==============================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number 1-8590
MURPHY OIL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 71-0361522
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
200 PEACH STREET
P. O. BOX 7000, EL DORADO, ARKANSAS 71731-7000
(Address of principal executive offices) (Zip Code)
(870) 862-6411
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
[X] Yes No
Number of shares of Common Stock, $1.00 par value, outstanding at June 30,
1999, was 44,966,199.
==============================================================================
<PAGE>
PART I - FINANCIAL INFORMATION
Murphy Oil Corporation and Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Thousands of dollars)
<TABLE>
<CAPTION>
(unaudited)
June 30, December 31,
1999 1998
--------- ------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 44,895 28,271
Accounts receivable, less allowance for
doubtful accounts of $10,777 in 1999
and $11,048 in 1998 264,676 233,906
Inventories
Crude oil and blend stocks 54,561 41,090
Finished products 66,150 49,714
Materials and supplies 37,421 38,973
Prepaid expenses 38,529 32,292
Deferred income taxes 14,172 13,120
--------- ---------
Total current assets 520,404 437,366
Property, plant and equipment, at cost less
accumulated depreciation, depletion and
amortization of $3,024,585 in 1999 and
$2,985,854 in 1998 1,721,010 1,662,362
Deferred charges and other assets 65,897 64,691
--------- ---------
Total assets $2,307,311 2,164,419
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 67 5,951
Notes payable - 1,961
Accounts payable and accrued liabilities 378,346 349,887
Income taxes 27,510 22,951
--------- ---------
Total current liabilities 405,923 380,750
Notes payable 344,233 189,705
Nonrecourse debt of a subsidiary 143,129 143,768
Deferred income taxes 142,318 124,543
Reserve for dismantlement costs 154,151 154,686
Reserve for major repairs 11,940 43,519
Deferred credits and other liabilities 147,712 149,215
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 511,019 510,116
Retained earnings 522,752 545,199
Accumulated other comprehensive income - foreign
currency translation (22,413) (23,520)
Unamortized restricted stock awards (2,663) (2,361)
Treasury stock, 3,809,115 shares of Common Stock
in 1999, 3,824,838 shares in 1998, at cost (99,565) (99,976)
--------- ---------
Total stockholders' equity 957,905 978,233
--------- ---------
Total liabilities and stockholders' equity $2,307,311 2,164,419
========= =========
</TABLE>
See Notes to Consolidated Financial Statements, page 4.
The Exhibit Index is on page 16.
1
<PAGE>
Murphy Oil Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Thousands of dollars, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
1999 1998* 1999 1998*
------- ------- ------- -------
<S> <C> <C> <C> <C>
REVENUES
Crude oil and natural gas sales $100,673 79,682 184,736 160,183
Petroleum product sales 340,675 344,889 545,822 683,208
Other operating revenues 8,614 23,222 22,283 44,161
Interest and other nonoperating
revenues 529 852 1,916 1,744
------- ------- ------- -------
Total revenues 450,491 448,645 754,757 889,296
------- ------- ------- -------
COSTS AND EXPENSES
Crude oil, products and related
operating expenses 334,985 323,975 555,000 653,396
Exploration expenses, including
undeveloped lease amortization 13,694 21,906 40,033 39,960
Selling and general expenses 16,902 16,876 33,428 33,644
Depreciation, depletion and
amortization 50,445 47,571 97,040 97,843
Provision for reduction in force - - 1,513 -
Interest expense 7,701 4,094 13,317 7,970
Interest capitalized (1,435) (2,636) (2,580) (5,186)
------- ------- ------- -------
Total costs and expenses 422,292 411,786 737,751 827,627
------- ------- ------- -------
Income before income taxes 28,199 36,859 17,006 61,669
Federal and state income tax
expense 3,120 12,680 114 20,413
Foreign income tax expense 9,359 1,980 7,870 3,516
------- ------- ------- -------
NET INCOME $ 15,720 22,199 9,022 37,740
======= ======= ======= =======
Net income per Common
share - basic $ .35 .49 .20 .84
======= ======= ======= =======
Net income per Common
share - diluted $ .35 .49 .20 .84
======= ======= ======= =======
Cash dividends per Common share $ .35 .35 .70 .70
======= ======= ======= =======
Average Common shares
outstanding - basic 44,963,681 44,959,704 44,959,429 44,948,944
Average Common shares
outstanding - diluted 45,035,215 45,034,378 44,981,607 45,024,016
*Revenues have been reclassified to conform to 1999 presentation.
</TABLE>
Murphy Oil Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(Thousands of dollars)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1999 1998 1999 1998
------- ------ ------ ------
<S> <C> <C> <C> <C>
Net income $15,720 22,199 9,022 37,740
Other comprehensive
income (loss) - net gain (loss)
from foreign currency translation 3,335 (14,328) 1,107 (7,949)
------ ------ ------ ------
COMPREHENSIVE INCOME $19,055 7,871 10,129 29,791
====== ====== ====== ======
</TABLE>
See Notes to Consolidated Financial Statements, page 4.
2
<PAGE>
Murphy Oil Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Thousands of dollars)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------
1999 1998
------- -------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 9,022 37,740
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation, depletion and amortization 97,040 97,843
Provisions for major repairs 8,337 11,347
Expenditures for major repairs and dismantlement costs (40,771) (17,210)
Exploratory expenditures charged against income 34,511 34,554
Amortization of undeveloped leases 5,522 5,406
Deferred and noncurrent income tax charges 13,622 11,526
Pretax gains from disposition of assets (280) (708)
Other - net 6,571 6,026
------- -------
133,574 186,524
Net increase in operating working capital other than
cash and cash equivalents (33,396) (20,602)
Other adjustments related to operating activities (8,858) (4,366)
------- -------
Net cash provided by operating activities 91,320 161,556
------- -------
INVESTING ACTIVITIES
Capital expenditures requiring cash (187,082) (197,088)
Proceeds from sale of property, plant and equipment 2,355 3,584
Other investing activities - net (1,428) (62)
------- -------
Net cash required by investing activities (186,155) (193,566)
------- -------
FINANCING ACTIVITIES
Increase in notes payable 152,630 62,344
Decrease in nonrecourse debt of a subsidiary (6,586) (561)
Cash dividends paid (31,469) (31,468)
Other financing activities - net (2,080) 346
------- -------
Net cash provided by financing activities 112,495 30,661
------- -------
Effect of exchange rate changes on cash and cash
equivalents (1,036) (303)
------- -------
Net increase (decrease) in cash and cash equivalents 16,624 (1,652)
Cash and cash equivalents at January 1 28,271 24,288
------- -------
Cash and cash equivalents at June 30 $ 44,895 22,636
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES
Cash income taxes paid (refunded) $ (5,976) 23,559
Interest paid, net of amounts capitalized 7,931 2,999
</TABLE>
See Notes to Consolidated Financial Statements, page 4.
3
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
These notes are an integral part of the financial statements of Murphy Oil
Corporation and Consolidated Subsidiaries (Murphy/the Company) on pages 1
through 3 of this Form 10-Q report.
NOTE A - INTERIM FINANCIAL STATEMENT
The consolidated financial statements of the Company presented herein have not
been audited by independent auditors, except for the Consolidated Balance
Sheet at December 31, 1998. In the opinion of Murphy's management, the
unaudited financial statements presented herein include all accruals necessary
to present fairly the Company's financial position at June 30, 1999, and the
results of operations and cash flows for the three-month and six-month periods
ended June 30, 1999 and 1998, in conformity with generally accepted accounting
principles.
Financial statements and notes to consolidated financial statements included
in this Form 10-Q report should be read in conjunction with the Company's 1998
Form 10-K report, as certain notes and other pertinent information have been
abbreviated or omitted in this report. Financial results for the six months
ended June 30, 1999, are not necessarily indicative of future results.
NOTE B - ENVIRONMENTAL CONTINGENCIES
The Company's operations are subject to numerous laws and regulations intended
to protect the environment and/or impose remedial obligations. The Company is
also 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 and 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, a liability for an environmental
obligation is recorded when an obligation is 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.
Actual cash expenditures often occur one or more years after a liability is
recognized.
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 currently considered a Potentially Responsible Party (PRP) at
three Superfund sites and has also 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 a "de
minimus" party as to ultimate responsibility at the four 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 not provided a
reserve for remedial 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.
