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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 10-Q
 
                    (Mark one)
x    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) 
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2002
 
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
incorporation or organization)
  
(I.R.S. Employer
Identification Number)
200 Peach Street
    
P. O. Box 7000, El Dorado, Arkansas
  
71731-7000
(Address of principal executive offices)
  
(Zip Code)
 
(870) 862-6411
(Registrant’s telephone number, including area code)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 
x  Yes    No  ¨
 
Number of shares of Common Stock, $1.00 par value, outstanding at September 30, 2002, was 45,820,451.
 

PART I – FINANCIAL INFORMATION
 
ITEM 1.    FINANCIAL STATEMENTS
 
MURPHY OIL CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of dollars)
 
    
September 30, 2002
     
December 31, 2001
  
    
(Unaudited)
         
ASSETS
                
Current Assets
                
Cash and cash equivalents
   
$
126,376
 
   
82,652
 
Accounts receivable, less allowance for doubtful accounts of $9,081 in 2002 and $11,263 in 2001
   
 
351,677
 
   
262,022
 
Inventories
                
Crude oil and blend stocks
   
 
107,804
 
   
38,917
 
Finished products
   
 
103,257
 
   
85,133
 
Materials and supplies
   
 
63,060
 
   
49,098
 
Prepaid expenses
   
 
74,296
 
   
61,062
 
Deferred income taxes
   
 
19,169
 
   
19,777
 
    
  
Total current assets
   
 
845,639
 
   
598,661
 
                 
Property, plant and equipment, at cost less accumulated depreciation
and amortization of $3,498,331 in 2002 and $3,277,673 in 2001
   
 
2,793,685
 
   
2,525,807
 
Goodwill, net
   
 
50,564
 
   
50,412
 
Deferred charges and other assets
   
 
91,106
 
   
84,219
 
    
  
Total assets
   
$
3,780,994
 
   
3,259,099
 
    
  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
Current liabilities
                
Current maturities of long-term debt
   
$
56,160
 
   
48,250
 
Accounts payable and accrued liabilities
   
 
548,957
 
   
463,429
 
Income taxes
   
 
47,915
 
   
48,378
 
    
  
Total current liabilities
   
 
653,032
 
   
560,057
 
Notes payable
   
 
797,603
 
   
416,061
 
Nonrecourse debt of a subsidiary
   
 
77,406
 
   
104,724
 
Deferred income taxes
   
 
315,880
 
   
302,868
 
Accrued dismantlement costs
   
 
171,102
 
   
160,764
 
Accrued major repair costs
   
 
51,341
 
   
44,570
 
Deferred credits and other liabilities
   
 
164,809
 
   
171,892
 
Stockholders’ equity
                
Cumulative Preferred Stock, par $100, authorized 400,000 shares, none issued
   
 
—  
 
   
—  
 
Common stock, par $1.00, authorized 200,000,000 shares, issued 48,775,314 shares
   
 
48,775
 
   
48,775
 
Capital in excess of par value
   
 
547,592
 
   
527,126
 
Retained earnings
   
 
1,097,875
 
   
1,096,567
 
Accumulated other comprehensive loss
   
 
(66,967
)
   
(83,309
)
Unamortized restricted stock awards
   
 
(216
)
   
(968
)
Treasury stock, 2,954,863 shares of Common Stock in 2002,
3,444,234 shares in 2001, at cost
   
 
(77,238
)
   
(90,028
)
    
  
Total stockholders’ equity
   
 
1,549,821
 
   
1,498,163
 
    
  
Total liabilities and stockholders’ equity
   
$
3,780,994
 
   
3,259,099
 
    
  
 
See Notes to Consolidated Financial Statements, page 5.
 
The Exhibit Index is on page 23.

1

Murphy Oil Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Thousands of dollars, except per share amounts)
 
    
Three Months Ended
September 30,
     
Nine Months Ended
September 30,
  
    
2002
     
2001
     
2002
     
2001
  
REVENUES
                              
Crude oil and natural gas sales
   
$
170,487
 
   
173,059
 
   
590,664
 
   
633,811
 
Petroleum product sales
   
 
793,775
 
   
767,296
 
   
2,052,185
 
   
2,217,598
 
Crude oil trading sales
   
 
83,996
 
   
134,939
 
   
238,105
 
   
531,265
 
Other operating revenues
   
 
76,717
 
   
36,682
 
   
172,010
 
   
202,632
 
Interest and other nonoperating revenues
   
 
2,431
 
   
2,959
 
   
4,433
 
   
9,994
 
    
  
