURPHY OIL COMPANY LTD.
Per:__________________________________________
[FORM OF ACCEPTANCE]
Date:__________________________, 19__
Payable at [INSERT LOCATION]
[NAME OF LENDER]
Per: ________________________________
Authorized Signature
Per: ________________________________
Authorized Signature
Ex. 4.1-SE23
<PAGE>
EXHIBIT E
FORM OF NOTICE OF ALLOCATION
_____________________________, 19__
The Chase Manhattan Bank, as Domestic Administrative Agent
One Chase Plaza, Third Floor
New York, New York 10081
Attention: Ms. Sandra Miklave
Ladies and Gentlemen:
Reference is hereby made to that certain Credit Agreement dated as of November
13, 1997, among Murphy Oil Corporation, Murphy Oil USA, Inc., Murphy Oil Company
Ltd., Murphy Exploration & Production Company, and Murphy Petroleum Limited, The
Chase Manhattan Bank, as Domestic Administrative Agent, The Chase Manhattan Bank
of Canada, as Canadian Administrative Agent, and the Lenders defined therein (as
modified, amended, renewed, extended, or restated from time to time, the "CREDIT
AGREEMENT"). Capitalized terms used herein shall, unless otherwise indicated,
have the respective meanings set forth in the Credit Agreement. This notice
represents Murphy's notice, given pursuant to SECTION 2.1(b) of the Credit
Agreement, requesting a change in the amount of the Global Commitments allocated
in Dollar Equivalents to the Designated Canadian Commitment from $____________
to $_______________________ and the Domestic Commitments from $______________ to
$_______________________, effective _________________, 19__.
MURPHY OIL CORPORATION
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
Ex. 4.1-SE24
<PAGE>
EXHIBIT F
FORM OF NOTE
$______________________ ____________________, 1997
FOR VALUE RECEIVED, ______________________, a _________________ ("MAKER"),
hereby promises to pay to _______________________ ("LENDER"), at the office of
[THE CHASE MANHATTAN BANK] [THE CHASE MANHATTAN BANK OF CANADA] ("ADMINISTRATIVE
AGENT"), the principal sum of _______________ Dollars ($_______________) (or
such lesser amount as shall equal the aggregate unpaid principal amount of the
Advances made by Lender to Maker under the Credit Agreement as hereinafter
defined), in the Applicable Currency (as defined in the Credit Agreement) and in
immediately available funds, on the dates and in the principal amounts provided
in the Credit Agreement, and to pay interest on the unpaid principal amount of
each such Advance, at such office, in like money and funds, for the period
commencing on the date of such Advance until such Advance shall be paid in full,
at the rates per annum and on the dates provided in the Credit Agreement.
The date, amount, Type, interest rate, Interest Period, if any, and
maturity of each Advance made by Lender to Maker, and each payment made on
account of the principal thereof, may be recorded by Lender on its books and/or
endorsed by Lender on the schedules attached hereto or any continuation thereof.
This Note is issued pursuant to the Credit Agreement dated as of November
13, 1997, executed by Maker, the other Borrowers defined therein, The Chase
Manhattan Bank, as Domestic Administrative Agent, The Chase Manhattan Bank of
Canada, as Canadian Administrative Agent, and the Lenders defined therein (as
modified, amended, renewed, extended, or restated from time to time, the "CREDIT
AGREEMENT"), and is entitled to the benefits provided for in the Credit
Agreement and the other Loan Documents. The Credit Agreement provides for the
acceleration of the maturity of this Note upon the occurrence of certain events
and other provisions relevant to this Note.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK.
--------------------------------------------
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Ex. 4.1-SE25
<PAGE>
EXHIBIT G
FORM OF DRAWING NOTICE
_________________________, 19__
The Chase Manhattan Bank, as Domestic Administrative Agent
One Chase Plaza, Third Floor
New York, New York 10081
Attention: Ms. Sandra Miklave
The Chase Manhattan Bank of Canada, as Canadian Administrative Agent
1 First Canadian Place
100 King Street West, Suite 6900
Toronto, Ontario M5X 1A4
Attention: Funding Officer
Ladies and Gentlemen:
Reference is hereby made to that certain Credit Agreement dated as of November
13, 1997, among Murphy Oil Corporation, Murphy Oil USA, Inc., Murphy Oil Company
Ltd., Murphy Exploration & Production Company, and Murphy Petroleum Limited
(collectively, "BORROWERS"), The Chase Manhattan Bank, as Domestic
Administrative Agent, The Chase Manhattan Bank of Canada, as Canadian
Administrative Agent, and the Lenders defined therein (as modified, amended,
renewed, extended, or restated from time to time, the "CREDIT AGREEMENT").
Capitalized terms used herein shall, unless otherwise indicated, have the
respective meanings set forth in the Credit Agreement. This notice represents
Canadian Borrower's notice, given pursuant to SECTION 2.16 of the Credit
Agreement, requesting a drawing under the Credit Agreement on the date, in the
amount and having the term set forth below:
1. The Drawing Date, which is a Business Day, is _________________, 199_;
2. The aggregate Face Amount of Drafts to be accepted is Cdn. $_________;
and
3. The maturity date for such Drafts is ________________, 199_, which
represents a term to maturity of approximately [30/60/90/180] days.
The undersigned officer is authorized to execute this request on behalf of
Canadian Borrower. The undersigned further represents and warrants that no
event has occurred and is continuing or would result from the consummation of
the drawing contemplated hereby that would constitute a Potential Default or an
Event of Default.
MURPHY OIL COMPANY LTD.
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
Ex. 4.1-SE26
<PAGE>
EXHIBIT H
FORM OF COMPLIANCE CERTIFICATE
Reference is made to that certain Credit Agreement dated as of November 13,
1997, among Murphy Oil Corporation, Murphy Oil USA, Inc., Murphy Oil Company
Ltd., Murphy Exploration & Production Company, and Murphy Petroleum Limited
(collectively, "BORROWERS"), The Chase Manhattan Bank, as Domestic
Administrative Agent, The Chase Manhattan Bank of Canada, as Canadian
Administrative Agent, and the Lenders defined therein (as modified, amended,
renewed, extended, or restated from time to time, the "CREDIT AGREEMENT"). The
undersigned hereby certifies that [s]he is the ________________ of Murphy Oil
Corporation ("MURPHY"), and that as such [s]he is authorized to execute this
certificate on behalf of Murphy. The undersigned represents and warrants, to
the best of [his/her] knowledge, as follows (each capitalized term used herein
having the same meaning given to it in the Credit Agreement unless otherwise
specified):
(a) Each Company is in compliance with all terms, conditions, and
agreements set forth in the Credit Agreement.
(b) There exists no Potential Default or Event of Default.
(c) The ratio of Consolidated Recourse Debt to Adjusted Consolidated
Capitalization, all as determined in accordance with GAAP, is as follows:
(i) Consolidated Recourse Debt
(see supporting schedule of
Consolidated Recourse Debt): $_______________________
(ii) Adjusted Consolidated Capitalization
(see supporting schedule of Adjusted
Consolidated Capitalization): $_______________________
(iii) Ratio of (i) to (ii): _____________________________________
EXECUTED AND DELIVERED this ____ day of _______________________________.
MURPHY OIL CORPORATION
By:
---------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Ex. 4.1-SE27
<PAGE>
EXHIBIT 13
MURPHY OIL CORPORATION
1997 ANNUAL REPORT TO SECURITY HOLDERS
Ex. 13-0
<PAGE>
[GRAPHIC APPEARS HERE]
1997
MURPHY OIL CORPORATION
ANNUAL REPORT
[GRAPHIC APPEARS HERE]
[LOGO OF MURPHY OIL APPEARS HERE]
[GRAPHIC APPEARS HERE]
<PAGE>
EXHIBIT 13 FOR 1997 10-K
[PHOTOGRAPH APPEARS HERE]
1997
ANNUAL REPORT - MURPHY OIL CORPORATION
As used in this report, the terms Murphy, Murphy Oil, we, our, its and Company
may refer to Murphy Oil Corporation or any one or more of its consolidated
subsidiaries. The Company's interest percentage in exploration and production
projects and other jointly owned facilities is shown following the name of each
field, block or facility.
- - --------------------------------------------------------------------------------
CONTENTS
- - --------------------------------------------------------------------------------
Murphy Oil at a Glance 1
Summary of Operations 2
Highlights 3
Letter to the Shareholders 4
Exploration and Production 8
Refining, Marketing and Transportation 20
Corporate Responsibility 28
Summary of Photographs 29
Financial Review
Selected Financial Information 30
Management's Discussion and Analysis 31
Quarterly Information 38
Report of Management 39
Independent Auditors' Report 39
Consolidated Financial Statements 40
Notes to Consolidated Financial Statements 44
Supplemental Oil and Gas Information 54
Statistical Summary 59
Directors and Officers 61
Principal Subsidiaries 62
Corporate Information
(inside back cover)
<PAGE>
- - --------------------------------------------------------------------------------
MURPHY OIL AT A GLANCE
- - --------------------------------------------------------------------------------
[GRAPH - INCOME FROM CONTINUING OPERATIONS BEFORE SPECIAL ITEMS]
[GRAPH - CASH FLOW FROM CONTINUING OPERATIONS BEFORE SPECIAL ITEMS]
Murphy Oil Corporation is a worldwide oil and gas exploration and production
company with refining and marketing operations in the United States and the
United Kingdom.
Strong management, good strategic decisions and an entrepreneurial approach
throughout the Company have enabled Murphy to stake its claim as one of the
industry's strongest performers. In 1997, proved reserves grew for the seventh
consecutive year. Production rose 14 percent to record levels and discoveries
currently under development support continued growth well into the next century.
Aggressive acreage acquisition efforts focused on securing a strong position in
the deepwater Gulf of Mexico and the U.K. Atlantic Margin. Refining, marketing
and transportation operations emerged from a prolonged downturn to post
impressive operational and financial performances. The Company's commitment to
workplace and environmental safeguards continued to result in safety performance
well above general industry averages and operations that utilize cutting-edge
technology and sound science to protect the world's natural resources.
Against the backdrop of 1997's success and given the Company's strength across
an array of important indicators--a pristine balance sheet, growing production
and reserves, a robust exploratory prospect portfolio and sound operating
performance--Murphy is solidly positioned for future growth and increased
shareholder value.
1
<PAGE>
- - --------------------------------------------------------------------------------
SUMMARY OF OPERATIONS
- - --------------------------------------------------------------------------------
[GRAPH - CAPITAL EXPENDITURES]
[GRAPH - LONG-TERM OBLIGATIONS]
EXPLORATION AND PRODUCTION
Upstream operations are the premier long-term growth vehicle for Murphy Oil. The
Company has substantial exploration acreage positions in its politically secure
core areas of the Gulf of Mexico, Canada and the U.K., and in a number of
frontier areas that provide potential for significant reserve additions. Core
area exploration is highlighted by deepwater activity in the Gulf of Mexico, and
a frontier area of particular interest is the emerging Atlantic Margin play,
west of the U.K. and Ireland. Murphy's active and diversified exploration
program is designed to add to an already growing production profile. The first
of several significant additions to the Company's established core area
production was realized in late 1997 with the start-up of the Hibernia oil
field, offshore eastern Canada, the first field to be placed on stream in the
Jeanne d'Arc Basin. U.K. oil production is set to double with a mid-1998
commencement of production from two fields, including the second field to be
placed on stream in the Atlantic Margin. Murphy also has an interest in
Syncrude, the world's largest producer of light, sweet crude oil from oil sands,
where plans for significant increases in production have been announced.
Finally, further oil production growth is assured with the recent approval of
plans to develop the Terra Nova field, located to the southeast of Hibernia. All
told, Murphy has one of the most attractive production profiles in the oil
industry.
REFINING, MARKETING AND TRANSPORTATION
The resurgence of Murphy's downstream operations exemplifies the Company's
dedication to lean, tough and smart management that produces bottom-line
results. In 1997, record onstream efficiency and the ability to process less
expensive crude oil enabled Murphy's U.S. downstream operation to record its
most profitable year ever. A program with Wal-Mart to build retail stations in
the parking lots of Wal-Mart Supercenters and SAM'S Clubs in selected markets is
beginning to tap a market niche already established overseas but heretofore
underdeveloped in the U.S. In the U.K., where Murphy has partial ownership in a
refinery serving a marketing area covering much of England and Wales, profits
were up 48 percent. The Company also purchases, transports and resells crude oil
in Canada.
2
<PAGE>
- - --------------------------------------------------------------------------------
HIGHLIGHTS
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
FINANCIAL 1997 1996 1995
------------------------------------------------------------------------------------------------------------
(Thousands of dollars except per share data)
------------------------------------------------------------------------------------------------------------
FOR THE YEAR/1/
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $ 2,137,767 2,022,176 1,631,780
Income (loss) from continuing operations 132,406 125,956 (127,919)
Net income (loss) 132,406 137,855 (118,612)
Cash dividends paid 60,573 58,294 58,257
Capital expenditures for continuing operations 468,031 418,056 287,151
Net cash provided by continuing operations 401,843 472,480 309,878
Average Common shares outstanding - diluted 44,960,907 44,904,636 44,832,463
------------------------------------------------------------------------------------------------------------
AT YEAR-END
------------------------------------------------------------------------------------------------------------
Working capital $ 48,333 56,128 87,388
Total assets 2,238,319 2,243,786 2,098,466
Notes payable and capitalized lease obligations 28,367 20,871 21,647
Nonrecourse debt of a subsidiary 177,486 180,957 171,499
Stockholders' equity 1,079,351 1,027,478/2/ 1,101,145
------------------------------------------------------------------------------------------------------------
PER SHARE OF COMMON STOCK/1/
------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations - diluted $ 2.94 2.80 (2.85)
Net income (loss) - diluted 2.94 3.07 (2.65)
Cash dividends paid 1.35 1.30 1.30
Stockholders' equity 24.04 22.90 24.56
------------------------------------------------------------------------------------------------------------
</TABLE>
/1/ Includes special items that are detailed in Management's Discussion
and Analysis, page 31.
/2/ Reflects $172,561 charge for distribution of common stock of Deltic
Timber Corporation to stockholders.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
OPERATING 1997 1996 1995
<S> <C> <C> <C>
------------------------------------------------------------------------------------------------------------
Net crude oil and gas liquids produced - barrels a day 57,494 53,210 57,015
United States 10,760 11,645 13,736
International 46,734 41,565 43,279
------------------------------------------------------------------------------------------------------------
Net natural gas sold - thousands of cubic feet a day 268,669 220,633 251,726
United States 211,207 155,017 189,250
International 57,462 65,616 62,476
------------------------------------------------------------------------------------------------------------
Crude oil refined - barrels a day 161,560 157,886 155,503
United States 134,854 126,586 125,157
United Kingdom 26,706 31,300 30,346
------------------------------------------------------------------------------------------------------------
Petroleum products sold - barrels a day 182,337 169,973 161,911
United States 153,116 136,104 130,394
United Kingdom 28,977 33,615 31,234
Canada 244 254 283
------------------------------------------------------------------------------------------------------------
</TABLE>
[GRAPH - NET HYDROCARBONS PRODUCED]
[GRAPH - REFINED PRODUCTS SOLD]
3
<PAGE>
[PHOTOGRAPH APPEARS HERE]
Murphy is a thriving and vibrant company. Our performance shows we are a company
that is making good--and tough--decisions based on a strategic vision of the
future.
- - --------------------------------------------------------------------------------
LETTER TO THE SHAREHOLDERS
- - --------------------------------------------------------------------------------
Dear Fellow Shareholder:
This is the fourth time I have had the privilege to report to my fellow
shareholders as President and CEO of Murphy Oil Corporation. It is with pride
and great satisfaction that I tell you Murphy is a thriving and vibrant company,
well positioned for continued growth and success. Naturally, the most tangible
evidence is financial performance. In 1997, Murphy Oil Corporation earned $132.4
million, $2.94 a share, a net income record from exploration and production and
refining and marketing operations, breaking a mark set in 1996. Return on
capital employed of 10.4 percent in 1997 marked the second consecutive year that
this important performance measure scored in double digits.
In my report to you last year, I noted that 1996 was "a turnaround year" for us
and a year of significant
[GRAPH - RETURN ON CAPITAL EMPLOYED]
4
<PAGE>
corporate change as Deltic Timber Corporation was spun off to shareholders as a
debt-free, independent, market-valued company. The bottom-line results from
1997, which continued 1996's record performance, are a clear indication that our
turnaround will, in fact, stay around. Your Company's long-term prospects and
current value are stronger than ever.
Let's review the facts. Proved reserves increased for the seventh consecutive
year as your Company replaced 165 percent of its worldwide hydrocarbon
production in 1997. Production increased 14 percent on a barrel-equivalent
basis, setting a Company record, primarily due to natural gas discoveries made
in the Gulf of Mexico during 1996 that were promptly put on stream. There is
much more to come. In November, the Hibernia field (6.5%) commenced production--
on budget, ahead of schedule and bigger than originally advertised. Conservative
reserve projections now put the field at 615 million barrels compared to our
estimate of 485 million barrels when we acquired the field in 1992. Peak
production will be 135,000 barrels a day, although plans are being studied to
increase that figure substantially. Hibernia ownership ensures Murphy of a large
production increase at very low equity cost and surprisingly low lifting costs.
Hibernia improves our already strong production profile that includes proven
performers such as Syncrude (5%). Syncrude had a very positive financial impact
on Murphy in 1997, as earnings from this operation totaled $14.3 million. The
project's owners are currently investing in technology designed to improve
environmental protection and energy efficiency, while also increasing product
yield. In fact, Syncrude announced plans during 1997 to more than double its
production during the next 10 years to over 400,000 barrels a day or
approximately 20,000 barrels a day net to Murphy. Further augmenting production
growth is the midyear 1998 start-up of two U.K. fields--Schiehallion (5.9%) and
Mungo/Monan (12.7%). These additions will bring our production in northwestern
Europe to nearly 30,000 barrels a day. Lastly, but significantly, in January
1998 Canadian government approval was received to develop the Terra Nova field
(12%), located 22 miles southeast of Hibernia. First oil at Terra Nova is
anticipated no later than 2001.
What about production growth beyond this? Exploration efforts in 1997 led to
discoveries at Ship Shoal Blocks 166/167 (33-50%) and Eugene Island Block 335
(60%). The latter comes on stream in the first quarter of 1999, adding
approximately 25 million cubic feet a day to our U.S. natural gas production.
Importantly, in 1997 we stepped up Gulf of Mexico deepwater exploration
activity. After spending four years building an acreage position (we now own 80
deepwater leases) and forging drilling partnerships, we will spud four deepwater
wildcats during the balance of 1998. Furthermore, we added to our Atlantic
Margin position west of Britain and Ireland, and we now participate in six
separate tranches in this high-potential play.
Historically, downstream has been a smaller part of the Murphy portfolio, but
last year it was an extremely important one. In 1997, Murphy's downstream turned
in a solid financial and operational performance. Worldwide downstream
operations earned $56.7 million in 1997 as compared to $14.1 million in 1996.
Our U.S. refining and marketing operation turned in its best year ever, earning
$41.3 million. Operationally, downstream continued its strong performance, with
a composite 98 percent onstream time at the U.S. refineries. New records were
also established for refinery throughputs and product sales volume.
[GRAPH - HYDROCARBON PRODUCTION REPLACEMENT]
At Murphy, we are building on a legacy of leadership and innovation. In today's
world, that translates into a global perspective and a resolve to capitalize on
opportunities.
5
<PAGE>
Furthermore, downstream operations reflect the entrepreneurial spirit we have
worked hard to foster throughout all facets of the Murphy enterprise. Murco
Petroleum in the U.K., for example, came back from the scrapped merger with
Chevron and Elf to revitalize promising stations, jettison nonperforming ones,
claim new commercial business and make a handsome profit to boot. In the U.S.,
this entrepreneurship led to a pilot project with Wal-Mart to build service
stations at selected Supercenters and SAM'S Clubs.
This Company continues to pursue with vigor and success our goals of
long-term growth, market expansion, environmental stewardship and aggressive
exploration. Through hard work, creativity and sometimes sheer stubbornness, we
are performing better than ever in one of the most competitive industries in the
world. Nonetheless, the challenges keep coming. The decline in crude oil prices
at the end of 1997 and in early 1998 will exact a financial toll. As always, we
will strive to convert this into opportunities to acquire appropriately priced
assets.
As in most years, there were a number of personal milestones in 1997, two of
which I would especially like to note. Barry Sales, who managed our U.K.
marketing, retired in December after 23 years with Murphy. During his tenure, it
was (and remains) a well-managed and profitable operation. Finally, all of us at
Murphy, and indeed around the state of Arkansas, mourned the death of Johnie
Murphy. She was a great lady, generous of spirit and warm of heart with an
infectious charm. Her gifts to her family, to her community and to this Company
endure.
We thank you for your continued support and confidence.
/s/ Claiborne P. Deming
Claiborne P. Deming
President and Chief Executive Officer
March 12, 1998
El Dorado, Arkansas
[PHOTOGRAPH APPEARS HERE]
Murphy continues to pursue its goals with vigor and success. We are up to the
challenge of continuing that success in 1998 and beyond.
6
<PAGE>
- - --------------------------------------------------------------------------------
MURPHY OIL CORPORATION POSTED SIGNIFICANT ACHIEVEMENTS IN 1997
- - --------------------------------------------------------------------------------
[FIVE PHOTOGRAPHS APPEAR ON THIS PAGE]
Income from continuing operations before special items was a record $132.3
million, an increase of 27% over 1996.
U.S. downstream earned a record $41.3 million.
Daily hydrocarbon production set a record at 102,272 barrels of oil equivalent.
Cash flow before special items increased 15% over 1996 to $470 million.
Murphy realized a 10.4% return on capital employed for the second consecutive
year.
Dividends increased 10 cents per share to an annualized rate of $1.40 per share.
Proved reserves increased for the seventh consecutive year as Murphy replaced
165% of its worldwide hydrocarbon production in 1997.
7
<PAGE>
[PHOTOGRAPH APPEARS HERE]
[WORLDWIDE OPERATIONS MAP--WESTERN HEMISPHERE]
--------------------------
EXPLORATION AND PRODUCTION
--------------------------
[PHOTOGRAPH APPEARS HERE]
Murphy Oil Corporation explores for and produces oil and natural gas throughout
the world.
AN OVERVIEW
Murphy's exploration and production programs are the cornerstones of the
Company's plans for growth. Murphy's upstream operations are characterized by
profitable and consistent production growth and a diversified and efficient
exploration program in strategically defined areas. The Company actively pursues
exploration rights in the United States and around the globe, thereby spreading
the risk, while maximizing its ability to identify and develop profitable
fields.
Exploration and production activities earned $85 million in 1997, or 60 percent
of total Company earnings from operating segments. Murphy's proved reserves
increased at year-end 1997 to 362 million barrels of oil equivalent. This is the
seventh consecutive year that the Company's additions to proved reserves have
more than replaced its production.
Worldwide production increased to a record 102,272 barrels of oil equivalent a
day, up 14 percent from 1996 production levels.
8
<PAGE>
[WORLDWIDE OPERATIONS MAP--EASTERN HEMISPHERE]
- - --------------------------------------------------------------------------------
EXPLORATION AND PRODUCTION
- - --------------------------------------------------------------------------------
(Thousands of dollars) 1997 1996
- - --------------------------------------------------------------------------------
Income contribution* $ 84,984 101,831
Total assets 1,402,684 1,347,425
Capital expenditures 423,181 373,984
- - --------------------------------------------------------------------------------
Crude oil and liquids produced - barrels a day 57,494 53,210
Natural gas sold - MCF a day 268,669 220,633
Net proved hydrocarbon reserves - thousands
of barrels of oil equivalent 362,100 337,600
- - --------------------------------------------------------------------------------
*Before special items.
Murphy's core operating areas include four of the premier oil and natural gas
basins in the world: the Gulf of Mexico, the Canadian Western Sedimentary Basin,
the Jeanne d'Arc Basin off the east coast of Canada and the U.K. North Sea.
The Company's record production in 1997 is largely due to a 23-percent increase
in barrel-equivalent production in the U.S. The increase was due primarily to
the ability of the Company's innovative engineering staff to realize early
production from discoveries made in 1996.
U.S. exploration activity focuses on three distinct areas: deepwater Gulf of
Mexico, the Outer Continental Shelf of the Gulf and onshore South Louisiana.
Murphy's strategic goals are to create significant reserve additions with its
deepwater activity, to maintain production on the shelf while divesting high
lifting cost properties, and to maximize cost efficiencies by realizing early
production opportunities from the onshore program.
Murphy's investment in an emerging core area, offshore eastern Canada, began
paying dividends in 1997 as the Hibernia oil field (6.5%) came on stream. The
Company's interest in the Jeanne d'Arc Basin also includes the nearby Terra Nova
oil field (12%). Industry interest in the exploration potential of the basin is
high, and Murphy participated with nine other companies in a 3-D seismic study
conducted over much of the more prospective areas. Murphy's activities in Canada
also include an interest in Syncrude (5%), the world's largest producer of
synthetic crude oil. Light, sweet crude oil from oil sands could eventually
provide half of Canada's crude oil production.
Murphy's frontier exploration and production activities involve greater risk and
potentially greater reward than those in core areas. Frontier areas include the
U.K. Atlantic Margin, South America, China, Spain, the Philippines, Pakistan and
Alaska.
The U.K. has long been an important part of Murphy's exploration and production
activities, but during 1997, it assumed even greater significance. Production in
the region is expected to double by mid-1998 with the
9
<PAGE>
addition of two new fields. One of these, Schiehallion (5.9%), confirmed
Murphy's assessment of the exploration potential of the Atlantic Margin.
Following this success, the Company expanded its exploration presence in the
area in 1997 by securing a 25-percent interest in more than 650,000 exploration
acres.
South America is home to one of the industry's highest profile unexplored
basins--the Falkland Islands. Murphy has a 25-percent interest in a block that
will be the site of the first well drilled in the basin.
The history of Murphy's international frontier exploration and its development
of significant production capacity in emerging basins has been guided by a
commitment to seek out opportunities with the potential to build the Company.
That entrepreneurial spirit is tempered and balanced by a continuing focus on
the secure and established basins Murphy knows best. Murphy's management has
developed a strategic and integrated approach to exploration and production that
capitalizes on the Company's historic strengths and positions it for future
growth.
A review by core and frontier areas of the Company's principal exploration and
production activities is presented in the sections that follow. 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.
[PHOTOGRAPH APPEARS HERE]
[GRAPH - INCOME CONTRIBUTION--EXPLORATION AND PRODUCTION]
[GRAPH - CAPITAL EXPENDITURES--EXPLORATION AND PRODUCTION]
Murphy's exploration and production programs are the cornerstones of the
Company's plans for growth.
10
<PAGE>
[PHOTOGRAPH APPEARS HERE]
In 1997, Syncrude, the world's largest producer of light, sweet crude oil from
oil sands, announced plans to more than double production during the next 10
years to over 400,000 barrels a day, approximately 20,000 barrels net to Murphy.
[PHOTOGRAPH APPEARS HERE]
When production commences in 1998, Schiehallion will be one of only two
producing fields in the U.K. Atlantic Margin. Innovative use of a floating
production system enhances project economics by significantly reducing capital
and operating costs.
11
<PAGE>
- - --------------------------------------------------------------------------------
CORE EXPLORATION AND PRODUCTION: UNITED STATES
- - --------------------------------------------------------------------------------
[PHOTOGRAPH APPEARS HERE]
Operations in the U.S. are a significant contributor to Murphy's exploration and
production activities. In 1997, U.S. production averaged 45,961 barrels of oil
equivalent a day--a 23-percent increase driven by a 36-percent increase in
natural gas production. During the year, Murphy continued to strengthen its
investment in U.S. exploration by further concentration on three major areas--
deepwater Gulf of Mexico, the Outer Continental Shelf of the Gulf of Mexico and
onshore South Louisiana. The Company added 78 billion cubic feet of natural gas
equivalent to its U.S. proved reserves in 1997.
During 1998, Murphy plans to invest 63 percent of its worldwide exploration
budget in the U.S., with an ongoing emphasis in the Gulf of Mexico on both
deepwater and continental shelf prospects. The Company will continue to pursue
early production opportunities in South Louisiana in an effort to maximize
production gains.
