EXHIBIT 13
HIGHLIGHTS
FINANCIAL
(Thousands of dollars except per share data) 2002 2001 2000
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FOR THE YEAR*
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Revenues $ 3,984,327 3,865,968 3,658,186
Net income 111,508 330,903 296,828
Cash dividends paid 70,898 67,826 65,294
Capital expenditures 868,100 864,440 557,897
Net cash provided by operating activities 532,844 635,704 747,751
Average Common shares outstanding - diluted 92,134,967 91,181,998 90,479,412
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AT END OF YEAR
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Working capital $ 136,268 38,604 71,710
Net property, plant and equipment 2,886,599 2,525,807 2,184,719
Total assets 3,885,775 3,259,099 3,134,353
Long-term debt 862,808 520,785 524,759
Stockholders' equity 1,593,553 1,498,163 1,259,560
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PER SHARE OF COMMON STOCK*
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Net income - diluted $ 1.21 3.63 3.28
Cash dividends paid .775 .75 .725
Stockholders' equity 17.38 16.53 13.98
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*Includes nonrecurring items that are detailed in Management's Discussion and
Analysis, page 10 of the attached Form 10-K report.
OPERATING
FOR THE YEAR 2002 2001 2000
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Net crude oil and gas liquids produced - barrels a day 76,370 67,355 65,259
United States 5,285 5,763 6,663
Canada 48,239 36,059 31,296
Other International 22,846 25,533 27,300
Net natural gas sold - thousands of cubic feet a day 296,931 281,235 229,412
United States 92,106 115,527 144,789
Canada 197,852 152,583 73,773
United Kingdom 6,973 13,125 10,850
Crude oil refined - barrels a day 143,829 167,199 165,820
North America 114,189 140,214 137,313
United Kingdom 29,640 26,985 28,507
Petroleum products sold - barrels a day 210,631 205,318 179,515
North America 176,427 174,256 149,612
United Kingdom 34,204 31,062 29,903
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LETTER TO THE SHAREHOLDERS
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DEAR FELLOW SHAREHOLDER:
Net income in 2002 was $111.5 million, $1.21 per share, compared to $330.9
million in 2001, $3.63 per share. The decline was principally due to lower crude
oil and natural gas prices at the beginning of the year, depressed downstream
results throughout the year and lower gains on asset dispositions. As a partial
offset, the Company averaged 125,800 barrels equivalent a day of production in
2002, establishing a record which should be surpassed in 2003 and again in 2004.
Despite lower earnings, much was accomplished in 2002 that strengthens and
enhances the future growth of your Company. The Terra Nova field (12%) came on
stream in the first quarter with minimal start-up problems and produced above
expectation all year. This field along with the nearby Hibernia field (6.5%)
will be sources of net income and cash flow for many years to come. In addition,
development work continued at Medusa (60%), Habanero (33.75%) and Front Runner
(37.5%) in the deepwater Gulf of Mexico; West Patricia (85%) in shallow-water
Malaysia; Syncrude (5%) in northern Alberta, Canada; and Block 16 (20%) in
Ecuador. All of these fields, or field expansions, come on stream within the
next few years (Medusa, Habanero, West Patricia and Block 16 in 2003) and will
materially add to the profitability and size of Murphy.
Also during the year we continued the construction of the green fuels project at
the Meraux refinery. This project will be completed in the third quarter of 2003
at which time the newly expanded refinery will exclusively manufacture both
low-sulfur diesel and gasoline well in advance of government mandated deadlines.
In the retail marketing arena, the Company's presence at Wal-Mart sites expanded
as we built our 500th Murphy USA station in the fourth quarter of 2002. The
build-out is ongoing with the 600th site expected to open early in the fourth
quarter of this year. Murphy is the clear market leader in this segment, owning
approximately one out of every four hypermarket fuel retailing outlets in
America.
Perhaps the most significant event in 2002 was the Kikeh discovery in deepwater
Block K (80%), offshore Malaysia. We followed up the discovery well, which was
drilled at mid-year, with two appraisal wells that confirmed a substantial new
field. The Company
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LETTER TO THE SHAREHOLDERS continued...
now holds a substantial acreage position in the Sabah Trough - a virtually
undrilled geological province with only 13 wells that have yielded seven
discoveries. We will drill a minimum of five wildcats in deepwater Malaysia in
2003 as we systematically set about exploring this massive and extremely
prospective acreage position.
We are taking advantage of the current frothy price environment to dispose of
high-cost fields that no longer contribute to our portfolio. It is not without a
touch of sadness that we sold the venerable Ship Shoal Block 113 unit (50-70%)
in the Gulf of Mexico in 2002 and in early 2003 signed a letter of intent to
sell the once super-giant Ninian field (13.82%) in the U.K. North Sea. Each
field marked a milestone in the growth of your Company and were important
sources of cash flow through some of the lean times in the 1980s. Cash lifting
costs for these fields were in excess of $8.00 a barrel in 2002; it was clearly
time to let them go. Importantly, new fields will more than replace this
production and cash flow.
We suffered some setbacks in 2002. Except for Kikeh, our explorers did not
perform at their same outstanding level of the past several years, and for the
first time in 12 years we did not replace our production. Given the frontier
nature of your Company's exploratory program, this type of annual result is
perhaps, at some point, unavoidable. Also, given the size and extent of our
interest in the Sabah Trough, the events that occurred in 2002 should provide
extraordinary impetus for future reserve growth. In addition, the Company's
downstream business was bedeviled by weak refining and marketing margins much of
the year exacerbated by poor ontime performance for the Meraux refinery.
Returning to a more efficient operation at Meraux is a priority for 2003.
