<PAGE>
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended DECEMBER 31, 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 Identification Number)
incorporation or organization)
200 PEACH STREET, P.O. BOX 7000, 71731-7000
EL DORADO, ARKANSAS (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (870) 862-6411
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
COMMON STOCK, $1.00 PAR VALUE NEW YORK STOCK EXCHANGE
TORONTO STOCK EXCHANGE
SERIES A PARTICIPATING CUMULATIVE NEW YORK STOCK EXCHANGE
PREFERRED STOCK PURCHASE RIGHTS TORONTO STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes X No ____.
---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_]
Aggregate market value of the voting stock held by non-affiliates of the
registrant, based on average price at January 31, 2000, as quoted by the New
York Stock Exchange, was approximately $1,927,840,000.
Number of shares of Common Stock, $1.00 Par Value, outstanding at January 31,
2000 was 45,013,897.
Documents incorporated by reference:
Portions of the Registrant's definitive Proxy Statement relating to the Annual
Meeting of Stockholders on May 10, 2000 have been incorporated by reference in
Part III herein.
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<PAGE>
MURPHY OIL CORPORATION
TABLE OF CONTENTS - 1999 FORM 10-K REPORT
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
PART I
Item 1. Business 1
Item 2. Properties 1
Item 3. Legal Proceedings 6
Item 4. Submission of Matters to a Vote of Security Holders 7
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters 7
Item 6. Selected Financial Data 7
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations 8
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 17
Item 8. Financial Statements and Supplementary Data 18
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 18
PART III
Item 10. Directors and Executive Officers of the Registrant 18
Item 11. Executive Compensation 18
Item 12. Security Ownership of Certain Beneficial Owners and Management 18
Item 13. Certain Relationships and Related Transactions 18
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 19
Exhibit Index 19
Signatures 21
</TABLE>
i
<PAGE>
PART I
Items 1. and 2. BUSINESS AND PROPERTIES
SUMMARY
Murphy Oil Corporation is a worldwide oil and gas exploration and production
company with refining and marketing operations in the United States and the
United Kingdom and crude oil transportation and trading operations in Canada. As
used in this report, the terms Murphy, Murphy Oil, we, our, its and Company may
refer to Murphy Oil Corporation or any one or more of its consolidated
subsidiaries.
The Company was originally incorporated in Louisiana in 1950 as Murphy
Corporation. It was reincorporated in Delaware in 1964, at which time it adopted
the name Murphy Oil Corporation, and was reorganized in 1983 to operate
primarily as a holding company of its various businesses. Its operations are
classified into two business activities: (1) "Exploration and Production" and
(2) "Refining, Marketing and Transportation." For reporting purposes, Murphy's
exploration and production activities are subdivided into five geographic
segments -- the United States, Canada, the United Kingdom, Ecuador and all other
countries; Murphy's refining, marketing and transportation activities are
subdivided into three geographic segments -- the United States, the United
Kingdom and Canada. Additionally, "Corporate and Other Activities" include
interest income, interest expense and overhead not allocated to the segments. On
December 31, 1996, Murphy completed a spin-off to its stockholders of its wholly
owned farm, timber and real estate subsidiary, Deltic Farm & Timber Co., Inc.
(reincorporated as "Deltic Timber Corporation").
The information appearing in the 1999 Annual Report to Security Holders (1999
Annual Report) is incorporated in this Form 10-K report as Exhibit 13 and is
deemed to be filed as part of this Form 10-K report as indicated under Items 1,
2 and 7. A narrative of the graphic and image information that appears in the
paper format version of Exhibit 13 is included in the electronic Form 10-K
document as an appendix to Exhibit 13.
In addition to the following information about each business activity, data
about Murphy's operations, properties and business segments, including revenues
by class of products and financial information by geographic area, are provided
on pages 7 through 14, F-8, F-19 through F-21, and F-24 through F-26 of this
Form 10-K report and on pages 6 through 19 of the 1999 Annual Report.
EXPLORATION AND PRODUCTION
During 1999, Murphy's principal exploration and production activities were
conducted in the United States and Ecuador by wholly owned Murphy Exploration &
Production Company (Murphy Expro) and its subsidiaries, in western Canada and
offshore eastern Canada by wholly owned Murphy Oil Company Ltd. (MOCL) and its
subsidiaries, and in the U.K. North Sea and the Atlantic Margin by wholly owned
Murphy Petroleum Limited. Murphy's crude oil and natural gas liquids production
in 1999 was in the United States, Canada, the United Kingdom and Ecuador; its
natural gas was produced and sold in the United States, Canada and the United
Kingdom. MOCL owns a 5% interest in Syncrude Canada Ltd., which utilizes its
assets to extract bitumen from oil sand deposits in northern Alberta and to
upgrade this into synthetic crude oil. Subsidiaries of Murphy Expro conducted
exploration activities in various other areas including Malaysia, the Faroe
Islands, Pakistan, Philippines, Spain and Ireland.
Murphy's estimated net quantities of proved oil and gas reserves and proved
developed oil and gas reserves at December 31, 1996, 1997, 1998 and 1999 by
geographic area are reported on page F-23 of this Form 10-K report. Murphy has
not filed and is not required to file any estimates of its total net proved oil
or gas reserves on a recurring basis with any federal or foreign governmental
regulatory authority or agency other than the U.S. Securities and Exchange
Commission. Annually, Murphy reports gross reserves of properties operated in
the United States to the U.S. Department of Energy; such reserves are derived
from the same data from which estimated net proved reserves of such properties
are determined.
Net crude oil, condensate, and gas liquids production and net natural gas sales
by geographic area with weighted average sales prices for each of the five years
ended December 31, 1999 are shown on page 21 of the 1999 Annual Report.
1
<PAGE>
Production costs for the last three years in U.S. dollars per equivalent barrel
produced are discussed on page 11 of this Form 10-K report. For purposes of
these computations, natural gas volumes are converted to equivalent barrels of
crude oil using a ratio of six thousand cubic feet (MCF) of natural gas to one
barrel of crude oil.
Supplemental disclosures relating to oil and gas producing activities are
reported on pages F-22 through F-27 of this Form 10-K report.
At December 31, 1999, Murphy held leases, concessions, contracts or permits on
nonproducing and producing acreage as shown by geographic area in the following
table. Gross acres are those in which all or part of the working interest is
owned by Murphy; net acres are the portions of the gross acres applicable to
Murphy's working interest.
<TABLE>
<CAPTION>
Nonproducing Producing Total
-------------- -------------- --------------
Area (Thousands of acres) Gross Net Gross Net Gross Net
- - - - - ------------------------- ------ ------ ----- ---- ------ ------
<S> <C> <C> <C> <C> <C> <C>
United States - Onshore 3 3 40 21 43 24
- Gulf of Mexico 805 454 313 115 1,118 569
- Frontier 119 44 -- -- 119 44
------ ------ ----- ---- ------ ------
Total United States 927 501 353 136 1,280 637
------ ------ ----- ---- ------ ------
Canada - Onshore 781 529 1,226 199 2,007 728
- Offshore 3,874 908 55 3 3,929 911
- Oil sands 222 63 10 2 232 65
------ ------ ----- ---- ------ ------
Total Canada 4,877 1,500 1,291 204 6,168 1,704
------ ------ ----- ---- ------ ------
United Kingdom 1,423 448 77 11 1,500 459
Ecuador -- -- 494 99 494 99
Ireland 896 224 -- -- 896 224
Malaysia 6,498 5,319 -- -- 6,498 5,319
Pakistan 3,795 3,795 -- -- 3,795 3,795
Philippines 3,695 2,956 -- -- 3,695 2,956
Spain 330 99 -- -- 330 99
Tunisia 109 36 -- -- 109 36
------ ------ ----- ---- ------ ------
Totals 22,550 14,878 2,215 450 24,765 15,328
====== ====== ===== ==== ====== ======
</TABLE>
As used in the three tables that follow, "gross" wells are the total wells in
which all or part of the working interest is owned by Murphy, and "net" wells
are the total of the Company's fractional working interests in gross wells
expressed as the equivalent number of wholly owned wells.
The following table shows the number of oil and gas wells producing or capable
of producing at December 31, 1999.
<TABLE>
<CAPTION>
Oil Wells Gas Wells
-------------- --------------
Country Gross Net Gross Net
- - - - - ------- ----- ----- ----- -----
<S> <C> <C> <C> <C>
United States 300 131.6 209 77.1
Canada 3,932 786.0 768 272.0
United Kingdom 149 18.0 21 1.6
Ecuador 59 11.8 -- --
----- ----- ----- -----
Totals 4,440 947.4 998 350.7
===== ===== ===== =====
Wells included above with multiple
completions and counted as one well each 82 37.9 80 59.8
</TABLE>
2
<PAGE>
Murphy's net wells drilled in the last three years are shown in the following
table.
<TABLE>
<CAPTION>
United United
States Canada Kingdom Ecuador Other Total
----------------- ---------------- ---------------- --------------- ------------------ -----------------
Pro- Pro- Pro- Pro- Pro- Pro-
ductive Dry ductive Dry ductive Dry ductive Dry ductive Dry ductive Dry
------- --- ------- --- ------- --- ------- --- ------- --- ------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999
- - - - - ----
Exploratory 1.4 1.0 5.3 5.5 - - .4 - - - 7.1 6.5
Development .6 - 13.7 .2 1.0 - .8 - - - 16.1 .2
1998
- - - - - ----
Exploratory 9.0 .8 4.8 7.5 - - - - - 1.0 13.8 9.3
Development .6 - 5.4 - 1.9 - 1.2 - - - 9.1 -
1997
- - - - - ----
Exploratory 7.6 6.8 15.8 8.3 .5 .6 - - .4 1.0 24.3 16.7
Development 2.9 - 83.0 - .9 .3 1.6 - - - 88.4 .3
</TABLE>
Murphy's drilling wells in progress at December 31, 1999 are shown below.
<TABLE>
<CAPTION>
Exploratory Development Total
---------------- ------------- ---------------
Country Gross Net Gross Net Gross Net
- - - - - ------- ----- --- ----- --- ----- ---
<S> <C> <C> <C> <C> <C> <C>
United States 3 1.6 -- -- 3 1.6
Canada 2 .7 3 .7 5 1.4
United Kingdom -- -- 5 .5 5 .5
Ecuador -- -- 1 .2 1 .2
----- --- ----- --- ----- ---
Totals 5 2.3 9 1.4 14 3.7
===== === ===== === ===== ===
</TABLE>
Additional information about current exploration and production activities is
reported on pages 1 through 15 of the 1999 Annual Report.
REFINING, MARKETING AND TRANSPORTATION
Murphy Oil USA, Inc. (MOUSA), a wholly owned subsidiary, owns and operates two
refineries in the United States. The Meraux, Louisiana refinery is located on
fee land and on two leases that expire in 2010 and 2021, at which times the
Company has options to purchase the leased acreage at fixed prices. The refinery
at Superior, Wisconsin is located on fee land. Murco Petroleum Limited (Murco),
a wholly owned U.K. subsidiary serviced by Murphy Eastern Oil Company, has an
effective 30% interest in a refinery at Milford Haven, Wales that can process
108,000 barrels of crude oil a day. Refinery capacities at December 31, 1999 are
shown in the following table.
3
<PAGE>
<TABLE>
<CAPTION>
Milford Haven,
Meraux, Superior, Wales
Louisiana Wisconsin (Murco's 30%) Total
--------- --------- ------------- -----
<S> <C> <C> <C> <C>
Crude capacity - b/sd* 100,000 35,000 32,400 167,400
Process capacity - b/sd*
Vacuum distillation 50,000 20,500 16,500 87,000
Catalytic cracking - fresh feed 38,000 11,000 9,960 58,960
Pretreating cat-reforming feeds 22,000 9,000 5,490 36,490
Catalytic reforming 18,000 8,000 5,490 31,490
Distillate hydrotreating 15,000 7,800 20,250 43,050
Gas oil hydrotreating 27,500 -- -- 27,500
Solvent deasphalting 18,000 -- -- 18,000
Isomerization -- 2,000 3,400 5,400
Production capacity - b/sd*
Alkylation 8,500 1,500 1,680 11,680
Asphalt 7,500 -- 7,500
Crude oil and product storage
capacity - barrels 4,453,000 2,852,000 2,638,000 9,943,000
</TABLE>
*Barrels per stream day.
MOUSA markets refined products through a network of branded and unbranded
wholesale customers and retail gasoline stations in the United States and
Canada. Branded wholesale customers use the brand name SPUR(R). Murphy's retail
stations are primarily located in the parking areas of Wal-Mart stores and use
the brand name Murphy USA(R). Refined products are supplied from 11 terminals
that are wholly owned and operated by MOUSA, 16 terminals that are jointly owned
and operated by others, and numerous terminals owned by others. Of the terminals
wholly owned or jointly owned, four are supplied by marine transportation, three
are supplied by truck, two are adjacent to MOUSA's refineries and 18 are
supplied by pipeline. MOUSA receives products at the terminals owned by others
either in exchange for deliveries from the Company's terminals or by outright
purchase. At December 31, 1999, the Company marketed products through 145 Murphy
USA stations in a 13-state area of the southern United States, 480 SPUR stations
(25 of which are either owned or leased by the Company) in a 14-state area in
the southeastern and upper-midwestern United States, and eight SPUR stations in
the Thunder Bay area of Ontario, Canada. The Company plans to add up to 150 new
Murphy USA stations at Wal-Mart sites in the southern and midwestern United
States in 2000.
At the end of 1999, Murco distributed refined products in the United Kingdom
from the Milford Haven refinery, three wholly owned terminals supplied by rail,
seven terminals owned by others where products are received in exchange for
deliveries from the Company's terminals, and 384 branded stations under the
brand names MURCO and EP.
Murphy owns a 20% interest in a 120-mile refined products pipeline, with a
capacity of 165,000 barrels a day, that transports products from the Meraux
refinery to two common carrier pipelines serving the southeastern United States.
The Company also owns a 22% interest in a 312-mile crude oil pipeline in Montana
and Wyoming, with a capacity of 120,000 barrels a day, and a 3.2% interest in
LOOP LLC, which provides deepwater unloading accommodations off the Louisiana
coast for oil tankers and onshore facilities for storage of crude oil. A crude
oil pipeline with a diameter of 24 inches connects LOOP storage at Clovelly,
Louisiana to the Meraux refinery. Murphy owns 29.4% of the first 22 miles of
this pipeline from Clovelly to Alliance, Louisiana and 100% of the remaining 24
miles from Alliance to Meraux. The pipeline is connected to another company's
pipeline system, allowing crude oil transported by that system to also be
shipped to the Meraux refinery.
4
<PAGE>
At December 31, 1999, MOCL operated the following Canadian crude oil pipelines,
with the ownership percentage, extent and capacity in barrels a day of each as
shown. MOCL also operated and owned all or most of several short lateral
connecting pipelines.
<TABLE>
<CAPTION>
Pipeline Description Percent Miles Bbls./Day Route
- - - - - -------- ----------- ------- ----- --------- -----
<S> <C> <C> <C> <C> <C>
Manito Dual heavy oil 52.5 101 65,000 Dulwich to Kerrobert, Sask.
North-Sask Dual heavy oil 36.1 40 20,000 Paradise Hill to Dulwich, Sask.
Cactus Lake Dual heavy oil 13.1 40 50,000 Cactus Lake to Kerrobert, Sask.
Bodo Dual heavy oil 41.3 15 18,000 Bodo, Alta. to Cactus Lake, Sask.
Milk River Dual medium/light oil 100 10.5 118,000 Milk River, Alta. to U.S. border
Wascana Single light oil 100 108 45,000 Regina, Sask. to U.S. border
Senlac Dual heavy oil 100 28 15,000 Senlac to Unity, Sask.
</TABLE>
Additional information about current refining, marketing and transportation
activities and a statistical summary of key operating and financial indicators
for each of the five years ended December 31, 1999 are reported on pages 1
through 3, 5, 16 through 19, and 22 of the 1999 Annual Report.
EMPLOYEES
At December 31, 1999, Murphy had 2,153 employees -- 1,476 full-time and 677
part-time.
COMPETITION AND OTHER CONDITIONS WHICH MAY AFFECT BUSINESS
Murphy operates in the oil industry and experiences intense competition from
other oil and gas companies, many of which have substantially greater resources.
In addition, the oil industry as a whole competes with other industries in
supplying energy requirements around the world. Murphy is a net purchaser of
crude oil and other refinery feedstocks and purchases refined products and may
be required to respond to operating and pricing policies of others, including
producing country governments from whom it makes purchases. Additional
information concerning current conditions of the Company's business is reported
under the caption "Outlook" on page 16 of this Form 10-K report.
The operations and earnings of Murphy have been and continue to be affected by
worldwide political developments. Many governments, including those that are
members of the Organization of Petroleum Exporting Countries (OPEC),
unilaterally intervene at times in the orderly market of crude oil and natural
gas produced in their countries through such actions as setting prices,
determining rates of production, and controlling who may buy and sell the
production. In addition, prices and availability of crude oil, natural gas and
refined products could be influenced by political unrest and by various
governmental policies to restrict or increase petroleum usage and supply. Other
governmental actions that could affect Murphy's operations and earnings include
tax changes and regulations concerning: currency fluctuations, protection and
remediation of the environment (See the caption "Environmental" on page 15 of
this Form 10-K report), preferential and discriminatory awarding of oil and gas
leases, restrictions on drilling and/or production, restraints and controls on
imports and exports, safety, and relationships between employers and employees.
Because these and other factors too numerous to list are subject to constant
changes caused by governmental and political considerations and are often made
in great haste in response to changing internal and worldwide economic
conditions and to actions of other governments or specific events, it is not
practical to attempt to predict the effects of such factors on Murphy's future
operations and earnings.
Murphy's business is subject to operational hazards and risks normally
associated with the exploration for and production of oil and natural gas and
the refining, marketing and transportation of crude oil and petroleum products.
The occurrence of a significant event could result in the loss of hydrocarbons,
environmental pollution, personal injury and loss of life, damage to the
property of the Company and others, and loss of revenues, and could subject the
Company to substantial fines and/or claims for punitive damages. Murphy
maintains insurance against certain, but not all, hazards that could arise from
its operations, and such insurance is believed to be reasonable for the hazards
and risks faced by the Company. There can be no assurance that such insurance
will be adequate to offset lost revenues or costs associated with potentially
significant events or that insurance coverage will continue to be available in
the future on terms that justify its purchase. The occurrence of a significant
event that is not fully insured could have a material adverse effect on the
Company's financial condition and results of operations in the future.
5
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
The age at January 1, 2000, present corporate office and length of service in
office of each of the Company's executive officers are reported in the following
listing. Executive officers are elected annually but may be removed from office
at any time by the Board of Directors.
R. Madison Murphy - Age 42; Chairman of the Board since October 1994 and
Director and Member of the Executive Committee since 1993. Mr. Murphy served
as Executive Vice President and Chief Financial and Administrative Officer
from 1993 to 1994; Executive Vice President and Chief Financial Officer from
1992 to 1993; Vice President, Planning/Treasury, from 1991 to 1992; and Vice
President, Planning, from 1988 to 1991, with additional duties as Treasurer
from 1990 until August 1991.
Claiborne P. Deming - Age 45; President and Chief Executive Officer since
October 1994 and Director and Member of the Executive Committee since 1993.
He served as Executive Vice President and Chief Operating Officer from 1992
to 1993 and President of MOUSA from 1989 to 1992.
Steven A. Cosse'- Age 52; Senior Vice President since October 1994 and General
Counsel since August 1991. Mr. Cosse' was elected Vice President in 1993. For
the eight years prior to August 1991, he was General Counsel for Murphy
Expro, at that time named Ocean Drilling & Exploration Company (ODECO), a
majority-owned subsidiary of Murphy.
Herbert A. Fox Jr. - Age 65; Vice President since October 1994. Mr. Fox has also
been President of MOUSA since 1992. He served with MOUSA as Vice President,
Manufacturing, from 1990 to 1992.
Bill H. Stobaugh - Age 48; Vice President since May 1995, when he joined the
Company. Prior to that, he had held various engineering, planning and
managerial positions, the most recent being with an engineering consulting
firm.
Odie F. Vaughan - Age 63; Treasurer since August 1991. From 1975 through July
1991, he was with ODECO as Vice President of Taxes and Treasurer.
John W. Eckart - Age 41; Controller since March 2000. Mr. Eckart had been
Assistant Controller since February 1995. He joined the Company as Auditing
Manager in 1990.
Walter K. Compton - Age 37; Secretary since December 1996. He has been an
attorney with the Company since 1988 and became Manager, Law Department, in
November 1996.
ITEM 3. LEGAL PROCEEDINGS
Following a 1998 compliance inspection of the Superior, Wisconsin refinery, the
U.S. Environmental Protection Agency (EPA) gave the Company notices of violation
of environmental laws. Although the penalty amounts were not listed, the
statutes involved provide for rates of up to $27,500 per day of violation. The
EPA has referred the matter to the U.S. Department of Justice for enforcement.
The Superior refinery also received a notice of violation from the Wisconsin
Department of Natural Resources for alleged failure to meet new source
performance emission standards for the sulfur plant at the refinery. This item
has been referred to the Wisconsin Department of Justice for enforcement.
Penalties for these alleged state and federal violations could exceed $100,000.
The Company believes it has valid defenses to these alleged violations and plans
vigorous defenses. While the enforcement actions are in their preliminary stages
and no assurance can be given, the Company does not believe that the ultimate
resolution of these matters will have a material adverse effect on its financial
condition.
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.
6
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of 1999.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is traded on the New York Stock Exchange and the
Toronto Stock Exchange using "MUR" as the trading symbol. There were 3,431
stockholders of record as of December 31, 1999. Information as to high and low
market prices per share and dividends per share by quarter for 1999 and 1998 are
reported on page F-28 of this Form 10-K report.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
(Thousands of dollars except per share data) 1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS FOR THE YEAR/1/
Sales and other operating revenues $2,036,840 1,694,470 2,133,387 2,009,736 1,613,848
Net cash provided by continuing operations 368,878 321,091 401,843 472,480 309,878
Income (loss) from continuing operations 119,707 (14,394) 132,406 125,956 (127,919)
Net income (loss) 119,707 (14,394) 132,406 137,855 (118,612)
Per Common share - diluted
Income (loss) from continuing operations 2.66 (.32) 2.94 2.80 (2.85)
Net income (loss) 2.66 (.32) 2.94 3.07 (2.65)
Cash dividends per Common share 1.40 1.40 1.35 1.30 1.30
Percentage return on
Average stockholders' equity 12.3 (1.3) 12.7 12.2 (9.3)
Average borrowed and invested capital 9.7 (.6) 10.4 10.4 (7.9)
Average total assets 5.2 (.6) 6.0 6.2 (5.2)
CAPITAL EXPENDITURES FOR THE YEAR
Exploration and production $ 295,958 331,647 423,181 373,984 231,718
Refining, marketing and transportation 88,075 55,025 37,483 42,880 53,602
Corporate and other 2,572 2,127 7,367 1,192 1,831
------- ------- ------- ------- -------
$ 386,605 388,799 468,031 418,056 287,151
======= ======= ======= ======= =======
FINANCIAL CONDITION AT DECEMBER 31
Current ratio 1.22 1.15 1.10 1.10 1.22
Working capital $ 105,477 56,616 48,333 56,128 87,388
Net property, plant and equipment 1,782,741 1,662,362 1,655,838 1,556,830 1,377,455
Total assets 2,445,508 2,164,419 2,238,319 2,243,786 2,098,466
Long-term debt 393,164 333,473 205,853 201,828 193,146
Stockholders' equity 1,057,172 978,233 1,079,351 1,027,478/2/ 1,101,145
Per share 23.49 21.76 24.04 22.90 24.56
Long-term debt - percent of capital employed 27.1 25.4 16.0 16.4 14.9
</TABLE>
/1/Includes effects on income of special items in 1999, 1998 and 1997 that are
detailed in Management's Discussion and Analysis of Financial Condition and
Results of Operations. Also, special items in 1996 and 1995 increased
(decreased) net income by $22,124, $.49 a diluted share, and $(152,066),
$(3.39) a diluted share, respectively.
/2/Reflects $172,561 charge for distribution of common stock of Deltic Timber
Corporation to Murphy's stockholders.
7
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The Company reported net income in 1999 of $119.7 million, $2.66 a diluted
share, compared to a net loss in 1998 of $14.4 million, $.32 a diluted share. In
1997, the Company earned $132.4 million, $2.94 a diluted share. Results of
operations for the three years ended December 31, 1999 included certain special
items that resulted in a net benefit of $19.7 million, $.44 a diluted share, in
1999; a net charge of $57.9 million, $1.29 a diluted share, in 1998; and a net
benefit of $.1 million, with no per share effect, in 1997. The 1999 special
items included after-tax gains of $7.5 million, $.17 a diluted share, from sale
of assets, and $12.2 million, $.27 a diluted share, primarily from settlements
of income tax and other matters. The 1998 special items included an after-tax
charge of $57.6 million, $1.28 a diluted share, from a write-down of assets
determined to be impaired under Statement of Financial Accounting Standards
(SFAS) No. 121.
1999 VS. 1998 - Excluding special items, income in 1999 totaled $100 million,
$2.22 a share, an increase of $56.5 million from the $43.5 million earned in
1998. The increase in income was primarily attributable to record earnings from
exploration and production operations, which totaled $121.2 million in 1999
compared to $5.8 million in 1998. This improvement was partially offset by lower
earnings from the Company's refining, marketing and transportation operations,
which earned $14.9 million in 1999, down from $49.2 million earned in 1998. The
improvement in exploration and production earnings in 1999 was primarily
attributable to an increase of $6.05 a barrel in the average worldwide crude oil
sales price, up 56% compared to 1998, and record crude oil production. In
addition, the Company's worldwide natural gas sales volume and U.S. natural gas
sales prices both increased 4% in 1999. Refining, marketing and transportation
operations were adversely affected by the increase in the prices of crude oil
and other refinery feedstocks. This segment's decline in earnings was primarily
attributable to lower U.S. operating results, as rising crude oil prices
squeezed margins throughout most of the year. The costs of corporate and other
activities, which include interest income and expense and corporate overhead not
allocated to operating functions, were $36.1 million in 1999 compared to $11.5
million in 1998. The increase in corporate costs in 1999 was primarily
attributable to higher net interest costs and higher costs of awards under the
Company's incentive plans.
1998 VS. 1997 - Excluding special items, income totaled $43.5 million in 1998,
$.97 a diluted share, a decrease of $88.8 million from the $132.3 million earned
in 1997. The income reduction was primarily attributable to a $79.2 million
decline in earnings from the Company's exploration and production operations.
Sharply lower crude oil prices in 1998 were the main reason for the reduction.
The Company's average crude oil sales price declined by $5.62 a barrel in 1998,
down 34% from oil prices realized in 1997. Higher crude oil production from new
fields in Canada and the United Kingdom were mostly offset by lower production
from maturing U.S. and U.K. oil fields and by selective shut-in of Canadian
heavy oil production. Natural gas sales prices in the United States declined 15%
in 1998 and U.S. natural gas sales volume was down 20%. Earnings from the
Company's refining, marketing and transportation operations were down $7.5
million in 1998, as record levels of finished product sales volumes were more
than offset by lower unit margins on product sales in the United States. The
costs of corporate and other activities increased $2.1 million in 1998 compared
to 1997, primarily due to higher net interest costs offset in part by lower
costs under the Company's incentive plans.
In the following table, the Company's results of operations for the three years
ended December 31, 1999 are presented by segment. Special items, which can
obscure underlying trends of operating results and affect comparability between
years, are set out separately. More detailed reviews of operating results for
the Company's exploration and production and refining, marketing and
transportation activities follow the table.
8
<PAGE>
<TABLE>
<CAPTION>
(Millions of dollars) 1999 1998 1997
----- ---- ----
<S> <C> <C> <C>
Exploration and production
United States $ 30.3 20.1 56.5
Canada 47.0 2.6 18.8
United Kingdom 37.2 .7 13.1
Ecuador 14.4 2.4 12.9
Other (7.7) (20.0) (16.3)
----- ---- ----
121.2 5.8 85.0
----- ---- -----
Refining, marketing and transportation
United States (5.9) 27.7 41.3
United Kingdom 14.0 16.8 9.2
Canada 6.8 4.7 6.2
----- ---- -----
14.9 49.2 56.7
----- ---- -----
Corporate and other (36.1) (11.5) (9.4)
----- ---- -----
Income before special items 100.0 43.5 132.3
Gain on sale of assets 7.5 2.9 11.5
Settlement of income tax matters 5.0 -- 3.2
Settlement of crude oil transportation rate 4.9 -- --
Net recovery pertaining to 1996 modifications of
foreign crude oil contracts 3.3 2.4 1.6
Provision for reduction in force (1.0) -- --
Impairment of long-lived assets -- (57.6) (16.2)
Charge resulting from cancellation of a drilling rig contract -- (4.2) --
Write-down of crude oil inventories to market value -- (4.2) --
Settlement of U.K. long-term sales contract -- 2.8 --
----- ---- -----
Net income (loss) $ 119.7 (14.4) 132.4
===== ==== =====
</TABLE>
EXPLORATION AND PRODUCTION - Earnings from exploration and production operations
before special items were a record $121.2 million in 1999, compared to earnings
of $5.8 million in 1998 and $85 million in 1997. The improvement in 1999 was
primarily attributable to an increase in the Company's average worldwide crude
oil sales price, which averaged $16.86 a barrel in 1999 compared to $10.81 in
1998. The year 1999 also included a Company record for crude oil and condensate
production, which increased primarily due to higher production from new fields
in the United Kingdom and Canada. Natural gas sales volumes increased in 1999 in
both the United States and Canada, and each area benefited from higher average
natural gas sales prices. Lower average natural gas sales prices in the United
Kingdom served as a partial offset. The earnings decline in 1998 was primarily
due to lower worldwide crude oil sales prices, which averaged $10.81 a barrel in
1998 and $16.43 in 1997. Lower U.S. natural gas sales prices and volumes also
contributed to the 1998 decline. Partial offsets were provided by higher crude
oil production and lower exploration costs. Crude oil production from new fields
in the United Kingdom brought on stream during the third quarter of 1998 and
from the Hibernia field, offshore Newfoundland, which came on stream in late
1997, was partially offset by selective shut-in of heavy oil production in
western Canada in response to lower heavy oil prices and by lower production
from mature oil fields in the United States and the United Kingdom.
The results of operations for oil and gas producing activities for each of the
last three years are shown by major operating area on pages F-25 and F-26 of
this Form 10-K report. Daily production rates and weighted average sales prices
are shown on page 21 of the 1999 Annual Report.
A summary of oil and gas revenues, including intersegment sales that are
eliminated in the consolidated financial statements, is presented in the
following table.
9
<PAGE>
(Millions of dollars) 1999 1998 1997
---- ---- ----
United States
Crude oil $ 54.1 35.6 74.9
Natural gas 143.2 132.1 196.7
Canada
Crude oil 106.8 55.4 71.6
Natural gas 38.9 24.0 22.1
Synthetic oil 74.8 53.0 67.9
United Kingdom
Crude oil 134.7 70.3 95.3
Natural gas 7.7 10.0 12.2
Ecuador - crude oil 37.2 19.1 34.7
----- ----- -----
Total oil and gas revenues $ 597.4 399.5 575.4
===== ===== =====
The Company's crude oil and gas liquids production averaged 66,083 barrels a day
in 1999, 59,128 in 1998 and 57,494 in 1997. Crude oil and liquids production in
the United States increased 9% in 1999, with the increase primarily due to new
production from several small fields on the continental shelf of the Gulf of
Mexico. In 1998, U.S. production was down 28% from 1997, primarily due to
declining production at mature oil fields in the Gulf of Mexico. Crude oil
production in Canada rose 6% in 1999 and established a record of 29,980 barrels
a day. The increase was primarily attributable to an increase of 2,212 barrels a
day at Hibernia, which averaged 6,404 in 1999. Hibernia, which came on stream in
the fourth quarter of 1997, produced 4,192 barrels a day in 1998 and 224 in
1997. Production at the Company's synthetic oil operation in Canada increased 5%
in 1999, but this increase was offset by 6% and 9% reductions in onshore
Canadian heavy oil and light oil production, respectively, during the year. The
higher net production of synthetic oil in 1999 was due to a 6% increase in gross
production, partially offset by a slightly higher net profit royalty rate caused
by higher oil prices. The Company's net interest in production of synthetic oil
in Canada increased 12% in 1998 due to a 1% increase in gross production and a
decrease in the net profits royalty rate as a result of lower oil prices. Before
royalties, the Company's synthetic oil production was 11,146 barrels a day in
1999, 10,501 in 1998 and 10,371 in 1997. Heavy oil production declined by 577
barrels a day in 1999 due to continued selective shut-in of fields caused by low
oil prices during the early part of the year. In 1998, crude oil production in
Canada increased 12%. As a result of selective shut-ins in the second half of
the year, production of heavy oil in Canada decreased 16% in 1998, compared to
1997. The Company's U.K. oil production increased 33% in 1999 after an 11%
increase in 1998. Oil production from the Mungo/Monan and Schiehallion fields,
which commenced in the third quarter of 1998, averaged 5,568 and 4,721 barrels a
day, respectively, in 1999. Mungo/Monan produced 2,025 barrels a day in 1998 and
Schiehallion produced 1,219. Oil production from the "T" Block field in the
United Kingdom declined by 24% during 1999, after an 18% decline in 1998.
Production from Ninian, the Company's other major North Sea oil field, declined
7% in 1999, after having declined 8% in 1998. Production in Ecuador declined 8%
in 1999 due to pipeline restrictions, after being essentially unchanged in 1998
when compared to 1997.
Worldwide sales of natural gas averaged 240.4 million cubic feet a day in 1999,
230.9 million in 1998 and 268.7 million in 1997. U.S. natural gas sales were
171.8 million cubic feet a day in 1999, 169.5 million in 1998 and 211.2 million
in 1997. The 1% increase in U.S. natural gas sales in 1999 was mainly due to
sales from several new fields in the Gulf of Mexico that offset lower sales from
maturing fields in the Gulf. The 20% decrease in U.S. natural gas sales in 1998
was mainly due to reduced deliverability in certain maturing Gulf of Mexico
fields. Natural gas sales in Canada in 1999 of 56.2 million cubic feet were at
record levels for the fourth straight year, as sales increased 15% in 1999
following a 9% increase in 1998. Natural gas sales in the United Kingdom of 12.4
million cubic feet were essentially unchanged in 1999, following a 2% decline in
1998.
As previously indicated, worldwide crude oil sales prices strengthened
considerably throughout 1999 after a significant downturn during 1998. In the
United States, Murphy's 1999 monthly sales prices for crude oil and condensate
ranged from $10.71 to $25.80 a barrel, and averaged $17.97 for the year, 41%
above the average 1998 price. In Canada, the average sales price for light oil
was $17.00 a barrel in 1999, also an increase of 41%. Heavy oil prices in Canada
averaged $12.77 a barrel, up 95% from prices in 1998. The average sales price
for synthetic oil in 1999 was $18.64 a barrel, 36% higher than a year earlier.
The sales price for crude oil from the Hibernia field averaged $18.69 a barrel,
up 78%. Sales prices in the United Kingdom were up 44% in 1999 and averaged
$18.09 a barrel. Sales prices in Ecuador averaged $12.94 a barrel in 1999, up
91% compared to a year ago. In 1998, U.S. crude and condensate sales prices
decreased 34% compared to 1997 and averaged $12.76 a barrel for the year. In
Canada, crude oil prices in 1998 declined 32% for light oil, 39% for heavy oil,
10
<PAGE>
31% for synthetic oil and 31% for Hibernia. Sales prices in the United Kingdom
were down 34% in 1998 and prices in Ecuador were down 44%. Although crude oil
sales prices were strong in early 2000, the Company can give no assurance that
prices will remain at or near these levels in the future.
Average monthly natural gas sales prices in the United States ranged from $1.73
to $2.88 an MCF during 1999. For the year, U.S. sales prices averaged $2.27 an
MCF compared to $2.18 a year ago. The average price for natural gas sold in
Canada during 1999 was $1.90 an MCF, an increase of 42% from the average in
1998, as Canadian natural gas sales prices moved closer to parity with other
North American gas prices during the year. The average price in the United
Kingdom declined 25% to $1.68. The decline in average U.K. sales prices
primarily resulted from a contractual price basis adjustment at the Company's
largest gas producing field in the United Kingdom. Average U.S. natural gas
sales prices in 1998 were 15% lower than in 1997, prices were essentially
unchanged in Canada, and prices in the United Kingdom declined by 16%.
Based on 1999 volumes and deducting taxes at marginal rates, each $1 a barrel
and $.10 an MCF fluctuation in prices would have affected annual exploration and
production earnings by $16.2 million and $5.5 million, respectively. The effect
of these price fluctuations on consolidated net income cannot be measured
because operating results of the Company's refining, marketing and
transportation segments could be affected differently.
Production costs were $152 million in 1999, $155.1 million in 1998 and $164.8
million in 1997. These amounts are shown by major operating area on pages F-25
and F-26 of this Form 10-K report. Costs per equivalent barrel of production
during the last three years were as follows.
(Dollars per equivalent barrel) 1999 1998 1997
---- ---- ----
United States $2.63 3.32 2.59
Canada
Excluding synthetic oil 3.84 3.64 4.63
Synthetic oil 9.09 8.99 11.32
United Kingdom 3.73 5.60 5.58
Ecuador 3.62 2.48 3.87
Worldwide - excluding synthetic oil 3.33 3.79 3.72
The decrease in U.S. production cost per equivalent barrel in 1999 was
attributable to lower well servicing costs combined with higher production
volumes. The increase in Canada in 1999, excluding synthetic oil, was caused by
higher well servicing costs at heavy oil properties. The increase in the
Canadian synthetic oil unit rate was due to an increase in royalty barrels
caused by higher sales prices. The decrease in the U.K. cost per barrel was due
to higher production from lower-cost fields at Mungo/Monan and Schiehallion. The
higher cost in Ecuador in 1999 was caused by higher field operating costs
combined with lower production during the year. The increase in the U.S. cost
per equivalent barrel in 1998 was attributable to lower production volumes
combined with higher workover costs. The decline in Canada in 1998, excluding
synthetic oil, was caused by higher oil production at Hibernia, voluntary shut-
in of certain high-cost heavy oil production and a lower Canadian dollar
exchange rate vs. the U.S. dollar. The decrease in the cost for synthetic oil in
1998 was due to lower maintenance costs, a decrease in royalty barrels due to
lower sales prices and a lower Canadian dollar exchange rate. The lower cost in
Ecuador in 1998 was caused by lower energy and other field operating costs
during the year.
Exploration expenses for each of the last three years are shown in total in the
following table, and amounts are reported by major operating area on pages F-25
and F-26 of this Form 10-K report. Certain of the expenses are included in the
capital expenditure totals for exploration and production activities.
(Millions of dollars) 1999 1998 1997
---- ---- ----
Exploratory expenditures charged against income
Dry hole costs $32.4 31.5 48.3
Geological and geophysical costs 18.7 17.0 26.4
Other costs 8.5 6.6 9.6
---- ---- ----
59.6 55.1 84.3
Undeveloped lease amortization 11.0 10.5 10.5
---- ---- ----
Total exploration expenses $70.6 65.6 94.8
==== ==== ====
11
<PAGE>
Depreciation, depletion and amortization for exploration and production
operations totaled $166.3 million in 1999, $163.1 million in 1998 and $172.4
million in 1997. The 1999 increase was primarily due to higher production from
the Hibernia field offshore eastern Canada. The decrease in 1998 was primarily
attributable to lower worldwide hydrocarbon production.
REFINING, MARKETING AND TRANSPORTATION - Earnings from refining, marketing and
transportation operations before special items were $14.9 million in 1999, $49.2
million in 1998 and $56.7 million in 1997. Operations in the United States lost
$5.9 million in 1999 compared to earnings of $27.7 million in 1998, as the
average cost of crude oil and other feedstocks increased more than product sales
realizations. U.S. operations earned $41.3 million in 1997. Settlement of crude
oil swap agreements increased earnings by $5 million in 1997. U.K. operations
earned $14 million in 1999, $16.8 million in 1998 and $9.2 million in 1997. The
lower earnings in the United Kingdom in 1999 were caused by a larger increase in
the cost of refining feedstock than in product sales realizations. Canadian
operations contributed $6.8 million to 1999 earnings compared to $4.7 million in
1998 and $6.2 million in 1997.
Unit margins (sales realizations less costs of crude oil, other feedstocks,
refining and transportation to point of sale) averaged $.70 a barrel in the
United States in 1999, $1.47 in 1998 and $1.79 in 1997. U.S. product sales
declined 8% in 1999 following a 3% increase in 1998. The decline in sales volume
in the United States in 1999 was caused by a turnaround at the Company's Meraux
refinery early in the year. U.S. margins were under pressure during most of 1999
and the second half of 1998. Unit margins were very weak in early 2000 and the
Company was experiencing losses in its U.S. downstream operations.