Following a compliance inspection in 1998, Murphy's Superior, Wisconsin
refinery received notices of violations of the Clean Air Act from the EPA.
Although the penalty amounts were not listed, the statutes involved provide
for rates of up to $27,500 per day of violation. The Company believes it has
valid defenses to the allegations and plans a vigorous defense. The Company
does not believe that this or other known environmental matters will have a
material adverse effect on its financial condition. There is the possibility
that 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.
4
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTD.)
NOTE B - ENVIRONMENTAL CONTINGENCIES (CONTD.)
Certain environmental expenditures are likely to be recovered by the Company
from other sources, primarily environmental funds maintained by certain
states. Since no assurance can be given that recoveries from other sources
will occur, the Company has not recognized a benefit for likely recoveries at
June 30, 1999.
NOTE C - OTHER CONTINGENCIES
The Company's operations and earnings have been and may be affected by various
other forms of governmental action both in the United States and throughout
the world. Examples of such governmental action include, but are by no means
limited to: tax increases and retroactive tax claims; restrictions on
production; import and export controls; price controls; currency controls;
allocation of supplies of crude oil and petroleum products and other goods;
expropriation of property; restrictions and preferences affecting issuance of
oil and gas or mineral leases; laws and regulations intended for the promotion
of safety; 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.
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,
the Company is required under certain contracts with various governmental
authorities and others to provide letters of credit that may be drawn upon if
the Company fails to perform under those contracts. At June 30, 1999, the
Company had contingent liabilities of $44.5 million on outstanding letters of
credit and $46.6 million under certain financial guarantees.
NOTE D - DERIVATIVE INSTRUMENTS
Murphy uses derivative instruments on a limited basis to manage certain risks
related to interest rates, foreign currency exchange rates and commodity
prices. Instruments that reduce the exposure of assets, liabilities or
anticipated transactions to interest rate, currency or price risks are
accounted for as hedges. Gains or losses on derivatives that cease to qualify
as hedges are recognized in income or expense. The use of derivative
instruments for risk management is covered by operating policies and is
closely monitored by the Company's senior management. The Company does not
hold any derivatives for trading purposes, and it does not use derivatives
with leveraged or complex features. Counterparties to derivative instruments
are either creditworthy major financial institutions or national exchanges.
Murphy uses interest rate swap agreements to convert certain variable rate
long-term debt to fixed rates. Under the accrual/settlement method of
accounting, the Company records the net amount to be received or paid under
the swap agreements as part of "Interest Expense" in the Consolidated
Statements of Income. If the Company should terminate an interest rate swap
prior to maturity, 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.
The Company periodically uses 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 are generally deferred and
recognized in connection with the associated crude oil purchase. If
conditions indicate 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 will be provided for the
nonrecoverable portion of the unrealized swap loss. The Company records
pretax operating results associated with crude oil swaps in "Crude Oil,
Products and Related Operating Expenses" in the Consolidated Statements of
Income.
The Company periodically uses natural gas swap agreements to reduce a portion
of the financial exposure of its Meraux, Louisiana refinery to fluctuations in
the price of certain future natural gas fuel purchases. Unrealized gains or
losses on such swap contracts are deferred until the contracts are settled and
the
5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTD.)
NOTE D - DERIVATIVE INSTRUMENTS (CONTD.)
associated natural gas is purchased. The Company will record the related
contract results in "Crude Oil, Products and Related Operating Expenses" in
the Consolidated Statements of Income.
NOTE E - EARNINGS PER SHARE
Net income was used as the numerator in computing both basic and diluted
income per Common share for the three-month and six-month periods ended June
30, 1999 and 1998. Reconciliations of the weighted-average shares outstanding
for these computations are shown in the following table.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Reconciliation of Shares
Outstanding Three Months Ended Six Months Ended
June 30, June 30,
- -----------------------------------------------------------------------------
(Weighted-average shares) 1999 1998 1999 1998
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic method . . . . . . . . . 44,963,681 44,959,704 44,959,429 44,948,944
Dilutive stock options . . . . 71,534 74,674 22,178 75,072
- -----------------------------------------------------------------------------
Diluted method 45,035,215 45,034,378 44,981,607 45,024,016
=============================================================================
</TABLE>
The following table presents additional information about outstanding options
that were not considered in calculating diluted earnings per share in the
preceding table because the effects of these options would have improved the
Company's earnings per share.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Information About Options
at End of Periods Three Months Ended Six Months Ended
June 30, June 30,
- -----------------------------------------------------------------------------
1999 1998 1999 1998
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total options outstanding 1,346,899 1,064,409 1,346,899 1,064,409
Options not considered in
diluted calculations 687,750 705,000 1,008,250 705,000
Exercise price per share
- maximum $65.49 65.49 65.49 65.49
- minimum $49.75 49.75 35.69 49.75
- average $53.33 53.25 47.72 53.25
Remaining life in years
- maximum 8.6 9.6 9.6 9.6
- minimum 7.6 8.6 7.6 8.6
- average 8.0 9.0 8.5 9.0
</TABLE>
NOTE F - PROVISION FOR REDUCTION IN FORCE
In early 1999, the Company offered enhanced voluntary retirement benefits to
eligible exploration, production and administrative employees in its New
Orleans and Calgary offices and severed certain other employees. As a result
of this reduction in force, the Company recorded a "Provision for Reduction in
Force" of $1.5 million, $1 million after taxes, in the Consolidated Statement
of Income for the six months ended June 30, 1999.
6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTD.)
NOTE G - BUSINESS SEGMENTS
<TABLE>
<CAPTION>
Three Mos. Ended June 30, 1999
Total Assets ------------------------------
at June 30, External Interseg. Income
(Millions of dollars) 1999 Revenues Revenues (Loss)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Exploration and production*
United States $ 386.0 36.6 10.5 7.8
Canada 665.9 34.9 13.1 8.4
United Kingdom 292.6 21.8 6.0 3.4
Ecuador 62.4 7.0 - 3.1
Other 9.9 .3 - (2.6)
- ----------------------------------------------------------------------------
Total 1,416.8 100.6 29.6 20.1
- ----------------------------------------------------------------------------
Refining, marketing and
transportation
United States 527.8 280.3 1.1 (1.4)
United Kingdom 181.0 61.6 - 2.5
Canada 61.4 7.5 .1 2.1
- ----------------------------------------------------------------------------
Total 770.2 349.4 1.2 3.2
- ----------------------------------------------------------------------------
Total operating segments 2,187.0 450.0 30.8 23.3
Corporate and other 120.3 .5 - (7.6)
- ----------------------------------------------------------------------------
Total consolidated $2,307.3 450.5 30.8 15.7
============================================================================
Three Mos. Ended June 30, 1998
------------------------------
External Interseg. Income
(Millions of dollars) Revenues Revenues (Loss)
- ----------------------------------------------------------------------------
Exploration and production*
United States $ 42.9 8.2 7.9
Canada 22.2 9.6 (.2)
United Kingdom 24.3 - 1.0
Ecuador 6.1 - 2.6
Other .4 - (6.3)
- ----------------------------------------------------------------------------
Total 95.9 17.8 5.0
- ----------------------------------------------------------------------------
Refining, marketing and
transportation
United States 278.6 .9 15.2
United Kingdom 67.8 - 4.1
Canada 5.5 - 1.0
- ----------------------------------------------------------------------------
Total 351.9 .9 20.3
- ----------------------------------------------------------------------------
Total operating segments 447.8 18.7 25.3
Corporate and other .8 - (3.1)
- ----------------------------------------------------------------------------
Total consolidated $448.6 18.7 22.2
============================================================================
Six Mos. Ended June 30, 1999
-----------------------------
External Interseg. Income
(Millions of dollars) Revenues Revenues (Loss)
- ----------------------------------------------------------------------------
Exploration and production*
United States $ 69.5 17.9 3.1
Canada 61.6 21.4 8.6
United Kingdom 44.9 6.0 4.9
Ecuador 11.7 - 4.1
Other .9 - (3.8)
- ----------------------------------------------------------------------------
Total 188.6 45.3 16.9
- ----------------------------------------------------------------------------
Refining, marketing and
transportation
United States 442.9 2.1 (1.4)
United Kingdom 107.5 - 3.8
Canada 13.9 .2 3.7
- ----------------------------------------------------------------------------
Total 564.3 2.3 6.1
- ----------------------------------------------------------------------------
Total operating segments 752.9 47.6 23.0
Corporate and other 1.9 - (14.0)
- ----------------------------------------------------------------------------
Total consolidated $754.8 47.6 9.0
============================================================================
Six Mos. Ended June 30, 1998
-----------------------------
External Interseg. Income
(Millions of dollars) Revenues Revenues (Loss)
- ----------------------------------------------------------------------------
Exploration and production*
United States $ 84.8 18.5 14.9
Canada 41.8 21.2 .3
United Kingdom 46.2 - 1.6
Ecuador 11.8 - 4.0
Other 1.2 - (9.8)
- ----------------------------------------------------------------------------
Total 185.8 39.7 11.0
- ----------------------------------------------------------------------------
Refining, marketing and
transportation
United States 547.4 1.4 21.2
United Kingdom 141.9 - 8.6
Canada 12.5 - 2.9
- ----------------------------------------------------------------------------
Total 701.8 1.4 32.7
- ----------------------------------------------------------------------------
Total operating segments 887.6 41.1 43.7
Corporate and other 1.7 - (6.0)
- ----------------------------------------------------------------------------
Total consolidated $889.3 41.1 37.7
============================================================================
*Additional details about results of operations, excluding special items, are
presented in the tables on page 14.