I am extremely sanguine regarding Murphy Oil Corporation's future. Your Company
has a powerful combination of high-quality, low-cost producing fields that form
the current core, soon to be augmented by the lineup of new production that
comes on stream in
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2003 and 2004. Furthermore, our exploration potential is as good as I have ever
seen at Murphy. The Company's deepwater Gulf of Mexico 2003 prospect listing is
outstanding, with up to six wildcats on tap. The portfolio in deepwater Malaysia
is extensive in both quality and number. We have excellent opportunities for
meaningful reserve additions this year in these programs. The Company's
downstream business, anchored by our stations at Wal-Mart stores, is rapidly
expanding its market share at the expense of less efficient competitors.
The Board of Directors signaled strong support for the future growth of the
Company by increasing the dividend to $.80 a share (on a post-split basis) at
mid-year. In addition, the Board split the stock two-for-one at the end of the
year. The Board also added two extremely capable new members in February of
2003. Frank Blue, a lawyer who is Of Counsel with the firm of Fulbright &
Jaworski, specializes in corporate governance. Frank was most recently
Vice-President, General Counsel and Corporate Secretary with Caltex Corporation,
one of the largest oil and gas firms operating in the Far East. Ivar Ramberg was
most recently President and CEO of Norsk Hydro Canada. Before joining the
industry, he had a distinguished university academic career in Norway and the
U.S. teaching geology and geophysics.
Enoch Dawkins, President of Murphy Exploration & Production Company, will retire
on March 1, 2003, and Herb Fox, Executive Vice President of Worldwide
Downstream, will retire on April 1, 2003. Upon retirement, Enoch and Herb will
have 39 and 33 years of service, respectively, with your Company. Each provided
invaluable contributions to their respective disciplines and important
assistance to the Company's broader goals. They are men of integrity and
dedication and always put in the time required to get the job done. They will be
missed.
Charles H. Murphy, Jr. died March 20, 2002. He was a unique man with
extraordinary insights not only into our industry but also the larger world. He
inspired at least two generations of Murphy managers who were fortunate enough
to work with him. Also, George Ishiyama died February 4, 2003. George was a
director from 1976 to 1986 and a director emeritus from 1986 to 2003. He was a
pioneer in promoting post-war, U.S.-Japanese trade development and a valued
contributor to the Board.
As always, I appreciate your support and look forward with confidence to our
shared future.
/s/ Claiborne P. Deming
Claiborne P. Deming
President and Chief Executive Officer
February 19, 2003
El Dorado, Arkansas
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EXPLORATION & PRODUCTION
Murphy continues to generate significant production growth through its focused
exploration programs in deepwater Gulf of Mexico, offshore eastern Canada,
western Canada and Malaysia.
For the full year 2002, worldwide production averaged more than 125,800 barrels
of oil equivalent a day, which reflected an increase of 10% over 2001 average
levels, and continued Murphy's trend of achieving higher production levels each
year for the last three years. Driving the increase was the start-up of
production at the Terra Nova field offshore eastern Canada and peaking natural
gas production rates at the Murphy-operated Ladyfern field in western Canada.
The trend of increased production is set to continue in 2003, as two new fields
in the deepwater Gulf of Mexico, Medusa and Habanero, come on stream and
production in shallow-water Malaysia commences. Production rates during 2003
should reach an average of 130,000 to 135,000 barrels of oil equivalent a day.
Operations during 2004 will benefit from a full year of Medusa, Habanero and
shallow-water Malaysia production. Also in 2004, the Murphy-operated Front
Runner field will be placed on stream, which should drive Murphy's average oil
equivalent production on a worldwide basis above 160,000 barrels a day.
The deepwater Gulf of Mexico remains an integral component of
EXPLORATION AND PRODUCTION
(thousands of dollars) 2002 2001 2000
Income from continuing operations $ 161,003 187,543 245,755
Total assets 2,387,381 2,151,049 1,902,618
Capital expenditures 632,250 683,448 392,732
Crude oil and liquids produced - barrels a day 76,370 67,355 65,259
Natural gas sold - MCF a day 296,931 281,235 229,412
Net hydrocarbons produced - oil equivalent barrels a day 125,859 114,228 103,494
Net proved hydrocarbon reserves - thousands of oil
equivalent barrels 455,300 501,200 442,300
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Murphy's upstream strategy. Murphy moved to the deepwater in 1996 and to date
has accumulated an acreage position of 154 blocks and has three major
discoveries in development. Two of these developments, Medusa and Habanero, will
be placed on stream during 2003. The first deepwater development is in the final
stages at the Murphy-operated Medusa field in Mississippi Canyon Blocks 538 and
582 (60%) as the hull is on site and is expected to be mated with the topsides
in early spring. The Medusa facility is sized to handle daily production rates
of up to 40,000 barrels of oil and 110 million cubic feet of natural gas. First
production is anticipated for mid-year 2003 and will ramp up throughout the
remainder of the year.
The Habanero field, located in Garden Banks Block 341 (33.75%), is the other
deepwater Gulf of Mexico development nearing completion and first production is
expected during the third quarter of 2003 when two wells in this field will be
tied into an existing host facility.
The Front Runner project, located in Green Canyon Blocks 338/339, was sanctioned
in early 2002 with first production expected in 2004. The development plan
includes a Truss Spar-type Floating Production System capable of handling daily
production of 60,000 barrels of crude oil and 110 million cubic feet of natural
gas and will serve as a production hub for Murphy-operated discoveries at Front
Runner, Front Runner South and Quatrain (all 37.5%). Front Runner and Front
Runner South were discovered during 2001. A smaller discovery was drilled at
Quatrain during the third quarter of 2002. The well at Quatrain was cased as a
producing well to tie into the spar facility being constructed for the Front
Runner project. Located only one mile from the planned location of the Front
Runner spar, Quatrain will be a cost effective tie back to that facility and
reflects the maturity of Murphy's deepwater drilling program, whereby smaller
discoveries can be economically produced through Company-owned and operated
facilities.