  
  
Total revenues
   
 
1,127,406
 
   
1,114,935
 
   
3,057,397
 
   
3,595,300
 
    
  
  
  
COSTS AND EXPENSES
                              
Crude oil, products and related operating expenses
   
 
958,088
 
   
910,721
 
   
2,523,935
 
   
2,736,946
 
Exploration expenses, including undeveloped lease amortization
   
 
17,619
 
   
45,541
 
   
121,407
 
   
125,091
 
Selling and general expenses
   
 
23,166
 
   
25,698
 
   
68,657
 
   
71,727
 
Depreciation, depletion and amortization
   
 
67,796
 
   
58,090
 
   
223,167
 
   
170,578
 
Impairment of properties
   
 
9,154
 
   
—  
 
   
9,154
 
   
—  
 
Amortization of goodwill
   
 
—  
 
   
782
 
   
—  
 
   
2,355
 
Interest expense
   
 
13,961
 
   
9,516
 
   
36,790
 
   
28,962
 
Interest capitalized
   
 
(7,172
)
   
(5,065
)
   
(16,596
)
   
(12,984
)
    
  
  
  
Total costs and expenses
   
 
1,082,612
 
   
1,045,283
 
   
2,966,514
 
   
3,122,675
 
    
  
  
  
Income before income taxes
   
 
44,794
 
   
69,652
 
   
90,883
 
   
472,625
 
Income tax expense
   
 
7,386
 
   
27,923
 
   
37,012
 
   
170,492
 
    
  
  
  
NET INCOME
   
$
37,408
 
   
41,729
 
   
53,871
 
   
302,133
 
    
  
  
  
NET INCOME PER COMMON SHARE
                              
Basic
   
$
.82
 
   
.92
 
   
1.18
 
   
6.69
 
Diluted
   
 
.81
 
   
.91
 
   
1.17
 
   
6.63
 
Average Common shares outstanding
                              
Basic
   
 
45,819,355
 
   
45,306,674
 
   
45,690,981
 
   
45,190,224
 
Diluted
   
 
46,073,736
 
   
45,683,102
 
   
46,044,342
 
   
45,550,230
 
 

2

Murphy Oil Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
(Thousands of dollars)
 
    
Three Months Ended September 30,
     
Nine Months Ended September 30,
  
    
2002
     
2001
     
2002
     
2001
  
Net income
   
$
37,408
 
   
41,729
 
   
53,871
 
   
302,133
 
Other comprehensive income (loss), net of tax
                              
Cash flow hedges
                              
Net derivative gains (losses)
   
 
(1,899
)
   
(2,057
)
   
5,723
 
   
(4
)
Reclassification adjustments
   
 
(3,881
)
   
(2,001
)
   
(6,259
)
   
(655
)
    
  
  
  
Total cash flow hedges
   
 
(5,780
)
   
(4,058
)
   
(536
)
   
(659
)
Net gain (loss) from foreign currency translation
   
 
(35,538
)
   
(19,188
)
   
16,878
 
   
(41,056
)
    
  
  
  
Other comprehensive income (loss) before cumulative effect of accounting change
   
 
(41,318
)
   
(23,246
)
   
16,342
 
   
(41,715
)
Cumulative effect of accounting change (Note B)
   
 
—  
 
   
—  
 
   
—  
 
   
6,642
 
    
  
  
  
Other comprehensive income (loss)
   
 
(41,318
)
   
(23,246
)
   
16,342
 
   
(35,073
)
    
  
  
  
COMPREHENSIVE INCOME/(LOSS)
   
$
(3,910
)
   
18,483
 
   
70,213
 
   
267,060
 
    
  
  
  
 
See Notes to Consolidated Financial Statements, page 5.

3

Murphy Oil Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(Thousands of dollars)
 
    
Nine Months Ended September 30,
  
    
2002
     
2001
  
OPERATING ACTIVITIES
                
Net income
   
$
53,871
 
   
302,133
 
Adjustments to reconcile net income to net cash provided by operating activities
                
Depreciation, depletion and amortization
   
 
223,167
 
   
170,578
 
Impairment of properties
   
 
9,154
 
   
—  
 
Provisions for major repairs
   
 
14,820
 
   
16,870
 
Expenditures for major repairs and dismantlement costs
   
 
(11,821
)
   
(14,113
)
Dry holes
   
 
78,373
 
   
65,638
 
Amortization of undeveloped leases
   
 
18,369
 
   
17,268
 
Amortization of goodwill
   
 
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