</TABLE>
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1999 COMPARED TO THREE MONTHS ENDED JUNE 30, 1998
Net income in the second quarter of 1999 totaled $15.7 million, $.35 a diluted
share, compared to earnings before special items of $18 million, $.40 a
diluted share, in the second quarter a year ago. Net income for the second
quarter of 1998, including gains from special items of $4.2 million, $.09 a
share, totaled $22.2 million, $.49 a diluted share. Special items benefiting
exploration and production operations for the 1998 quarter were $2.8 million
from modification of a natural gas sales contract in the United Kingdom and
$1.4 million from partial recovery of a 1996 loss resulting from modification
to a crude oil production contract in Ecuador. Cash flow from operating
activities, excluding changes in noncash working capital items, totaled $76.8
million in the second quarter of 1999 compared to $99.1 million a year ago.
A 20% increase in crude oil production and a 31% increase in average worldwide
crude oil sales prices were significant contributors to Murphy's exploration
and production operations, which earned $20.1 million in the current quarter
compared to $.8 million in the second quarter of 1998. Worldwide downstream
operations earned $3.2 million in the current quarter compared to $20.3
million a year ago, as margins in the United States and the United Kingdom
were under pressure throughout the quarter.
Exploration and production operations in the United States earned $7.8 million
compared to $7.9 million in the second quarter of 1998. Operations in Canada
earned $8.4 million compared to a loss of $.2 million a year ago, and U.K.
operations earned $3.4 million compared to a loss of $1.8 million before
special items. Operations in Ecuador earned $3.1 million in the second
quarter of 1999 compared to $1.2 million before special items a year ago.
Other international operations reported a loss of $2.6 million compared to a
$6.3 million loss a year earlier. The Company's worldwide crude oil and
condensate sales prices averaged $14.50 a barrel in the current quarter
compared to $11.08 a year ago. Crude oil and condensate sales prices averaged
$16.03 a barrel in the United States, up 27%, and $15.35 in the United
Kingdom, up 18%. In Canada, sales prices averaged $15.35 a barrel for light
oil, up 28% from last year; $10.91 for heavy oil, up 89%; $14.57 for
production from the offshore Hibernia field, up 25%; and $17.00 for synthetic
oil, up 21%. The average crude oil sales price in Ecuador was $10.50 a
barrel, up 42%. Total crude oil and gas liquids production averaged 65,547
barrels a day compared to 54,476 in the second quarter of 1998. The increase
was due to production from new fields in the United Kingdom and Canada.
Production increased 59% in the United Kingdom and 11% in the United States.
Production at the Hibernia field, off the east coast of Canada, increased
4,469 barrels a day. In other areas, production decreased 12% for Canadian
light oil and 6% each for synthetic oil in Canada and crude oil in Ecuador,
while being essentially unchanged for Canadian heavy oil. Natural gas sales
prices in the United States averaged $2.13 a thousand cubic feet (MCF) in the
current quarter, down 7%, and $1.73 an MCF in Canada, up 32%. Total natural
gas sales averaged 246 million cubic feet a day in the current quarter
compared to 230 million a year ago. Sales of natural gas in the United States
averaged 183 million cubic feet a day, up from 175 million in the second
quarter of 1998. Canadian natural gas sales averaged 55 million cubic feet a
day in the current quarter, an increase of 21%. Exploration expenses totaled
$13.7 million compared to $21.9 million in 1998. The tables on page 14
provide additional details of the results of exploration and production
operations for the second quarter of each year.
Refining, marketing and transportation operations in the United States
reported a loss of $1.4 million compared to earnings of $15.2 million a year
ago. Operations in the United Kingdom earned $2.5 million compared to $4.1
million in the second quarter of 1998. Earnings from purchasing, transporting
and reselling crude oil in Canada were $2.1 million in the 1999 quarter
compared to $1 million in last year's second quarter. Refinery crude runs
worldwide were 161,321 barrels a day compared to 164,339 in the second quarter
of 1998. Worldwide refined product sales were 163,663 barrels a day compared
to 172,676 a year ago.
Corporate functions, which include interest income and expense and corporate
overhead not allocated to operating functions, reflected a loss of $7.6
million in the current quarter compared to a loss of $3.1 million in the
second quarter of 1998. The additional loss was primarily caused by higher
net interest expense.
SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE 30, 1998
For the first six months of 1999, net income totaled $9 million, $.20 a
diluted share, compared to $37.7 million, $.84 a diluted share, a year ago.
The current six-month period included an after-tax charge of $1 million, $.02
a diluted share, for a reduction in force, while the same period a year ago
included total benefits in exploration and
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTD.)
RESULTS OF OPERATIONS (CONTD.)
production operations of $4.2 million, $.09 a share, from the previously
mentioned special items in the second quarter.
Year-to-date earnings from exploration and production operations before
special items were up $10.1 million over the prior year, mainly due to
increases in crude oil production, average worldwide crude oil prices, and
Canadian natural gas sales volumes and prices, partially offset by lower U.S.
natural gas sales prices. This improvement was more than offset by a $26.6
million decrease in earnings of the Company's worldwide downstream operations
and an additional loss of $7 million from corporate functions. Earnings from
refining, marketing and transportation activities decreased primarily because
of pressure on product margins and lower product sales volumes in both the
United States and the United Kingdom.
Earnings from exploration and production operations for the six months ended
June 30, 1999 were $16.9 million, up from $6.8 million before special items in
1998. Canadian operations earned $8.6 million for the first half of 1999
compared to $.3 million in the prior period, and U.K. operations earned $4.9
million compared to a loss of $1.2 million in 1998. An increase from the
prior year also occurred in Ecuador, which had earnings of $4.1 million
compared to $2.6 million, but earnings in the United States dropped from $14.9
million in 1998 to $3.1 million in the current year. Other international
operations recorded losses of $3.8 million in the first six months of 1999 and
$9.8 million in the 1998 period. Crude oil and gas liquids production for the
first half of 1999 averaged 64,557 barrels a day compared to 54,269 during the
same period of 1998. Production of crude oil and gas liquids in the United
Kingdom averaged 19,748 barrels a day, up 59%, and crude oil production at
Hibernia averaged 5,389 barrels a day, up 2,990. In other areas, crude oil
and gas liquids production averaged 11,068 barrels a day for Canadian
synthetic oil, up 8%; 8,590 in the United States, up 4%; 8,872 for Canadian
heavy oil, down 7%; 3,615 for Canadian light oil, also down 7%; and 7,275 in
Ecuador, down 3%. The Company's crude oil and condensate sales prices
averaged $13.96 a barrel in the United States, up 2%, and $13.13 in the United
Kingdom, down 3%. In Canada, sales prices averaged $13.29 a barrel for light
oil, up 5% from last year; $9.53 for heavy oil, up 76%; $13.77 for production
from the Hibernia field, up 12%; and $14.83 for synthetic oil, up 2%. The
average crude oil sales price in Ecuador was $8.60 a barrel, up 12%. Natural
gas sales prices for the first six months of 1999 averaged $1.98 an MCF in the
United States, down 14%; $1.64 in Canada, up 36%; and $1.68 in the United
Kingdom, down 28%. Total natural gas sales averaged 248 million cubic feet a
day in 1999 compared to 240 million in 1998. Sales of natural gas in the
United States averaged 180 million cubic feet a day, down 1% from 1998. In
other areas, average natural gas sales volumes in Canada were 54 million cubic
feet a day, up 19%, and 14 million in the United Kingdom, up 14%, as
production from the Amethyst field was shut in during the early part of 1998
to repair pipeline damages. Exploration expenses totaled $40 million for the
six months ended June 30, 1999, essentially the same as a year ago.