DEEPWATER GULF OF MEXICO
Due to the excellent producibility of the deepwater Gulf of Mexico reservoirs,
progressive expansion of the infrastructure and royalty relief, discoveries in
this area have been consistently profitable.
Murphy was an early entrant in the deepwater Gulf. With the addition of 27
leases (25-100%) in 1997, the Company has a total of 80 deepwater leases in the
Gulf of Mexico. Eight prospects on 11 leases have been further delineated with
3-D seismic data. At least four of these wells should be drilled in 1998; Murphy
is the operator of two.
One issue of importance in the deepwater Gulf of Mexico is rig availability, and
Murphy has taken steps to ensure that it will have access to equipment to
continue exploration activities in this area. Along with two other oil
companies, Murphy has signed a five-year contract for a deepwater drilling rig.
The agreement provides each company use of the rig for one-third of the
contract. The rig, capable of drilling in depths up to 6,000 feet of water, is
scheduled to be available in mid-1999.
OUTER CONTINENTAL SHELF OF THE GULF OF MEXICO
Murphy also has a major presence on the Outer Continental Shelf of the Gulf of
Mexico. The continental shelf has an established infrastructure and allows for
steady production with lower risk than deepwater exploration. During 1997, the
Company added to its substantial shelf acreage position with the acquisition of
11 new leases (60-80%).
Natural gas production from West Cameron Block 631 (60%), located in 325 feet of
water, began in February 1997, just 10 months after drilling of the second
discovery well, due to the Company's ability to convert existing processing
facilities. Natural gas production from the field averaged 33 million cubic feet
a day for the year.
Similarly, Eugene Island Block 322 (50%), located in 254 feet of water, came on
stream in June 1997, nine months after drilling of the second discovery well and
with the use of an existing processing facility. The discovery on Ship Shoal
Blocks 166/167 (33-50%) came on stream in December 1997. Eugene Island Block 323
(50%) commenced production in February 1998. A satellite structure was installed
in this field, and production is piped to facilities at Eugene Island Block 322.
Combined production from these discoveries averages 32 million cubic feet of
natural gas equivalent a day.
The remaining development wells at Viosca Knoll Block 783 (30%) came on stream
in 1997, and production at this field for the year averaged 25 million cubic
feet of
[PHOTOGRAPH APPEARS HERE]
12
<PAGE>
natural gas equivalent a day. One of Murphy's better discoveries of the year,
Eugene Island Block 335 (60%), is expected to start producing natural gas in
early 1999 at a rate of approximately 25 million cubic feet a day.
The Destin Dome Block 56 unit (33%) is one of the largest undeveloped natural
gas discoveries remaining in the U.S. Located in federal waters 30 miles off the
coast of Florida, three previously drilled exploratory wells have confirmed a
significant reservoir of dry natural gas in the Norphlet sandstone. Murphy and
its two partners filed a development plan with the U.S. Minerals Management
Service in November 1996. A rigorous regulatory process designed to protect the
environment and ensure compatibility with other uses of surrounding areas is
under way. Completion of the process could extend into late 1999.
ONSHORE SOUTH LOUISIANA
Murphy is currently pursuing a program involving third-party review of the
Company's existing 2-D seismic database to identify new prospects, thereby
minimizing cost and spreading risk. Further delineation utilizing 3-D seismic
data is expected to result in the drilling of two to three of these prospects
each year. At year-end 1997, a well at the N.E. Wright field (50%) was in
progress.
[GULF OF MEXICO MAP]
[GRAPH - CRUDE OIL AND NGL PRODUCTION]
[GRAPH - NATURAL GAS SALES]
13
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CORE EXPLORATION AND PRODUCTION: CANADA
- - --------------------------------------------------------------------------------
Canada is Murphy's largest source of crude oil production, and the Company's
portfolio includes some of the country's legacy properties.
During 1997, Murphy's Canadian production averaged 32,547 barrels of oil
equivalent a day, an increase of 10 percent over 1996 levels. The Company's
Canadian exploration and production operations are located in two primary
geographic areas: the Jeanne d'Arc Basin off Canada's east coast and western
Canada, including the Athabasca Oil Sand Deposit in Alberta.
THE JEANNE D'ARC BASIN -- HIBERNIA AND TERRA NOVA
The initiation of production at Hibernia (6.5%) in November marked a milestone
for Canada and Murphy and provided a springboard for continued growth. Projects
of this magnitude require creative problem-solving ideas and cutting-edge
technological ability and equipment. The partnership that developed Hibernia
brings together those attributes, as well as hundreds of years of exploration
and production experience, making Hibernia a solid investment.
And it is an investment that provides Murphy with an exceptional rate of return.
Due to a favorable financing package negotiated at the time Murphy acquired its
interest, the Company's equity investment in the project as production commenced
was approximately $1.25 a barrel. With a 20-year life span, Hibernia is expected
to be highly profitable well into the future.
Hibernia's production and drilling platform uses state-of-the-art environmental
protection technology to tap one of the world's largest crude oil discoveries of
the past quarter century. Recoverable reserves at Hibernia are conservatively
estimated to be 615 million barrels of oil equivalent. Peak gross production of
approximately 135,000 barrels a day will be reached as rapidly as possible
consistent with high safety and environmental protection standards. Current
estimates indicate that this production level will be achieved by early 1999.
The operating company is studying alternatives whereby additional investment in
equipment and technology could boost production well beyond designed rates.
Hibernia's platform, which is nearly one acre in size, is the first in North
America to use a concrete gravity base structure and the first in the world
designed to withstand
[PHOTOGRAPH APPEARS HERE]
Peak gross production at Hibernia should reach 135,000 barrels of oil a day by
early 1999 and could increase substantially with additional investments of
equipment and technology.
[OFFSHORE EASTERN CANADA MAP]
14
<PAGE>
the impact of an iceberg. Two 850,000-barrel, double-hulled tankers, designed to
operate in the harsh environment of the North Atlantic, will load from the
platform and will initially shuttle crude oil directly to refineries until a
Newfoundland onshore terminal is completed in late 1998.
The Company's holdings in the area also include a 12-percent interest in the
Terra Nova oil field, located 22 miles southeast of Hibernia. With estimated
reserves of 300 to 400 million barrels, Terra Nova is projected to come on
stream late in the year 2000, at a gross production rate of approximately
115,000 barrels of oil a day. In early 1998, the Canadian government sanctioned
the project, and the Terra Nova partners announced their decision to proceed
with development.
The Company is actively seeking additional exploration opportunities in the
Jeanne d'Arc Basin and continues to participate in bidding at crown land sales.
Murphy has a 25-percent interest in Cape Race, a 34,000-acre exploration license
located between Hibernia and Terra Nova. Seismic surveys conducted in 1997 are
under evaluation. Should results prove encouraging, an exploratory well could be
drilled in 1999.
WESTERN CANADA--SYNCRUDE
Long-life production in Canada is also provided by Murphy's five-percent working
interest in the Syncrude project, located in the Athabasca Oil Sand Deposit in
Alberta. Syncrude is the world's largest producer of light, sweet crude oil from
oil sands and is the single largest source of oil in Canada. Syncrude combines
mining, extraction and upgrading technologies to convert oil sands to synthetic
crude oil.
Syncrude achieved record gross production during 1997, averaging over 207,000
barrels of oil a day. Murphy's 1997 earnings from the project totaled $14.3
million. With investments in new technology to improve productivity and reduce
costs, this project is expected to remain highly profitable well into the next
century. Syncrude has announced plans to invest a total of $4 billion in
technology and projects that will double production by 2007 and generate an even
lighter, lower sulfur crude oil than is currently being produced.
While Syncrude has historically invested heavily in environmental improvements,
the planned new investments include more than $420 million to improve
environmental protection while increasing product yield. By 2006, sulfur dioxide
emissions per barrel are projected to fall by 70 percent from 1990 levels.
Similarly, Syncrude's production costs are projected to decrease significantly
over the next decade.
WESTERN CANADA--CONVENTIONAL
Murphy's conventional hydrocarbon activities in western Canada are focused on
increasing natural gas production and enhancing the profitability of the
Company's vast heavy oil reserves.
In 1997, the Company was able to maintain its natural gas production through
workovers and development drilling in existing fields. The Company is also
developing a broad natural gas prospect portfolio in Canada and will drill at
least three impact exploratory wells in 1998. In late 1997, a significant gas
discovery at Josephine (50%) in the Peace River Arch added 7.5 billion cubic
feet of proved reserves, augmenting previous reserve additions at Umbach (50%)
and Boundary Lake South (50%). Delineation at these fields continues in 1998.
Murphy's strategy for profitable heavy oil production in Canada is focused on
lowering production costs, which is made possible by the quality of Murphy's
Canadian reserves and use of the best technology. This allows the Company to
weather downturns in pricing, such as that being experienced in early 1998.
[PHOTOGRAPH APPEARS HERE]
Murphy is piloting the use of Steam Assisted Gravity Drainage technology to
increase production at its heavy oil projects.
15
<PAGE>
Productivity at Murphy's heavy oil projects in Canada has been significantly
increased by the Company's ability to leverage new and existing technology.
Murphy co-pioneered the first application of Steam Assisted Gravity Drainage
(SAGD) technology in Saskatchewan by using horizontal wells at its Tangleflags
project (50%). This project has commercially recovered eight million barrels of
oil since 1987 from a quality channel sand that contains 95 million barrels.
New pumping technology has led to commercial primary production from the
Lindbergh field (100%), where the Company has historically conducted only
thermal operations, and peak production rates of 2,500 barrels a day were
achieved during 1997. Also at Lindbergh, piloting of SAGD technology continued
in the thicker sands. This oil is immobile at reservoir temperatures but flows
readily once heated. Although Murphy has not yet developed commercially viable
recovery techniques for current price levels, estimated oil in place of over one
billion barrels encourages further technology development.
Murphy's light oil production in western Canada declined in 1997 due to the
mature nature of the Company's producing property base. As production and income
from Hibernia replace this historically important position in the portfolio, the
Company will accelerate its disposition of these assets.
[TWO PHOTOGRAPHS APPEAR HERE]
Murphy's earnings from the Syncrude project increased 18% to $14.3 million.
16
<PAGE>
[PHOTOGRAPH APPEARS HERE]
The midyear start-up of the two U.K. fields will bring production in
northwestern Europe close to 30,000 barrels a day.
- - --------------------------------------------------------------------------------
CORE EXPLORATION AND PRODUCTION: UNITED KINGDOM
- - --------------------------------------------------------------------------------
Murphy's core area of exploration and production in the U.K. is in the North
Sea, where production from the Ninian, "T" Block and Amethyst fields averaged
15,963 barrels of oil equivalent a day in 1997, essentially unchanged from a
year ago. Industry activity in the area remains high. The key to success in the
North Sea is access to acreage, and Murphy's strategy is to continue to
participate actively in licensing rounds, with an emphasis on increasing
ownership interest levels and securing operatorship.
NORTH SEA
Murphy's substantial U.K. North Sea production is set to increase with the
mid-1998 start-up at Mungo/Monan (12.7%). Developed jointly with five other oil
and gas fields as part of the Eastern Trough Area Project (ETAP) integrated
development, Mungo will be produced from a normally unmanned platform, while
Monan will use a subsea system. Both fields will produce to a two-platform
central processing facility.
Jackets for all three ETAP platforms were set and pipelines and other subsea
facilities were installed in 1997. Installation of the topsides will take place
in the spring of 1998, and first oil is expected in mid-1998. Peak gross
production is expected to reach 65,000 barrels of oil and gas liquids a day for
Mungo and Monan combined.
Elsewhere in the North Sea, operatorship of the Ninian field (13.8%) changed in
1997, with a primary emphasis on cost control. As a result, operating costs were
reduced 12 percent. Two new wells were drilled and completed during 1997 at
Ninian, and increased drilling is planned for 1998. On the Ninian satellite
fields, drilling of the second well was in progress at year-end 1997 at Columba
B (5.4%), and drilling of an appraisal well is scheduled for early 1998 at
Columba E (5.8%).
In 1997, the Company completed a successful exploration step-out well at Block
16/17, "T" Block (11.3%), on the north flank of the Tiffany field.
Successful exploratory drilling at Block 16/6b (the Dalmore discovery, 37.5%)
found oil in shallow Paleocene-age sands. Reevaluation of 3-D seismic data
covering this area will occur in 1998, and additional appraisal drilling will be
required before commerciality can be determined.
Murphy acquired interests in an additional 196,000 exploration acres in the U.K.
North Sea in 1997. In "Tranche 1," Blocks 38/9 and 38/10 (40%, Operator) located
on the east end of the Mid North Sea High, 900 kilometers of seismic data will
be evaluated during 1998. Blocks 29/20a and 30/21 (100%, Operator), located on
the western flank of the Central Graben adjacent to the Auk field, were acquired
through an equity swap.
ATLANTIC MARGIN
Murphy's philosophy that a presence in major hydrocarbon basins will lead to
good things is reinforced by an interest in the Schiehallion field (5.9%). A
well drilled in 1994 on acreage acquired as part of the Company's U.K.
exploration efforts confirmed the viability of the emerging Atlantic Margin
play. First production from Schiehallion is expected in mid-1998, and peak gross
production is forecast in excess of 130,000 barrels of oil a day. In 1997,
installation of infield pipelines was completed, while the construction of a
floating production storage and offloading vessel was nearly complete at year
end. Development drilling and completion operations will continue well beyond
first oil.
[PHOTOGRAPH APPEARS HERE]
Murphy Oil developed Mungo/Monan in alliance with five other oil and gas fields
as part of the Eastern Trough Area Project.
17
<PAGE>
- - --------------------------------------------------------------------------------
EXPLORATION AND PRODUCTION: FRONTIER
- - --------------------------------------------------------------------------------
Murphy's management believes the Company has the right geographic spread, the
right risk spread, the right expertise and the right prospects for growing the
Company long-term. As part of developing a strong exploration and production
profile, Murphy has pursued an active and calculated interest in developing
properties, obtaining acreage and entering joint-venture projects in areas
where, though risky, high reward is possible. Exploration and production
activities in these frontier areas are part of management's strategy to position
the Company for substantial future growth.
U.K. ATLANTIC MARGIN
The Atlantic Margin is an area of intense industry activity, and Murphy, because
of its early firsthand understanding of the geology in the Schiehallion field,
has a strong acreage position in this developing frontier. The Company's
strategy of acquiring quality acreage early has resulted in ownership of 24 full
blocks and three partial blocks that encompass a total of 1.39 million acres.
Murphy's average working interest is 25 percent.
In 1997, the Company acquired 25-percent interests in over 650,000 acres,
including U.K. Tranches 36 and 48 and Ireland License 6/97. Murphy's 1998
exploration program is to acquire and evaluate seismic data on this acreage.
Depending on the evaluation, drilling is expected to commence in 1999.
Murphy has also joined a study/bid group with several other oil companies to
evaluate acreage on offer in the Faroe Islands First Licensing Round and in
future U.K. licensing rounds.
[UNITED KINGDOM MAP]
CHINA
In 1996, Murphy participated in a well that discovered oil on Block 04/36 (45%)
in Bohai Bay, northeastern China. The well tested at a combined gross rate in
excess of 6,000 barrels of oil a day from two zones below 11,000 feet. Three
appraisal wells were drilled in 1997, but commerciality is still uncertain.
Murphy is acquiring 3-D seismic data over the discovery area to further define
field limits.
[CHINA MAP]
SOUTH AMERICA
Murphy's production from Block 16 (20%) in Ecuador highlighted the Company's
1997 South American activities. In August, the Southern Production Facilities
went on line, a year ahead of schedule. In addition, eight development oil wells
were drilled, including three horizontal wells, with one completed at multiple
depths. Results from the horizontal wells are very encouraging. Production was
7,802 barrels of oil a day in 1997 compared to 6,005 in 1996. A plan by the
Ecuadoran government to expand pipeline capacity could allow for significant
field production increases.
The Falkland Islands exemplifies Murphy's frontier strategy of "high risk, high
reward" exploration. After acquiring a 25-percent interest in 400,000 acres in
an unexplored sedimentary basin north of the Islands in 1996, the Company
acquired and evaluated 2-D seismic data in 1997. The acreage contains several
large structures and the first of two exploratory wells is scheduled to spud in
mid-1998.
18
<PAGE>
Murphy's production activities in Ecuador highlighted the Company's 1997 South
American activities.
[PHOTOGRAPH APPEARS HERE]
Murphy submitted proposals on three exploration areas to the Brazilian
government during 1997. The Company, as a 100-percent operator, will enter
negotiations on one of the areas during 1998.
SPAIN
In early 1997, Murphy obtained a 35-percent working interest in two adjacent
exploration permits covering 345,000 acres off the northern coast of Spain. In
1998, the Company will acquire 3-D seismic data on the West Fragata permit.
The platform, wells and offshore facilities from the depleted Gaviota field are
utilized as part of Murphy's ALGA gas storage project (18%). ALGA handles
third-party natural gas in consideration for a tariff that covers the operating
cost of the gas storage operations and provides a return on capital invested.
Murphy completed one additional injection/production well and installed
additional onshore compression facilities during 1997.
PHILIPPINES
A Geophysical Survey and Exploration Contract (GSEC) (80%) covering
approximately 3.1 million acres in the northern Sulu Sea has been negotiated and
is awaiting signature by the Philippine president. The GSEC will involve the
acquisition of seismic data, with an option to drill an exploratory well.
PAKISTAN
Murphy is renegotiating the Kharan concession agreement (100%) of 1978, under
which it obtained the rights to explore 6.7 million acres in the province of
Baluchistan in the western part of the country. The acreage has long been held
by force majeure. If negotiations are successful, the Company anticipates
beginning seismic activities in 1998.
ALASKA
Murphy's formerly sizeable holdings in Alaska are now relatively minor, but they
continue to position the Company in an area of renewed interest to the industry.
Unresolved royalty and economic viability issues have delayed the development of
the Sandpiper (58%) and Northstar (2%) projects. During 1997, Murphy acquired a
25-percent interest in 15 leases in Alaskan state waters on which new 3-D
seismic data will be acquired in 1998.
19
<PAGE>
[PHOTOGRAPH APPEARS HERE]
[WORLDWIDE OPERATIONS MAP--WESTERN HEMISPHERE]
---------------------------
REFINING, MARKETING AND
TRANSPORTATION
---------------------------
[PHOTOGRAPH APPEARS HERE]
Murphy Oil conducts refining, marketing and transportation activities in the
United States, the United Kingdom and Canada.
AN OVERVIEW
In 1997, Murphy's worldwide refining, marketing and transportation operations
delivered its best operating performance ever. Compared to 1996, earnings
increased over 300 percent to $56.7 million, and combined throughputs at its
U.S. refineries (Meraux, Louisiana and Superior, Wisconsin) reached record
levels. Improved margins in the U.S. and the U.K. led the way to increased
profitability. Canadian pipeline throughputs increased 25 percent and 21 percent
for Manito and Cactus Lake, respectively.
Throughout its downstream operations, Murphy's commitment to improving the
return on assets through strategic capital investments, lowering operating costs
and appropriate joint ventures is proving effective and successful. The
operating environment in which the refining, marketing and transportation
segment competes
20
<PAGE>
[WORLDWIDE OPERATIONS MAP--EASTERN HEMISPHERE]
- - --------------------------------------------------------------------------------
REFINING, MARKETING AND TRANSPORTATION
- - --------------------------------------------------------------------------------
(Thousands of dollars) 1997 1996
------------------------------------------------------------------
Income contribution $ 56,738 14,102
Total assets 750,626 739,072
Capital expenditures 37,483 42,880
------------------------------------------------------------------
Crude oil processed - barrels a day 161,560 157,886
Products sold - barrels a day 182,337 169,973
Average gross margin on products sold -
dollars a barrel
United States $ 1.57 .25
United Kingdom 2.90 2.08
is volatile, difficult and evolving, but the Company continues to pursue those
activities and initiatives that will overcome these challenges.
Refining capital projects completed in the early and mid-1990s enable Murphy to
process higher sulfur, lower cost crude oil in the U.S. and to produce ultra
low-sulfur distillates in the U.K. As a result of these and other capital
improvements in the Company's refining and marketing facilities, and through the
realignment of operating departments, Murphy has lowered overhead and operating
costs and increased its ability to produce and deliver quality products at
competitive prices.
Refining capital expenditures declined 45 percent in 1997 as the Company's focus
shifted to operational efficiency and reliability. During the same period,
marketing capital expenditures increased by 86 percent, primarily due to
expansion of U.S. retail marketing operations. Two years ago, Murphy announced
plans to build high-volume retail gasoline stations in the parking lots of
Wal-Mart Supercenters and SAM'S Clubs in selected markets in the southeastern
U.S. Since then, 18 stations have been built, including 15 in 1997, under the
Murphy USA(R) brand. The one-stop shopping convenience this endeavor provides
to customers is a tried-and-true facet of European motor fuel marketing. In the
U.S., Murphy is among the first to utilize its integrated downstream assets to
leverage this type of marketing approach.
Following its withdrawal from negotiations to merge with two other companies,
Murphy's U.K. refining and marketing company launched a wide-ranging program to
refocus and further streamline its organization, reduce operating costs and
strengthen its marketing network. A high-pressure distillate hydrotreating unit
completed in 1996 allows the jointly owned Milford Haven refinery (30%) to
supply the U.K. market with cleaner-burning diesel fuel. Successful
implementation of strategic plans and operational changes together with the
closing of a nearby competitor's refinery have helped Murphy's system become one
of the most competitive in the U.K.
21
<PAGE>
[TWO PHOTOGRAPHS APPEAR HERE]
Murphy's natural gas marketing division continues to move gas production further
down the delivery system, and in 1997, 40 percent of the Company's daily volume
of natural gas production was sold directly to end users such as utilities. The
Company has made a commitment to carefully planned growth in this area. By
entering into firm transportation agreements and term sales--in effect leasing
pipeline space on an annual basis--Murphy has ensured that pipeline capacity is
available to gather and transport its natural gas production.
Murphy owns interests in five crude oil pipeline systems in western Canada. In
1997, the Murphy-operated Manito and Cactus Lake pipelines were expanded for the
second consecutive year in response to higher heavy oil production levels in
western Saskatchewan and eastern Alberta. With this new capacity, Murphy is able
to meet the increasing demands for reliable and economic transportation in the
areas it serves.
[GRAPH - INCOME CONTRIBUTION--REFINING, MARKETING AND TRANSPORTATION]
22
<PAGE>
[PHOTOGRAPH APPEARS HERE]
[GRAPH - CAPITAL EXPENDITURES--REFINING, MARKETING AND TRANSPORTATION]
[GRAPH - CANADIAN PIPELINE THROUGHPUTS]
23
<PAGE>
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REFINING, MARKETING AND TRANSPORTATION: UNITED STATES
- - --------------------------------------------------------------------------------
[UNITED STATES MAP]
Murphy's U.S. downstream operations posted earnings of $41.3 million, a record
financial performance. The 100,000-barrel-a-day refinery in Meraux, Louisiana
anchors the Company's Gulf Coast market, which serves the southeastern region of
the U.S. The refinery posted impressive throughput results in 1997, with average
crude runs of 101,150 barrels a day, an eight-percent increase over the previous
record achieved in 1996. The efficiency and reliability of this operation--the
refinery recorded a composite 98 percent onstream time in 1997--is the result
of prudent capital investment and careful management.
During 1997, Meraux completed the transition, begun in the early 1990s, from
processing a more expensive light, sweet crude oil to processing a medium, sour
crude oil imported from Latin America. Substantial cost savings resulted from
the refinery's processing over 100,000 barrels a day of the lower cost crude in
1997. Additionally, significant freight savings were realized through the
utilization of large capacity tankers that are offloaded at the Louisiana
Offshore Oil Port (3.2%), which is connected to the Meraux refinery through a
crude oil pipeline owned jointly with another company. Utilization of the
refinery's key process units, including the crude distillation unit and the two
fluid catalytic cracking units, exceeded 100 percent of rated capacities in
1997.
The petroleum products produced at the Meraux refinery are distributed via
pipeline and barges throughout an 11-state marketing area. Murphy's southeastern
distribution system includes 34 terminals, 22 of which are either wholly or
jointly owned by Murphy. The distribution system supplies gasoline to 346 owned
and branded wholesale stations, a net addition of 27 stations over year-end
1996. Products are marketed primarily under the SPUR(R) brand.
[PHOTOGRAPH APPEARS HERE]
24
<PAGE>
[PHOTOGRAPH APPEARS HERE]
The Company's refinery in Superior, Wisconsin processed 33,704 barrels a day of
crude oil in 1997, its best performance since 1977. Taking advantage of the
weakness in the pricing of low gravity crude oil, the refinery processed over
8,100 barrels a day of heavy Canadian asphaltic crude, an increase of more than
15 percent over recent years. Continued reliable operations, stable margins, and
strong light products and asphalt demand supported the increased throughputs.
Murphy's upper-midwestern distribution and marketing system covers a six-state
area. The distribution system includes 21 light products terminals, two of which
are wholly owned by Murphy. This system supplies gasoline to 239 owned and
SPUR(R) branded wholesale stations, a net addition of 31 stations for the
year.
In 1997, a record 1.68 million barrels of asphalt were sold through three
Murphy-owned terminals in the Upper Midwest. Fuel oil and marine diesel fuel
were sold directly into the active Superior/Duluth marine fueling market.
[GRAPH - MERAUX REFINERY--HEAVIER CRUDE OIL PROCESSED]
[GRAPH - MERAUX REFINERY--HIGHER SULFUR CRUDE OIL PROCESSED]
Murphy's Meraux refinery posted record throughputs in 1997.
[PHOTOGRAPH APPEARS HERE]
25
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REFINING, MARKETING AND TRANSPORTATION: UNITED KINGDOM
- - --------------------------------------------------------------------------------
Murphy's U.K. downstream operations earned $9.2 million in 1997, a 48-percent
increase over 1996, largely due to improved margins in retail marketing.
By cutting expenses, closing nonviable service stations, upgrading remaining
outlets and expanding into commercial fuels, the Company's marketing system has
become one of the most competitive in the U.K. It consistently earned profits
during the fierce retail price wars of the past two years, and its recently
developed wide-ranging strategic program strives to ensure that Murphy will
retain its position as a strong competitor.
Murphy has an effective 30-percent interest in the jointly owned Milford Haven
refinery in Wales. Refined products are transported by rail to the Company's
three cost-effective distribution terminals. The Company also receives products
by exchange at seven terminals owned by others.
The refinery continued its reliable operation of past years. A new high-pressure
distillate hydrotreating unit, commissioned in 1996, now enables the refinery to
produce cleaner-burning diesel fuel with a sulfur content of less than 50 parts
per million. The refinery processed a daily average of 26,706 barrels of crude
oil for the Company's account. The refinery's crude runs were reduced from
recent years, primarily due to a monthlong shutdown for planned maintenance.
The Company's retail marketing system in the U.K. includes 396 MURCO branded
stations.
[THREE PHOTOGRAPHS APPEAR ON THIS PAGE]
[UNITED KINGDOM MAP]
A high-pressure distillate hydrotreating unit at the jointly owned Milford Haven
refinery enables the facility to produce cleaner-burning diesel fuel with a
sulfur content of less than 50 parts per million.
26
<PAGE>
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REFINING, MARKETING AND TRANSPORTATION: CANADA
- - --------------------------------------------------------------------------------
Murphy's five crude oil pipeline systems in western Canada include two that
supply Canadian crude oil to pipelines at the U.S. border. The Murphy-operated
Manito (52.5%) and Cactus Lake (13.1%) pipelines increased throughputs by 25
percent and 21 percent, respectively, over 1996, while the North-Sask pipeline
(36.1%), completed in 1996, exceeded expectations by delivering an average of
15,600 barrels a day into the Manito system.
As previously mentioned, both the Manito and Cactus Lake pipelines were expanded
in 1996 and 1997 to meet the increasing demands for reliable and economic
transportation in western Saskatchewan and eastern Alberta. These successes were
counterbalanced, however, by nearly corresponding throughput reductions on the
U.S.-connected Wascana pipeline (100%), which was exposed to significant new
outside competition from third-party pipelines that commenced operations in
1997.
The Company also operates a fleet of crude oil and natural gas liquid haulers in
Canada. The 70-unit SPUR(R) trucking fleet transported over 48,000 barrels a
day in 1997, and earnings from the trucking operations improved by 30 percent
due to increased utilization.
Overall Canadian downstream operations earned $6.2 million in 1997, essentially
flat with 1996.
