EXHIBIT 13
MURPHY OIL CORPORATION
1999 ANNUAL REPORT
CONTENTS
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
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.
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
[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
HIGHLIGHTS
FINANCIAL
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(Thousands of dollars except per share data) 1999 1998 1997
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For the Year*
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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
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At End of Year
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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
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Per Share of Common Stock*
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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
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* Includes special items that are detailed in Management's Discussion and
Analysis, page 9 of the attached Form 10-K report.
OPERATING
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For the Year 1999 1998 1997
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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
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3
[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
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
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
1999 1998 1997
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(Thousands of dollars)
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
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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
[PICTURE APPEARS HERE]
6
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
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
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
[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
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
[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
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
[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
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
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
1999 1998 1997
- - - - - ----------------------------------------------------------------------------------
(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
[PICTURE APPEARS HERE]
16
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
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
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
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
STATISTICAL SUMMARY
1999 1998 1997 1996 1995
- - - - - -------------------------------------------------------------------------------------------------
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
=================================================================================================
/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
1999 1998 1997 1996 1995
- - - - - -------------------------------------------------------------------------------------------------------------
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
- - - - - -------------------------------------------------------------------------------------------------------------
*At December 31.
22
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
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
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
murphyoil@murphyoilcorp.com
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
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
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
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
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
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