Exploration expenses were higher in the United States, but were lower in other
international areas. The tables on page 14 provide additional details of the
results of exploration and production operations for the first half of each
year.
Refining, marketing and transportation operations in the United States were
affected by lower product margins and lower sales volumes, and reported a loss
of $1.4 million in the first six months of 1999 compared to earnings of $21.2
million for the same period last year. Operations in the United Kingdom were
affected by weaker product margins and lower product sales volumes and earned
$3.8 million in the first half of 1999 compared to $8.6 million in the prior
year. Earnings from purchasing, transporting and reselling crude oil in
Canada were $3.7 million in the current year compared to $2.9 million a year
ago. Refinery crude runs worldwide were 126,461 barrels a day compared to
165,678 a year ago. Petroleum product sales were 140,658 barrels a day, down
from 173,348 in 1998. Crude runs and product sales were both adversely
affected by a scheduled turnaround at the Company's Meraux, Louisiana refinery
in early 1999.
Financial results from corporate functions before special items reflected a
loss of $13 million in the first half of 1999 compared to a loss of $6 million
a year ago. The additional loss was primarily due to higher net interest
expense.
FINANCIAL CONDITION
Net cash provided by operating activities was $91.3 million for the first six
months of 1999 compared to $161.6 million for the same period in 1998.
Changes in operating working capital other than cash and cash equivalents
required cash of $33.4 million in the first six months of 1999 and $20.6
million in the 1998 period. The cash results for operating activities were
also reduced by expenditures for refinery turnarounds and abandonment of oil
and gas properties totaling $40.8 million in the current year and $17.2
million in 1998. Other predominant uses of cash in
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTD.)
FINANCIAL CONDITION (CONTD.)
each year were for capital expenditures (which, including amounts expensed,
are summarized in the following table) and for dividends of 31.5 million.
<TABLE>
<CAPTION>
--------------------------------------------------------------------
Capital Expenditures Six Months Ended June 30,
--------------------------------------------------------------------
(Millions of dollars) 1999 1998
--------------------------------------------------------------------
<S> <C> <C>
Exploration and production. . . . . . . . . . $147.3 174.9
Refining, marketing and transportation. . . . 38.8 21.1
Corporate and other . . . . . . . . . . . . . 1.0 1.1
--------------------------------------------------------------------
$187.1 197.1
====================================================================
</TABLE>
Working capital at June 30, 1999 was $114.5 million, up $57.9 million from
December 31, 1998. This level of working capital does not fully reflect the
Company's liquidity position, because the lower historical costs assigned to
inventories under LIFO accounting were $56.8 million below current costs at
June 30, 1999.
At June 30, 1999, long-term notes payable of $344.2 million were up $154.5
million due to additional borrowing for certain oil and gas development
projects and other capital needs. In May 1999, Murphy issued $250 million of
30-year, 7.05% notes and used the proceeds to retire floating rate debt with
shorter maturities. Long-term nonrecourse debt of a subsidiary was $143.1
million, down slightly from December 31, 1998. A summary of capital employed
at June 30, 1999 and December 31, 1998 follows.
<TABLE>
<CAPTION>
------------------------------------------------------------------------
Capital Employed June 30, 1999 December 31, 1998
------------------------------------------------------------------------
(Millions of dollars) Amount % Amount %
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Notes payable . . . . . . . . . . . $ 344.2 24 189.7 14
Nonrecourse debt of a subsidiary . . 143.1 10 143.8 11
Stockholders' equity . . . . . . . . 957.9 66 978.2 75
------------------------------------------------------------------------
$1,445.2 100 1,311.7 100
========================================================================
</TABLE>
NEW ACCOUNTING STANDARD
The Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and
Hedging Activities, in June 1998. This statement establishes accounting and
reporting standards for derivative instruments and hedging activities.
Effective January 1, 2001, Murphy must recognize the fair value of all
derivative instruments as either assets or liabilities in its Consolidated
Balance Sheet. A derivative instrument meeting certain conditions may be
designated as a hedge of a specific exposure; accounting for changes in a
derivative's fair value will depend on the intended use of the derivative and
the resulting designation. Any transition adjustments resulting from adopting
this statement will be reported in either net income or other comprehensive
income, as appropriate, as the cumulative effect of a change in accounting
principle. As described in Note D on page 5 of this Form 10-Q report, the
Company makes limited use of derivative instruments to hedge specific market
risks. The Company has not yet determined the effects that SFAS No. 133 will
have on its future consolidated financial statements or the amount of the
cumulative adjustment that will be made upon adopting this new standard.
YEAR 2000 ISSUES
GENERAL - Year 2000 issues affect all companies and relate to the possibility
that computer programs and embedded computer chips may be unable to accurately
process data with year dates of 2000 and beyond. Murphy is devoting
significant internal and external resources to address Year 2000 compliance,
and the Company's Year 2000 project (Project) is proceeding well. In 1993,
Murphy began a worldwide business systems replacement project using systems
primarily from J.D. Edwards & Company (Edwards) in the United States and the
United Kingdom, PricewaterhouseCoopers LLP (PW*Sequel) in Canada, and for
exploration and production operations, Applied Terravision Systems Inc.
(Artesia) in the United States and EFA Software Services Ltd. (PRISM) in
Canada. Certain U.S. business software systems developed by the Company will
not be replaced with compliant vendor systems by the Year 2000 and have been
remedied to be Year 2000 compliant. Remaining hardware, software and
facilities are expected to be made Year 2000 compliant through the Project.
None of the Company's other information technology projects are expected to be
significantly delayed due to the implementation of the Project.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTD.)
YEAR 2000 ISSUES (CONTD.)
PROJECT - The Company has established an Enterprise Project Office (EPO) and
has engaged KPMG LLP to assist with Project management. The Project is
primarily being managed by major operating location. At each location, the
Project is divided into three major components: Computer Hardware,
Applications Software, and Process Control and Instrumentation (Embedded
Technology). The Computer Hardware component consists of computing equipment
and systems software other than Applications Software. Applications Software
includes both internally developed and vendor software systems. Embedded
Technology includes the hardware, software and associated embedded computer
chips (other than computing equipment) that are used in facilities operated by
the Company. The general phases common to all components are: (1)
inventorying Year 2000 items; (2) assigning priorities to identified items;
(3) assessing the Year 2000 compliance of identified items; (4) repairing or
replacing material items that are determined not to be Year 2000 compliant;
(5) evaluating and testing required material items; and (6) designing and
implementing contingency and business continuation plans as necessary.
Material items are those that the Company believes to have safety,
environmental or property damage risks, or that may adversely affect the
Company's ability to process and record revenues if not properly addressed.
The inventorying and priority assessment phases of the Project were completed
during 1998. The remaining four phases of the Project are in progress and are
being performed primarily by employees of the Company, with assistance from
vendors and independent contractors.
A fourth major component of the Project involves the review of third party
suppliers, customers and business partners (Third Parties) and is being
managed for all locations by the EPO. This includes the process of
identifying and prioritizing critical Third Parties and communicating with
them about their plans and progress in addressing the Year 2000 problem.
Evaluations of the most critical Third Parties began in the second quarter of
1998 and will continue throughout 1999. Based on the results of evaluations
and other available information, contingency plans are being developed as
necessary to address potential Year 2000 problems related to critical Third
Parties.
The Company has also engaged an engineering firm to perform independent
evaluations of the Company's Year 2000 readiness at selected U.S. operating
sites. These evaluations will be completed during the third quarter of 1999
and the findings will be considered during the remainder of the project.