[TWO PHOTOGRAPHS APPEAR ON THIS PAGE]
27
<PAGE>
In all its operations around the globe, Murphy Oil accepts its responsibility
for environmental stewardship, employee safety and training, emergency
preparedness and community involvement.
- - --------------------------------------------------------------------------------
CORPORATE RESPONSIBILITY
- - --------------------------------------------------------------------------------
The Company's record of responsible corporate citizenship is a tribute to the
hard work, dedication and expertise of its employees and to clear, resolute and
unyielding management practices that emphasize continuous improvement, establish
high standards and encourage employees throughout the Murphy enterprise to
pursue excellence in all facets of their work. The Company has a comprehensive
set of standard operating procedures, a proven system of internal controls and a
published code of conduct for employees and monitors compliance to
environmental, safety, ethical and security policies using internal audit
procedures.
ENVIRONMENTAL PROTECTION AND PERFORMANCE
Since 1990, Murphy has invested more than $200 million in environmental
improvement projects. These projects include an upgrade in equipment and the
construction of a state-of-the-art waste water treatment plant at the Superior,
Wisconsin refinery; a new distillate desulfurizer along with facilities for the
production of reformulated gasoline at the Meraux, Louisiana refinery; and the
construction of a distillate desulfurizer at the Milford Haven refinery in
Wales. In Canada, a voluntary program of running corrosion survey tools on
Company-operated pipelines to monitor line integrity enables Murphy to make
repairs before a problem occurs.
Murphy's investments have produced results. The Superior refinery's waste water
treatment plant effluent is, for most parameters, better than Wisconsin's
standards for drinking water quality. In the U.K., Milford Haven produces
cleaner-burning diesel fuel with a sulfur content of less than 50 parts per
million, more than 90 percent below mandated limits. Overall, Murphy has reduced
air emissions from its refineries by 40 percent in the past eight years.
Murphy's exploration and production operations have adopted cutting-edge,
environmental and safety management policies and procedures that ensure the
efficient production of oil and gas while also achieving high levels of
compliance with all applicable government regulations. In the Gulf of Mexico,
upstream operations have a 99 percent or better compliance record for meeting
required aqueous discharge levels. As part of Murphy's dedication to continue
conscientious environmental and safety practices, the Company is participating
in a voluntary endeavor developed in conjunction with the Minerals Management
Service to implement a Safety and Environmental Management Program. This program
promotes management, training, design, construction, operating and maintenance
initiatives intended to maximize environmental protection and worker safety.
The Company's proactive approach to environmental stewardship is also evident in
its voluntary reclamation activities on U.S. onshore producing properties and in
its active participation in surface reclamation of well sites, roadways and
other facility sites as part of the ongoing Lloydminster Abandonment Program in
western Canada.
[PHOTOGRAPH APPEARS HERE]
EMPLOYEE SAFETY AND TRAINING
Each year, Murphy provides nearly 30,000 hours of training worldwide for safety
and emergency response programs. In addition, the Company offers a myriad of
professional development and personal enrichment classes to employees.
International, national and industry organizations, including the National
Petroleum Refiner's Association, the National Safety Council, the Gas Oil
Pipeline Safety Council, the Canadian OSHA and the Gas Processors Safety Council
have recognized Murphy's achievements with awards and commendations. Those
achievements include seven consecutive years without a lost-time injury in
Murphy's terminal operations. Murphy's exploration and production lost-time
accident incidence rate averaged 0.71 per 200,000 manhours worked over the last
eight years, well below industry norms. In addition, at the request of the
Federal Emergency Management Agency, Murphy's well-regarded emergency response
teams participated in a very successful disaster drill at the Meraux refinery.
COMMUNITY INVOLVEMENT
Murphy's employees and its management team are equal partners in efforts to
contribute positively to the communities in which Murphy's facilities are
located. Murphy and its employees are major contributors to the United Way, and
Murphy is recognized as a pacesetter company in each community where operations
are conducted. Employees volunteer countless hours in numerous educational,
civic and charitable endeavors
28
<PAGE>
including school boards, chambers of commerce, youth sports, girl and boy
scouts, mentoring, battered women's shelters, senior citizens' centers, the
American Red Cross and the American Cancer Society. In 1997, Murphy initiated a
Community Spirit Award, presented by President and CEO Claiborne Deming at an
annual awards dinner, to recognize outstanding volunteer efforts on the part of
Murphy employees and local citizens.
Murphy is also a leader in efforts to reward and encourage academic excellence.
The Company recently donated $50,000 toward the purchase of new equipment for
two science labs at the University of Wisconsin-Superior. The Murphy Education
Program is an innovative incentive program in El Dorado, Arkansas, site of the
Company's headquarters. The program awards financial stipends to high school
students demonstrating outstanding academic achievement in Advanced Placement
courses, SAT and ACT standardized testing and the National Merit Scholarship
program. The Company also sponsors scholarship programs in Alberta and
Louisiana.
[PHOTOGRAPH APPEARS HERE]
[GRAPH - SAFETY PERFORMANCE]
- - --------------------------------------------------------------------------------
SUMMARY OF PHOTOGRAPHS--Murphy's staff of over 1,300 employees has worked hard
to make 1997 a successful and productive year. They are a team of trained,
conscientious professionals who take pride in their work--helping to meet the
increasing world demand for petroleum products safely, efficiently and in an
environmentally responsible manner. Members of the Murphy team and various
Murphy facilities are featured in photographs throughout our annual report.
Below is a summary of the photographs and the people and facilities they
highlight. The key below assigns a number to each Murphy unit. Where employees
are referenced, the number corresponding to their unit follows their title.
Photographs are listed top to bottom and names are listed left to right.
Front Cover: *Hibernia platform
*Superior refinery
- - --------------------------------------------------------------------------------
Contents: *West Cameron Block 631 platform
- - --------------------------------------------------------------------------------
Page 4: *Hibernia platform
*Claiborne P. Deming,
President and Chief Executive Officer (1)
- - --------------------------------------------------------------------------------
Page 6: *Claiborne P. Deming,
President and Chief Executive Officer (1)
- - --------------------------------------------------------------------------------
Page 7: *Meraux refinery
*Amanda E. Reagor, Supervisor, Blending/Laboratory (5) and
Pat Dean, Environmental Chemist (5)
*Bill H. Stobaugh, Vice President (1) and
Mindy West, Planning Analyst (1)
*George M. Shirley, General Manager, Negotiations & New Business
Development (3),
Maite B. Vail, Analyst (3),
David M. Wood, Vice President, Frontier Exploration and
Production (3),
Robert F. Sawyer, Manager, Far East Exploration (3),
Randall H. Skiff, Manager, South American Exploration (3) and
Ralph M. DePauw, Manager, Frontier Operations (3)
*West Cameron Block 631 platform
S. J. "Vay" Carboni Jr., Vice President,
Production - Domestic Operations (3) and
Sherrod A. Wilder, Gauger (3)
- - --------------------------------------------------------------------------------
Page 8: *West Cameron Block 631 platform
Sherrod A. Wilder, Gauger (3)
- - --------------------------------------------------------------------------------
Page 10: *Enoch L. Dawkins, President (3) and
Woods W. Allen Jr., Executive Vice President, United Kingdom
Exploration and Production and New Basin Analysis (3)
- - --------------------------------------------------------------------------------
Page 11: *Syncrude facility
*Schiehallion oil storage and offloading vessel
- - --------------------------------------------------------------------------------
Page 12: *West Cameron Block 631 platform
*James R. Murphy, Vice President, Geophysics (3),
Larry Boudreau, Manager, Gulf of Mexico Exploration (3) and
John C. Higgins, Vice President, U.S. Exploration (3)
- - --------------------------------------------------------------------------------
Page 14: *Hibernia platform
- - --------------------------------------------------------------------------------
Page 15: *Canadian heavy oil wells
- - --------------------------------------------------------------------------------
Page 16: *Syncrude workers
*Harvey Doerr, President (4)
- - --------------------------------------------------------------------------------
Page 17: *Mungo/Monan jacket (top and bottom)
- - --------------------------------------------------------------------------------
Page 19: *Block 16, Ecuador production facilities
- - --------------------------------------------------------------------------------
Page 20: *Superior refinery
*King Sanchez, Operator, Area IV (5) and
Brian Nunez, Operator, Area IV (5)
- - --------------------------------------------------------------------------------
Page 22: *Milford Haven, Wales refinery
*Charles A. Ganus, Vice President, Marketing (2),
Herbert A. "Herb" Fox Jr., Vice President (1), President (2) and
Frederec C. "Fred" Green, Vice President, Manufacturing and
Crude Oil Supply (2)
- - --------------------------------------------------------------------------------
Page 23: *Murphy USA(R) station, Stockbridge, Georgia
Belinda Silvera, Store Manager (2) and
Michelle Jones, District Manager-Retail (2)
- - --------------------------------------------------------------------------------
Page 24: *Murphy USA(R) station, Muscle Shoals, Alabama
- - --------------------------------------------------------------------------------
Page 25: *Liz Lundmark, Oil Movements Superintendent (6) and
Jerald Swanson, Assistant Pumper, Oil Movements (6)
*Dave Podratz, Manager, Technical Services (5) and
Sherwood J. Breaux, Refinery Manager (5)
- - --------------------------------------------------------------------------------
Page 26: *Mike Hulse, President (7)
*Cas Francis, Stations Specialist, MURCO
service station, Milton Keynes, England (7)
*Milford Haven, Wales refinery
- - --------------------------------------------------------------------------------
Page 27: *Manito pipeline construction, Canada
*Canadian crude oil hauler
- - --------------------------------------------------------------------------------
Page 28: *Rescue training at Superior refinery
- - --------------------------------------------------------------------------------
Page 29: *Claiborne P. Deming,
President and Chief Executive Officer (1) and
Leoncio "Chris" Roussel, citizen
winner of the Community Spirit Award
- - --------------------------------------------------------------------------------
Page 61: *Board of Directors
- - --------------------------------------------------------------------------------
Back Cover: *Hibernia platform
Key to Murphy Units: (1) Murphy Oil Corporation; (2) Murphy Oil USA, Inc; (3)
Murphy Exploration & Production Company; (4) Murphy Oil Company Ltd.; (5) Meraux
refinery, Murphy Oil USA, Inc; (6) Superior refinery, Murphy Oil USA, Inc.; (7)
Murphy Eastern Oil Company
29
<PAGE>
- - --------------------------------------------------------------------------------
FINANCIAL REVIEW
- - --------------------------------------------------------------------------------
SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
(Thousands of dollars except per share data) 1997 1996 1995 1994 1993
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS FOR THE YEAR/1/
Sales and other operating revenues $2,132,252 2,008,450 1,612,500 1,580,962 1,556,281
Net cash provided by continuing operations 401,843 472,480 309,878 312,251 347,731
Income (loss) from continuing operations 132,406 125,956 (127,919) 89,347 73,453
Income (loss) before cumulative effect of changes
in accounting principles 132,406 137,855 (118,612) 106,628 86,798
Net income (loss) 132,406 137,855 (118,612) 106,628 102,136
Per Common share - diluted
Income (loss) from continuing operations 2.94 2.80 (2.85) 1.99 1.64
Income (loss) before cumulative effect of changes
in accounting principles 2.94 3.07 (2.65) 2.38 1.94
Net income (loss) 2.94 3.07 (2.65) 2.38 2.28
Cash dividends per Common share 1.35 1.30 1.30 1.30 1.25
Percentage return on
Average stockholders' equity 12.7 12.2 (9.3) 8.6 8.4
Average borrowed and invested capital 10.4 10.4 (7.9) 8.0 8.4
Average total assets 6.0 6.2 (5.2) 4.8 5.1
----------------------------------------------------------------------------------------------------------------
CAPITAL EXPENDITURES FOR THE YEAR
Exploration and production $ 423,181 373,984 231,718 286,348 520,086
Refining, marketing and transportation 37,483 42,880 53,602 94,697 86,885
Corporate 7,367 1,192 1,831 4,876 4,034
----------------------------------------------------------------------------------------------------------------
$ 468,031 418,056 287,151 385,921 611,005
================================================================================================================
FINANCIAL CONDITION AT YEAR-END
Current ratio 1.10 1.10 1.22 1.14 1.27
Working capital $ 48,333 56,128 87,388 61,750 109,666
Net property 1,655,838 1,556,830 1,377,455 1,558,716 1,402,448
Total assets 2,238,319 2,243,786 2,098,466 2,297,459 2,156,272
Long-term obligations 205,853 201,828 193,146 172,289 109,164
Stockholders' equity 1,079,351 1,027,478/2/1,101,145 1,270,679 1,222,350
Per share 24.04 22.90 24.56 28.34 27.28
Long-term obligations - percent of capital employed 16.0 16.4 14.9 11.9 8.2
----------------------------------------------------------------------------------------------------------------
</TABLE>
/1/ Includes effects on income of special items in 1997, 1996 and 1995 that
are detailed in Management's Discussion and Analysis, page 31. Also,
special items in 1994 and 1993 resulted in increases to net income of
$20,236, $.45 a diluted share, and $10,367, $.23 a diluted share,
respectively.
/2/ Reflects $172,561 charge for distribution of common stock of Deltic
Timber Corporation to stockholders.
[GRAPH - INCOME FROM CONTINUING OPERATIONS BY FUNCTION]
[GRAPH - CASH FLOW FROM CONTINUING OPERATIONS BY FUNCTION]
[GRAPH - CAPITAL EXPENDITURES BY FUNCTION]
30
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
Consolidated net income for 1997 was $132.4 million, $2.94 a diluted share,
compared to net income in 1996 of $137.9 million, $3.07 a diluted share. In
1995, the Company lost $118.6 million, $2.65 a diluted share. Results of
operations for the three years ended December 31, 1997 included certain special
items that resulted in a net gain of $.1 million, a nil per share effect, in
1997; a net gain of $22.2 million, $.49 a diluted share, in 1996; and a net
charge of $152 million, $3.39 a diluted share, in 1995. The 1995 special items
included an after-tax charge of $168.4 million, $3.75 a diluted share, from a
write-down of assets determined to be impaired under Statement of Financial
Accounting Standards (SFAS) No. 121. In addition, net income for 1996 and 1995
included earnings from discontinued operations of $11.9 million, $.27 a diluted
share, and $9.3 million, $.20 a diluted share, respectively. Such amounts were
attributable to the activities of the Company's farm, timber and real estate
subsidiary, which was spun off to the Company's shareholders on December 31,
1996, as described in Note B to the consolidated financial statements.
1997 versus 1996 -- Excluding special items, income from continuing operations
totaled $132.3 million, $2.94 a diluted share, in 1997, a Company record. The
results for 1997 represented a $28.5 million improvement compared to income from
continuing operations in 1996, which totaled $103.8 million, $2.31 a diluted
share. Earnings from the Company's exploration and production operations
declined $16.8 million in 1997, primarily due to higher exploration costs.
Increases in crude oil production and natural gas sales led to record
hydrocarbon production in 1997 of 102,272 barrels a day on an energy equivalent
basis. However, lower worldwide crude oil sales prices nearly offset the benefit
of higher production volumes. Income from the Company's refining, marketing and
transportation segment was $56.7 million in 1997, up $42.6 million from 1996.
The improvement occurred primarily in the U.S., where the effects of lower costs
for crude oil and other feedstocks greatly exceeded the decline in sales
realizations for the Company's finished products. The Company's Meraux refinery
continued a trend of processing a lower gravity, higher sulfur crude oil in
1997, and operating results benefited from a favorable cost differential for
this crude oil compared to lighter and sweeter crudes. An improved onstream rate
also helped the Company's U.S. refineries achieve a record level of crude oil
throughputs. Sales of finished products in the U.S. also were at record levels
during 1997. The cost of corporate activities, which includes interest income
and expense and corporate overhead not allocated to operating functions,
decreased $2.7 million in 1997 compared to 1996, primarily due to lower costs of
awards under the Company's incentive plans.
1996 versus 1995 -- Income from continuing operations before special items
totaled $103.8 million in 1996, $2.31 a diluted share, an increase of $79.7
million from the $24.1 million, $.54 a diluted share, generated in 1995. The
favorable results were primarily attributable to a $72.3 million improvement in
earnings from the Company's exploration and production operations. This
improvement was caused by a significant increase in the average sales price for
U.S. natural gas and higher worldwide crude oil sales prices. The Company's
earnings from refining, marketing and transportation operations were up $12.1
million in 1996, with the improvement being primarily a result of crude oil swap
agreements in the U.S. The cost of corporate activities increased $4.7 million
in 1996 due to higher costs of awards under the Company's incentive plans.
In the following table, the Company's results of operations for the three years
ended December 31, 1997 are presented by segment. Special items, which can
obscure underlying trends of operating results and affect comparability between
years, are set out separately. A more detailed review of operating results for
the Company's exploration and production and refining, marketing and
transportation segments follows the table.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
(Millions of dollars) 1997 1996 1995
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Exploration and production
United States $ 56.5 50.4 4.8
Canada 18.8 27.6 21.7
United Kingdom 13.1 14.7 6.4
Ecuador 12.9 13.8 2.7
Other international (16.3) (4.7) (6.1)
----------------------------------------------------------------------------------------------------------------
85.0 101.8 29.5
----------------------------------------------------------------------------------------------------------------
Refining, marketing and transportation
United States 41.3 1.8 (3.8)
United Kingdom 9.2 6.2 .3
Canada 6.2 6.1 5.5
----------------------------------------------------------------------------------------------------------------
56.7 14.1 2.0
----------------------------------------------------------------------------------------------------------------
Corporate (9.4) (12.1) (7.4)
----------------------------------------------------------------------------------------------------------------
Income from continuing operations before special items 132.3 103.8 24.1
Gain on sale of producing properties 11.5 17.7 -
Impairment of long-lived assets (16.2) - (168.4)
Refund and settlement of income tax matters 3.2 5.1 13.6
Net recovery (loss) pertaining to 1996 modifications of foreign
crude oil contracts 1.6 (.6) -
Provision for reduction-in-force - - (4.2)
Adjustment of estimates for self-insured liabilities - - 7.0
----------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations 132.4 126.0 (127.9)
Income from discontinued farm, timber and real estate operations - 14.0 9.3
Costs of spin-off transaction - (2.1) -
----------------------------------------------------------------------------------------------------------------
Net income (loss) $132.4 137.9 (118.6)
================================================================================================================
</TABLE>
31
<PAGE>
Exploration and Production -- Earnings from exploration and production
operations before special items were $85 million in 1997, $101.8 million in 1996
and $29.5 million in 1995. A $24.6 million increase in exploration costs,
primarily in the U.S. Gulf of Mexico and Bohai Bay, China, accounted for the
decline in 1997. While crude oil and liquids production increased eight percent
and natural gas sales increased 22 percent in 1997, these favorable production
volumes were mostly offset by a 13-percent decline in the average worldwide
crude oil sales price. The improvement in 1996 earnings was due to a 59-percent
increase in the average sales price for U.S. natural gas and a 21-percent
increase in the average worldwide crude oil sales price. A seven-percent
reduction in crude oil and liquids production and a 12-percent decline in
natural gas sales volumes provided partial offsets.
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 56 and 57. Daily
production rates and weighted average sales prices are shown on page 59.
A summary of oil and gas revenues is presented in the following table.
---------------------------------------------------------
(Millions of dollars) 1997 1996 1995
---------------------------------------------------------
United States
Crude oil $ 74.9 86.1 82.2
Natural gas 196.7 147.1 112.8
Canada
Crude oil 71.6 81.6 68.3
Natural gas 22.1 17.3 14.5
Synthetic oil 67.9 63.3 55.7
United Kingdom
Crude oil 95.3 102.1 92.6
Natural gas 12.2 14.4 9.8
Ecuador -- crude oil 34.7 35.0 25.9
Other - 7.8 11.3
---------------------------------------------------------
Total $575.4 554.7 473.1
=========================================================
The Company's crude oil and gas liquids production averaged 57,494 barrels a day
in 1997, 53,210 in 1996 and 57,015 in 1995. Crude oil and liquids production in
the U.S. declined eight percent in 1997, with the reduction primarily due to the
sale of onshore producing properties effective July 1, 1996. In 1996, production
was down 15 percent from 1995, again due to the sale of onshore producing
properties in mid-1996. Canadian production rose 12 percent in the current year
compared to a two-percent decline in 1996. Production of heavy oil in Canada
increased 19 percent in 1997 following a nine-percent increase in 1996. The
Company's net interest in production of synthetic crude oil in Canada increased
14 percent in 1997, after declining eight percent in 1996. The increase in net
synthetic oil production in 1997 was due to a three-percent increase in gross
production and a decrease in the net profits royalty rate as a result of lower
crude oil prices during the year. The decrease in net production in 1996 was due
to a higher net profits royalty rate caused by higher oil prices. Before
royalties, the Company's synthetic crude oil production was 10,371 barrels a day
in 1997, 10,036 in 1996 and 10,118 in 1995. The first oil production from the
Company's Hibernia field offshore Newfoundland commenced in the fourth quarter
of 1997 and was averaging 3,800 barrels a day at year-end. The Company's U.K.
oil production increased five percent in 1997 compared to a 12-percent decline
in 1996. Oil production from the Thelma field in the North Sea began in late
1996 and contributed to an 11-percent increase in "T" Block production in 1997.
Oil production at "T" Block was down 14 percent in 1996 as production from
initial fields began to decline. Production from Ninian, the Company's other
major oil-producing North Sea field, declined three percent in 1997 after having
declined 12 percent in 1996. Production in Ecuador increased 30 percent in 1997
following a 14-percent increase in 1996; both increases resulted from new fields
being placed on stream throughout 1996.
Worldwide sales of natural gas averaged 268.7 million cubic feet a day in 1997,
220.6 million in 1996 and 251.7 million in 1995. Sales of natural gas in the
U.S. increased 36 percent in 1997 as new production came on stream from Gulf of
Mexico fields discovered in recent years. An 18-percent decline in U.S. natural
gas sales in 1996 was due to reduced deliverability in certain of the Company's
maturing Gulf of Mexico fields and to the sale of onshore properties in
mid-1996. Natural gas sales in Canada in 1997 were at record levels for the
second straight year, as sales increased four percent in 1997 following a
five-percent increase in 1996. Natural gas sales in the U.K. were down 17
percent in 1997 following a 43-percent increase in 1996. Production of natural
gas in Spain ceased at the end of 1996, after decreasing 33 percent from the
previous year.
[GRAPH - RANGE OF U.S. CRUDE OIL SALES PRICES]
As previously indicated, worldwide crude oil sales prices weakened during 1997
after strengthening during 1996. In the U.S., Murphy's 1997 average monthly
sales prices for crude oil and condensate ranged from $17.23 a barrel to $24.61
a barrel, and averaged $19.43 for the year, four percent below the average 1996
price. In Canada, the average sales price for light oil was $17.74 a barrel in
1997, a decline of 11 percent. Heavy oil prices averaged $10.76 a barrel, down
25 percent from 1996. The average sales price for synthetic crude oil in 1997
was $19.92, off six percent from a year earlier. The sales price for crude oil
from the Hibernia field, which came on stream in the fourth quarter of 1997,
averaged $15.15 a barrel. U.K. sales prices were down 10 percent in 1997 and
averaged $18.89 a barrel. Sales prices in Ecuador averaged $12.17 a barrel in
1997, down 24 percent compared to a year ago. U.S. oil prices increased 22
percent in 1996 compared to 1995 and averaged $20.31 for the year. In Canada,
crude oil prices in 1996 were up 21 percent for light oil, 18 percent for heavy
oil and 23 percent for synthetic oil. Sales prices in the U.K. were up 24
percent in 1996, and prices in Ecuador were up 22 percent. Worldwide crude oil
prices began to decline in the fourth quarter of 1997, and the downward trend
continued into the first quarter of 1998.
Average monthly natural gas sales prices in the U.S. ranged from $1.82 an MCF to
$3.85 during 1997. For the year, U.S. sales prices averaged $2.57 an MCF
compared to $2.60 a
32
<PAGE>
[GRAPH - RANGE OF U.S. NATURAL GAS SALES PRICES]
year ago. The average price for natural gas sold in Canada during 1997 increased
23 percent to $1.35 an MCF, while prices in the U.K. increased three percent to
$2.65. Average U.S. natural gas sales prices were up 59 percent in 1996, and
prices were up in Canada and the U.K. by 13 percent and two percent,
respectively, during the same period.
Based on 1997 volumes and deducting taxes at marginal rates, each $1 a barrel
and $.10 an MCF fluctuation in prices would have affected annual exploration and
production earnings by $11.6 million and $6.2 million, respectively. The effect
of these price fluctuations on consolidated net income cannot be measured
because operating results of the Company's refining, marketing and
transportation segment could be affected differently.
Production costs were $164.8 million in 1997, $160.5 million in 1996 and $167.5
million in 1995. These amounts are shown by major operating area on pages 56 and
57. Costs per equivalent barrel of production during the last three years were
as follows.
----------------------------------------------------------
(Dollars per equivalent
barrel) 1997 1996 1995
----------------------------------------------------------
United States $ 2.59 3.31 3.24
Canada
Excluding synthetic oil 4.63 3.95 3.55
Synthetic oil 11.32 12.72 12.17
United Kingdom 5.58 6.00 5.88
Ecuador 3.87 4.96 6.01
Worldwide--excluding
synthetic oil 3.72 4.09 3.90
----------------------------------------------------------
The decrease in the U.S. cost per equivalent barrel in 1997 was attributable to
the sale of high-cost onshore producing properties in mid-1996. The 1997
increase in Canada, excluding synthetic oil, was due to an increase in heavy oil
production compared to light oil and to higher costs associated with an
expansion of heavy oil thermal recovery projects. The decrease in the cost per
equivalent barrel for Canadian synthetic oil in 1997 was due to higher gross
production volumes and a decrease in royalty barrels caused by lower sales
prices. Based on synthetic oil production before royalties, per-barrel cost
declined two percent in 1997. A lower per-barrel cost in the U.K. in 1997 was
due to a favorable impact from higher production at "T" Block. Higher per-barrel
costs in the U.S. and the U.K. in 1996 were attributable to lower production
volumes. The 1996 increase in Canada, excluding synthetic oil, was due to
production mix, with light oil declining and heavy oil increasing. The increase
in cost for synthetic oil in 1996 was due to lower net production volumes
resulting from the increase in royalty barrels. Costs in Ecuador decreased each
year due to higher production volumes.
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 56
and 57. Certain of the expenses are included in the capital expenditure totals
for exploration and production activities.
---------------------------------------------------------
(Millions of dollars) 1997 1996 1995
---------------------------------------------------------
Included in capital
expenditures
Dry hole costs $48.3 28.5 30.9
Geological and
geophysical costs 26.4 24.1 16.2
Other costs 9.6 7.9 8.0
---------------------------------------------------------
84.3 60.5 55.1
Undeveloped lease
amortization 10.5 9.7 10.7
---------------------------------------------------------
Total $94.8 70.2 65.8
=========================================================
Depreciation, depletion and amortization for exploration and production
operations totaled $172.4 million in 1997, $147.6 million in 1996 and $182.7
million in 1995. The increase in 1997 was primarily due to higher worldwide
hydrocarbon production, while the decrease in 1996 was partially due to lower
production volumes. In addition, a write-down of assets under SFAS No. 121
during the fourth quarter of 1995 resulted in a reduction in depreciation,
depletion and amortization in 1996 of $12.9 million ($10.5 million after tax).
[GRAPH - WORLDWIDE EXTRACTION COSTS]
[GRAPH - EXPLORATION EXPENSES]
Refining, Marketing and Transportation -- Earnings from refining, marketing and
transportation operations before special items were $56.7 million in 1997, $14.1
million in 1996 and $2 million in 1995. Operations in the U.S. earned $41.3
million in 1997 compared to income of $1.8 million in 1996, as crude oil and
other refinery feedstock costs declined more than average product realizations.
Operations in the U.S. lost $3.8 million in 1995. Crude oil swap agreements
increased earnings by $5 million in 1997 and $9.2 million in 1996, but reduced
earnings in 1995 by
33
<PAGE>
$3.9 million. Operations in the U.K. earned $9.2 million in 1997, $6.2 million
in 1996 and $.3 million in 1995. The improvement in the U.K. in 1997 was also
caused by a larger decline for refining feedstock costs than for sales prices of
finished products. Asset writedowns taken in 1995 under SFAS No. 121 resulted in
a reduction in depreciation, depletion and amortization of $4.6 million ($3.1
million after tax) in 1996. Canadian operations contributed $6.2 million to 1997
earnings compared to $6.1 million in 1996 and $5.5 million in 1995.