Exploratory drilling will continue in the immediate Front Runner area, as Murphy
plans to test at least two prospects during 2003 on the 13 contiguous blocks
currently under lease by the Company. The first of which, Cool Papa, located in
Green Canyon Block 380 (37.5%), is set to spud early in the second quarter of
2003. A wildcat well at the Lecomte
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EXPLORATION & PRODUCTION continued...
prospect, located in Green Canyon Block 428 (37.5%), is also planned for 2003.
Murphy has identified several other prospects on this group of blocks and is
planning further drilling in this region in 2004. In addition, a well will be
drilled in the second quarter of 2003 to test a prospect named RunfortheRoses,
located approximately 27 miles south of the Front Runner area in Green Canyon
Blocks 735 and 736 (50%).
Off the east coast of Canada, the Terra Nova field (12%) was placed on stream in
January 2002. Terra Nova produces through a state-of-the-art floating storage
and production facility and serves as a strong complement to the nearby Hibernia
field (6.5%). The production ramp-up from the Terra Nova field was outstanding
and, based on high volume testing of the facility, the operator has applied for
increases in allowable throughputs. Similarly, Hibernia produced at record
volumes in 2002 and is seeking increased allowable production rates. These East
Coast assets were a primary driver of Murphy's strong production increases
during 2002 and are on track for record volumes again in 2003.
The results of Murphy's first three exploration wells on the Scotian Shelf, near
Sable Island, were disappointing. In August 2002, Murphy and partners announced
results from Annapolis (19%), the first industry deepwater well drilled off the
Scotian Shelf. This well proved the existence of reservoir and hydrocarbon
presence in a wildcat setting, but further drilling is required to establish
threshold reserves for a commercial development. To this end, Murphy and
partners are discussing additional exploratory drilling on the Annapolis block
during 2003. Seismic surveys will also be acquired over the two adjacent blocks.
This area has the potential to add North American natural gas reserves to
Murphy's oil-weighted portfolio.
In western Canada, natural gas production reached record rates propelled by
Murphy's operated interest in the prolific Ladyfern field (63%). The field
reached peak gross production rates of over 700 million cubic feet a day as
expected during the early summer of 2002 and is
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currently in decline. The Company continues to explore its large acreage
position west of Ladyfern, and is also active with several winter wells in the
foothills.
Murphy continues to be a player in the heavy oil and oil sands industry in
Canada. An aggressive heavy oil drilling program began before year-end 2002, and
will continue into 2003, focusing on primary and secondary recovery of
conventional heavy oils in Murphy's traditional operating areas. Strong
production growth from these properties is anticipated during 2003. Murphy is
also an owner in Syncrude (5%), which has undertaken an aggressive expansion and
will contribute growing volumes.
The Company believes it is important to continue to participate in the
development of this vast Canadian resource, which offers a secure supply of
hydrocarbons in North America for future decades.
The most significant story of 2002 on the exploration front lies in deepwater
Malaysia. After a rocky beginning, with announced dry holes at the Bagang and
Bliais prospects, Murphy achieved success at Kikeh (80%), the first deepwater
oil discovery made in Malaysia. The initial Kikeh well in the southern part of
Block K in 4,400 feet of water found in excess of 500 net feet of oil pay and
Murphy quickly moved to drill more wells to appraise the size of the structure.
A total of three wells and two associated sidetracks have been drilled with an
average net oil pay of 400 to 600 feet. Furthermore, all pay sands appeared to
be in communication and were full to base with oil. To date, no water or natural
gas has been found in any of the wells. During 2003, a different well location
on the Kikeh structure will be drilled, then production tested, to help further
define both reserves
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EXPLORATION & PRODUCTION continued...
and oil flow characteristics. Following those results, an engineering and design
study will commence to determine the type of development needed with the aim of
sanctioning a development project by year-end 2003 or early 2004. First
production from deepwater Malaysia is expected by 2007.
Murphy will also test at least two new prospects on Block K this year and one on
undrilled contiguous Block H to further explore Murphy's large deepwater
Malaysia acreage position. Each of these prospects, if successful, have the
potential to materially affect the reserves of the Company. Although exact
drilling locations have not been named, drilling on Block K will likely be
concentrated in the Kikeh vicinity searching for Kikeh "look-alikes," and on the
southwest corner of Block H near exploratory success by another company in an
adjacent block. Murphy, as operator, has an 80% working interest in Block K and
adjoining Block H, which combined, cover over six million acres.
Success continues in Murphy's 85%-owned, shallow-water blocks in Malaysia.
During 2002, Murphy confirmed the commercial viability of this acreage, by
sanctioning a development at West Patricia, located approximately 25 miles from
the coastal port of Bintulu, Sarawak, Malaysia. The establishment of a
production center will allow Murphy to fully develop its surrounding acreage.
Development at West Patricia is proceeding and the field is scheduled to be
placed on stream during the second quarter of 2003. West Patricia will produce
from a well jacket to a floating storage facility and will net to the Company
approximately 10,000 barrels a day of oil at peak rates. West Patricia has been
designed as a production hub
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and Murphy has identified many nearby untested structures that, if successful,
could tie into the West Patricia infrastructure. In fact, Murphy has already had
success at the nearby Congkak discovery. With the Congkak #1 exploration well,
Murphy discovered a new oil field in Block SK 309, offshore Sarawak. The Congkak
discovery is located in 136 feet of water and lies three kilometers from the
West Patricia field production platform. The discovery supports Murphy's belief
that there are many small field development opportunities on the acreage and the
Company views Congkak as a natural add-on to its established infrastructure.
Murphy continues to extend its presence in Malaysia with the addition of an
acreage position in Peninsular Malaysia and a new award of acreage in deepwater.
A production sharing contract was signed in July 2002 giving Murphy a 75%
working interest in PM Blocks 311/312. These blocks represent exploitation
acreage, similar to shallow-water Blocks SK 309/311, as hydrocarbons have
already been found on the blocks. Murphy plans to shoot 3D seismic surveys
during 2003 in preparation for a drilling program that will commence in 2004.