A Year 2000 compliant version of Edwards has been fully implemented in the
United States and is approximately 80% complete in the United Kingdom.
Implementation of Edwards is ongoing in the United Kingdom and final phases
are expected to be completed in October 1999. A Year 2000 compliant version
of Artesia was implemented in the United States at the end of 1998 and testing
was completed in January 1999. In Canada, the Company upgraded to a Year 2000
compliant version of PRISM during the first quarter of 1999, and Year 2000
testing was completed in July 1999. A compliant version of PW*Sequel has been
implemented and testing was completed in July 1999. Testing of U.S. offshore
production platform systems was essentially completed at March 31, 1999.
Exploration system upgrades were released by the vendor in early 1999 and were
installed and tested in July 1999. Remedy of certain internally developed
downstream accounting, customer invoicing and human resources systems in the
United States had been completed at December 31, 1998. Upgrading and testing
of U.S. refining and marketing systems were substantially completed in July
1999. The operator at the Company's jointly owned U.K. refinery is directing
that location's Year 2000 action plan and has reported that the plan is
scheduled to be completed by October 31, 1999. Company employees are
monitoring the operator's progress and believe the work is on schedule.
Systems at U.K. marketing terminals are being upgraded to a Year 2000
compliant version; certain terminals have been upgraded and the remaining
locations are scheduled to be completed in the third quarter of 1999. Supply
and transportation systems in Canada were substantially Year 2000 ready at
June 30, 1999.
Murphy maintains comprehensive disaster recovery plans for significant
worldwide operating facilities. In addition to these plans, the Company is
developing Year 2000 specific contingency plans in certain operating areas
that are deemed critical. Contingency plans have been prepared to address the
possibility that the last phases of the U.K. Edwards implementation will not
be achieved by the end of 1999. If necessary, the contingency plans call for
activation of certain temporary back-up systems, which could be triggered as
late as the third quarter of 1999. Other contingency plans will be prepared
and monitored throughout the remainder of 1999, and are likely to include
accumulating higher than normal levels of crude oil, finished products and
critical supplies inventories for short-term needs, and identifying
alternative providers of services and supplies for the Company's longer-term
needs. The Company is also likely to supplement its normal emergency response
teams to be prepared to assist with Year 2000 transition issues that may
arise. Staffing may also be increased at certain locations during the
critical
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTD.)
YEAR 2000 ISSUES (CONTD.)
year-end period. Additionally, Murphy is monitoring the state of its
partner's contingency planning at the jointly owned U.K. refinery.
At July 31, 1999, the overall Project is estimated to be 95% complete. Thus
far, no material noncompliant Year 2000 issues have been discovered that were
not identified in the completed Year 2000 inventory. Significant components
of the Project have been completed by July 31, 1999, except for certain
activities in the United Kingdom. The final stages of the Company's U.K.
Edwards implementation and certain Year 2000 compliance activities at the
jointly owned U.K. refinery will be completed in the fourth quarter of 1999.
COSTS - The Company's total cost to become Year 2000 compliant is not expected
to be material to its financial position. The most likely estimate of the
total cost of the Project is approximately $5 million, including the costs of
new systems that concurrently provide improved business functionality and Year
2000 compliance. These costs include $2 million for the EPO (including
assessment of Third Parties); the remaining costs are for miscellaneous
hardware replacement, noncompliant system renovations and upgrades, and
Embedded Technology issues. It is reasonably possible that total costs could
exceed the most likely estimate by up to $1 million. Funds for the Project
are primarily obtained from internally generated cash flows. This cost
estimate does not include the Company's potential share of Year 2000 costs
that may be incurred by partnerships and joint ventures that the Company does
not operate, except for an estimated $.7 million to make Murphy's jointly
owned U.K. refinery Year 2000 compliant.
The total amount expended on the Project through June 30, 1999 was $3.1
million, including $1.5 million in the first six months of 1999. Of this
amount, $1.9 million has been included in selling and general expenses,
including $.3 million in the first six months of 1999. The remaining cost to
complete the Year 2000 Project is estimated to be approximately $1.9 million.
RISKS - Not correcting material Year 2000 problems could result in
interruptions in, or failures of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity or financial condition by impeding the
Company's ability to produce and deliver crude oil, natural gas and finished
petroleum products, and to invoice and collect related revenues from
customers. The Company has anticipated that certain operations may be
disrupted on a short-term basis, but does not believe such disruptions will be
either long-term in nature or of major consequence to the Company's
operations. The Company can not completely eliminate, however, the
possibility of significant disruptions.
Due to the general uncertainty inherent in the Year 2000 problem, resulting in
part from uncertainty about the Year 2000 readiness of critical Third Parties,
the Company is unable to determine at this time whether or not the
consequences of possible Year 2000 failures will materially affect its results
of operations, liquidity or financial condition. The Project is expected to
significantly reduce the Company's level of uncertainty about the Year 2000
issue, and in particular, about the Year 2000 compliance and readiness of the
Company's critical Third Parties. The Company believes that it is taking
reasonable steps to address potentially material Year 2000 failures, and with
completion of the Project as scheduled, the possibility of significant
interruptions of normal operations should be greatly reduced.
Readers are cautioned that forward-looking statements contained in this Year
2000 section should be read in conjunction with Murphy's disclosures in the
following paragraph of this Form 10-Q report.
OTHER MATTERS
In July 1999, Murphy sold 60 Company-owned Spur-branded retail stations
located throughout the southeastern United States. The Company received
consideration totaling $31.5 million, which was primarily used to reduce
outstanding debt.
In August 1999, Murphy filed a registration statement, which when declared
effective by the U.S. Securities and Exchange Commission, will allow the
Company to issue up to $1 billion in common and preferred stock, debt
securities, depositary shares and warrants. Any proceeds from sales of these
securities will be used for general corporate purposes, which may include
working capital, capital expenditures, debt repayment, or financing of
possible acquisitions.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTD.)
FORWARD-LOOKING STATEMENTS
This Form 10-Q report contains 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.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risks associated with interest rates, foreign
currency exchange rates, and prices of crude oil, natural gas and petroleum
products. As described in Note D on page 5 of the Form 10-Q report, Murphy
makes limited use of derivative financial and commodity instruments to manage
risks associated with existing or anticipated transactions.
At June 30, 1999, the Company was a party to interest rate swaps with notional
amounts totaling $100 million that were designed to convert a similar amount
of variable-rate debt to fixed rates. The interest rate swaps mature in 2002
and 2004. The swaps require the Company to pay an average interest rate of
6.46% over their composite lives, and at June 30, 1999, the interest rate to
be received by the Company averaged 5.03%. The variable interest rate
received by the Company under each swap contract is repriced quarterly. The
Company considers these swaps to be a hedge against potentially higher future
interest rates. The estimated fair value of these interest rate swaps was a
liability of $1.8 million at June 30, 1999.
At June 30, 1999, 42% of the Company's long-term debt had variable interest
rates and 21% was denominated in Canadian dollars. Based on debt outstanding
at June 30, 1999, a 10% increase in variable interest rates would increase the
Company's interest expense over the next 12 months by an estimated $.6 million
after a $.5 million favorable effect of lower net settlement payments under
the aforementioned interest rate swaps. A 10% increase in the exchange rate
of the Canadian dollar versus the U.S. dollar would increase interest expense
by an estimated $.4 million over the next 12 months on Canadian dollar
denominated debt.
At June 30, 1999, the Company was a party to crude oil swap agreements for a
total notional volume of two million barrels that reduce a portion of the
financial exposure of Murphy's U.S. refineries to crude oil price movements.
The agreements mature in 2001 and 2002. At termination, the swaps require
Murphy to pay an average crude oil price of $16.63 a barrel and to receive the
average of the near-month NYMEX West Texas Intermediate (WTI) crude oil prices
during the respective contractual maturity periods. The estimated fair value
of these crude oil swaps was an asset of $1.8 million at June 30, 1999; a 10%
fluctuation in the price of WTI crude oil over the next 12 months would change
the estimated fair value of these swaps by $3 million.