Unit margins (sales realizations less costs of crude, other feedstocks, refining
and transportation to point of sale) averaged $1.57 a barrel in the U.S. in
1997, $.25 in 1996 and $.46 in 1995. U.S. product sales were up 12 percent in
1997 following a four-percent increase in 1996. Margins in the U.S. were much
improved during most of 1997 after being under pressure throughout 1996.
Declines in the average costs of crude oil and other feedstocks more than offset
a reduction in average sales realizations until late 1997, when unit margins
experienced a substantial retreat from the mid-year highs. In 1996, the U.S.
margin was down 46 percent compared to 1995.
Unit margins in the U.K. averaged $2.90 a barrel in 1997, $2.08 in 1996 and
$2.26 in 1995. Sales of petroleum products were down 14 percent in 1997
following an eight-percent increase in 1996. Sales through Company-owned and
third-party terminals increased in 1997, but were more than offset by lower
cargo sales caused by a planned turnaround early in the year. The increase in
product sales in 1996 was due to higher cargo sales. Although margins increased
in 1997, the Company's branded outlets still face stiff competition from
supermarket sales of motor fuels.
Based on sales volumes for 1997 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 $17.7 million. The effect of these unit margin
fluctuations on consolidated net income cannot be measured because operating
results of the Company's exploration and production segment could be affected
differently.
Income from purchasing, transporting and reselling crude oil in Canada in 1997
was virtually unchanged as higher pipeline throughputs and better margins on
crude oil trucking operations were offset by lower crude trading margins. The
improvement in earnings in 1996 compared to 1995 was due to increases in crude
trading volumes and margins and higher pipeline throughputs.
Special Items -- Net income for the last three years included the special items
reviewed below; the quarter in which each item occurred is indicated. Certain
other quarterly information is presented on page 38.
. Gain on sale of producing properties -- An after-tax gain of $11.5 million
was recorded in the fourth quarter of 1997 from sale of a Canadian heavy oil
property, and a $17.7 million gain was recorded in the third quarter of 1996
from sale of 48 onshore producing oil and gas properties in the U.S.
. Impairment of long-lived assets -- After-tax provisions of $3.3 million and
$12.9 million were recorded in the third and fourth quarters, respectively,
of 1997, and $168.4 million was recorded in the fourth quarter of 1995 for
the write-down of assets determined to be impaired under provisions of SFAS
No. 121 (see Note D to the consolidated financial statements).
. Refund and settlement of income tax matters -- A gain of $3.2 million for
refund of U.K. income taxes was recorded in the third quarter of 1997. A gain
of $5.1 million for settlement of income tax matters in Canada was recorded
in the fourth quarter of 1996. A gain of $4.9 million for refund of U.S.
taxes was included in the third quarter of 1995. Gains for settlement of
income tax matters in 1995 included $3.2 million and $3.5 million in the
third and fourth quarters, respectively, for the U.K., and $2 million in the
fourth quarter for Gabon.
. Net recovery (loss) pertaining to 1996 modifications of foreign crude oil
contracts -- A gain of $1.6 million was recorded in the fourth quarter of
1997 for a partial recovery of a 1996 loss resulting from modification to a
crude oil production contract in Ecuador. A net loss of $.6 million was
recorded in the fourth quarter of 1996 resulting from modifications to
contracts related to crude oil production in Ecuador and Gabon (See Note O to
the consolidated financial statements).
. Provision for reduction-in-force -- An after-tax provision of $4.2 million
was recorded in the fourth quarter of 1995 for the cost of enhanced early
retirement and severance programs.
. Adjustment of estimates for self-insured liabilities -- An after-tax gain of
$7 million was recorded in the first quarter of 1995 from an adjustment of
amounts previously reserved related to matters for which the Company is
self-insured.
The income (loss) effects of special items for the three years ended December
31, 1997 are summarized by segment in the following table.
--------------------------------------------------------
(Millions of dollars) 1997/1/ 1996 1995/2/
--------------------------------------------------------
Exploration and production
United States $ (4.9) 17.7 (1.1)
Canada .2 5.1 -
United Kingdom 3.2 - (18.4)
Ecuador 1.6 (8.8) (100.0)
Other international - 8.2 (.6)
--------------------------------------------------------
.1 22.2 (120.1)
Refining, marketing
and transportation
United Kingdom - - (35.6)
Corporate - - 3.7
--------------------------------------------------------
Total $ .1 22.2 (152.0)
========================================================
/1/ Includes after-tax effect of asset write-down under SFAS No. 121 as follows:
exploration and production--U.S., $4.9; Canada, $11.3.
/2/ Includes after-tax effect of asset write-down under SFAS No. 121 as follows:
exploration and production--U.S., $6; U.K., $24.2; Ecuador, $100; other
international, $2.6; refining, marketing and transportation--U.K., $35.6.
Capital Expenditures
As shown in the selected financial information on page 30, capital expenditures
were $468 million in 1997 compared to $418.1 million in 1996 and $287.2 million
in 1995. These amounts included $84.3 million, $60.5 million and $55.1 million
of exploration expenditures that were expensed.
34
<PAGE>
Capital expenditures for exploration and production activities totaled $423.2
million in 1997, 90 percent of the Company's total capital expenditures for the
year. Exploration and production capital expenditures in 1997 included $26.6
million for acquisition of undeveloped leases, $22.2 million for acquisition of
proved oil and gas properties, $135.3 million for exploration activities and
$239.1 million for development projects. Development expenditures included $47.5
million for the Hibernia and Terra Nova oil fields, offshore Newfoundland; $31.3
million and $26 million for the Schiehallion and Mungo/Monan fields,
respectively, offshore U.K.; and $10.4 million for oil fields in Ecuador.
Exploration and production capital expenditures are shown by major operating
area on pages 56 and 57. Amounts shown under "Other" in 1997 included $18.3
million for exploration costs in China, including costs to evaluate a 1996 oil
discovery on Block 04/36 in Bohai Bay. Exploration costs totaling $15.1 million
have been capitalized for Block 04/36 at year-end 1997 pending further
evaluation expected to occur in 1998.
Refining, marketing and transportation expenditures, detailed in the following
table, were $37.5 million in 1997, or eight percent of total capital
expenditures, compared to $42.9 million in 1996 and $53.6 million in 1995.
-------------------------------------------------------
(Millions of dollars) 1997 1996 1995
-------------------------------------------------------
Refining
United States $12.5 13.2 22.9
United Kingdom 1.5 12.2 17.9
-------------------------------------------------------
Total refining 14.0 25.4 40.8
-------------------------------------------------------
Marketing
United States 14.1 7.5 4.6
United Kingdom 2.2 1.3 4.6
-------------------------------------------------------
Total marketing 16.3 8.8 9.2
-------------------------------------------------------
Transportation
United States 2.6 .3 .1
Canada 4.6 8.4 3.5
-------------------------------------------------------
Total transportation 7.2 8.7 3.6
-------------------------------------------------------
Total $37.5 42.9 53.6
=======================================================
Refining expenditures in the U.S. were primarily for capital projects necessary
to keep the refineries operating efficiently and within industry standards.
Marketing expenditures included the costs of new stations, primarily on land
leased in the U.S. from Wal-Mart Stores, Inc., and improvements and normal
replacements at existing stations and terminals.
[GRAPH - CAPITAL EXPENDITURES--EXPLORATION AND PRODUCTION]
[GRAPH - CAPITAL EXPENDITURES--REFINING, MARKETING AND TRANSPORTATION]
Cash Flows
Cash provided by continuing operations was $401.8 million in 1997, $472.5
million in 1996 and $309.9 million in 1995. Special items increased cash flow
from operations by $3.8 million in 1997 and $14.7 million in 1995, but reduced
cash by $12.8 million in 1996. Changes in operating working capital other than
cash and cash equivalents required cash of $72.4 million in 1997, provided cash
of $77.1 million in 1996 and required cash of $36.6 million in 1995. Cash
provided by continuing operations was further reduced by expenditures for
refinery turnarounds and abandonment of oil and gas properties totaling $14.4
million in 1997, $10.8 million in 1996 and $13.8 million in 1995.
Cash proceeds from property sales were $43.8 million in 1997, $55.5 million in
1996 and $8.3 million in 1995. Additional borrowings under nonrecourse debt
arrangements provided $6.4 million of cash in 1997, $23.1 million in 1996 and
$59.5 million in 1995. Other borrowings also provided $9.7 million of cash in
1997.
Capital expenditures required $468 million of cash in 1997, $418.1 million in
1996 and $287.2 million in 1995. Other significant cash outlays during the three
years included $17.3 million in 1997, $11.4 million in 1996 and $35.6 million in
1995 for debt repayment. Cash used for dividends to stockholders was $60.6
million in 1997 and $58.3 million in both 1996 and 1995.
Financial Condition
Year-end working capital totaled $48.3 million in 1997, $56.1 million in 1996
and $87.4 million in 1995. 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 $76 million below current
costs at December 31, 1997. Cash and equivalents at the end of 1997 totaled
$24.3 million compared to $109.7 million a year ago and $60.9 million at
year-end 1995.
Long-term obligations increased $4.1 million during 1997 to $205.9 million at
year-end, 16 percent of total capital employed, and included $177.5 million of
nonrecourse debt incurred in connection with the acquisition and development of
proved properties. Long-term obligations totaled $201.8 million at the end of
1996 compared to $193.1 million at year-end 1995. Stockholders' equity was $1.1
billion at the end of 1997 compared to $1 billion a year ago and $1.1 billion at
the end of 1995. The decrease in 1996 was caused by the spin-off of the
Company's farm, timber and real estate subsidiary to stockholders at year-end. A
summary of transactions in the equity accounts is presented on page 43.
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
35
<PAGE>
arrangements are set forth in Note E to the consolidated financial statements.
The Company does not anticipate any problem in meeting future requirements for
funds.
The Company had commitments of $228 million for capital projects in progress at
December 31, 1997, including $89 million related to a one-third interest in a
five-year contract for a semisubmersible drilling rig capable of drilling in
6,000 feet of water. Delivery of the rig is scheduled for 1999.
Environmental
The Company's worldwide operations are subject to numerous laws and regulations
intended to protect the environment and/or impose remedial obligations. In
addition, the Company is involved in personal injury and property damage claims,
allegedly caused by exposure to or by the release or disposal of materials
manufactured or used in the Company's operations. The Company 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 environmental
obligations are recorded when such obligations are probable and the cost can be
reasonably estimated. If there is a range of reasonably estimated costs, the
most likely amount will be recorded, or if no amount is most likely, the minimum
of the range is used. Recorded liabilities are reviewed quarterly and adjusted
as needed. Actual cash expenditures often occur one or more years after
recognition of the liabilities.
The Company's reserve for remedial 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 for proposed
remediation of former refinery waste sites. If regulatory authorities require
more costly alternatives than the proposed processes, future expenditures could
exceed the amount reserved by up to an estimated $3 million.
The Company has received notices from the U.S. Environmental Protection Agency
(EPA) that it is a Potentially Responsible Party (PRP) at seven Superfund sites
and has been assigned responsibility by defendants at another Superfund site.
The potential total cost to all parties to perform necessary remedial work at
these sites may be substantial. Based on currently available information, the
Company has reason to believe that it is no longer considered a PRP by the EPA
at five of these sites and that it is a "de minimus" party as to ultimate
responsibility at the other three sites. The Company does not expect that its
related remedial costs will be material to its financial condition or its
results of operations, and it has provided no reserve for remediation costs on
Superfund sites. 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 PRPs 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 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 materially affect the results of
operations in a future period.
Certain liabilities for environmentally related obligations and prior
environmental expenditures are expected to be recovered by the Company from
other sources, primarily environmental funds maintained by the various states.
Since no assurance can be given that recoveries from other sources will occur,
the Company has not recorded a benefit for these potential recoveries at
December 31, 1997.
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 $3.2 million in 1997.
In addition to remediation and other recurring expenditures, Murphy commits a
portion of its capital expenditure program for compliance with environmental
laws and regulations. Such capital expenditures were approximately $25 million
in 1997 and are expected to be $33 million in 1998.
Other Matters
. Impact of inflation - General inflation was moderate during the last
three years in most countries where the Company operates; however, the
Company's revenues and capital and operating costs are influenced to a larger
extent by specific price changes in the oil and gas and allied industries
than by changes in general inflation. 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 and demand 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 supplies is generally
restricted to specific geographical areas. Higher crude oil and natural gas
sales prices over most of the last two years have led to upward pressure on
amounts paid by the Company for goods and services, particularly in offshore
operations.
. Accounting matters - The Financial Accounting Standards Board (FASB) issued
SFAS No. 130, Reporting Comprehensive Income, in June 1997. The statement
requires the Company to report both comprehensive income and net income for
all periods presented beginning with the quarter ending March 31, 1998.
Through 1997, the Company's only item of other comprehensive income as
defined by this statement has been foreign currency translation adjustments.
The following table shows the Company's pro forma comprehensive income for
the three years ended December 31, 1997.
---------------------------------------------------------
(Millions of dollars) 1997 1996 1995
---------------------------------------------------------
Net income (loss) as
reported $132.4 137.9 (118.6)
Other comprehensive
income--net gain (loss)
from foreign currency
translation (21.7) 18.0 7.0
---------------------------------------------------------
Pro forma comprehensive
income $110.7 155.9 (111.6)
=========================================================
36
<PAGE>
The FASB also issued SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information, in June 1997. This statement will alter
the Company's disclosures about its operating segments beginning with the
results for the year ending December 31, 1998 and for each period thereafter,
with restated comparative disclosures for earlier periods. Although this
statement does not amend any existing accounting procedures, it requires
disclosures about an enterprise's components for which separate financial
information is available and regularly used by the chief operating decision
maker in allocating resources and assessing performance. Although the Company
has not fully determined the effects that the new statement will have on its
1998 consolidated financial statements, it expects to provide certain
additional segment information for revenues, expenses and assets on a
geographical basis.
During 1997, the Securities and Exchange Commission adopted amendments to
Regulation S-K that will require expanded disclosures concerning a broad
range of market sensitive instruments, including debt and equity securities
and derivative instruments, beginning with the Company's 1998 Annual Report.
Specifically, the new rules will require the Company to make disclosure
outside of the consolidated financial statements of both quantitative and
qualitative information concerning the market risks posed by risk-sensitive
instruments. As described in Notes A and J, the Company makes limited use of
derivative instruments to hedge specific market risks. The Company has not
determined which of several acceptable methods it will use to present the
required quantitative and qualitative disclosures.
. Year 2000 issues - The Company has assessed its electronic operating systems
to identify those that are not Year 2000 compliant and is in the process of
developing an implementation plan for noncompliant systems. Although the
Company cannot predict with any degree of certainty the total amount that
will be spent to address this issue, the assessment indicates that up to $5
million of expense could be incurred through 1999 to modify systems to be
Year 2000 compliant. Costs incurred and expensed in 1997 for the Year 2000
issue were insignificant. The Company is also in the process of communicating
with significant vendors and business partners to determine its risks
relative to these third parties' systems on which the Company relies.
Although the Company expects to have all of its major systems compliant by
year-end 1999, there can be no assurance that the Company will not be
adversely affected by internal or third-party operating systems that
encounter Year 2000 problems.
. Other - The Company's use of derivative financial instruments and the effects
of exchange rate fluctuations on net income are reviewed in Notes J and M,
respectively, to the consolidated financial statements.
Outlook
In planning for 1998, prices for the Company's products remain uncertain.
Worldwide crude oil sales prices declined sharply in the fourth quarter of 1997,
primarily caused by increasing oil production from OPEC producers and a
softening of worldwide oil demand due to the economic downturn in Asia. The
downward trend in oil prices has continued in early 1998, as the Company's
average worldwide oil prices were as much as $4 a barrel below the average price
for the fourth quarter of 1997. The lower oil prices will exert downward
pressure on the Company's operating results in early 1998. In such an
environment, constant reassessment of spending plans is required. The Company's
capital expenditure budget for 1998 was prepared during the fall of 1997 and
provides for expenditures of $539 million. A major portion of this amount, $440
million or 82 percent, is allocated for exploration and production.
Geographically, about 37 percent of the exploration and production budget is
designated for the U.S.; 35 percent for Canada, including $77 million for
further development of the Hibernia and Terra Nova oil fields; 19 percent for
the U.K., including $44 million for development costs related to the
Schiehallion and Mungo/Monan oil fields; four percent for continuing development
of oil fields in Ecuador; and the remaining five percent for other overseas
operations. Refining, marketing and transportation capital expenditures for 1998
are budgeted at $97 million, including $81 million in the U.S. and $8 million
each in the U.K. and Canada. Capital and other expenditures are under constant
review, and these budgeted amounts may be adjusted to reflect changes in
estimated cash flow.
Forward-Looking Statements
This Annual Report includes statements of the Company's expectations,
intentions, plans and beliefs that are forward-looking and are dependent on
certain events, risks and uncertainties that may be outside of the Company's
control. These forward-looking statements are made in reliance upon the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Actual results and developments could differ materially from those expressed or
implied by such statements due to a number of factors including those described
in the context of such forward-looking statements as well as those contained in
the Company's January 15, 1997 Form 8-K on file with the U.S. Securities and
Exchange Commission.
37
<PAGE>
QUARTERLY INFORMATION
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------------------
1997/1/
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 $507.2 506.3 555.2 563.6 2,132.3
Income before income taxes 53.4 42.8 64.3 51.2 211.7
Net income 30.6 27.6 42.3 31.9 132.4
Net income per Common share - basic .68 .62 .94 .71 2.95
Net income per Common share - diluted .68 .61 .94 .71 2.94
Cash dividends per Common share .325 .325 .35 .35 1.35
Market Price/2/
High 54 1/4 49 1/4 58 13/16 62 9/16 62 9/16
Low 46 43 48 3/4 53 5/16 43
- - ---------------------------------------------------------------------------------------------------------------------
1996/1/
- - ---------------------------------------------------------------------------------------------------------------------
Sales and other operating revenues $415.4 497.1 525.0 571.0 2,008.5
Income from continuing operations before income taxes 37.5 40.4 70.5 68.0 216.4
Income from continuing operations 20.3 24.8 40.5 40.4 126.0
Income from discontinued operations 3.7 3.3 1.8 3.1 11.9
Net income 24.0 28.1 42.3 43.5 137.9
Per Common share - basic
Income from continuing operations .45 .55 .90 .90 2.80
Income from discontinued operations .09 .07 .04 .07 .27
Net income .54 .62 .94 .97 3.07
Per Common share - diluted
Income from continuing operations .45 .55 .90 .90 2.80
Income from discontinued operations .09 .07 .04 .07 .27
Net income .54 .62 .94 .97 3.07
Cash dividends per Common share .325 .325 .325 .325 1.30
Market Price/2,3/
High 44 46 3/8 49 56 1/2 56 1/2
Low 40 3/4 42 5/8 42 1/4 47 1/4 40 3/4
- - ---------------------------------------------------------------------------------------------------------------------
</TABLE>
/1/The effects of special 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 special items are
reported in the following table.
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
1997
----
<S> <C> <C> <C> <C> <C>
Quarterly totals $ - - (.1) .2 .1
Per Common share - basic - - - - -
Per Common share - diluted - - - - -
1996
----
Quarterly totals - - 17.7 4.5 22.2
Per Common share - basic - - .39 .10 .49
Per Common share - diluted - - .39 .10 .49
</TABLE>
/2/Market prices of Common Stock are as quoted on the New York Stock Exchange.
There were 3,899 stockholders of record at December 31, 1997.
/3/Stock prices in 1996 have not been restated to reflect the spin-off of
Deltic Timber Corporation.
38
<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, but not absolute, assurance 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. The Company's audit staff
independently and systematically evaluates and formally reports on the adequacy
and effectiveness of the internal control 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.
The Board of Directors appoints an Audit Committee annually 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, 1997 and 1996, 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, 1997.
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, 1997 and 1996, and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 1997, in conformity with generally
accepted accounting principles.
As discussed in Note C to the consolidated financial statements, in 1995 the
Company adopted the provisions of Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.
KPMG PEAT MARWICK LLP
Shreveport, Louisiana
March 2, 1998
39
<PAGE>
- - --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------
(Thousands of dollars except per share amounts)
- - --------------------------------------------------------------------------------------------------------------
Years Ended December 31 1997 1996 1995
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Sales $ 2,055,164 1,916,599 1,571,929
Other operating revenues 77,088 91,851 40,571
Interest, income from equity companies and
other nonoperating revenues 5,515 13,726 19,280
- - --------------------------------------------------------------------------------------------------------------
Total revenues 2,137,767 2,022,176 1,631,780
- - --------------------------------------------------------------------------------------------------------------
COSTS AND EXPENSES
Crude oil, products and related operating expenses 1,527,301 1,483,914 1,218,083
Exploration expenses, including undeveloped lease amortization 94,792 70,206 65,755
Selling and general expenses 65,928 66,402 63,788
Depreciation, depletion and amortization 209,419 182,381 221,871
Impairment of long-lived assets 28,056 - 198,988
Provision for reduction-in-force - - 6,610
Interest expense 12,717 13,120 14,428
Interest capitalized (12,096) (10,202) (9,015)
- - --------------------------------------------------------------------------------------------------------------
Total costs and expenses 1,926,117 1,805,821 1,780,508
- - --------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations before income taxes 211,650 216,355 (148,728)
Federal and state income taxes (benefits) 49,062 43,860 (6,233)
Foreign income taxes (benefits) 30,182 46,539 (14,576)
- - --------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations 132,406 125,956 (127,919)
- - --------------------------------------------------------------------------------------------------------------
DISCONTINUED FARM, TIMBER AND REAL ESTATE OPERATIONS
Income from discontinued operations - 13,999 9,307
Costs of spin-off transaction - (2,100) -
- - --------------------------------------------------------------------------------------------------------------
Total discontinued operations - 11,899 9,307
- - --------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 132,406 137,855 (118,612)
==============================================================================================================
PER COMMON SHARE - BASIC
Continuing operations $ 2.95 2.80 (2.85)
Discontinued operations - .27 .20
- - --------------------------------------------------------------------------------------------------------------
Net income (loss) $ 2.95 3.07 (2.65)
==============================================================================================================
PER COMMON SHARE - DILUTED
Continuing operations $ 2.94 2.80 (2.85)
Discontinued operations - .27 .20
- - --------------------------------------------------------------------------------------------------------------
Net income (loss) $ 2.94 3.07 (2.65)
==============================================================================================================
Average Common shares outstanding - basic 44,881,225 44,858,115 44,832,463
==============================================================================================================
Average Common shares outstanding - diluted 44,960,907 44,904,636 44,832,463
==============================================================================================================
</TABLE>
See notes to consolidated financial statements, page 44.
40
<PAGE>
- - --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------
(Thousands of dollars)
- - --------------------------------------------------------------------------------------------------------------
December 31 1997 1996
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 24,288 109,707
Accounts receivable, less allowance for doubtful accounts
of $13,530 in 1997 and $15,267 in 1996 272,447 319,661
Inventories
Crude oil and raw materials 55,075 42,811
Finished products 64,394 44,310
Materials and supplies 38,947 44,234
Prepaid expenses 47,323 29,820
Deferred income taxes 15,278 19,626
- - -------------------------------------------------------------------------------------------------------------
Total current assets 517,752 610,169
Property, plant and equipment, at cost less accumulated depreciation,
depletion and amortization of $2,762,805 in 1997 and $2,573,606 in 1996 1,655,838 1,556,830
Deferred charges and other assets 64,729 76,787
- - --------------------------------------------------------------------------------------------------------------
Total assets $2,238,319 2,243,786
==============================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term obligations $ 6,227 13,635
Notes payable 2,175 -
Accounts payable 329,094 406,583
Withholdings and collections due governmental agencies 58,323 45,640
Other accrued liabilities 47,973 50,790
Income taxes 25,627 37,393
- - --------------------------------------------------------------------------------------------------------------
Total current liabilities 469,419 554,041
Notes payable and capitalized lease obligations 28,367 20,871
Nonrecourse debt of a subsidiary 177,486 180,957
Deferred income taxes 136,390 127,319
Reserve for dismantlement costs 153,021 152,528
Reserve for major repairs 43,038 29,776
Deferred credits and other liabilities 151,247 150,816
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 509,615 509,008
Retained earnings 622,532 550,699
Currency translation adjustments 891 22,573
Unamortized restricted stock awards (944) (1,298)
Treasury stock (101,518) (102,279)
- - --------------------------------------------------------------------------------------------------------------
Total stockholders' equity 1,079,351 1,027,478
- - --------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $2,238,319 2,243,786
==============================================================================================================
</TABLE>
See notes to consolidated financial statements, page 44.
41
<PAGE>
- - --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------------
(Thousands of dollars)
- - ---------------------------------------------------------------------------------------------------------------
Years Ended December 31 1997 1996 1995
- - ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Income (loss) from continuing operations $ 132,406 125,956 (127,919)
Adjustments to reconcile above income (loss) to net cash provided
by operating activities
Depreciation, depletion and amortization 209,419 182,381 221,871
Impairment of long-lived assets 28,056 - 198,988
Provisions for major repairs 24,614 24,797 25,375
Expenditures for major repairs and dismantlement costs (14,393) (10,839) (13,820)
Exploratory expenditures charged against income 84,320 60,532 55,055
Amortization of undeveloped leases 10,472 9,674 10,700
Deferred and noncurrent income tax charges (credits) 25,992 28,464 (46,961)
Pretax gains from disposition of assets (29,061) (34,369) (3,136)
Other - net 7,969 5,889 17,201
- - ---------------------------------------------------------------------------------------------------------------
479,794 392,485 337,354
(Increase) decrease in operating working capital other than cash
and cash equivalents (72,391) 77,111 (36,609)
Net recoveries on insurance claim to repair hurricane damage - - 7,619
Other adjustments related to continuing operations (5,560) 2,884 1,514
- - ---------------------------------------------------------------------------------------------------------------
Net cash provided by continuing operations 401,843 472,480 309,878
Net cash provided by discontinued operations - 18,158 13,061
- - ---------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 401,843 490,638 322,939
- - ---------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Capital expenditures requiring cash (468,031) (418,056) (287,151)
Proceeds from sale of property, plant and equipment 43,776 55,536 8,281
Other continuing operations - net 673 (1,128) (10,158)
Investing activities of discontinued operations - (17,402) (8,596)
- - ---------------------------------------------------------------------------------------------------------------
Net cash required by investing activities (423,582) (381,050) (297,624)
- - ---------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Additions to notes payable 9,675 - -
Reductions of notes payable and capitalized lease obligations (4) (776) (28,004)
Additions to nonrecourse debt of a subsidiary 6,397 23,089 59,489
Reductions of nonrecourse debt of a subsidiary (17,276) (10,628) (7,604)
Sale of treasury shares under employee stock purchase plan 192 - -
Cash dividends paid (60,573) (58,294) (58,257)
- - ---------------------------------------------------------------------------------------------------------------
Net cash required by financing activities (61,589) (46,609) (34,376)
- - ---------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash equivalents (2,091) 2,277 201
- - ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (85,419) 65,256 (8,860)
(Increase) decrease applicable to discontinued operations - (16,402) 913
- - ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents of
continuing operations (85,419) 48,854 (7,947)
Cash and cash equivalents of continuing operations at January 1 109,707 60,853 68,800
- - ---------------------------------------------------------------------------------------------------------------
Cash and cash equivalents of continuing operations at December 31 $ 24,288 109,707 60,853
===============================================================================================================
</TABLE>
See notes to consolidated financial statements, page 44.