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REFINING & MARKETING
In Murphy's downstream operations, refining and marketing margins in the U.S.
and U.K. were squeezed during 2002 primarily due to generally rising crude oil
prices throughout the year. Results were also hampered during the year by
operational problems at the Meraux refinery that reduced the average daily crude
oil throughput of this plant. The downstream business incurred a loss of almost
$40 million in 2002 following a year of record operating earnings in 2001.
The Murphy USA program continues to be the focus for the Company's downstream
operation. In cooperation with Wal-Mart, Murphy builds high volume fueling sites
in the parking lots of Wal-Mart Supercenters throughout the southern and
midwestern United States. Through these outlets, Murphy provides gasoline and
diesel to customers with convenient service and significant cost savings. Sales
volumes at Murphy USA stations remain strong, averaging over 200,000 gallons a
month per site. The Company opened its 500th location late in 2002 in Houston,
Texas and by year-end had 506 sites in operation. These sites combine the
benefits of low operating costs, low capital costs and high sales volume to
create a formidable retail presence.
Of note in 2002, Murphy signed a new agreement with Wal-Mart to extend this
program in Canada. Marketed under the Murphy Canada brand, six sites are
currently open.
Due to the growth of the Murphy USA retail marketing business, the Company must
buy a larger portion of gasoline needed to supply these stations. The size of
this business has allowed the Company to achieve a stronger negotiating position
for gasoline purchases in its marketing areas.
The expansion project at the Meraux refinery continued to proceed during
REFINING AND MARKETING
(thousands of dollars) 2002 2001 2000
Income (loss) $ (39,908) 153,680 54,456
Total assets 1,208,244 918,764 1,018,555
Capital expenditures 234,714 175,186 153,750
Crude oil processed - barrels a day 143,829 167,199 165,820
Products sold - barrels a day 210,631 205,318 179,515
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2002. Murphy is constructing a hydrocracker and related hardware that, when
installed, will allow Murphy to produce low-sulfur gasoline and diesel products
ahead of mandated requirements. The Company is also expanding the refinery's
crude processing capacity from 100,000 to 125,000 barrels a day. The start-up of
the hydrocracker and expanded crude unit is expected to take place during the
third quarter of 2003. Once this green fuels project is completed, capital
expenditures in the Company's downstream business will sharply drop.
Murphy also owns a refinery at Superior, Wisconsin, on the western tip of Lake
Superior. This refinery can process 35,000 barrels per day of Canadian and
domestic crude oil, with its primary attribute being the ability to produce
asphalt products from generally lower-priced Canadian heavy oil that is
available to the refinery via pipeline. Superior's lighter refined products also
serve to supply the Company's stations at Wal-Mart stores in the upper Midwest.
Murphy has an effective 30% interest in a refinery at Milford Haven, Wales,
where up to 32,400 barrels of crude oil per day can be processed for the
Company's account. The Company markets light refined products to U.K. retail
customers primarily under the Murco brand. Murphy's U.K. downstream business
continues to benefit from a successful alliance with the Costcutter grocery
chain, which upgrades neighborhood motor fueling stations into popular and
convenient shopping destinations for local consumers.
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As a mid-size player in the energy industry, Murphy realizes it must deploy
resources in a focused, deliberate manner. To this end, Murphy concentrates its
exploration capital in four main areas: deepwater Gulf of Mexico, western
Canada, the Scotian Shelf offshore eastern Canada, and Malaysia. To date, Murphy
has announced significant discoveries in three of its core areas through success
at Medusa and Front Runner in the deepwater Gulf, the Ladyfern natural gas field
in western Canada and Kikeh in deepwater Malaysia.
Murphy has substantially increased its production profile and added value to the
Company by meticulously concentrating on what it does best -adding reserves
through the drill bit. In downstream operations, Murphy has a retail presence
through its relationship with Wal-Mart that is unparalleled in the industry. The
combination of its acreage portfolio, aggressive exploration program, and
downstream retail strategy position Murphy as an outperformer not only capable
of continuing its successful track record, but ready to climb to a new level of
growth and profitability.
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STATISTICAL SUMMARY
2002 2001 2000 1999 1998
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EXPLORATION AND PRODUCTION
Net crude oil and condensate production - barrels a day
United States 3,837 4,339 4,770 5,826 5,192
Canada - light 2,150 2,937 2,606 2,992 3,219
heavy 9,484 11,707 10,574 9,099 9,676
offshore 24,037 9,535 9,199 6,404 4,192
synthetic 11,362 10,479 8,443 10,997 10,500
United Kingdom 18,180 20,049 20,679 20,217 14,975
Ecuador 4,544 5,319 6,405 7,104 7,720
Net natural gas liquids production - barrels a day
United States 291 413 551 777 643
Canada 1,206 1,401 474 488 612
United Kingdom 122 165 216 321 436
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Continuing operations 75,213 66,344 63,917 64,225 57,165
Discontinued operations 1,157 1,011 1,342 1,858 1,963
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Total liquids produced 76,370 67,355 65,259 66,083 59,128
==================================================================================================================================
Net crude oil and condensate sold - barrels a day
United States 3,837 4,339 4,769 5,832 5,185
Canada - light 2,150 2,937 2,606 2,992 3,219
heavy 9,484 11,707 10,574 9,099 9,676
offshore 23,935 9,862 9,456 4,727 4,396
synthetic 11,362 10,479 8,443 10,997 10,500
United Kingdom 18,209 20,206 20,921 20,217 15,336
Ecuador 4,293 5,381 6,393 7,104 7,907
Net natural gas liquids sold - barrels a day