Unit margins in the United Kingdom averaged $3.38 a barrel in 1999, $2.81 in
1998 and $2.90 in 1997. Sales of petroleum products were 11% lower in 1999
following a 25% increase in 1998. The volume decline in 1999 was attributable to
lower sales in the cargo market. Sales in both terminal and cargo markets
increased in 1998. Although margins improved in 1999, the Company's branded
outlets still face stiff competition from supermarket sales of motor fuels. Unit
margins have weakened considerably in early 2000.
Based on sales volumes for 1999 and deducting taxes at marginal rates, each $.42
a barrel ($.01 a gallon) fluctuation in unit margins would have affected annual
refining and marketing profits by $15.6 million. The effect of these unit margin
fluctuations on consolidated net income cannot be measured because operating
results of the Company's exploration and production segments could be affected
differently.
Income before special items from purchasing, transporting and reselling crude
oil in Canada in 1999 increased by $2.1 million due to improved earnings from
the Company's crude oil trading and pipeline operations. Earnings declined by
$1.5 million in 1998 as lower prices for heavy oil led to production shut-ins,
which brought about lower pipeline throughputs and fewer barrels available for
crude trading activities.
SPECIAL ITEMS - Net income for the last three years included the special items
reviewed in the following paragraphs; the quarter in which each item occurred is
indicated. The effects of special items on quarterly results for 1999 and 1998
are presented on page F-28 of this Form 10-K report.
. GAIN ON SALE OF ASSETS - After-tax gains on sale of assets included
$6.3 million and $1.2 million recorded in the third and fourth
quarter, respectively, of 1999 from sale of U.S. service stations,
$2.9 million recorded in the fourth quarter of 1998 from sale of a
U.K. service station, and $11.5 million recorded in the fourth quarter
of 1997 from sale of a Canadian heavy oil property.
. SETTLEMENT OF INCOME TAX MATTERS - A gain of $5 million for settlement
of U.S. income taxes was recorded in the fourth quarter of 1999. A
gain of $3.2 million for settlement of U.K. income taxes was recorded
in the third quarter of 1997.
. SETTLEMENT OF CRUDE OIL TRANSPORTATION RATE - A gain of $4.9 million
for settlement of a crude oil transportation rate dispute in Ecuador
was recorded in the fourth quarter of 1999.
. NET RECOVERY PERTAINING TO 1996 MODIFICATIONS OF FOREIGN CRUDE OIL
CONTRACTS - Gains of $3.3 million, $1.4 million, $1 million and $1.6
million were recorded in the fourth quarter of 1999, the second
quarter of 1998, the fourth quarter of 1998 and the fourth quarter of
1997, respectively, for partial recoveries of a 1996 loss resulting
from modification of a crude oil production contract in Ecuador. (See
Note N to the consolidated financial statements.)
12
<PAGE>
. PROVISION FOR REDUCTION IN FORCE - An after-tax charge of $1 million
for a reduction in force program was recorded in the first quarter of
1999. (See Note E to the consolidated financial statements.)
. IMPAIRMENT OF LONG-LIVED ASSETS - An after-tax provision of $57.6
million was recorded in the fourth quarter of 1998 and after-tax
provisions of $3.3 million and $12.9 million were recorded in the
third and fourth quarters, respectively, of 1997 for the write-down of
assets determined to be impaired. (See Note B to the consolidated
financial statements.)
. CHARGE RESULTING FROM CANCELLATION OF A DRILLING RIG CONTRACT - An
after-tax charge of $4.2 million was recorded in the fourth quarter of
1998 resulting from cancellation of a drilling contract for the Terra
Nova oil field, offshore eastern Canada. The contract was cancelled
because market conditions allowed a more efficient and modern rig to
be obtained, thus reducing drilling costs for the Terra Nova project
compared to what they might otherwise have been.
. WRITE-DOWN OF CRUDE OIL INVENTORIES TO MARKET VALUE - An after-tax
charge of $4.2 million was recorded in the fourth quarter of 1998 to
establish a valuation allowance to reduce the carried amount of crude
oil inventories in the United Kingdom and Canada to market values.
. SETTLEMENT OF U.K. LONG-TERM SALES CONTRACT - An after-tax gain of
$2.8 million was recorded in the second quarter of 1998 related to
settlement of a U.K. long-term sales contract.
The income (loss) effects of special items for each of the three years ended
December 31, 1999 are summarized by segment in the following table.
(Millions of dollars) 1999 1998 1997
---- ---- ----
Exploration and production
United States $ 5.0 (19.4) (4.9)
Canada -- (10.1) .2
United Kingdom -- (14.0) 3.2
Ecuador 8.2 2.4 1.6
Other -- (15.1) --
---- ---- ----
13.2 (56.2) .1
---- ---- ----
Refining, marketing and transportation
United States 7.5 -- --
United Kingdom -- .5 --
Canada -- (2.2) --
---- ---- ----
7.5 (1.7) --
---- ---- ----
Corporate and other (1.0) -- --
---- ---- ----
Total income (loss) from special items $19.7 (57.9) .1
==== ==== ====
CAPITAL EXPENDITURES
As shown in the selected financial data on page 7 of this Form 10-K report,
capital expenditures were $386.6 million in 1999 compared to $388.8 million in
1998 and $468 million in 1997. Expenditures charged to expense during each of
these years were $59.6 million, $55.1 million and $84.3 million, respectively.
Capital expenditures for exploration and production activities totaled $295.9
million in 1999, 77% of the Company's total capital expenditures for the year.
Exploration and production capital expenditures in 1999 included $18.3 million
for acquisition of undeveloped leases, $.4 million for acquisition of proved oil
and gas properties, $79.2 million for exploration activities and $198 million
for development projects. Development expenditures included $79.2 million for
the Terra Nova oil field, offshore Newfoundland; $26.8 million for expansion of
the synthetic oil operations in Canada; and $11.9 million and $11.8 million for
the Schiehallion and Mungo/Monan fields, respectively, offshore United Kingdom.
Capital expenditures for exploration and production activities are shown by
major operating area on page F-24 of this Form 10-K report. Amounts shown under
"Other" included $9.5 million in 1998 from drilling two unsuccessful offshore
wildcat wells in the Falkland Islands and $18.3 million in 1997 for exploration
drilling and related costs in Bohai Bay, China.
13
<PAGE>
Refining, marketing and transportation expenditures, detailed in the following
table, were $88.1 million in 1999, or 23% of total capital expenditures,
compared to $55 million in 1998 and $37.5 million in 1997.
(Millions of dollars) 1999 1998 1997
---- ---- ----
Refining
United States $ 17.4 27.0 12.5
United Kingdom 7.0 .7 1.5
---- ---- ----
Total refining 24.4 27.7 14.0
---- ---- ----
Marketing
United States 58.7 16.7 14.1
United Kingdom 4.4 6.1 2.2
---- ---- ----
Total marketing 63.1 22.8 16.3
---- ---- ----
Transportation
United States .3 1.9 2.6
Canada .3 2.6 4.6
---- --- ----
Total transportation .6 4.5 7.2
---- ---- ----
Total $ 88.1 55.0 37.5
==== ==== ====
U.S. and U.K. refining expenditures were primarily for capital projects to keep
the refineries operating efficiently and within industry standards and to study
alternatives for meeting anticipated future environmentally driven changes to
U.S. motor fuel specifications. Marketing expenditures in the United States
included the costs of new stations, primarily on land leased from Wal-Mart, and
improvements and normal replacements at existing stations and terminals. U.K.
marketing expenditures were primarily for improvements and normal replacements
at existing stations and terminals.
CASH FLOWS
Cash provided by operating activities was $368.9 million in 1999, $321.1 million
in 1998 and $401.8 million in 1997. Special items increased cash flow from
operations by $18.9 million in 1999 and $3.8 million in 1997, but reduced cash
by $6.3 million in 1998. Changes in operating working capital other than cash
and cash equivalents required cash of $35.2 million, $3.8 million and $72.4
million in 1999, 1998 and 1997, respectively. Cash provided by operating
activities was further reduced by expenditures for refinery turnarounds and
abandonment of oil and gas properties totaling $44.1 million in 1999, $24.6
million in 1998 and $14.4 million in 1997.
Cash proceeds from property sales were $40.9 million in 1999, $9.5 million in
1998 and $43.8 million in 1997. Borrowings under long-term notes payable
provided $247.8 million of cash in 1999, $161.3 million in 1998 and $9.7 million
in 1997. Additional borrowings under nonrecourse debt arrangements provided $6.4
million of cash in 1997.
Capital expenditures required $386.6 million of cash in 1999, $388.8 million in
1998 and $468 million in 1997. Other significant cash outlays during the three
years included $195.9 million in 1999, $34.5 million in 1998 and $17.3 million
in 1997 for debt repayment. Cash used for dividends to stockholders was $63
million in 1999, $62.9 million in 1998 and $60.6 million in 1997.
FINANCIAL CONDITION
Year-end working capital totaled $105.5 million in 1999, $56.6 million in 1998
and $48.3 million in 1997. The current level of working capital does not fully
reflect the Company's liquidity position, as the carrying values for inventories
under last-in first-out accounting were $115.2 million below current costs at
December 31, 1999. Cash and cash equivalents at the end of 1999 totaled $34.1
million compared to $28.3 million a year ago and $24.3 million at the end of
1997.
Long-term debt increased $59.7 million during 1999 to $393.2 million at the end
of the year, 27.1% of total capital employed, and included $144.6 million of
nonrecourse debt incurred in connection with the acquisition and development of
Hibernia. The increase in long-term debt in 1999 was attributable to the sale of
$250 million of long-term notes due in 2029; the proceeds of these notes were
used primarily to pay down borrowings under other long-term credit facilities.
Long-term debt totaled $333.5 million at the end of 1998 compared to $205.9
million at December 31, 1997. Stockholders' equity was $1.1 billion at the end
of 1999 compared to $1 billion a year ago and $1.1 billion at the end of 1997. A
summary of transactions in the stockholders' equity accounts is presented on
page F-5 of this Form 10-K report.
14
<PAGE>
The primary sources of the Company's liquidity are internally generated funds,
access to outside financing and working capital. The Company relies on
internally generated funds to finance the major portion of its capital and other
expenditures, but maintains lines of credit with banks and borrows as necessary
to meet spending requirements. Current financing arrangements are set forth in
Note C to the consolidated financial statements. The Company does not expect any
problem in meeting future requirements for funds.
Murphy had commitments of $256 million for capital projects in progress at
December 31, 1999, including $84 million related to its share of a multiyear
contract for a semisubmersible deepwater drilling rig and associated equipment.
Certain costs committed under this contract will be charged to Murphy's partners
when future deepwater wells are drilled.
ENVIRONMENTAL
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, an environmental liability is recorded
when such 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 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 1998 compliance inspection of the Superior, Wisconsin refinery, the
EPA gave the Company notices of violation of environmental laws. Although the
penalty amounts were not listed, the statutes involved provide for rates of up
to $27,500 per day of violation. The EPA has referred the matter to the U.S.
Department of Justice for enforcement. The Superior refinery also received a
notice of violation from the Wisconsin Department of Natural Resources for
alleged failure to meet new source performance emission standards for the sulfur
plant at the refinery. This item has been referred to the Wisconsin Department
of Justice for enforcement. The Company believes it has valid defenses to these
allegations and plans vigorous defenses. While the enforcement actions are in
their preliminary stages and no assurance can be given, the Company does not
believe that these 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 regulations could require additional expenditures at known sites. Such
expenditures could materially affect the results of operations in a future
period.
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 future recoveries from other sources will
occur, the Company has not recorded a benefit for likely recoveries at December
31, 1999.
The Company's refineries also incur costs to handle and dispose of hazardous
wastes and other chemical substances. These costs are expensed as incurred and
amounted to $2.9 million in 1999. In addition to these expenses, Murphy
allocates a
15
<PAGE>
portion of its capital expenditure program to comply with environmental laws and
regulations. Such capital expenditures were approximately $25 million in 1999
and are projected to be $28 million in 2000.
YEAR 2000 ISSUES
The Year 2000 issues related to the possibility that computer programs and
embedded computer chips might be unable to accurately process data with year
dates of 2000 and beyond. Murphy devoted significant internal and external
resources to address Year 2000 compliance. The Company's Year 2000 project
(Project) was successful, as the Company experienced no operational disruptions
attributable to Year 2000. The total amount expended on the Project was $4.9
million, including $3.3 million in 1999. Of the total expended, $2.3 million was
included in expense, including $.7 million in 1999, and costs of $2.6 million
have been capitalized as improvements in business system functionality beyond
Year 2000 compliance.
OTHER MATTERS
IMPACT OF INFLATION - General inflation was moderate during the last three years
in most countries where the Company operates; however, the Company's revenues
and capital and operating costs are influenced to a larger extent by specific
price changes in the oil and gas and allied industries than by changes in
general inflation. Crude oil and petroleum product prices generally reflect the
balance between supply and demand, with crude oil prices being particularly
sensitive to OPEC production levels and/or attitudes of traders concerning
supply and demand in the near future. Natural gas prices are affected by supply
and demand, which to a significant extent are affected by the weather and by the
fact that delivery of gas is generally restricted to specific geographic areas.
If crude oil prices, which strengthened during 1999, remain strong, the Company
believes that future prices for oil field goods and services could be adversely
affected. Lower commodity prices in 1998 led to a softening of prices for goods
and services during the prior year.
ACCOUNTING MATTERS - The Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities," in 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 net income or other
comprehensive income, as appropriate, as the cumulative effect of a change in
accounting principle. As described in Note A to the consolidated financial
statements, 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.
OUTLOOK
Prices for the Company's primary products are often quite volatile. Entering
1999, oil prices were under extreme pressure, but due to increased worldwide
demand and disciplined management of supply by the world's producers --
primarily by members of OPEC -- oil prices rebounded significantly and the price
of West Texas Intermediate crude oil was more than $25 a barrel at the end of
1999. Despite the fact that crude oil prices have continued to strengthen in
early 2000 due to low crude oil inventories caused by supplies not fully meeting
demands, the Company can make no assurance that the price of oil will remain at
this high level in the future. Due to milder than normal winter weather across
much of North America, the price of natural gas has remained under pressure in
early 2000. The Company was experiencing losses in its U.S. refining and
marketing operations in early 2000, and U.K. margins had weakend considerably.
In such an environment, constant reassessment of spending plans is required. The
Company's capital expenditure budget for 2000 was prepared during the fall of
1999 and provides for expenditures of $457 million. Of this amount, $335 million
or 73% is allocated for exploration and production. Geographically, 41% of the
exploration and production budget is allocated to the United States; another 41%
is allocated to Canada, including $58 million for continued development of the
Terra Nova oil field, offshore Newfoundland, that is currently scheduled for an
early 2001 start-up; 9% is allocated to the United Kingdom; 3% is allocated to
Ecuador; and 6% is allocated to other foreign operations, which primarily
pertain to Malaysia. Planned refining, marketing and transportation capital
expenditures for 2000 are $120 million, including $104 million in the United
States, $13 million in the United Kingdom and $3 million in Canada. U.S. amounts
include funds for additional stations at
16
<PAGE>
Wal-Mart sites. Capital and other expenditures are under constant review and
planned capital expenditures may be adjusted to reflect changes in estimated
cash flow.
In the United States, the Company is concentrating its exploration and
production capital spending on prospects in the deep waters of the Gulf of
Mexico. Although the Company is pleased with the successes achieved to date in
this exploration program, most of its discoveries in the deep water will take
two years or more to bring on production. Because of the lead time to bring on
this new production, the Company expects that its worldwide oil and natural gas
production will decline in 2000 by approximately 3% to 4% on a barrel-equivalent
basis when compared to 1999 production levels.
FORWARD-LOOKING STATEMENTS
This Form 10-K report, including documents incorporated by reference herein,
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 report on file with the U.S. Securities and Exchange
Commission.
ITEM 7A. 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 A to the consolidated financial statements,
Murphy makes limited use of derivative financial and commodity instruments to
manage certain risks associated with existing or anticipated transactions.
At December 31, 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. These 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 December 31, 1999, the interest rate to be
received by the Company averaged 6.19%. 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 gain of $.3
million at December 31, 1999.
At December 31, 1999, 29% of the Company's long-term debt had variable interest
rates and 19% was denominated in Canadian dollars. Based on debt outstanding at
December 31, 1999, a 10% increase in variable interest rates would not change
the Company's interest expense in 2000 after a $.6 million favorable effect
resulting from lower net settlement payments under the aforementioned interest
rate swaps. A 10% increase in the exchange rate of the Canadian dollar vs. the
U.S. dollar would increase interest expense in 2000 by $.3 million on debt
denominated in Canadian dollars.
At December 31, 1999, the Company was a party to crude oil swap agreements for a
total notional volume of 2.3 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 $16.76 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. At December 31, 1999, the estimated
fair value of these crude oil swaps was a gain of $2.7 million; a 10%
fluctuation in the price of WTI crude oil would have changed the estimated fair
value of these swaps by $3.5 million.
At December 31, 1999, Murphy was also a party to natural gas price swap
agreements for a total notional volume of 7 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 $2.61 an MMBTU
and to receive the average NYMEX Henry Hub price for the final three trading
days of the month. At December 31, 1999, the estimated fair value of these
agreements was a loss of $.1 million; a 10% fluctuation in the average NYMEX
Henry Hub price of natural gas would have changed the estimated fair value of
these swaps by $1.3 million.
17
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by this item appears on pages F-1 through F-28 of this Form
10-K report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Certain information regarding executive officers of the Company is included on
page 6 of this Form 10-K report. Other information required by this item is
incorporated by reference to the Registrant's definitive Proxy Statement for the
Annual Meeting of Stockholders on May 10, 2000 under the caption "Election of
Directors."
ITEM 11. EXECUTIVE COMPENSATION
Information required by this item is incorporated by reference to the
Registrant's definitive Proxy Statement for the Annual Meeting of Stockholders
on May 10, 2000 under the captions "Compensation of Directors," "Executive
Compensation," "Option Exercises and Fiscal Year-End Values," "Option Grants,"
"Compensation Committee Report for 1999," "Shareholder Return Performance
Presentation" and "Retirement Plans."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by this item is incorporated by reference to the
Registrant's definitive Proxy Statement for the Annual Meeting of Stockholders
on May 10, 2000 under the captions "Security Ownership of Certain Beneficial
Owners" and "Security Ownership of Management."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by this item is incorporated by reference to the
Registrant's definitive Proxy Statement for the Annual Meeting of Stockholders
on May 10, 2000 under the caption "Compensation Committee Interlocks and Insider
Participation."
18
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS - The consolidated financial statements of Murphy
Oil Corporation and consolidated subsidiaries are located or begin on
the pages of this Form 10-K report as indicated below.
Page No.
--------
Report of Management F-1
Independent Auditors' Report F-1
Consolidated Statements of Income F-2
Consolidated Statements of Comprehensive Income F-2
Consolidated Balance Sheets F-3
Consolidated Statements of Cash Flows F-4
Consolidated Statements of Stockholders' Equity F-5
Notes to Consolidated Financial Statements F-6
Supplemental Oil and Gas Information (unaudited) F-22
Supplemental Quarterly Information (unaudited) F-28
2. FINANCIAL STATEMENT SCHEDULES - Financial statement schedules are
omitted because either they are not applicable or the required
information is included in the consolidated financial statements or
notes thereto.
3. EXHIBITS - The following is an index of exhibits that are hereby filed
as indicated by asterisk (*), that are to be filed by an amendment as
indicated by pound sign (#), or that are incorporated by reference.
Exhibits other than those listed have been omitted since they either
are not required or are not applicable.
<TABLE>
<CAPTION>
Exhibit
No. Incorporated by Reference to
- - - - - ------- ---------------------------------------------------------
<S> <C> <C>
3.1 Certificate of Incorporation of Murphy Oil Exhibit 3.1 of Murphy's Form 10-K report for the year
Corporation as of September 25, 1986 ended December 31, 1996
*3.2 By-laws of Murphy Oil Corporation as amended
December 1, 1999
4 Instruments Defining the Rights of Security
Holders. Murphy is party to several long-term debt
instruments in addition to the ones in Exhibits
4.1 and 4.2, 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 Oil Corporation and Exhibit 4.1 of Murphy's Form 10-K report for the year
certain subsidiaries and the Chase Manhattan Bank et al as ended December 31, 1997
of November 13, 1997
4.2 Form of Indenture and Form of Supplemental Exhibits 4.1 and 4.2 of Murphy's Form 8-K report filed
Indenture between Murphy Oil Corporation and SunTrust Bank, April 29, 1999 under the Securities Exchange Act of 1934
Nashville, N.A., as Trustee
</TABLE>
19
<PAGE>
<TABLE>
<S> <C> <C>
*4.3 Rights Agreement dated as of December 6, 1989
between Murphy Oil Corporation and Harris Trust Company of
New York, as Rights Agent
4.4 Amendment No. 1 dated as of April 6, 1998 to Exhibit 3 of Murphy's Form 8-A/A, Amendment No. 1, filed
Rights Agreement dated as of December 6, 1989 between Murphy April 14, 1998 under the Securities Exchange Act of 1934
Oil Corporation and Harris Trust Company of New York, as
Rights Agent
4.5 Amendment No. 2 dated as of April 15, 1999 to Exhibit 4 of Murphy's Form 8-A/A, Amendment No. 2, filed
Rights Agreement dated as of December 6, 1989 between Murphy April 19, 1999 under the Securities Exchange Act of 1934
Oil Corporation and Harris Trust Company of New York, as
Rights Agent
*10.1 1987 Management Incentive Plan as amended February
7, 1990 retroactive to February 3, 1988
10.2 1992 Stock Incentive Plan as amended May 14, 1997 Exhibit 10.2 of Murphy's Form 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
1993
*13 1999 Annual Report to Security Holders including
Narrative to Graphic and Image Material as an appendix
*21 Subsidiaries of the Registrant
*23 Independent Auditors' Consent
*27 Financial Data Schedule for 1999
*99.1 Undertakings
#99.2 Form 11-K, Annual Report for the fiscal year ended To be filed as an amendment to this Form 10-K report not
December 31, 1999 covering the Thrift Plan for Employees of later than 180 days after December 31,1999
Murphy Oil Corporation
#99.3 Form 11-K, Annual Report for the fiscal year ended To be filed as an amendment to this Form 10-K report not
December 31, 1999 covering the Thrift Plan for later than 180 days after December 31, 1999
Employees of Murphy Oil USA, Inc. Represented by
United Steelworkers of America, AFL-CIO, Local No.
8363
#99.4 Form 11-K, Annual Report for the fiscal year ended To be filed as an amendment to this Form 10-K report not
December 31, 1999 covering the Thrift Plan for Employees of later than 180 days after December 31, 1999
Murphy Oil USA, Inc. Represented by International Union of
Operating Engineers, AFL-CIO, Local No. 305
</TABLE>
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended December
31, 1999.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
MURPHY OIL CORPORATION
By CLAIBORNE P. DEMING Date: March 23, 2000
-------------------------------- -----------------------
Claiborne P. Deming, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on March 23, 2000 by the following persons on
behalf of the registrant and in the capacities indicated.
<TABLE>
<S> <C>
R. MADISON MURPHY C. H. MURPHY JR.
----------------------------------------------- -------------------------------------------
R. Madison Murphy, Chairman and Director C. H. Murphy Jr., Director
CLAIBORNE P. DEMING MICHAEL W. MURPHY
----------------------------------------------- -------------------------------------------
Claiborne P. Deming, President and Chief Michael W. Murphy, Director
Executive Officer and Director
(Principal Executive Officer)
B. R. R. BUTLER WILLIAM C. NOLAN JR.
----------------------------------------------- -------------------------------------------
B. R. R. Butler, Director William C. Nolan Jr., Director
GEORGE S. DEMBROSKI CAROLINE G. THEUS
----------------------------------------------- -------------------------------------------
George S. Dembroski, Director Caroline G. Theus, Director
H. RODES HART LORNE C. WEBSTER
----------------------------------------------- -------------------------------------------
H. Rodes Hart, Director Lorne C. Webster, Director
ROBERT A. HERMES STEVEN A. COSSE'
----------------------------------------------- -------------------------------------------
Robert A. Hermes, Director Steven A. Cosse', Senior Vice President
and General Counsel
(Principal Financial Officer)
VESTER T. HUGHES JR. JOHN W. ECKART
----------------------------------------------- -------------------------------------------
Vester T. Hughes Jr., Director John W. Eckart, Controller
(Principal Accounting Officer)
</TABLE>
21
<PAGE>
REPORT OF MANAGEMENT
The management of Murphy Oil Corporation is responsible for the preparation and
integrity of the accompanying consolidated financial statements and other
financial data. The statements were prepared in conformity with generally
accepted accounting principles appropriate in the circumstances and include some
amounts based on informed estimates and judgments, with consideration given to
materiality.
Management is also responsible for maintaining a system of internal accounting
controls designed to provide reasonable, but not absolute, assurance that
financial information is objective and reliable by ensuring that all
transactions are properly recorded in the Company's accounts and records,
written policies and procedures are followed and assets are safeguarded. The
system is also supported by careful selection and training of qualified
personnel. When establishing and maintaining such a system, judgment is required
to weigh relative costs against expected benefits. The Company's audit staff
independently and systematically evaluates and formally reports on the adequacy
and effectiveness of the internal control system.
Our independent auditors, KPMG LLP, have audited the consolidated financial
statements. Their audit was conducted in accordance with generally accepted
auditing standards and provides an independent opinion about the fair
presentation of the consolidated financial statements. When performing their
audit, KPMG LLP considers the Company's internal control structure to the extent
they deem necessary to issue their opinion on the financial statements. The
Board of Directors appoints the independent auditors; ratification of the
appointment is solicited annually from the shareholders.
The Board of Directors appoints an Audit Committee annually to perform an
oversight role for the financial statements. This Committee is composed solely
of directors who are not employees of the Company. The Committee meets
periodically with representatives of management, the Company's audit staff and
the independent auditors to review the Company's internal controls, the quality
of its financial reporting, and the scope and results of audits. The independent
auditors and the Company's audit staff have unrestricted access to the
Committee, without management's presence, to discuss audit findings and other
financial matters.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders of Murphy Oil Corporation:
We have audited the accompanying consolidated balance sheets of Murphy Oil
Corporation and Consolidated Subsidiaries as of December 31, 1999 and 1998, and
the related consolidated statements of income, comprehensive income,
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1999. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Murphy Oil
Corporation and Consolidated Subsidiaries as of December 31, 1999 and 1998, and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 1999, in conformity with generally
accepted accounting principles.
KPMG LLP
Shreveport, Louisiana
January 31, 2000
F-1
<PAGE>
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years Ended December 31 (Thousands of dollars except per share amounts) 1999 1998 1997
----------- ---------- ----------
<S> <C> <C> <C>
REVENUES
Crude oil and natural gas sales $ 464,802 312,253 450,785
Petroleum product sales 1,515,537 1,312,727 1,604,379
Other operating revenues 56,501 69,490 78,223
Interest and other nonoperating revenues 4,358 4,378 4,380
----------- ---------- ----------
Total revenues 2,041,198 1,698,848 2,137,767
----------- ---------- ----------
COSTS AND EXPENSES
Crude oil, products and related operating expenses 1,484,089 1,279,619 1,527,301
Exploration expenses, including undeveloped lease amortization 70,557 65,582 94,792
Selling and general expenses 81,817 61,363 65,928
Depreciation, depletion and amortization 204,446 202,695 209,419
Impairment of long-lived assets - 80,127 28,056
Charge resulting from cancellation of a drilling rig contract - 7,255 -
Provision for reduction in force 1,513 - -
Interest expense 28,139 18,090 12,717
Interest capitalized (7,865) (7,606) (12,096)
----------- ---------- ----------
Total costs and expenses 1,862,696 1,707,125 1,926,117
----------- ---------- ----------
Income (loss) before income taxes 178,502 (8,277) 211,650
Federal and state income tax expense 5,808 18,469 49,062
Foreign income tax expense (benefit) 52,987 (12,352) 30,182
----------- ---------- ----------
NET INCOME (LOSS) $ 119,707 (14,394) 132,406
=========== ========== ==========
NET INCOME PER COMMON SHARE - BASIC $ 2.66 (.32) 2.95
NET INCOME PER COMMON SHARE - DILUTED 2.66 (.32) 2.94
Average Common shares outstanding - basic 44,970,457 44,955,679 44,881,225
Average Common shares outstanding - diluted 45,030,225 44,955,679 44,960,907
</TABLE>
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Years Ended December 31 (Thousands of dollars) 1999 1998 1997
----------- ---------- ----------
<S> <C> <C> <C>
Net income (loss) $ 119,707 (14,394) 132,406
Other comprehensive income (loss) - net gain (loss) from
foreign currency translation 18,536 (24,411) (21,682)
----------- ---------- ----------
COMPREHENSIVE INCOME (LOSS) $ 138,243 (38,805) 110,724
=========== ========== ==========
</TABLE>
See notes to consolidated financial statements, page F-6.
F-2
<PAGE>
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31 (Thousands of dollars) 1999 1998
------ ------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 34,132 28,271
Accounts receivable, less allowance for doubtful accounts
of $8,298 in 1999 and $11,048 in 1998 357,472 233,906
Inventories
Crude oil and blend stocks 61,853 41,090
Finished products 50,572 49,714
Materials and supplies 39,218 38,973
Prepaid expenses 28,145 32,292
Deferred income taxes 21,720 13,120
---------- ---------
Total current assets 593,112 437,366
Property, plant and equipment, at cost less accumulated depreciation,
depletion and amortization of $3,007,578 in 1999 and $2,985,854 in 1998 1,782,741 1,662,362
Deferred charges and other assets 69,655 64,691
---------- ---------
Total assets $2,445,508 2,164,419
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 71 5,951
Notes payable - 1,961
Accounts payable 334,420 248,967
Withholdings and collections due governmental agencies 65,706 51,606
Other accrued liabilities 49,143 49,314
Income taxes 38,295 22,951
---------- ---------
Total current liabilities 487,635 380,750
Notes payable 248,569 189,705
Nonrecourse debt of a subsidiary 144,595 143,768
Deferred income taxes 154,109 124,543
Reserve for dismantlement costs 158,377 154,686
Reserve for major repairs 22,099 43,519
Deferred credits and other liabilities 172,952 149,215
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 512,488 510,116
Retained earnings 601,956 545,199
Accumulated other comprehensive loss - foreign currency translation (4,984) (23,520)
Unamortized restricted stock awards (2,328) (2,361)
Treasury stock (98,735) (99,976)
---------- ---------
Total stockholders' equity 1,057,172 978,233
---------- ---------
Total liabilities and stockholders' equity $2,445,508 2,164,419
========== =========
</TABLE>
See notes to consolidated financial statements, page F-6.
F-3
<PAGE>
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31 (Thousands of dollars) 1999 1998 1997
--------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 119,707 (14,394) 132,406
Adjustments to reconcile net income (loss) to net cash provided
by operating activities
Depreciation, depletion and amortization 204,446 202,695 209,419
Impairment of long-lived assets - 80,127 28,056
Provisions for major repairs 18,721 20,420 24,614
Expenditures for major repairs and dismantlement costs (44,096) (24,582) (14,393)
Exploratory expenditures charged against income 59,589 55,128 84,320
Amortization of undeveloped leases 10,968 10,454 10,472
Deferred and noncurrent income tax charges (credits) 38,027 (937) 25,992
Pretax gains from disposition of assets (11,940) (3,857) (29,061)
Other - net 22,643 4,504 7,969
--------- -------- --------
418,065 329,558 479,794
Increase in operating working capital other than cash
and cash equivalents (35,159) (3,810) (72,391)
Other adjustments related to operating activities (14,028) (4,657) (5,560)
--------- -------- --------
Net cash provided by operating activities 368,878 321,091 401,843
--------- -------- --------
INVESTING ACTIVITIES
Capital expenditures requiring cash (386,605) (388,799) (468,031)
Proceeds from sale of property, plant and equipment 40,871 9,463 43,776
Other investing activities - net (3,532) (1,767) 673
--------- -------- --------
Net cash required by investing activities (349,266) (381,103) (423,582)
--------- -------- --------
FINANCING ACTIVITIES
Additions to notes payable 247,776 161,342 9,675
Reductions of notes payable (190,806) (218) (4)
Additions to nonrecourse debt of a subsidiary - 240 6,397
Reductions of nonrecourse debt of a subsidiary (5,120) (34,234) (17,276)
Cash dividends paid (62,950) (62,939) (60,573)
Other financing activities - net (1,742) 552 192
--------- -------- --------
Net cash provided (required) by financing activities (12,842) 64,743 (61,589)
--------- -------- --------
Effect of exchange rate changes on cash and cash equivalents (909) (748) (2,091)
--------- -------- --------
Net increase (decrease) in cash and cash equivalents 5,861 3,983 (85,419)
Cash and cash equivalents at January 1 28,271 24,288 109,707
--------- -------- --------
Cash and cash equivalents at December 31 $ 34,132 28,271 24,288
========== ======== ========
</TABLE>
See notes to consolidated financial statements, page F-6.
F-4
<PAGE>
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Years Ended December 31 (Thousands of dollars) 1999 1998 1997
---------- -------- ---------
<S> <C> <C> <C>
CUMULATIVE PREFERRED STOCK - par $100, authorized
400,000 shares, none issued $ - - -
---------- -------- ---------
COMMON STOCK - par $1.00, authorized 80,000,000 shares,
issued 48,775,314 shares at beginning and end of year 48,775 48,775 48,775
---------- -------- ---------
CAPITAL IN EXCESS OF PAR VALUE
Balance at beginning of year 510,116 509,615 509,008
Exercise of stock options 797 103 521
Restricted stock transactions 1,344 142 7
Sale of stock under employee stock purchase plan 231 256 79
---------- -------- ---------
Balance at end of year 512,488 510,116 509,615
---------- -------- ---------
RETAINED EARNINGS
Balance at beginning of year 545,199 622,532 550,699
Net income (loss) for the year 119,707 (14,394) 132,406
Cash dividends - $1.40 a share in 1999 and 1998, $1.35 a
share in 1997 (62,950) (62,939) (60,573)
---------- -------- ---------
Balance at end of year 601,956 545,199 622,532
---------- -------- ---------
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) -
FOREIGN CURRENCY TRANSLATION
Balance at beginning of year (23,520) 891 22,573
Translation gains (losses) during the year 18,536 (24,411) (21,682)
---------- -------- ---------
Balance at end of year (4,984) (23,520) 891
---------- -------- ---------
UNAMORTIZED RESTRICTED STOCK AWARDS
Balance at beginning of year (2,361) (944) (1,298)
Stock awards - (3,238) -
Amortization, forfeitures and changes in price of Common Stock 33 1,821 354
---------- -------- ---------
Balance at end of year (2,328) (2,361) (944)
---------- -------- ---------
TREASURY STOCK
Balance at beginning of year (99,976) (101,518) (102,279)
Exercise of stock options 704 110 526
Awarded restricted stock, net of forfeitures - 1,136 122
Sale of stock under employee stock purchase plan 537 296 113
---------- -------- ---------
Balance at end of year - 3,777,319 shares of Common
Stock in 1999, 3,824,838 shares in 1998 and
3,883,883 shares in 1997 (98,735) (99,976) (101,518)
---------- -------- ---------
TOTAL STOCKHOLDERS' EQUITY $1,057,172 978,233 1,079,351
========== ======== =========
</TABLE>
See notes to consolidated financial statements, page F-6.
F-5
<PAGE>
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS - Murphy Oil Corporation is an international oil and gas
company that conducts its business through various operating subsidiaries. The
Company produces oil and natural gas in the United States, Canada, the United
Kingdom, and Ecuador, and conducts exploration activities worldwide. The Company
has an interest in a Canadian synthetic crude oil operation and operates two oil
refineries in the United States and has an effective 30% interest in a U.K.
refinery. Murphy markets petroleum products under various brand names and to
unbranded wholesale customers in the United States, the United Kingdom, and
Canada and transports and trades crude oil in Canada.
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include the
accounts of Murphy Oil Corporation and all majority-owned subsidiaries.
Investments in affiliates in which the Company owns from 20% to 50% are
accounted for by the equity method. Other investments are generally carried at
cost. All significant intercompany accounts and transactions have been
eliminated.
REVENUE RECOGNITION - Revenues associated with sales of refined products are
recorded when title passes to the customer. The Company uses the sales method to
record revenues associated with natural gas production. The Company records a
liability for natural gas balancing when the Company has sold more than its
working interest share of natural gas production and the estimated remaining
reserves make it doubtful that partners can recoup their share of production
from the field. At December 31, 1999 and 1998, the liabilities for gas balancing
arrangements were immaterial. Excise taxes collected on sales of refined
products and remitted to governmental agencies are not included in revenues or
in costs and expenses.
CASH EQUIVALENTS - Short-term investments, which include government securities
and other instruments with government securities as collateral, that have a
maturity of three months or less from the date of purchase are classified as
cash equivalents.
PROPERTY, PLANT AND EQUIPMENT - The Company uses the successful efforts method
to account for exploration and development expenditures. Leasehold acquisition
costs are capitalized. If proved reserves are found on an undeveloped property,
leasehold cost is transferred to proved properties. Significant undeveloped
leases are reviewed periodically and a valuation allowance is provided for any
estimated decline in value. Cost of other undeveloped leases is expensed over
the estimated average life of the leases. Cost of exploratory drilling is
initially capitalized but is subsequently expensed if proved reserves are not
found. Other exploratory costs are charged to expense as incurred. Development
costs, including unsuccessful development wells, are capitalized.
Oil and gas properties are evaluated by field for potential impairment; other
long-lived assets are evaluated on a specific asset basis or in groups of
similar assets, as applicable. An impairment is recognized when the estimated
undiscounted future net cash flows of an evaluated asset are less than its
carrying value.
Depreciation and depletion of producing oil and gas properties are recorded
based on units of production. Unit rates are computed for unamortized
development costs using proved developed reserves and for unamortized leasehold
costs using all proved reserves. Estimated dismantlement, abandonment and site
restoration costs, net of salvage value, are considered in determining
depreciation and depletion. Refining and marketing facilities are depreciated
primarily using the composite straight-line method. Other properties are
depreciated by individual unit on the straight-line method.
Gains and losses on disposals or retirements that are significant or include an
entire depreciable or depletable property unit are included in income. Costs of
dismantling oil and gas production facilities and site restoration are charged
against the related reserve. All other dispositions, retirements or abandonments
are reflected in accumulated depreciation, depletion and amortization.
Provisions for turnarounds of refineries and a synthetic oil upgrading facility
are charged to expense monthly. Costs incurred are charged against the reserve.
All other maintenance and repairs are expensed. Renewals and betterments are
capitalized.
F-6
<PAGE>
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
INVENTORIES - Inventories of refinery feedstocks and finished products are
valued at the lower of cost, generally applied on a last-in first-out (LIFO)
basis, or market. Materials and supplies are valued at the lower of average cost
or estimated value.
ENVIRONMENTAL LIABILITIES - A provision for environmental obligations is charged
to expense when the Company's liability for an environmental assessment and/or
cleanup is probable and the cost can be reasonably estimated. Related
expenditures are charged against the reserve. Environmental remediation
liabilities have not been discounted for the time value of future expected
payments. Environmental expenditures that have future economic benefit are
capitalized.
INCOME TAXES - The Company accounts for income taxes using the asset and
liability method. Under this method, income taxes are provided for amounts
currently payable, and for amounts deferred as tax assets and liabilities based
on differences between the financial statement carrying amounts and the tax
bases of existing assets and liabilities. Deferred income taxes are measured
using the enacted tax rates that are assumed will be in effect when the
differences reverse. Petroleum revenue taxes are provided using the estimated
effective tax rate over the life of applicable U.K. properties.
FOREIGN CURRENCY - Local currency is the functional currency used for recording
operations in Canada and Spain and the majority of activities in the United
Kingdom. The U.S. dollar is the functional currency used to record all other
operations. Gains or losses from translating foreign functional currency into
U.S. dollars are included in "Accumulated Other Comprehensive Loss" on the
Consolidated Balance Sheets. Exchange gains or losses from transactions in a
currency other than the functional currency are included in income.
DERIVATIVE INSTRUMENTS - The Company 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. Derivative instruments are traded either with
creditworthy major financial institutions or over national exchanges.
Murphy uses interest 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 future natural gas fuel purchases. Unrealized gains or losses on such
swap contracts are deferred and recognized in connection with the associated
fuel purchases. The Company records the related pretax contract results in
"Crude Oil, Products and Related Operating Expenses" in the Consolidated
Statements of Income.
F-7
<PAGE>
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NET INCOME PER COMMON SHARE - Basic income per Common share is computed by
dividing net income for each reporting period by the weighted average number of
Common shares outstanding during the period. Diluted income per Common share is
computed by dividing net income for each reporting period by the weighted
average number of Common shares outstanding during the period plus the effects
of potentially dilutive Common shares.
USE OF ESTIMATES - In preparing the financial statements of the Company in
conformity with generally accepted accounting principles, management has made a
number of estimates and assumptions related to the reporting of assets,
liabilities, revenues, and expenses and the disclosure of contingent assets and
liabilities. Actual results may differ from the estimates.