42
<PAGE>
- - --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------
(Thousands of dollars)
- - --------------------------------------------------------------------------------------------------------------
Years Ended December 31 1997 1996 1995
- - --------------------------------------------------------------------------------------------------------------
<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 509,008 507,758 507,797
Exercise of stock options 521 450 40
Restricted stock transactions 7 800 (79)
Sale of stock under employee stock purchase plan 79 - -
- - --------------------------------------------------------------------------------------------------------------
Capital in excess of par value at end of year 509,615 509,008 507,758
- - --------------------------------------------------------------------------------------------------------------
RETAINED EARNINGS
Balance at beginning of year 550,699 643,699 820,568
Net income (loss) for the year 132,406 137,855 (118,612)
Distribution of common stock of Deltic Timber Corporation
to stockholders - (172,561) -
Cash dividends - $1.35 a share in 1997 and $1.30 a share
in 1996 and 1995 (60,573) (58,294) (58,257)
- - --------------------------------------------------------------------------------------------------------------
Retained earnings at end of year 622,532 550,699 643,699
- - --------------------------------------------------------------------------------------------------------------
CURRENCY TRANSLATION ADJUSTMENTS
Balance at beginning of year 22,573 4,568 (2,403)
Translation gains (losses) during the year (21,682) 18,005 6,971
- - --------------------------------------------------------------------------------------------------------------
Currency translation adjustments at end of year 891 22,573 4,568
- - --------------------------------------------------------------------------------------------------------------
UNAMORTIZED RESTRICTED STOCK AWARDS
Balance at beginning of year (1,298) (592) (993)
Stock awards - (1,023) -
Amortization, forfeitures and changes in price of Common Stock 354 317 401
- - --------------------------------------------------------------------------------------------------------------
Unamortized restricted stock awards at end of year (944) (1,298) (592)
- - --------------------------------------------------------------------------------------------------------------
TREASURY STOCK
Balance at beginning of year (102,279) (103,063) (103,065)
Exercise of stock options 526 543 67
Awarded restricted stock, net of forfeitures 122 241 (65)
Sale of stock under employee stock purchase plan 113 - -
- - --------------------------------------------------------------------------------------------------------------
Treasury stock at end of year - 3,883,883 shares of
Common Stock in 1997, 3,912,971 shares in 1996 and 3,942,800
shares in 1995, at cost (101,518) (102,279) (103,063)
- - --------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY $1,079,351 1,027,478 1,101,145
==============================================================================================================
</TABLE>
See notes to consolidated financial statements, page 44.
43
<PAGE>
- - --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
NOTE A - SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS - Murphy Oil Corporation is an international oil and gas
company that conducts business through various operating subsidiaries. The
Company produces oil and natural gas in the U.S., Canada, the U.K. North Sea and
Ecuador, and conducts exploration activities in numerous countries. The Company
has an interest in a Canadian synthetic crude oil operation, the world's
largest, and operates two oil refineries in the U.S. and shares ownership in a
U.K. refinery. Murphy markets petroleum products under various brand names in
the U.S., the U.K. and Canada and trades and transports crude oil in Canada.
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include the
accounts of Murphy Oil Corporation and all majority-owned subsidiaries.
Investments in affiliates in which the Company has 20- to 50-percent ownership
are accounted for by the equity method. Other investments are generally carried
at cost. 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. 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
to account for exploration and development expenditures. Leasehold acquisition
costs are capitalized. If proved reserves are found on an undeveloped property,
leasehold cost is transferred to proved properties. Significant undeveloped
leases are reviewed periodically and a valuation allowance is provided for any
estimated decline in value. Cost of other undeveloped leases is expensed over
the estimated average life of the leases. Cost of exploratory drilling is
initially capitalized but is subsequently expensed if proved reserves are not
found. Other exploratory costs are charged to expense as incurred. Development
costs, including unsuccessful development wells, are capitalized.
In 1995 the Company adopted Statement of Financial Accounting Standards (SFAS)
No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of. Under SFAS No. 121, oil and gas properties are
evaluated by field for potential impairment; other long-lived assets are
evaluated on a specific asset basis or in groups of similar assets, as
applicable. An impairment is recognized when the undiscounted estimated future
net cash flows of an evaluated asset are less than the carrying value of the
asset.
Depreciation and depletion of producing oil and gas properties are provided
under the unit-of-production method. Unit rates are computed for unamortized
development costs using developed reserves and for unamortized leasehold costs
using proved reserves. Estimated dismantlement, abandonment and site restoration
costs, net of salvage value, are considered in determining depreciation and
depletion. Refining and marketing facilities are depreciated using the composite
straight-line method. Other properties are depreciated by individual unit 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 for refinery turnarounds are charged to expense monthly. Costs
incurred are changed against the reserve. All other maintenance and repairs are
expensed. Renewals and betterments are capitalized.
ENVIRONMENTAL LIABILITIES - A provision for environmental obligations is charged
to expense when 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 remediation
liabilities have not been discounted for the time value of future expected
payments. Environmental expenditures that have future economic benefit are
capitalized.
INCOME TAXES - The Company accounts for income taxes using the asset and
liability method. Under this method, income taxes are provided for amounts
currently payable, and for amounts deferred as tax assets and liabilities based
on differences between the financial statement carrying amounts and the tax
bases of existing assets and liabilities and measured using the enacted tax
rates that are assumed will be in effect when the differences reverse. Provision
for U.K. petroleum revenue taxes is based on the estimated effective tax rate
over the life of certain U.K. properties.
FOREIGN CURRENCY - Local currency is the functional currency used for recording
operations in Canada and Spain and the majority of activities in the U.K. The
U.S. dollar is the functional currency used to record all other operations.
Gains or losses from translating foreign functional currency into U.S. dollars
are included in "Currency Translation Adjustments" in "Stockholders' Equity."
Exchange gains or losses from transactions in a currency other than the
functional currency are included in income.
DERIVATIVE INSTRUMENTS - Derivative instruments are used by the Company on a
limited basis to manage well-defined risks related to interest rates, foreign
currency exchange rates and commodity prices. Instruments that reduce the
exposure of assets, liabilities or anticipated transactions to price, currency
or interest rate risks are accounted for as hedges. Gains and losses on
derivatives that cease to qualify as hedges are recognized in income or expense.
The Company does not hold any derivatives for trading purposes. Net cash amounts
paid or received
44
<PAGE>
on interest rate swaps are recognized as an adjustment of interest expense over
the life of the swap contract. Gains or losses on settlement of crude oil swaps
are included in costs in the periods that the hedged oil purchases occur. A loss
is recognized if the estimated cost of the future crude oil purchases, including
projected settlement costs of these swap contracts, exceeds the estimated net
realizable value of the related finished products. Gains or losses on foreign
exchange contracts are 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 - Basic income per Common share is computed by
dividing net income for each reporting period by the weighted average number of
Common shares outstanding during the period. Diluted income per Common share is
computed by dividing net income for each reporting period by the weighted
average number of Common shares outstanding during the period plus the effects
of potentially dilutive Common shares.
USE OF ESTIMATES - In the preparation of financial statements of the Company in
conformity with generally accepted accounting principles, management has made a
number of estimates and assumptions related to the reporting of assets,
liabilities, revenues and expenses and the disclosure of contingent assets and
liabilities. Actual results may differ from the estimates.
NOTE B - DISCONTINUED OPERATIONS
On December 31, 1996, Murphy completed a tax-free spin-off to its stockholders
of all the common stock of its wholly owned farm, timber and real estate
subsidiary, Deltic Farm & Timber Co, Inc. (reincorporated as "Deltic Timber
Corporation"). The spin-off resulted in a net charge of $172,561,000 to
"Retained Earnings" in 1996. Farm, timber and real estate activities have been
accounted for as discontinued operations. Selected operating results for these
activities, presented as net amounts in the Consolidated Statements of Income,
were as follows.
- - --------------------------------------------------------------------------------
(Thousands of dollars except per share amounts) 1996 1995
- - --------------------------------------------------------------------------------
Revenues $87,746 79,433
Income tax provisions 8,878 5,394
Income from operations 13,999 9,307
Costs of spin-off transaction (2,100) -
Income from operations per diluted share 31 .20
Costs of spin-off transaction per diluted share (.04) -
- - --------------------------------------------------------------------------------
NOTE C - ACCOUNTING CHANGES
Effective December 31, 1997, the Company adopted SFAS No. 128, Earnings per
Share. In accordance with SFAS No. 128, the Company has restated income per
Common share computations for the first three quarters of 1997 and for all prior
periods presented. SFAS No. 128 requires that earnings per share be presented on
both a basic (which assumes no dilution for potential stock issuances) and a
diluted (assumes dilutive effects of potential stock issuances) basis. Adoption
of this statement did not significantly change income per Common share as
previously reported.
Effective October 1, 1995, the Company adopted SFAS No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.
The effects of this accounting change are discussed in Note D.
NOTE D - PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------
Investment Investment
December 31, 1997 December 31, 1996
(Thousands of dollars) Cost Net Cost Net
- - -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Exploration and
production $3,476,167 1,235,373* 3,215,266 1,139,324*
Refining 649,374 254,032 639,152 264,588
Marketing 178,179 104,305 169,905 96,506
Transportation 80,819 42,125 75,582 39,715
Corporate 34,104 20,003 30,531 16,697
- - -------------------------------------------------------------------------------------
$4,418,643 1,655,838 4,130,436 1,556,830
=====================================================================================
</TABLE>
*Includes $17,084 in 1997 and $17,989 in 1996 related to administrative assets
and support equipment.
In 1997 and 1995, the Company recorded noncash charges of $28,056,000 and
$198,988,000, respectively, for impairment of certain long-lived assets in
accordance with SFAS No. 121. After related income tax benefits, these write-
downs reduced net income by $16,224,000 in 1997, $.36 a diluted share, and
$168,367,000 in 1995, $3.75 a diluted share. The 1997 impairment charges related
to certain investments in Canadian heavy oil fields that were not adequately
supported by proven reserves and three natural gas fields in the Gulf of Mexico
that depleted earlier than anticipated. The 1995 charge was taken upon adoption
of SFAS No. 121 and resulted from management's expectation of a continuation of
the low-price environment for crude oil, natural gas and petroleum products that
existed throughout most of 1995; the write-down included certain oil and gas
assets in Ecuador, the U.K. North Sea and the U.S. Gulf of Mexico and U.K.
refining and marketing assets. The carrying values for assets determined to be
impaired were adjusted to fair values based on estimated future net cash flows
for such assets, discounted at a market rate of interest.
NOTE E - FINANCING ARRANGEMENTS
At December 31, 1997, the Company had a committed credit facility with a major
banking consortium for an equivalent US $300,000,000 for a combination of U.S.
dollar and Canadian dollar borrowings, of which US $7,500,000 was outstanding at
that date. In addition, the Company had committed facilities of US $120,564,000
with major banks that are subject to drawdown based on the availability of loan
guarantees from the Canadian government. Depending on the credit facility,
borrowings bear interest at prime or varying cost of fund options. Facility fees
are due at varying rates on certain of the commitments. The facilities expire at
dates ranging from 1998 through 2002. At December 31, 1997 and 1996, U.S. dollar
and Canadian dollar commercial paper and bankers' acceptances totaling an
equivalent US $118,834,000 and US $114,496,000, supported by bank credit
facilities, were classified as nonrecourse debt.
45
<PAGE>
In addition, the Company had other lines of credit with banks at December 31,
1997 totaling an equivalent US $129,578,000 for a combination of U.S. dollar and
Canadian dollar borrowings. At December 31, 1997, US $2,175,000 was outstanding
under these lines, which could be withdrawn at any time.
At year-end 1997, the Company had a shelf registration on file with the
Securities and Exchange Commission that would permit the offer and sale of
$250,000,000 in debt securities. No securities had been issued as of December
31, 1997.
NOTE F - LONG-TERM OBLIGATIONS
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
(Thousands of dollars)
December 31 1997 1996
- - ---------------------------------------------------------------------------------
Notes payable
<S> <C> <C>
Notes payable to bank, 10.1%, due 2004 $ 20,000 20,000
Notes payable to bank, 5.75%, due 2002 7,500 -
- - ---------------------------------------------------------------------------------
Subtotal 27,500 20,000
- - ---------------------------------------------------------------------------------
Capitalized lease obligations due 1998-2021; 6%, 8% 871 875
- - ---------------------------------------------------------------------------------
Nonrecourse debt of a subsidiary
Guaranteed credit facilities with bank
Commercial paper, 3.61% to 5.91%,
$43,211 payable in Canadian dollars,
supported by credit facility 112,611 114,496
Bankers' acceptance, 4.17%, payable in
Canadian dollars, supported by credit facility,
due 1998 6,223 -
Loan payable to Canadian government, interest-
free, due 1999-2008, payable in Canadian dollars 36,358 37,944
Promissory note, 6.25%, due 1998,
payable in Canadian dollars 28,517 42,148
- - ---------------------------------------------------------------------------------
Subtotal 183,709 194,588
- - ---------------------------------------------------------------------------------
Total 212,080 215,463
Current maturities (6,227) (13,635)
- - ---------------------------------------------------------------------------------
Total long-term obligations $205,853 201,828
=================================================================================
</TABLE>
Amounts becoming due for the four years after 1998 are: 1999, $3,640,000; 2000,
$3,641,000; 2001, $12,591,000; and 2002, $49,657,000.
The nonrecourse guaranteed credit facilities were arranged to finance
expenditures for the Hibernia oil field. Subject to certain conditions and
limitations, the Canadian government has unconditionally guaranteed repayment of
amounts drawn under/supported by the facilities to lenders having qualifying
Participation Certificates. The Company has borrowed the maximum available under
the Primary Guarantee Facility at December 31, 1997. The amount guaranteed
declines quarterly beginning two years after cumulative production reaches 25
million barrels, which is now projected to occur near the end of 1998. No
guaranteed financing is available after January 1, 2016. A guarantee fee of .5
percent is payable annually in arrears to the Canadian government. Quarterly
repayment, projected to begin in 2001, is based on the greater of 30 percent of
the field's after-tax free cash flow or an eight-year amortization. Since the
Company intends to refinance outstanding debt under the Primary Guarantee
Facility, the first debt payment is reflected as becoming due in 2001.
The 6.25-percent promissory note of Cdn $37,972,000 (US $28,517,000 at a hedged
exchange rate) is payable to the province of Alberta and is secured by a
debenture, which mortgages the Company's interest in the Syncrude project and
its 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. This borrowing has been classified as long-term at
December 31, 1997, since the Company intends to refinance this obligation under
an existing committed credit facility during 1998.
NOTE G - INCOME TAXES
The components of income (loss) from continuing operations before income taxes
and income tax expense (benefit) were as follows.
- - --------------------------------------------------------------------------------
(Thousands of dollars) 1997 1996 1995
- - --------------------------------------------------------------------------------
Income (loss) from continuing
operations before income taxes
United States $135,476 104,888 (5,574)
Foreign 76,174 111,467 (143,154)
- - --------------------------------------------------------------------------------
$211,650 216,355 (148,728)
================================================================================
Income tax expense (benefit)
Continuing operations
Federal - Current* $ 31,278 16,445 5,619
Deferred (1,751) 15,837 (20,800)
Noncurrent 14,946 8,762 9,008
- - --------------------------------------------------------------------------------
44,473 41,044 (6,173)
- - --------------------------------------------------------------------------------
State - Current 4,589 2,816 (60)
- - --------------------------------------------------------------------------------
Foreign - Current 12,912 46,130 22,929
Deferred 19,423 4,095 (19,580)
Noncurrent (2,153) (3,686) (17,925)
- - --------------------------------------------------------------------------------
30,182 46,539 (14,576)
- - --------------------------------------------------------------------------------
Total continuing operations 79,244 90,399 (20,809)
Discontinued operations - 8,878 5,394
- - --------------------------------------------------------------------------------
$ 79,244 99,277 (15,415)
================================================================================
* Net of benefits of $12,537 in 1997, $1,035 in 1996 and $4,273 in 1995 for
alternative minimum tax credit.
Noncurrent taxes, classified in the Consolidated Balance Sheets as "Deferred
Credits and Other Liabilities," relate to petroleum revenue taxes payable to the
U.K. government ($644,000 and $2,774,000 at December 31, 1997 and 1996) and to
matters not resolved with various taxing authorities. The significant components
of deferred income tax expense (benefit) attributable to income (loss) from
continuing operations before income taxes for the years ended December 31, 1997,
1996 and 1995 were as follows.
- - --------------------------------------------------------------------------------
(Thousands of dollars) 1997 1996 1995
- - --------------------------------------------------------------------------------
Deferred tax expense excluding the
effects of the items below on
deferred tax assets and liabilities $13,180 17,754 (36,053)
Estimated tax credit carryforward
(increase) decrease 6,065 2,178 (4,327)
Effect of change in U.K. tax rate (1,573) - -
- - --------------------------------------------------------------------------------
Total deferred tax expense
(benefit) $17,672 19,932 (40,380)
================================================================================
46
<PAGE>
Following is a reconciliation of the U.S. statutory income tax rate to the
Company's effective rates on income (loss) from continuing operations before
income taxes.
- - --------------------------------------------------------------------------------
1997 1996 1995
- - --------------------------------------------------------------------------------
U.S. statutory income tax rate 35% 35% (35)%
Foreign asset impairment with
no tax benefit - - 24
Foreign income subject to foreign taxes
at greater than U.S. statutory rate 3 7 7
Refund and settlement of foreign taxes (1) (1) (5)
Refund and settlement of U.S. taxes - - (5)
State income taxes 1 1 -
Other, net (1) - -
- - --------------------------------------------------------------------------------
Effective income tax rates 37% 42% (14)%
================================================================================
An analysis of the Company's deferred tax assets and deferred tax liabilities at
December 31, 1997 and 1996 showing the tax effects of significant temporary
differences follows.
- - --------------------------------------------------------------------------------
(Thousands of dollars) 1997 1996
- - --------------------------------------------------------------------------------
Deferred tax assets
Property and leasehold costs $ 76,516 58,185
Reserves for dismantlements and major repairs 64,206 60,404
Federal alternative minimum
tax credit carryforward - 6,065
Postretirement and other employee benefits 21,146 20,486
Other deferred tax assets 24,873 30,524
- - --------------------------------------------------------------------------------
Total gross deferred tax assets 186,741 175,664
Less valuation allowance (47,228) (33,609)
- - --------------------------------------------------------------------------------
Net deferred tax assets 139,513 142,055
- - --------------------------------------------------------------------------------
Deferred tax liabilities
Property, plant and equipment (41,069) (43,198)
Accumulated depreciation,
depletion and amortization (194,540) (184,445)
Other deferred tax liabilities (25,117) (22,105)
- - --------------------------------------------------------------------------------
Total gross deferred tax liabilities (260,726) (249,748)
- - --------------------------------------------------------------------------------
Net deferred tax liabilities $(121,213) (107,693)
================================================================================
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 relates primarily to tax assets arising in foreign tax
jurisdictions, and in the judgment of management, these tax assets are not
likely to be realized. The valuation allowance increased $13,619,000 in 1997
after decreasing $988,000 in 1996; the change in each year offset the change in
certain deferred tax assets. 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 has not recorded a deferred tax liability of $25,700,000 related to
undistributed earnings of certain foreign subsidiaries at December 31, 1997,
because the earnings are considered permanently invested.
Income tax returns are subject to audit by the Internal Revenue Service and tax
authorities of other countries. In 1997, 1996 and 1995, the Company recorded
benefits to income of $3,163,000, $5,120,000 and $13,603,000, respectively, from
refunds and settlements of various U.S. and foreign tax issues primarily related
to prior years. The Company believes that adequate accruals have been made for
unsettled issues.
NOTE H - INCENTIVE PLANS
The Company's 1992 Stock Incentive Plan (the Plan) permits annual awards of
shares of the Company's Common Stock to executives and other key employees.
Under the Plan, the Executive Compensation and Nominating Committee (the
Committee) is authorized to grant: (1) stock options (nonqualified or
incentive), (2) stock appreciation rights (SAR) and (3) restricted stock awards.
Total annual grants may not exceed .5 percent of shares outstanding at the end
of the preceding year; any allowed shares not granted may be awarded in future
years. The Company uses APB Opinion No. 25 to account for stock-based
compensation plans. Accordingly, costs of options and restricted stock are
accrued over the vesting/performance periods and are adjusted for subsequent
changes in fair market value of the shares. Compensation cost charged against
income for stock-based plans was $2,026,000 in 1997, $5,566,000 in 1996 and
$222,000 in 1995; outstanding awards were not significantly modified in the last
three years. Had compensation cost of the Company's stock-based plans been based
on the fair value of the instruments at the grant dates using the provisions of
SFAS No. 123, Accounting for Stock-Based Compensation, the Company's net income
and earnings per share would be the following pro forma amounts.
- - --------------------------------------------------------------------------------
(Thousands of dollars except per share data) 1997 1996 1995
- - --------------------------------------------------------------------------------
Net income (loss) - As reported $ 132,406 137,855 (118,612)
Pro forma 132,089 138,570 (118,979)
Earnings per share - As reported, basic $ 2.95 3.07 (2.65)
Pro forma, basic 2.94 3.09 (2.65)
As reported, diluted 2.94 3.07 (2.65)
Pro forma, diluted 2.94 3.09 (2.65)
- - --------------------------------------------------------------------------------
The pro forma effects on net income in the preceding table may not be
representative of the pro forma effects on net income of future years because
the SFAS No. 123 provisions used in these calculations were only applied to
options and restricted stock granted after 1994.
STOCK OPTIONS - For each option granted under the Plan, the Committee fixes the
option price at no less than fair market value (FMV) on the date of the grant
and fixes the option term at no more than 10 years from such date. Each
option granted to date has had a 10-year term, has been nonqualified, and has
had an option price equal to grant-date FMV except for certain 1997 grants with
option prices above grant-date FMV. One-half of each grant may be exercised
after two years and the remainder after three years. At exercise, a grantee may
pay cash for shares, or alternatively, not remit cash and only receive shares
equal to the inherent value of options exercised on that date. The number of
outstanding options at January 1, 1997 and the related option prices
47
<PAGE>
were adjusted to preserve the existing economic values of the options at the
time of the Deltic spin-off.
The pro forma net income calculations in the preceding table reflect the
following weighted-average grant-date fair values of options granted in 1997,
1996 and 1995; these have been estimated by using the Black-Scholes option-
pricing model and the assumptions as shown.
- - --------------------------------------------------------------------------------
1997 1997 1996 1995
Above FMV FMV FMV FMV
- - --------------------------------------------------------------------------------
Weighted-average grant-
date fair value per share $8.25 9.75 7.27 10.21
Weighted-average assumptions
Dividend yield 3.00% 3.00% 3.20% 3.04%
Expected volatility 17.37% 17.37% 17.64% 19.76%
Risk-free interest rate 6.37% 6.18% 5.26% 7.45%
Expected life 7 yr. 5 yr. 5 yr. 5 yr.
- - --------------------------------------------------------------------------------
Changes in options outstanding, including shares issued under a prior plan, were
as follows.
- - --------------------------------------------------------------------------------
Average
Number Exercise
of Shares Price
- - --------------------------------------------------------------------------------
Outstanding December 31, 1994 339,730 $37.00
Granted at FMV 142,000 43.94
Exercised (33,250) 35.86
Forfeited (23,250) 39.20
- - --------------------------------------------------------------------------------
Outstanding December 31, 1995 425,230 39.28
Granted at FMV 168,000 42.44
Exercised (105,006) 36.47
Forfeited (47,625) 42.82
- - --------------------------------------------------------------------------------
Outstanding December 31, 1996 440,599 40.77
Deltic spin-off adjustment 17,407 -
Granted at FMV 180,250 50.38
Granted above FMV 231,750 60.45
Exercised (68,022) 36.53
Forfeited (31,295) 49.08
- - --------------------------------------------------------------------------------
Outstanding December 31, 1997 770,689 48.04
================================================================================
Exercisable December 31, 1995 198,355 $36.31
Exercisable December 31, 1996 153,223 36.92
Exercisable December 31, 1997 174,269 37.79
- - --------------------------------------------------------------------------------
Additional information about stock options outstanding at December 31, 1997
follows.
- - --------------------------------------------------------------------------------
Options Outstanding Options Exercisable
Range of No. of Avg. Life Avg. No. of Avg.
Exercise Prices Options in Years Price Options Price
- - --------------------------------------------------------------------------------
$26.08 to $34.92 63,420 4.0 $33.93 63,420 $33.93
$36.42 to $42.25 310,269 7.1 40.78 110,849 40.00
$50.37 to $65.49 397,000 9.1 55.97 - -
- - --------------------------------------------------------------------------------
$26.08 to $65.49 770,689 7.9 $48.04 174,269 $37.79
================================================================================
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.
RESTRICTED STOCK - Since 1992, shares of restricted stock have been granted in
alternate years. Each grant will vest if the Company achieves specific financial
objectives at the end of a five-year performance period. Additional shares may
be awarded if objectives are exceeded, but some or all shares may be forfeited
if objectives are not met. During the performance period, a grantee may vote and
receive dividends on the shares, but shares are subject to transfer restrictions
and are all or partially forfeited if a grantee terminates, depending on the
reason. The Company may reimburse a grantee up to 50 percent of the award value
for personal income tax liability on stock awarded. For the pro forma net income
calculation, the fair value per share of restricted stock granted in 1996 was
$42.44, the grant-date market price of the stock. On December 31, 1996, the
performance period ended for shares granted in 1992; based on financial
objectives achieved, 50 percent of eligible shares were awarded and the
remainder were forfeited. The number of restricted shares outstanding at January
1, 1997 was adjusted to preserve the existing economic value of the stock at the
time of the Deltic spin-off. Changes in restricted stock outstanding were as
follows.
- - --------------------------------------------------------------------------------
(Number of shares) 1997 1996 1995
- - --------------------------------------------------------------------------------
Balance at beginning of year 36,512 38,011 40,511
Granted - 24,250 -
Deltic spin-off adjustment 5,977 - -
Awarded (1,336)* (10,563) -
Forfeited (1,297) (15,186) (2,500)
- - --------------------------------------------------------------------------------
Balance at end of year 39,856 36,512 38,011
================================================================================
*Adjustment of 1996 award for Deltic spin-off.
CASH AWARDS - The Committee also administers the Company's incentive
compensation plans, which provide for annual or periodic cash awards to
officers, directors and key employees if the Company achieves specific financial
objectives. Compensation expense of $3,894,000, $3,100,000 and $400,000 was
recorded in 1997, 1996 and 1995, respectively, for these plans.
EMPLOYEE STOCK PURCHASE PLAN (ESPP) - In 1997, the Company's shareholders
approved the ESPP, under which 50,000 shares of the Company's Common Stock could
be sold to employees. Each quarter, an eligible U.S. employee may elect to
withhold up to 10 percent of his or her salary to purchase shares of the
Company's stock at a price equal to 90 percent of the fair value of the stock as
of the first day of the quarter or, if appropriate, the last business day prior
to such date. The ESPP will terminate at the earlier of the date that all 50,000
shares have been sold or June 30, 2002. In 1997, 4,326 shares of the Company's
stock were sold under the ESPP at $44.44 a share, and at year-end 45,674 shares
remained available for sale. Compensation costs related to the ESPP were
immaterial.
NOTE I - EMPLOYEE AND RETIREE BENEFITS
RETIREMENT PLANS - The Company has noncontributory 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.
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
48
<PAGE>
statutory limitations on the amount of benefits that may be paid from qualified
plans. As part of a reduction-in-force program, special termination benefits
were offered certain U.S. employees in 1995; a curtailment gain resulted from
reduced future service cost for employees accepting the offer.
Retirement expense (credit) and its components for 1997, 1996 and 1995 are shown
in the following table.
- - --------------------------------------------------------------------------------
U.S. Plans
(Thousands of dollars) 1997 1996 1995
- - --------------------------------------------------------------------------------
Service cost - benefits earned
during the year $ 2,834 3,191 3,266
Interest accrued on benefits
earned in prior years 11,948 11,609 10,984
Actual return on plan assets (46,427) (21,641) (32,876)
Net amortization and deferral 29,209 4,739 18,456
- - --------------------------------------------------------------------------------
Retirement expense reduction* (2,436) (2,102) (170)
Special termination benefits - - 7,005
Curtailment gain - - (2,494)
- - --------------------------------------------------------------------------------
Net retirement expense (credit) $ (2,436) (2,102) 4,341
================================================================================
*Major assumptions were discount rates of 7.50% for 1997 and 1995 and 7.00%
for 1996 and assumed long-term rate of return on plan assets of 8.50% for
each year.
Net retirement expense (credit) included in "Income from Discontinued
Operations" in the Consolidated Statements of Income was $(69,000) in 1996 and
$(12,000) in 1995.
- - --------------------------------------------------------------------------------
Non-U.S. Plans
(Thousands of dollars) 1997 1996 1995
- - --------------------------------------------------------------------------------
Service cost - benefits earned
during the year $1,683 1,528 1,482
Interest accrued on benefits
earned in prior years 2,941 2,620 2,173
Actual return on plan assets (7,101) (5,011) (3,652)
Net amortization and deferral 2,500 910 811
- - --------------------------------------------------------------------------------
Retirement expense* $ 23 47 814
================================================================================
*Major assumptions were discount rates of 7.50-9.50% and assumed long-term
rates of return on plan assets of 7.50-9.50% in each year.