United States 291 413 551 777 643
Canada 1,206 1,401 474 488 612
United Kingdom 149 148 216 321 436
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Continuing operations 74,916 66,873 64,403 62,554 57,910
Discontinued operations 1,157 1,011 1,342 1,858 1,963
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Total liquids sold 76,073 67,884 65,745 64,412 59,873
==================================================================================================================================
Net natural gas sold - thousands of cubic feet a day
United States 88,067 112,616 141,373 163,587 160,932
Canada 197,852 152,583 73,773 56,238 48,998
United Kingdom 6,973 13,125 10,850 12,443 12,384
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Continuing operations 292,892 278,324 225,996 232,268 222,314
Discontinued operations 4,039 2,911 3,416 8,175 8,587
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Total natural gas sold 296,931 281,235 229,412 240,443 230,901
==================================================================================================================================
Net hydrocarbons produced - equivalent barrels/1/,/2/ a day 125,859 114,228 103,494 106,157 97,612
Estimated net hydrocarbon reserves - million equivalent barrels/1/,
/2/,/3/ 455.3 501.2 442.3 400.8 379.9
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Weighted average sales prices/4/
Crude oil and condensate - dollars a barrel
United States $ 24.25 24.92 30.38 18.09 12.89
Canada/5/ - light 22.60 22.40 27.68 17.00 12.03
heavy 16.82 11.06 17.83 12.77 6.56
offshore 25.36 23.77 27.16 19.08 11.80
synthetic 25.64 25.04 29.62 18.64 13.73
United Kingdom 24.39 24.44 27.78 18.09 12.52
Ecuador 19.64 17.00 22.01 14.42 8.56
Natural gas liquids - dollars a barrel
United States 17.13 20.40 23.04 13.70 11.50
Canada/5/ 16.35 20.35 19.98 12.09 9.16
United Kingdom 18.28 19.12 23.64 13.45 11.04
Natural gas - dollars a thousand cubic feet
United States 3.37 4.64 4.01 2.34 2.25
Canada/5/ 2.74 3.28 3.67 1.96 1.40
United Kingdom/5/ 2.76 2.52 1.81 1.68 2.23
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/1/ Natural gas converted at a 6:1 ratio.
/2/ Includes synthetic oil.
/3/ At December 31.
/4/ Includes intracompany transfers at market prices.
/5/ U.S.dollar equivalent.
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STATISTICAL SUMMARY
2002 2001 2000 1999 1998
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REFINING
Crude capacity/1/ of refineries - barrels per stream day 167,400 167,400 167,400 167,400 167,400
==================================================================================================================================
Refinery inputs - barrels a day
Crude - Meraux, Louisiana 83,721 104,345 103,154 82,410 101,834
Superior, Wisconsin 30,468 35,869 34,159 33,402 32,966
Milford Haven, Wales 29,640 26,985 28,507 27,392 30,780
Other feedstocks 11,013 9,901 8,298 10,484 11,404
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Total inputs 154,842 177,100 174,118 153,688 176,984
==================================================================================================================================
Refinery yields - barrels a day
Gasoline 63,409 73,217 75,106 65,216 73,482
Kerosine 9,446 12,874 11,955 11,316 15,394
Diesel and home heating oils 48,344 52,660 49,606 44,054 50,506
Residuals 16,589 20,530 18,524 17,370 21,310
Asphalt, LPG and other 12,651 13,467 14,624 12,225 12,565
Fuel and loss 4,403 4,352 4,303 3,507 3,727
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Total yields 154,842 177,100 174,118 153,688 176,984
==================================================================================================================================
Average cost of crude inputs to refineries - dollars a barrel
North America $ 24.76 23.44 28.82 18.80 12.55
United Kingdom 25.83 24.86 29.29 17.22 13.62
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MARKETING
Products sold - barrels a day
North America - Gasoline 112,281 96,597 76,314 61,786 61,429
Kerosine 5,818 9,621 8,517 7,545 10,170
Diesel and home heating oils 35,995 41,064 39,347 34,514 40,403
Residuals 13,759 17,308 15,163 13,812 16,170
Asphalt, LPG and other 8,574 9,666 10,271 9,134 9,887
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176,427 174,256 149,612 126,791 138,059
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United Kingdom - Gasoline 12,058 11,058 11,622 12,511 14,058
Kerosine 2,685 2,547 2,478 3,053 4,369
Diesel and home heating oils 14,574 11,798 9,760 10,995 10,884
Residuals 3,127 3,538 3,852 3,608 5,203
LPG and other 1,760 2,121 2,191 2,084 1,579
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34,204 31,062 29,903 32,251 36,093
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Total products sold 210,631 205,318 179,515 159,042 174,152
==================================================================================================================================
Branded retail outlets/1/
North America 914 815 712 625 552
United Kingdom 416 411 386 384 389
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STOCKHOLDER AND EMPLOYEE DATA
Common shares outstanding/1/,/2/ (thousands) 91,689 90,662 90,092 89,996 89,900
Number of stockholders of record/1/ 2,826 2,991 3,185 3,431 3,684
Number of employees/1/ 4,010 3,779 3,109 2,153 1,566
Average number of employees 3,875 3,438 2,528 1,797 1,498
- ----------------------------------------------------------------------------------------------------------------------------------
/1/ At December 31.
/2/ 1998 through 2001 have been adjusted to reflect a two-for-one stock split
effective December 30, 2002.
14
.. DIRECTORS
WILLIAM C. NOLAN JR. /1/
Chairman of the Board
Murphy Oil Corporation
Partner
Nolan and Alderson
El Dorado, Arkansas
Director since 1977
CLAIBORNE P. DEMING /1/
President and Chief Executive Officer
Murphy Oil Corporation
El Dorado, Arkansas
Director since 1993
FRANK W. BLUE /2/,/4/
Attorney
Fulbright & Jaworski
Houston, Texas
Director since 2003
GEORGE S. DEMBROSKI /1/,/2/,/3/
Vice Chairman, Retired
RBC Dominion Securities Limited
Toronto, Ontario, Canada
Director since 1995
H. RODES HART /2/,/3/
Chairman and Chief Executive Officer
Franklin Industries, Inc.