At June 30, 1999, Murphy was also a party to natural gas price swap agreements
for a total notional volume of 5 million MMBTU that are intended to reduce a
portion of the financial exposure of its Meraux, Louisiana refinery to
fluctuations in the price of natural gas purchased for fuel. The agreements
are to be settled equally over the 12 months of 2004. In each month of
settlement, the swaps require Murphy to pay an average natural gas price of
$2.62 an MMBTU and to receive the average NYMEX Henry Hub price for the final
three trading days of the month. The estimated fair value of these agreements
was a liability of $.2 million at June 30, 1999; a 10% fluctuation in the
average NYMEX Henry Hub price of natural gas over the next 12 months would
change the estimated fair value by $.9 million.
13
<PAGE>
<TABLE>
<CAPTION>
OIL AND GAS OPERATING RESULTS* (UNAUDITED)
- ------------------------------------------------------------------------------
United Synthetic
United King- Ecua- Oil -
(Millions of dollars) States Canada dom dor Other Canada Total
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
THREE MONTHS ENDED
JUNE 30, 1999
Oil and gas sales and
operating revenues $ 47.1 30.8 27.8 7.0 .3 17.2 130.2
Production costs 9.9 8.7 7.5 1.8 - 9.4 37.3
Depreciation, depletion
and amortization 16.3 10.7 9.8 2.0 - 1.8 40.6
Exploration expenses
Dry hole costs .5 - 2.3 - 1.1 - 3.9
Geological and geophysical
costs 2.3 1.7 .3 - .8 - 5.1
Other costs .8 .1 .3 - .7 - 1.9
- ------------------------------------------------------------------------------
3.6 1.8 2.9 - 2.6 - 10.9
Undeveloped lease
amortization 1.7 1.1 - - - - 2.8
- ------------------------------------------------------------------------------
Total exploration
expenses 5.3 2.9 2.9 - 2.6 - 13.7
- ------------------------------------------------------------------------------
Selling and general expenses 3.8 1.5 .8 .1 .2 - 6.4
Income tax provisions 4.0 2.6 3.4 - .1 2.0 12.1
- ------------------------------------------------------------------------------
Results of operations
(excluding corporate
overhead and interest) $ 7.8 4.4 3.4 3.1 (2.6) 4.0 20.1
==============================================================================
THREE MONTHS ENDED
JUNE 30, 1998
Oil and gas sales and
operating revenues $ 51.1 16.7 20.3 4.7 .4 15.1 108.3
Production costs 9.8 8.1 7.7 1.7 - 9.8 37.1
Depreciation, depletion
and amortization 17.1 7.7 9.0 2.5 - 1.7 38.0
Exploration expenses
Dry hole costs 5.6 2.2 - - 5.6 - 13.4
Geological and geophysical
costs .2 .9 2.3 - .7 - 4.1
Other costs .6 .1 .6 - .4 - 1.7
- ------------------------------------------------------------------------------
6.4 3.2 2.9 - 6.7 - 19.2
Undeveloped lease
amortization 1.6 1.1 - - - - 2.7
- ------------------------------------------------------------------------------
Total exploration
expenses 8.0 4.3 2.9 - 6.7 - 21.9
- ------------------------------------------------------------------------------
Selling and general expenses 4.0 1.5 .9 .1 .4 - 6.9
Income tax provisions
(benefits) 4.3 (2.4) 1.6 (.8) (.4) 1.3 3.6
- ------------------------------------------------------------------------------
Results of operations
(excluding corporate
overhead and interest) $ 7.9 (2.5) (1.8) 1.2 (6.3) 2.3 .8
==============================================================================
SIX MONTHS ENDED
JUNE 30, 1999
Oil and gas sales and
operating revenues $ 87.4 53.3 50.9 11.7 .9 29.7 233.9
Production costs 19.5 17.4 17.1 3.4 - 18.1 75.5
Depreciation, depletion
and amortization 32.0 19.6 20.8 4.1 - 3.5 80.0
Exploration expenses
Dry hole costs 13.5 2.0 2.3 - 1.1 - 18.9
Geological and geophysical
costs 5.8 4.2 .6 - 1.5 - 12.1
Other costs 1.2 .3 .6 - 1.4 - 3.5
- ------------------------------------------------------------------------------
20.5 6.5 3.5 - 4.0 - 34.5
Undeveloped lease
amortization 3.5 2.0 - - - - 5.5
- ------------------------------------------------------------------------------
Total exploration
expenses 24.0 8.5 3.5 - 4.0 - 40.0
- ------------------------------------------------------------------------------
Selling and general expenses 7.9 3.0 1.6 .1 .5 - 13.1
Income tax provisions .9 1.6 3.0 - .2 2.7 8.4
- ------------------------------------------------------------------------------
Results of operations
(excluding corporate
overhead and interest) $ 3.1 3.2 4.9 4.1 (3.8) 5.4 16.9
==============================================================================
SIX MONTHS ENDED
JUNE 30, 1998
Oil and gas sales and
operating revenues $ 103.3 35.5 42.2 10.4 1.2 27.5 220.1
Production costs 19.7 17.7 15.6 3.5 - 16.9 73.4
Depreciation, depletion
and amortization 35.4 16.4 18.9 5.0 - 3.2 78.9
Exploration expenses
Dry hole costs 11.0 3.2 - - 8.3 - 22.5
Geological and geophysical
costs 2.3 2.9 2.6 - 1.0 - 8.8
Other costs .9 .3 1.0 - 1.1 - 3.3
- ------------------------------------------------------------------------------
14.2 6.4 3.6 - 10.4 - 34.6
Undeveloped lease
amortization 3.2 2.2 - - - - 5.4
- ------------------------------------------------------------------------------
Total exploration
expenses 17.4 8.6 3.6 - 10.4 - 40.0
- ------------------------------------------------------------------------------
Selling and general expenses 8.1 3.2 1.7 .1 .8 - 13.9
Income tax provisions
(benefits) 7.8 (5.7) 3.6 (.8) (.2) 2.4 7.1
- ------------------------------------------------------------------------------
Results of operations
(excluding corporate
overhead and interest) $ 14.9 (4.7) (1.2) 2.6 (9.8) 5.0 6.8
==============================================================================
*Excludes special items.
</TABLE>
14
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Following a 1998 compliance inspection of the Superior, Wisconsin
refinery, the Company received notices of violations of the Clean Air
Act from the U.S. Environmental Protection Agency. Although the penalty
amounts were not listed, the statutes involved provide for rates of up to
$27,500 per day of violation, and penalties therefore could exceed
$100,000. The Company believes it has valid defenses to the alleged
violations and plans a vigorous defense. While the notices of violation
are preliminary in nature and no assurance can be given, the Company does
not believe that the ultimate resolution of the matter will have a
material adverse effect on the financial condition of the Company.
Murphy and its subsidiaries are engaged in a number of other legal
proceedings, all of which Murphy considers routine and incidental to its
business and none of which is expected to have a material adverse effect
on the Company's financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the annual meeting of security holders on May 12, 1999, the directors
proposed by management were elected with a tabulation of votes to the
nearest share as shown below.
<TABLE>
<CAPTION>
For Withheld
---------- ---------
<S> <C> <C>
B. R. R. Butler 40,600,017 258,419
George S. Dembroski 40,539,430 319,006
Claiborne P. Deming 40,600,526 257,910
H. Rodes Hart 37,998,359 2,860,077
Vester T. Hughes Jr. 40,254,348 604,088
C. H. Murphy Jr. 40,124,444 733,992
Michael W. Murphy 40,601,636 256,800
R. Madison Murphy 40,601,653 256,783
William C. Nolan Jr. 40,601,216 257,220
Caroline G. Theus 40,600,776 257,660
Lorne C. Webster 40,596,992 261,444
</TABLE>
In addition, the earlier appointment by the Board of Directors of KPMG
LLP as independent auditors for 1999 was ratified with 40,769,599 shares
voted in favor, 73,112 shares voted in opposition, and 15,724 shares not
voted.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The Exhibit Index on page 16 of this Form 10-Q report lists the
exhibits that are hereby filed or incorporated by reference.
