MURPHY OIL CORP /DE - 10-Q Quarterly Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2004

¨	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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). x Yes ¨ No

Number of shares of Common Stock, $1.00 par value, outstanding at June 30, 2004 was 92,004,733.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Murphy Oil Corporation and Consolidated Subsidiaries

CONSOLIDATED BALANCE SHEETS

(Thousands of dollars)


	(Unaudited) June 30, 2004			December 31, 2003
ASSETS
Current assets
Cash and cash equivalents	$	947,009		252,425
Accounts receivable, less allowance for doubtful accounts of $11,272 in 2004 and $10,735 in 2003		640,344		450,201
Inventories, at lower of cost or market
Crude oil and blend stocks		84,710		46,626
Finished products		134,756		157,078
Materials and supplies		64,984		66,806
Prepaid expenses		47,769		44,779
Deferred income taxes		27,548		20,940

Total current assets		1,947,120		1,038,855

Property, plant and equipment, at cost less accumulated depreciation, depletion and amortization of $2,983,716 in 2004 and $3,472,133 in 2003		3,244,619		3,530,800
Goodwill, net		39,191		64,873
Deferred charges and other assets		70,432		78,119

Total assets	$	5,301,362		4,712,647

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current maturities of long-term debt	$	61,642		67,224
Accounts payable and accrued liabilities		857,429		659,609
Income taxes		151,842		83,493

Total current liabilities		1,070,913		810,326

Notes payable		1,032,798		1,061,410
Nonrecourse debt of a subsidiary		14,046		28,897
Deferred income taxes		419,954		421,700
Asset retirement obligations		200,855		252,397
Accrued major repair costs		30,718		20,513
Deferred credits and other liabilities		181,498		166,521

Stockholders’ equity
Cumulative Preferred Stock, par $100, authorized 400,000 shares, none issued		—		—
Common Stock, par $1.00, authorized 200,000,000 shares, issued 94,613,379 shares		94,613		94,613
Capital in excess of par value		509,594		504,809
Retained earnings		1,769,228		1,357,910
Accumulated other comprehensive income		50,717		65,246
Unamortized restricted stock awards		(5,479	)	—
Treasury stock, 2,608,646 shares of Common Stock in 2004 and 2,742,781 shares in 2003 at cost		(68,093	)	(71,695	)

Total stockholders’ equity		2,350,580		1,950,883

Total liabilities and stockholders’ equity	$	5,301,362		4,712,647

See Notes to Consolidated Financial Statements, page 5.

The Exhibit Index is on page 27.

Murphy Oil Corporation and Consolidated Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(Thousands of dollars except per share amounts)


	Three Months Ended June 30,					Six Months Ended June 30,
	2004			2003*		2004		2003*
REVENUES
Sales and other operating revenues	$	2,087,060		1,172,895		3,703,626		2,430,065
Gain on sale of assets		1,593		49,274		30,800		49,298
Interest and other income		7,114		1,220		9,413		2,195

Total revenues		2,095,767		1,223,389		3,743,839		2,481,558

COSTS AND EXPENSES
Crude oil, natural gas and product purchases		1,507,177		839,739		2,674,442		1,744,432
Operating expenses		180,026		151,599		348,436		294,495
Exploration expenses, including undeveloped lease amortization		23,209		28,048		72,358		43,447
Selling and general expenses		33,194		27,189		63,875		56,122
Depreciation, depletion and amortization		82,714		59,125		162,910		116,301
Accretion of asset retirement obligations		2,467		2,490		4,974		4,961
Interest expense		14,179		14,272		28,467		28,233
Interest capitalized		(4,814	)	(10,112	)	(9,066	)	(19,648	)

Total costs and expenses		1,838,152		1,112,350		3,346,396		2,268,343

Income from continuing operations before income taxes		257,615		111,039		397,443		213,215
Income tax expense		89,480		38,684		148,612		58,003

Income from continuing operations		168,135		72,355		248,831		155,212
Discontinued operations, net of tax		181,738		7,331		199,281		18,579

Income before cumulative effect of change in accounting principle		349,873		79,686		448,112		173,791
Cumulative effect of change in accounting principle, net of tax		—		—		—		(6,993	)

NET INCOME	$	349,873		79,686		448,112		166,798

INCOME (LOSS) PER COMMON SHARE – BASIC
Income from continuing operations	$	1.82		.79		2.70		1.69
Discontinued operations		1.98		.08		2.17		.21
Cumulative effect of change in accounting principle		—		—		—		(.08	)

NET INCOME – BASIC	$	3.80		.87		4.87		1.82

INCOME (LOSS) PER COMMON SHARE – DILUTED
Income from continuing operations	$	1.80		.78		2.67		1.68
Discontinued operations		1.95		.08		2.14		.20
Cumulative effect of change in accounting principle		—		—		—		(.08	)

NET INCOME – DILUTED	$	3.75		.86		4.81		1.80

Average common shares outstanding – basic		91,994,700		91,817,165		91,957,965		91,776,458
Average common shares outstanding – diluted		93,341,176		92,503,242		93,253,067		92,464,624

*	Reclassified to conform to 2004 presentation.

See Notes to Consolidated Financial Statements, page 5.

Murphy Oil Corporation and Consolidated Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

(Thousands of dollars)


	Three Months Ended June 30,					Six Months Ended June 30,
	2004			2003		2004		2003
Net income	$	349,873		79,686		448,112		166,798

Other comprehensive income, net of tax
Cash flow hedges
Net derivative gains (losses)		1,980		(4,468	)	4,368		(24,155	)
Reclassification adjustments		(2,366	)	8,689		(5,474	)	27,138

Total cash flow hedges		(386	)	4,221		(1,106	)	2,983
Net gain (loss) from foreign currency translation		(8,555	)	90,456		(13,423	)	143,103
Minimum pension liability adjustment		—		—		—		(707	)

COMPREHENSIVE INCOME	$	340,932		174,363		433,583		312,177

See Notes to Consolidated Financial Statements, page 5.

Murphy Oil Corporation and Consolidated Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(Thousands of dollars)


	Six Months Ended June 30,
	2004			2003
OPERATING ACTIVITIES
Income from continuing operations	$	248,831		155,212
Adjustments to reconcile income from continuing operations to net cash provided by operating activities
Depreciation, depletion and amortization		162,910		116,301
Provisions for major repairs		15,177		15,830
Expenditures for major repairs and asset retirement obligations		(8,989	)	(26,193	)
Dry hole costs		50,596		19,365
Amortization of undeveloped leases		7,608		6,970
Accretion of asset retirement obligations		4,974		4,961
Deferred and noncurrent income tax charges		47,690		5,640
Pretax gains from disposition of assets		(30,800	)	(49,298	)
Net (increase) decrease in operating working capital other than cash and cash equivalents		(1,848	)	6,107
Other		(1,265	)	(5,672	)

Net cash provided by continuing operations		494,884		249,223
Net cash provided by discontinued operations		60,272		89,909