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. Accumulated benefits in excess of assets in
these plans were $6,381,000 in 1997 and $5,501,000 in 1996; 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 U.S. Plans Non-U.S. Plans Non-U.S. Plans
(Thousands of dollars) 1997 1996 1997 1996
- - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Present value of accumulated benefits based on years of
service, applicable pay formula and present pay levels
Vested $153,499 138,428 33,981 27,991
Nonvested 6,257 5,494 87 120
- - -------------------------------------------------------------------------------------------------------------------------
Accumulated benefit obligation/1/ 159,756 143,922 34,068 28,111
Provision for future pay increases 18,354 15,592 8,500 6,298
- - -------------------------------------------------------------------------------------------------------------------------
Projected benefit obligation/1/ 178,110 159,514 42,568 34,409
Plan assets - at market value/2/ 220,780 185,355 48,697 44,935
- - -------------------------------------------------------------------------------------------------------------------------
Plan assets in excess of projected benefit obligation 42,670 25,841 6,129 10,526
Unrecognized net asset from transition to SFAS No. 87/3/ (11,524) (13,529) (1,801) (2,143)
Unrecognized net gain from favorable actuarial experience (20,212) (4,740) (10,098) (14,612)
Unrecognized prior service cost 1,273 1,421 2,430 2,718
Additional minimum liability (518) (360) - -
- - -------------------------------------------------------------------------------------------------------------------------
Prepaid (accrued) retirement cost $ 11,689 8,633 (3,340) (3,511)
=========================================================================================================================
</TABLE>
1 Major assumptions for U.S. plans were discount rates of 7.00% for 1997 and
7.50% for 1996 and future pay rate increases of 4.60% for 1997 and 1996.
Major assumptions for non-U.S. plans were discount rates of 7.00-7.50% for
1997 and 7.50-9.50% for 1996 and future pay rate increases of 5.50-6.00% for
1997 and 6.00-7.00% for 1996.
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 matches contributions at a stated percentage of each
employee's allotment based on length of participation in the plans. Company
contributions to these plans were $3,076,000 in 1997, $2,784,000 in 1996 and
$2,952,000 in 1995, including $190,000 in 1996 and $157,000 in 1995 that were
included in "Income from Discontinued Operations" in the Consolidated Statements
of Income.
POSTRETIREMENT BENEFITS - The Company sponsors plans that provide health care
and life insurance benefits for most retired U.S. employees. Costs are accrued
for these plans during the service lives of covered employees. Retirees
contribute a portion of the cost of health care benefits; the Company
contributes the remainder. The Company pays premiums for life insurance
coverage, arranged through an insurance company. The health care plan is self-
funded on a pay-as-you-go basis. The Company has the right to modify the
benefits and/or costsharing provisions.
Based on actuarial computations, postretirement expense and its components for
1997, 1996 and 1995 were as follows.
49
<PAGE>
- - --------------------------------------------------------------------------------
(Thousands of dollars) 1997 1996 1995
- - --------------------------------------------------------------------------------
Service cost $ 508 714 548
Amortization of net actuarial loss 67 17 476
Interest cost 2,466 2,175 2,706
- - --------------------------------------------------------------------------------
Postretirement expense $3,041 2,906 3,730
================================================================================
Postretirement expense included in "Income from Discontinued Operations" in the
Consolidated Statements of Income was $433,000 in 1996 and $466,000 in 1995.
A summary follows of postretirement benefit obligations recorded at December 31,
1997 and 1996. Calculation of the amount of accumulated unfunded postretirement
benefit obligations (APBO) was based on discount rates of 7.00 percent in 1997
and 7.50 percent in 1996. Accrued APBO obligations were included in "Deferred
Credits and Other Liabilities" in the Consolidated Balance Sheets.
- - --------------------------------------------------------------------------------
(Thousands of dollars) 1997 1996
- - --------------------------------------------------------------------------------
APBO - Retirees $ 26,444 18,450
Fully eligible active participants 1,659 2,680
Other active participants 8,152 7,931
- - --------------------------------------------------------------------------------
Total unfunded APBO 36,255 29,061
Unrecognized net actuarial gain (loss) (6,428) 611
- - --------------------------------------------------------------------------------
Accrued APBO obligations $ 29,827 29,672
================================================================================
In determining the APBO at December 31, 1997, health care inflation cost was
assumed to increase at an annual rate of 7.5 percent, gradually decreasing to
4.5 percent in 2002 and thereafter. A one-percent increase in the assumed health
care cost trend would increase the 1997 postretirement benefit expense by 7.2
percent and the APBO at December 31, 1997 by 6.5 percent.
NOTE J - FINANCIAL INSTRUMENTS
DERIVATIVE INSTRUMENTS - Murphy utilizes derivative instruments on a limited
basis to manage risks related to interest rates, foreign currency exchange rates
and commodity prices. The use of derivative instruments is closely monitored by
the Company's senior management, and all such transactions are designed to
address certain risk-management objectives. The Company does not hold any
derivatives for trading purposes, and it does not use derivatives with leveraged
features. Derivative instruments are traded either with creditworthy major
financial institutions or over national exchanges.
At December 31, 1997, the Company had interest rate swaps agreements with
notional amounts totaling $100,000,000 that serve to convert an equal amount of
variable rate long-term debt to fixed rates. The swaps mature in 2002 and 2004
and have a weighted-average fixed interest rate of 6.46 percent. No interest
rate swaps were outstanding at December 31, 1996. Using the accrual/settlement
method of accounting, the net amount to be received or paid on a quarterly basis
under the swap agreements is accrued as part of "Interest Expense" in the
Consolidated Income Statement. Although the Company has never terminated an
interest rate swap prior to maturity, if it did, any cash paid or received as
settlement would be deferred and recognized as an adjustment to interest expense
over the shorter of the remaining life of the debt or the remaining contractual
life of the swap.
At December 31, 1997, the Company had a forward foreign currency exchange
contract that serves to fix the U.S. dollar cost for Canadian dollar nonrecourse
debt associated with the Company's Syncrude project. The currency exchange
contract matures in December 1998, at which time the Company will pay US
$28,517,000 to acquire the Canadian dollars needed to meet the payment of Cdn
$37,970,000. The Company accounts for the unrealized difference between the
contract exchange rate and the actual period-ending exchange rate on the
Consolidated Balance Sheet as an adjustment to "Nonrecourse Debt of a
Subsidiary" with the offset to "Currency Translation Adjustments." When the
contract is settled, any adjustment to the difference previously recorded will
be included in the same accounts.
The Company previously used crude oil swap agreements to reduce a portion of the
financial exposure of its U.S. refineries to crude oil price movements.
Unrealized gains or losses on such swap contracts were generally deferred and
recognized in connection with the associated crude oil purchase. If conditions
indicated that the market price of finished products would not allow for
recovery of the costs of the finished products, including any unrealized loss on
the crude oil swap, a liability was provided for the nonrecoverable portion of
the unrealized swap loss. The final swap matured in the third quarter of 1997.
The Company recorded operating results associated with crude oil swaps in "Crude
Oil, Products and Related Operating Expenses" in the Consolidated Statements of
Income. For 1997, 1996 and 1995, the after-tax results of crude oil swaps were
gains (losses) of $5,041,000, $9,209,000 and $(3,900,000), respectively.
FAIR VALUE - The following table presents the carrying amounts and estimated
fair values of financial instruments held by the Company at December 31, 1997
and 1996. 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,
investments and noncurrent receivables, trade accounts payable, and accrued
expenses, all of which had fair values approximating carrying amounts.
- - --------------------------------------------------------------------------------
1997 1996
Estimated Estimated
Carrying Fair Carrying Fair
(Thousands of dollars) Amount Value Amount Value
- - --------------------------------------------------------------------------------
Financial liabilities
Current and long-term
debt $(214,255) (205,240) (215,463) (203,848)
Off-balance-sheet exposures
Interest rate swaps - (1,886) - -
Crude oil swaps - - - 6,166
Financial guarantees and
letters of credit - - - -
- - --------------------------------------------------------------------------------
The carrying amounts of financial liabilities in the preceding table are
included in the Consolidated Balance Sheets under "Current Maturities of Long-
Term Obligations," "Notes Payable," "Notes Payable and Capitalized Lease
Obligations" and "Nonrecourse Debt of a Subsidiary." The following methods and
assumptions
50
<PAGE>
were used to estimate the fair value of each class of financial instruments for
which it is practicable to estimate that value.
. Current and long-term debt - The fair value is estimated based on current
rates offered the Company for debt of the same maturities.
. Interest rate and crude oil swaps - The fair value is an estimate of the
amount, based on quotes from counterparties, that the Company would receive
(pay) at the reporting date to cancel the contracts.
. Financial guarantees and letters of credit - The fair value, which represents
fees associated with obtaining the instruments, was nominal.
CREDIT RISKS - The Company's primary credit risks are associated with trade
accounts receivable, cash equivalents and derivative instruments. Trade
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 the U.K. The
credit history and financial condition of potential customers are reviewed
before credit is extended, security is obtained when considered appropriate
based on a potential customer's financial condition, and routine follow-up
evaluations are made. The combination of these evaluations and the large number
of customers tend to limit the risk of credit concentration to an acceptable
level. Cash equivalents are placed with several major financial institutions;
this limits the Company's exposure to credit risk. The Company controls the
credit risks on derivatives through credit approvals and monitoring procedures
and believes such risks are minimal, as counterparties to the transactions are
major financial institutions.
NOTE K - STOCKHOLDER RIGHTS PLAN
The Company's Stockholder Rights Plan provides for each Common stockholder 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 after 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. 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 L - EARNINGS PER SHARE
A reconciliation of the weighted-average shares outstanding for computation of
basic and diluted income per Common share for the three years ended December 31,
1997 follows. No difference existed between net income used in computing basic
and diluted income per Common share for these years.
- - --------------------------------------------------------------------------------
(Weighted-average shares outstanding) 1997 1996 1995
- - --------------------------------------------------------------------------------
Basic method 44,881,225 44,858,115 44,832,463
Dilutive stock options 79,682 46,521 -
- - --------------------------------------------------------------------------------
Assuming dilution 44,960,907 44,904,636 44,832,463
================================================================================
Stock options representing the rights to acquire 346,306, 140,692 and 452,086
shares in 1997, 1996 and 1995, respectively, were not considered in the
computation of diluted earnings per share because any effects of these options
would have been antidilutive.
NOTE M - OTHER FINANCIAL INFORMATION
INVENTORIES - Inventories valued at cost under the LIFO method totaled
$82,709,000 and $63,783,000 at December 31, 1997 and 1996, respectively. These
amounts were $76,008,000, and $120,290,000 respectively, less than such
inventories would have been valued using the FIFO method.
FOREIGN CURRENCY - Cumulative translation gains and losses are included in
"Stockholders' Equity." At December 31, 1997, components of the net cumulative
gain of $891,000 were gains (losses) of $37,320,000 for pounds sterling,
$(37,031,000) for Canadian dollars and $602,000 for other currencies.
Comparability of net income was not significantly affected by exchange rate
fluctuations in 1997, 1996 or 1995. Net gains (losses) from foreign currency
transactions included in the Consolidated Statements of Income were $200,000 in
1997, $(175,000) in 1996 and $82,000 in 1995.
CASH FLOW DISCLOSURES - Cash income taxes paid, net of refunds, were
$86,962,000, $51,983,000 and $24,638,000 in 1997, 1996 and 1995. Interest paid,
net of amounts capitalized, was $269,000, $1,659,000 and $5,434,000 in 1997,
1996 and 1995.
(Increases) decreases in noncash operating working capital for the three years
ended December 31, 1997 were as follows.
- - --------------------------------------------------------------------------------
(Thousands of dollars) 1997 1996 1995
- - --------------------------------------------------------------------------------
Accounts receivable $ 47,214 (89,453) 7,203
Inventories (27,061) 22,558 (18,192)
Prepaid expenses (17,503) (1,679) 7,131
Deferred income tax assets 4,348 (2,234) (2,551)
Accounts payable and accrued
liabilities (67,623) 131,774 (23,987)
Current income tax liabilities (11,766) 16,145 (6,213)
- - --------------------------------------------------------------------------------
$(72,391) 77,111 (36,609)
================================================================================
NOTE N - COMMITMENTS
The Company leases land, service stations and other facilities under operating
leases. Future minimum rental commitments under noncancellable operating leases
are not material. Commitments for capital expenditures were approximately
$228,000,000 at December 31, 1997, including $89,000,000 related to a one-third
interest in a
51
<PAGE>
five-year contract for a semisubmersible drilling rig capable of drilling in
6,000 feet of water. Delivery of the rig is scheduled for 1999.
NOTE O - 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; governmental support for other forms of
energy; 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 the actions may take or the effect such
actions may have on the Company.
FOREIGN CRUDE OIL CONTRACTS - In August 1996, the Ecuadoran government notified
the Company that its contractual arrangement for production of crude oil in
Ecuador must be modified to give the government a larger share of future oil
revenues. As a result, the Company's risk-service contract was replaced by a
production-sharing contract effective January 1, 1997. While the state oil
company, PetroEcuador, acknowledged that amounts were owed under the former
contract and indicated its intention to pay, the Company considered the
circumstances surrounding the contract replacement and recorded an $8,876,000
provision for doubtful accounts at December 31, 1996. Based on amounts collected
in 1997, the Company determined that a portion of the allowance for doubtful
accounts was no longer required and recognized income of $1,642,000 in 1997. Any
collections of the remaining $7,234,000 receivable will be recognized as income
as received.
In late 1996, the Company negotiated a settlement of abandonment obligations
with other joint owners of former oil properties in Gabon. As a result of this
settlement, the Company recorded a net gain of $8,201,000 in 1996 to adjust for
the dismantlement reserve no longer required.
ENVIRONMENTAL MATTERS - The Company's environmental contingencies are reviewed
in Management's Discussion and Analysis under the section entitled
"Environmental" on page 36.
OTHER MATTERS - The Company and its subsidiaries are engaged in a number of
legal proceedings, all of which the Company considers routine and incidental to
its business and none of which is considered material. 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, 1997, the Company had contingent liabilities of $15,400,000 on
outstanding letters of credit and $14,000,000 under certain financial
guarantees.
NOTE P - BUSINESS SEGMENTS
Information about business segments and geographic operations is summarized in
the following tables. Excise taxes on petroleum products of $679,953,000,
$550,116,000 and $521,250,000 for the years 1997, 1996 and 1995 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.
- - --------------------------------------------------------------------------------
(Thousands of dollars) 1997 1996 1995
- - --------------------------------------------------------------------------------
REVENUES FOR THE YEAR
Exploration and production
United States $ 274,825 265,223 205,604
Canada 185,543 167,258 139,133
United Kingdom 121,602 130,989 110,789
Ecuador 36,034 34,977 26,096
Other international 2,453 8,799 11,885
- - --------------------------------------------------------------------------------
620,457 607,246 493,507
- - --------------------------------------------------------------------------------
Refining, marketing and
transportation
United States 1,341,650 1,267,029 1,010,967
Canada 26,102 24,627 22,589
United Kingdom 268,609 317,941 254,746
- - --------------------------------------------------------------------------------
1,636,361 1,609,597 1,288,302
- - --------------------------------------------------------------------------------
2,256,818 2,216,843 1,781,809
Intrasegment transfers elimination (124,566) (208,393) (169,309)
- - --------------------------------------------------------------------------------
Total operating revenues 2,132,252 2,008,450 1,612,500
Corporate 5,515 13,726 19,280
- - --------------------------------------------------------------------------------
$2,137,767 2,022,176 1,631,780
================================================================================
- - --------------------------------------------------------------------------------
(Thousands of dollars) 1997 1996 1995
- - --------------------------------------------------------------------------------
ASSETS AT YEAR-END
Exploration and production
United States $ 400,708 400,964 317,422
Canada 595,979 552,745 502,830
United Kingdom 319,592 307,016 248,493
Ecuador 61,536 72,462 64,406
Other international 24,869 14,238 16,282
- - --------------------------------------------------------------------------------
1,402,684 1,347,425 1,149,433
- - --------------------------------------------------------------------------------
Refining, marketing and
transportation
United States 491,430 503,791 494,577
Canada 64,530 83,497 56,786
United Kingdom 194,666 151,784 128,952
- - --------------------------------------------------------------------------------
750,626 739,072 680,315
- - --------------------------------------------------------------------------------
Corporate 85,009 157,289 123,978
Net investment in discontinued
operations - - 144,740
- - --------------------------------------------------------------------------------
$2,238,319 2,243,786 2,098,466
================================================================================
52
<PAGE>
------------------------------------------------------------------------
(Thousands of dollars) 1997 1996 1995*
------------------------------------------------------------------------
OPERATING INCOME (LOSS)
FOR THE YEAR
Exploration and production $136,470 205,734 (97,583)
Refining, marketing and
transportation 91,452 23,361 (42,670)
------------------------------------------------------------------------
Operating income (loss) 227,922 229,095 (140,253)
Nonoperating (charges) credits
Income of equity companies 1,136 1,286 1,348
Income taxes (79,244) (90,399) 20,809
Corporate revenues
(expenses) - net (17,408) (14,026) (9,823)
Income from discontinued
operations - 11,899 9,307
------------------------------------------------------------------------
Net income (loss) $132,406 137,855 (118,612)
========================================================================
-----------------------------------------------------------------------
(Thousands of dollars) 1997 1996 1995*
-----------------------------------------------------------------------
NET INCOME (LOSS) FOR THE YEAR
Exploration and production
United States $ 51,491 68,063 3,755
Canada 19,017 32,747 21,669
United Kingdom 16,301 14,729 (11,934)
Ecuador 14,543 4,874 (97,320)
Other international (16,300) 3,542 (6,755)
-----------------------------------------------------------------------
85,052 123,955 (90,585)
-----------------------------------------------------------------------
Refining, marketing and
transportation
United States 41,355 1,773 (3,767)
Canada 6,186 6,143 5,544
United Kingdom 9,197 6,186 (35,294)
-----------------------------------------------------------------------
56,738 14,102 (33,517)
-----------------------------------------------------------------------
Corporate (9,384) (12,101) (3,817)
-----------------------------------------------------------------------
Income (loss) from continuing
operations 132,406 125,956 (127,919)
Income from discontinued
operations - 11,899 9,307
-----------------------------------------------------------------------
$132,406 137,855 (118,612)
=======================================================================
* As set forth in Note D to the consolidated financial statements,
the effects of adopting SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, were:
Operating income (loss) - a loss of $198,988, $150,301 related to
exploration and production and $48,687 to refining,
marketing and transportation.
Net income (loss) - a loss of $168,367, $132,798 related to exploration and
production ($5,986 United States, $24,197 United Kingdom, $100,000 Ecuador
and $2,615 other international) and $35,569 related to refining, marketing
and transportation - United Kingdom.
-----------------------------------------------------------------------
(Thousands of dollars) 1997 1996 1995
-----------------------------------------------------------------------
ADDITIONS TO PROPERTY, PLANT
AND EQUIPMENT FOR THE YEAR
Exploration and production
United States $102,523 149,739 36,064
Canada 135,024 91,610 93,612
United Kingdom 79,998 55,929 27,527
Ecuador 10,422 11,732 17,553
Other international 10,893 4,442 1,907
-----------------------------------------------------------------------
338,860 313,452 176,663
-----------------------------------------------------------------------
Refining, marketing and
transportation
United States 29,194 20,868 27,565
Canada 4,625 8,468 3,561
United Kingdom 3,664 13,544 22,476
-----------------------------------------------------------------------
37,483 42,880 53,602
-----------------------------------------------------------------------
Corporate 7,367 1,192 1,831
-----------------------------------------------------------------------
$383,710 357,524 232,096
=======================================================================
-----------------------------------------------------------------------
(Thousands of dollars) 1997 1996 1995
-----------------------------------------------------------------------
DEPRECIATION, DEPLETION AND
AMORTIZATION EXPENSE FOR THE YEAR
Exploration and production
United States $ 79,471 60,560 89,669
Canada 37,794 30,768 26,707
United Kingdom 43,718 40,768 50,426
Ecuador 11,418 8,945 10,728
Other international - 6,581 5,195
-----------------------------------------------------------------------
172,401 147,622 182,725
-----------------------------------------------------------------------
Refining, marketing and
transportation
United States 27,823 26,443 25,862
Canada 2,008 1,637 1,549
United Kingdom 4,671 3,767 9,062
-----------------------------------------------------------------------
34,502 31,847 36,473
-----------------------------------------------------------------------
Corporate 2,516 2,912 2,673
-----------------------------------------------------------------------
$209,419 182,381 221,871
=======================================================================
53
<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, to 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 NATURAL GAS RESERVES
Reserves of crude oil, condensate, and natural gas liquids and natural gas are
estimated by the Company's engineers and adjusted to reflect contractual
arrangements and royalty rates in effect at each year-end. Many assumptions and
judgmental decisions are required to estimate reserves. Reported quantities are
subject to future revisions, some of which may be substantial, as additional
information becomes available. Such additional knowledge may result from:
reservoir performance, new geological and geophysical data, additional drilling,
technological advancements, price changes and other economic factors.
Regulations of the U.S. 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 volumes expected to be
recovered through existing wells with existing equipment and operating methods.
Proved undeveloped reserves are volumes expected to be recovered as a result of
additional investments for 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 may
differ from sales quantities 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, but amounted to approximately 2.4 billion cubic feet in 1997, 1.5
billion in 1996 and .5 billion in 1995 for natural gas.
Synthetic oil reserves in Canada are attributable to Murphy's share, after
deducting estimated net profit royalty, of the currently producing leases in the
Syncrude project. Additional reserves will be added as development progresses on
other Syncrude leases.
The Company has no proved reserves attributable to either long-term supply
agreements with foreign governments or investees accounted for by the equity
method.
SCHEDULE 4 - 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 operation that also refines crude oil
and sells refined products. Results of oil and gas producing activities include
certain special items that are reviewed in Management's Discussion and Analysis
(see page 34), and 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 (1997 and 1996) 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 reported 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 1997 used for this calculation
were $16.27 a barrel for the U.S., $15.68 for Canadian light, $6.28 for Canadian
heavy, $14.47 for Canadian offshore, $15.83 for the U.K. and $11.79 for Ecuador.
Average natural gas prices were $2.71 an MCF for the U.S., $1.18 for Canada and
$2.60 for the U.K. Oil and natural gas prices have declined sharply in early
1998.
Schedule 6 also presents the principal reasons for change in the standardized
measure of discounted future net cash flows for each of the three years ended
December 31, 1997.
[GRAPH - ESTIMATED NET PROVED OIL RESERVES]
[GRAPH - ESTIMATED NET PROVED NATURAL GAS RESERVES]
[GRAPH - ESTIMATED NET PROVED HYDROCARBON RESERVES]
54
<PAGE>
SCHEDULE 1 - ESTIMATED NET PROVED OIL RESERVES
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------------------------------
Crude Oil, Condensate and Natural Gas Liquids
-------------------------------------------------------
Synthetic
United United Oil -
(Millions of barrels) States Canada* Kingdom Ecuador Total Canada Total
- - ------------------------------------------------------------------------------------------------------------------------
PROVED
- - ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
December 31, 1994 24.5 37.5 24.5 35.0 121.5 98.8 220.3
Revisions of previous estimates 3.9 - .7 (3.5) 1.1 .7 1.8
Purchases .2 2.0 - - 2.2 - 2.2
Extensions and discoveries 1.0 3.6 20.3 - 24.9 - 24.9
Production (5.0) (5.1) (5.5) (1.9) (17.5) (3.3) (20.8)
Sales - (1.7) - - (1.7) - (1.7)
- - ------------------------------------------------------------------------------------------------------------------------
December 31, 1995 24.6 36.3 40.0 29.6 130.5 96.2 226.7
Revisions of previous estimates .5 .6 .2 - 1.3 3.2 4.5
Extensions and discoveries 4.0 3.8 14.6 - 22.4 - 22.4
Production (4.3) (5.2) (4.8) (2.2) (16.5) (3.0) (19.5)
Sales (6.1) (.3) - - (6.4) - (6.4)
- - ------------------------------------------------------------------------------------------------------------------------
December 31, 1996 18.7 35.2 50.0 27.4 131.3 96.4 227.7
Revisions of previous estimates 1.6 (.4) 6.1 6.6 13.9 10.5 24.4
Improved recovery - .5 - - .5 - .5
Purchases .2 2.1 - - 2.3 - 2.3
Extensions and discoveries 2.5 18.8 6.2 - 27.5 - 27.5
Production (3.9) (5.8) (5.0) (2.9) (17.6) (3.4) (21.0)
Sales - (1.3) - - (1.3) - (1.3)
- - ------------------------------------------------------------------------------------------------------------------------
December 31, 1997 19.1 49.1 57.3 31.1 156.6 103.5 260.1
========================================================================================================================
PROVED DEVELOPED
December 31, 1994 15.2 23.6 19.2 3.8 61.8 80.5 142.3
December 31, 1995 21.3 22.4 19.5 7.8 71.0 69.9 140.9
December 31, 1996 16.3 21.4 16.8 10.1 64.6 66.9 131.5
December 31, 1997 15.3 22.5 18.3 20.6 76.7 70.4 147.1
- - ------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Excludes 50 million barrels of crude oil to be added to proved reserves as
development of the Hibernia and Terra Nova oil fields proceeds.