NOTE B - PROPERTY, PLANT AND EQUIPMENT
Investment Investment
December 31, 1999 December 31, 1998
--------------------- --------------------
(Thousands of dollars) Cost Net Cost Net
---------- --------- --------- ---------
Exploration and production $3,750,077 1,324,685* 3,657,399 1,228,477*
Refining 698,100 259,883 677,245 257,640
Marketing 219,124 140,786 196,362 116,958
Transportation 84,391 38,762 81,307 40,459
Corporate and other 38,627 18,625 35,903 18,828
---------- --------- --------- ---------
$4,790,319 1,782,741 4,648,216 1,662,362
========== ========= ========= =========
*Includes $16,270 in 1999 and $15,766 in 1998 related to administrative assets
and support equipment.
In 1998 and 1997, the Company recorded noncash charges of $80,127,000 and
$28,056,000, respectively, for impairment of certain long-lived assets. After
related income tax benefits, these write-downs reduced net income by $57,573,000
in 1998 and $16,224,000 in 1997. The 1998 charges resulted from management's
expectation of a continuation of the low-price environment for sales of crude
oil and natural gas that existed at the end of 1998; the write-down included
certain oil and gas assets in the U.S. Gulf of Mexico, the U.K. North Sea,
China, and Canada and certain marketing assets in Canada. The 1997 charges
related to certain investments in Canadian heavy oil fields that were not
adequately supported by reserves and three natural gas fields in the Gulf of
Mexico that depleted earlier than anticipated. The carrying values for assets
determined to be impaired were adjusted to the assets' fair values based on
projected future discounted net cash flows, using the Company's estimates of
future commodity prices.
NOTE C - FINANCING ARRANGEMENTS
At December 31, 1999, the Company had an unused committed credit facility with a
major banking consortium of an equivalent US $300,000,000 for a combination of
U.S. dollar and Canadian dollar borrowings. U.S. dollar and Canadian dollar
commercial paper totaling an equivalent US $112,191,000 at December 31, 1999 was
outstanding and classified as nonrecourse debt. This outstanding debt is
supported by a similar amount of credit facilities with major banks based on
loan guarantees from the Canadian government. Depending on the credit facility,
borrowings bear interest at prime or varying cost of fund options. Facility fees
are due at varying rates on certain of the commitments. The facilities expire at
dates ranging from 2000 through 2002. In addition, the Company had unused
uncommitted lines of credit with banks at December 31, 1999 totaling an
equivalent US $186,333,000 for a combination of U.S. dollar and Canadian dollar
borrowings.
During 1999, the Company filed a shelf registration statement with the U.S.
Securities and Exchange Commission that was declared effective and permits the
offer and sale of up to $1 billion in debt and equity securities. No securities
had been issued under this shelf registration as of December 31, 1999.
F-8
<PAGE>
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE D - LONG-TERM DEBT
<TABLE>
<CAPTION>
December 31 (Thousands of dollars) 1999 1998
---- ----
<S> <C> <C>
Notes payable
7.05% notes, due 2029 $247,277 -
Notes payable to bank, 10.1%, due 2004 - 20,000
Notes payable to banks, 5.30% to 5.35%, $7,842 payable in
Canadian dollars, due 2002 - 168,842
Other, 6% to 8%, due 2000-2021 1,363 867
-------- -------
Total notes payable 248,640 189,709
-------- -------
Nonrecourse debt of a subsidiary
Guaranteed credit facilities with banks
Commercial paper, 4.93% to 6.15%, $42,791 payable in
Canadian dollars, supported by credit facility, due 2001-2008 112,191 109,786
Bankers' acceptance, 5.27%, payable in Canadian dollars,
supported by credit facility - 5,947
Loan payable to Canadian government, interest free, payable in
Canadian dollars, due 2000-2008 32,404 33,982
-------- -------
Total nonrecourse debt of a subsidiary 144,595 149,715
-------- -------
Total debt including current maturities 393,235 339,424
Current maturities (71) (5,951)
-------- -------
Total long-term debt $393,164 333,473
======== =======
</TABLE>
Amounts becoming due for the four years after 2000 are: $76,000 in 2001,
$29,645,000 in 2002, $14,696,000 in 2003, and $16,016,000 in 2004.
During 1999, the Company issued $250 million of 30-year notes in the public
market; these notes mature in May 2029 and are shown in the above table net of
unamortized discount. The proceeds were used primarily to repay amounts
previously borrowed under other financing arrangements, which remain available
to the Company at December 31, 1999 as discussed in Note C.
The nonrecourse guaranteed credit facilities were arranged to finance certain
expenditures for the Hibernia oil field. Subject to certain conditions and
limitations, the Canadian government has unconditionally guaranteed repayment of
amounts drawn under the facilities to lenders having qualifying Participation
Certificates. The Company has borrowed the maximum amount available under the
Primary Guarantee Facility at December 31, 1999. The amount guaranteed declines
quarterly beginning in 2001, at which time repayment will begin based on the
greater of 30% of Murphy's after-tax free cash flow from Hibernia or equal
quarterly payments over eight years. The payment for 2001 is planned to be
refinanced under an existing committed credit facility and is thereby reflected
as becoming due in 2002. No guaranteed financing is available after January 1,
2016. A guarantee fee of .5% is payable annually in arrears to the Canadian
government.
The interest free loan from the Canadian government was also used to finance
expenditures for the Hibernia field. Repayment began in 1999, but payments
through 2001 are planned to be refinanced under an existing committed credit
facility and are thereby reflected as becoming due in 2002.
NOTE E - 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 at these locations. The
voluntary retirements and severances reduced the Company's workforce by 31
employees, and a "Provision for Reduction in Force" of $1,513,000 was recorded
in the Consolidated Statement of Income in 1999. The provision included
additional defined benefit plan expense of $1,041,000 and severance and other
costs of $472,000, the latter of which was essentially all paid during 1999.
F-9
<PAGE>
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE F - INCOME TAXES
The components of income (loss) before income taxes for each of the three years
ended December 31, 1999 and income tax expense (benefit) attributable thereto
were as follows.
<TABLE>
<CAPTION>
(Thousands of dollars) 1999 1998 1997
-------- ------- -------
<S> <C> <C> <C>
Income (loss) before income taxes
United States $ 15,074 44,600 135,476
Foreign 163,428 (52,877) 76,174
-------- ------- -------
$178,502 (8,277) 211,650
======== ======= =======
Income tax expense (benefit)
Federal - Current/1/ $(13,497) 6,431 31,278
Deferred 1,597 6,232 (1,751)
Noncurrent 16,366 3,785 14,946
-------- ------- -------
4,466 16,448 44,473
-------- ------- -------
State - Current 1,342 2,021 4,589
-------- ------- -------
Foreign - Current 40,726 (3,498) 12,912
Deferred/2/ 11,165 (10,201) 19,423
Noncurrent 1,096 1,347 (2,153)
-------- ------- -------
52,987 (12,352) 30,182
-------- ------- -------
Total income tax expense $ 58,795 6,117 79,244
======== ======= =======
</TABLE>
/1/Net of benefits of $12,537 in 1997 for alternative minimum tax credits.
/2/Net of benefits of $609 in 1999 and $1,573 in 1997 for reductions in U.K. tax
rate.
Noncurrent taxes, classified in the Consolidated Balance Sheets as a component
of "Deferred Credits and Other Liabilities," relate primarily to matters not
resolved with various taxing authorities.
The following table reconciles income taxes based on the U.S. statutory tax rate
to the Company's income tax expense.
<TABLE>
<CAPTION>
(Thousands of dollars) 1999 1998 1997
-------- ------ ------
<S> <C> <C> <C>
Income tax expense (benefit) based on the
U.S. statutory tax rate $62,475 (2,897) 74,078
Foreign income subject to foreign taxes at a rate
different than the U.S. statutory rate 1,988 5,692 11,087
State income taxes 872 1,313 2,983
Settlement of U.S. taxes (5,000) (704) -
Settlement of foreign taxes - (1,410) (3,163)
Foreign asset impairment with no tax benefit - 5,293 -
Other, net (1,540) (1,170) (5,741)
------- ------ ------
Total income tax expense $58,795 6,117 79,244
======= ====== ======
</TABLE>
F-10
<PAGE>
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
An analysis of the Company's deferred tax assets and deferred tax liabilities at
December 31, 1999 and 1998 showing the tax effects of significant temporary
differences follows.
<TABLE>
<CAPTION>
(Thousands of dollars) 1999 1998
--------- --------
<S> <C> <C>
Deferred tax assets
Property and leasehold costs $ 64,469 75,716
Reserves for dismantlements and major repairs 53,470 63,763
Federal alternative minimum tax credit carryforward 3,177 2,068
Postretirement and other employee benefits 24,637 17,979
Foreign tax operating losses 23,135 15,064
Other deferred tax assets 29,379 24,234
--------- --------
Total gross deferred tax assets 198,267 198,824
Less valuation allowance (57,388) (62,358)
--------- --------
Net deferred tax assets 140,879 136,466
--------- --------
Deferred tax liabilities
Property, plant and equipment (32,985) (34,152)
Accumulated depreciation, depletion and amortization (213,674) (189,082)
Other deferred tax liabilities (27,364) (24,686)
--------- --------
Total gross deferred tax liabilities (274,023) (247,920)
--------- --------
Net deferred tax liabilities $(133,144) (111,454)
========= ========
</TABLE>
The Company has tax loss carryforwards of $92,500,000 associated with its
operations in Ecuador. These losses can be carried forward for five years but
are limited to 25% of each year's taxable income. The losses begin to expire in
2002.
In management's judgment, the net deferred tax assets in the preceding table
will more likely than not be realized as reductions of future taxable income or
by utilizing available tax planning strategies. The valuation allowance for
deferred tax assets relates primarily to tax assets arising in foreign tax
jurisdictions, and in the judgment of management, these tax assets are not
likely to be realized. The valuation allowance decreased $4,970,000 in 1999, but
increased $10,762,000 in 1998; the change in each year primarily offset the
change in certain deferred tax assets. Any subsequent reductions of the
valuation allowance will be reported as reductions of tax expense assuming no
offsetting change in the deferred tax asset.
The Company has not recorded a deferred tax liability of $23,640,000 related to
undistributed earnings of certain foreign subsidiaries at December 31, 1999
because the earnings are considered permanently invested.
Tax returns are subject to audit by various taxing authorities. In 1999, 1998
and 1997, the Company recorded benefits to income of $5,000,000, $2,114,000, and
$3,163,000, respectively, from settlements of various U.S. and foreign tax
issues primarily related to prior years. The Company believes that adequate
accruals have been made for unsettled issues.
NOTE G - INCENTIVE PLANS
The Company's 1992 Stock Incentive Plan (the Plan) authorized the Executive
Compensation and Nominating Committee (the Committee) to make annual grants of
the Company's Common Stock to executives and other key employees as follows: (1)
stock options (nonqualified or incentive), (2) stock appreciation rights (SAR),
and/or (3) restricted stock. Annual grants may not exceed 1% (.5% prior to 2000)
of shares outstanding at the end of the preceding year; allowed shares not
granted may be granted in future years. The Company uses APB Opinion No. 25 to
account for stock-based compensation, accruing costs of options and restricted
stock over the vesting/performance periods and adjusting costs for changes in
fair market value of Common Stock. Compensation cost charged against (credited
to) income for stock-based plans was $13,161,000 in 1999, $(4,646,000) in 1998
and $2,026,000 in 1997; outstanding awards were not significantly modified in
the last three years. Had compensation cost of the Plan been based on the fair
value of the instruments at the date of grant using the provisions of Statement
of Financial Accounting Standards (SFAS) No. 123, the Company's net income and
earnings per share would be the pro forma amounts shown in the following table.
The pro forma effects on net income in the table may not be representative of
the pro forma effects on net income of future years because the SFAS No. 123
provisions used in these calculations were only applied to stock options and
restricted stock granted after 1994.
F-11
<PAGE>
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
(Thousands of dollars except per share data) 1999 1998 1997
-------- -------- -------
<S> <C> <C> <C>
Net income (loss) - As reported $119,707 (14,394) 132,406
Pro forma 124,543 (18,182) 132,089
Earnings per share - As reported, basic $ 2.66 (.32) 2.95
Pro forma, basic 2.77 (.40) 2.94
As reported, diluted 2.66 (.32) 2.94
Pro forma, diluted 2.76 (.40) 2.94
</TABLE>
STOCK OPTIONS - The Committee fixes the option price of each option granted at
no less than fair market value (FMV) on the date of the grant and fixes the
option term at no more than 10 years from such date. Each option granted to date
under the Plan has had a term of 10 years, has been nonqualified, and has had an
option price equal to FMV at date of grant, except for certain 1997 grants with
option prices above FMV. Generally, one-half of each grant may be exercised
after two years and the remainder after three years. At exercise, a grantee may
pay cash for shares, or alternatively, not remit cash and receive shares equal
to the inherent value of options exercised on that date. On December 31, 1996,
Murphy completed a tax-free spin-off to its stockholders of all the common stock
of its wholly owned subsidiary, Deltic Timber Corporation (Deltic). The number
of outstanding options at January 1, 1997 and the related option prices were
adjusted to preserve the existing economic values of the options at the time of
the Deltic spin-off.
The pro forma net income calculations in the preceding table reflect the
following weighted-average fair values of options granted in 1999, 1998 and
1997; fair values of options have been estimated by using the Black-Scholes
pricing model and the assumptions as shown.
<TABLE>
<CAPTION>
1999 1998 1997 1997
FMV FMV FMV Above FMV
----- ----- ----- ----------
<S> <C> <C> <C> <C>
Weighted-average fair value per share at grant date $ 7.76 $ 9.01 $ 9.75 $ 8.25
Weighted-average assumptions
Dividend yield 2.87% 2.91% 3.00% 3.00%
Expected volatility 24.21% 17.27% 17.37% 17.37%
Risk-free interest rate 4.77% 5.46% 6.18% 6.37%
Expected life 5 yrs. 5 yrs. 5 yrs. 7 yrs.
</TABLE>
Changes in options outstanding, including shares issued under a prior plan, were
as follows.
Average
Number Exercise
of Shares Price
--------- --------
Outstanding at December 31, 1996 440,599 $40.77
Deltic spin-off adjustment 17,407 -
Granted at FMV 180,250 50.38
Granted above FMV 231,750 60.45
Exercised (68,022) 36.53
Forfeited (31,295) 49.08
---------
Outstanding at December 31, 1997 770,689 48.04
Granted at FMV 312,000 49.75
Exercised (17,400) 36.04
Forfeited (12,040) 49.34
---------
Outstanding at December 31, 1998 1,053,249 48.73
Granted at FMV 325,500 35.69
Exercised (109,130) 39.57
Forfeited (15,250) 45.27
---------
Outstanding at December 31, 1999 1,254,369 46.19
=========
Exercisable at December 31, 1997 174,269 $37.79
Exercisable at December 31, 1998 284,529 39.53
Exercisable at December 31, 1999 441,119 45.36
F-12
<PAGE>
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Additional information about stock options outstanding at December 31, 1999 is
shown below.
Options Outstanding Options Exercisable
------------------------------- ----------------------
Range of Exercise No. of Avg. Life Avg. No. of Avg.
Prices Per Share Options in Years Price Options Price
- - - - - ------------------- --------- --------- -------- ---------- -------
$34.56 to $39.42 388,919 7.9 $35.80 68,419 $ 36.33
$40.81 to $42.25 180,700 5.7 41.41 180,700 41.41
$49.75 to $50.38 464,250 7.7 49.97 118,500 50.38
$55.41 to $65.49 220,500 7.1 60.45 73,500 55.41
--------- -------
Total outstanding 1,254,369 7.4 46.19 441,119 45.36
========= =======
SAR - SAR may be granted in conjunction with or independent of stock options;
the Committee determines when SAR may be exercised and the price. No SAR have
been granted.
RESTRICTED STOCK - Beginning in 1992, shares of restricted stock were granted in
certain years. Each grant will vest if the Company achieves specific financial
objectives at the end of a five-year performance period. Additional shares may
be awarded if objectives are exceeded, but some or all shares may be forfeited
if objectives are not met. During the performance period, a grantee receives
dividends and may vote these shares, but shares are subject to transfer
restrictions and are all or partially forfeited if a grantee terminates. The
Company may reimburse a grantee up to 50% of the award value for personal income
tax liability on stock awarded. For the pro forma net income calculation, the
fair values per share of restricted stock granted in 1998 was $49.50, the market
price of the stock at the date granted. The number of restricted shares
outstanding at January 1, 1997 was adjusted to preserve the existing economic
value of the stock at the time of the Deltic spin-off. On December 31, 1998, all
shares granted in 1994 were forfeited because financial objectives were not
achieved. Changes in restricted stock outstanding were as follows.
(Number of shares) 1999 1998 1997
------ ------- -------
Balance at beginning of year 83,364 39,856 36,512
Granted - 59,750 -
Grant adjustment to reflect Deltic spin-off - - 5,977
Awarded - - (1,336)*
Forfeited - (16,242) (1,297)
------ ------- ------
Balance at end of year 83,364 83,364 39,856
====== ======= ======
*Additional shares awarded related to Deltic spin-off.
CASH AWARDS - The Committee also administers the Company's incentive
compensation plans, which provide for annual or periodic cash awards to
officers, directors and key employees if the Company achieves specific financial
objectives. Compensation expense of $5,301,000, $518,000 and $3,894,000 was
recorded in 1999, 1998, and 1997, respectively, for these plans.
EMPLOYEE STOCK PURCHASE PLAN (ESPP) - In 1997, the Company's shareholders
approved the ESPP, under which 50,000 shares of the Company's Common Stock could
be purchased by employees. Each quarter, an eligible U.S. employee may elect to
withhold up to 10% of his or her salary to purchase shares of the Company's
stock at a price equal to 90% of the fair value of the stock as of the first day
of the quarter. The ESPP will terminate on the earlier of the date that
employees have purchased all 50,000 shares or June 30, 2002. Employee stock
purchases under the ESPP were 20,486 shares at an average price of $37.56 a
share in 1999, 11,315 shares at $48.81 a share in 1998 and 4,326 shares at
$44.44 in 1997. At December 31, 1999, 13,873 shares remained available for sale
under the ESPP. Compensation costs related to the ESPP were immaterial.
F-13
<PAGE>
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE H - EMPLOYEE AND RETIREE BENEFIT PLANS
PENSION AND POSTRETIREMENT PLANS - The Company has noncontributory defined
benefit pension plans that cover substantially all full-time employees. In
addition, the Company sponsors plans that provide health care and life insurance
benefits for most retired U.S. employees. The health care benefits are
contributory; the life insurance benefits are noncontributory.
The tables that follow provide a reconciliation of the changes in the plans'
benefit obligations and fair value of assets for the years ended December 31,
1999 and 1998 and a statement of the funded status as of December 31, 1999 and
1998.
<TABLE>
<CAPTION>
Pension Postretirement
Benefits Benefits
------------------ -----------------
(Thousands of dollars) 1999 1998 1999 1998
-------- ------- ------- -------
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION
Obligation at January 1 $238,022 220,981 36,749 36,255
Service cost 5,791 5,242 712 601
Interest cost 15,516 15,309 2,366 2,474
Plan amendments 225 2,744 - -
Participant contributions - - 531 535
Actuarial (gain) loss (6,167) 8,492 (2,916) 496
Curtailment 226 - - -
Settlements (82) - - -
Special early retirement benefits 1,079 - - -
Exchange rate changes 18 (908) - -
Benefits paid (13,998) (13,838) (3,092) (3,612)
-------- ------- ------- -------
Obligation at December 31 240,630 238,022 34,350 36,749
-------- ------- ------- -------
CHANGE IN PLAN ASSETS
Fair value of plan assets at January 1 286,846 269,794 - -
Actual return on plan assets 30,613 30,727 - -
Employer contributions 842 1,373 2,561 3,077
Participant contributions - - 531 535
Settlements (82) - - -
Exchange rate changes 253 (1,210) - -
Benefits paid (13,998) (13,838) (3,092) (3,612)
-------- ------- ------- -------
Fair value of plan assets at December 31 304,474 286,846 - -
-------- ------- ------- -------
RECONCILIATION OF FUNDED STATUS
Funded status at December 31 63,844 48,824 (34,350) (36,749)
Unrecognized actuarial (gain) loss (43,292) (30,410) 3,610 6,730
Unrecognized transition asset (8,729) (10,960) - -
Unrecognized prior service cost 6,391 6,813 - -
-------- ------- ------- -------
Net plan asset (liability) recognized $ 18,214 14,267 (30,740) (30,019)
======== ======= ======= =======
AMOUNTS RECOGNIZED IN THE CONSOLIDATED
BALANCE SHEETS AT DECEMBER 31
Prepaid benefit asset $ 34,200 29,477 - -
Accrued benefit liability (16,300) (16,087) (30,740) (30,019)
Intangible asset 314 877 - -
-------- ------- ------- -------
Net plan asset (liability) recognized $ 18,214 14,267 (30,740) (30,019)
======== ======= ======= =======
</TABLE>
F-14
<PAGE>
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company's U.S. and Canadian nonqualified retirement plans and U.S.
directors' retirement plan were the only pension plans with accumulated benefit
obligations in excess of plan assets at December 31, 1999 and 1998. The
accumulated benefit obligations of these plans at December 31, 1999 and 1998
were $7,784,000 and $7,486,000, respectively; there were no assets in these
plans. The Company's postretirement benefit plan also had no plan assets; the
benefit obligation for this plan at December 31, 1999 and 1998 was $30,740,000
and $30,019,000, respectively.
The table that follows provides the components of net periodic benefit expense
(credit) for each of the three years ended December 31, 1999.
<TABLE>
<CAPTION>
Pension Benefits Postretirement Benefits
-------------------------- -----------------------
(Thousands of dollars) 1999 1998 1997 1999 1998 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Service cost $ 5,791 5,242 4,517 712 601 508
Interest cost 15,516 15,309 14,889 2,366 2,474 2,466
Expected return on plan assets (23,105) (22,180) (19,040) - - -
Amortization of prior service cost 622 626 402 - - -
Amortization of transitional asset (2,204) (2,211) (2,216) - - -
Recognized actuarial (gain) loss (766) (758) (965) 203 194 67
-------- -------- ------- ------ ----- -----
Net periodic benefit
expense (credit) (4,146) (3,972) (2,413) 3,281 3,269 3,041
Special early retirement benefits 1,041 - - - - -
-------- -------- ------- ------ ----- -----
Total periodic benefit
expense (credit) $ (3,105) (3,972) (2,413) 3,281 3,269 3,041
======== ======== ======= ====== ===== =====
</TABLE>
The preceding tables in Note H include the following amounts related to
foreign benefit plans.
<TABLE>
<CAPTION>
Pension Postretirement
Benefits Benefits
-------------- --------------
(Thousands of dollars) 1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Obligation at December 31 $53,675 47,625 - -
Fair value of plan assets at December 31 61,462 54,348 - -
Net plan liability recognized (3,178) (3,285) - -
Net periodic benefit expense 364 410 - -
</TABLE>
The following table provides the weighted-average assumptions used in the
measurement of the Company's benefit obligations at December 31, 1999 and 1998.
<TABLE>
<CAPTION>
Pension Postretirement
Benefits Benefits
-------------- --------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Discount rate 7.26% 6.62% 7.50% 6.75%
Expected return on plan assets 8.34% 8.31% - -
Rate of compensation increase 4.66% 4.67% - -
</TABLE>
For purposes of measuring postretirement benefit obligations at December 31,
1999, the future annual rates of increase in the cost of health care were
assumed to be 6.5% for 2000, 5.5% for 2001 and 4.5% for 2002 and beyond.
F-15
<PAGE>
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Assumed health care cost trend rates have a significant effect on the expense
and obligation reported for the postretirement benefit plan. A 1% change in
assumed health care cost trend rates would have the following effects.
<TABLE>
<CAPTION>
(Thousands of dollars) 1% Increase 1% Decrease
----------- -----------
<S> <C> <C>
Effect on total service and interest cost components of
net periodic postretirement benefit expense for the
year ended December 31, 1999 $ 221 (211)
Effect on the health care component of the accumulated
postretirement benefit obligation at December 31, 1999 2,124 (2,063)
</TABLE>
THRIFT PLANS - Most U.S. and Canadian employees of the Company may participate
in thrift plans by allotting up to a specified percentage of their base pay. The
Company matches contributions at a stated percentage of each employee's
allotment based on years of participation in the plans. Amounts charged to
expense for these plans were $2,523,000 in 1999, $3,333,000 in 1998 and
$3,076,000 in 1997. In early 2000, the Company initiated a profit sharing plan
for its U.K. employees, whereby the Company matches contributions of eligible
employees. The cost of the U.K. plan is projected to be $190,000 in 2000.
NOTE I - FINANCIAL INSTRUMENTS
DERIVATIVE INSTRUMENTS - As discussed in Note A, Murphy utilizes derivative
instruments on a limited basis to manage risks related to interest rates,
foreign currency exchange rates and commodity prices. At December 31, 1999 and
1998, the Company had interest rate swap agreements with notional amounts
totaling $100,000,000 that serve to convert an equal amount of variable rate
long-term debt to fixed rates. The swaps mature in 2002 and 2004. The swaps
require Murphy to pay an average interest rate of 6.46% over their composite
lives and to receive a variable rate, which averaged 6.19% at December 31, 1999.
The variable rate received by the Company under each contact is repriced
quarterly.
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. At
December 31, 1999, the Company was a party to crude oil swap agreements for a
total notional volume of 2.3 million barrels; these swaps mature in 2001 and
2002. At termination, the swaps require Murphy to pay an average crude oil price
of $16.76 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. 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. After-tax gains from crude
oil swaps were $5,041,000 in 1997.
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 natural gas purchased for fuel. At December 31, 1999, Murphy was a
party to natural gas swap agreements for a total notional volume of 7 million
MMBTU. One-twelfth of the notional volume matures each month during 2004. The
swaps require Murphy to pay an average natural gas price of $2.61 an MMBTU and
to receive the average NYMEX Henry Hub price for the final three trading days of
each respective month in 2004. Unrealized gains or losses on such swap contracts
are deferred and recognized in connection with the associated fuel purchases.
FAIR VALUE - The following table presents the carrying amounts and estimated
fair values of financial instruments held by the Company at December 31, 1999
and 1998. The fair value of a financial instrument is the amount at which the
instrument could be exchanged in a current transaction between willing parties.
The table excludes cash and cash equivalents, trade accounts receivable,
investments and noncurrent receivables, trade accounts payable, and accrued
expenses, all of which had fair values approximating carrying amounts.
F-16
<PAGE>
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
1999 1998
-------------------- --------------------
Carrying Carrying Fair Carrying Fair
(Thousands of dollars) Amount Value Amount Value
--------- -------- -------- ---------
<S> <C> <C> <C> <C>
Financial liabilities
Current and long-term debt $(393,235) (373,546) (341,385) (333,905)
Off-balance-sheet exposures -
unrealized gain (loss)
Interest rate swaps - 266 - (5,453)
Crude oil swaps - 2,668 - -
Natural gas swaps - (83) - -
Financial guarantees and letters of credit - - - -
</TABLE>
The carrying amounts of financial liabilities in the preceding table are
included in the Consolidated Balance Sheets under "Current Maturities of Long-
Term Debt," "Notes Payable," and "Nonrecourse Debt of a Subsidiary." The
following methods and assumptions were used to estimate the fair value of each
class of financial instruments shown in the table.
. Current and long-term debt - The fair value is estimated based on current
rates offered the Company for debt of the same maturities.
. Interest rate swaps, crude oil swaps and natural gas swaps - The fair
values are based on quotes from counterparties.
. Financial guarantees and letters of credit - The fair value, which
represents fees associated with obtaining the instruments, was nominal.
CREDIT RISKS - The Company's primary credit risks are associated with trade
accounts receivable, cash equivalents and derivative instruments. Trade
receivables arise mainly from sales of crude oil, natural gas and petroleum
products to a large number of customers in the United States, Canada and the
United Kingdom. The credit history and financial condition of potential
customers are reviewed before credit is extended, security is obtained when
deemed appropriate based on a potential customer's financial condition, and
routine follow-up evaluations are made. The combination of these evaluations and
the large number of customers tends to limit the risk of credit concentration to
an acceptable level. Cash equivalents are placed with several major financial
institutions, which limits the Company's exposure to credit risk. The Company
controls credit risk on derivatives through credit approvals and monitoring
procedures and believes that such risks are minimal because counterparties to
the transactions are major financial institutions.
NOTE J - STOCKHOLDER RIGHTS PLAN
The Company's Stockholder Rights Plan provides for each Common stockholder to
receive a dividend of one Right for each share of the Company's Common Stock
held. The Rights will expire on April 6, 2008 unless earlier redeemed or
exchanged. The Rights will detach from the Common Stock and become exercisable
following a specified period of time after the first public announcement that a
person or group of affiliated or associated persons (other than certain persons)
has become the beneficial owner of 15% or more of the Company's Common Stock.
The Rights have certain antitakeover effects and will cause substantial dilution
to a person or group that attempts to acquire the Company without conditioning
the offer on a substantial number of Rights being acquired. The Rights are not
intended to prevent a takeover, but rather are designed to enhance the ability
of the Board of Directors to negotiate with an acquiror on behalf of all
shareholders. Other terms of the Rights are set forth in, and the foregoing
description is qualified in its entirety by, the Rights Agreement, as amended,
between the Company and Harris Trust Company of New York, as Rights Agent.
NOTE K - EARNINGS PER SHARE
The following table reconciles the weighted-average shares outstanding for
computation of basic and diluted income (loss) per Common share for each of the
three years ended December 31, 1999. No difference existed between net income
(loss) used in computing basic and diluted income (loss) per Common share for
these years.
F-17
<PAGE>
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Weighted-average shares outstanding) 1999 1998 1997
---- ---- ----
Basic method 44,970,457 44,955,679 44,881,225
Dilutive stock options 59,768 - 79,682
---------- ---------- ----------
Diluted method 45,030,225 44,955,679 44,960,907
========== ========== ==========
The computations of diluted earnings per share in the Consolidated Statements of
Income did not consider outstanding options at year end of 684,750 shares in
1999, 1,053,249 shares in 1998 and 397,000 shares in 1997 because the effects of
these options would have improved the Company's earnings per share. Average
exercise prices per share of the options not used were $53.34, $48.73 and
$55.97, respectively.
NOTE L - OTHER FINANCIAL INFORMATION
INVENTORIES - Inventories accounted for under the LIFO method totaled
$72,452,000 and $65,107,000 at December 31, 1999 and 1998, respectively, and
were $115,236,000 and $14,195,000 less than such inventories would have been
valued using the first-in first-out method. At December 31, 1998, the Company
established an allowance to reduce the carrying value of certain crude oil
inventories to market value, resulting in an after-tax charge to income of
$4,227,000. Based on crude oil prices at December 31, 1999, the Company carried
no such inventory valuation allowance at that date.
FOREIGN CURRENCY - Cumulative translation gains and losses, net of insignificant
related income tax effects, are included in "Accumulated Other Comprehensive
Loss" in the Consolidated Balance Sheets. At December 31, 1999, components of
the net cumulative loss of $4,984,000 were gains (losses) of $31,218,000 for
pounds sterling, $(36,632,000) for Canadian dollars and $430,000 for other
currencies. Comparability of net income was not significantly affected by
exchange rate fluctuations in 1999, 1998 or 1997. Net gains (losses) from
foreign currency transactions included in the Consolidated Statements of Income
were $(847,000) in 1999, $282,000 in 1998 and $200,000 in 1997.
CASH FLOW DISCLOSURES - Cash income taxes paid (refunded) were $(5,343,000),
$26,227,000 and $86,962,000 in 1999, 1998 and 1997, respectively. Interest paid,
net of amounts capitalized, was $17,140,000, $9,551,000 and $269,000 in 1999,
1998 and 1997, respectively.
Noncash operating working capital (increased) decreased for each of the three
years ended December 31, 1999 as follows.
<TABLE>
<CAPTION>
(Thousands of dollars) 1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Accounts receivable $(123,566) 38,541 47,214
Inventories (21,866) 28,639 (27,061)
Prepaid expenses 4,147 15,031 (17,503)
Deferred income tax assets (8,600) 2,158 4,348
Accounts payable and accrued liabilities 99,382 (85,503) (67,623)
Current income tax liabilities 15,344 (2,676) (11,766)
--------- ------- -------
Net increase in noncash operating working capital $ (35,159) (3,810) (72,391)
========= ======= =======
</TABLE>
NOTE M - COMMITMENTS
The Company leases land, gasoline stations and other facilities under operating
leases. Future minimum rental commitments under noncancellable operating leases
are not material. Commitments for capital expenditures were approximately
$256,000,000 at December 31, 1999, including $84,000,000 related to the
Company's share of a multiyear contract for a semisubmersible deepwater drilling
rig and associated support equipment. Certain costs committed under this
contract will be charged to the Company's partners when future deepwater wells
are drilled.
F-18
<PAGE>
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE N - CONTINGENCIES
The Company's operations and earnings have been and may be affected by various
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 the issuance of oil and gas or mineral
leases; restrictions on drilling and/or production; laws and regulations
intended for the promotion of safety and the protection and/or remediation of
the environment; governmental support for other forms of energy; and laws and
regulations affecting the Company's relationships with employees, suppliers,
customers, stockholders and others. Because governmental actions are often
motivated by political considerations, may be taken without full consideration
of their consequences, and may be taken in response to actions of other
governments, it is not practical to attempt to predict the likelihood of such
actions, the form the actions may take or the effect such actions may have on
the Company.
FOREIGN CRUDE OIL CONTRACTS - In August 1996, the Ecuadoran government notified
the Company that its risk service contract for production of crude oil in
Ecuador would be replaced by a production sharing contract effective January 1,
1997 to give the government a larger share of future oil revenues. While the
state oil company, PetroEcuador, acknowledged that amounts were owed under the
former contract and indicated its intention to pay, the Company considered the
circumstances surrounding the contract replacement and recorded an $8,876,000
provision for doubtful accounts in 1996. Based on amounts subsequently
collected, the Company determined that portions of the allowance for doubtful
accounts were no longer required and recognized income of $3,304,000 in 1999,
$2,410,000 in 1998 and $1,642,000 in 1997.
ENVIRONMENTAL MATTERS - The Company's environmental contingencies are reviewed
in Management's Discussion and Analysis of Financial Condition and Results of
Operations under the section entitled "Environmental" beginning on page 15 of
this Form 10-K report.
OTHER MATTERS - The Company and its subsidiaries are engaged in a number of
other legal proceedings, all of which the Company considers routine and
incidental to its business and none of which is 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
December 31, 1999, the Company had contingent liabilities of $52,400,000 on
outstanding letters of credit and $66,900,000 under certain financial
guarantees.
NOTE O - BUSINESS SEGMENTS
Murphy's reportable segments are organized into two major types of business
activities, each subdivided into geographic areas of operations. The Company's
exploration and production activity is subdivided into segments for the United
States, Canada, the United Kingdom, Ecuador, and all other countries; each of
these segments derives revenues primarily from the sale of crude oil and natural
gas. The refining, marketing and transportation segments in the United States
and the United Kingdom derive revenues mainly from the sale of petroleum
products; the Canadian segment derives revenues primarily from the
transportation and trading of crude oil. The Company's management evaluates
segment performance based on income from operations, excluding interest income
and interest expense. Intersegment transfers of crude oil, natural gas and
petroleum products are at market prices and intersegment services are recorded
at cost.
Information about business segments and geographic operations is reported in the
following tables. Excise taxes on petroleum products of $898,917,000,
$831,385,000 and $679,953,000 for the years 1999, 1998 and 1997, respectively,
were excluded from revenues and costs and expenses. For geographic purposes,
revenues are attributed to the country in which the sale occurs. The Company had
no single customer from which it derived more than 10% of its revenues. Murphy's
equity method investments are in companies that transport crude oil and
petroleum products. Corporate and other activities, including interest income,
miscellaneous gains and losses, interest expense and unallocated overhead, are
shown in the tables to reconcile the business segments to consolidated totals.
As used in the table on page F-20, "Certain Long-Lived Assets at December 31"
exclude investments, noncurrent receivables and deferred tax assets.
F-19
<PAGE>
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
SEGMENT INFORMATION Exploration and Production
------------------------------------------------------------------
(Millions of dollars) U.S. Canada U.K. Ecuador Other Total
---- ------ ---- ------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1999
Segment income (loss) $ 35.3 47.0 37.2 22.6 (7.7) 134.4
Revenues from external customers 151.1 162.0 119.0 40.1 2.0 474.2
Intersegment revenues 50.6 58.7 23.4 - - 132.7
Interest income - - - - - -
Interest expense, net of capitalization - - - - - -
Income of equity companies - - - - - -
Income tax expense (benefit) 10.3 24.8 24.5 - .5 60.1
Significant noncash charges (credits)
Depreciation, depletion, amortization 65.1 50.3 42.8 8.0 .1 166.3
Provisions for major repairs - 2.5 - - - 2.5
Amortization of undeveloped leases 7.0 4.0 - - - 11.0
Deferred and noncurrent income taxes 12.6 21.3 (3.8) - 1.3 31.4
Additions to property, plant, equipment 60.7 143.0 25.6 7.1 (.1) 236.3
Total assets at year-end 391.0 737.9 299.4 60.0 9.5 1,497.8
- - - - - --------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1998
Segment income (loss) $ .7 (7.5) (13.3) 4.8 (35.1) (50.4)
Revenues from external customers 146.7 92.5 82.8 21.3 2.7 346.0
Intersegment revenues 32.4 42.5 12.3 - - 87.2
Interest income - - - - - -
Interest expense, net of capitalization - - - - - -
Income of equity companies - - - - - -
Income tax expense (benefit) (.1) (11.3) (1.6) (.8) .1 (13.7)
Significant noncash charges (credits)
Depreciation, depletion, amortization 66.0 44.0 42.9 10.2 - 163.1
Impairment of long-lived assets 29.9 10.1 24.3 - 15.1 79.4
Provisions for major repairs - 3.1 - - - 3.1
Amortization of undeveloped leases 6.7 3.8 - - - 10.5
Deferred and noncurrent income taxes (3.3) (6.3) (4.3) - .7 (13.2)
Additions to property, plant, equipment 104.0 94.1 67.5 10.2 .7 276.5
Total assets at year-end 399.1 595.6 317.6 60.3 13.3 1,385.9
- - - - - --------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1997
Segment income (loss) $ 51.6 19.0 16.3 14.5 (16.3) 85.1
Revenues from external customers 210.7 125.1 121.6 36.0 2.5 495.9
Intersegment revenues 64.1 60.5 - - - 124.6
Interest income - - - - - -
Interest expense, net of capitalization - - - - - -
Income of equity companies - - - - - -
Income tax expense (benefit) 27.2 9.8 15.4 (1.1) .1 51.4
Significant noncash charges (credits)
Depreciation, depletion, amortization 79.4 37.9 43.7 11.4 - 172.4
Impairment of long-lived assets 7.7 20.4 - - - 28.1
Provisions for major repairs - 4.6 - - - 4.6
Amortization of undeveloped leases 6.7 3.6 .1 - .1 10.5
Deferred and noncurrent income taxes (9.8) 9.1 (.9) - 1.3 (.3)
Additions to property, plant, equipment 102.5 135.1 80.0 10.4 10.9 338.9
Total assets at year-end 400.7 596.0 319.6 61.5 24.9 1,402.7
- - - - - --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GEOGRAPHIC INFORMATION Certain Long-Lived Assets at December 31
------------------------------------------------------------------
(Millions of dollars) U.S. Canada U.K. Ecuador Other Total
---- ------ ---- ------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
1999 $ 725.6 724.5 333.8 53.5 7.7 1,845.1
1998 706.2 600.4 352.8 54.4 8.4 1,722.2
1997 683.8 601.4 354.5 54.4 21.7 1,715.8
</TABLE>
F-20
<PAGE>
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
SEGMENT INFORMATION (CONTINUED) Refining, Marketing & Transportation
------------------------------------ Corp. & Consoli-
(Millions of dollars) U.S. U.K. Canada Total Other dated
----- ---- ------ ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1999
Segment income (loss) $ 1.6 14.0 6.8 22.4 (37.1) 119.7
Revenues from external customers 1,247.8 286.7 28.1 1,562.6 4.4 2,041.2
Intersegment revenues 4.6 - .6 5.2 - 137.9
Interest income - - - - 3.9 3.9
Interest expense, net of capitalization - - - - 20.3 20.3
Income of equity companies .5 - - .5 - .5
Income tax expense (benefit) .4 6.6 6.6 13.6 (14.9) 58.8
Significant noncash charges (credits)
Depreciation, depletion, amortization 27.6 5.8 2.0 35.4 2.7 204.4
Provisions for major repairs 14.2 1.9 - 16.1 .1 18.7
Amortization of undeveloped leases - - - - - 11.0
Deferred and noncurrent income taxes 7.9 (.5) - 7.4 (.8) 38.0
Additions to property, plant, equipment 76.4 11.4 .3 88.1 2.6 327.0
Total assets at year-end 549.7 199.0 89.6 838.3 109.4 2,445.5
- - - - - --------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1998
Segment income (loss) $ 27.7 17.3 2.5 47.5 (11.5) (14.4)
Revenues from external customers 1,064.9 260.7 22.8 1,348.4 4.4 1,698.8
Intersegment revenues 3.1 - .3 3.4 - 90.6
Interest income - - - - 4.0 4.0
Interest expense, net of capitalization - - - - 10.5 10.5
Income of equity companies .8 - - .8 - .8
Income tax expense (benefit) 15.7 7.9 3.1 26.7 (6.9) 6.1
Significant noncash charges (credits)
Depreciation, depletion, amortization 29.3 5.2 1.9 36.4 3.2 202.7
Impairment of long-lived assets - - .7 .7 - 80.1
Provisions for major repairs 15.2 2.0 - 17.2 .1 20.4
Amortization of undeveloped leases - - - - - 10.5
Deferred and noncurrent income taxes 2.9 .6 (.3) 3.2 9.1 (.9)
Additions to property, plant, equipment 45.6 6.8 2.6 55.0 2.2 333.7
Total assets at year-end 465.5 160.8 50.2 676.5 102.0 2,164.4
- - - - - --------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1997
Segment income (loss) $ 41.3 9.2 6.2 56.7 (9.4) 132.4
Revenues from external customers 1,342.8 268.6 26.1 1,637.5 4.4 2,137.8
Intersegment revenues 2.4 - .1 2.5 - 127.1
Interest income - - - - 4.8 4.8
Interest expense, net of capitalization - - - - .6 .6
Income of equity companies 1.1 - - 1.1 - 1.1
Income tax expense (benefit) 23.7 5.9 6.2 35.8 (8.0) 79.2
Significant noncash charges (credits)
Depreciation, depletion, amortization 27.8 4.7 2.0 34.5 2.5 209.4
Impairment of long-lived assets - - - - - 28.1
Provisions for major repairs 18.1 1.8 - 19.9 .1 24.6
Amortization of undeveloped leases - - - - - 10.5
Deferred and noncurrent income taxes (.7) 1.9 .1 1.3 25.0 26.0
Additions to property, plant, equipment 29.2 3.7 4.6 37.5 7.3 383.7
Total assets at year-end 491.4 194.7 64.5 750.6 85.0 2,238.3
- - - - - --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GEOGRAPHIC INFORMATION Revenues from External Customers for the Year
------------------------------------------------------------------
(Millions of dollars) U.S. U.K. Canada Ecuador Other Total
---- ---- ------ ------- ----- -----
<S> <C> <C> <C> <C> <C>
<C>
1999 $1,400.1 408.6 190.4 40.1 2.0 2,041.2
1998 1,212.0 346.9 115.9 21.3 2.7 1,698.8
1997 1,554.7 392.9 151.7 36.0 2.5 2,137.8
</TABLE>
F-21
<PAGE>
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED)
The following schedules are presented in accordance with SFAS No. 69,
"Disclosures about Oil and Gas Producing Activities," to provide users with a
common base for preparing estimates of future cash flows and comparing reserves
among companies. Additional background information follows concerning four of
the schedules.