(b) A report on Form 8-K was filed on April 29, 1999, that included the
Form of Indenture and Form of Supplemental Indenture between Murphy
and SunTrust Bank, Nashville, N.A., as Trustee of Murphy's 30-year,
7.05% notes for $250 million.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MURPHY OIL CORPORATION
(Registrant)
By /s/ Ronald W. Herman
--------------------
Ronald W. Herman, Controller
(Chief Accounting Officer and Duly
Authorized Officer)
August 12, 1999
(Date)
15
<PAGE>
EXHIBIT INDEX
Exhibit
No. Incorporated by Reference to
- ------- ----------------------------
3.1 Certificate of Incorporation of Exhibit 3.1 of Murphy's Form
Murphy Oil Corporation as of 10-K report for the year ended
September 25, 1986 December 31, 1996
3.2 By-laws of Murphy Oil Corporation Exhibit 3.2 of Murphy's Form
at January 24, 1996 10-K report for the year ended
December 31, 1997
3.3 By-laws of Murphy Oil Corporation Exhibit 3.3 filed herewith
as amended May 12, 1999
4 Instruments Defining the Rights of
Security Holders. Murphy is party
to several long-term debt instruments
in addition to the ones below, none
of which authorizes securities
exceeding 10% 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 Exhibit 4.1 of Murphy's Form
Oil Corporation and certain 10-K report for the year ended
subsidiaries and the Chase December 31, 1997
Manhattan Bank et al as
of November 13, 1997
4.2 Form of Indenture and Form of Exhibits 4.1 and 4.2 of Murphy's
Supplemental Indenture between Form 8-K report filed April 29,
Murphy Oil Corporation and SunTrust 1999, under the Securities
Bank, Nashville, N.A., as Trustee Exchange Act of 1934
4.3 Rights Agreement dated as of Exhibit 4.1 of Murphy's Form
December 6, 1989, between Murphy 10-K report for the year ended
Oil Corporation and Harris Trust December 31, 1994
Company of New York, as Rights
Agent
4.4 Amendment No. 1 dated as of April 6, Exhibit 3 of Murphy's Form
1998, to Rights Agreement dated as 8-A/A, Amendment No. 1, filed
of December 6, 1989, between Murphy April 14, 1998, under the
Oil Corporation and Harris Trust Securities Exchange Act of
Company of New York, as Rights Agent 1934
4.5 Amendment No. 2 dated as of Exhibit 4 of Murphy's Form
April 15, 1999, to Rights 8-A/A, Amendment No. 2, filed
Agreement dated as of December April 19, 1999, under the
6, 1989, between Murphy Oil Securities Exchange Act of
Corporation and Harris Trust 1934
Company of New York, as Rights
Agent
10.1 1987 Management Incentive Plan as Exhibit 10.2 of Murphy's
amended February 7, 1990, Form 10-K report for the
retroactive to February 3, 1988 year ended December 31, 1994
10.2 1992 Stock Incentive Plan as Exhibit 10.2 of Murphy's Form
amended May 14, 1997 10-Q report 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 filed
May 19, 1997, under the
Securities Act of 1933
27 Financial Data Schedule for the Filed herewith in electronic
six months ended June 30, 1999 filing
Exhibits other than those listed above have been omitted since they are either
not required or not applicable.
16
EXHIBIT 3.3
BY-LAWS
OF
MURPHY OIL CORPORATION
As Amended May 12, 1999
ARTICLE I.
Offices.
Section 1. Offices. Murphy Oil Corporation (hereinafter called the
Company) may have, in addition to its principal office in Delaware, a
principal or other office or offices at such place or places, either within or
without the State of Delaware, as the board of directors may from time to time
determine or as shall be necessary or appropriate for the conduct of the
business of the Company.
ARTICLE II.
Meetings of Stockholders.
Section 1. Place of Meetings. The annual meeting of the stockholders
shall be held at the place therein determined by the board of directors and
stated in the notice thereof, and other meetings of the stockholders may be
held at such place or places, within or without the State of Delaware, as
shall be fixed by the board of directors and stated in the notice thereof.
Section 2. Annual Meetings. The annual meeting of stockholders for the
election of directors and the transaction of such other business as may come
before the meeting shall be held in each year on the second Wednesday in May.
If this date shall fall upon a legal holiday, the meeting shall be held on
the next succeeding business day. At each annual meeting the stockholders
entitled to vote shall elect a board of directors and they may transact such
other corporate business as shall be stated in the notice of the meeting.
Section 3. Special Meetings. Special meetings of the stockholders for
any purpose or purposes may be called by the Chairman of the Board or by
order of the board of directors and shall be called by the Chairman of the
Board or the Secretary upon the written request of stockholders holding of
record at least a majority of the outstanding shares of stock of the Company
entitled to vote at such meeting. Such written request shall state the
purpose or purposes for which such meeting is to be called.
Section 4. Notice of Meetings. Except as otherwise expressly required
by law, notice of each meeting of stockholders, whether annual or special, shall
be given at least 10 days before the date on which the meeting is to be held to
each stockholder of record entitled to 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
Ex. 3.3-1
<PAGE>
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 by-laws. 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 by-laws. Directors need not be stockholders.
Each director shall hold office until the annual meeting of the stockholders
next following his election and until his successor shall have been elected and
shall qualify, or until his death, resignation or removal.
Section 3. Quorum and Manner of Acting. Unless otherwise provided by
law the presence of six members of the board of directors shall be necessary
to constitute a quorum for the transaction of business. In the absence of a
quorum, a majority of the directors present 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.
Ex. 3.3-2
<PAGE>
Section 4. Place of Meetings, etc. The board of directors may hold its
meetings and keep the books and records of the Company at such place or
places within or without the State of Delaware as the board may from time to
time determine.
Section 5. Annual Meeting. Promptly after each annual meeting of
stockholders for the election of directors and on the same day the board of
directors shall meet for the purpose of organization, the election of
officers and the transaction of other business. Notice of such meeting need
not be given. Such meeting may be held at any other time or place as shall be
specified in a notice given as hereinafter provided for special meetings of
the board of directors or in a consent and waiver of notice thereof signed by
all the directors.
Section 6. Regular Meetings. Regular meetings of the board of directors
may be held at such time and place, within or without the State of Delaware,
as shall from time to time be determined by the board of directors. After
there has been such determination and notice thereof has been once given to
each member of the board of directors, regular meetings may be held without
further notice being given.
Section 7. Special Meetings; Notice. Special meetings of the board of
directors shall be held whenever called by the Chairman of the Board or by a
majority of the directors. Notice of each such meeting shall be mailed to
each director, addressed to him at his residence or usual place of business,
at least 10 days before the day on which the meeting is to be held, or shall
be sent to him at such place by telegraph, cable, radio or wireless, or be
delivered personally or by telephone, not later than the day before the day
on which such meeting is to be held. Each such notice shall state the time
and place of the meeting but need not state the purposes thereof. Notice of
any meeting of the board of directors need not be given to any director,
however, if waived by him in writing or by telegraph, cable, radio or
wireless and confirmed in writing, whether before or after such meeting, or
if he shall be present at such meeting. Any meeting of the board of
directors shall be a legal meeting without any notice thereof having been
given if all the directors then in office shall be present thereat.
Section 8. Resignation. Any director of the Company may resign at any
time by giving written notice to the Chairman of the Board or the Secretary
of the Company. The resignation of any director shall take effect upon
receipt of notice thereof or at such later time as shall be specified in such
notice; and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 9. Removal. Any director may be removed at any time, either
with or without cause, by the affirmative vote of the holders of record of a
majority of the issued and outstanding class of stock of the Company entitled
to vote for the election of such director, given at a special meeting of the
stockholders called for that purpose. The vacancy in the board of directors
caused by any such removal may be filled by the stockholders at such meeting.
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.
Ex. 3.3-3
<PAGE>
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 such number of members as the Board in its discretion shall
determine, in addition to the Chairman of the Board, who by virtue of his
office shall be a member of the executive committee and chairman thereof.
Unless otherwise ordered by the board of directors, each elected member of
the executive committee shall continue to be a member thereof until the
expiration of his term of office as a director.
The executive committee, subject to any limitations prescribed by the
board of directors, shall have special charge of all financial accounting,
legal and general administrative affairs of the Company. During the
intervals between the meetings of the board of directors the executive
committee shall have all the powers of the board in the management of the
business and affairs of the Company, including the power to authorize the
seal of the Company to be affixed to all papers which require it, except that
said committee shall not have the power of the board (i) to fill vacancies in
the board, (ii) to amend the by-laws, (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
Ex. 3.3-4
<PAGE>
have such name or names as may be determined from time to time by resolution
adopted by the board of directors.