SCHEDULE 2 - ESTIMATED NET PROVED NATURAL GAS RESERVES
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------
United United
(Billions of cubic feet) States Canada Kingdom Spain Total
- - ------------------------------------------------------------------------------------------------------------------------
PROVED
- - ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 31, 1994 430.1 176.7 29.6 7.2 643.6
Revisions of previous estimates 3.8 (5.2) 1.9 .6 1.1
Purchases 2.8 5.8 - - 8.6
Extensions and discoveries 64.1 2.0 19.8 - 85.9
Production (69.3) (15.2) (3.9) (4.0) (92.4)
Sales - (4.0) - - (4.0)
- - ------------------------------------------------------------------------------------------------------------------------
December 31, 1995 431.5 160.1 47.4 3.8 642.8
Revisions of previous estimates 19.8 (5.1) 2.1 (1.2) 15.6
Extensions and discoveries 85.0 15.6 - - 100.6
Production (58.3) (15.8) (5.6) (2.6) (82.3)
Sales (13.6) (3.7) - - (17.3)
- - ------------------------------------------------------------------------------------------------------------------------
December 31, 1996 464.4 151.1 43.9 - 659.4
Revisions of previous estimates (23.7) (4.9) (2.9) - (31.5)
Purchases 11.1 .4 - - 11.5
Extensions and discoveries 63.2 17.0 - - 80.2
Production (79.4) (16.4) (4.6) - (100.4)
Sales (.2) (6.8) - - (7.0)
- - ------------------------------------------------------------------------------------------------------------------------
December 31, 1997 435.4 140.4 36.4 - 612.2
========================================================================================================================
PROVED DEVELOPED
December 31, 1994 221.6 165.0 29.6 7.2 423.4
December 31, 1995 229.0 150.0 27.6 3.8 410.4
December 31, 1996 291.1 146.0 25.4 - 462.5
December 31, 1997 304.2 135.2 24.0 - 463.4
- - ------------------------------------------------------------------------------------------------------------------------
</TABLE>
55
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 3 - COSTS INCURRED IN OIL AND GAS PROPERTY ACQUISITION, EXPLORATION AND DEVELOPMENT ACTIVITIES
- - ------------------------------------------------------------------------------------------------------------------------------------
1997
---------------------------------------------------------------------
Synthetic
United United Oil -
(Millions of dollars) States Canada Kingdom Ecuador Other Subtotal Canada Total
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Property acquisition costs
Unproved $ 20.5 5.9 .2 - - 26.6 - 26.6
Proved 8.2 13.9 .1 - - 22.2 - 22.2
- - ------------------------------------------------------------------------------------------------------------------------------------
Total acquisition costs 28.7 19.8 .3 - - 48.8 - 48.8
Exploration costs 74.4 18.2 14.6 - 28.1 135.3 - 135.3
Development costs 43.9 96.0 76.0 10.4 - 226.3 12.8 239.1
- - ------------------------------------------------------------------------------------------------------------------------------------
Total capital expenditures 147.0 134.0 90.9 10.4 28.1 410.4 12.8 423.2
- - ------------------------------------------------------------------------------------------------------------------------------------
Charged to expense
Dry hole expense 30.9 4.5 5.7 - 7.2 48.3 - 48.3
Geophysical and other costs 13.6 7.2 5.2 - 10.0 36.0 - 36.0
- - ------------------------------------------------------------------------------------------------------------------------------------
Total charged to expense 44.5 11.7 10.9 - 17.2 84.3 - 84.3
- - ------------------------------------------------------------------------------------------------------------------------------------
Expenditures capitalized $ 102.5 122.3 80.0 10.4 10.9 326.1 12.8 338.9
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE 4 - RESULTS OF OPERATIONS FOR OIL AND GAS PRODUCING ACTIVITIES
- - ------------------------------------------------------------------------------------------------------------------------------------
1997
---------------------------------------------------------------------
Synthetic
United United Oil -
(Millions of dollars) States Canada Kingdom Ecuador Other Subtotal Canada Total
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Crude oil and natural gas liquids
Transfers to consolidated operations $ 64.1 13.7 - - - 77.8 46.8 124.6
Sales to unaffiliated enterprises 10.8 57.9 95.3 34.7 - 198.7 21.1 219.8
Natural gas 196.7 22.1 12.2 - - 231.0 - 231.0
- - ------------------------------------------------------------------------------------------------------------------------------------
Total oil and gas revenues 271.6 93.7 107.5 34.7 - 507.5 67.9 575.4
Other operating revenues/1/ 3.2 24.0 14.1 1.3 2.5 45.1 - 45.1
- - ------------------------------------------------------------------------------------------------------------------------------------
Total revenues 274.8 117.7 121.6 36.0 2.5 552.6 67.9 620.5
- - ------------------------------------------------------------------------------------------------------------------------------------
Costs and deductions
Production costs 43.5 39.2 32.5 11.0 - 126.2 38.6 164.8
Exploration expenses 44.5 11.7 10.9 - 17.2 84.3 - 84.3
Undeveloped lease amortization 6.7 3.6 .1 - .1 10.5 - 10.5
Depreciation, depletion and amortization 79.4 31.4 43.7 11.4 - 165.9 6.5 172.4
Impairment of long-lived assets 7.7 20.4 - - - 28.1 - 28.1
Selling and general expenses 14.3 5.2 2.7 .2 1.4 23.8 .1 23.9
Loss from modifications to foreign crude oil contracts - - - - - - - -
- - ------------------------------------------------------------------------------------------------------------------------------------
Total costs and deductions 196.1 111.5 89.9 22.6 18.7 438.8 45.2 484.0
- - ------------------------------------------------------------------------------------------------------------------------------------
78.7 6.2 31.7 13.4 (16.2) 113.8 22.7 136.5
Income tax provisions (benefits) 27.2 1.4 15.4 (1.1) .1 43.0 8.4 51.4
- - ------------------------------------------------------------------------------------------------------------------------------------
Results of operations/2/ $ 51.5 4.8 16.3 14.5 (16.3) 70.8 14.3 85.1
====================================================================================================================================
</TABLE>
/1/ Includes pretax gains of $20.7 on sale of Canadian properties and $1.6 on
1996 contract modification in Ecuador.
/2/ Excludes corporate overhead and interest.
56
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 3 - COSTS INCURRED IN OIL AND GAS PROPERTY ACQUISITION, EXPLORATION AND DEVELOPMENT ACTIVITIES (Contd.)
- - --------------------------------------------------------------------------------------------------------------------------------
1996
------------------------------------------------------------------
Synthetic
United United Oil -
(Millions of Dollars) States Canada Kingdom Ecuador Other Subtotal Canada Total
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Property acquisition costs
Unproved $ 16.9 5.7 - - - 22.6 - 22.6
Proved - - - - - - - -
- - --------------------------------------------------------------------------------------------------------------------------------
Total acquisition costs 16.9 5.7 - - - 22.6 - 22.6
Exploration costs 107.7 10.3 13.2 - 8.9 140.1 - 140.1
Development costs 60.1 75.7 56.1 11.7 - 203.6 7.7 211.3
- - --------------------------------------------------------------------------------------------------------------------------------
Total capital expenditures 184.7 91.7 69.3 11.7 8.9 366.3 7.7 374.0
- - --------------------------------------------------------------------------------------------------------------------------------
Charged to expense
Dry hole expense 17.3 1.7 9.5 - - 28.5 - 28.5
Geophysical and other costs 17.6 6.1 3.9 - 4.4 32.0 - 32.0
- - --------------------------------------------------------------------------------------------------------------------------------
Total charged to expense 34.9 7.8 13.4 - 4.4 60.5 - 60.5
- - -------------------------------------------------------------------------------------------------------------------------------
Expenditures capitalized $149.8 83.9 55.9 11.7 4.5 305.8 7.7 313.5
===============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE 4 - RESULTS OF OPERATIONS FOR OIL AND GAS PRODUCING ACTIVITIES (Contd.)
- - ---------------------------------------------------------------------------------------------------------------------------------
1996
--------------------------------------------------------------------
Synthetic
United United Oil -
(Millions of dollars) States Canada Kingdom Ecuador Other Subtotal Canada Total
- - ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Crude oil and natural gas liquids
Transfers to consolidated operations $ 71.8 57.6 34.4 - - 163.8 44.6 208.4
Sales to unaffiliated enterprises 14.3 24.0 67.7 35.0 - 141.0 18.7 159.7
Natural gas 147.1 17.3 14.4 - 7.8 186.6 - 186.6
- - ---------------------------------------------------------------------------------------------------------------------------------
Total oil and gas revenues 233.2 98.9 116.5 35.0 7.8 491.4 63.3 554.7
Other operating revenues/1/ 32.0 5.0 14.5 - 1.0 52.5 - 52.5
- - ---------------------------------------------------------------------------------------------------------------------------------
Total revenues 265.2 103.9 131.0 35.0 8.8 543.9 63.3 607.2
- - ----------------------------------------------------------------------------------------------------------------------------------
Costs and deductions
Production costs 45.4 30.8 34.7 10.9 .7 122.5 38.0 160.5
Exploration expenses 34.9 7.8 13.4 - 4.4 60.5 - 60.5
Undeveloped lease amortization 6.5 3.0 .1 - .1 9.7 - 9.7
Depreciation, depletion and amortization 60.5 25.2 40.8 8.9 6.6 142.0 5.6 147.6
Impairment of long-lived assets - - - - - - - -
Selling and general expenses 12.7 5.2 3.0 .2 1.3 22.4 .1 22.5
Loss from modifications to foreign crude oil contracts - - - 8.8 (8.2) .6 - .6
- - ----------------------------------------------------------------------------------------------------------------------------------
Total costs costs and deductions 160.0 72.0 92.0 28.8 4.9 357.7 43.7 401.4
- - ----------------------------------------------------------------------------------------------------------------------------------
105.2 31.9 39.0 6.2 3.9 186.2 19.6 205.8
Income tax provisions (benefits) 37.1 11.3 24.3 1.2 .4 74.3 7.5 81.8
- - ----------------------------------------------------------------------------------------------------------------------------------
Results of operations/2/ $ 68.1 20.6 14.7 5.0 3.5 111.9 12.1 124.0
==================================================================================================================================
</TABLE>
/1/ Includes pretax gain of $27.9 on sale of U.S. onshore properties.
/2/ Excludes corporate overhead and interest.
<TABLE>
<CAPTION>
SCHEDULE 3 - COSTS INCURRED IN OIL AND GAS PROPERTY ACQUISITION, EXPLORATION AND DEVELOPMENT ACTIVITIES (Contd.)
- - ---------------------------------------------------------------------------------------------------------------------------------
1995
------------------------------------------------------------------
Synthetic
United United Oil -
(Millions of Dollars) States Canada Kingdom Ecuador Other Subtotal Canada Total
- - ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Property acquisition costs
Unproved $ 7.0 3.0 .1 - .2 10.3 - 10.3
Proved 2.5 4.7 - - - 7.2 - 7.2
- - ----------------------------------------------------------------------------------------------------------------------------------
Total acquisition costs 9.5 7.7 .1 - .2 17.5 - 17.5
Exploration costs 41.7 7.5 6.8 - 9.3 65.3 - 65.3
Development costs 20.0 76.8 25.6 17.6 1.6 141.6 7.3 148.9
- - ----------------------------------------------------------------------------------------------------------------------------------
Total capital expenditures 71.2 92.0 32.5 17.6 11.1 224.4 7.3 231.7
- - ----------------------------------------------------------------------------------------------------------------------------------
Charged to expense
Dry hole expense 25.9 2.9 .7 - 1.4 30.9 - 30.9
Geophysical and other costs 9.2 2.9 4.3 - 7.8 24.2 - 24.2
- - ----------------------------------------------------------------------------------------------------------------------------------
Total charged to expense 35.1 5.8 5.0 - 9.2 55.1 - 55.1
- - ----------------------------------------------------------------------------------------------------------------------------------
Expenditures capitalized $ 36.1 86.2 27.5 17.6 1.9 169.3 7.3 176.6
==================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE 4 - RESULTS OF OPERATIONS FOR OIL AND GAS PRODUCING ACTIVITIES (Contd.)
- - ---------------------------------------------------------------------------------------------------------------------------------
1995
----------------------------------------------------------------------
Synthetic
United United Oil -
(Millions of dollars) States Canada Kingdom Ecuador Other Subtotal Canada Total
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Crude oil and natural gas liquids
Transfers to consolidated operations $ 67.8 45.7 20.9 - - 134.4 34.9 169.3
Sales to unaffiliated enterprises 14.4 22.6 71.7 25.9 - 134.6 20.8 155.4
Natural gas 112.8 14.5 9.8 - 11.3 148.4 - 148.4
- - ----------------------------------------------------------------------------------------------------------------------------------
Total oil and gas revenues 195.0 82.8 102.4 25.9 11.3 417.4 55.7 473.1
Other operating revenues 10.6 - 8.4 .2 .6 19.8 .6 20.4
- - ----------------------------------------------------------------------------------------------------------------------------------
Total revenues 205.6 82.8 110.8 26.1 11.9 437.2 56.3 493.5
- - ----------------------------------------------------------------------------------------------------------------------------------
Costs and deductions
Production costs 53.5 27.0 36.1 11.6 .1 128.3 39.2 167.5
Exploration expenses 35.1 5.8 5.0 - 9.2 55.1 - 55.1
Undeveloped lease amortization 6.9 2.3 - - 1.5 10.7 - 10.7
Depreciation, depletion and amortization 89.7 21.9 50.4 10.7 5.3 178.0 4.7 182.7
Impairment of long-lived assets 9.2 - 38.5 100.0 2.6 150.3 - 150.3
Selling and general expenses 14.1 5.6 3.5 .1 1.4 24.7 .1 24.8
Loss from modifications to foreign crude oil contracts - - - - - - - -
- - ----------------------------------------------------------------------------------------------------------------------------------
Total costs costs and deductions 208.5 62.6 133.5 122.4 20.1 547.1 44.0 591.1
- - ----------------------------------------------------------------------------------------------------------------------------------
(2.9) 20.2 (22.7) (96.3) (8.2) (109.9) 12.3 (97.6)
Income tax provisions (benefits) (6.6) 6.3 (10.8) 1.0 (1.4) (11.5) 4.5 (7.0)
- - ----------------------------------------------------------------------------------------------------------------------------------
Results of operations/1/ $ 3.7 13.9 (11.9) (97.3) (6.8) (98.4) 7.8 (90.6)
==================================================================================================================================
</TABLE>
/1/ Excludes corporate overhead and interest.
57
<PAGE>
SCHEDULE 5 - CAPITALIZED COSTS RELATING TO OIL AND GAS PRODUCING ACTIVITIES
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
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, 1997
Unproved oil and gas properties $ 96.8 32.9 4.3 - 19.6 153.6 - 153.6
Proved oil and gas properties 1,468.9 732.9/1/ 764.5 189.3 - 3,155.6 133.6 3,289.2
- - ------------------------------------------------------------------------------------------------------------------------------------
Gross capitalized costs 1,565.7 765.8 768.8 189.3 19.6 3,309.2 133.6 3,442.8
Accumulated depreciation,
depletion and amortization
Unproved oil and gas properties (47.0) (18.2) (1.0) - (4.0) (70.2) - (70.2)
Proved oil and gas properties/2/ (1,185.6) (295.0)/1/ (520.0) (134.9) - (2,135.5) (18.8) (2,154.3)
- - ------------------------------------------------------------------------------------------------------------------------------------
Net capitalized costs $ 333.1 452.6 247.8 54.4 15.6 1,103.5 114.8 1,218.3
====================================================================================================================================
December 31, 1996
Unproved oil and gas properties $ 86.2 33.4 1.8 - 8.7 130.1 - 130.1
Proved oil and gas properties 1,384.1 659.5/1/ 703.5 178.8 - 2,925.9 126.5 3,052.4
- - ------------------------------------------------------------------------------------------------------------------------------------
Gross capitalized costs 1,470.3 692.9 705.3 178.8 8.7 3,056.0 126.5 3,182.5
Accumulated depreciation,
depletion and amortization
Unproved oil and gas properties (45.3) (16.8) (.9) - (3.9) (66.9) - (66.9)
Proved oil and gas properties/2/ (1,102.4) (264.1) (490.6) (123.5) - (1,980.6) (13.7) (1,994.3)
- - ------------------------------------------------------------------------------------------------------------------------------------
Net capitalized costs $ 322.6 412.0 213.8 55.3 4.8 1,008.5 112.8 1,121.3
====================================================================================================================================
</TABLE>
/1/ Includes net costs of $249 in 1997 and $212.4 in 1996 related to Hibernia
and Terra Nova oil fields.
/2/ Does not include reserve for dismantlement costs
of $153 in 1997 and $152.5 in 1996.
SCHEDULE 6 - STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS
RELATING TO PROVED OIL AND GAS RESERVES/1/
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
United United
(Millions of dollars) States Canada Kingdom Ecuador Total
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 31, 1997
Future cash inflows $ 1,487.7 769.6 972.0 366.3 3,595.6
Future development costs (154.6) (253.1) (104.2) (49.7) (561.6)
Future production and abandonment costs (348.5) (296.3) (356.3) (111.4) (1,112.5)
Future income taxes (286.0) (6.8) (145.7) (26.7) (465.2)
- - ------------------------------------------------------------------------------------------------------------------------------------
Future net cash flows 698.6 213.4 365.8 178.5 1,456.3
10% annual discount for estimated timing of cash flows (214.7) (115.2) (104.0) (59.4) (493.3)
- - ------------------------------------------------------------------------------------------------------------------------------------
Standardized measure of discounted future net cash flows $ 483.9 98.2 261.8 119.1 963.0
====================================================================================================================================
December 31, 1996
Future cash inflows $ 2,218.3 960.7 1,270.3 446.8 4,896.1
Future development costs (158.1) (112.3) (153.4) (52.4) (476.2)
Future production and abandonment costs (349.6) (286.5) (399.3) (194.8) (1,230.2)
Future income taxes (551.7) (119.1) (203.2) (68.8) (942.8)
- - ------------------------------------------------------------------------------------------------------------------------------------
Future net cash flows 1,158.9 442.8 514.4 130.8 2,246.9
10% annual discount for estimated timing of cash flows (346.3) (164.7) (166.5) (48.4) (725.9)
- - ------------------------------------------------------------------------------------------------------------------------------------
Standardized measure of discounted future net cash flows $ 812.6 278.1 347.9 82.4 1,521.0
====================================================================================================================================
</TABLE>
/1/ Excludes discounted future net cash flows from synthetic oil of $164.3 at
December 31, 1997.
/2/ Excludes future net cash flows attributable to 50 million barrels of
crude oil to be added to proved reserves as development of the Hibernia
and Terra Nova oil fields proceeds.
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) 1997 1996 1995
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net changes in prices, production costs and development costs $(1,437.3) 643.2 81.3
Sales and transfers of oil and gas produced, net of production costs (230.8) (324.9) (226.2)
Net change due to extensions and discoveries 278.6 450.8 298.1
Net change due to purchases and sales of proved reserves 17.4 (121.4) 7.5
Development costs incurred 214.2 201.5 132.8
Accretion of discount 217.6 115.6 76.1
Revisions of previous quantity estimates 55.0 54.8 25.4
Net change in income taxes 327.3 (352.2) (153.0)
- - ------------------------------------------------------------------------------------------------------------------------------------
Net increase (558.0) 667.4 242.0
Standardized measure at January 1 1,521.0 853.6 611.6
- - ------------------------------------------------------------------------------------------------------------------------------------
Standardized measure at December 31 $ 963.0 1,521.0 853.6
====================================================================================================================================
</TABLE>
58
<PAGE>
- - --------------------------------------------------------------------------------
STATISTICAL SUMMARY
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
EXPLORATION AND PRODUCTION
Net crude oil and condensate production - barrels a day
United States 9,565 10,614 12,772 12,503 12,864
Canada -light 3,351 3,774 4,417 4,775 4,546
heavy 11,538 9,670 8,864 6,840 7,449
offshore 224 - - - -
synthetic 9,341 8,163 8,832 9,065 -
United Kingdom 13,438 12,918 14,588 13,389 6,342
Ecuador 7,802 6,005 5,274 1,967 -
Other international - - 117 1,038 1,550
Net natural gas liquids production - barrels a day
United States 1,195 1,031 964 852 863
Canada 617 689 740 748 697
United Kingdom 423 346 447 151 -
- - ------------------------------------------------------------------------------------------------------------------------------------
Total 57,494 53,210 57,015 51,328 34,311
====================================================================================================================================
Net natural gas sold - thousands of cubic feet a day
United States 211,207 155,017 189,250 195,555 215,471
Canada 44,853 43,031 40,907 37,945 36,792
United Kingdom 12,609 15,247 10,671 10,138 13,074
Spain - 7,338 10,898 12,620 9,571
- - ------------------------------------------------------------------------------------------------------------------------------------
Total 268,669 220,633 251,726 256,258 274,908
====================================================================================================================================
Total hydrocarbons produced - equivalent barrels/1/ a day 102,272 89,982 98,969 94,038 80,129
- - ------------------------------------------------------------------------------------------------------------------------------------
Estimated net hydrocarbon reserves - million equivalent barrels/1,2/ 362.1 337.6 333.8 327.6 311.3
- - ------------------------------------------------------------------------------------------------------------------------------------
Weighted average sales prices/3/
Crude oil and condensate - dollars a barrel
United States $19.43 20.31 16.61 15.36 16.60
Canada/4/ - light 17.74 19.97 16.45 14.61 15.01
heavy 10.76 14.27 12.10 10.56 9.84
offshore 15.15 - - - -
synthetic 19.92 21.20 17.28 15.92 -
United Kingdom 18.89 21.08 16.96 15.77 16.63
Ecuador 12.17 15.96 13.03 12.07 -
Other international - - 15.12 14.80 14.14
Natural gas liquids - dollars a barrel
United States 15.82 17.00 12.62 12.19 13.36
Canada/4/ 14.87 13.69 9.70 9.21 9.59
United Kingdom 18.02 18.54 13.99 12.16 -
Natural gas - dollars a thousand cubic feet
United States 2.57 2.60 1.64 1.91 2.10
Canada/4/ 1.35 1.10 .97 1.42 1.22
United Kingdom/4/ 2.65 2.58 2.53 2.43 2.31
Spain/4/ - 2.89 2.88 2.55 2.64
- - ------------------------------------------------------------------------------------------------------------------------------------
Net wells completed
Oil wells - United States .8 3.7 3.0 2.6 3.0
Canada 78.9 41.6 29.6 20.7 24.3
Other 3.3 3.6 3.7 2.7 2.0
Gas wells - United States 9.7 14.7 3.6 4.0 8.5
Canada 19.9 33.9 2.3 14.5 4.1
Other .1 - .2 .4 -
Dry holes - United States 6.8 3.9 1.9 4.1 6.5
Canada 8.3 6.5 5.9 6.5 6.9
Other 1.9 1.2 .6 .5 .6
- - ------------------------------------------------------------------------------------------------------------------------------------
Total 129.7 109.1 50.8 56.0 55.9
====================================================================================================================================
</TABLE>
/1/ Natural gas converted on an energy equivalent basis of 6:1.
/2/ At December 31.
/3/ Includes intracompany and affiliated company transfers at market prices.
/4/ U.S. dollar equivalent.
59
<PAGE>
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
- - ------------------------------------------------------------------------------------------------------------------------------------
<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 101,150 93,929 91,940 78,252 78,732
- Superior, Wisconsin 33,704 32,657 33,217 30,592 30,358
- Milford Haven, Wales 26,706 31,300 30,346 32,038 27,991
Other feedstocks 8,178 6,315 8,280 8,731 10,350
- - ------------------------------------------------------------------------------------------------------------------------------------
Total inputs 169,738 164,201 163,783 149,613 147,431
====================================================================================================================================
Gasoline 72,672 69,658 73,964 67,746 66,460
Kerosine 14,959 14,965 15,113 16,989 16,024
Diesel and home heating oils 44,681 43,514 39,351 35,553 34,356
Residuals 20,852 19,756 19,641 15,444 16,441
Asphalt, LPG and other 13,139 12,513 10,158 10,077 9,627
Fuel and loss 3,435 3,795 5,556 3,804 4,523
- - ------------------------------------------------------------------------------------------------------------------------------------
Total yields 169,738 164,201 163,783 149,613 147,431
====================================================================================================================================
Average cost of crude inputs to refineries - dollars
a barrel
United States $ 18.54 21.05 17.34 15.81 16.81
United Kingdom 20.12 21.66 17.59 16.32 17.44
- - ------------------------------------------------------------------------------------------------------------------------------------
MARKETING
Products sold - barrels a day
United States - Gasoline 74,015 62,476 63,364 60,327 61,577
- Kerosine 9,569 9,831 9,945 11,911 11,682
- Diesel and home heating oils 43,060 39,374 33,495 30,172 29,252
- Residuals 16,527 15,415 14,775 10,454 11,812
- Asphalt, LPG and other 9,945 9,008 8,815 7,754 6,519
- - ------------------------------------------------------------------------------------------------------------------------------------
153,116 136,104 130,394 120,618 120,842
- - ------------------------------------------------------------------------------------------------------------------------------------
United Kingdom - Gasoline 11,467 13,919 14,277 16,601 13,270
- Kerosine 3,795 4,353 4,387 6,044 4,660
- Diesel and home heating oils 7,638 8,981 6,647 9,200 7,525
- Residuals 4,215 4,351 4,993 5,157 5,068
- LPG and other 1,862 2,011 930 3,264 1,996
- - ------------------------------------------------------------------------------------------------------------------------------------
28,977 33,615 31,234 40,266 32,519
- - ------------------------------------------------------------------------------------------------------------------------------------
Canada 244 254 283 246 234
- - ------------------------------------------------------------------------------------------------------------------------------------
Total products sold 182,337 169,973 161,911 161,130 153,595
====================================================================================================================================
Average gross margin on products sold - dollars
a barrel
United States $ 1.57 .25 .46 1.07 .82
United Kingdom 2.90 2.08 2.26 2.17 3.08
- - ------------------------------------------------------------------------------------------------------------------------------------
Branded retail outlets*
United States 585 527 514 588 606
United Kingdom 396 424 465 470 428
Canada 6 7 7 8 8
- - ------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION
Pipeline throughputs of crude oil - Canada - barrels
a day 188,685 183,130 173,720 159,517 151,722
- - ------------------------------------------------------------------------------------------------------------------------------------
STOCKHOLDER AND EMPLOYEE DATA
Common shares outstanding* (thousands) 44,891 44,862 44,833 44,832 44,808
Number of stockholders of record* 3,899 4,093 4,873 4,778 5,265
Number of employees* 1,338 1,339 1,794 1,767 1,803
Average number of employees 1,342 1,679 1,786 1,778 1,787
Salaries, wages and benefits (thousands) $ 92,495 95,583 96,035 93,216 90,734
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*At December 31.
60
<PAGE>
- - --------------------------------------------------------------------------------
DIRECTORS
- - --------------------------------------------------------------------------------
R. MADISON MURPHY/1/
Chairman
Murphy Oil Corporation
El Dorado, Arkansas
Director since 1993
CLAIBORNE P. DEMING/1/
President and Chief Executive Officer
Murphy Oil Corporation
El Dorado, Arkansas
Director since 1993
B. R. R. BUTLER/3,4/
Managing Director, Retired
The British Petroleum Company p.l.c.
Holbeton, Devon, England
Director since 1991
GEORGE S. DEMBROSKI/2,3/
Corporate Director,
Until January 31, 1998, Vice Chairman
RBC Dominion Securities
Toronto, Ontario, Canada
Director since 1995
H. RODES HART/1,3,4/
Chairman and Chief Executive Officer
Franklin Industries, Inc.
Nashville, Tennessee
Director since 1975
VESTER T. HUGHES Jr./2,4/
Partner
Hughes & Luce
Dallas, Texas
Director since 1973
C. H. MURPHY Jr./1,3/
Former Chairman of the Board
Murphy Oil Corporation
El Dorado, Arkansas
Director since 1950
MICHAEL W. MURPHY/1,2,3/
President
Marmik Oil Company
El Dorado, Arkansas
Director since 1977
WILLIAM C. NOLAN Jr./1,2,3/
Partner
Nolan and Alderson
El Dorado, Arkansas
Director since 1977
CAROLINE G. THEUS/3,4/
President
Inglewood Land and Development Company
Alexandria, Louisiana
Director since 1985
LORNE C. WEBSTER/2,3/
Chairman and Chief Executive Officer
Prenor Group Ltd.
Montreal, Quebec, Canada
Director since 1989
[PHOTOGRAPH OF MURPHY OIL CORPORATION'S BOARD OF DIRECTORS APPEARS HERE]
Murphy Oil Corporation's Board of Directors. Pictured seated left to right are:
Claiborne P. Deming, Caroline G. Theus, Vester T. Hughes Jr., William C. Nolan,
C. H. Murphy Jr. Standing left to right are: H. Rodes Hart, B. R. R. Butler,
George S. Dembroski, Lorne C. Webster, William C. Nolan Jr., Michael W. Murphy,
R. Madison Murphy.
- - --------------------------------------------------------------------------------
OFFICERS
- - --------------------------------------------------------------------------------
R. MADISON MURPHY
Chairman
CLAIBORNE P. DEMING
President and Chief Executive Officer
STEVEN A. COSSE'
Senior Vice President and General Counsel
HERBERT A. FOX Jr.
Vice President
BILL H. STOBAUGH
Vice President
ODIE F. VAUGHAN
Treasurer
RONALD W. HERMAN
Controller
WALTER K. COMPTON
Secretary
- - --------------------------------------------------------------------------------
DIRECTORS EMERITI
- - --------------------------------------------------------------------------------
WILLIAM C. NOLAN
GEORGE S. ISHIYAMA
Committees of the Board
/1/ Member of the Executive Committee chaired
by Mr. R. Madison Murphy.
/2/ Member of the Audit Committee chaired by Mr. Hughes.
/3/ Member of the Executive Compensation and Nominating Committee
chaired by Mr. William C. Nolan Jr.
/4/ Member of the Public Policy and Environmental Committee
chaired by Mr. Butler.
61
<PAGE>
- - --------------------------------------------------------------------------------
PRINCIPAL SUBSIDIARIES
- - --------------------------------------------------------------------------------
MURPHY EXPLORATION & PRODUCTION COMPANY
131 South Robertson Street
New Orleans, Louisiana 70112
(504) 561-2811
Mailing Address:
P. O. Box 61780
New Orleans, Louisiana 70161-1780
Engaged worldwide in crude oil and natural gas exploration and production.
ENOCH L. DAWKINS
President
WOODS W. ALLEN JR.
Executive Vice President, United Kingdom Exploration and Production
and New Basin Analysis
S. J. CARBONI JR.
Vice President, Production - Domestic Operations
JOHN C. HIGGINS
Vice President, U.S. Exploration
JAMES R. MURPHY
Vice President, Geophysics
DAVID M. WOOD
Vice President, Frontier Exploration and Production
STEVEN A. COSSE'
Vice President and General Counsel
ODIE F. VAUGHAN
Vice President and Treasurer
BOBBY R. CAMPBELL
Controller
WALTER K. COMPTON
Secretary
MURPHY OIL USA, INC.