SCHEDULES 1 AND 2 - ESTIMATED NET PROVED OIL AND NATURAL GAS RESERVES - Reserves
of crude oil, condensate, natural gas liquids and natural gas are estimated by
the Company's engineers and are adjusted to reflect contractual arrangements and
royalty rates in effect at the end of each year. Many assumptions and judgmental
decisions are required to estimate reserves. Reported quantities are subject to
future revisions, some of which may be substantial, as additional information
becomes available from: reservoir performance, new geological and geophysical
data, additional drilling, technological advancements, price changes and other
economic factors.
The U.S. Securities and Exchange Commission defines proved reserves as those
volumes of crude oil, condensate, natural gas liquids and natural gas that
geological and engineering data demonstrate with reasonable certainty are
recoverable from known reservoirs under existing economic and operating
conditions. Proved developed reserves are volumes expected to be recovered
through existing wells with existing equipment and operating methods. Proved
undeveloped reserves are volumes expected to be recovered as a result of
additional investments for drilling new wells to offset productive units,
recompleting existing wells, and/or installing facilities to collect and
transport production.
Production quantities shown are net volumes withdrawn from reservoirs. These may
differ from sales quantities due to inventory changes, and especially in the
case of natural gas, volumes consumed for fuel and/or shrinkage from extraction
of natural gas liquids.
Synthetic oil reserves in Canada are attributable to Murphy's share, after
deducting estimated net profit royalty, of the Syncrude project, and include
currently producing leases and the approved development of the Aurora mine.
Additional reserves will be added as development progresses.
The Company has no proved reserves attributable to either long-term supply
agreements with foreign governments or investees accounted for by the equity
method.
SCHEDULE 4 - RESULTS OF OPERATIONS FOR OIL AND GAS PRODUCING ACTIVITIES -
Results of operations from exploration and production activities by geographic
area are reported as if these activities were not part of an operation that also
refines crude oil and sells refined products. Results of oil and gas producing
activities include certain special items that are reviewed in Management's
Discussion and Analysis of Financial Condition and Results of Operations on page
9 of this Form 10-K report, and should be considered in conjunction with the
Company's overall performance.
SCHEDULE 6 - STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING
TO PROVED OIL AND GAS RESERVES - SFAS No. 69 requires calculation of future net
cash flows using a 10% annual discount factor and year-end prices, costs and
statutory tax rates, except for known future changes such as contracted prices
and legislated tax rates. Future net cash flows from the Company's interest in
synthetic oil are excluded.
The reported value of proved reserves is not necessarily indicative of either
fair market value or present value of future cash flows because prices, costs
and governmental policies do not remain static; appropriate discount rates may
vary; and extensive judgment is required to estimate the timing of production.
Other logical assumptions would likely have resulted in significantly different
amounts. Average year-end 1999 crude oil prices used for this calculation were
$23.23 a barrel for the United States, $25.68 for Canadian light, $17.25 for
Canadian heavy, $23.85 for Canadian offshore, $24.29 for the United Kingdom and
$17.45 for Ecuador. Average year-end 1999 natural gas prices used were $2.23 an
MCF for the United States, $1.95 for Canada and $2.01 for the United Kingdom.
Schedule 6 also presents the principal reasons for change in the standardized
measure of discounted future net cash flows for each of the three years ended
December 31, 1999.
F-22
<PAGE>
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) (Continued)
<TABLE>
<CAPTION>
SCHEDULE 1 - ESTIMATED NET PROVED OIL RESERVES
Crude Oil, Condensate and Natural Gas Liquids
--------------------------------------------------------------- Synthetic
United United Oil -
(Millions of barrels) States Canada Kingdom Ecuador Total Canada Total
PROVED ------ ------ ------- ------- ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
December 31, 1996 18.7 35.2 50.0 27.4 131.3 96.4 227.7
Revisions of previous estimates 1.6 (.4) 6.1 6.6 13.9 10.5 24.4
Improved recovery - .5 - - .5 - .5
Purchases .2 2.1 - - 2.3 - 2.3
Extensions and discoveries 2.5 18.8 6.2 - 27.5 - 27.5
Production (3.9) (5.8) (5.0) (2.9) (17.6) (3.4) (21.0)
Sales - (1.3) - - (1.3) - (1.3)
------ ----- ---- ----- ----- ----- ------
December 31, 1997 19.1 49.1 57.3 31.1 156.6 103.5 260.1
Revisions of previous estimates (1.0) 6.7 5.0 2.6 13.3 15.9 29.2
Purchases - 1.3 - - 1.3 - 1.3
Extensions and discoveries 8.0 .3 - 1.3 9.6 - 9.6
Production (2.8) (6.5) (5.6) (2.8) (17.7) (3.8) (21.5)
Sales (.3) (.1) - - (.4) - (.4)
------ ----- ---- ----- ----- ----- ------
December 31, 1998 23.0 50.8 56.7 32.2 162.7 115.6 278.3
Revisions of previous estimates (1.6) 9.1 7.7 4.5 19.7 8.9 28.6
Extensions and discoveries 15.8 .7 - 2.9 19.4 - 19.4
Production (3.1) (6.9) (7.5) (2.6) (20.1) (4.0) (24.1)
------ ----- ---- ----- ----- ----- ------
December 31, 1999 34.1 53.7 56.9 37.0 181.7 120.5 302.2
====== ===== ==== ===== ===== ===== =====
PROVED DEVELOPED
December 31, 1996 16.3 21.4 16.8 10.1 64.6 66.9 131.5
December 31, 1997 15.3 22.5 18.3 20.6 76.7 70.4 147.1
December 31, 1998 14.5 27.9 31.5 21.0 94.9 67.1 162.0
December 31, 1999 11.7 26.6 34.1 21.2 93.6 66.0 159.6
</TABLE>
SCHEDULE 2 - ESTIMATED NET PROVED NATURAL GAS RESERVES
<TABLE>
<CAPTION>
United United
(Billions of cubic feet) States Canada Kingdom Total
PROVED ------ ------ ------- -----
<S> <C> <C> <C> <C>
December 31, 1996 464.4 151.1 43.9 659.4
Revisions of previous estimates (23.7) (4.9) (2.9) (31.5)
Purchases 11.1 .4 - 11.5
Extensions and discoveries 63.2 17.0 - 80.2
Production (79.4) (16.4) (4.6) (100.4)
Sales (.2) (6.8) - (7.0)
----- ----- ----- ------
December 31, 1997 435.4 140.4 36.4 612.2
Revisions of previous estimates (14.3) (.2) 7.2 (7.3)
Purchases - 6.3 - 6.3
Extensions and discoveries 80.9 2.6 - 83.5
Production (61.9) (17.9) (4.5) (84.3)
Sales - (1.1) - (1.1)
----- ----- ----- ------
December 31, 1998 440.1 130.1 39.1 609.3
Revisions of previous estimates (2.6) 5.5 3.9 6.8
Extensions and discoveries 53.6 10.8 - 64.4
Production (62.7) (20.6) (4.5) (87.8)
Sales (1.1) - - (1.1)
----- ----- ----- ------
December 31, 1999 427.3 125.8 38.5 591.6
===== ===== ===== ======
PROVED DEVELOPED
December 31, 1996 291.1 146.0 25.4 462.5
December 31, 1997 304.2 135.2 24.0 463.4
December 31, 1998 291.8 120.3 29.9 442.0
December 31, 1999 284.8 111.3 32.9 429.0
</TABLE>
F-23
<PAGE>
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) (Continued)
SCHEDULE 3 - COSTS INCURRED IN OIL AND GAS PROPERTY ACQUISITION, EXPLORATION AND
DEVELOPMENT ACTIVITIES
<TABLE>
<CAPTION>
Synthetic
United United Oil -
(Millions of dollars) States Canada Kingdom Ecuador Other Subtotal Canada Total
YEAR ENDED DECEMBER 31, 1999 ------ ------ ------- ------- ----- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Property acquisition costs
Unproved $ 12.1 6.2 - - - 18.3 - 18.3
Proved - .4 - - - .4 - .4
------ ----- ---- ----- ----- ----- ---- ------
Total acquisition costs 12.1 6.6 - - - 18.7 - 18.7
Exploration costs 54.9 14.2 1.2 1.0 7.9 79.2 - 79.2
Development costs 28.6 108.2 28.3 6.1 - 171.2 26.8 198.0
------ ----- ---- ----- ----- ----- ---- ------
Total capital expenditures 95.6 129.0 29.5 7.1 7.9 269.1 26.8 295.9
------ ----- ---- ----- ----- ----- ---- ------
Charged to expense
Dry hole expense 24.2 3.9 3.0 - 1.3 32.4 - 32.4
Geophysical and other costs 10.7 8.9 .9 - 6.7 27.2 - 27.2
------ ----- ---- ----- ----- ----- ---- ------
Total charged to expense 34.9 12.8 3.9 - 8.0 59.6 - 59.6
------ ----- ---- ----- ----- ----- ---- ------
Expenditures capitalized $ 60.7 116.2 25.6 7.1 (.1) 209.5 26.8 236.3
====== ===== ==== ===== ===== ===== ==== ======
YEAR ENDED DECEMBER 31, 1998
Property acquisition costs
Unproved $ 14.1 2.7 .2 - - 17.0 - 17.0
Proved 3.8 1.1 - - - 4.9 - 4.9
------ ----- ---- ----- ----- ----- ---- ------
Total acquisition costs 17.9 3.8 .2 - - 21.9 - 21.9
Exploration costs 77.6 18.3 2.6 - 21.9 120.4 - 120.4
Development costs 25.1 69.4 68.2 10.2 - 172.9 16.4 189.3
------ ----- ---- ----- ----- ----- ---- ------
Total capital expenditures 120.6 91.5 71.0 10.2 21.9 315.2 16.4 331.6
------ ----- ---- ----- ----- ----- ---- ------
Charged to expense
Dry hole expense 10.8 8.9 (.4) - 12.2 31.5 - 31.5
Geophysical and other costs 5.8 4.9 3.9 - 9.0 23.6 - 23.6
------ ----- ---- ----- ----- ----- ---- ------
Total charged to expense 16.6 13.8 3.5 - 21.2 55.1 - 55.1
------ ----- ---- ----- ----- ----- ---- ------
Expenditures capitalized $104.0 77.7 67.5 10.2 .7 260.1 16.4 276.5
====== ===== ==== ===== ===== ===== ==== ======
YEAR ENDED DECEMBER 31, 1997
Property acquisition costs
Unproved $ 20.5 5.9 .2 - - 26.6 - 26.6
Proved 8.2 13.9 .1 - - 22.2 - 22.2
------ ----- ---- ----- ----- ----- ---- ------
Total acquisition costs 28.7 19.8 .3 - - 48.8 - 48.8
Exploration costs 74.4 18.2 14.6 - 28.1 135.3 - 135.3
Development costs 43.9 96.0 76.0 10.4 - 226.3 12.8 239.1
------ ----- ---- ----- ----- ----- ---- ------
Total capital expenditures 147.0 134.0 90.9 10.4 28.1 410.4 12.8 423.2
------ ----- ---- ----- ----- ----- ---- ------
Charged to expense
Dry hole expense 30.9 4.5 5.7 - 7.2 48.3 - 48.3
Geophysical and other costs 13.6 7.2 5.2 - 10.0 36.0 - 36.0
------ ----- ---- ----- ----- ----- ---- ------
Total charged to expense 44.5 11.7 10.9 - 17.2 84.3 - 84.3
------ ----- ---- ----- ----- ----- ---- ------
Expenditures capitalized $102.5 122.3 80.0 10.4 10.9 326.1 12.8 338.9
====== ===== ==== ===== ===== ===== ==== ======
</TABLE>
F-24
<PAGE>
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) (Continued)
SCHEDULE 4 - RESULTS OF OPERATIONS FOR OIL AND GAS PRODUCING ACTIVITIES
<TABLE>
<CAPTION>
Synthetic
United United Oil -
(Millions of dollars) States Canada Kingdom Ecuador Other Subtotal Canada Total
YEAR ENDED DECEMBER 31, 1999 ------- ------- -------- -------- ----- -------- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Crude oil and natural gas liquids
Transfers to consolidated operations $ 48.8 15.9 23.4 - - 88.1 42.8 130.9
Sales to unaffiliated enterprises 5.3 90.9 111.3 37.2 - 244.7 32.0 276.7
Natural gas
Transfer to consolidated operations 1.8 - - - - 1.8 - 1.8
Sales to unaffiliated enterprises 141.4 38.9 7.7 - - 188.0 - 188.0
------ ----- ----- ---- ----- ----- ---- -----
Total oil and gas revenues 197.3 145.7 142.4 37.2 - 522.6 74.8 597.4
Other operating revenues/1/ 4.4 .2 - 2.9 2.0 9.5 - 9.5
------ ----- ----- ---- ----- ----- ---- -----
Total revenues 201.7 145.9 142.4 40.1 2.0 532.1 74.8 606.9
------ ----- ----- ---- ----- ----- ---- -----
Costs and expenses
Production costs 35.6 39.7 30.8 9.4 - 115.5 36.5 152.0
Exploration costs charged to expense 34.9 12.8 3.9 - 8.0 59.6 - 59.6
Undeveloped lease amortization 7.0 4.0 - - - 11.0 - 11.0
Depreciation, depletion and amortization 65.1 43.2 42.8 8.0 .1 159.2 7.1 166.3
Selling and general expenses 13.5 5.6 3.2 .1 1.1 23.5 - 23.5
------ ----- ----- ---- ----- ----- ---- -----
Total costs and expenses 156.1 105.3 80.7 17.5 9.2 368.8 43.6 412.4
------ ----- ----- ---- ----- ----- ---- -----
45.6 40.6 61.7 22.6 (7.2) 163.3 31.2 194.5
Income tax expense 10.3 14.3 24.5 - .5 49.6 10.5 60.1
------ ----- ----- ---- ----- ----- ---- -----
Results of operations/2/ $ 35.3 26.3 37.2 22.6 (7.7) 113.7 20.7 134.4
====== ===== ===== ==== ===== ===== ==== =====
YEAR ENDED DECEMBER 31, 1998
Revenues
Crude oil and natural gas liquids
Transfers to consolidated operations $ 32.4 7.1 12.3 - - 51.8 35.4 87.2
Sales to unaffiliated enterprises 3.2 48.3 58.0 19.1 - 128.6 17.6 146.2
Natural gas
Sales to unaffiliated enterprises 132.1 24.0 10.0 - - 166.1 - 166.1
------ ----- ----- ---- ----- ----- ---- -----
Total oil and gas revenues 167.7 79.4 80.3 19.1 - 346.5 53.0 399.5
Other operating revenues/3/ 11.4 2.7 14.8 2.2 2.7 33.8 (.1) 33.7
------ ----- ----- ---- ----- ----- ---- -----
Total revenues 179.1 82.1 95.1 21.3 2.7 380.3 52.9 433.2
------ ----- ----- ---- ----- ----- ---- -----
Costs and expenses
Production costs 43.6 34.3 35.7 7.0 - 120.6 34.5 155.1
Exploration costs charged to expense 16.6 13.8 3.5 - 21.2 55.1 - 55.1
Undeveloped lease amortization 6.7 3.8 - - - 10.5 - 10.5
Depreciation, depletion and amortization 66.0 37.8 42.9 10.2 - 156.9 6.2 163.1
Impairment of long-lived assets 29.9 10.1 24.3 - 15.1 79.4 - 79.4
Cancellation of a drilling rig contract - 7.2 - - - 7.2 - 7.2
Selling and general expenses 15.7 6.0 3.6 .1 1.4 26.8 .1 26.9
------ ----- ----- ---- ----- ----- ---- -----
Total costs and expenses 178.5 113.0 110.0 17.3 37.7 456.5 40.8 497.3
------ ----- ----- ---- ----- ----- ---- -----
.6 (30.9) (14.9) 4.0 (35.0) (76.2) 12.1 (64.1)
Income tax expense (benefit) (.1) (15.2) (1.6) (.8) .1 (17.6) 3.9 (13.7)
------ ----- ----- ---- ----- ----- ---- -----
Results of operations/2/ $ .7 (15.7) (13.3) 4.8 (35.1) (58.6) 8.2 (50.4)
====== ===== ===== ==== ===== ===== ==== =====
</TABLE>
/1/Includes a gain of $3.3 from recovery on a 1996 contract modification in
Ecuador.
/2/Excludes corporate overhead and interest.
/3/Includes pretax gains of $4 from settlement of a U.K. long-term sales
contract and $2.4 from recovery on a 1996 contract modification in Ecuador.
F-25
<PAGE>
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) (Continued)
SCHEDULE 4 - RESULTS OF OPERATIONS FOR OIL AND GAS PRODUCING ACTIVITIES
(CONTINUED)
<TABLE>
<CAPTION>
Synthetic
United United Oil -
(Millions of dollars) States Canada Kingdom Ecuador Other Subtotal Canada Total
YEAR ENDED DECEMBER 31, 1997 ------ ------ ------- ------- ----- -------- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Crude oil and natural gas liquids
Transfers to consolidated operations $ 64.1 13.7 - - - 77.8 46.8 124.6
Sales to unaffiliated enterprises 10.8 57.9 95.3 34.7 - 198.7 21.1 219.8
Natural gas
Sales to unaffiliated enterprises 196.7 22.1 12.2 - - 231.0 - 231.0
------ ----- ----- ---- ----- ----- ---- -----
Total oil and gas revenues 271.6 93.7 107.5 34.7 - 507.5 67.9 575.4
Other operating revenues/1/ 3.2 24.0 14.1 1.3 2.5 45.1 - 45.1
------ ----- ----- ---- ----- ----- ---- -----
Total revenues 274.8 117.7 121.6 36.0 2.5 552.6 67.9 620.5
------ ----- ----- ---- ----- ----- ---- -----
Costs and expenses
Production costs 43.5 39.2 32.5 11.0 - 126.2 38.6 164.8
Exploration costs charged to expense 44.5 11.7 10.9 - 17.2 84.3 - 84.3
Undeveloped lease amortization 6.7 3.6 .1 - .1 10.5 - 10.5
Depreciation, depletion and amortization 79.4 31.4 43.7 11.4 - 165.9 6.5 172.4
Impairment of long-lived assets 7.7 20.4 - - - 28.1 - 28.1
Selling and general expenses 14.3 5.2 2.7 .2 1.4 23.8 .1 23.9
------ ----- ----- ---- ----- ----- ---- -----
Total costs and expenses 196.1 111.5 89.9 22.6 18.7 438.8 45.2 484.0
------ ----- ----- ---- ----- ----- ---- -----
78.7 6.2 31.7 13.4 (16.2) 113.8 22.7 136.5
Income tax expense (benefit) 27.2 1.4 15.4 (1.1) .1 43.0 8.4 51.4
------ ----- ----- ---- ----- ----- ---- -----
Results of operations/2/ $ 51.5 4.8 16.3 14.5 (16.3) 70.8 14.3 85.1
====== ===== ===== ==== ===== ===== ==== =====
</TABLE>
/1/Includes pretax gains of $20.7 from sale of Canadian properties and $1.6 from
recovery on a 1996 contract modification in Ecuador.
/2/Excludes corporate overhead and interest.
SCHEDULE 5 - CAPITALIZED COSTS RELATING TO OIL AND GAS PRODUCING ACTIVITIES
<TABLE>
<CAPTION>
Synthetic
United United Oil -
(Millions of dollars) States Canada Kingdom Ecuador Other Subtotal Canada Total
--------- --------- ------- ------- ------- -------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DECEMBER 31, 1999
Unproved oil and gas properties $ 91.5 37.7 .3 - 3.5 133.0 - 133.0
Proved oil and gas properties 1,453.7 902.6 841.5 206.6 - 3,404.4 176.7 3,581.1
--------- -------- ------ ------ ------- -------- ------ --------
Gross capitalized costs 1,545.2 940.3 841.8 206.6 3.5 3,537.4 176.7 3,714.1
Accumulated depreciation,
depletion and amortization
Unproved oil and gas properties (34.4) (22.1) (.3) - (3.5) (60.3) - (60.3)
Proved oil and gas properties/1/ (1,182.0) (370.0) (609.1) (153.1) - (2,314.2) (31.2) (2,345.4)
--------- -------- ------ ------ ------- -------- ------ --------
Net capitalized costs $ 328.8 548.2/2/ 232.4 53.5 - 1,162.9 145.5 1,308.4
========= ======== ====== ====== ======= ======== ====== ========
DECEMBER 31, 1998
Unproved oil and gas properties $ 102.4 31.8 1.3 - 20.3 155.8 - 155.8
Proved oil and gas properties 1,536.1 755.5 836.0 199.5 - 3,327.1 140.8 3,467.9
--------- -------- ------ ------ ------- -------- ------ --------
Gross capitalized costs 1,638.5 787.3 837.3 199.5 20.3 3,482.9 140.8 3,623.7
Accumulated depreciation,
depletion and amortization
Unproved oil and gas properties (50.7) (18.2) (1.0) - (19.1) (89.0) - (89.0)
Proved oil and gas properties/1/ (1,250.4) (317.8) (585.6) (145.1) - (2,298.9) (23.1) (2,322.0)
--------- -------- ------ ------ ------- -------- ------ --------
Net capitalized costs $ 337.4 451.3/2/ 250.7 54.4 1.2 1,095.0 117.7 1,212.7
========= ======== ====== ====== ======= ======== ====== ========
</TABLE>
/1/Does not include reserve for dismantlement costs of $158.4 in 1999 and $154.7
in 1998.
/2/Includes net costs of $365.2 in 1999 and $276.3 in 1998 related to the
Hibernia and Terra Nova oil fields.
F-26
<PAGE>
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) (Continued)
SCHEDULE 6 - STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING
TO PROVED OIL AND GAS RESERVES
<TABLE>
<CAPTION>
United United
(Millions of dollars) States Canada* Kingdom Ecuador Total
DECEMBER 31, 1999 ------ ------- ------- ------- -----
<S> <C> <C> <C> <C> <C>
Future cash inflows $1,745.5 1,417.9 1,426.4 645.3 5,235.1
Future development costs (210.6) (90.1) (66.0) (48.1) (414.8)
Future production and abandonment costs (409.9) (339.3) (417.4) (184.5) (1,351.1)
Future income taxes (356.4) (202.8) (315.9) (115.9) (991.0)
-------- ------- ------- ------- --------
Future net cash flows 768.6 785.7 627.1 296.8 2,478.2
10% annual discount for estimated timing of
cash flows (271.3) (230.6) (205.5) (119.8) (827.2)
-------- ------- ------- ------- --------
Standardized measure of discounted future
net cash flows $ 497.3 555.1 421.6 177.0 1,651.0
======== ======= ======= ======= ========
DECEMBER 31, 1998
Future cash inflows $1,120.5 647.6 667.2 167.2 2,602.5
Future development costs (182.7) (177.5) (64.6) (14.9) (439.7)
Future production and abandonment costs (361.1) (269.9) (372.6) (93.9) (1,097.5)
Future income taxes (139.0) (28.3) (23.6) (.6) (191.5)
-------- ------- ------- ------- --------
Future net cash flows 437.7 171.9 206.4 57.8 873.8
10% annual discount for estimated timing of
cash flows (138.1) (74.3) (56.4) (23.1) (291.9)
-------- ------- ------- ------- --------
Standardized measure of discounted future
net cash flows $ 299.6 97.6 150.0 34.7 581.9
======== ======= ======= ======= ========
</TABLE>
*Excludes future net cash flows from synthetic oil of $410.2 at December 31,
1999 and $64.1 at December 31, 1998.
Following are the principal sources of change in the standardized measure of
discounted future net cash flows for the years shown.
<TABLE>
<CAPTION>
(Millions of dollars) 1999 1998 1997
-------- ------ --------
<S> <C> <C> <C>
Net changes in prices, production costs and development costs $1,188.2 (894.8) (1,437.3)
Sales and transfers of oil and gas produced, net of production costs (317.9) (132.3) (230.8)
Net change due to extensions and discoveries 250.0 125.4 278.6
Net change due to purchases and sales of proved reserves (2.0) 4.5 17.4
Development costs incurred 163.4 165.4 214.2
Accretion of discount 71.9 129.0 217.6
Revisions of previous quantity estimates 220.7 30.7 55.0
Net change in income taxes (505.2) 191.0 327.3
-------- ------ --------
Net increase (decrease) 1,069.1 (381.1) (558.0)
Standardized measure at January 1 581.9 963.0 1,521.0
-------- ------ --------
Standardized measure at December 31 $1,651.0 581.9 963.0
======== ====== ========
</TABLE>
F-27
<PAGE>
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL QUARTERLY INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
First Second Third Fourth
(Millions of dollars except per share amounts) Quarter Quarter Quarter Quarter Year
-------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1999/1/
Sales and other operating revenues $ 302.9 449.9 632.4 651.6 2,036.8
Income (loss) before income taxes (11.2) 28.2 80.5 81.0 178.5
Net income (loss) (6.7) 15.7 51.2 59.5 119.7
Net income (loss) per Common share - basic (.15) .35 1.14 1.32 2.66
Net income (loss) per Common share - diluted (.15) .35 1.14 1.32 2.66
Cash dividends per Common share .35 .35 .35 .35 1.40
Market Price of Common Stock/2/
High 42 5/8 50 15/16 54 5/8 61 9/16 61 9/16
Low 32 7/8 41 3/8 47 11/16 51 1/4 32 7/8
YEAR ENDED DECEMBER 31, 1998/1/
Sales and other operating revenues $ 439.8 447.8 432.2 374.7 1,694.5
Income (loss) before income taxes 24.8 36.9 15.4 (85.4) (8.3)
Net income (loss) 15.5 22.2 9.0 (61.1) (14.4)
Net income (loss) per Common share - basic .35 .49 .20 (1.36) (.32)
Net income (loss) per Common share - diluted .35 .49 .20 (1.36) (.32)
Cash dividends per Common share .35 .35 .35 .35 1.40
Market Price of Common Stock/2/
High 54 7/16 53 11/16 51 15/16 42 5/16 54 7/16
Low 47 7/16 48 1/8 34 1/2 36 3/16 34 1/2
</TABLE>
/1/The effect of special gains (losses) on quarterly net income are reviewed in
Management's Discussion and Analysis of Financial Condition and Results of
Operations on pages 12 and 13 of this Form 10-K report. Quarterly totals, in
millions of dollars, and the effect per Common share of these special items
are shown in the following table.
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
1999
----
Quarterly totals $(1.0) - 6.3 14.4 19.7
Per Common share - basic (.02) - .14 .32 .44
Per Common share - diluted (.02) - .14 .32 .44
1998
----
Quarterly totals $ - 4.2 - (62.1) (57.9)
Per Common share - basic - .09 - (1.38) (1.29)
Per Common share - diluted - .09 - (1.38) (1.29)
/2/Prices are as quoted on the New York Stock Exchange.
F-28
<PAGE>
EXHIBIT 3.2
BY-LAWS
OF
MURPHY OIL CORPORATION
As Amended December 1, 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
Ex. 3.2-1
<PAGE>
to him at his address as it appears on the books of the Company, unless he shall
have filed with the Secretary of the Company a written request that notices
intended for him be directed to another address, in which case such notice shall
be directed to him at the address designated in such request. Notice of any
meeting of stockholders shall not be required to be given to any stockholder who
shall attend such meeting in person or by proxy; and if any stockholder shall in
person or by attorney thereunto authorized, in writing or by telegraph, cable,
radio or wireless and confirmed in writing, waive notice of any meeting of the
stockholders, whether prior to or after such meeting, notice thereof need not be
given to him. Notice of any adjourned meeting of the stockholders shall not be
required to be given except where expressly required by law.
Section 5. Quorum. At each meeting of the stockholders the holders of
record of a majority of the issued and outstanding stock of the Company entitled
to vote at such meeting, present in person or by proxy, shall constitute a
quorum for the transaction of business except where otherwise provided by law,
the certificate of incorporation or these 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
twelve, 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
Ex. 3.2-2
<PAGE>
of business. In the absence of a quorum, a majority of the directors present may
adjourn the meeting from time to time until a quorum shall be present. Notice of
any adjourned meeting need not be given. At all meetings of directors, a quorum
being present, all matters shall be decided by the affirmative vote of a
majority of the directors present, except as otherwise required by the laws of
the State of Delaware.
Section 4. Place of Meetings, etc. The board of directors may hold its
meetings and keep the books and records of the Company at such place or places
within or without the State of Delaware as the board may from time to time
determine.
Section 5. Annual Meeting. Promptly after each annual meeting of
stockholders for the election of directors and on the same day the board of
directors shall meet for the purpose of organization, the election of officers
and the transaction of other business. Notice of such meeting need not be
given. Such meeting may be held at any other time or place as shall be
specified in a notice given as hereinafter provided for special meetings of the
board of directors or in a consent and waiver of notice thereof signed by all
the directors.
Section 6. Regular Meetings. Regular meetings of the board of directors
may be held at such time and place, within or without the State of Delaware, as
shall from time to time be determined by the board of directors. After there
has been such determination and notice thereof has been once given to each
member of the board of directors, regular meetings may be held without further
notice being given.
Section 7. Special Meetings; Notice. Special meetings of the board of
directors shall be held whenever called by the Chairman of the Board or by a
majority of the directors. Notice of each such meeting shall be mailed to each
director, addressed to him at his residence or usual place of business, at least
10 days before the day on which the meeting is to be held, or shall be sent to
him at such place by telegraph, cable, radio or wireless, or be delivered
personally or by telephone, not later than the day before the day on which such
meeting is to be held. Each such notice shall state the time and place of the
meeting but need not state the purposes thereof. Notice of any meeting of the
board of directors need not be given to any director, however, if waived by him
in writing or by telegraph, cable, radio or wireless and confirmed in writing,
whether before or after such meeting, or if he shall be present at such meeting.
Any meeting of the board of directors shall be a legal meeting without any
notice thereof having been given if all the directors then in office shall be
present thereat.
Section 8. Resignation. Any director of the Company may resign at any
time by giving written notice to the Chairman of the Board or the Secretary of
the Company. The resignation of any director shall take effect upon receipt of
notice thereof or at such later time as shall be specified in such notice; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 9. Removal. Any director may be removed at any time, either with
or without cause, by the affirmative vote of the holders of record of a majority
of the issued and outstanding class of stock of the Company entitled to vote for
the election of such director, given at a special meeting of the stockholders
called for that purpose. The vacancy in the board of directors caused by any
such removal may be filled by the stockholders at such meeting.
Ex. 3.2-3
<PAGE>
Section 10. Vacancies. Any vacancy that shall occur in the board of
directors by reason of death, resignation, disqualification or removal or any
other cause whatever, unless filled as provided in Section 9 hereof, shall be
filled by the majority (even if that be only a single director) of the remaining
directors theretofore elected by the holders of the class of capital stock which
elected the directors whose office shall have become vacant. If any new
directorship is created by increase in the number of directors, a majority of
the directors then in office may fill such new directorship. The term of office
of any director so chosen to fill a vacancy or a new directorship shall
terminate upon the election and qualification of directors at any meeting of
stockholders called for the purpose of electing directors.
Section 11. Compensation of Directors. Directors may receive a fee, as
fixed by the Chairman of the Board, for their services, together with expenses
for attendance at regular or special meetings 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
Ex. 3.2-4
<PAGE>
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 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.
Ex. 3.2-5
<PAGE>
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 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
Ex. 3.2-6
<PAGE>
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 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
Ex. 3.2-7
<PAGE>
Company and may be issued and delivered as though the person who signed such
certificate or whose facsimile signature shall have been used thereon had not
ceased to be such officer.
Section 4. Designations, Preferences, etc. on Certificates for Stock.
Certificates for shares of capital stock of the Company shall state on the face
or back thereof that the Company will furnish without charge to each stockholder
who so requests (which request may be addressed to the Secretary of the Company
or to a transfer agent) a statement of the designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof which the Company is authorized to issue and the
qualifications, limitations or restrictions of such preferences and/or rights.
Section 5. Stock Ledger. A record shall be kept by the Secretary or by
any other officer, employee or agent designated by the board of directors of the
name of the person, firm, or corporation holding the stock represented by such
certificates, the number of shares represented by such certificates,
respectively, and the respective dates thereof, and in case of cancellation the
respective dates of cancellation.
Section 6. Cancellation. Every certificate surrendered to the Company for
exchange or transfer shall be canceled, and no new certificate or certificates
shall be issued in exchange for any existing certificate until such existing
certificate shall have been so canceled.
Section 7. Transfers of Stock. Transfers of shares of the capital stock
of the Company shall be made only on the books of the Company by the registered
holder thereof or by his attorney thereunto authorized on surrender of the
certificate or certificates for such shares properly endorsed and the payment of
all taxes thereon. The person in whose name shares of stock stand on the books
of the Company shall be deemed the owner thereof for all purposes as regards the
Company; provided, however, that whenever any transfer of shares shall be made
for collateral security, and not absolutely, such fact, if known to the
Secretary or the transfer agent making such transfer, shall be so expressed in
the entry of transfer.
Section 8. Closing of Transfer Books. The board of directors may by
resolution direct that the stock transfer books of the Company be closed for a
period not exceeding 60 days preceding the date of any meeting of the
stockholders, or the date for the payment of any dividend, or the date for the
allotment of any rights, or the date when any change or conversion or exchange
of capital stock of the Company shall go into effect, or for a period not
exceeding 60 days in connection with obtaining the consent of stockholders for
any purpose. In lieu of such closing of the stock transfer books, the board may
fix in advance a date, not exceeding 60 days preceding the date of any meeting
of stockholders, or the date for the payment of any dividend, or the date for
the allotment of rights, or the date when any change or conversion or exchange
of capital stock shall go into effect or a date in connection with obtaining
such consent, as a record date for the determination of the stockholders
entitled to notice of, and to vote at, such meeting, and any adjournment
thereof, or to receive payment of any such dividend, or to receive any such
allotment of rights, or to exercise the rights in respect of any such change,
conversion, or exchange of capital stock or to give such consent, as the case
may be, notwithstanding any transfer of any stock on the books of the Company
after any record date so fixed.
Ex. 3.2-8
<PAGE>
ARTICLE VII.
Miscellaneous Provisions.
Section 1. Corporate Seal. The board of directors shall provide a
corporate seal which shall be in the form of a circle and shall bear the name of
the Company and words and figures showing that it was incorporated in the State
of Delaware in the year 1964. The Secretary shall be the custodian of the seal.
The board of directors may authorize a duplicate seal to be kept and used by any
other officer.
Section 2. Fiscal Year. The fiscal year of the Company shall be fixed by
resolution of the board of directors.
Section 3. Voting of Stocks Owned by the Company. The board of directors
may authorize any person in behalf of the Company to attend, vote and grant
proxies to be used at any meeting of stockholders of any corporation in which
the Company may hold stock.
Section 4. Dividends. Subject to the provisions of the certificate of
incorporation, the board of directors may, out of funds legally available
therefor, at any regular or special meeting declare dividends upon the capital
stock of the Company as and when they deem expedient. Dividends may be paid in
cash, in property, or in shares of capital stock of the Company, subject to the
provisions of the certificate of incorporation. Before declaring any dividend
there may be set apart out of any funds of the Company available for dividends
such sum or sums as the directors from time to time in their discretion deem
proper for working capital or as a reserve fund to meet contingencies or for
equalizing dividends or for such other purposes as the directors shall deem
conducive to the interests of the Company.
ARTICLE VIII.
Indemnification of Officers, Directors,
Employees and Agents; Insurance.
Section 1. Indemnification.
(a) The Company may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including an action by or in the right of the Company) by reason of the fact
that he is or was a director, officer, employee or agent of the Company, or is
or was serving at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees) and, except for an
action by or in the right of the Company, judgments, fines and amounts paid in
settlement, actually and reasonably incurred by him in connection with such
action, suit or proceeding, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
Ex. 3.2-9
<PAGE>
reasonable cause to believe his conduct was unlawful. Except for an action by
or in the right of the Company, the termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Company, and, with
respect to any criminal action or proceeding, had reasonable cause to believe
that his conduct was unlawful. With respect to an action by or in the right of
the Company, no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the Company unless
and only to the extent that the Delaware Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which such court shall deem proper.
(b) To the extent that a director, officer, employee or agent of the
Company has been successful on the merits or otherwise in defense of any action,
suit or proceeding referred to in subsection (a) or in defense of any claim,
issue or matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
(c) Any indemnification under subsection (a) (unless ordered by a court)
shall be made by the Company only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because he has met the applicable standard of
conduct set forth in subsection (a). Such determination shall be made (i) by
the board of directors by a majority vote of a quorum consisting of directors
who were not parties to such action, suit or proceeding, or (ii) if such a
quorum is not obtainable, or, even if obtainable a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, or
(iii) by the stockholders.
(d) Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the Company in advance of the final disposition of
such action, suit or proceeding as authorized by the board of directors in the
manner provided in subsection (c) upon receipt of an undertaking by or on behalf
of the director, officer, employee or agent to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the Company as
authorized in this section.
(e) The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in their official capacities and as to action in
other capacities while holding such offices, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
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
Ex. 3.2-10
<PAGE>
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. 3.2-11
<PAGE>
EXHIBIT 4.3
[CONFORMED COPY]
RIGHTS AGREEMENT
dated as of
December 6, 1989
between
MURPHY OIL CORPORATION
and
HARRIS TRUST COMPANY OF NEW YORK,
as Rights Agent
Ex. 4.3-0
<PAGE>
TABLE OF CONTENTS*
<TABLE>
<CAPTION>
Page
<S> <C>
Section 1. Definitions................................................... Ex. 4.3-1
Section 2. Appointment of Rights Agent................................... Ex. 4.3-4
Section 3. Issue of Right Certificates................................... Ex. 4.3-4
Section 4. Form of Right Certificates.................................... Ex. 4.3-6
Section 5. Countersignature and Registration............................. Ex. 4.3-6
Section 6. Transfer and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates......................... Ex. 4.3-7
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights....................................................... Ex. 4.3-8
Section 8. Cancellation and Destruction of Right Certificates............Ex. 4.3-10
Section 9. Reservation and Availability of Capital Stock.................Ex. 4.3-10
Section 10. Preferred Stock Record Date..................................Ex. 4.3-11
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights...........................................Ex. 4.3-12
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares...............................................................Ex. 4.3-21
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power........................................................Ex. 4.3-21
Section 14. Fractional Rights and Fractional Shares......................Ex. 4.3-23
Section 15. Rights of Action.............................................Ex. 4.3-25
Section 16. Agreement of Right Holders...................................Ex. 4.3-25
Section 17. Right Certificate Holder Not Deemed a Stockholder............Ex. 4.3-26
Section 18. Concerning the Rights Agent..................................Ex. 4.3-26
Section 19. Merger or Consolidation or Change of Name of Rights Agent....Ex. 4.3-27
Section 20. Duties of Rights Agent.......................................Ex. 4.3-28
Section 21. Change of Rights Agent.......................................Ex. 4.3-30
Section 22. Issuance of New Right Certificates...........................Ex. 4.3-31
Section 23. Redemption...................................................Ex. 4.3-31
Section 24. Exchange.....................................................Ex. 4.3-32
Section 25. Notice of Proposed Actions...................................Ex. 4.3-33
Section 26. Notices......................................................Ex. 4.3-34
Section 27. Supplements and Amendments...................................Ex. 4.3-34
Section 28. Successors...................................................Ex. 4.3-35
Section 29. Determinations and Actions by the Board of
Directors, etc.......................................................Ex. 4.3-35
Section 30. Benefits of this Agreement...................................Ex. 4.3-35
</TABLE>
__________________
* The Table of Contents is not a part of this Agreement.