ARTICLE V.
Officers.
Section 1. Number. The principal officers of the Company shall be a
Chairman of the Board, President, one or more Vice Presidents (which may be
designated as Executive or Senior Vice President(s)), a Secretary, a
Treasurer, and a Controller. No officers except the Chairman of the Board
and President need be directors. One person may hold the offices and perform
the duties of any two or more of said offices.
Section 2. Election and Term of Office. The principal officers of the
Company shall be chosen annually by the board of directors at the annual
meeting thereof. Each such officer shall hold office until his successor
shall have been chosen and shall qualify, or until his death or until he
shall resign or shall have been removed in the manner hereinafter provided.
Section 3. Subordinate Officers. In addition to the principal officers
enumerated in Section 1 of this Article V, the Company may have one or more
Assistant Vice Presidents, one or more Assistant Treasurers, one or more
Assistant Secretaries and such other officers, agents and employees as the
board of directors may deem necessary, each of whom shall hold office for such
period, have such authority, and perform such duties as the board or the
President may from time to time determine. The board of directors may
delegate to any principal officer the power to appoint and to remove any such
subordinate officers, agents or employees.
Section 4. Compensation of Principal Officers. The salaries of the
principal officers shall be fixed from time to time either by the board of
directors or by a committee of the board to which such power may be delegated.
The salaries of any other officers shall be fixed by the President or by a
committee or committees to which he may delegate such power.
Section 5. Removal. Any officer may be removed, either with or without
cause, at any time, by resolution adopted by the board of directors at any
regular meeting of the board or at any special meeting of the board called
for the purpose at which a quorum is present.
Section 6. Vacancies. A vacancy in any office may be filled for the
unexpired portion of the term in the manner prescribed in these by-laws 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
Ex. 3.3-5
<PAGE>
to him by the board of directors. In the absence of the Chairman of the
Board, the President shall preside at meetings of the stockholders and
directors.
Section 9. Vice Presidents. The Vice Presidents, in order of their
seniority unless otherwise determined by the board of directors, shall in the
absence or disability of the President perform the duties and exercise the
powers of such offices. The Vice Presidents shall perform such other duties
and have such other powers as the President or the board of directors may from
time to time prescribe.
Section 10. Secretary. The Secretary shall attend all sessions of the
board and all meetings of the stockholders, and record all votes and the
minutes of all proceedings in a book to be kept for that purpose, and shall
perform like duties for the committees of the board of directors when
required. He shall give or cause to be given, notice of all meetings of the
stockholders and of special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors, or
the President, under whose supervision he shall be. He shall keep in safe
custody the seal of the Company and, when authorized by the board of
directors, affix the same to any instrument requiring it, and when so affixed
it shall be attested by his signature or by the signature of the Treasurer or
an Assistant Secretary.
Section 11. Treasurer. The Treasurer shall have custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in the books belonging to the Company, and shall
deposit all moneys and other valuable effects in the name and to the credit
of the Company in such depositories as may be designated from time to time by
the Board of Directors.
He shall disburse the funds of the Company as may be ordered by the
board, taking proper vouchers for such disbursements, and shall render to the
President and board of directors at the regular meetings of the board, or
whenever they may require it, an account of the financial condition of the
Company.
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 by-laws, 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
Ex. 3.3-6
<PAGE>
or more transfer agents and one or more registrars, and may require all such
certificates to bear the signature or signatures of any of them.
Section 3. Stock Certificate Signature. The certificates for shares of
the respective classes of such stock shall be signed by, or in the name of
the Company by, the Chairman of the Board, the President or any Vice
President and the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary, and where signed (a) by a transfer agent or an assistant
transfer agent or (b) by a transfer clerk acting on behalf of the Company and
a registrar, the signature of any such Chairman of the Board, President, Vice
President, Treasurer, Assistant Treasurer, Secretary or Assistant Secretary
may be facsimile. Each such certificate shall exhibit the name of the holder
thereof and number of shares represented thereby and shall not be valid until
countersigned by a transfer agent.
The board of directors may, if it so determines, direct that certificates
for shares of any class or classes of capital stock of the Company be
registered by a registrar, in which case such certificates will not be valid
until so registered.
In case any officer of the Company who shall have signed, or whose
facsimile signature shall have been used on, any certificate for shares of
capital stock of the Company shall cease to be such officer, whether because
of death, resignation or otherwise, before such certificate shall have been
delivered by the Company, such certificate shall nevertheless be deemed to
have been adopted by the Company and may be issued and delivered as though
the person who signed such certificate or whose facsimile signature shall
have been used thereon had not ceased to be such officer.
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.
Ex. 3.3-7
<PAGE>
Section 8. Closing of Transfer Books. The board of directors may by
resolution direct that the stock transfer books of the Company be closed for
a period not exceeding 60 days preceding the date of any meeting of the
stockholders, or the date for the payment of any dividend, or the date for
the allotment of any rights, or the date when any change or conversion or
exchange of capital stock of the company shall go into effect, or for a
period not exceeding 60 days in connection with obtaining the consent of
stockholders for any purpose. In lieu of such closing of the stock transfer
books, the board may fix in advance a date, not exceeding 60 days preceding
the date of any meeting of stockholders, or the date for the payment of any
dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect or a
date in connection with obtaining such consent, as a record date for the
determination of the stockholders entitled to notice of, and to vote at, such
meeting, and any adjournment thereof, or to receive payment of any such
dividend, or to receive any such allotment of rights, or to exercise the
rights in respect of any such change, conversion, or exchange of capital
stock or to give such consent, as the case may be, notwithstanding any
transfer of any stock on the books of the Company after any record date so
fixed.
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.
Ex. 3.3-8
<PAGE>
ARTICLE VIII.
Indemnification of Officers, Directors,
Employees and Agents; Insurance.
Section 1. Indemnification.
(a) The Company may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including an action by or in the right of the Company) by reason of the fact
that he is or was a director, officer, employee or agent of the Company, or
is or was serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise, against expenses (including attorneys' fees) and, except
for an action by or in the right of the Company, judgments, fines and amounts
paid in settlement, actually and reasonably incurred by him in connection
with such action, suit or proceeding, if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests
of the Company, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful. Except for an
action by or in the right of the Company, the termination of any action, suit
or proceeding by judgment, order, settlement, conviction, or 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.
Ex. 3.3-9
<PAGE>
(e) The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any agreement, vote of stockholders or disinterested directors
or otherwise, both as to action in their official capacities and as to action
in other capacities while holding such offices, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
Section 2. Insurance. The Company may purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent
of the Company, or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the Company would have the power to indemnify
him against such liability under the provisions of either the General
Corporation Law of the State of Delaware or of these by-laws.
ARTICLE IX.
Amendments.
The by-laws 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. By-laws, whether made or altered by the
stockholders or by the board of directors, shall be subject to alteration or
repeal by the stockholders as in this Article provided.
Ex. 3.3-10
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY UNAUDITED FINANCIAL INFORMATION
EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AT JUNE 30, 1999, AND THE
CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS THEN ENDED 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 44,895
<SECURITIES> 0
<RECEIVABLES> 275,453
<ALLOWANCES> 10,777
<INVENTORY> 158,132
<CURRENT-ASSETS> 520,404
<PP&E> 4,745,595
<DEPRECIATION> 3,024,585
<TOTAL-ASSETS> 2,307,311
<CURRENT-LIABILITIES> 405,923
<BONDS> 487,362
0
0
<COMMON> 48,775
<OTHER-SE> 909,130
<TOTAL-LIABILITY-AND-EQUITY> 2,307,311
<SALES> 730,558
<TOTAL-REVENUES> 754,757
<CGS> 652,040
<TOTAL-COSTS> 652,040
<OTHER-EXPENSES> 41,546<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,737
<INCOME-PRETAX> 17,006
<INCOME-TAX> 7,984
<INCOME-CONTINUING> 9,022
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,022
<EPS-BASIC> .20
<EPS-DILUTED> .20
<FN>
<F1>Includes 1,513 provision for reduction in force.
</FN>
</TABLE>