200 Peach Street
El Dorado, Arkansas 71730
(870) 862-6411
Mailing Address:
P. O. Box 7000
El Dorado, Arkansas 71731-7000
Engaged in refining, marketing and transporting of petroleum products in the
United States.
HERBERT A. FOX JR.
President
CHARLES A. GANUS
Vice President, Marketing
FREDEREC C. GREEN
Vice President, Manufacturing and Crude Oil Supply
STEVEN A. COSSE'
Vice President and General Counsel
ODIE F. VAUGHAN
Treasurer
RONALD W. HERMAN
Controller
WALTER K. COMPTON
Secretary
MURPHY OIL COMPANY LTD.
2100-555-4th Avenue S.W.
Calgary, Alberta T2P 3E7
(403) 294-8000
Mailing Address:
P. O. Box 2721, Station M
Calgary, Alberta T2P 3Y3
Canada
Engaged in crude oil and natural gas exploration and production; extraction and
sale of synthetic crude oil; purchasing, transporting and reselling of crude
oil; and marketing of petroleum products in Canada.
HARVEY DOERR
President
W. PATRICK OLSON
Vice President, Production
R. D. URQUHART
Vice President, Supply and Transportation
ROBERT L. LINDSEY
Vice President, Finance and Secretary
ODIE F. VAUGHAN
Treasurer
MURPHY EASTERN OIL COMPANY
Winston House, Dollis Park,
Finchley
London N3 1HZ, England
181-371-3333
Provides technical and professional services to certain of Murphy Oil
Corporation's subsidiaries engaged in crude oil and natural gas exploration and
production in the Eastern Hemisphere and refining, marketing and transporting of
petroleum products in the United Kingdom.
W. MICHAEL HULSE
President
JAMES N. COPELAND
Vice President, Legal and Personnel
IJAZ IQBAL
Vice President
ODIE F. VAUGHAN
Treasurer
WALTER K. COMPTON
Secretary
62
<PAGE>
- - --------------------------------------------------------------------------------
CORPORATE INFORMATION
- - --------------------------------------------------------------------------------
CORPORATE OFFICES
200 Peach Street
El Dorado, Arkansas 71730
(870) 862-6411
MAILING ADDRESS
P. O. Box 7000
El Dorado, Arkansas 71731-7000
INTERNET ADDRESS
http://www.murphyoilcorp.com
E-MAIL ADDRESS
[email protected]
STOCK EXCHANGE LISTINGS
Trading Symbol: MUR
New York Stock Exchange
The Toronto Stock Exchange
TRANSFER AGENTS
Harris Trust Company of New York
77 Water Street
New York, New York 10005
Mailing address:
c/o Harris Trust and Savings Bank
P. O. Box 830
Chicago, Illinois 60690-9972
Montreal Trust Company of Canada
151 Front Street West
Toronto, Ontario M5J 2N1
REGISTRAR
Harris Trust Company of New York
77 Water Street
New York, New York 10005
ANNUAL MEETING
The annual meeting of the Company's shareholders will be held at 10 a.m. on May
13, 1998, at the South Arkansas Arts Center, 110 East 5th Street, El Dorado,
Arkansas. A formal notice of the meeting, together with a proxy statement and
proxy form, will be mailed to all shareholders.
FORM 10-K
A copy of the Company's Annual Report on Form 10-K, filed with the Securities
and Exchange Commission, may be obtained by writing to:
Murphy Oil Corporation
Controller's Department
P. O. Box 7000
El Dorado, Arkansas 71731-7000
INQUIRIES
Inquiries regarding shareholder account matters should be addressed to:
Walter K. Compton
Secretary
Murphy Oil Corporation
P. O. Box 7000
El Dorado, Arkansas 71731-7000
Members of the financial community should direct their inquiries to:
Kevin G. Fitzgerald
Director of Investor Relations
Murphy Oil Corporation
P. O. Box 7000
E1 Dorado, Arkansas 71731-7000
(870) 864-6272
ELECTRONIC PAYMENT OF DIVIDENDS
Shareholders may have dividends deposited directly into their bank accounts by
electronic funds transfer. Authorization forms may be obtained from:
Harris Trust and Savings Bank
P. O. Box 830
Chicago, Illinois 60690-9972
(312) 461-2457
Printed in U.S.A. on recycled paper. [RECYCLING LOGO APPEARS HERE]
inside back cover
<PAGE>
1997
ANNUAL REPORT
[GRAPHIC APPEARS HERE]
MURPHY OIL CORPORATION
200 PEACH STREET
P. O. BOX 7000
EL DORADO, AR 71731-7000
[LOGO OF MURPHY OIL APPEARS HERE]
[GRAPHIC APPEARS HERE]
<PAGE>
EXHIBIT 13 APPENDIX
MURPHY OIL CORPORATION - CIK 0000717423
Appendix to Electronically Filed Exhibit 13
(1997 Annual Report to Security Holders,
Which is Incorporated in This Form 10-K)
Providing a Narrative of Graphic and Image Material Appearing on
Inside Front Cover Through Inside Back Cover of Paper Format
Exhibit 13
Page No. Map Narrative
- - ---------- -------------
8 & 9 Worldwide Operations - The locations of the Company's "core" and
"frontier" exploration and production operations are shown by the
placement of rowels on a stylized map.
13 Gulf of Mexico - The locations and areal extent of acreage leased
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 under
development; or (2) nonproducing.
14 Offshore Eastern Canada - The locations of the Company's Hibernia
and Terra Nova oil fields, in the Jeanne d'Arc Basin in the North
Atlantic Ocean east of Newfoundland are shown. Also depicted is
the Company's Cape Race exploration license, which is midway
between the Hibernia and Terra Nova fields.
18 United Kingdom - The locations and areal extent of acreage under
license by the Company are shown in the U.K. sector of the North
Sea and the Atlantic Margin area west of Britain and Ireland.
Additionally, each lease is categorized as either: (1) producing
or under development; or (2) nonproducing.
18 China - The location of jointly owned Block 04/36 in Bohai Bay,
offshore northeastern China, is shown. Three prospective areas
within this block are identified, including prospect CFD 2-1,
where a 1996 well tested at a combined gross rate in excess of
6,000 barrels of oil a day from two zones below 11,000 feet.
20 & 21 Worldwide Operations - The locations of the Company's refining,
marketing and transportation operations are shown by the placement
of rowels on a stylized map.
24 United States - The locations of the Company's refineries in
Superior, Wisconsin and Meraux, Louisiana are shown along with
depictions of 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 six states in the
upper-Midwest.
Ex. 13A-1
<PAGE>
MURPHY OIL CORPORATION - CIK 0000717423
Appendix to Electronically Filed Exhibit 13 (Contd.)
Exhibit 13
Page No. Map Narrative (Continued)
- - ---------- -------------
26 United Kingdom - The Company's jointly owned refinery in Milford
Haven, Wales is shown along with depictions of the routes and
means of moving finished products from the refinery into U.K.
marketing areas, the locations of 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.
Picture Narrative
-----------------
A summary of pictures contained in Exhibit 13 can be found on page
29 of Exhibit 13.
<TABLE>
<CAPTION>
Graph Narrative
---------------
<S> <C> <C> <C> <C> <C> <C>
1 INCOME FROM CONTINUING OPERATIONS BEFORE SPECIAL ITEMS
Scale 0 to 150 (millions of dollars).
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
63 69 24 104 132
This vertical bar graph has values printed above bars.
1 CASH FLOW* FROM CONTINUING OPERATIONS BEFORE SPECIAL
ITEMS
Scale 0 to 525 (millions of dollars).
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
306 331 332 408 470
*Excludes changes in noncash working capital.
This vertical bar graph has values printed above bars.
2 CAPITAL EXPENDITURES
Scale 0 to 700 (millions of dollars).
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
611 386 287 418 468
This vertical bar graph has values printed above bars.
2 LONG-TERM OBLIGATIONS
Scale 0 to 240 (millions of dollars).
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
109 172 193 202 206
This vertical bar graph has values printed above bars.
</TABLE>
Ex. 13A-2
<PAGE>
MURPHY OIL CORPORATION - CIK 0000717423
Appendix to Electronically Filed Exhibit 13 (Contd.)
<TABLE>
<CAPTION>
Page No. Graph Narrative (Continued)
- - ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
3 NET HYDROCARBONS PRODUCED
Scale 0 to 120 (thousands of oil equivalent barrels a day).
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
Other International (top) 3 5 7 7 8
United Kingdom 8 15 17 16 16
Canada 19 28 30 30 32
United States (bottom) 50 46 45 37 46
---- ---- ---- ---- ----
Totals 80 94 99 90 102
==== ==== ==== ==== ====
This stacked vertical bar graph has totals printed above bars.
3 REFINED PRODUCTS SOLD
Scale 0 to 200 (thousands of barrels a day).
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
United Kingdom (top) 33 40 31 34 29
United States (bottom) 121 121 131 136 153
---- ---- ---- ---- ----
Totals 154 161 162 170 182
==== ==== ==== ==== ====
This stacked vertical bar graph has totals printed above bars.
4 RETURN ON CAPITAL EMPLOYED
Scale (9) to 12 (percent).
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
8.4 8.0 (7.9) 10.4 10.4
This vertical bar graph has values printed above (below) bars.
5 HYDROCARBON PRODUCTION REPLACEMENT
Scale 0 to 500 (percent).
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
443 147 117 111 165
This vertical bar graph has values printed above bars.
10 INCOME CONTRIBUTION* - EXPLORATION AND PRODUCTION
Scale 0 to 120 (millions of dollars).
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
37 45 30 102 85
*Before special items.
This vertical bar graph has values printed above bars.
10 CAPITAL EXPENDITURES - EXPLORATION AND PRODUCTION
Scale 0 to 600 (millions of dollars).
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
Other International (top) 74 62 29 21 38
United Kingdom 175 34 33 69 91
Canada 178 111 99 99 147
United States (bottom) 93 79 71 185 147
---- ---- ---- ---- ----
Totals 520 286 232 374 423
==== ==== ==== ==== ====
This stacked vertical bar graph has values printed above bars.
</TABLE>
EX. 13A-3
<PAGE>
MURPHY OIL CORPORATION - CIK 0000717423
Appendix to Electronically Filed Exhibit 13 (Contd.)
<TABLE>
<CAPTION>
Exhibit 13
Page No. Graph Narrative (Continued)
- - ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
13 CRUDE OIL AND NGL PRODUCTION
Scale 0 to 70 (thousands of barrels a day).
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
Other International (top) 1.6 3.0 5.4 6.0 7.8
United Kingdom 6.3 13.5 15.0 13.3 13.9
Canada - Synthetic Oil - 9.1 8.9 8.2 9.3
Canada - Other Oil 12.7 12.4 14.0 14.1 15.7
United States (bottom) 13.7 13.3 13.7 11.6 10.8
---- ---- ---- ---- ----
Totals 34.3 51.3 57.0 53.2 57.5
==== ==== ==== ==== ====
This stacked vertical bar graph has rounded totals printed above bars.
13 NATURAL GAS SALES
Scale 0 to 320 (millions of cubic feet a day).
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
Spain (top) 10 13 11 8 -
United Kingdom 13 10 11 15 13
Canada 37 38 41 43 45
United States (bottom) 215 195 189 155 211
---- ---- ---- ---- ----
Totals 275 256 252 221 269
==== ==== ==== ==== ====
This stacked vertical bar graph has totals printed above bars.
22 INCOME CONTRIBUTION* - REFINING, MARKETING AND
TRANSPORTATION
Scale 0 to 70 (millions of dollars).
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
31 30 2 14 57
*Before special items.
This vertical bar graph has values printed above bars.
23 CAPITAL EXPENDITURES - REFINING, MARKETING AND
TRANSPORTATION
Scale 0 to 120 (millions of dollars).
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
Canada (top) 4 3 4 8 5
United Kingdom 12 12 22 14 4
United States (bottom) 71 80 28 21 29
---- ---- ---- ---- ----
Totals 87 95 54 43 38
==== ==== ==== ==== ====
This stacked vertical bar graph has totals printed above bars.
23 CANADIAN PIPELINE THROUGHPUTS
Scale 0 to 210 (thousands of barrels a day).
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
152 160 174 183 189
This vertical bar graph has values printed above bars.
</TABLE>
EX. 13A-4
<PAGE>
MURPHY OIL CORPORATION - CIK 0000717423
Appendix to Electronically Filed Exhibit 13 (Contd.)
<TABLE>
<CAPTION>
Exhibit 13
Page No. Graph Narrative (Continued)
- - ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
25 MERAUX REFINERY - HEAVIER CRUDE OIL PROCESSED
Scale 28 to 34 (degrees of API gravity).
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
32.8 33.6 32.8 30.7 29.6
This vertical bar graph has values printed above bars.
25 MERAUX REFINERY - HIGHER SULFUR CRUDE OIL PROCESSED
Scale 0.5 to 1.0 (percent sulfur by weight).
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
.57 .58 .74 .87 1.00
This vertical bar graph has values printed above bars.
29 SAFETY PERFORMANCE
Scale 0 to 10 (recordable injuries per 200,000 manhours).
1991 1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ---- ----
Murphy Oil (left) 3.95 3.14 2.95 2.90 2.97 2.05 2.26
Industry Average (right) 8.16 8.51 9.39 9.34 9.01 7.80 NA
This is a side-by-side bar graph. NA = not available.
30 INCOME FROM CONTINUING OPERATIONS BY FUNCTION*
Scale 0 to 160 (millions of dollars).
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
Refining, Marketing and Transportation (top) 31 30 2 14 57
Exploration and Production (bottom) 37 45 30 102 85
---- ---- ---- ---- ----
Totals 68 75 32 116 142
==== ==== ==== ==== ====
*Excludes special items and Corporate expenses.
This stacked vertical bar graph has totals printed above bars.
30 CASH FLOW FROM CONTINUING OPERATIONS BY FUNCTION*
Scale 0 to 500 (millions of dollars).
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
Refining, Marketing and Transportation (top) 60 38 51 59 100
Exploration and Production (bottom) 238 316 270 343 365
---- ---- ---- ---- ----
Totals 298 354 321 402 465
==== ==== ==== ==== ====
*Excludes special items, Corporate expenses and changes in noncash working capital.
This stacked vertical bar graph has totals printed above bars.
</TABLE>
EX. 13A-5
<PAGE>
MURPHY OIL CORPORATION - CIK 0000717423
Appendix to Electronically Filed Exhibit 13 (Contd.)
<TABLE>
<CAPTION>
Exhibit 13
Page No. Graph Narrative (Continued)
- - ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
30 CAPITAL EXPENDITURES BY FUNCTION
Scale 0 to 700 (millions of dollars).
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
Corporate (top) 4 5 2 1 7
Refining, Marketing and Transportation 87 95 53 43 38
Exploration and Production (bottom) 520 286 232 374 423
---- ---- ---- ---- ----
Totals 611 386 287 418 468
==== ==== ==== ==== ====
This stacked vertical bar graph has totals printed above bars.
32 RANGE OF U.S. CRUDE OIL SALES PRICES
Scale 10 to 28 (dollars a barrel).
1995 1996 1997
---- ---- ----
High Monthly Crude Oil Price (top of bar) 18.06 24.32 24.61
Average Crude Oil Price for the Year (colored line) 16.61 20.31 19.43
Low Monthly Crude Oil Price (bottom of bar) 15.42 17.41 17.23
This floating vertical bar graph has highs printed above bars, averages printed above
contrasting-color lines and lows printed below bars.
33 RANGE OF U.S. NATURAL GAS SALES PRICES
Scale 1.00 to 4.50 (dollars a thousand cubic feet).
1995 1996 1997
---- ---- ----
High Monthly Natural Gas Price (top of bar) 2.45 3.68 3.85
Average Natural Gas Price for the Year (colored line) 1.64 2.60 2.57
Low Monthly Natural Gas Price (bottom of bar) 1.39 2.01 1.82
This floating vertical bar graph has highs printed above bars, averages printed
above contrasting-color lines and lows printed below bars.
33 WORLDWIDE EXTRACTION COSTS
Scale 0 to 12 (dollars per equivalent barrel).
1995 1996 1997
---- ---- ----
Depreciation, Depletion and Amortization (top) 5.06 4.48 4.62
Production Costs (bottom) 4.64 4.87 4.41
---- ---- ----
Totals 9.70 9.35 9.03
==== ==== ====
This stacked vertical bar graph has values printed within segments and totals
printed above bars.
33 EXPLORATION EXPENSES
Scale 0 to 120 (millions of dollars).
1995 1996 1997
---- ---- ----
Undeveloped Lease Amortization (top) 11 10 11
Geological, Geophysical and Other Costs 24 32 36
Dry Hole Costs (bottom) 31 28 48
---- ---- ----
Totals 66 70 95
==== ==== ====
This stacked vertical bar graph has totals printed above bars.
</TABLE>
EX. 13A-6
<PAGE>
MURPHY OIL CORPORATION - CIK 0000717423
Appendix to Electronically Filed Exhibit 13 (Contd.)
<TABLE>
<CAPTION>
Exhibit 13
Page No. Graph Narrative (Continued)
- - ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
35 CAPITAL EXPENDITURES - EXPLORATION AND PRODUCTION
Scale - 0 to 480 (millions of dollars).
1995 1996 1997
---- ---- ----
Proved Property Acquisitions (top) 7 - 22
Development Costs 149 211 239
Exploration Costs (bottom) 76 163 162
---- ---- ----
Totals 232 374 423
==== ==== ====
This stacked vertical bar graph has totals printed above bars.
35 CAPITAL EXPENDITURES - REFINING, MARKETING AND
TRANSPORTATION
Scale 0 to 60 (millions of dollars).
1995 1996 1997
---- ---- ----
Transportation (top) 4 9 7
Marketing 9 9 17
Refining (bottom) 41 25 14
---- ---- ----
Totals 54 43 38
==== ==== ====
This stacked vertical bar graph has totals printed above bars.
54 ESTIMATED NET PROVED OIL RESERVES
Scale 0 to 300 (millions of barrels).
1993 1994 1995 1996 1997
---- ---- ---- ----- ----
Other International (top) 35 35 30 27 31
United Kingdom 27 24 40 50 57
Canada 120 136 132 132 153
United States (bottom) 20 25 25 19 19
---- ---- ---- ----- ----
Totals 202 220 227 228 260
==== ==== ==== ===== ====
This stacked vertical bar graph has totals printed above bars.
54 ESTIMATED NET PROVED NATURAL GAS RESERVES
Scale 0 to 750 (billions of cubic feet).
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
Spain (top) 11 7 4 - -
United Kingdom 31 30 47 44 36
Canada 183 177 160 151 140
United States (bottom) 429 430 432 464 436
---- ---- ---- ---- ----
Totals 654 644 643 659 612
==== ==== ==== ==== ====
This stacked vertical bar graph has totals printed above bars.
</TABLE>
EX. 13A-7
<PAGE>
MURPHY OIL CORPORATION - CIK 0000717423
Appendix to Electronically Filed Exhibit 13 (Contd.)
<TABLE>
<CAPTION>
Exhibit 13
Page No. Graph Narrative (Continued)
- - ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
54 ESTIMATED NET PROVED HYDROCARBON RESERVES
Scale 0 to 400 (millions of equivalent barrels).
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
Other International (top) 37 36 30 27 31
United Kingdom 32 30 48 58 63
Canada 151 166 159 157 176
United States (bottom) 91 96 97 96 92
---- ---- ---- ---- ----
Totals 311 328 334 338 362
==== ==== ==== ==== ====
This stacked vertical bar graph has totals printed above bars.
</TABLE>
EX. 13A-8
<PAGE>
EXHIBIT 21
MURPHY OIL CORPORATION
SUBSIDIARIES OF THE REGISTRANT AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
Percentage
of Voting
Securities
State or Other Owned by
Jurisdiction Immediate
Name of Company of Incorporation Parent
- - ---------------------------------------------- ---------------- ------------
<S> <C> <C>
MURPHY OIL CORPORATION (REGISTRANT)
A. El Dorado Engineering Inc. Delaware 100.0
1. El Dorado Contractors Inc. Delaware 100.0
B. Murphy Eastern Oil Company Delaware 100.0
C. 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. Murphy Ireland Offshore Limited Bahamas 100.0
b. Ocean Drilling 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 Bangladesh Oil Company Delaware 100.0
7. Murphy Building Corporation Delaware 100.0
8. Murphy Denmark Oil Company Delaware 100.0
9. Murphy Ecuador Oil Company Ltd. Bermuda 100.0
10. Murphy Equatorial Guinea Oil Company Delaware 100.0
11. Murphy Faroes Oil Co., Ltd. Bahamas 100.0
12. Murphy France Oil Company Delaware 100.0
13. Murphy Indus Energy Ltd. Bahamas 100.0
14. Murphy Ireland Oil Company Delaware 100.0
15. Murphy Italy Oil Company Delaware 100.0
16. Murphy New Zealand Oil Company Delaware 100.0
17. Murphy Overseas Ventures Inc. Delaware 100.0
18. Murphy Pacific Rim, Ltd. Bahamas 100.0
19. Murphy Pakistan Oil Company Delaware 100.0
20. Murphy Peru Oil Company, S.A. Panama 100.0
21. Murphy Philippines Oil Co. Ltd. Bahamas 100.0
22. Murphy Somali Oil Company Delaware 100.0
23. Murphy South Asia Oil Co., Ltd. Bahamas 100.0
24. Murphy South Atlantic Oil Company Delaware 100.0
25. Murphy-Spain Oil Company Delaware 100.0
26. Murphy Venezuela Oil Company, S.A. Panama 100.0
27. Murphy Western Oil Company Delaware 100.0
28. Murphy Yemen Oil Company Delaware 100.0
29. Norske Murphy Oil Company Delaware 100.0
30. Norske Ocean Exploration Company Delaware 100.0
31. Ocean Exploration Company Delaware 100.0
32. Ocean France Oil Company Delaware 100.0
33. Ocean Gabon Oil Company Delaware 100.0
</TABLE>
Ex. 21-1
<PAGE>
EXHIBIT 21 (CONTD.)
MURPHY OIL CORPORATION
SUBSIDIARIES OF THE REGISTRANT AS OF DECEMBER 31, 1997 (CONTD.)
<TABLE>
<CAPTION>
Percentage
of Voting
Securities
State or Other Owned by
Jurisdiction Immediate
Name of Company of Incorporation Parent
- - ---------------------------------------------- ---------------- ------------
<S> <C> <C>
MURPHY OIL CORPORATION (REGISTRANT) - Contd.
C. Murphy Exploration & Production Company - Contd.
34. Ocean International Finance Corporation Delaware 100.0
35. Odeco Gabon Oil Company Delaware 100.0
36. Odeco International Corporation Panama 100.0
37. Odeco Italy Oil Company Delaware 100.0
38. Sub Sea Offshore (M) Sdn. Bhd. Malaysia 60.0
D. Murphy Oil Company, Ltd. Canada 100.0
1. 340236 Alberta Ltd. Canada 100.0
2. Murphy Atlantic Offshore Finance Company Ltd. Canada 100.0
3. Murphy Atlantic Offshore Oil Company Ltd. Canada 100.0
4. Spur Refined Products Ltd. Canada 100.0
5. Wascana Pipe Line Ltd. Canada 100.0
E. 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
F. Murphy Ventures Corporation Delaware 100.0
G. New Murphy Oil (UK) Corporation Delaware 100.0
1. Murphy Petroleum Limited England 100.0
a. Alnery No. 166 Ltd. England 100.0
b. H. Hartley (Doncaster) Ltd. England 100.0
c. Murco Petroleum Limited England 100.0
(1) European Petroleum Distributors Ltd. England 100.0
(2) Murco Petroleum (Ireland) Ltd. Ireland 100.0
H. Rowel Corporation Delaware 100.0
</TABLE>
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, 2-86760, and 333-27407) on Form S-8 and (No. 33-55161) on Form
S-3 of Murphy Oil Corporation of our report dated March 2, 1998, relating to the
consolidated balance sheets of Murphy Oil Corporation and Consolidated
Subsidiaries as of December 31, 1997 and 1996, 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, 1997, which report is included in
the December 31, 1997, annual report on Form 10-K of Murphy Oil Corporation.
Our report refers to changes in 1995 in the method of accounting for the
impairment of long-lived assets and for long-lived assets to be disposed of.
KPMG PEAT MARWICK LLP
Shreveport, Louisiana
March 26, 1998
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, 1997, AND THE
AUDITED CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1997,
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-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 24,288
<SECURITIES> 0
<RECEIVABLES> 285,977
<ALLOWANCES> 13,530
<INVENTORY> 158,416
<CURRENT-ASSETS> 517,752
<PP&E> 4,418,643
<DEPRECIATION> 2,762,805
<TOTAL-ASSETS> 2,238,319
<CURRENT-LIABILITIES> 469,419
<BONDS> 205,853
0
0
<COMMON> 48,775
<OTHER-SE> 1,030,576
<TOTAL-LIABILITY-AND-EQUITY> 2,238,319
<SALES> 2,055,164
<TOTAL-REVENUES> 2,137,767
<CGS> 1,736,720
<TOTAL-COSTS> 1,736,720
<OTHER-EXPENSES> 122,848<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 621
<INCOME-PRETAX> 211,650
<INCOME-TAX> 79,244
<INCOME-CONTINUING> 132,406
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 132,406
<EPS-PRIMARY> 2.95
<EPS-DILUTED> 2.94
<FN>
<F1>INCLUDES 28,056 FOR IMPAIRMENT OF LONG-LIVED ASSETS.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY RESTATED FINANCIAL INFORMATION
EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS AND THE CONSOLIDATED STATEMENTS
OF INCOME FOR THE PERIODS AS INDICATED OF MURPHY OIL CORPORATION AND
CONSOLIDATED SUBSIDIARIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS AS RESTATED. OTHER PERIODS WERE NOT AFFECTED BY SFAS 128.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1997 DEC-31-1997
<PERIOD-END> DEC-31-1995 JUN-30-1997 SEP-30-1997
<CASH> 60,853 29,237 69,571
<SECURITIES> 0 0 0
<RECEIVABLES> 235,974 259,321 259,315
<ALLOWANCES> 5,766 15,312 15,320
<INVENTORY> 153,913 138,693 145,545
<CURRENT-ASSETS> 490,507 457,656 515,989
<PP&E> 4,024,598 4,275,515 4,331,713
<DEPRECIATION> 2,647,143 2,648,700 2,691,741
<TOTAL-ASSETS> 2,098,466 2,155,560 2,222,971
<CURRENT-LIABILITIES> 403,119 416,121 484,211
<BONDS> 193,146 229,550 209,876
0 0 0
0 0 0
<COMMON> 48,775 48,775 48,775
<OTHER-SE> 1,052,370 1,000,469 1,020,917
<TOTAL-LIABILITY-AND-EQUITY> 2,098,466 2,155,560 2,222,971
<SALES> 1,571,929 987,607 1,527,914
<TOTAL-REVENUES> 1,631,780 1,016,040 1,572,354
<CGS> 1,439,954 838,975 1,287,494
<TOTAL-COSTS> 1,439,954 838,975 1,287,494
<OTHER-EXPENSES> 264,743<F1> 51,774 76,608<F2>
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 5,413 45 81
<INCOME-PRETAX> (148,728)<F3> 96,215 160,480
<INCOME-TAX> (20,809)<F3> 38,043 59,983
<INCOME-CONTINUING> (127,919)<F3> 58,172 100,497
<DISCONTINUED> 9,307<F3> 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (118,612) 58,172 100,497
<EPS-PRIMARY> (2.65)<F4> 1.30<F4> 2.24<F4>
<EPS-DILUTED> (2.65)<F4> 1.29 2.23
<FN>
<F1>INCLUDES 198,988 FOR IMPAIRMENT OF LONG-LIVED ASSETS.
<F2>INCLUDES 5,100 FOR IMPAIRMENT OF LONG-LIVED ASSETS.
<F3>RESTATED TO CORRECT ERROR IN 9/30/96 RESTATEMENT.
<F4>RESTATED AS REQUIRED BY SFAS 128.
</FN>
</TABLE>
<PAGE>
EXHIBIT 99.1
UNDERTAKINGS
To be incorporated by reference into Form S-8 Registration Statements No.
2-82818, 2-86749, 2-86760, and 333-27407, and Form S-3 Registration Statement
No. 33-55161.
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 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
Ex. 99.1-1
<PAGE>
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