Ex. 4.3-i
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
Section 31. Severability.............................................Ex. 4.3-35
Section 32. Governing Law............................................Ex. 4.3-36
Section 33. Counterparts.............................................Ex. 4.3-36
Section 34. Descriptive Headings.....................................Ex. 4.3-36
Exhibit A - Form of Certificate of Designation of Preferred Stock....Ex. 4.3-A-1
Exhibit B - Form of Right Certificate................................Ex. 4.3-B-1
Exhibit C - Summary Description of the Stockholder Rights Plan.......Ex. 4.3-C-1
</TABLE>
Ex. 4.3-ii
<PAGE>
RIGHTS AGREEMENT
AGREEMENT dated as of December 6, 1989, between Murphy Oil Corporation, a
Delaware corporation (the "Company"), and Harris Trust Company of New York, as
Rights Agent (the "Rights Agent"),
W I T N E S S E T H
WHEREAS, on December 6, 1989 the Board of Directors of the Company
authorized and declared a dividend of one preferred stock purchase right (a
"Right") for each share of Common Stock (as hereinafter defined) outstanding at
the close of business on December 20, 1989 (the "Record Date") and has
authorized the issuance, upon the terms and subject to the conditions
hereinafter set forth, of one Right in respect of each share of Common Stock
issued after the Record Date, each Right representing the right to purchase,
upon the terms and subject to the conditions hereinafter set forth, one one-
hundredth of a share of Preferred Stock (as hereinafter defined);
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. Definitions. The following terms, as used herein, have the
following meanings:
"Acquiring Person" means any Person (other than Charles H. Murphy, Jr. and
Affiliates of Charles H. Murphy, Jr.) who, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner of 15% or more of the
shares of Common Stock then outstanding, but shall not include the Company, any
of its Subsidiaries, any employee benefit plan of the Company or any of its
Subsidiaries or any Person organized, appointed or established by the Company or
any of its Subsidiaries for or pursuant to the terms of any such plan.
"Affiliate" and "Associate" have the respective meanings ascribed to such
terms in Rule 12b-2 under the Exchange Act as in effect on the date hereof.
A Person shall be deemed the "Beneficial Owner" of, and shall be deemed to
"Beneficially Own", any securities:
(a) which such Person or any of its Affiliates or Associates, directly or
indirectly, beneficially owns (as determined pursuant to Rule 13d-3 under the
Exchange Act as in effect on the date hereof);
Ex. 4.3-1
<PAGE>
(b) which such Person or any of its Affiliates or Associates, directly or
indirectly, has
(i) the right to acquire (whether such right is exercisable
immediately or only upon the occurrence of certain events or the passage of
time or both) pursuant to any agreement, arrangement or understanding
(whether or not in writing) or otherwise (other than pursuant to the
Rights); PROVIDED that a Person shall not be deemed the "Beneficial Owner"
of or to "Beneficially Own" securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of its Affiliates
or Associates until such tendered securities are accepted for payment or
exchange; or
(ii) the right to vote (whether such right is exercisable
immediately or only upon the occurrence of certain events or the passage of
time or both) pursuant to any agreement, arrangement or understanding
(whether or not in writing) or otherwise; PROVIDED that a Person shall not
be deemed the "Beneficial Owner" of or to "Beneficially Own" any security
under this clause (ii) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement or
understanding (A) arises solely from a revocable proxy or consent given in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations under the Exchange
Act and (B) is not also then reportable by such Person on Schedule 13D
under the Exchange Act (or any comparable or successor report); or
(c) which are beneficially owned, directly or indirectly, by any other
Person (or any Affiliate or Associate thereof) with which such Person or any of
its Affiliates or Associates has any agreement, arrangement or understanding
(whether or not in writing) for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in subparagraph (b)(ii)
immediately above) or disposing of any such securities.
"Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions in the State of New York are authorized or obligated
by law or executive order to close.
"Close Of Business" on any given date means 5:00 P.M., New York City time,
on such date; PROVIDED that if such date is not a Business Day "Close Of
Business" means 5:00 P.M., New York City time, on the next succeeding Business
Day.
Ex. 4.3-2
<PAGE>
"Common Stock" means the Common Stock, par value $1.00 per share, of the
Company, except that, when used with reference to any Person other than the
Company, "COMMON STOCK" means the capital stock of such Person with the greatest
voting power, or the equity securities or other equity interest having power to
control or direct the management, of such Person.
"Continuing Director" means any member of the Board of Directors of the
Company, while such Person is a member of the Board, who is not an Acquiring
Person or an Affiliate or Associate of an Acquiring Person or a representative
or nominee of an Acquiring Person or of any such Affiliate or Associate and
either (a) was a member of the Board immediately prior to the time any Person
becomes an Acquiring Person or (b) subsequently becomes a member of the Board,
if such Person's nomination for election or election to the Board is recommended
or approved by a majority of the Continuing Directors.
"Distribution Date" means the close of business on the tenth day (or such
later day as may be designated by action of a majority of the Continuing
Directors) after the Stock Acquisition Date.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expiration Date" means the earlier of (a) the Final Expiration Date and
(b) the time at which all Rights are redeemed as provided in Section 23 or
exchanged as provided in Section 24.
"Final Expiration Date" means the close of business on December 6, 1999.
"Person" means an individual, corporation, partnership, association, trust
or any other entity or organization.
"Preferred Stock" means the Series A Participating Cumulative Preferred
Stock, par value $100.00 per share, of the Company, having the terms set forth
in the form of certificate of designation attached hereto as Exhibit A.
"Purchase Price" means the price (subject to adjustment as provided herein)
at which a holder of a Right may purchase one one-hundredth of a share of
Preferred Stock (subject to adjustment as provided herein) upon exercise of a
Right, which price shall initially be $130.00.
"Section 11(a)(ii) Event" means any event described in the first clause of
Section 11(a)(ii).
Ex. 4.3-3
<PAGE>
"Section 13 Event" means any event described in clauses (x), (y) or (z) of
Section 13(a).
"Securities Act" means the Securities Act of 1933, as amended.
"Stock Acquisition Date" means the date of the first public announcement
(including the filing of a report on Schedule 13D under the Exchange Act (or any
comparable or successor report)) by the Company or an Acquiring Person
indicating that an Acquiring Person has become such.
"Subsidiary" of any Person means any other Person of which securities or
other ownership interests having ordinary voting power, in the absence of
contingencies, to elect a majority of the board of directors or other Persons
performing similar functions are at the time directly or indirectly owned by
such first Person.
"Trading Day" means a day on which the principal national securities
exchange on which the shares of Common Stock are listed or admitted to trading
is open for the transaction of business or, if the shares of Common Stock are
not listed or admitted to trading on any national securities exchange, a
Business Day.
"Triggering Event" means any Section 11(a)(ii) Event or any Section 13
Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such Co-
Rights Agents as it may deem necessary or desirable. If the Company appoints
one or more Co-Rights Agents, the respective duties of the Rights Agent and any
Co-Rights Agents shall be as the Company shall determine.
Section 3. Issue of Right Certificates. (a) Prior to the Distribution
Date, (i) the Rights will be evidenced by the certificates for the Common Stock
and not by separate Right Certificates (as hereinafter defined) and the
registered holders of the Common Stock shall be deemed to be the registered
holders of the associated Rights, and (ii) the Rights will be transferable only
in connection with the transfer of the underlying shares of Common Stock. As
soon as practicable after the Record Date, the Company will send a summary of
the Rights substantially in the form of Exhibit C hereto, by first-class,
postage prepaid mail, to each record holder of the Common Stock as of the close
of business on the Record Date at the address of such holder shown on the
records of the Company.
Ex. 4.3-4
<PAGE>
(b) As soon as practicable after the Company has notified the Rights Agent
of the occurrence of the Distribution Date, the Rights Agent will send, by
first-class, insured, postage prepaid mail, to each record holder of the Common
Stock as of the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, one or more Right Certificates
evidencing one Right (subject to adjustment as provided herein) for each share
of Common Stock so held. If an adjustment in the number of Rights per share of
Common Stock has been made pursuant to Section 11(p), the Company shall, at the
time of distribution of the Right Certificates, make the necessary and
appropriate rounding adjustments (in accordance with Section 14(a)) so that
Right Certificates representing only whole numbers of Rights are distributed and
cash is paid in lieu of any fractional Rights. From and after the Distribution
Date, the Rights will be evidenced solely by such Right Certificates.
(c) Rights shall be issued in respect of all shares of Common Stock
outstanding as of the Record Date or issued (on original issuance or out of
treasury) after the Record Date but prior to the earlier of the Distribution
Date and the Expiration Date. In addition, in connection with the issuance or
sale of shares of Common Stock following the Distribution Date and prior to the
Expiration Date, the Company (i) shall, with respect to shares of Common Stock
so issued or sold (x) pursuant to the exercise of stock options or under any
employee plan or arrangement or (y) upon the exercise, conversion or exchange of
other securities issued by the Company prior to the Distribution Date and (ii)
may, in any other case, if deemed necessary or appropriate by the Board of
Directors of the Company, issue Right Certificates representing the appropriate
number of Rights in connection with such issuance or sale; PROVIDED that no such
Right Certificate shall be issued if, and to the extent that, (i) the Company
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the Person to whom such
Right Certificate would be issued or (ii) appropriate adjustment shall otherwise
have been made in lieu of the issuance thereof.
(d) Certificates for the Common Stock issued after the Record Date but
prior to the earlier of the Distribution Date and the Expiration Date shall have
impressed on, printed on, written on or otherwise affixed to them the following
legend:
This certificate also evidences certain Rights as set forth in a
Rights Agreement between Murphy Oil Corporation (the "Company") and
Harris Trust Company of New York dated as of December 6, 1989 (the
"Rights Agreement"), the terms of which are hereby incorporated herein
by reference and a copy of which is on file at the principal executive
offices of the Company. The Company will
Ex. 4.3-5
<PAGE>
mail to the holder of this certificate a copy of the Rights Agreement
without charge promptly after receipt of a written request therefor.
Under certain circumstances, as set forth in the Rights Agreement,
such Rights may be evidenced by separate certificates and no longer be
evidenced by this certificate, may be redeemed or exchanged or may
expire. As set forth in the Rights Agreement, Rights issued to, or
held by, any Person who is, was or becomes an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement), whether currently held by or on behalf of such
Person or by any subsequent holder, may be null and void.
Section 4. Form of Right Certificates. (a) The certificates evidencing
the Rights (and the forms of assignment, election to purchase and certificates
to be printed on the reverse thereof) (the "Right Certificates") shall be
substantially in the form of Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law, rule or regulation or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage. The Right Certificates, whenever distributed, shall be dated as of the
Record Date.
(b) Any Right Certificate representing Rights beneficially owned by any
Person referred to in clauses (i), (ii) or (iii) of the first sentence of
Section 7(d) shall (to the extent feasible) contain the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). This Right Certificate and the
Rights represented hereby may be or may become null and void in the
circumstances specified in Section 7(d) of such Agreement.
Section 5. Countersignature and Registration. (a) The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board, its
President or any Vice President, either manually or by facsimile signature, and
shall have affixed thereto the Company's seal or a facsimile thereof which shall
be attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any purpose unless
so countersigned. In case any officer of the Company whose manual or facsimile
signature is affixed to the Right Certificates shall cease to be such officer of
the
Ex. 4.3-6
<PAGE>
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Right Certificates may, nevertheless, be countersigned by the
Rights Agent and issued and delivered with the same force and effect as though
the Person who signed such Right Certificates had not ceased to be such officer
of the Company. Any Right Certificate may be signed on behalf of the Company by
any Person who, at the actual date of the execution of such Right Certificate,
shall be a proper officer of the Company to sign such Right Certificate,
although at the date of the execution of this Rights Agreement any such Person
was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its principal office or offices designated as the place for
surrender of Right Certificates upon exercise, transfer or exchange, books for
registration and transfer of the Right Certificates. Such books shall show with
respect to each Right Certificate the name and address of the registered holder,
the number of Rights indicated on the certificate and the certificate number.
Section 6. Transfer and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates. (a) At any time after the
Distribution Date and prior to the Expiration Date, any Right Certificate or
Certificates may, upon the terms and subject to the conditions set forth below
in this Section 6(a), be transferred or exchanged for another Right Certificate
or Certificates evidencing a like number of Rights as the Right Certificate or
Certificates surrendered. Any registered holder desiring to transfer or
exchange any Right Certificate or Certificates shall surrender such Right
Certificate or Certificates (with, in the case of a transfer, the form of
assignment and certificate on the reverse side thereof duly executed) to the
Rights Agent at the principal office or offices of the Rights Agent designated
for such purpose. Neither the Rights Agent nor the Company shall be obligated
to take any action whatsoever with respect to the transfer of any such
surrendered Right Certificate or Certificates until the registered holder of the
Rights has complied with the requirements of Section 7(e). Upon satisfaction of
the foregoing requirements, the Rights Agent shall, subject to Sections 4(b),
7(d), 14 and 24, countersign and deliver to the Person entitled thereto a Right
Certificate or Certificates as so requested. The Company may require payment of
a sum sufficient to cover any transfer tax or other governmental charge that may
be imposed in connection with any transfer or exchange of any Right Certificate
or Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto,
Ex. 4.3-7
<PAGE>
and upon surrender to the Rights Agent and cancellation of the Right Certificate
if mutilated, the Company will issue and deliver a new Right Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) The registered holder of any Right Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein, including Sections 7(d)
and (e), 9(c), 11(a)(iii) and 24) in whole or in part at any time after the
Distribution Date and prior to the Expiration Date upon surrender of the Right
Certificate, with the form of election to purchase and the certificate on the
reverse side thereof duly executed, to the Rights Agent at the principal office
or offices of the Rights Agent designated for such purpose, together with
payment (in lawful money of the United States of America by certified check or
bank draft payable to the order of the Company) of the aggregate Purchase Price
with respect to the Rights then to be exercised and an amount equal to any
applicable transfer tax or other governmental charge.
(b) Upon satisfaction of the requirements of Section 7(a) and subject to
Section 20(k), the Rights Agent shall thereupon promptly (i)(A) requisition from
any transfer agent of the Preferred Stock (or make available, if the Rights
Agent is the transfer agent therefor) certificates for the total number of one
one-hundredths of a share of Preferred Stock to be purchased (and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests) or (B) if the Company shall have elected to deposit the shares of
Preferred Stock issuable upon exercise of the Rights with a depositary agent,
requisition from the depositary agent depositary receipts representing such
number of one one-hundredths of a share of Preferred Stock as are to be
purchased (in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company will direct the depositary agent to comply
with such request, (ii) requisition from the Company the amount of cash, if any,
to be paid in lieu of issuance of fractional shares in accordance with Section
14 and (iii) after receipt of such certificates or depositary receipts and cash,
if any, cause the same to be delivered to or upon the order of the registered
holder of such Right Certificate (with such certificates or receipts registered
in such name or names as may be designated by such holder). If the Company is
obligated to deliver Common Stock, other securities or assets pursuant to this
Agreement, the Company will make all arrangements necessary so that such other
securities and assets are available for delivery by the Rights Agent, if and
when appropriate.
Ex. 4.3-8
<PAGE>
(c) In case the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate evidencing
the number of Rights remaining unexercised shall be issued by the Rights Agent
and delivered to, or upon the order of, the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder, subject to the provisions of Section 14.
(d) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Section 11(a)(ii) Event, any Rights beneficially
owned by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such or
(iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person (or any such
Associate or Affiliate) to holders of equity interests in such Acquiring Person
(or in any such Associate or Affiliate) or to any Person with whom the Acquiring
Person (or any such Associate or Affiliate) has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(d) shall become null and void without any further
action, and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to insure that the
provisions of this Section 7(d) and Section 4(b) are complied with, but shall
have no liability to any holder of Right Certificates or other Person as a
result of its failure to make any determinations with respect to an Acquiring
Person or its Affiliates and Associates or any transferee of any of them
hereunder.
(e) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder of Rights upon the occurrence of any purported
transfer pursuant to Section 6 or exercise pursuant to this Section 7 unless
such registered holder (i) shall have completed and signed the certificate
contained in the form of assignment or election to purchase, as the case may be,
set forth on the reverse side of the Right Certificate surrendered for such
transfer or exercise, as the case may be, (ii) shall not have indicated an
affirmative response to clause 1 or 2 thereof and (iii) shall have provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request.
Ex. 4.3-9
<PAGE>
Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for exercise, transfer or exchange shall, if
surrendered to the Company or to any of its agents, be delivered to the Rights
Agent for cancellation or in cancelled form, or, if surrendered to the Rights
Agent, shall be cancelled by it, and no Right Certificates shall be issued in
lieu thereof except as expressly permitted by this Agreement. The Company shall
deliver to the Rights Agent for cancellation, and the Rights Agent shall cancel,
any other Right Certificate purchased or acquired by the Company otherwise than
upon the exercise thereof. The Rights Agent shall deliver all cancelled Right
Certificates to the Company, or shall, at the written request of the Company,
destroy such cancelled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock. (a) The
Company covenants and agrees that it will cause to be reserved and kept
available a number of shares of Preferred Stock which are authorized but not
outstanding or otherwise reserved for issuance sufficient to permit the exercise
in full of all outstanding Rights as provided in this Agreement.
(b) So long as the Preferred Stock issuable upon the exercise of Rights
may be listed on any national securities exchange, the Company shall use its
best efforts to cause, from and after such time as the Rights become
exercisable, all securities reserved for such issuance to be listed on any such
exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts (i) to file, as soon as
practicable following the earliest date after the occurrence of a Section
11(a)(ii) Event as of which the consideration to be delivered by the Company
upon exercise of the Rights has been determined in accordance with Section
11(a)(iii), or as soon as is required by law following the Distribution Date, as
the case may be, a registration statement under the Securities Act with respect
to the securities issuable upon exercise of the Rights, (ii) to cause such
registration statement to become effective as soon as practicable after such
filing and (iii) to cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Securities Act) until
the earlier of (A) the date as of which the Rights are no longer exercisable for
such securities and (B) the Expiration Date. The Company will also take such
action as may be appropriate under, or to ensure compliance with, the securities
or blue sky laws of the various states in connection with the exercisability of
the Rights. The Company may temporarily suspend, for a period of time not to
exceed 90 days after the date set forth in clause (i) of the first sentence of
this Section 9(c), the exercisability of the Rights in order to prepare and file
such registration statement and permit it to become effective. Upon any such
suspension, the Company shall issue a public
Ex. 4.3-10
<PAGE>
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. Notwithstanding any such provision of this Agreement to the
contrary, the Rights shall not be exercisable for securities in any jurisdiction
if the requisite qualification in such jurisdiction shall not have been
obtained, such exercise therefor shall not be permitted under applicable law or
a registration statement in respect of such securities shall not have been
declared effective.
(d) The Company covenants and agrees that it will take all such action as
may be necessary to insure that all one one-hundredths of a share of Preferred
Stock issuable upon exercise of Rights shall, at the time of delivery of the
certificates for such securities (subject to payment of the Purchase Price), be
duly and validly authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and other governmental
charges which may be payable in respect of the issuance or delivery of the Right
Certificates and of any certificates for Preferred Stock upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax or
other governmental charge which may be payable in respect of any transfer
involved in the issuance or delivery of any Right Certificates or of any
certificates for Preferred Stock to a Person other than the registered holder of
the applicable Right Certificate, and prior to any such transfer, issuance or
delivery any such tax or other governmental charge shall have been paid by the
holder of such Right Certificate or it shall have been established to the
Company's satisfaction that no such tax or other governmental charge is due.
Section 10. Preferred Stock Record Date. Each Person (other than the
Company) in whose name any certificate for Preferred Stock is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of such Preferred Stock represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate evidencing such Rights
was duly surrendered and payment of the Purchase Price (and any transfer taxes
or other governmental charges) was made; PROVIDED that if the date of such
surrender and payment is a date upon which the transfer books of the Company
relating to the Preferred Stock are closed, such Person shall be deemed to have
become the record holder of such shares on, and such certificate shall be dated,
the next succeeding Business Day on which the applicable transfer books of the
Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Right Certificate shall not be entitled to any rights of a
stockholder of the Company with respect to shares for which the Rights shall be
exercisable, including the right to vote, to receive dividends or other
distributions or to
Ex. 4.3-11
<PAGE>
exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. (a) (i) If the Company shall at any time after the date of
this Agreement (A) pay a dividend on the Preferred Stock payable in shares of
Preferred Stock, (B) subdivide the outstanding Preferred Stock into a greater
number of shares, (C) combine the outstanding Preferred Stock into a smaller
number of shares or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such reclassification in
connection with a consolidation or merger involving the Company), the Purchase
Price in effect immediately prior to the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and the
number and kind of shares of Preferred Stock or other capital stock issuable on
such date shall be proportionately adjusted so that each holder of a Right shall
(except as otherwise provided herein, including Section 7(d)) thereafter be
entitled to receive, upon exercise thereof at the Purchase Price in effect
immediately prior to such date, the aggregate number and kind of shares of
Preferred Stock or other capital stock, as the case may be, which, if such Right
had been exercised immediately prior to such date and at a time when the
applicable transfer books of the Company were open, such holder would have been
entitled to receive upon such exercise and by virtue of such dividend,
subdivision, combination or reclassification. If an event occurs which requires
an adjustment under both this Section 11(a)(i) and Section 11(a)(ii), the
adjustment provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section 11(a)(ii).
(ii) If any Person, alone or together with its Affiliates and
Associates, shall, at any time after the date of this Agreement, become the
Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding, then proper provision shall promptly be made so that each
holder of a Right shall (except as otherwise provided herein, including
Section 7(d)) thereafter be entitled to receive, upon exercise thereof at
the Purchase Price in effect immediately prior to the first occurrence of a
Section 11(a)(ii) Event, in lieu of Preferred Stock, such number of duly
authorized, validly issued, fully paid and nonassessable shares of Common
Stock of the Company (such number of shares being referred to herein as the
"Adjustment Shares") as shall be equal to the result obtained by dividing
(x) the product obtained by multiplying the Purchase Price in
effect immediately prior to the first occurrence of a Section
11(a)(ii) Event by the number of one one-hundredths of a share of
Preferred Stock for which a Right was exercisable immediately
Ex. 4.3-12
<PAGE>
prior to such first occurrence (such product being thereafter referred
to as the "Purchase Price" for each Right and for all purposes of this
Agreement) by
(y) 50% of the current market price (determined pursuant to
Section 11(d)(i)) per share of Common Stock on the date of such first
occurrence;
PROVIDED that if the transaction that would otherwise give rise to the foregoing
adjustment is also subject to the provisions of Section 13, then only the
provisions of Section 13 shall apply and no adjustment shall be made pursuant to
this Section 11(a)(ii).
(iii) If the number of shares of Common Stock which are authorized by
the Company's certificate of incorporation but not outstanding or reserved
for issuance other than upon exercise of the Rights is not sufficient to
permit the exercise in full of the Rights in accordance with Section
11(a)(ii), the Company shall, with respect to each Right, make adequate
provision to substitute for the Adjustment Shares, upon payment of the
Purchase Price then in effect, (A) (to the extent available) Common Stock
and then, (B) (to the extent available) other equity securities of the
Company which the Board of Directors of the Company (or, if at such time
there is an Acquiring Person, a majority of the Continuing Directors) has
determined to be essentially equivalent to shares of Common Stock in
respect to dividend, liquidation and voting rights (such securities being
referred to herein as "common stock equivalents") and then, if necessary,
(C) other equity or debt securities of the Company, cash or other assets, a
reduction in the Purchase Price or any combination of the foregoing, having
an aggregate value (as determined by the Board of Directors of the Company
based upon the advice of a nationally recognized investment banking firm
selected by the Board of Directors of the Company) equal to the value of
the Adjustment Shares; PROVIDED that (x) the Company may, and (y) if the
Company shall not have made adequate provision as required above to deliver
value within 30 days following the later of the first occurrence of a
Section 11(a)(ii) Event and the first date that the right to redeem the
Rights pursuant to Section 23 shall expire, then the Company shall be
obligated to, deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, (1) (to the extent
available) Common Stock and then (2) (to the extent available) common stock
equivalents and then, if necessary, (3) other debt or equity securities to
the Company, cash or other assets or any combination of the foregoing,
having an aggregate value (as determined by the Board of Directors of the
Company based upon the advice of a nationally recognized
Ex. 4.3-13
<PAGE>
investment banking firm selected by the Board of Directors of the Company)
equal to the excess of the value of the Adjustment Shares over the Purchase
Price. If the Board of Directors of the Company shall determine in good
faith that it is likely that sufficient additional shares of Common Stock
could be authorized for issuance upon exercise in full of the Rights, the
30 day period set forth above (such period, as it may be extended, being
referred to herein as the "Substitution Period") may be extended to the
extent necessary, but not more than 90 days following the first occurrence
of a Section 11(a)(ii) Event, in order that the Company may seek
stockholder approval for the authorization of such additional shares. To
the extent that the Company determines that some action is to be taken
pursuant to the first and/or second sentence of this Section 11(a)(iii),
the Company (X) shall provide, subject to Section 7(d), that such action
shall apply uniformly to all outstanding Rights and (Y) may suspend the
exercisability of the Rights until the expiration of the Substitution
Period in order to seek any authorization of additional shares and/or to
decide the appropriate form and value of any consideration to be delivered
as referred to in such first and/or second sentence. If any such suspension
occurs, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in effect.
For purposes of this Section 11(a)(iii), the value of the Common Stock
shall be the current market price per share of Common Stock (as determined
pursuant to Section 11(d)) on the later of the date of the first occurrence
of a Section 11(a)(ii) Event and the first date that the right to redeem
the Rights pursuant to Section 23 shall expire; any "common stock
equivalent" shall be deemed to have the same value as the Common Stock on
such date; and the value of other securities or assets shall be determined
pursuant to Section 11(d)(iii).
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them to
subscribe for or purchase (for a period expiring within 45 calendar days after
such record date) Preferred Stock (or securities having the same rights,
privileges and preferences as the shares of Preferred Stock ("equivalent
preferred stock")) or securities convertible into or exercisable for Preferred
Stock (or equivalent preferred stock) at a price per share of Preferred Stock
(or equivalent preferred stock) (in each case, taking account of any conversion
or exercise price) less than the current market price (as determined pursuant to
Section 11(d)) per share of Preferred Stock on such record date, the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock outstanding
on such record date, plus the number of shares of
Ex. 4.3-14
<PAGE>
Preferred Stock which the aggregate price (taking account of any conversion or
exercise price) of the total number of shares of Preferred Stock (and/or
equivalent preferred stock) so to be offered would purchase at such current
market price and the denominator of which shall be the number of shares of
Preferred Stock outstanding on such record date plus the number of additional
shares of Preferred Stock (and/or equivalent preferred stock) so to be offered.
In case such subscription price may be paid by delivery of consideration part or
all of which shall be in a form other than cash, the value of such consideration
shall be as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes. Shares of Preferred Stock owned
by or held for the account of the Company shall not be deemed outstanding for
the purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed, and if such rights, options or warrants
are not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of Preferred Stock (including any such distribution
made in connection with a consolidation or merger involving the Company) of
evidences of indebtedness, equity securities other than Preferred Stock, assets
(other than a regular periodic cash dividend out of the earnings or retained
earnings of the Company) or rights, options or warrants (excluding those
referred to in Section 11(b)), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the current market price (as determined pursuant to Section 11(d)) per
share of Preferred Stock on such record date, less the value (as determined
pursuant to Section 11(d)(iii)) of such evidences of indebtedness, equity
securities, assets, rights, options or warrants so to be distributed with
respect to one share of Preferred Stock and the denominator of which shall be
such current market price per share of Preferred Stock. Such adjustment shall
be made successively whenever such a record date is fixed, and if such
distribution is not so made, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.
(d) (i) For the purpose of any computation hereunder other than
computations made pursuant to Section 11(a)(iii) or 14, the "current market
price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock for the 30
consecutive Trading Days immediately prior to such date; for purposes of
computations made pursuant to Section 11(a)(iii), the "current market price" per
share of Common Stock on any date shall be deemed to be the average of the daily
closing prices per
Ex. 4.3-15
<PAGE>
share of such Common Stock for the 10 consecutive Trading Days immediately
following such date; and for purposes of computations made pursuant to Section
14, the "current market price" per share of Common Stock for any Trading Day
shall be deemed to be the closing price per share of Common Stock for such
Trading Day; PROVIDED that if the current market price per share of the Common
Stock is determined during a period following the announcement by the issuer of
such Common Stock of (A) a dividend or distribution on such Common Stock payable
in shares of such Common Stock or securities exercisable for or convertible into
shares of such Common Stock (other than the Rights), or (B) any subdivision,
combination or reclassification of such Common Stock, and prior to the
expiration of the requisite 30 Trading Day or 10 Trading Day period, as set
forth above, after the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or reclassification, then, and
in each such case, the "current market price" shall be properly adjusted to take
into account ex-dividend trading. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the shares of Common Stock are not listed or admitted to trading on the New
York Stock Exchange, on the principal national securities exchange on which the
shares of Common Stock are listed or admitted to trading or, if the shares of
Common Stock are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or such other system then in use or, if on any such date the shares
of Common Stock are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Common Stock selected by the Board of Directors of the Company.
If on any such date no market maker is making a market in the Common Stock, the
fair value of such shares on such date as determined in good faith by the Board
of Directors of the Company shall be used. If the Common Stock is not publicly
held or not so listed or traded, the "current market price" per share means the
fair value per share as determined in good faith by the Board of Directors of
the Company, or, if at the time of such determination there is an Acquiring
Person, by a majority of the Continuing Directors, or if there are no Continuing
Directors, by a nationally recognized investment banking firm selected by the
Board of Directors, which determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all purposes.
Ex. 4.3-16
<PAGE>
(ii) For the purpose of any computation hereunder, the "current
market price" per share of Preferred Stock shall be determined in the same
manner as set forth above for the Common Stock in Section 11(d)(i) (other
than the last sentence thereof). If the current market price per share of
Preferred Stock cannot be determined in such manner, the "current market
price" per share of Preferred Stock shall be conclusively deemed to be an
amount equal to 100 (as such number may be appropriately adjusted for such
events as stock splits, stock dividends and recapitalizations with respect
to the Common Stock occurring after the date of this Agreement) multiplied
by the current market price per share of Common Stock (as determined
pursuant to Section 11(d)(i) (other than the last sentence thereof)). If
neither the Common Stock nor the Preferred Stock is publicly held or so
listed or traded, the "Current Market Price" per share of the Preferred
Stock shall be determined in the same manner as set forth in the last
sentence of Section 11(d)(i). For all purposes of this Agreement, the
"current market price" of one one-hundredth of a share of Preferred Stock
shall be equal to the "current market price" of one share of Preferred
Stock divided by 100.
(iii) For the purpose of any computation hereunder, the value of any
securities or assets other than Common Stock or Preferred Stock shall be
the fair value as determined in good faith by the Board of Directors of the
Company, or, if at the time of such determination there is an Acquiring
Person, by a majority of the Continuing Directors then in office, or, if
there are no Continuing Directors, by a nationally recognized investment
banking firm selected by the Board of Directors, which determination shall
be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; PROVIDED that any
adjustments which by reason of this Section 11(e) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the nearest cent or to
the nearest ten-thousandth of a share of Common Stock or other share or one-
millionth of a share of Preferred Stock, as the case may be.
(f) If at any time, as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a), the holder of any Right shall be entitled to receive
upon exercise of such Right any shares of capital stock other than Preferred
Stock, thereafter the number of such other shares so receivable upon exercise of
any Right and the Purchase Price thereof shall be subject to adjustment from
time to
Ex. 4.3-17
<PAGE>
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Section 11(a), (b),
(c), (e), (g), (h), (i), (j), (k) and (m), and the provisions of Sections 7, 9,
10, 13 and 14 with respect to the Preferred Stock shall apply on like terms to
any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made hereunder shall evidence the right to purchase, at the Purchase
Price then in effect, the then applicable number of one one-hundredths of a
share of Preferred Stock and other capital stock of the Company issuable from
time to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Section 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-hundredths of a
share of Preferred Stock (calculated to the nearest one-millionth) obtained by
(i) multiplying (x) the number of one one-hundredths of a share for which a
Right was exercisable immediately prior to this adjustment by (y) the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in lieu of any adjustment in the
number of one one-hundredths of a share of Preferred Stock issuable upon the
exercise of a Right. Each of the Rights outstanding after such adjustment of
the number of Rights shall be exercisable for the number of one one-hundredths
of a share of Preferred Stock for which such Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such adjustment of
the number of Rights shall become that number of Rights (calculated to the
nearest ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Right Certificates on such record date Right
Ex. 4.3-18
<PAGE>
Certificates evidencing, subject to Section 14, the additional Rights to which
such holders shall be entitled as a result of such adjustment, or, at the option
of the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided for herein
(and may bear, at the option of the Company, the adjusted Purchase Price) and
shall be registered in the names of the holders of record of Right Certificates
on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of one one-hundredths of a share of Preferred Stock issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price per one one-hundredth of a share and
the number of shares which were expressed in the initial Right Certificates
issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the par value, if any, of the number of one one-hundredths
of a share of Preferred Stock issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable such number of one one-hundredths of a share of Preferred Stock at
such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuance to the holder of any Right exercised after such record date the number
of one one-hundredths of a share of Preferred Stock or other capital stock of
the Company, if any, issuable upon such exercise over and above the number of
one one-hundredths of a share of Preferred Stock or other capital stock of the
Company, if any, issuable upon such exercise on the basis of the Purchase Price
in effect prior to such adjustment; PROVIDED that the Company shall deliver to
such holder a due bill or other appropriate instrument evidencing such holder's
right to receive such additional shares upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the
Ex. 4.3-19
<PAGE>
extent that it, in its sole discretion, shall determine to be advisable in order
that any consolidation or subdivision of the Preferred Stock, issuance wholly
for cash of any Preferred Stock at less than the current market price, issuance
wholly for cash of Preferred Stock or securities which by their terms are
convertible into or exercisable for Preferred Stock, stock dividends or issuance
of rights, options or warrants referred to in this Section 11, hereafter made by
the Company to the holders of its Preferred Stock, shall not be taxable to such
stockholders.
(n) The Company covenants and agrees that it will not at any time after
the Distribution Date (i) consolidate, merge or otherwise combine with or (ii)
sell or otherwise transfer (and/or permit any of its Subsidiaries to sell or
otherwise transfer), in one transaction or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries, taken as a whole, to any other Person or
Persons if (x) at the time of or immediately after such consolidation, merger,
combination or sale there are any rights, warrants or other instruments or
securities outstanding or any agreements or arrangements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or immediately after
such consolidation, merger, combination or sale, the stockholders of a Person
who constitutes, or would constitute, the "Principal Party" for the purposes of
Section 13 shall have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that after the Distribution Date, it
will not, except as permitted by Sections 23, 24 and 27, take (or permit any
Subsidiary to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights.
(p) Notwithstanding anything in this Agreement to the contrary, if at any
time after the date hereof and prior to the Distribution Date the Company shall
(i) pay a dividend on the outstanding shares of Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common Stock into a larger
number of shares or (iii) combine the outstanding Common Stock into a smaller
number of shares, the number of Rights associated with each share of Common
Stock then outstanding, or issued or delivered thereafter as contemplated by
Section 3(c), shall be proportionately adjusted so that the number of Rights
thereafter associated with each share of Common Stock following any such event
shall equal the result obtained by multiplying the number of Rights associated
with each share of Common Stock immediately prior to such event by a fraction
the numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the denominator
Ex. 4.3-20
<PAGE>
of which shall be the total number of shares of Common Stock outstanding
immediately following the occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 13, the Company
shall (a) promptly prepare a certificate setting forth such adjustment and a
brief statement of the facts accounting for such adjustment, (b) promptly file
with the Rights Agent and with each transfer agent for the Preferred Stock and
the Common Stock a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate (or, if prior to the Distribution Date, to
each holder of a certificate representing shares of Common Stock) in the manner
set forth in Section 26. The Rights Agent shall be fully protected in relying
on any such certificate and on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power. (a) If, following the Stock Acquisition Date, directly or indirectly,
(x) the Company shall consolidate with, merge into, or otherwise
combine with, any other Person, and the Company shall not be the continuing
or surviving corporation of such consolidation, merger or combination,
(y) any Person shall merge into, or otherwise combine with, the
Company, and the Company shall be the continuing or surviving corporation
of such merger or combination and, in connection with such merger or
combination, all or part of the outstanding shares of Common Stock shall be
changed into or exchanged for other stock or securities of the Company or
any other Person, cash or any other property, or
(z) the Company and/or one or more of its Subsidiaries shall sell or
otherwise transfer, in one transaction or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries, taken as a whole, to any other
Person or Persons,
then, and in each such case, proper provision shall promptly be made so that
(1) each holder of a Right shall (except as otherwise provided herein,
including Section 7(d)) thereafter be entitled to receive, upon exercise thereof
at the Purchase Price in effect immediately prior to the first occurrence of any
Triggering Event, such number of duly authorized, validly issued, fully paid and
nonassessable shares of freely tradeable Common Stock of the Principal Party (as
Ex. 4.3-21
<PAGE>
hereinafter defined), not subject to any rights of call or first refusal, liens,
encumbrances or other claims, as shall be equal to the result obtained by
dividing
(A) the product obtained by multiplying the Purchase Price in effect
immediately prior to the first occurrence of any Triggering Event by the
number of one one-hundredths of a share of Preferred Stock for which a
Right was exercisable immediately prior to such first occurrence (such
product being thereafter referred to as the "Purchase Price" for each Right
and for all purposes of this Agreement) by
(B) 50% of the current market price (determined pursuant to Section
11(d)(i)) per share of the Common Stock of such Principal Party on the date
of consummation of such consolidation, merger, combination, sale or
transfer;
(2) the Principal Party shall thereafter be liable for, and shall assume,
by virtue of such consolidation, merger, combination, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement;
(3) the term "Company" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of Section
11 shall apply only to such Principal Party following the first occurrence of a
Section 13 Event; and
(4) such Principal Party shall take such steps (including the
authorization and reservation of a sufficient number of shares of its Common
Stock to permit exercise of all outstanding Rights in accordance with this
Section 13(a)) in connection with the consummation of any such transaction as
may be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to the shares of its
Common Stock thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" means
(i) in the case of any transaction described in Section 13(a)(x) or
(y), the Person that is the issuer of any securities into which shares of
Common Stock of the Company are converted in such merger, consolidation or
combination, and if no securities are so issued, the Person that is the
other party to such merger, consolidation or combination; and
(ii) in the case of any transaction described in Section 13(a)(z), the
Person that is the party receiving the greatest portion of the assets or
earning power transferred pursuant to such transaction or transactions;
Ex. 4.3-22
<PAGE>
PROVIDED that in any such case, (A) if the Common Stock of such Person is not at
such time and has not been continuously over the preceding 12-month period
registered under Section 12 of the Exchange Act, and such Person is a direct or
indirect Subsidiary of another Person the Common Stock of which is and has been
so registered, "Principal Party" shall refer to such other Person; and (B) in
case such Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market value.