Nashville, Tennessee
Director since 1975
ROBERT A. HERMES /4/,/5/
Chairman of the Board
Purvin & Gertz, Inc.
Houston, Texas
Director since 1999
MICHAEL W. MURPHY
President
Marmik Oil Company
El Dorado, Arkansas
Director since 1977
R. MADISON MURPHY /1/,/2/
Private Investor
El Dorado, Arkansas
Director since 1993
IVAR B. RAMBERG /4/,/5/
Executive Officer
Ramberg Consulting AS (Ram-Co)
Lysaker, Norway
Director since 2003
DAVID J. H. SMITH /3/,/5/
Chief Executive Officer, Retired
Whatman plc
Maidstone, Kent, England
Director since 2001
CAROLINE G. THEUS /1/,/5/
President
Keller Enterprises, LLC
Alexandria, Louisiana
Director since 1985
.. EXECUTIVE OFFICERS
CLAIBORNE P. DEMING
President and Chief Executive Officer
W. MICHAEL HULSE
Executive Vice President - Worldwide
Downstream Operations
STEVEN A. COSSE
Senior Vice President and
General Counsel
BILL H. STOBAUGH
Vice President
KEVIN G. FITZGERALD
Treasurer
JOHN W. ECKART
Controller
WALTER K. COMPTON
Secretary
.. DIRECTOR EMERITUS
William C. Nolan
- ----------
COMMITTEES OF THE BOARD
/1/ Member of the Executive Committee chaired by Mr. Nolan. The Chairman serves
as ex-officio member of all Committees.
/2/ Member of the Audit Committee chaired by Mr. R. Madison Murphy.
/3/ Member of the Executive Compensation Committee chaired by Mr. Dembroski.
/4/ Member of the Nominating and Governance Committee chaired by Mr. Hermes.
/5/ Member of the Public Policy and Environmental Committee chaired by
Mrs. Theus.
15
.. PRINCIPAL SUBSIDIARIES
Murphy Exploration &
Production Company - USA
131 South Robertson Street
New Orleans, Louisiana 70112
(504) 561-2811
Mailing Address:
P. O. Box 61780
New Orleans, Louisiana 70161-1780
Engaged in crude oil and
natural gas exploration and production
in the continental U.S. and in the
Gulf of Mexico.
JOHN C. HIGGINS
President
S. J. CARBONI JR.
Vice President, Deepwater
Development and Production
JAMES R. MURPHY
Vice President, Exploration
STEVEN A. COSSE
Vice President and General Counsel
KEVIN G. FITZGERALD
Treasurer
GASPER F. BIVALACQUA
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, and marketing of petroleum
products in Canada.
HARVEY DOERR
President
TIMOTHY A. LARSON
Vice President, Crude Oil and
Natural Gas
J. TERRY MCCOY
Vice President, Exploration
and Land
W. PATRICK OLSON
Vice President, Production
ROBERT L. LINDSEY
Vice President, Finance
and Secretary
KEVIN G. FITZGERALD
Treasurer
Murphy Exploration & Production
Company - International
550 WestLake Park Blvd.
Suite 1000
Houston, Texas 77079
(281) 249-1040
Engaged in crude oil and
natural gas exploration and
production outside North
America and in Alaska.
DAVID M. WOOD
President
GEORGE M. SHIRLEY
Vice President and General
Manager - Malaysia
STEVEN A. COSSE
Vice President and General Counsel
KEVIN G. FITZGERALD
Treasurer
JOHN W. ECKART
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 and marketing of
petroleum products in the United States.
W. MICHAEL HULSE
President
CHARLES A. GANUS
Senior Vice President, Marketing
FREDEREC C. GREEN
Senior Vice President,
Engineering and Government Affairs
GARY R. BATES
Vice President, Supply and
Transportation
HENRY J. HEITHAUS
Vice President, Retail Marketing
ERNEST C. CAGLE
Vice President, Manufacturing
STEVEN A. COSSE
Vice President and General Counsel
GORDON W. WILLIAMSON
Treasurer
JOHN W. ECKART
Controller
WALTER K. COMPTON
Secretary
MURPHY EASTERN OIL COMPANY
4 Beaconsfield Road
St. Albans, Hertfordshire
AL1 3RH, England
172-789-2400
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 and marketing of petroleum
products in the United Kingdom.
STEPHEN R. WYLIE
President
KEVIN W. MELNYK
Vice President, Supply and Refining
IJAZ IQBAL
Vice President
KEVIN G. FITZGERALD
Treasurer
WALTER K. COMPTON
Secretary
16
PRINCIPAL OFFICES
.. El Dorado, Arkansas . Calgary, Alberta, Canada
.. New Orleans, Louisiana . St. Albans, Hertfordshire, England
.. Houston, Texas . Kuala Lumpur, Malaysia
.. Corporate Information
CORPORATE OFFICE
200 Peach Street
P.O. Box 7000
El Dorado, Arkansas 71731-7000
(870) 862-6411
STOCK EXCHANGE LISTINGS
Trading Symbol: MUR
New York Stock Exchange
Toronto Stock Exchange
TRANSFER AGENTS
Computershare Investor Services, L.L.C.
P. O. Box A3504
Chicago, Illinois 60690-3504
Toll-free (888) 239-5303
Local Chicago (312)360-5303
COMPUTERSHARE TRUST COMPANY OF CANADA
100 University Avenue, 8th Floor
Toronto, Ontario M5J 2Y1
REGISTRAR
Computershare Investor Services, L.L.C.