(c) The Company shall not consummate any such consolidation, merger,
combination, sale or transfer unless the Principal Party shall have a sufficient
number of authorized shares of its Common Stock which are not outstanding or
otherwise reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in Section 13(a) and
(b) and providing that, as soon as practicable after the date of any
consolidation, merger, combination, sale or transfer mentioned in Section 13(a),
the Principal Party will
(i) prepare and file a registration statement under the Securities
Act with respect to the securities issuable upon exercise of the Rights,
and will use its best efforts to cause such registration statement (A) to
become effective as soon as practicable after such filing and (B) to remain
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date and
(ii) deliver to holders of the Rights historical financial statements
for the Principal Party and each of its Affiliates which comply in all
respects with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers,
consolidations, combinations, sales or other transfers. If any Section 13 Event
shall occur at any time after the occurrence of a Section 11(a)(ii) Event, the
Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
Section 14. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractions of Rights, except prior to the
Distribution Date as provided in Section 11(p), or to distribute Right
Certificates which evidence fractional Rights. In lieu of any such fractional
Rights, the Company shall
Ex. 4.3-23
<PAGE>
pay to the registered holders of the Right Certificates with regard to which
such fractional Rights would otherwise be issuable an amount in cash equal to
the same fraction of the current market price of a whole Right. For purposes of
this Section 14(a), the current market price of a whole Right shall be the
closing price of a Right for the Trading Day immediately prior to the date on
which such fractional Rights would otherwise have been issuable. The closing
price of a Right for any day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Rights are not
listed or admitted to trading on the New York Stock Exchange, on the principal
national securities exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price, or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
NASDAQ or such other system then in use or, if on any such date the Rights are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date no such
market maker is making a market in the Rights, the current market price of the
Rights on such date shall be as determined in good faith by the Board of
Directors of the Company.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are multiples of one one-hundredth
of a share of Preferred Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Preferred Stock (other than
fractions which are multiples of one one-hundredth of a share of Preferred
Stock). In lieu of any such fractional shares of Preferred Stock, the Company
shall pay to the registered holders of Right Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market price of one one-hundredth of a share of
Preferred Stock. For purposes of this Section 14(b), the current market price
of one one-hundredth of a share of Preferred Stock shall be one one-hundredth of
the closing price of a share of Preferred Stock (as determined pursuant to
Section 11(d)) for the Trading Day immediately prior to the date of such
exercise.
(c) Following the occurrence of any Triggering Event or upon any exchange
pursuant to Section 24, the Company shall not be required to issue fractions of
shares of Common Stock upon exercise of the Rights or to distribute certificates
which evidence fractional shares of Common Stock. In lieu of fractional shares
of Common Stock, the Company shall pay to the registered holders of Right
Certificates at the time such Rights are exercised or exchanged as
Ex. 4.3-24
<PAGE>
herein provided an amount in cash equal to the same fraction of the current
market price of a share of Common Stock. For purposes of this Section 14(c), the
current market price of a share of Common Stock shall be the closing price of a
share of Common Stock (as determined pursuant to Section 11(d)(i)) for the
Trading Day immediately prior to the date of such exercise or exchange.
(d) The holder of a Right by the acceptance of the Right expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
certificates representing Common Stock); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of any certificate representing
Common Stock), without the consent of the Rights Agent or of the holder of any
other Right Certificate (or, prior to the Distribution Date, of any certificate
representing Common Stock), may, in his own behalf and for his own benefit,
enforce, and may institute and maintain any suit, action or proceeding against
the Company to enforce, or otherwise act in respect of, his right to exercise
the Rights evidenced by such Right Certificate in the manner provided in such
Right Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of the obligations of, any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only
in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the principal
office or offices of the Rights Agent designated for such purposes, duly
endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed;
(c) subject to Sections 6 and 7, the Company and the Rights Agent may deem
and treat the Person in whose name a Right Certificate (or, prior to the
Ex. 4.3-25
<PAGE>
Distribution Date, a certificate representing shares of Common Stock) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right Certificate
or the certificate representing shares of Common Stock made by anyone other than
the Company or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent, subject to the last sentence of Section 7(d),
shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligation; PROVIDED that the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the shares of capital stock which may
at any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Right Certificate be construed to
confer upon the holder of any Right Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in Section 25), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. (a) The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and disbursements and other disbursements incurred in
the execution or administration of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss, liability, or
expense, incurred without negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the administration of this Agreement or the exercise or
performance of its duties
Ex. 4.3-26
<PAGE>
hereunder, including the costs and expenses of defending against any claim of
liability.
(b) The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in connection with
the administration of this Agreement or the exercise or performance of its
duties hereunder in reliance upon any Right Certificate or certificate for
Common Stock or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice,
instruction, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the corporate
trust or stock transfer business of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties hereto; PROVIDED that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21. In
case at the time such successor Rights Agent shall succeed to the agency created
by this Agreement, any of the Right Certificates shall have been countersigned
but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
Ex. 4.3-27
<PAGE>
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any "Acquiring Person" and the
determination of "current market price") be proved or established by the Company
prior to taking, suffering or omitting to take any action hereunder, such fact
or matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by the Chairman of the Board, the President or any Vice
President and by the Treasurer or any Assistant Treasurer or the Secretary or
any Assistant Secretary of the Company and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent for any action
taken, suffered or omitted in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 7(d)) or any adjustment in the terms of
the Rights (including the manner, method or amount thereof) provided for in
Sections 3, 11, 13, 23 or 24, or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise of Rights
evidenced by Right
Ex. 4.3-28
<PAGE>
Certificates after actual notice of any such adjustment); nor shall it by any
act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock or Preferred Stock to
be issued pursuant to this Agreement or any Right Certificate or as to whether
any shares of Common Stock or Preferred Stock will, when issued, be duly
authorized, validly issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President or any Vice President or the Secretary or
any Assistant Secretary or the Treasurer or any Assistant Treasurer of the
Company, and to apply to such officers for advice or instructions in connection
with its duties, and it shall not be liable for any action taken, suffered or
omitted to be taken by it in good faith in accordance with instructions of any
such officer.
(h) The Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not the Rights Agent under
this Agreement. Nothing herein shall preclude the Rights Agent from acting in
any other capacity for the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company or to any holders of Rights resulting from
any such act, default, neglect or misconduct, provided that reasonable care was
exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
Ex. 4.3-29
<PAGE>
(k) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the cases may be, has either not
been completed or indicates an affirmative response to clause 1 or 2 thereof,
the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Stock and Preferred Stock by registered or certified mail, and,
subsequent to the Distribution Date, to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and Preferred Stock by registered or certified mail, and,
subsequent to the Distribution Date, to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be (a)
a corporation organized and doing business under the laws of the United States
or of any state of the United States, in good standing, having a principal
office in the State of New York, which is authorized under such laws to exercise
stock transfer or corporate trust powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000 or (b) an Affiliate of a corporation described in clause (a) of this
sentence. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and the Preferred Stock, and, subsequent to the Distribution
Date, mail a notice thereof in writing to the registered holders of the Right
Certificates. Failure to give any
Ex. 4.3-30
<PAGE>
notice provided for in this Section 21, or any defect therein, shall not affect
the legality or validity of the resignation or removal of the Rights Agent or
the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares of stock
issuable upon exercise of the Rights made in accordance with the provisions of
this Agreement.
Section 23. Redemption. (a) The Board of Directors of the Company may,
at its option, at any time prior to the earlier of (i) the close of business on
the tenth day after the Stock Acquisition Date (or such later date as a majority
of the Continuing Directors may designate prior to such time as the Rights are
no longer redeemable) and (ii) the Final Expiration Date, redeem all but not
less than all the then outstanding Rights at a redemption price of $.01 per
Right, as such amount may be appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "REDEMPTION PRICE");
PROVIDED that after any Person has become an Acquiring Person, any redemption of
the Rights shall be effective only if there are Continuing Directors then in
office, and such redemption shall have been approved by a majority of such
Continuing Directors. Notwithstanding anything in this Agreement to the
contrary, the Rights shall not be exercisable after the first occurrence of a
Section 11(a)(ii) Event until such time as the Company's right of redemption
hereunder has expired.
(b) Immediately upon the action of the Board of Directors of the Company
electing to redeem the Rights and without any further action and without any
notice, the right to exercise the Rights will terminate and thereafter the only
right of the holders of Rights shall be to receive the Redemption Price for each
Right so held. The Company shall promptly thereafter give notice of such
redemption to the Rights Agent and the holders of the Rights in the manner set
forth in Section 26; PROVIDED that the failure to give, or any defect in, such
notice shall not affect the validity of such redemption. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the
method by which the payment of the Redemption Price will be made. Neither the
Company nor any of its Affiliates or Associates may redeem, acquire or purchase
for value any Rights at any time in any manner other than that specifically set
forth in Section 23 or 24, and other than in connection with the purchase,
acquisition or redemption of shares of Common Stock prior to the Distribution
Date.
Ex. 4.3-31
<PAGE>
Section 24. Exchange. (a) The Board of Directors of the Company may, at
its option, at any time after any Person becomes an Acquiring Person, exchange
all or part of the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to Section 7(d)) for shares of
Common Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such exchange
at any time after any Person (other than the Company, any of its Subsidiaries,
any employee benefit plan of the Company or any of its Subsidiaries or any
Person organized, appointed or established by the Company or any of its
Subsidiaries for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the shares of Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the Company
electing to exchange any Rights pursuant to Section 24(a) and without any
further action and without any notice, the right to exercise such Rights will
terminate and thereafter the only right of a holder of such Rights shall be to
receive that number of shares of Common Stock equal to the number of such Rights
held by such holder multiplied by the Exchange Ratio. The Company shall
promptly thereafter give notice of such exchange to the Rights Agent and the
holders of the Rights to be exchanged in the manner set forth in Section 26;
PROVIDED that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the
exchange of the shares of Common Stock for Rights will be effected and, in the
event of any partial exchange, the number of Rights which will be exchanged.
Any partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become void pursuant to Section 7(d)) held by each
holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute common stock equivalents (as defined in Section
11(a)(iii)) for shares of Common Stock exchangeable for Rights, at the initial
rate of one common stock equivalent for each share of Common Stock, as
appropriately adjusted to reflect adjustments in dividend, liquidation and
voting rights of common stock equivalents pursuant to the terms thereof, so that
each common stock equivalent delivered in lieu of each share of Common Stock
shall have essentially the same dividend, liquidation and voting rights as one
share of Common Stock.
Ex. 4.3-32
<PAGE>
Section 25. Notice of Proposed Actions. (a) In case the Company shall
propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the Company), or
(ii) to offer to the holders of its Preferred Stock rights or warrants to
subscribe for or to purchase any additional shares of Preferred Stock or shares
of stock of any class or any other securities, rights or options, or (iii) to
effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision or combination of outstanding
shares of Preferred Stock) or (iv) to effect any consolidation or merger with
any other Person, or to effect and/or to permit one or more of its Subsidiaries
to effect any sale or other transfer, in one transaction or a series of related
transactions, of assets or earning power aggregating more than 50% of the assets
or earning power of the Company and its Subsidiaries, taken as a whole, to any
other Person or Persons, or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of a Right, to the extent feasible and in accordance with Section
26, a notice of such proposed action, which shall specify the record date for
the purposes of any such dividend, distribution or offering of rights or
warrants, or the date on which any such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution or winding up is to take place and the
date of participation therein by the holders of Preferred Stock, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 20 days prior to the record date
for determining holders of the Preferred Stock entitled to participate in such
dividend, distribution or offering, and in the case of any such other action, at
least 20 days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of Preferred Stock, whichever shall
be the earlier. The failure to give notice required by this Section or any
defect therein shall not affect the legality or validity of the action taken by
the Company or the vote upon any such action.
(b) Notwithstanding anything in this Agreement to the contrary, prior to
the Distribution Date a filing by the Company with the Securities and Exchange
Commission shall constitute sufficient notice to the holders of securities of
the Company, including the Rights, for purposes of this Agreement and no other
notice need be given to such holders.
(c) If a Triggering Event shall occur, then, in any such case, (1) the
Company shall as soon as practicable thereafter give to each holder of a Right,
in accordance with Section 26, a notice of the occurrence of such event, which
shall specify the event and the consequences of the event to holders of Rights
under Section 11(a)(ii) or 13, as the case may be, and (2) all references in
Section 25(a)
Ex. 4.3-33
<PAGE>
to Preferred Stock shall be deemed thereafter to refer to Common Stock or other
capital stock, as the case may be.
Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right to or on the
Company shall be sufficiently given or made if sent by first-class mail (postage
prepaid) to the address of the Company indicated on the signature page hereof or
such other address as the Company shall specify in writing to the Rights Agent.
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Right to or
on the Rights Agent shall be sufficiently given or made if sent by first-class
mail (postage prepaid) to the address of the Rights Agent indicated on the
signature page hereof or such other address as the Rights Agent shall specify in
writing to the Company. Notices or demands authorized by this Agreement to be
given or made by the Company or the Rights Agent to the holder of any Right
Certificate (or, prior to the Distribution Date, to the holder of any
certificate representing shares of Common Stock) shall be sufficiently given or
made if sent by first-class mail (postage prepaid) to the address of such holder
shown on the registry books of the Company.
Section 27. Supplements and Amendments. Prior to the Distribution Date,
the Company and the Rights Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement without the approval of any holders of
certificates representing shares of Common Stock. From and after the
Distribution Date, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend this Agreement without the approval of any holders
of Right Certificates in order (a) to cure any ambiguity, (b) to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein or (c) to change or supplement the provisions
hereof in any manner which the Company may deem necessary or desirable and which
shall not adversely affect the interests of the holders of Rights (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person).
Notwithstanding the foregoing, after any Person has become an Acquiring Person,
any supplement or amendment shall be effective only if there are Continuing
Directors then in office, and such supplement or amendment shall have been
approved by a majority of such Continuing Directors. Upon the delivery of a
certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this
Section, the Rights Agent shall execute such supplement or amendment. Prior to
the Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.
Ex. 4.3-34
<PAGE>
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of Directors, etc. For
all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) under the Exchange Act as in effect on
the date of this Agreement. The Board of Directors of the Company (with, where
specifically provided for herein, the concurrence of the Continuing Directors)
shall have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board or to the
Company, or as may be necessary or advisable in the administration of this
Agreement, including the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to redeem or
exchange or not to redeem or exchange the Rights or to amend the Agreement).
All such actions, calculations, interpretations and determinations (including,
for purposes of clause (y) below, all omissions with respect to the foregoing)
which are done or made by the Board (or, where specifically provided for herein,
by the Continuing Directors) in good faith shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights and all
other parties, and (y) not subject the Board of Directors of the Company or the
Continuing Directors to any liability to the holders of the Rights.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the certificates representing the shares of Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, the certificates representing the shares of Common Stock).
Section 31. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated;
PROVIDED that, notwithstanding anything in this Agreement to the contrary, if
any such term, provision, covenant or restriction is held by such court or
authority to be invalid,
Ex. 4.3-35
<PAGE>
void or unenforceable and the Board of Directors of the Company determines in
its good faith judgment that severing the invalid language from this Agreement
would adversely affect the purpose or effect of this Agreement, the right of
redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the close of business on the tenth day following the date of such
determination by the Board of Directors.
Section 32. Governing Law. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State, except that the rights and
obligations of the Rights Agent shall be governed by the law of the State of New
York.
Section 33. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute one and the
same instrument.
Section 34. Descriptive Headings. The captions herein are included for
convenience of reference only, do not constitute a part of this Agreement and
shall be ignored in the construction and interpretation hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
MURPHY OIL CORPORATION
By: /s/ CLEFTON VAUGHAN
Clefton Vaughan
Vice President
200 Peach Street
El Dorado, Arkansas 71730
Attention: W. Bayless Rowe
Ex. 4.3-36
<PAGE>
HARRIS TRUST COMPANY
OF NEW YORK
By: /s/ VINCENT G. MARRONE
Vincent G. Marrone
Assistant Vice President
77 Water Street
New York, New York 10005
Attention: Vincent Marrone
Ex. 4.3-37
<PAGE>
EXHIBIT 4.3-EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATION
OF
SERIES A PARTICIPATING CUMULATIVE
PREFERRED STOCK
OF
MURPHY OIL CORPORATION
Pursuant to Section 151 of the
General Corporation Law of the
State of Delaware
We, R. Madison Murphy, Vice President, Planning, and W. Bayless Rowe,
Secretary, of Murphy Oil Corporation, a corporation organized and existing under
the General Corporation Law of the State of Delaware ("Delaware Law"), in
accordance with the provisions thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation of the Corporation, the Board of Directors on
December 6, 1989, adopted the following resolution creating a series of
Preferred Stock in the amount and having the designation, voting powers,
preferences and relative, participating, optional and other special rights and
qualifications, limitations and restrictions thereof as follows:
Section 1. Designation and Number of Shares. The shares of such series
shall be designated as "Series A Participating Cumulative Preferred Stock" (the
"Series A Preferred Stock"), and the number of shares constituting such series
shall be 350,000.
Section 2. Dividends and Distributions.
(A) The holders of shares of Series A Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable on March 1, June 1,
September 1 and December 1 of each year (each such date being referred to herein
as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of any share or fraction of a
share
Ex. 4.3-A-1
<PAGE>
of Series A Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $1.00 and (b) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate per share amount of
all cash dividends or other distributions and 100 times the aggregate per share
amount of all non-cash dividends or other distributions (other than (i) a
dividend payable in shares of Common Stock (as hereinafter defined) or (ii) a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise)), declared on the Common Stock, par value $1.00 per share, of the
Corporation (the "Common Stock") since the immediately preceding Quarterly
Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of Series A
Preferred Stock. If the Corporation shall at any time after December 6, 1989
(the "Rights Declaration Date") pay any dividend on Common Stock payable in
shares of Common Stock or effect a subdivision or combination of the outstanding
shares of Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then in each such case the amount to
which holders of shares of Series A Preferred Stock were entitled immediately
prior to such event under clause (b) of the preceding sentence shall be adjusted
by multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the Series
A Preferred Stock as provided in paragraph (A) above immediately after it
declares a dividend or distribution on the Common Stock (other than as described
in clause (i) and (ii) of the first sentence of paragraph (A)); PROVIDED that if
no dividend or distribution shall have been declared on the Common Stock during
the period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date (or, with respect to the first Quarterly
Dividend Payment Date, the period between the first issuance of any share or
fraction of a share of Series A Preferred Stock and such first Quarterly
Dividend Payment Date), a dividend of $1.00 per share on the Series A Preferred
Stock shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Preferred Stock, unless
the date of issue of such shares is on or before the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue and be cumulative from the date of issue of such shares, or
unless the date of issue is a date after the record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive a quarterly
dividend and on
Ex. 4.3-A-2
<PAGE>
or before such Quarterly Dividend Payment Date, in which case dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on shares
of Series A Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of holders of
shares of Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall not be more than 60 days
prior to the date fixed for the payment thereof.
Section 3. Voting Rights. In addition to any other voting rights required
by law, the holders of shares of Series A Preferred Stock shall have the
following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Preferred Stock shall entitle the holder thereof to 100 votes
on all matters submitted to a vote of stockholders of the Corporation. If the
Corporation shall at any time after the Rights Declaration Date pay any dividend
on Common Stock payable in shares of Common Stock or effect a subdivision or
combination of the outstanding shares of Common Stock (by reclassification or
otherwise) into a greater or lesser number of shares of Common Stock, then in
each such case the number of votes per share to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of shares
of Series A Preferred Stock and the holders of shares of Common Stock shall vote
together as a single class on all matters submitted to a vote of stockholders of
the Corporation.
(C) (i) If at any time dividends on any Series A Preferred Stock shall be
in arrears in an amount equal to six quarterly dividends thereon, the occurrence
of such contingency shall mark the beginning of a period (herein called a
"default period") which shall extend until such time when all accrued and unpaid
dividends for all previous quarterly dividend periods and for the current
quarterly dividend period on all shares of Series A Preferred Stock then
outstanding shall have been declared and paid or set apart for payment. During
each default period, all holders of Preferred Stock and any other series of
Preferred Stock then entitled as a class
Ex. 4.3-A-3
<PAGE>
to elect directors, voting together as a single class, irrespective of series,
shall have the right to elect two Directors.
(ii) During any default period, such voting right of the holders of
Series A Preferred Stock may be exercised initially at a special meeting
called pursuant to subparagraph (iii) of this Section 3(C) or at any annual
meeting of stockholders, and thereafter at annual meetings of stockholders,
provided that neither such voting right nor the right of the holders of any
other series of Preferred Stock, if any, to increase, in certain cases, the
authorized number of Directors shall be exercised unless the holders of 10%
in number of shares of Preferred Stock outstanding shall be present in
person or by proxy. The absence of a quorum of holders of Common Stock
shall not affect the exercise by holders of Preferred Stock of such voting
right. At any meeting at which holders of Preferred Stock shall exercise
such voting right initially during an existing default period, they shall
have the right, voting as a class, to elect Directors to fill such
vacancies, if any, in the Board of Directors as may then exist up to two
Directors or, if such right is exercised at an annual meeting, to elect two
Directors. If the number which may be so elected at any special meeting
does not amount to the required number, the holders of the Preferred Stock
shall have the right to make such increase in the number of Directors as
shall be necessary to permit the election by them of the required number.
After the holders of the Preferred Stock shall have exercised their right
to elect Directors in any default period and during the continuance of such
period, the number of Directors shall not be increased or decreased except
by vote of the holders of Preferred Stock as herein provided or pursuant to
the rights of any equity securities ranking senior to or "pari passu" with
the Series A Preferred Stock.
(iii) the holders of Preferred Stock shall, during an existing
default period, have previously exercised their right to elect Directors,
the Board of Directors may order, or any stockholder or stockholders owning
in the aggregate not less than 10% of the total number of shares of
Preferred Stock outstanding, irrespective of series, may request, the
calling of special meeting of holders of Preferred Stock, which meeting
shall thereupon be called by the President, a Vice President or the
Secretary of the Corporation. Notice of such meeting and of any annual
meeting at which holders of Preferred Stock are entitled to vote pursuant
to this paragraph (C)(iii) shall be given to each holder of record of
Preferred Stock by mailing a copy of such notice to him at his last address
as the same appears on the books of the Corporation. Such meeting shall be
called for a time not earlier than 20 days and not later than 60 days after
such order or request or in default of the calling of such meeting within
60
Ex. 4.3-A-4
<PAGE>
days after such order or request, such meeting may be called on similar
notice by any stockholder or stockholders owning in the aggregate not less
than 10% of the total number of shares of Preferred Stock outstanding,
irrespective of series. Notwithstanding the provisions of this paragraph
(C)(iii), no such special meeting shall be called during the period within
60 days immediately preceding the date fixed for the next annual meeting of
stockholders.
(iv) In any default period, the holders of Common Stock, and other
classes of stock of the Corporation if applicable, shall continue to be
entitled to elect the whole number of Directors until the holders of
Preferred Stock shall have exercised their right to elect two Directors
voting as a class, after the exercise of which right (x) the Directors so
elected by the holders of Preferred Stock shall continue in office until
their successors shall have been elected by such holders or until the
expiration of the default period, and (y) any vacancy in the Board of
Directors may (except as provided in paragraph (C)(ii) of this Section 3)
be filled by vote of a majority of the remaining Directors theretofore
elected by the holders of the class of stock which elected the Director
whose office shall have become vacant. References in this paragraph (C) to
Directors elected by the holders of a particular class of stock shall
include Directors elected by such Directors to fill vacancies as provided
in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Preferred Stock as a class to elect Directors shall
cease, (y) the term of any Directors elected by the holders of Preferred
Stock as a class shall terminate, and (z) the number of Directors shall be
such number as may be provided for in the certificate of incorporation or
bylaws irrespective of any increase made pursuant to the provisions of
paragraph (C)(ii) of this Section 3 (such number being subject, however, to
change thereafter in any manner provided by law or in the certificate of
incorporation or bylaws). Any vacancies in the Board of Directors effected
by the provisions of clauses (y) and (z) in the preceding sentence may be
filled by a majority of the remaining Directors.
(D) The Certificate of Incorporation of the Corporation shall not be
amended in any manner (whether by merger or otherwise) so as to adversely affect
the powers, preferences or special rights of the Series A Preferred Stock
without the affirmative vote of the holders of a majority of the outstanding
shares of Series A Preferred Stock, voting separately as a class.
Ex. 4.3-A-5
<PAGE>
(E) Except as otherwise provided herein, holders of Series A Preferred
Stock shall have no special voting rights, and their consent shall not be
required for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on outstanding shares of Series A Preferred Stock shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends on, or make any other distributions
on, any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on, or make any other distributions
on, any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
other parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are
then entitled;
(iii) redeem, purchase or otherwise acquire for value any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock; PROVIDED that
the Corporation may at any time redeem, purchase or otherwise acquire
shares of any such junior stock in exchange for shares of stock of the
Corporation ranking junior (as to dividends and upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or
(iv) redeem, purchase or otherwise acquire for value any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of Series A Preferred Stock and all such other
parity stock upon such terms as the Board of Directors, after consideration
of the respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective
series or classes.
Ex. 4.3-A-6
<PAGE>
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for value any shares of stock of the Corporation
unless the Corporation could, under paragraph (A) of this Section 4, purchase or
otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
redeemed, purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock without designation as to series and may be
reissued as part of a new series of Preferred Stock to be created by resolution
or resolutions of the Board of Directors as permitted by the Certificate of
Incorporation or as otherwise permitted under Delaware Law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (1)
to the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall have
received $1.00 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment;
PROVIDED that the holders of shares of Series A Preferred Stock shall be
entitled to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of Common Stock, or (2) to the holders of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except distributions made ratably
on the Series A Preferred Stock and all such other parity stock in proportion to
the total amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. If the Corporation shall at any time
after the Rights Declaration Date pay any dividend on Common Stock payable in
shares of Common Stock or effect a subdivision or combination of the outstanding
shares of Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then in each such case the aggregate
amount to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under the proviso in clause (1) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. If the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of
Ex. 4.3-A-7
<PAGE>
Common Stock are exchanged for or changed into other stock or securities, cash
or any other property, then in any such case the shares of Series A Preferred
Stock shall at the same time be similarly exchanged for or changed into an
amount per share, subject to the provision for adjustment hereinafter set forth,
equal to 100 times the aggregate amount of stock, securities, cash or any other
property, as the case may be, into which or for which each share of Common Stock
is changed or exchanged. If the Corporation shall at any time after the Rights
Declaration Date pay any dividend on Common Stock payable in shares of Common
Stock or effect a subdivision or combination of the outstanding shares of Common
Stock (by reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Series A
Preferred Stock shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 8. No Redemption. The Series A Preferred Stock shall not be
redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank junior (as to
dividends and upon liquidation, dissolution and winding up) to all other series
of the Corporation's preferred stock except any series that specifically
provides that such series shall rank junior to the Series A Preferred Stock.
Section 10. Fractional Shares. Series A Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate this
( ) day of December, 1989.
( )
R. Madison Murphy
Vice President
Attest:
( )
W. Bayless Rowe
Secretary
Ex. 4.3-A-8
<PAGE>
EXHIBIT 4.3 - EXHIBIT B
[Form of Right Certificate]
No. R- ( ) Rights
NOT EXERCISABLE AFTER THE EARLIER OF DECEMBER 6, 1999 AND THE DATE ON WHICH
THE RIGHTS EVIDENCED HEREBY ARE REDEEMED OR EXCHANGED BY THE COMPANY AS SET
FORTH IN THE RIGHTS AGREEMENT. AS SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OF
SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BE NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHT CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR AN
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BE OR MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION
7(d) OF THE RIGHTS AGREEMENT.]*
RIGHT CERTIFICATE
MURPHY OIL CORPORATION
This Right Certificate certifies that ( ), or
registered assigns, is the registered holder of the number of Rights set forth
above, each of which entitles the holder (upon the terms and subject to the
conditions set forth in the Rights Agreement dated as of December 6, 1989 (the
"Rights Agreement") between Murphy Oil Corporation, a Delaware corporation (the
"Company"), and Harris Trust Company of New York (the "Rights Agent")) to
- - - - - -----------------------
*If applicable, insert this portion of the legend and delete the preceeding
sentence.
Ex. 4.3-B-1
<PAGE>
purchase from the Company, at any time after the Distribution Date and prior to
the Expiration Date, ( ) one-hundredth[s] of a fully paid, nonassessable
share of Series A Participating Cumulative Preferred Stock (the "Preferred
Stock") of the Company at a purchase price of $130.00 per one one-hundredth of a
share (the "Purchase Price"), payable in lawful money of the United States of
America, upon surrender of this Right Certificate, with the form of election to
purchase and related certificate duly executed, and payment of the Purchase
Price at an office of the Rights Agent designated for such purpose.
Terms used herein and not otherwise defined herein have the meanings
assigned to them in the Rights Agreement.
The number of Rights evidenced by this Right Certificate (and the number
and kind of shares issuable upon exercise of each Right) and the Purchase Price
set forth above are as of December 6, 1989, and may have been or in the future
be adjusted as a result of the occurrence of certain events, as more fully
provided in the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event, if the Rights evidenced
by this Right Certificate are beneficially owned by (a) an Acquiring Person or
an Associate or Affiliate of an Acquiring Person, (b) a transferee of an
Acquiring Person (or any such Associate or Affiliate) who becomes a transferee
after the Acquiring Person becomes such, or (c) under certain circumstances
specified in the Rights Agreement, a transferee of an Acquiring Person (or any
such Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such, such Rights shall become null and void,
and no holder hereof shall have any right with respect to such Rights from and
after the occurrence of such Section 11(a)(ii) Event.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Upon surrender at the principal office or offices of the Rights Agent
designated for such purpose and subject to the terms and conditions set forth in
the Rights Agreement, any Rights Certificate or Certificates may be transferred
or exchanged for another Rights Certificate or Certificates evidencing a like
number of Rights as the Rights Certificate or Certificates surrendered.
Ex. 4.3-B-2
<PAGE>
Subject to the provisions of the Rights Agreement, the Board of Directors
of the Company may, at its option,
(a) at any time prior to the earlier of (i) the close of business on
the tenth day after the Stock Acquisition Date (or such later date as a
majority of the Continuing Directors may designate prior to such time as
the Rights are no longer redeemable) and (ii) the Final Expiration Date,
redeem all but not less than all the then outstanding Rights at a
redemption price of $.01 per Right; or
(b) at any time after any Person becomes an Acquiring Person (but
before such Person becomes the Beneficial Owner of 50% or more of the
shares of Common Stock then outstanding), exchange all or part of the then
outstanding Rights (other than Rights held by the Acquiring Person and
certain related Persons) for shares of Common Stock at an exchange ratio of
one share of Common Stock per Right. If the Rights shall be exchanged in
part, the holder of this Right Certificate shall be entitled to receive
upon surrender hereof another Right Certificate or Certificates for the
number of whole Rights not exchanged.
No fractional shares of Preferred Stock will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractions which are multiples
of one one-hundredth of a share of Preferred Stock, which may, at the election
of the Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement. If this Right
Certificate shall be exercised in part, the holder shall be entitled to receive
upon surrender hereof another Right Certificate or Certificates for the number
of whole Rights not exercised.
No holder of this Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the shares of capital stock
which may at any time be issuable on the exercise hereof, nor shall anything
contained in the Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or, to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised as provided in the
Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
Ex. 4.3-B-3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal by its authorized officers.
Dated as of ( ) , 19 ( )
MURPHY OIL CORPORATION
By ( )
Title:
[SEAL]
Attest:
( )
Secretary
Countersigned:
HARRIS TRUST COMPANY
OF NEW YORK,
as Rights Agent
By ( )
Authorized Signature
Ex. 4.3-B-4
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed if the registered holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ( )
hereby sells, assigns and transfers unto ( )
( )
(Please print name and address of transferee)
( )
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ( ) Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: ( ), 19( )
( )
Signature
Signature Guaranteed:
Ex. 4.3-B-5
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate / /are / /are not
being assigned by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
/ /did / /did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ( ), 19 ( ) ( )
Signature
____________
The signatures to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
____________
Ex. 4.3-B-6
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to exercise
Rights represented by the Right Certificate.)
To: Murphy Oil Corporation
The undersigned hereby irrevocably elects to exercise ( ) Rights
represented by this Right Certificate to purchase shares of Preferred Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such securities be issued in the name
of and delivered to:
Please insert social security
or other identifying number
( )
(Please print name and address)
( )
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance of such Rights shall
be registered in the name of and delivered to:
Please insert social security
or other identifying number
( )
(Please print name and address)
( )
Dated: ( ), 19 ( )
( )
Signature
Signature Guaranteed:
Ex. 4.3-B-7
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate / /are / /are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
/ /did / /did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ( ), 19 ( ) ( )
Signature
__________
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
__________
Ex. 4.3-B-8
<PAGE>
EXHIBIT 4.3-EXHIBIT C
MURPHY OIL CORPORATION
STOCKHOLDER RIGHTS PLAN
Summary of Terms
Form of Security: The Board of Directors has declared a dividend of one
preferred stock purchase right for each share of the
Company's Common Stock outstanding at the close of
business on December 20, 1989 (each a "Right" and
collectively, the "Rights").
Transfer: Prior to the Distribution Date*, the Rights will be
evidenced by the certificates for and will trade with
the Common Stock, and the registered holders of the
Common Stock will be deemed to be the registered
holders of the Rights.
After the Distribution Date, the Rights Agent will mail
separate certificates evidencing the Rights to each
record holder of the Common Stock as of the close of
business on the Distribution Date, and thereafter the
Rights will be transferable separately from the Common
Stock.
Exercise: Prior to the Distribution Date, the Rights will not be
exercisable.
____________________
*Distribution Date means the close of business on the 10th day after public
announcement that any person or group (an "Acquiring Person") has become the
beneficial owner of 15% or more of the Company's Common Stock subject to
extension by a majority of the directors not affiliated with the Acquiring
Person.
Ex. 4.3-C-1
<PAGE>
After the Distribution Date, each Right will be
exercisable to purchase, for $130.00 (the "Exercise
Price"), one one-hundredth of a share of Series A
Participating Cumulative Preferred Stock, par value
$100.00 per share, of the Company.
Flip-In: If any person or group (an "Acquiring Person") becomes
the beneficial owner of 15% or more of the Company's
Common Stock, then each Right (other than Rights owned
by the Acquiring Person and certain related persons)
will entitle the holder to purchase, for the Exercise
Price, a number of shares of the Company's Common Stock
having a market value of twice the Exercise Price.
Flip-Over: If, after any person has become an Acquiring Person,
(1) the Company is involved in a merger or other
business combination in which the Company is not the
surviving corporation or its Common Stock is changed
into or exchanged for other securities or assets or (2)
the Company and/or one or more of its subsidiaries sell
or otherwise transfer assets or earning power
aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries, taken as a
whole, then each Right (other than Rights owned by the
Acquiring Person and certain related persons) will
entitle the holder to purchase, for the Exercise Price,
a number of shares of common stock of the other party
to such business combination or sale (or in certain
circumstances, an affiliate) having a market value of
twice the Exercise Price.
Redemption: The Board of Directors may redeem all of the Rights at
a price of $.01 per Right at any time prior to the
close of business on the 10th day after public
announcement that any person has become an Acquiring
Person
Ex. 4.3-C-2
<PAGE>
(subject to extension by a majority of the directors
not affiliated with the Acquiring Person).
After any person has become an Acquiring Person, the
Rights may be redeemed only with the approval of a
majority of the directors not affiliated with the
Acquiring Person.
Exchange: The Board of Directors may, at any time after any
person or group has become the beneficial owner of 15%
or more but less than 50% of the Company's Common
Stock, exchange all or part of the Rights (other than
Rights owned by the Acquiring Person and certain
related persons) for shares of Common Stock at an
exchange ratio of one share of Common Stock per Right.
Expiration: The Rights will expire on December 6, 1999, unless
earlier redeemed or exchanged.
Amendments: Prior to the Distribution Date, the Rights Agreement
may be amended in any respect.
After the Distribution Date, the Rights Agreement may
be amended in any respect that does not adversely
affect the Rights holders (other than any Acquiring
Person and certain related persons); PROVIDED that the
Rights Agreement may be amended to extend the
redemption period at any time prior to the expiration
of such period.
After any person has become an Acquiring Person, the
Rights Agreement may be amended only with the approval
of a majority of the directors not affiliated with the
Acquiring Person.
Voting Rights: The Rights have no voting power.
Ex. 4.3-C-3
<PAGE>
Antidilution The Rights Agreement includes antidilution
Provisions: provisions designed to prevent efforts to
diminish the efficacy of the Rights.
Taxes: Distribution of the Rights is designed to be tax-
free to the Company and the stockholders, although
income may be recognized by the holders of the
Rights upon the occurrence of certain subsequent
events.
_______________
A copy of the Rights Agreement has been filed with the Securities and Exchange
Commission as an Exhibit to a Registration Statement on Form 8-A. A copy of the
Rights Agreement is available free of charge from the Company. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement.
Ex. 4.3-C-4
<PAGE>
EXHIBIT 10.1
MURPHY OIL CORPORATION
1987 MANAGEMENT INCENTIVE PLAN
(As Amended February 7, 1990
Retroactive to February 3, 1988)
SECTION I. DEFINITIONS
Unless the context otherwise indicates, the following definitions shall be
applicable for the purpose of this Management Incentive Plan:
. "Company" means Murphy Oil Corporation, a Delaware corporation.
. "Board of Directors" means the Board of Directors of the Company.
. "Committee" means the Executive Compensation Committee appointed by the
Board of Directors and composed of not less than three directors of the
Company. A majority of the members of the Committee shall not be
employees.
. "Subsidiary" means any company more than 50% of the voting stock of
which is owned directly or indirectly by the Company, except that for
the purposes of the Plan Ocean Drilling & Exploration Company (ODECO)
shall not be considered a Subsidiary and for the purpose of the
Incentive Bonus Plan portion of the Plan Murphy Oil Company Ltd. (MOCL)
shall not be considered a Subsidiary.
. "Company and Consolidated Subsidiaries" means the Company and all the
Company's subsidiaries, the financial results of which for the year in
question are consolidated with those of the Company and so included in
the Company's Annual Report to its stockholders, with the exception of
ODECO and its subsidiaries and MOCL and its subsidiaries for purposes of
the Incentive Bonus Plan portion of the Plan.
. "Employee" means regular employee, whether or not a director.
. "Key Employee" means employee who is a director or officer or in a
managerial, professional or other key position.
Ex. 10.1-1
<PAGE>
. "Eligible Employee" means Key Employee of the Company or of a Subsidiary
that does not have in effect for its personnel any plan similar to the
Plan. In addition to Key Employees the Committee may in any year include
any other Employee who has made some unusual contribution which would
not be expected of such Employee in the ordinary course of his work.
. "Independent Auditors" means the independent auditors appointed by the
Board of Directors to examine and certify the financial statements of
the Company and Consolidated Subsidiaries.
. "Incentive Award" means an award either paid currently or paid on a
deferred basis as a result of the operation of the Plan.
. "Incentive Award Reserve" or "Reserve" means monies available for
distribution as Incentive Awards as the result of the operation of the
Plan.
. "Shares," "Shares of Stock," or "Stock" means shares of the Common Stock
of the Company including shares which have been previously issued and
reacquired by the Company at such times as the Company may deem
advisable.
. "Plan" means this Management Incentive Plan.
. "Beneficiary" means the person designated by an Option Holder by written
notice to the Company as the person entitled to exercise an option upon
the death of the Option Holder.
. "Normal Termination" means terminate (i) at normal retirement time, (ii)
for permanent and total disability, or (iii) with Employer approval, and
without being terminated for cause.
. "Option Holder" or "Holder" means an Employee to whom an option has been
granted.
Ex. 10.1-2
<PAGE>
. "Terminate" means cease to be an Employee of the Company or a Subsidiary
except by death, but a change of employment from the Company or one
Subsidiary to another Subsidiary or to the Company shall not be
considered a Termination. For this definition ODECO and MOCL shall be
considered Subsidiaries.
SECTION II. ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall have
the exclusive right to interpret provisions of the Plan, which interpretation
shall be binding and conclusive upon all persons. The Committee may promulgate
rules and regulations for the administration of the Plan. The Committee shall
also have the exclusive right to select Employees eligible for participation in
the Plan, and the amount and extent of such participation in each individual
case shall rest in the Committee's absolute discretion. No member of the
Committee, while he serves on the Committee, may be granted an Incentive Award
or a Stock Option under the Plan.
The Board of Directors may from time to time remove members from the
Committee or add members thereto, and vacancies in the Committee, however
caused, shall be filled by action of the Board of Directors. The Committee
shall select one of its members as chairman, and shall hold its meetings at such
times and places as it may determine. A majority of its members shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. The members of the Committee may receive such
compensation for their services as the Board of Directors may determine.
SECTION III. STOCK OPTION PLAN
1. Stock Subject to Plan
Subject to adjustment as provided in subsection 2, the total number of
shares of Common Stock which may be acquired pursuant to options granted under
the Plan shall not
Ex. 10.1-3
<PAGE>
exceed 300,000. Not more than 100,000 of such shares may be optioned to
directors and not more than 30,000 such shares may be optioned to any one
Employee. Shares optioned to an Employee who is not a director shall not be
counted against the limitations on grants to directors, even though such
Employee may have previous been a director or should later be elected a
director. All options granted under this Plan which are outstanding or have been
exercised shall be deducted from the foregoing totals in determining whether
further options may be granted hereunder. For this purpose options which have
expired or lapsed due to the death or Termination of an Option Holder before the
option becomes excisable shall not be considered outstanding.
2. Adjustments
The total number of shares which may be acquired pursuant to the Plan and
the total number of shares which may be acquired by directors or by any one
director, as well as the number of shares subject to any outstanding option and
the option price per share with respect to any outstanding option, shall be
appropriately adjusted to take into account any stock split, stock dividend, or
other relevant change in the capitalization of the Company which becomes
effective while this Plan is in effect or any option granted hereunder is
outstanding.
3. Provisions of Options
Each option granted hereunder shall be evidenced by a written agreement
between the Company and the Option Holder and shall not be assignable except as
provided in case of death and shall not be subject in whole or in part to
attachment, execution or levy. Any option or portion thereof which is
exercisable shall be exercisable for the full amount or for any part thereof.
Each option shall be granted for an option price determined by the
Committee which shall not be less than the fair market value of the Common Stock
subject thereto on the date the option is granted.
Ex. 10.1-4
<PAGE>
Provided the Option Holder has not died or Terminated, each option shall
become exercisable as to one-half of the shares subject thereto beginning two
years from the date of grant and shall become exercisable as to all of the
shares subject thereto beginning three years from the date of grant provided
that each option shall become exercisable in full immediately if the Company
should propose or become a party to any form of corporate reorganization
requiring a vote of Common Stockholders of the Company, of if there should be a
tender offer for Common Stock of the Company which results in one person or
group of persons acting in concert becoming the owners of as much as 20% of the
outstanding Common Stock of the Company. Each option may be exercised only by
the Option Holder, except that in the event of his death after the option has
become exercisable the option may be exercised by his Beneficiary or, if no
Beneficiary has been designated, the option may be exercised by the executor or
administrator of his estate.
Each option shall expire and be no longer exercisable as follows:
A. If the Option Holder is then living, it shall expire at the
earliest of the following times:
(i) Ten years after it is granted.
(ii) Three months after Normal Termination, or
(iii) Any earlier time provided for in the option agreement.
B. If the Option Holder Terminates otherwise than normally, it shall
expire at the time of Termination.
C. If the Option Holder dies, it shall expire:
(i) One year after his death, or
(ii) Any earlier time provided for in the option agreement.
At the discretion of the Committee, options may be designated as either
"Stock Options" or "Incentive Stock Options." Options designated as Incentive
Stock options may not
Ex. 10.1-5
<PAGE>
be granted to any employee which would result in Shares of Stock having an
aggregate fair market value at the time of grant in excess of $100,000 first
becoming exercisable in any one calendar year.
4. Grant of Options
The Committee shall select Eligible Employees to whom options are to be
granted under this Plan. Subject to the limitations expressed in subsection 1,
the Committee shall grant options under this Plan for such numbers of shares as
the Committee shall in its discretion determine to be appropriate.
5. Payment for Options Exercised
Upon exercise of an option, the purchase price of Shares purchased shall
be paid either in cash or by delivery of Shares of Stock of the Company, which
Shares shall be valued at the fair market value on date of exercise.
6. Cancellation of Options
The Committee may in its discretion authorize payment, in cash or in
Shares, or partly in cash and partly in Shares, as the Committee may direct, of
an amount equal to the difference at the time between the fair market value of
all or part of the Shares subject to an option and the option price in
consideration of the cancellation of the option in whole or in part. In such an
event the Shares subject to the option so cancelled shall be charged against the
limitations set forth in subsection 1 of this Section III.
SECTION IV. INCENTIVE BONUS PLAN
1. Incentive Award Reserve
In each of the five calendar years after 1987 the Board of Directors may
cause to be credited to the Incentive Award Reserve an amount not exceeding 3%
of the amount by which the Net Income of the Company and Consolidated
Subsidiaries for that year, exclusive of ODECO
Ex. 10.1-6
<PAGE>
and MOCL, exceeds an amount equal to 7% of Capital Employed in the Business of
the Company and Consolidated Subsidiaries, exclusive of ODECO and MOCL. For the
purpose of determining the maximum amount creditable to the Reserve in each year
as above provided:
A. "Capital Employed in the Business of the Company and Consolidated
Subsidiaries" for any year means the amount of (i) Stockholders'
Equity (which includes Capital Stock, Capital in Excess of Par Value,
and Retaining Earnings) less the cost of shares reacquired, plus (ii)
Long-Term Debt having a maturity of more than one year, as reported in
the financial statements of the Company and Consolidated Subsidiaries
included in the Company's Annual Report to stockholders as of the end
of the previous year, exclusive of ODECO and MOCL, with an appropriate
adjustment for any significant change during the year in the amount of
issued capital or debt as well as in the amount of earnings reinvested
and employed in the business resulting from surplus adjustments.
B. "Net Income" for any year means the amount reported as "Net Income" in
the "Statement of Income of the Company and Consolidated Subsidiaries"
included in the Company's Annual Report to stockholders for that year,
after eliminating the accounts of ODECO and MOCL from the
consolidation and after giving effect to such adjustment for any
unusual or nonrecurring items of income or loss not arising in the
ordinary course of the business as the Committee in its sole
discretion may determine, plus (i) interest on long-term debt, reduced
by interest attributable to debt funds invested in or loaned or
advanced to ODECO and MOCL, and (ii) amounts credited to the Reserve
during the year, and less (iii) any dividends received from ODECO and
MOCL (adjusted in each case by the estimated tax effect applicable
thereto). In determining the amount of interest attributable to long-
term debt funds invested in or loaned or advanced to ODECO or MOCL,
the Company's investments and loans or
Ex. 10.1-7
<PAGE>
advances to these companies after their elimination from the
consolidation shall be deemed to have been 40% long-term debt funds,
and the annual interest rate shall be deemed to be 7%.
As soon as practicable after the end of each fiscal year, the
Independent Auditors shall determine, in accordance with the Plan, and
report to the Board of Directors the maximum amount available for
credit to the Incentive Award Reserve for that year and the amount of
any balance in such Reserve credited thereto in prior years and
currently available for Incentive Awards, and the Board of Directors
shall rely upon and be bound by such reports. The Board of Directors
will determine the amount to be credited to the Reserve and advise the
Committee the total amount available for Incentive Awards. In making
such determination, the Board of Directors may reduce the amount to be
credited to the Reserve to adjust for the effect of any extraordinary
or unusual accounting adjustments, such as a writedown of asset
values.
No amount shall be credited to the Reserve in any year in which no
dividends, either in cash, stock, or property, have been declared on
the Common Stock of the Company.
2. Allotments to Participants
In respect of any year the Committee shall select those Employees
to whom Incentive Awards shall be made and its determination of the amount and
method of payment of each such Incentive Award shall be final.
The Committee shall not be required to award the total amount
creditable to the Reserve for any particular year, and any amount of the Reserve
for any year which the Committee shall not have awarded shall be carried forward
and may be awarded in succeeding years or, if the Committee so determines, may
be restored to net income.
Ex. 10.1-8
<PAGE>
No allotment to an individual Employee shall exceed 50% of such
Employee's annual salary rate for that year as in effect on the date of the
Incentive Award.
3. Form of Allotments
Subject to the limitations of subsection 4, the Committee may in its
absolute discretion make allotments to Employees eligible for participation
wholly in cash or in Shares of Stock, or in a combination of cash or Shares of
Stock. The number of Shares shall be determined by reference to the closing
price on the New York Stock Exchange on the trading date next preceding the date
of allotment. Such number of Shares shall be adjusted to give effect to any
stock splits, stock dividends, or other relevant changes in capitalization
occurring after the date of allotment. Shares allotted under the Plan may be
freely transferable or may be subject to such terms and conditions, including
forfeiture, and to such restrictions against sale, transfer or other disposition
as may be determined by the Committee at the time of making a bonus award. The
Committee may in its discretion remove, modify or accelerate the release of
restrictions on any Shares in the event of hardship of disability of the
participant while employed, or for such other reasons as the Committee may deem
appropriate in the event that the participant ceases to be an Employee of the
Company or a Subsidiary (including ODECO and MOCL) as the result of death or
otherwise. In the event of the death of a participant following the transfer of
Shares to him subject to restrictions, the legal representatives of the
participant and the person receiving such Shares under his Will or under the
laws of descent and distribution shall take such Shares subject to the same
restrictions, conditions and provisions in effect at the time of his death, to
the extent applicable.
4. Settlement of Allotments
A. Subject to the provisions of paragraph B of this subsection 4,
all allotments shall be settled as determined by the Committee in
individual cases at the time of allotment by payment of cash and
delivery of Shares either (i) in full as soon as
Ex. 10.1-9
<PAGE>
practicable after the date of allotment, or (ii) in not more than
four equal annual installments commencing as soon as practicable
after date of allotment.
B. If any allotment is payable after the death of the participant it
shall be payable (i) to his designated Beneficiary, or if there
is no designated Beneficiary, to his personal representative, and
(ii) either in the same installments as originally provided in
the allotment or otherwise as the Committee may determine in
individual cases.
5. Contribution by Subsidiaries
To the extent that Employees of Subsidiaries shall participate in the
Plan, each of such Subsidiaries will be charged with the total amount of
allotments made to its Employees in each fiscal year.
6. Forfeiture Provisions
All allotments to participants, whether in cash or Shares of Stock,
shall be deemed to be provisional and, to the extent not actually paid to
participants, shall be subject to forfeiture under the following circumstances:
A. unless otherwise determined by the Committee, if a participant's
service is terminated for any reason other than by death,
disability, retirement at normal retirement age, early retirement
for the convenience of the Company, or
B. if after termination of employment a participant shall engage in
activities which would be detrimental to the interest of the
Company or its Subsidiaries.
A change in employment from the Company or one Subsidiary to another
Subsidiary of the Company shall not be considered a termination. For purposes
of the preceding sentence ODECO and MOCL shall be considered Subsidiaries.
Ex. 10.1-10
<PAGE>
Any amounts so forfeited (in the case of forfeited Stock, said amounts
being determined by reference to prices used to determine the amount of the
original allotment) shall be restored to net income in the year of forfeiture.
SECTION V. AMENDMENT AND TERMINATION OF THE PLAN
The Board of Directors may from time to time amend the Plan or any
provision thereof without the consent of the stockholders except that (i) the
number of shares which may be optioned under the Stock Option portion of the
Plan may not be increased nor may the number of shares which may be acquired by
members of the Board or any one member thereof be increased, (ii) the minimum
time provided for an option to become exercisable may not be decreased nor may
the maximum term for options be increased, (iii) the minimum price at which
options may be granted may not be decreased, (iv) the maximum amount which may
be credited to the Bonus Reserve may not be increased, (v) the maximum amount
which may be allotted in any year to any participant in the Incentive Bonus
portion of the Plan may not be increased, and (vi) the Plan may not be amended
to permit participation by members of the Committee.
The Board of Directors may terminate the Plan in whole or in part at any
time provided that no such termination shall alter the terms of options then
outstanding or of Bonus awards which have been allocated but remain unpaid.
SECTION VI. EFFECTIVE PERIOD
The Plan has been approved by the Board of Directors but will not become
effective unless and until approved by Common stockholders of the Company at the
annual meeting on May 13, 1987. If the 1987 Management Incentive Plan is then
approved by stockholders, (i) the Stock Option portion of the existing
Management Incentive Plan shall be terminated except with respect to options
previously granted, (ii) the Stock Option portion of the 1987 Management
Ex. 10.1-11
<PAGE>
Incentive Plan shall become effective immediately and shall remain in effect
until April 30, 1992, and (iii) the Incentive Bonus portion of the 1987
Management Incentive Plan shall be effective for the purposes of accruing
Reserves for the five calendar years 1988 through 1992 and shall continue
thereafter with respect to awards made from Reserves accrued during such years.
Ex. 10.1-12
<PAGE>
EXHIBIT 13
MURPHY OIL CORPORATION
1999 ANNUAL REPORT
CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Murphy Oil at a Glance............................................... 1
Highlights........................................................... 3
Letter to the Shareholders........................................... 4
Exploration and Production........................................... 6
Refining, Marketing & Transportation................................. 16
Corporate Responsibility............................................. 20
Statistical Summary.................................................. 21
Directors and Officers............................................... 23
Principal Subsidiaries............................................... 24
Corporate Information.................................. inside back cover
</TABLE>
As used in this report, the terms Murphy, Murphy Oil, we, our, its and Company
may refer to Murphy Oil Corporation or any one or more of its consolidated
subsidiaries. The Company's interest percentage in exploration and production
projects and other jointly owned facilities is shown following the name of each
field, block or facility.
<PAGE>
MURPHY OIL AT A GLANCE
Murphy Oil Corporation is a worldwide oil and gas exploration and production
company with refining and marketing operations in the United States and the
United Kingdom. In 1999, Murphy's long-standing philosophy of conservative
financial management, selective investment and carefully calculated risk-taking
enabled the Company to successfully weather wildly fluctuating commodity prices
and report record results from its upstream operations.
Murphy's exploration and production activities are centered in four of the
world's premier oil and natural gas regions: the Gulf of Mexico and onshore
South Louisiana, off the east coast of Canada, western Canada and the United
Kingdom. Significant achievements during 1999 included two important deepwater
Gulf of Mexico discoveries, record hydrocarbon production, and the acquisition
of highly prospective exploration acreage off the coasts of Nova Scotia and
Malaysia. The Company continued to lower its per-barrel production costs, and
for the ninth consecutive year, proved reserves grew. Murphy's production
profile, one of the strongest in the industry, improved in 1999 due to growing
volumes from low-cost, long-lived properties now on line -- Hibernia,
Schiehallion and Mungo/Monan.
Downstream operations were highlighted by the Wal-Mart project. In 1999, Murphy
built an additional 113 stations in Wal-Mart parking areas, bringing the number
of stations in operation to 145 at year end. The Wal-Mart project -- with
[GRAPH -- INCOME CONTRIBUTION FROM CONTINUING OPERATIONS BY FUNCTION]
[GRAPH -- CASH FLOW FROM CONTINUING OPERATIONS BY FUNCTION]
1
<PAGE>
[GRAPH -- HYDROCARBON PRODUCTION REPLACEMENT]
[GRAPH -- CAPITAL EXPENDITURES BY FUNCTION]
its well-designed and well-executed strategy -- is one of the Company's impact
investments and positions Murphy as an industry leader in the evolving retail
landscape. The focus at the Company's three refineries continues to be
reliability and on-stream efficiency.
Worldwide, Murphy's continued emphasis on employee safety and training,
environmental responsibility and corporate citizenship are evidenced by a record
of achievement far above industry norms.
After emerging from a period of extremely low oil prices, Murphy recorded strong
1999 operating results. Exploration successes, driven by a commitment to premier
geologic plays, have added high-impact projects to the Company's development
portfolio. As expected, increasing output from legacy properties has led to
record hydrocarbon production. Continued expansion of the Wal-Mart program
exemplifies the excellent array of investment opportunities available to the
Company across all segments of the enterprise.
In 1999, Murphy's long-term commitment to its core principles was justly
rewarded, and the Company is well-positioned to build on that foundation in the
years to come.
[PICTURE APPEARS HERE]
2
<PAGE>
HIGHLIGHTS
<TABLE>
<CAPTION>
FINANCIAL
- - - - - ----------------------------------------------------------------------------------------
(Thousands of dollars except per share data) 1999 1998 1997
- - - - - ----------------------------------------------------------------------------------------
For the Year*
- - - - - ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $ 2,041,198 1,698,848 2,137,767
Net income (loss) 119,707 (14,394) 132,406
Cash dividends paid 62,950 62,939 60,573
Capital expenditures 386,605 388,799 468,031
Net cash provided by operating activities 368,878 321,091 401,843
Average Common shares outstanding - diluted 45,030,225 44,955,679 44,960,907
- - - - - ----------------------------------------------------------------------------------------
At End of Year
- - - - - ----------------------------------------------------------------------------------------
Working capital $ 105,477 56,616 48,333
Total assets 2,445,508 2,164,419 2,238,319
Notes payable 248,569 189,705 28,367
Nonrecourse debt of a subsidiary 144,595 143,768 177,486
Stockholders' equity 1,057,172 978,233 1,079,351
- - - - - ----------------------------------------------------------------------------------------
Per Share of Common Stock*
- - - - - ----------------------------------------------------------------------------------------
Net income (loss) - diluted $ 2.66 (.32) 2.94
Cash dividends paid 1.40 1.40 1.35
Stockholders' equity 23.49 21.76 24.04
- - - - - ----------------------------------------------------------------------------------------
</TABLE>
* Includes special items that are detailed in Management's Discussion and
Analysis, page 9 of the attached Form 10-K report.
<TABLE>
<CAPTION>
OPERATING
- - - - - -----------------------------------------------------------------------------------------
For the Year 1999 1998 1997
- - - - - -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net crude oil and gas liquids produced - barrels a day 66,083 59,128 57,494
United States 8,461 7,798 10,760
International 57,622 51,330 46,734
Net natural gas sold - thousands of cubic feet a day 240,443 230,901 268,669
United States 171,762 169,519 211,207
International 68,681 61,382 57,462
Crude oil refined - barrels a day 143,204 165,580 161,560
United States 115,812 134,800 134,854
United Kingdom 27,392 30,780 26,706
Petroleum products sold - barrels a day 159,042 174,152 163,430
United States 126,195 137,620 134,209
United Kingdom 32,251 36,093 28,977
Canada 596 439 244
- - - - - -----------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
[PICTURE APPEARS HERE]
LETTER TO THE SHAREHOLDERS
DEAR FELLOW SHAREHOLDER:
By almost every meaningful measure -- earnings, exploration success, production
growth, reserve replacement, finding and development costs, and retail
expansion -- 1999 was a very good year for Murphy Oil Corporation. Earnings
before special items rose to $100 million ($2.22 a share). That is a healthy
130% increase over 1998 and reflects the impact of higher crude oil and natural
gas sales prices as well as a 9% increase in net hydrocarbon production. Net
income for 1999 totaled $119.7 million ($2.66 a share) compared to a loss of
$14.4 million ($.32 a share) in 1998. Cash provided by operations, the source of
funds for future growth, increased to $368.9 million ($8.19 a share) in 1999.
More telling than the numbers, however, are the events that transpired during
1999. Initiatives such as deepwater Gulf of Mexico exploration that started
several years ago began contributing to the Company's success. As a result, we
can now identify the assets that will provide future growth and complement the
extraordinarily strong core assets of Murphy -- Hibernia, Syncrude, Schiehallion
and Terra Nova. These core assets, all long-lived, low-cost oil fields, provide
strength and stability that very few oil and gas companies enjoy. What we
lacked, however, was a demonstrable means to grow beyond this base. Now we have
it. I will review the year, highlighting the properties and programs that
provide our future.
Murphy made two significant deepwater Gulf of Mexico discoveries in 1999. The
first, Habanero (33.8%), was announced in February and the second, Medusa (60%),
was announced in October. Habanero is located in Garden Banks Block 341 in the
Auger Basin and has a field size within a range of 75 to 100 million barrels of
oil equivalent. Importantly, this discovery sets up two similar prospects
located immediately to the north called Moccasin (37.5%) and South Moccasin
(37.5%). Murphy-operated Medusa, located in Mississippi Canyon Blocks 538/582,
has been substantially delineated and has estimated reserves of about 80 million
barrels of oil equivalent. The Medusa development team is in place, with first
oil currently targeted for the second quarter of 2002.
Although important in their own right, the Habanero and Medusa discoveries also
serve to establish the validity and credibility of our deepwater program and
provide a successful introduction to a prospect inventory that Murphy began
building in 1995. Of course there will be disappointments along the way, but
Murphy continues to grow its portfolio of drillable prospects, several of which
will be tested this year.
Your Company's international frontier exploratory program also increased its
pace and intensity last year.
[GRAPH -- ESTIMATED NET PROVED HYDROCARBON RESERVES]
4
<PAGE>
Similar to the deepwater Gulf of Mexico, this program is focused on proven
basins that are early in their exploration cycle. Murphy added 740,000 net acres
in eight blocks in the highly prospective, gas-prone Scotian Shelf offshore Nova
Scotia. Two of these large acreage blocks are adjacent to the Sable Island Gas
Project, which started delivering natural gas to New England in November. This
basin is one of very few in North America that can provide the opportunity for
multitrillion cubic foot gas discoveries. In addition, Murphy acquired
concessions covering three large offshore blocks in Malaysia. Two are shallow-
water blocks, which contain identified structures with exploitation potential.
The third is a rank wildcat deepwater block, which also contains structures and
is adjacent to Brunei and blocks held by major oil companies.
Your Company set a hydrocarbon production record in 1999. Volumes will be flat
to down this year, primarily due to declines in Gulf of Mexico natural gas
production as we shift investment dollars to deep water. Nevertheless, Murphy
will establish another record in 2001, when Terra Nova (12%) comes on stream.
This field will provide approximately 15,000 barrels a day for Murphy's account
when it reaches its plateau rate. Yet another production record should be set in
2002, when Medusa starts up. Likewise, hydrocarbon reserves reached record
levels at year-end 1999, increasing for the ninth consecutive year and exceeding
400 million barrels of oil equivalent for the first time.
Your Company built 113 stations at Wal-Mart sites during 1999 and plans to
construct 150 more this year. Sales volume per station averaged 200,000 gallons
a month towards year end, one of the best in the nation for a large network. We
added seven states in the Midwest to the 13 southern states that comprise our
Wal-Mart territory. High volumes, minimal capital costs and excellent locations
create a low-cost, competitive business enterprise. My hat is off to the
entrepreneurial Murphy people who created this industry-leading opportunity.
During the trying days of 1998 and early 1999, we prudently trimmed programs yet
maintained a core investment strategy. Your Company never lost momentum and
picked up key exploratory acreage in the deepwater Gulf of Mexico, Scotian Shelf
and Malaysia as well as sealed the Wal-Mart deal during this period. Those
decisions laid the foundation for where we are today. Our strategy is sound and
proven. On the upstream side, our Company is drill-bit focused, primarily in
basins that have proven hydrocarbon systems with large reserve potential. Over
time, this is the best way to add low-cost, sizable reserves that deliver
profitable growth. Nevertheless, if a unique acquisition that complements
existing assets becomes available, we have the balance sheet strength and
flexibility to make the deal. On the downstream side, Wal-Mart is our focus. The
Meraux refinery will be upgraded to make low sulfur gasoline and diesel to
provide "green" products for this premier distribution and marketing system.
Charles H. Murphy Jr., the Company's founder and retired CEO and Chairman, steps
down from the Board in May after 50 years of service. Charles' genius, as Jack
McNutt, my predecessor, once observed, was his ability to see "over the
horizon." This unique gift, as well as Charles' insights, witticisms and loyalty
will be missed.
Two other valued directors -- Vester Hughes and Lorne Webster -- will also
retire in May. Vester has been a director for 27 years and a trusted advisor as
well as a valued friend to Murphy. Lorne joined the Board in 1989, bringing many
years of experience from the Canadian business community. We will miss their
views and advice in the years ahead.
We were extremely fortunate to add Robert Hermes of Houston to the Board in
November of last year. Bob is a recognized expert in downstream issues and his
counsel will be invaluable.
In addition, Ron Herman, a 25-year employee of the Company will retire March 1,
2000 after nine years as Controller. Ron's intelligence, work ethic and good
judgment will be sorely missed. John Eckart will move up from Assistant
Controller to take Ron's place.
The future will undoubtedly bring more challenges, but our asset base and our
people are the best in this Company's history. As a result, we will meet these
challenges and continue to deliver accelerating future growth.
As always, I appreciate your support.
/s/ Claiborne P. Deming
Claiborne P. Deming
President and Chief Executive Officer
February 17, 2000
El Dorado, Arkansas
5
<PAGE>
EXPLORATION AND PRODUCTION
THE YEAR IN REVIEW
Continued long-term success in Murphy's exploration and production activities
remains the critical component in the Company's ability to achieve strategic,
profitable growth. Significant achievements in 1999 included two important
discoveries in the deepwater Gulf of Mexico, record hydrocarbon production
levels, and the acquisition of highly prospective exploration acreage off the
coasts of Nova Scotia and Malaysia.
The improvement in oil prices in the second half of the year, combined with the
growing production profile, resulted in record earnings from the Company's
exploration and production operations in 1999. Such earnings before special
items totaled $121.2 million in 1999 compared to $5.8 million in 1998. Proved
reserves at the end of 1999 increased to a Company record 401 million barrels of
oil equivalent -- the ninth consecutive year that Murphy has more than replaced
its production. Importantly, this growth did not come at the expense of a
reduced competitive position as the Company's concerted effort to manage its
cost structure aggressively resulted in a continued decline in unit operating
expenses and finding and development costs. Record worldwide production of
106,157 barrels of oil equivalent a day represented a 9% increase over 1998.
Murphy's upstream activities are centered in four of the world's premier,
politically secure oil and natural gas regions: the Gulf of Mexico and onshore
South Louisiana, off the east coast of Canada, western Canada and the United
Kingdom.
Approximately two-thirds of Murphy's exploration capital was invested in the
Gulf of Mexico and onshore South Louisiana in 1999, and a similar allocation is
budgeted for 2000. In the Gulf of Mexico, Murphy has shifted its emphasis from
the continental shelf to deep water, which offers better opportunities to
identify prospects with impact reserve potential. Building on the successful
deepwater exploration efforts achieved in 1998, the
EXPLORATION AND PRODUCTION
<TABLE>
<CAPTION>
1999 1998 1997
- - - - - -----------------------------------------------------------------------------------------------------------------
(Thousands of dollars)
<S> <C> <C> <C>
Income contribution before special items $ 121,182 5,809 84,984
Total assets 1,497,770 1,385,879 1,402,684
Capital expenditures 295,959 331,647 423,181
- - - - - -----------------------------------------------------------------------------------------------------------------
Crude oil and liquids produced - barrels a day 66,083 59,128 57,494
Natural gas sold - MCF a day 240,443 230,901 268,669
Total hydrocarbons produced - oil equivalent barrels a day 106,157 97,612 102,272
Net proved hydrocarbon reserves - thousands of oil equivalent barrels 400,800 379,900 362,100
</TABLE>
[PICTURE APPEARS HERE]
6
<PAGE>
Company added two discoveries to its development portfolio during 1999.
Production from the Hibernia oil field (6.5%) offshore eastern Canada continued
to ramp up throughout 1999. On balance, the field is performing better than
originally anticipated, and regulatory approval has been sought in 2000 to
increase average annual gross production to 180,000 barrels a day. The nearby
Terra Nova development project (12%) is expected to deliver first oil in early
2001. Plateau production rate estimates have recently been increased to
approximately 130,000 gross barrels of crude oil a day. Murphy's Canadian
activities also include an interest in Syncrude (5%), the world's largest
producer of synthetic crude oil from oil sands. In addition, the Company has
established an impressive portfolio of acreage offshore Nova Scotia, giving
Murphy a foothold in one of the very exciting natural gas plays in North
America.
The Company's U.K. properties continued to provide significant production during
1999. A full year of production from the Schiehallion (5.9%) and Mungo/Monan
(12.7%) oil fields, which both came on stream during the third quarter of 1998,
resulted in a 33% increase in the Company's U.K. oil production. As the North
Sea basin continues to mature, growth opportunities will diminish and the
Company's efforts will focus on harvesting the existing asset base.
[GRAPH -- WORLDWIDE FINDING AND DEVELOPMENT COSTS]
[GRAPH -- NET HYDROCARBONS PRODUCED]
[MAP -- PRIMARY AREAS OF UPSTREAM ACTIVITIES]
7
<PAGE>
Murphy also has a growing international frontier program that seeks to acquire
high-interest ownership positions in a world-class portfolio of prospects,
preferably early in the exploration cycle of these emerging basins. Frontier
areas of particular note include the Atlantic Margin; Ecuador; and Malaysia,
where a local office was established during 1999 to commence exploration
activities on the three offshore blocks acquired earlier in the year.
A review of the Company's principal exploration and production activities is
presented in the sections that follow. Murphy's working interest percentage is
shown, generally following the name of each field or block. Unless otherwise
indicated, average daily production rates are net to the Company after deduction
for royalty interests. Oil production includes crude oil, condensate and natural
gas liquids where applicable.
UNITED STATES
Murphy's U.S. operations during 1999 were highlighted by discoveries in the
deepwater region of the Gulf of Mexico and onshore South Louisiana. Additions to
the Company's U.S. proved reserves totaled 22.5 million barrels of oil
equivalent, which replaced 166% of U.S. production. Finding and development
costs for the United States were $4.21 an equivalent barrel for the year,
continuing the marked decline experienced over the last few years. Daily U.S.
production for 1999 averaged 37,088 barrels of oil equivalent, an increase of 3%
from a year ago. Additionally, Murphy participated in two 1999 Gulf of Mexico
federal lease sales, acquiring interests ranging from 40% to 100% in 19 blocks,
18 of which are in deep water, where the Company currently has an interest in
110 leases.
[MAP -- GULF OF MEXICO]
8
<PAGE>
The shifting focus in the Gulf of Mexico to deep water has resulted in the
continuing dedication of a large percentage of exploration capital to the area.
The deepwater Gulf is well known for its potential for discoveries with impact
reserves, and Murphy has positioned itself as an early mover in collecting a
robust portfolio of such prospects.
Murphy's strategy is to drill four to six deepwater wells per year in this
premier basin. Aggressive participation in Gulf of Mexico lease sales and
ongoing acreage evaluation should provide the Company with attractive prospects
for many years.
During 1999, discoveries were made at Garden Banks Block 341 (Habanero, 33.8%)
and Mississippi Canyon Blocks 538/582 (Medusa, 60%). The Habanero discovery,
located in approximately 2,000 feet of water, encountered over 250 net feet of
oil pay in two zones, with current gross reserve estimates of 75 to 100 million
barrels of oil equivalent. Furthermore, success at Habanero has enhanced the
potential of two nearby prospects to the north -- Garden Banks Block 253
(Moccasin, 37.5%) and Garden Banks Block 297 (South Moccasin, 37.5%). These
prospects each target reserves in the range of 100-plus million barrels of oil
equivalent, and development scenarios in this area will depend on drilling
results. Current plans project the Habanero area being placed on stream in 2003.
The Medusa discovery, located in approximately 2,200 feet of water, penetrated
161 net feet of oil pay in three intervals. Appraisal activities have included
two successful sidetracks into a separate fault block, and an additional well
commenced in January 2000. Current gross reserve estimates are approaching 80
million barrels of oil equivalent. Development alternatives are presently being
evaluated and first oil is expected in 2002.
[MAP -- MEDUSA]
[PICTURE APPEARS HERE]
9
<PAGE>
[GRAPH -- CAPITAL EXPENDITURES -- EXPLORATION AND PRODUCTION]
Complementing the successes of Habanero and Medusa, planned deepwater activity
in 2000 also includes drilling at Green Canyon Block 25 (Sidewinder, 42.5%) near
the 1998 discovery well at Ewing Bank Block 994 (Boomslang, 45%). Results of
this well will determine the type of development required.
In the shallower waters of the Gulf of Mexico, exploitation drilling is planned
in 2000 for certain producing fields as well as selective drilling on untested
prospects, some of which will be obtained via joint participation or farm-in of
third party acreage.
Murphy has a 33.3% interest in the Destin Dome Block 56 unit located in federal
waters 30 miles off the coast of Florida. The unit is one of the largest
undeveloped natural gas discoveries remaining in the United States. Along with
its two partners, Murphy filed a development plan in 1996 with the U.S. Minerals
Management Service. A rigorous regulatory process designed to protect the
environment and ensure compatibility with other uses of surrounding areas is
under way, but opposition to development exists. Completion of this process will
extend well into 2000 and possibly beyond.
Natural gas discoveries in the Murphy-operated Wright field (50%) have confirmed
Murphy's renewed interest in prolific onshore South Louisiana. The Broussard
well, completed in
[PICTURE APPEARS HERE]
10
<PAGE>
1999, logged 150 net feet of natural gas pay in the Marg Tex sand interval. A
third Wright field well, named Langlinais, was spudded in January 2000. Due to
the attractiveness of this gas-prone province, an evaluation program is
currently in place to identify additional regional prospects. Murphy's success
onshore South Louisiana will be fundamental in providing near-term production
opportunities while larger deepwater projects proceed through development.
CANADA
Murphy's Canadian holdings include three of the country's most significant oil
assets (Syncrude, Hibernia and Terra Nova); a portfolio of heavy oil, light oil
and natural gas properties in western Canada; and exploratory acreage offshore
Nova Scotia. Production activities in 1999 established record Canadian volumes
for both oil and natural gas. Murphy participated in several natural gas
discoveries, and added significantly to acreage and seismic data, particularly
offshore Nova Scotia.
Syncrude, the world's largest producer of synthetic crude oil from oil sands,
set a record for annual production of 81.4 million barrels, or 10,997 barrels a
day net to Murphy. Lease acquisitions in recent years will ensure ample bitumen
feedstock for many years. Syncrude is in the midst of a four-phase expansion
aimed at increasing production and reducing fixed operating costs per barrel.
Phase II, including a debottlenecking of the existing plant and start-up of the
Aurora mine, will be completed in 2000, netting additional productive capacity.
Engineering is under way for Phase III, which includes a new coker and an
additional mining train at Aurora, both of which are planned to be operational
by 2004. Phase IV includes more mining and upgrading capacity. Successful
implementation of all phases has the potential to raise gross production to 166
million barrels a year by 2007.
In 1999, operations at the Hibernia oil field produced 6,404 barrels of oil a
day, but suffered from reliability
[GRAPH -- WORLDWIDE EXTRACTION COSTS]
[PICTURE APPEARS HERE]
11
<PAGE>
[MAP -- SCOTIAN SHELF]
issues, primarily related to early operations on a complex platform. Several
design shortcomings were identified and corrected. Despite these
disappointments, reservoir performance in the Hibernia sands exceeded
expectations. This resulted in increasing Murphy's ultimate recovery estimates
for the field to over 700 million gross barrels. At year end, the platform was
demonstrating stabilized throughputs of over 150,000 gross barrels a day, and
was tested at 180,000 barrels a day for short periods of time. During 2000,
significant efforts will be directed towards increasing production rates and
improving reliability. Future development efforts will begin to focus more on
the Avalon sands, which contain the bulk of the oil in place and represent the
potential for further reserve additions. Drilling plans for 2000 include an
exploration well at Southwest Hibernia to test a potential accumulation of
thicker Avalon sands on the flank of the main field structure.
Construction activities continued throughout 1999 on the 350 to 400 million
barrel Terra Nova project. The floating production, storage and offloading
vessel (FPSO) is nearing completion in Korea and will be transported to Bull
Arm, Newfoundland in the second quarter of 2000. Topside equipment will be
installed and commissioned prior to field installation near year end. Marine
operations commenced in 1999, including sea floor excavations to provide iceberg
protection for wellheads and subsea manifolds, installation of mooring equipment
and drilling of the first development well. Drilling will continue throughout
2000 and first oil production is anticipated in early 2001.
Organizational modifications at Hibernia and Terra Nova are being made to
capture synergies between the operations,
[PICTURE APPEARS HERE]
12
<PAGE>
improve the focus on operational excellence, and utilize knowledge acquired from
Hibernia's operations as Terra Nova comes on stream. Murphy has booked less than
half of its share of estimated ultimate reserves from Hibernia and Terra Nova,
and the Company expects to add proved reserves as additional fault blocks are
successfully tested and as more performance history is established.
Heavy oil prices in western Canada staged a remarkable recovery in 1999 as
narrow heavy oil price differentials caused by declining supply coincided with
strong worldwide crude oil prices. Reactivated capital spending and start-up of
shut-in wells and projects raised Murphy's volumes to around 10,000 barrels a
day by year end, compared to the year's average of 9,099 barrels a day. Capital
spending in 2000 will include drilling of up to 40 low-cost vertical and
horizontal wells.
Murphy's natural gas production in western Canada reached record levels of 56
million cubic feet a day through a combination of exploitation and exploration
successes. Exploratory drilling took place during the year at Josephine (50%),
Hotchkiss (100%), Snowfall (25%) and Parkland (100%). In addition, Murphy has a
33.3% interest in a successful well at Chicken Creek in the British Columbia
foothills that is currently being tied in and will increase Canadian natural gas
production during 2000. Additional acreage on this trend was acquired at a 50%
working interest. At year end, Murphy initiated a four-well drilling program in
the South Hamburg area, which resulted in a January 2000 discovery that tested
at over 30 million gross cubic feet of natural gas a day. Drilling continues,
and pipeline construction has commenced to provide early production from this
area. Further foothills exploration is planned later in 2000.
One of the most significant industry events in Canada in 1999 was the April
lease sale on the Scotian Shelf, in which a significant portion of the
prospective acreage offshore Nova Scotia was awarded. At that sale, Murphy
acquired interests in three blocks, which attracted some of the highest bids,
including the Southampton (25%) and Annapolis (20%) tracts immediately south of
the Sable Island project. Five blocks were added in the October sale, increasing
the Company's gross leasehold in the area to 3.7 million acres, with a 25%
average working interest. A 3-D seismic survey is under way over the Southampton
and Annapolis blocks, and drilling plans should be firm by early 2001.
UNITED KINGDOM
Murphy's production in the United Kingdom averaged 22,612 barrels of oil
equivalent a day in 1999, an increase of 29% from a year ago. The increase was
due primarily to a full year of production from new fields that came on stream
during 1998. These include the Mungo and Monan fields (12.7%), which are part of
the seven-field Eastern Trough Area Project integrated development, and the
Schiehallion field (5.9%), which is located west of the Shetland Islands.
Development drilling activities will continue in 2000.
The Mungo/Monan fields produced over 5,500 barrels of oil a day in 1999.
Producing through an unmanned platform, Mungo/Monan is a flagship development
that utilizes technology and existing infrastructure. Crude oil production from
Schiehallion averaged over 6,500 barrels
13
<PAGE>
[MAP -- ECUADOR]
a day at the end of 1999. Extending across five blocks, Schiehallion contains
over 400 million gross barrels of oil and is expected to produce for another 15
years.
As the North Sea basin matures, the Company foresees fewer growth opportunities
in this region. Accordingly, Murphy has shifted emphasis to portfolio
rationalization and to exploration acreage in the Atlantic Margin, including
west of Britain and Ireland and offshore the Faroe Islands. Exploration activity
in these areas was down significantly due to low oil prices in the first part of
1999, and exploratory drilling related to the initial license phases has been
delayed. In preparation for this drilling, previously agreed seismic commitments
have largely been fulfilled.
ECUADOR
Murphy's production from Block 16 (20%) in Ecuador averaged 7,104 barrels of oil
a day in 1999, down 8% from 1998. Lack of pipeline export capacity significantly
hampered production levels, but plans to expand the system are being actively
pursued with industry partners. Ongoing development drilling has met with
continued success, including the drilling of the horizontal Ginta B-4 well,
which tested at initial rates of 18,170 gross barrels of oil a day. This is the
eleventh horizontal well drilled on this block and further confirms the success
of this technique for generating high rate, quick payout wells. Additionally,
two successful exploration wells were drilled in Block 16 during 1999.
[PICTURE APPEARS HERE]
14
<PAGE>
MALAYSIA
Exploration activities offshore Malaysia in the three newly acquired blocks
operated by Murphy progressed during 1999 with the establishment of an office in
Kuala Lumpur and preparations to begin seismic acquisition early in 2000.
Additional technical work throughout the year has high-graded specific target
areas within the Company's acreage. Blocks SK 309 (85%) and SK 311 (85%) are
contiguous shallow-water blocks covering 2.4 million acres and carry a $15
million five-year work commitment, which includes seismic data acquisition and
four exploratory wells. Both blocks contain a number of attractive features and
contain previously discovered oil and gas deposits. Exploitation work will be
geared toward near-term production opportunities. Block K (80%) covers 4.1
million undrilled acres in water depths of 4,800 to 10,000 feet. A loose grid of
existing seismic data has been used to identify several large structures and the
potential for various geologic plays. Commitments include a seismic program and
one exploratory well over seven years, with a minimum expenditure of $14
million. Murphy is the third largest holder of exploration acreage in Malaysia
behind two of the world's largest oil companies. In addition to the development
of the existing prospect base in Malaysia and identification of new
opportunities there, Murphy plans to use its Malaysian office as a base from
which to evaluate additional ventures in the region.
[PICTURE APPEARS HERE]
[MAP -- MALAYSIA]
15
<PAGE>
REFINING, MARKETING & TRANSPORTATION
THE YEAR IN REVIEW
Murphy Oil's refining, marketing and transportation strategy remains focused:
develop prudent, cost-effective means to supply the end user; target reduction
of operating costs while increasing operational efficiency and reliability; seek
out appropriate joint ventures; and continue the Company's commitment to
environmental protection and performance.
The Company's refining, marketing and transportation businesses are centered
around major assets in the United States, the United Kingdom and western Canada.
The most exciting development for Murphy's downstream operations in 1999 was the
rapid expansion of the Company's program to build high-volume, low-cost retail
gasoline stations, primarily in the parking areas of Wal-Mart Supercenters.
During the year, 113 such stations were built, increasing the total to 145 in
operation at the end of 1999 and giving the Company a leading position in the
growing U.S. market of gasoline sales at nontraditional locations. With an
expanding marketing area that now includes seven states in the Midwest, the
program will experience significant growth in 2000 as 150 additional sites are
slated for construction. All Wal-Mart stations operate under the Murphy USA(R)
brand. Operational results have been compelling, with immediate and strong
customer acceptance.