P. O. Box A3504
Chicago, Illinois 60690-3504
E-MAIL ADDRESS
murphyoil@murphyoilcorp.com
www.murphyoilcorp.com
Murphy Oil's website provides frequently
updated information about the Company and its
operations, including:
. News releases
. Annual report
. Quarterly reports
. Live webcasts of quarterly conference calls
. Links to the Company's SEC filings
. Stock quotes
. Profiles of the Company's operations
. On-line stock investment accounts
. Murphy USA station locator
ANNUAL MEETING
The annual meeting of the Company's shareholders
will be held at 10 a.m. on May 14, 2003, 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:
Mindy K. West
Director of Investor Relations
Murphy Oil Corporation
P. O. Box 7000
El Dorado, Arkansas 71731-7000
(870) 864-6315
ELECTRONIC PAYMENT OF DIVIDENDS
Shareholders may have dividends deposited directly
into their bank accounts by electronic funds transfer.
Authorization forms may be obtained from:
Computershare Investor Services, L.L.C.
P. O. Box 0289
Chicago, Illinois 60690-0289
Toll-free (888) 239-5303
Local Chicago (312) 360-5303
[LOGO] Printed in U.S.A. on paper containing recycled content.
EXHIBIT 13 APPENDIX
MURPHY OIL CORPORATION – CIK 0000717423
Appendix to Electronically Filed Exhibit 13
(2002 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 12 of Paper Format
Exhibit 13 Page No.
| | Picture Narrative
|
|
1 | | Claiborne P. Deming, President and Chief Executive Officer of Murphy Oil Corporation, is pictured. Perhaps the most significant event in 2002 was the Kikeh discovery in deepwater Block K (80%), offshore Malaysia. Murphy now holds a substantial acreage position in the Sabah Trough – a virtually undrilled geological province with only 13 wells that have yielded seven discoveries. |
|
3 | | In November 2002, Murphy opened its 500th Murphy USA retail fueling outlet in Houston, Texas; a Murphy USA station is shown. |
|
5 | | The oil tanker Kometik shuttles production from Murphy’s Hibernia and Terra Nova fields, with the latter field being the primary driver of the Company’s production increase in 2002; a photo of the vessel is displayed. |
|
7 | | A semisubmersible rig is shown drilling the Kikeh discovery, the first in deepwater Malaysia believed to be one of the most significant discoveries in Company history. |
|
9 | | Six development wells were drilled from this well jacket at West Patricia in preparation for first oil production in 2003; a photo of a portion of the well jacket is presented. |
|
11 | | The Meraux refinery’s clean fuels project includes the addition of a hydrocracker unit, which will help Murphy provide “greener” fuels to consumers; a photo of the construction site is displayed. |
|
Map | | Map Narrative
|
|
| | | Murphy has secured strategic worldwide positions for oil and gas exploration and production and downstream operations. A world map is displayed with a key indicating the Company’s Properties, Headquarters, Refineries, and Other Principal offices. A brief narrative of certain properties is displayed within the map as follows: |
|
| | | Syncrude – Murphy has a five-percent ownership interest in Syncrude Canada, Ltd., the largest single oil producing operation in Canada. Stage III expansion will raise the gross production from this operation to 335,000 barrels per day by 2005. |
|
| | | Hibernia & Terra Nova – These two large fields are the first to come on-line offshore Newfoundland. On a combined basis, these fields produced 24,000 barrels of oil per day net to Murphy’s interest in 2002. |
Ex. 13A-1
EXHIBIT 13 APPENDIX
MURPHY OIL CORPORATION – CIK 0000717423
Exhibit 13 Page No.
| | Picture Narrative(Contd.)
|
Map (Contd.) | | |
|
| | | Gulf of Mexico Deepwater – The Company has accumulated 154 blocks in the deep waters of the Gulf of Mexico. To date Murphy has four discoveries, three of which will be on stream in 2003 and 2004. |
|
| | | Meraux Refinery – Major expansion projects will be completed in 2003 and will enable the refinery to meet new low sulfur product specifications which will be mandatory in 2006. |
|
| | | Murphy USA Sites – Murphy had 506 operating retail stations at Wal-Mart sites in the U.S. at December 31, 2002. The Company will build another 100 stations in 2003. |
|
| | | Ecuador – A new heavy oil pipeline will be operational in the second half of 2003 that will allow the Company’s production from Block 16 to double to about 11,000 barrels per day. |
|
| | | Malaysia – New production will commence in mid-2003 from shallow-water Block SK 309. The Company made a sizeable discovery at Kikeh in deepwater Block K in 2002. Significant exploration work will continue on deepwater blocks in 2003. |
Ex. 13A-2
EXHIBIT 13 APPENDIX
MURPHY OIL CORPORATION – CIK 0000717423
Exhibit 13 Page No.
| | Graph Narrative(Contd.)
| | | | | | | | | | |
|
1 | | NET HYDROCARBONS PRODUCED | | | | | | | | | | |
| | | Scale 0 to 150 (thousands of oil equivalent barrels a day) | | | | | | | | | | �� |
| | | | | 1998
| | 1999
| | 2000
| | 2001
| | 2002
|
| | | Ecuador and Other (top) | | 8 | | 7 | | 6 | | 5 | | 4 |
| | | United Kingdom | | 18 | | 23 | | 23 | | 22 | | 20 |
| | | Canada | | 36 | | 39 | | 43 | | 62 | | 81 |
| | | United States (bottom) | | 36 | | 37 | | 31 | | 25 | | 21 |
| | | | |
| |
| |
| |
| |
|
| | | Total | | 98 | | 106 | | 103 | | 114 | | 126 |
| | | | |
| |
| |
| |
| |
|
| | | This stacked vertical bar graph has the total for each bar printed above it. | | | | | | | | | | |
|
2 | | CAPITAL EXPENDITURES BY FUNCTION | | | | | | | | | | |
| | | Scale 0 to 900 (millions of dollars) | | | | | | | | | | |
| | | | | 1998
| | 1999
| | 2000
| | 2001
| | 2002
|
| | | Corporate (top) | | 2 | | 3 | | 11 | | 6 | | 1 |
| | | Refining and Marketing | | 55 | | 88 | | 154 | | 175 | | 235 |
| | | Exploration and Production (bottom) | | 332 | | 296 | | 393 | | 683 | | 632 |
| | | | |
| |
| |
| |
| |
|
| | | Total | | 389 | | 387 | | 558 | | 864 | | 868 |
| | | | |
| |
| |
| |
| |
|
| | | This stacked vertical bar graph has the total for each bar printed above it. | | | | | | | | | | |
|
7 | | ESTIMATED NET PROVED HYDROCARBON RESERVES | | | | | | | | | | |
| | | Scale 0 to 600 (millions of oil equivalent barrels) | | | | | | | | | | |
| | | | | 1998
| | 1999
| | 2000
| | 2001
| | 2002
|
| | | Ecuador and Other (top) | | 32 | | 37 | | 41 | | 54 | | 48 |
| | | United Kingdom | | 63 | | 63 | | 56 | | 50 | | 48 |
| | | Canada | | 188 | | 195 | | 238 | | 243 | | 234 |
| | | United States (bottom) | | 97 | | 106 | | 107 | | 154 | | 125 |
| | | | |
| |
| |
| |
| |
|
| | | Total | | 380 | | 401 | | 442 | | 501 | | 455 |
| | | | |
| |
| |
| |
| |
|
| | | This stacked vertical bar graph has the total for each bar printed above it. | | | | | | | | | | |
|
8 | | CAPITAL EXPENDITURES – EXPLORATION AND PRODUCTION | | | | | | | | | | |
| | | Scale 0 to 720 (millions of dollars) | | | | | | | | | | |
| | | | | 1998
| | 1999
| | 2000
| | 2001
| | 2002
|
| | | United Kingdom and Other (top) | | 103 | | 41 | | 46 | | 32 | | 55 |
| | | Malaysia | | — | | 3 | | 18 | | 45 | | 127 |
| | | Canada | | 108 | | 156 | | 192 | | 347 | | 228 |
| | | United States (bottom) | | 121 | | 96 | | 137 | | 259 | | 222 |
| | | | |
| |
| |
| |
| |
|
| | | Total | | 332 | | 296 | | 393 | | 683 | | 632 |
| | | | |
| |
| |
| |
| |
|
| | | This stacked vertical bar graph has the total for each bar printed above it. | | | | | | | | | | |
|
11 | | REFINED PRODUCTS SOLD | | | | | | | | | | |
| | | Scale 0 to 250 (thousands of barrels a day) | | | | | | | | | | |
| | | | | 1998
| | 1999
| | 2000
| | 2001
| | 2002
|
| | | United Kingdom (top) | | 36 | | 32 | | 30 | | 31 | | 34 |
| | | North America (bottom) | | 138 | | 127 | | 150 | | 174 | | 177 |
| | | | |
| |
| |
| |
| |
|
| | | Total | | 174 | | 159 | | 180 | | 205 | | 211 |
| | | | |
| |
| |
| |
| |
|
| | | This stacked vertical bar graph has the total for each bar printed above it. | | | | | | | | | | |
Ex. 13A-3
EXHIBIT 13 APPENDIX
MURPHY OIL CORPORATION – CIK 0000717423
Exhibit 13 Page No.
| | Graph Narrative(Contd.)
| | | | | | | | | | | |
|
11 | | CAPITAL EXPENDITURES – REFINING AND MARKETING | | | | | | | | | | | |
| | | Scale 0 to 250 (millions of dollars) | | | | | | | | | | | |
| | | | | 1998
| | 1999
| | 2000
| | 2001
| | 2002
| |
| | | United Kingdom (top) | | 7 | | 12 | | 13 | | 12 | | 4 | |
| | | North America (bottom) | | 48 | | 76 | | 141 | | 163 | | 231 | |
| | | | |
| |
| |
| |
| |
|
|
| | | Total | | 55 | | 88 | | 154 | | 175 | | 235 | |
| | | | |
| |
| |
| |
| |
|
|
| | | This stacked vertical bar graph has the total for each bar printed above it. | | | | | | | | | | | |
|
12 | | INCOME CONTRIBUTION FROM CONTINUING OPERATIONS BY FUNCTION | | | | | | | | | |
| | | Excludes nonrecurring items and Corporate activities | | | | | | | | | | | |
| | | Scale (60) to 360 (millions of dollars) | | | | | | | | | | | |
| | | | | 1998
| | 1999
| | 2000
| | 2001
| | 2002
| |
| | | Exploration and Production (left) | | 3 | | 115 | | 271 | | 186 | | 168 | |
| | | Refining and Marketing (right) | | 49 | | 15 | | 55 | | 89 | | (40 | ) |
| | | | |
| |
| |
| |
| |
|
|
| | | Total | | 52 | | 130 | | 326 | | 275 | | 128 | |
| | | | |
| |
| |
| |
| |
|
|
| | | This vertical bar graph has the total for each bar printed above it and a combined annual total at the top of the graph. | | | | | | | | | | | |
|
12 | | CASH FLOW FROM CONTINUING OPERATIONS BY FUNCTION | | | | | | | | | | | |
| | | Excludes nonrecurring items, Corporate activities and changes in noncash working capital. | | | | | | | | | |
| | | Scale 0 to 750 (millions of dollars) | | | | | | | | | | | |
| | | | | 1998
| | 1999
| | 2000
| | 2001
| | 2002
| |
| | | Exploration and Production (left) | | 237 | | 340 | | 561 | | 573 | | 597 | |
| | | Refining and Marketing (right) | | 89 | | 36 | | 120 | | 158 | | 44 | |
| | | | |
| |
| |
| |
| |
|
|
| | | Total | | 326 | | 376 | | 681 | | 731 | | 641 | |
| | | | |
| |
| |
| |
| |
|
|
| | | This stacked vertical bar graph has the total for each bar printed above it and a combined annual total at the top of the graph. |
Ex. 13A-4