Through a network of 27 Company-owned terminals and numerous terminals owned by
others, Murphy supplied products to 625 retail and branded wholesale stations at
year end in the United States, along with
REFINING, MARKETING & TRANSPORTATION
<TABLE>
<CAPTION>
1999 1998 1997
- - - - - ----------------------------------------------------------------------------------
<S> <C> <C> <C>
(Thousands of dollars)
Income contribution before special items $ 14,881 49,230 56,738
Total assets 838,295 676,517 750,626
Capital expenditures 88,075 55,025 37,483
- - - - - ----------------------------------------------------------------------------------
Crude oil processed - barrels a day 143,204 165,580 161,560
Products sold - barrels a day 159,042 174,152 163,430
Average gross margin on products sold -
dollars a barrel
United States $ .70 1.47 1.79
United Kingdom 3.38 2.81 2.90
</TABLE>
[PICTURE APPEARS HERE]
16
<PAGE>
numerous unbranded wholesale customers, in a total of 22 states. In the United
Kingdom, Murphy supplied 384 MURCO stations from 10 terminals, three of which
are owned by the Company.
The year 1999 was a difficult one for U.S. refiners, who experienced the lowest
margins in recent years. As a result, earnings from Murphy's downstream
activities before special items were $14.9 million in 1999, down from $49.2
million earned in 1998.
UNITED STATES
Murphy's refinery at Meraux, Louisiana is capable of processing 100,000 barrels
of crude oil a day. Crude oil is supplied to the refinery by pipeline through
the Louisiana Offshore Oil Port (3.2%) or by ocean tanker directly to the
Mississippi River dock. Products are transported by barge or pipeline to a
network of terminals, 22 of which are wholly or jointly owned. This network
supplied 145 Murphy USA stations at Wal-Mart sites and 238 SPUR(R) branded
stations at December 31, 1999.
As a result of the focus on reliability and on-stream efficiency, the Meraux
refinery concluded a record 51 months between scheduled turnarounds in January
1999. As a result of this maintenance downtime, refinery crude oil throughput
of 82,410 barrels a day was lower than in 1998.
Engineering is under way for a capital program to allow the Meraux refinery to
produce "green" products while reducing emissions of greenhouse gases. This
investment is targeted to allow the refinery to cost effectively meet future
[MAP -- WAL-MART SITES]
[GRAPH -- CAPITAL EXPENDITURES - REFINING MARKETING AND TRANSPORTATION]
[PICTURE APPEARS HERE]
17
<PAGE>
sulfur limits for gasoline and diesel and to improve its position in the highly
competitive Gulf Coast market.
Murphy's Superior, Wisconsin refinery can process 35,000 barrels a day of crude
oil, which is supplied to the refinery by pipeline from Canada and the northern
United States. Products are sold in the local market or supplied via pipeline
for sales in eight states through a network of terminals, five of which are
wholly owned. This system supplied products to 242 owned or branded SPUR
stations at December 31, 1999.
Crude runs in 1999 were 33,402 barrels a day at Superior, up slightly from 1998,
when the refinery underwent a complete turnaround. Capitalizing on attractive
heavy crude oil prices remains a key component in the profitability of the
refinery. Strong market development enabled the Company to sell almost 1.8
million barrels of asphalt through three Company terminals in the Upper Midwest.
In its first full year of operation, Murphy's marine fueling terminal at the
Duluth, Minnesota harbor was a great success and provided further evidence of
the Company's strategy to sell more of its refined products to end users. A good
location, combined with state-of-the-art equipment and efficient operations, led
to satisfied customers, as evidenced by higher than forecasted sales at the
terminal.
UNITED KINGDOM
The Milford Haven refinery (30%), which can process 108,000 barrels of crude oil
a day, was revamped in the fourth quarter of 1999 to accommodate new product
[PICTURE APPEARS HERE]
18
<PAGE>
specifications for cleaner-burning fuels as required by the European Union. The
economics of the refinery continue to be enhanced by the plant's capability to
manufacture ultra-low sulfur diesel fuel.
Murphy's U.K. retail marketing operations continued a program of upgrading its
gasoline stations to maximize non-fuel income. At year end, 19 of the Company's
95 owned stations had undergone substantial modernization, with plans to
redevelop another 20 during 2000. A key element of the retail upgrading program
is Murphy's alliance with the Costcutter grocery chain, which transforms
neighborhood stations into attractive shopping destinations for local customers.
WESTERN CANADA
Canadian downstream operations include crude oil pipeline operations as well as
trucking of crude oil and natural gas liquids. Throughputs on Murphy's two
wholly owned and three jointly owned pipelines were only slightly above 1998
levels in total, but showed substantial improvement near year end as a result of
higher oil prices. Major contributors in 1999 were the Manito pipeline,
averaging 48,000 barrels a day, and the Milk River pipeline, averaging 83,000
barrels a day.
[GRAPH -- REFINED PRODUCTS SOLD]
[PICTURE APPEARS HERE]
19
<PAGE>
CORPORATE RESPONSIBILITY
Murphy Oil is proud of its record of innovation, leadership and accomplishment
in the areas of employee safety and training, environmental stewardship and
community involvement.
No one embodies that commitment better than C. H. Murphy Jr., former Chairman,
President and CEO of Murphy Oil, who was honored in 1999 with the prestigious
Chevron Conservation Award. He is the first oil industry executive to receive
the award.
Today, Murphy is building on its legacy as an industry leader, and the Company's
achievements are a testament to a commitment that extends across every facet of
the Murphy enterprise.
Murphy's employees participate in over 30,000 hours of safety training annually,
both internally at various Company locations and externally in conjunction with
federal and local emergency response agencies. This training ranges from first
aid and firefighting to marine survival and transportation of hazardous
materials.
Murphy has made significant investments in environmental improvement and safety
features over the past 10 years, and those investments have resulted in an
outstanding environmental record.
To build on its leadership role, Murphy has elected to spearhead the development
of a program modeled after the Responsible Care Program(R) of the Chemical
Manufacturers' Association and to implement this program at its U.S. refineries.
In 1999, Murphy successfully completed federally mandated Risk Management Plans
(RMP) for both the Meraux and Superior refineries. In addition, Murphy took the
initiative to inform and involve a number of community partners in the RMP
process. This underscores the Company's commitment to both environmental and
community responsibility.
Murphy's Safety and Environmental Management Program (SEMP) is a voluntary
system for exploration and production developed in cooperation with the U.S.
Minerals Management Service and the American Petroleum Institute. Initially
designed to cover the Company's offshore operations in the United States, SEMP
is being expanded to ensure that Murphy's worldwide exploration and production
operations are conducted in accordance with sound environmental practices. Under
SEMP, the Company's oil releases have been among the lowest in the industry
measured as a percent of production, and its personal injury accident rates have
been well below industry averages.
[PICTURE APPEARS HERE]
20
<PAGE>
STATISTICAL SUMMARY
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
- - - - - -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
EXPLORATION AND PRODUCTION
Net crude oil and condensate
production - barrels a day
United States 7,582 7,025 9,565 10,614 12,772
Canada - light 2,992 3,219 3,351 3,774 4,417
- heavy 9,099 9,676 11,538 9,670 8,864
- offshore 6,404 4,192 224 - -
- synthetic 10,997 10,500 9,341 8,163 8,832
United Kingdom 20,217 14,975 13,438 12,918 14,588
Ecuador 7,104 7,720 7,802 6,005 5,274
Other - - - - 117
Net natural gas liquids
production - barrels a day
United States 879 773 1,195 1,031 964
Canada 488 612 617 689 740
United Kingdom 321 436 423 346 447
- - - - - -------------------------------------------------------------------------------------------------
Total 66,083 59,128 57,494 53,210 57,015
=================================================================================================
Net natural gas sold -
thousands of cubic feet a day
United States 171,762 169,519 211,207 155,017 189,250
Canada 56,238 48,998 44,853 43,031 40,907
United Kingdom 12,443 12,384 12,609 15,247 10,671
Spain - - - 7,338 10,898
- - - - - -------------------------------------------------------------------------------------------------
Total 240,443 230,901 268,669 220,633 251,726
=================================================================================================
Total hydrocarbons produced -
equivalent barrels/1, 3/ a day 106,157 97,612 102,272 89,982 98,969
- - - - - -------------------------------------------------------------------------------------------------
Estimated net hydrocarbon
reserves - million equivalent
barrels/1, 2, 3/ 400.8 379.9 362.1 337.6 333.8
- - - - - -------------------------------------------------------------------------------------------------
Weighted average sales prices/4/
Crude oil and condensate - dollars a barrel
United States $ 17.97 12.76 19.43 20.31 16.61
Canada/5/ - light 17.00 12.03 17.74 19.97 16.45
- heavy 12.77 6.56 10.76 14.27 12.10
- offshore 18.69 10.49 15.15 - -
- synthetic 18.64 13.73 19.92 21.20 17.28
United Kingdom 18.09 12.52 18.89 21.08 16.96
Ecuador 12.94 6.76 12.17 15.96 13.03
Other - - - - 15.12
Natural gas liquids - dollars a barrel
United States 13.70 11.50 15.82 17.00 12.62
Canada/5/ 12.09 9.16 14.87 13.69 9.70
United Kingdom 13.45 11.04 18.02 18.54 13.99
Natural gas - dollars a thousand cubic feet
United States 2.27 2.18 2.57 2.60 1.64
Canada/5/ 1.90 1.34 1.35 1.10 .97
United Kingdom/5/ 1.68 2.23 2.65 2.58 2.53
Spain/5/ - - - 2.89 2.88
- - - - - -------------------------------------------------------------------------------------------------
Net wells drilled
Oil wells - United States 1.4 1.8 .8 3.7 3.0
- Canada 11.2 6.0 78.9 41.6 29.6
- Other 2.2 3.1 3.3 3.6 3.7
Gas wells - United States .6 7.8 9.7 14.7 3.6
- Canada 7.8 4.2 19.9 33.9 2.3
- Other - - .1 - .2
Dry holes - United States 1.0 .8 6.8 3.9 1.9
- Canada 5.7 7.5 8.3 6.5 5.9
- Other - 1.0 1.9 1.2 .6
- - - - - -------------------------------------------------------------------------------------------------
Total 29.9 32.2 129.7 109.1 50.8
=================================================================================================
</TABLE>
/1/Natural gas converted at a 6:1 ratio.
/2/At December 31.
/3/Includes synthetic oil.
/4/Includes intracompany transfers at market prices.
/5/U.S. dollar equivalent.
21
<PAGE>
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
- - - - - -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REFINING
Crude capacity* of refineries - barrels per stream day 167,400 167,400 167,400 167,400 167,400
- - - - - -------------------------------------------------------------------------------------------------------------
Refinery inputs - barrels a day
Crude - Meraux, Louisiana 82,410 101,834 101,150 93,929 91,940
Superior, Wisconsin 33,402 32,966 33,704 32,657 33,217
Milford Haven, Wales 27,392 30,780 26,706 31,300 30,346
Other feedstocks 10,484 11,404 8,178 6,315 8,280
- - - - - -------------------------------------------------------------------------------------------------------------
Total inputs 153,688 176,984 169,738 164,201 163,783
=============================================================================================================
Refinery yields - barrels a day
Gasoline 65,216 73,482 72,672 69,658 73,964
Kerosine 11,316 15,394 14,959 14,965 15,113
Diesel and home heating oils 44,054 50,506 44,681 43,514 39,351
Residuals 17,370 21,310 20,852 19,756 19,641
Asphalt, LPG and other 12,225 12,565 13,139 12,513 10,158
Fuel and loss 3,507 3,727 3,435 3,795 5,556
- - - - - -------------------------------------------------------------------------------------------------------------
Total yields 153,688 176,984 169,738 164,201 163,783
=============================================================================================================
Average cost of crude inputs to refineries - dollars a barrel
United States $ 18.80 12.55 18.54 21.05 17.34
United Kingdom 17.22 13.62 20.12 21.66 17.59
- - - - - -------------------------------------------------------------------------------------------------------------
MARKETING
Products sold - barrels a day
United States - Gasoline 61,190 60,990 62,244 58,726 61,690
Kerosine 7,545 10,170 9,301 9,644 9,626
Diesel and home heating oils 34,514 40,403 36,192 34,797 31,237
Residuals 13,812 16,170 16,527 15,415 14,775
Asphalt, LPG and other 9,134 9,887 9,945 9,008 8,815
- - - - - -------------------------------------------------------------------------------------------------------------
126,195 137,620 134,209 127,590 126,143
- - - - - -------------------------------------------------------------------------------------------------------------
United Kingdom - Gasoline 12,511 14,058 11,467 13,919 14,277
Kerosine 3,053 4,369 3,795 4,353 4,387
Diesel and home heating oils 10,995 10,884 7,638 8,981 6,647
Residuals 3,608 5,203 4,215 4,351 4,993
LPG and other 2,084 1,579 1,862 2,011 930
- - - - - -------------------------------------------------------------------------------------------------------------
32,251 36,093 28,977 33,615 31,234
- - - - - -------------------------------------------------------------------------------------------------------------
Canada 596 439 244 254 283
- - - - - -------------------------------------------------------------------------------------------------------------
Total products sold 159,042 174,152 163,430 161,459 157,660
=============================================================================================================
Average gross margin on products sold - dollars a barrel
United States $ .70 1.47 1.79 .27 .47
United Kingdom 3.38 2.81 2.90 2.08 2.26
- - - - - -------------------------------------------------------------------------------------------------------------
Branded retail outlets*
United States 625 552 585 527 514
United Kingdom 384 389 396 424 465
Canada 8 8 6 7 7
- - - - - -------------------------------------------------------------------------------------------------------------
TRANSPORTATION
Pipeline throughputs of crude oil - Canada - barrels a day 175,244 170,236 188,685 183,130 173,720
- - - - - -------------------------------------------------------------------------------------------------------------
STOCKHOLDER AND EMPLOYEE DATA
Common shares outstanding* (thousands) 44,998 44,950 44,891 44,862 44,833
Number of stockholders of record* 3,431 3,684 3,899 4,093 4,873
Number of employees* 2,153 1,566 1,446 1,406 1,889
Average number of employees 1,797 1,498 1,421 1,777 1,874
Salaries, wages and benefits (thousands) $103,757 97,307 92,495 95,583 96,035
- - - - - -------------------------------------------------------------------------------------------------------------
</TABLE>
*At December 31.
22
<PAGE>
DIRECTORS
R. Madison Murphy /1/
Chairman of the Board
Murphy Oil Corporation
El Dorado, Arkansas
Director since 1993
Claiborne P. Deming /1/
President and Chief Executive Officer
Murphy Oil Corporation
El Dorado, Arkansas
Director since 1993
B. R. R. Butler /3, 4/
Managing Director, Retired
The British Petroleum Company p.l.c.
Holbeton, Devon, England
Director since 1991
George S. Dembroski /2, 3/
Vice Chairman, Retired
RBC Dominion Securities Limited
Toronto, Ontario, Canada
Director since 1995
H. Rodes Hart /1, 3, 4/
Chairman and Chief Executive Officer
Franklin Industries, Inc.
Nashville, Tennessee
Director since 1975
Robert A. Hermes
Chairman of the Board
Purvin & Gertz, Inc.
Houston, Texas
Director since 1999
Vester T. Hughes Jr. /2, 3, 4/
Partner
Hughes & Luce, LLP
Dallas, Texas
Director since 1973
C. H. Murphy Jr. /1, 3/
Former Chairman of the Board
Murphy Oil Corporation
El Dorado, Arkansas
Director since 1950
Michael W. Murphy /1, 3/
President
Marmik Oil Company
El Dorado, Arkansas
Director since 1977
William C. Nolan Jr. /1, 3/
Partner
Nolan and Alderson
El Dorado, Arkansas
Director since 1977
Caroline G. Theus /1, 3, 4/
President
Keller Enterprises, LLC
Alexandria, Louisiana
Director since 1985
Lorne C. Webster /2, 3/
Chairman and Chief Executive Officer
Prenor Group Ltd.
Montreal, Quebec, Canada
Director since 1989
Committees of the Board
/1/ Member of the Executive Committee chaired by Mr. R. Madison Murphy.
/2/ Member of the Audit Committee chaired by Mr. Hughes.
/3/ Member of the Executive Compensation and Nominating Committee chaired by Mr.
William C. Nolan Jr.
/4/ Member of the Public Policy and Environmental Committee chaired by Mr.
Butler.
OFFICERS
R. Madison Murphy
Chairman of the Board
Claiborne P. Deming
President and Chief Executive Officer
Steven A. Cosse'
Senior Vice President and General Counsel
Herbert A. Fox Jr.
Vice President
Bill H. Stobaugh
Vice President
Odie F. Vaughan
Treasurer
John W. Eckart
Controller
Walter K. Compton
Secretary
DIRECTORS EMERITI
William C. Nolan
George S. Ishiyama
23
<PAGE>
PRINCIPAL SUBSIDIARIES
MURPHY EXPLORATION & PRODUCTION COMPANY
131 South Robertson Street
New Orleans, Louisiana 70112
(504) 561-2811
Mailing Address:
P. O. Box 61780
New Orleans, Louisiana 70161-1780
Engaged worldwide in crude oil and natural gas exploration and production.
Enoch L. Dawkins
President
John C. Higgins
Senior Vice President, U.S. Exploration and Production
David M. Wood
Senior Vice President, Frontier Exploration and Production
S. J. Carboni Jr.
Vice President, U.S. Production
James R. Murphy
Vice President, U.S. Exploration
Steven A. Cosse'
Vice President and General Counsel
Odie F. Vaughan
Vice President and Treasurer
Bobby R. Campbell
Controller
Walter K. Compton
Secretary
MURPHY OIL USA, INC.
200 Peach Street
El Dorado, Arkansas 71730
(870) 862-6411
Mailing Address:
P. O. Box 7000
El Dorado, Arkansas 71731-7000
Engaged in refining, marketing and transporting of petroleum products in the
United States.
Herbert A. Fox Jr.
President
Charles A. Ganus
Senior Vice President, Marketing
Frederec C. Green
Senior Vice President, Manufacturing and Crude Oil Supply
Henry J. Heithaus
Vice President, Retail Marketing
Kevin W. Melnyk
Vice President, Manufacturing
Steven A. Cosse'
Vice President and General Counsel
Gordon W. Williamson
Treasurer
John W. Eckart
Controller
Walter K. Compton
Secretary
MURPHY OIL COMPANY LTD.
2100-555-4th Avenue S.W.
Calgary, Alberta T2P 3E7
(403) 294-8000
Mailing Address:
P. O. Box 2721, Station M
Calgary, Alberta T2P 3Y3
Canada
Engaged in crude oil and natural gas exploration and production; extraction and
sale of synthetic crude oil; purchasing, transporting and reselling of crude
oil; and marketing of petroleum products in Canada.
Harvey Doerr
President
R. D. Urquhart
Senior Vice President, Supply and Transportation
Timothy A. Larson
Vice President, Crude Oil and Natural Gas
W. Patrick Olson
Vice President, Production
Robert L. Lindsey
Vice President, Finance and Secretary
Odie F. Vaughan
Treasurer
MURPHY EASTERN OIL COMPANY
Winston House, Dollis Park,
Finchley
London N3 1HZ, England
181-371-3333
Provides technical and professional services to certain of Murphy Oil
Corporation's subsidiaries engaged in crude oil and natural gas exploration and
production in the Eastern Hemisphere and refining, marketing and transporting of
petroleum products in the United Kingdom.
W. Michael Hulse
President
James N. Copeland
Vice President, Legal and Personnel
Ijaz Iqbal
Vice President
Odie F. Vaughan
Treasurer
Walter K. Compton
Secretary
24
<PAGE>
CORPORATE INFORMATION
CORPORATE OFFICE
200 Peach Street
El Dorado, Arkansas 71730
(870) 862-6411
MAILING ADDRESS
P. O. Box 7000
El Dorado, Arkansas 71731-7000
INTERNET ADDRESS
http://www.murphyoilcorp.com
E-MAIL ADDRESS
[email protected]
STOCK EXCHANGE LISTINGS
Trading Symbol: MUR
New York Stock Exchange
Toronto Stock Exchange
TRANSFER AGENTS
Harris Trust Company of New York
77 Water Street
New York, New York 10005
Mailing address:
c/o Harris Trust and Savings Bank
P. O. Box 830
Chicago, Illinois 60690-9972
Toll-free (888) 239-5303
Local Chicago (312) 360-5303
Montreal Trust Company of Canada
151 Front Street West
Toronto, Ontario M5J 2N1
REGISTRAR
Harris Trust Company of New York
77 Water Street
New York, New York 10005
ANNUAL MEETING
The annual meeting of the Company's
shareholders will be held at 10 a.m. on May 10, 2000
at the South Arkansas Arts Center,
110 East 5th Street, El Dorado, Arkansas.
A formal notice of the meeting, together with a
proxy statement and proxy form, will be mailed
to all shareholders.
INQUIRIES
Inquiries regarding shareholder account matters
should be addressed to:
Walter K. Compton
Secretary
Murphy Oil Corporation
P. O. Box 7000
El Dorado, Arkansas 71731-7000
Members of the financial community should direct
their inquiries to:
Kevin G. Fitzgerald
Director of Investor Relations
Murphy Oil Corporation
P. O. Box 7000
El Dorado, Arkansas 71731-7000
(870) 864-6272
ELECTRONIC PAYMENT OF DIVIDENDS
Shareholders may have dividends deposited directly into their bank accounts by
electronic funds transfer. Authorization forms may be obtained from:
Harris Trust and Savings Bank
P. O. Box 830
Chicago, Illinois 60690-9972
Toll-free (888) 239-5303
Local Chicago (312) 360-5303
inside back cover
<PAGE>
EXHIBIT 13 APPENDIX
MURPHY OIL CORPORATION - CIK 0000717423
Appendix to Electronically Filed Exhibit 13
(1999 Annual Report to Security Holders, Which is Incorporated in This Form 10-K
Report)
Providing a Narrative of Graphic and Image Material Appearing on
Pages 1 Through 20 of Paper Format
Exhibit 13
Page No. Map Narrative
- - - - - ---------- -------------
7 Primary Areas of Upstream Activities - Murphy's main exploration
areas are depicted as western Canada, the U.S. Gulf of Mexico,
Ecuador, offshore eastern Canada, the Atlantic Margin, Spain, the
U.K. North Sea and Malaysia. In addition, Murphy's production areas
are shown as all of the preceding areas except for Spain and
Malaysia.
8 Gulf of Mexico - The locations of the Company's leases on the Gulf
of Mexico Continental Shelf and in the deepwater Gulf of Mexico are
shown. Each lease is colored to denote either (1) production acreage
or (2) exploration acreage.
9 Medusa - A schematic diagram of Mississippi Canyon Blocks 538/582
(Medusa, 60%) and adjacent blocks, which are in the deepwater Gulf
of Mexico, depicts water depth, location and depth of Murphy's 1999
natural gas discovery well and locations of another prospect and
another company's discovery well.
12 Scotian Shelf - Depicted on the Scotian Shelf, offshore Nova Scotia,
are locations of acreage owned by Murphy and other companies and of
existing discoveries within this natural gas play.
14 Ecuador - The locations of producing fields, Murphy's acreage, other
existing concessions, and connecting pipelines and other production
infrastructure in Ecuador are shown.
15 Malaysia - The locations and areal extent of shallow-water Blocks
SK 309 and SK 311 and deepwater Block K, which were acquired by the
Company in 1999, are shown offshore the Malaysian states of Sarawak
and Sabah.
17 Wal-Mart Sites Operational as of Year-end 1999 - The sites of the
Company's 145 gasoline stations located in the parking areas of
Wal-Mart stores in a 13-state area of the southern United States are
shown. Also depicted are the seven midwestern states comprising
Murphy's new Wal-Mart marketing area and the locations of the
Company's refineries in Superior, Wisconsin and Meraux, Louisiana.
Ex. 13A-1
<PAGE>
MURPHY OIL CORPORATION - CIK 0000717423
Appendix to Electronically Filed Exhibit 13 (Contd.)
Exhibit 13
Page No. Picture Narrative
- - - - - -------- -----------------
2 The floating production, storage and offloading vessel for the Terra
Nova oil field, offshore eastern Canada, is shown being built in a
Korean shipyard; production from Terra Nova should commence in early
2001.
4 Claiborne P. Deming, President and Chief Executive Officer of Murphy
Oil Corporation, is pictured.
6 The testing of a recent natural gas discovery in western Canada is
shown in a nighttime view; Murphy's successful exploration program
in this area should cause significant increases in the Company's
natural gas production in western Canada.
9 Pictured is the semisubmersible rig Amos Runner, which will be
utilized in Murphy's deepwater Gulf of Mexico drilling program.
10 A view is shown of the Langlinais well, which was spudded in early
2000 to further delineate the Wright natural gas field in South
Louisiana.
11 Construction activity at the Syncrude oil sands project, near Fort
McMurray, Alberta is shown. This activity is part of staged
development expansions that should increase Syncrude's gross
production to over 450,000 barrels a day by 2007.
12 A view is shown of the one-acre concrete "island" at the Hibernia
field, offshore Newfoundland that provides production facilities for
one of the largest crude oil discoveries of the last 30 years.
14 The floating production, storage and offloading vessel for the
Schiehallion field, located west of the Shetland Islands and placed
on stream in 1998, is shown as an example of Murphy's ownership in
premier, long-lived reserves.
15 Some of Murphy's office staff in Kuala Lumpur, Malaysia are shown.
Murphy opened this office in 1999 to support its Malaysian program
and to identify new opportunities in this high growth region.
16 A Murphy USA gasoline station that recently opened in
Campbellsville, Kentucky in the parking area of a Wal-Mart
Supercenter is shown. Under current expansion plans, 150 similar
stations will be built in 2000.
17 An aerial view of the Company's refinery in Superior, Wisconsin is
shown. The refinery supplies a wide range of refined petroleum
products to customers in the U.S. Upper Midwest.
Ex. 13A-2
<PAGE>
MURPHY OIL CORPORATION - CIK 0000717423
Appendix to Electronically Filed Exhibit 13 (Contd.)
Exhibit 13
Page No. Picture Narrative (Contd.)
- - - - - -------- -----------------
18 A view is shown of Murphy's marine terminal in Duluth, Minnesota. In
its first full year of operation, this has become a popular
refueling destination for shipping traffic on Lake Superior.
19 A Murco neighborhood gasoline station in Chiswick, England is shown
to exemplify the alliance between Murphy and Costcutter grocery
stores in the United Kingdom.
20 C. H. Murphy Jr., former Chairman, President and CEO of Murphy Oil,
is shown receiving the Chevron Conservation Award from Chevron's Dr.
Donald Paul. Mr. Murphy is the first oil industry executive to
receive this award.
Graph Narrative
---------------
1 INCOME CONTRIBUTION FROM CONTINUING OPERATIONS BY FUNCTION
Excludes special items and Corporate activities.
Scale 0 to 160 (millions of dollars)
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
Refining, Marketing and
Transportation (top) 2 14 57 49 15
Exploration and Production (bottom) 30 102 85 6 121
---- ---- ---- ---- ----
Total 32 116 142 55 136
==== ==== ==== ==== ====
This stacked vertical bar graph has the total for each bar printed
above it.
1 CASH FLOW FROM CONTINUING OPERATIONS BY FUNCTION
Excludes special items, Corporate activities, and changes in
noncash working capital.
Scale 0 to 500 (millions of dollars)
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
Refining, Marketing and
Transportation (top) 51 59 100 89 36
Exploration and Production (bottom) 270 343 365 268 376
---- ---- ---- ---- ----
Total 321 402 465 357 412
==== ==== ==== ==== ====
This stacked vertical bar graph has the total for each bar printed
above it.
Ex. 13A-3
<PAGE>
MURPHY OIL CORPORATION - CIK 0000717423
Appendix to Electronically Filed Exhibit 13 (Contd.)
Exhibit 13
Page No. Graph Narrative (Continued)
- - - - - ---------- ---------------
2 HYDROCARBON PRODUCTION REPLACEMENT
Scale 0 to 180 (percent of production)
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
117 111 165 150 154
This vertical bar graph has the value for each bar printed above
it.
2 CAPITAL EXPENDITURES BY FUNCTION
Scale 0 to 500 (millions of dollars)
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
Corporate (top) 2 1 7 2 3
Refining, Marketing and
Transportation 53 43 38 55 88
Exploration and Production (bottom) 232 374 423 332 296
---- ---- ---- ---- ----
Total 287 418 468 389 387
==== ==== ==== ==== ====
This stacked vertical bar graph has the total for each bar printed
above it.
4 ESTIMATED NET PROVED HYDROCARBON RESERVES
Scale 0 to 450 (millions of oil equivalent barrels)
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
Ecuador and Other (top) 30 27 31 32 37
United Kingdom 48 58 63 63 63
Canada 159 157 176 188 195
United States (bottom) 97 96 92 97 106
---- ---- ---- ---- ----
Total 334 338 362 380 401
==== ==== ==== ==== ====
This stacked vertical bar graph has the total for each bar printed
above it.
7 WORLDWIDE FINDING AND DEVELOPMENT COSTS
Scale 0 to 9.00 (dollars per oil equivalent barrel)
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
5.17 8.08 6.54 6.16 4.94
This vertical bar graph has the value for each bar printed above
it.
7 NET HYDROCARBONS PRODUCED
Scale 0 to 120 (thousands of oil equivalent barrels a day)
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
Ecuador and Other (top) 7 7 8 8 7
United Kingdom 17 16 16 18 23
Canada 30 30 32 36 39
United States (bottom) 45 37 46 36 37
---- ---- ---- ---- ----
Total 99 90 102 98 106
==== ==== ==== ==== ====
This stacked vertical bar graph has the total for each bar printed
above it.
Ex. 13A-4
<PAGE>
MURPHY OIL CORPORATION - CIK 0000717423
Appendix to Electronically Filed Exhibit 13 (Contd.)
Exhibit 13
Page No. Graph Narrative (Continued)
--------- ---------------
10 CAPITAL EXPENDITURES - EXPLORATION AND PRODUCTION
Scale 0 to 480 (millions of dollars)
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
Ecuador and Other (top) 29 21 38 32 15
United Kingdom 33 69 91 71 29
Canada 99 99 147 108 156
United States (bottom) 71 185 147 121 96
---- ---- ---- ---- ----
Total 232 374 423 332 296
==== ==== ==== ==== ====
This stacked vertical bar graph has the total for each bar printed
above it.
11 WORLDWIDE EXTRACTION COSTS
Scale 0 to 10.50 (dollars per oil equivalent barrel)
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
Depreciation, Depletion and
Amortization (top) 5.06 4.48 4.62 4.58 4.29
Production Expense (bottom) 4.64 4.87 4.41 4.35 3.92
---- ---- ---- ---- ----
Total 9.70 9.35 9.03 8.93 8.21
==== ==== ==== ==== ====
This stacked vertical bar graph has the value for each component
printed within each bar and the total printed above the bar.
17 CAPITAL EXPENDITURES - REFINING, MARKETING AND TRANSPORTATION
Scale 0 to 100 (millions of dollars)
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
Canada (top) 4 8 5 3 -
United Kingdom 22 14 4 7 12
United States (bottom) 28 21 29 45 76
---- ---- ---- ---- ----
Total 54 43 38 55 88
==== ==== ==== ==== ====
This stacked vertical bar graph has the total for each bar printed
above it.
19 REFINED PRODUCTS SOLD
Scale 0 to 200 (thousands of barrels a day)
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
United Kingdom (top) 31 33 29 36 32
United States (bottom) 127 128 134 138 127
---- ---- ---- ---- ----
Total 158 161 163 174 159
==== ==== ==== ==== ====
This stacked vertical bar graph has the total for each bar printed
above it.
Ex. 13A-5
<PAGE>
EXHIBIT 21
MURPHY OIL CORPORATION
SUBSIDIARIES OF THE REGISTRANT AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
Percentage
of Voting
Securities
State or Other Owned by
Jurisdiction Immediate
Name of Company of Incorporation Parent
- - - - - ----------------------------------------- --------------------- ----------
<S> <C> <C>
Murphy Oil Corporation (REGISTRANT)
A. El Dorado Engineering Inc. Delaware 100.0
1. El Dorado Contractors Inc. Delaware 100.0
B. Murphy Eastern Oil Company Delaware 100.0
C. Murphy Exploration & Production Company (formerly Ocean
Drilling & Exploration Company) Delaware 100.0
1. Canam Offshore A. G. (Switzerland) Switzerland 100.0
2. Canam Offshore Limited Bahamas 100.0
a. Murphy Ireland Offshore Limited Bahamas 100.0
b. Ocean Drilling Limited Bahamas 100.0
3. El Dorado Exploration, S.A. Delaware 100.0
4. Mentor Holding Corporation Delaware 100.0
a. Mentor Excess and Surplus Lines Insurance Company Delaware 100.0
b. Mentor Insurance and Reinsurance Company Louisiana 100.0
c. Mentor Insurance Limited Bermuda 99.993
(1) Mentor Insurance Company (U.K.) Limited England 100.0
(2) Mentor Underwriting Agents (U.K.) Limited England 100.0
5. Murphy Bangladesh Oil Company Delaware 100.0
6. Murphy Brazil Exploracao e Producao de Petroleo e Gas Ltda.
(see company C18a below) Brazil 90.0
7. Murphy Building Corporation Delaware 100.0
8. Murphy Central Asia Oil Co., Ltd. Bahamas 100.0
9. Murphy Denmark Oil Company Delaware 100.0
10. Murphy Ecuador Oil Company Ltd. Bermuda 100.0
11. Murphy Equatorial Guinea Oil Company Delaware 100.0
12. Murphy Exploration (Alaska), Inc. Delaware 100.0
13. Murphy Faroes Oil Co., Ltd. Bahamas 100.0
14. Murphy France Oil Company Delaware 100.0
15. Murphy Ireland Oil Company Delaware 100.0
16. Murphy Italy Oil Company Delaware 100.0
17. Murphy New Zealand Oil Company Delaware 100.0
18. Murphy Overseas Ventures Inc. Delaware 100.0
a. Murphy Brazil Exploracao e Producao de Petroleo e Gas Ltda.
(see company C6 above) Brazil 10.0
19. Murphy Pakistan Oil Company Delaware 100.0
20. Murphy Philippines Oil Co., Ltd. Bahamas 100.0
21. Murphy Sabah Oil Co., Ltd. Bahamas 100.0
22. Murphy Sarawak Oil Co., Ltd. Bahamas 100.0
23. Murphy Somali Oil Company Delaware 100.0
24. Murphy South Asia Oil Co., Ltd. Bahamas 100.0
25. Murphy South Atlantic Oil Company Delaware 100.0
26. Murphy-Spain Oil Company Delaware 100.0
27. Murphy Venezuela Oil Company, S.A. Panama 100.0
28. Murphy Western Oil Company Delaware 100.0
</TABLE>
Ex. 21-1
<PAGE>
EXHIBIT 21 (Contd.)
MURPHY OIL CORPORATION
SUBSIDIARIES OF THE REGISTRANT AS OF DECEMBER 31, 1999 (Contd.)
<TABLE>
<CAPTION>
Percentage
of Voting
Securities
State or Other Owned by
Jurisdiction Immediate
Name of Company of Incorporation Parent
- - - - - ----------------------------------------- --------------------- ----------
<S> <C> <C>
Murphy Oil Corporation (REGISTRANT) - Contd.
C. Murphy Exploration & Production Company - Contd.
29. Murphy Yemen Oil Company Delaware 100.0
30. Norske Murphy Oil Company Delaware 100.0
31. Norske Ocean Exploration Company Delaware 100.0
32. Ocean Exploration Company Delaware 100.0
33. Ocean France Oil Company Delaware 100.0
34. Ocean International Finance Corporation Delaware 100.0
35. Odeco Drilling (UK) Limited England 100.0
36. Odeco International Corporation Panama 100.0
37. Odeco Italy Oil Company Delaware 100.0
38. Sub Sea Offshore (M) Sdn. Bhd. Malaysia 60.0
D. Murphy Oil Company Ltd. Canada 100.0
1. 340236 Alberta Ltd. Canada 100.0
2. Murphy Atlantic Offshore Finance Company Ltd. Canada 100.0
3. Murphy Atlantic Offshore Oil Company Ltd. Canada 100.0
4. Spur Refined Products Ltd. Canada 100.0
E. Murphy Oil USA, Inc. Delaware 100.0
1. 864 Beverage, Inc. Texas 100.0
2. Arkansas Oil Company Delaware 100.0
3. Murphy Gas Gathering Inc. Delaware 100.0
4. Murphy Latin America Refining & Marketing, Inc. Delaware 100.0
5. Murphy LOOP, Inc. Delaware 100.0
6. Murphy Oil Trading Company (Eastern) Delaware 100.0
7. Spur Oil Corporation Delaware 100.0
8. Superior Crude Oil Trading Company Delaware 100.0
F. Murphy Realty Inc. Delaware 100.0
G. Murphy Ventures Corporation Delaware 100.0
H. New Murphy Oil (UK) Corporation Delaware 100.0
1. Murphy Petroleum Limited England 100.0
a. Alnery No. 166 Ltd. England 100.0
b. H. Hartley (Doncaster) Ltd. England 100.0
c. Murco Petroleum Limited England 100.0
(1) European Petroleum Distributors Ltd. England 100.0
(2) Murco Petroleum (Ireland) Ltd. Ireland 100.0
I. Rowel Corporation Delaware 100.0
</TABLE>
Ex. 21-2
<PAGE>
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
-----------------------------
The Board of Directors
Murphy Oil Corporation:
We consent to incorporation by reference in the Registration Statements (Nos.
2-82818, 2-86749, 2-86760, and 333-27407) on Form S-8 and (Nos. 33-55161 and
333-84547) on Form S-3 of Murphy Oil Corporation of our report dated January 31,
2000, relating to the consolidated balance sheets of Murphy Oil Corporation and
Consolidated Subsidiaries as of December 31, 1999 and 1998, and the related
consolidated statements of income, comprehensive income, stockholders' equity,
and cash flows for each of the years in the three-year period ended December 31,
1999, which report is included in the December 31, 1999, annual report on Form
10-K of Murphy Oil Corporation.
KPMG LLP
Shreveport, Louisiana
March 23, 2000
Ex. 23-1
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE AUDITED CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 1999, AND THE
AUDITED CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1999,
OF MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 34,132
<SECURITIES> 0
<RECEIVABLES> 365,770
<ALLOWANCES> 8,298
<INVENTORY> 151,643
<CURRENT-ASSETS> 593,112
<PP&E> 4,790,319
<DEPRECIATION> 3,007,578
<TOTAL-ASSETS> 2,445,508
<CURRENT-LIABILITIES> 487,635
<BONDS> 393,164
0
0
<COMMON> 48,775
<OTHER-SE> 1,008,397
<TOTAL-LIABILITY-AND-EQUITY> 2,445,508
<SALES> 1,980,339
<TOTAL-REVENUES> 2,041,198
<CGS> 1,688,535
<TOTAL-COSTS> 1,688,535
<OTHER-EXPENSES> 72,070<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,274
<INCOME-PRETAX> 178,502
<INCOME-TAX> 58,795
<INCOME-CONTINUING> 119,707
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 119,707
<EPS-BASIC> 2.66
<EPS-DILUTED> 2.66
<FN>
<F1>INCLUDES 1,513 PROVISION FOR REDUCTION IN FORCE.
</FN>
</TABLE>
<PAGE>
EXHIBIT 99.1
UNDERTAKINGS
To be incorporated by reference into Form S-8 Registration Statement Nos.
2-82818, 2-86749, 2-86760, and 333-27407, and Form S-3 Registration Statement
Nos. 33-55161 and 333-84547.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represents
a fundamental change in the information set forth in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes:
(1) To deliver or cause to be delivered with the prospectus to each
employee to whom the prospectus is sent or given a copy of the registrant's
annual report to stockholders for its last fiscal year, unless such employee
otherwise has received a copy of such report, in which case the registrant shall
state in the prospectus that it will promptly furnish, without charge, a copy of
Ex. 99.1-1
<PAGE>
such report on written request of the employee. If the last fiscal year of the
registrant has ended within 120 days prior to the use of the prospectus, the
annual report of the registrant for the preceding fiscal year may be so
delivered, but within such 120 day period the annual report for the last fiscal
year will be furnished to each such employee.
(2) To transmit or cause to be transmitted to all employees participating
in the plan who do not otherwise receive such material as stockholders of the
registrant, at the time and in the manner such material is sent to its
stockholders, copies of all reports, proxy statements and other communications
distributed to its stockholders generally.
Where interests in a plan are registered herewith, the undersigned
registrant and plan hereby undertake to transmit or cause to be transmitted
promptly, without charge, to any participant in the plan who makes a written
request, a copy of the then latest annual report of the plan filed pursuant to
section 15(d) of the Securities Exchange Act of 1934 (Form 11-K). If such
report is filed separately on Form 11-K, such form shall be delivered upon
written request. If such report is filed as a part of the registrant's annual
report on Form 10-K, that entire report (excluding exhibits) shall be delivered
upon written request. If such report is filed as a part of the registrant's
annual report to stockholders delivered pursuant to paragraph (1) or (2) of this
undertaking, additional delivery shall not be required.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Ex. 99.1-2
