EXHIBIT 13
1998 ANNUAL REPORT TO SECURITY HOLDERS
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
1998 Form 10-K Report follows page 24
Financial Statements and
Supplemental Data F-1
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. Throughout its history, the Company has earned a reputation for
conservative financial management, good strategic decisions, and the ability to
steer a steady course in the wake of fluctuating commodity prices and industry
uncertainty. Never were these strengths more necessary than in 1998, when Murphy
- - -- along with the rest of the oil and gas industry -- endured a slump in oil
prices that adversely affected its financial performance throughout the year.
Operationally, it was a different story. For the eighth consecutive year, proved
reserves grew. The Company's production profile, already one of the strongest in
the industry, strengthened as several new oil fields came on stream that provide
long production lives at a low cost. Discoveries in deepwater Gulf of Mexico,
where the Company's early entry has given it a major presence, and onshore
Louisiana highlighted the year's domestic exploration efforts. Murphy's taste
for exposure to significant growth offered by international frontier exploration
was reinforced in 1998 by acquisition of acreage offshore Malaysia.
[GRAPH - INCOME CONTRIBUTION FROM CONTINUING OPERATIONS BY FUNCTION]
[GRAPH - ESTIMATED NET PROVED HYDROCARBON RESERVES]
1
Downstream operations continued to reduce operating costs while increasing
operational efficiency and reliability. Notable in 1998 was the success of
Murphy's marketing expansion in collaboration with Wal-Mart. Murphy has built 35
stations in Wal-Mart parking areas, giving the Company a leading position in a
unique niche in the U.S. marketplace; further expansion is planned in 1999.
Costs for the initiative are in line with projections, while volume is exceeding
expectations. Murphy's U.K. refining and marketing efforts recorded another
profitable year in 1998.
The Company's commitment to and investment in employee safety, environmental
stewardship and corporate responsibility resulted in yet another year of
achievement well above industry norms.
All in all, 1998 will be remembered as much for accomplishments -- growth in
proved reserves, increasing oil production, significant discoveries and the
success of the Wal-Mart marketing initiative -- as for the challenges of low
commodity prices. As the Company looks forward to 1999 and beyond, the key
elements are in place -- quality oil properties; growing production; a focused,
robust exploration portfolio; and a strong balance sheet -- to enable the
Company to rebound from 1998 stronger, bigger and more profitable than before.
[GRAPH - CASH FLOW FROM CONTINUING OPERATIONS BY FUNCTION]
[GRAPH - CAPITAL EXPENDITURES BY FUNCTION]
2
HIGHLIGHTS
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FINANCIAL
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(Thousands of dollars except per share data) 1998 1997 1996
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FOR THE YEAR*
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Revenues $ 1,698,848 2,137,767 2,022,176
Income (loss) from continuing operations (14,394) 132,406 125,956
Net income (loss) (14,394) 132,406 137,855
Cash dividends paid 62,939 60,573 58,294
Capital expenditures for continuing operations 388,799 468,031 418,056
Net cash provided by continuing operations 321,091 401,843 472,480
Average Common shares outstanding - diluted 44,955,679 44,960,907 44,904,636
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AT END OF YEAR
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Working capital $ 56,616 48,333 56,128
Total assets 2,164,419 2,238,319 2,243,786
Notes payable 189,705 28,367 20,871
Nonrecourse debt of a subsidiary 143,768 177,486 180,957
Stockholders' equity 978,233 1,079,351 1,027,478
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PER SHARE OF COMMON STOCK*
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Income (loss) from continuing operations - diluted $ (.32) 2.94 2.80
Net income (loss) - diluted (.32) 2.94 3.07
Cash dividends paid 1.40 1.35 1.30
Stockholders' equity 21.76 24.04 22.90
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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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1998 1997 1996
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NET CRUDE OIL AND GAS LIQUIDS PRODUCED - BARRELS A DAY 59,128 57,494 53,210
United States 7,798 10,760 11,645
International 51,330 46,734 41,565
NET NATURAL GAS SOLD - THOUSANDS OF CUBIC FEET A DAY 230,901 268,669 220,633
United States 169,519 211,207 155,017
International 61,382 57,462 65,616
CRUDE OIL REFINED - BARRELS A DAY 165,580 161,560 157,886
United States 134,800 134,854 126,586
United Kingdom 30,780 26,706 31,300
PETROLEUM PRODUCTS SOLD - BARRELS A DAY 174,152 163,430 161,459
United States 137,620 134,209 127,590
United Kingdom 36,093 28,977 33,615
Canada 439 244 254
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3
LETTER TO THE SHAREHOLDERS
[PHOTOGRAPH APPEARS HERE]
DEAR FELLOW SHAREHOLDER:
Like most other oil and gas companies, Murphy Oil Corporation's bottom line was
adversely affected in 1998 by low commodity prices, which began to fall in the
fourth quarter of 1997 and continued to slide throughout 1998. As a result, I
must report to you that your Company's earnings before special items in 1998
were down 67% to $43.5 million ($.97 a share), and after special items,
primarily a $57.6 million after-tax write-down of the carrying value of oil and
gas assets, we experienced a net loss of $14.4 million ($.32 a share). A word
about the write-down. It is absolutely necessary that the value of our assets
reflect the world as it actually exists. The unavoidable fact is that crude oil
prices were lower on December 31, 1998, in nominal terms, than at any year-end
since 1973 and in real terms than at any year-end since 1931. Clearly, this
influenced our price outlook and caused us to reevaluate forward assumptions,
triggering the write-down. Significantly, none of Murphy's core properties --
Hibernia, Terra Nova, Syncrude, Schiehallion and Mungo/Monan -- were impaired.
There is no escaping the fact that economic troubles, almost exclusively outside
the United States and particularly in Asian markets, caused a marked slowdown in
energy growth leading to a significant drop in crude oil prices. Asia alone went
from adding 750,000 barrels a day of demand in 1997 to dropping a like amount in
1998. This swing of 1.5 million barrels a day, coupled with Iraq's renewed crude
oil sales, sent markets tumbling into one of their periodic tailspins. All
companies in this remarkably competitive business are going to be telling their
shareholders about reductions in capital spending, cost-cutting measures and a
reduced bottom line. In that regard, Murphy is no different. But I can also tell
you that your Company's proven, disciplined approach to financial management,
which has sustained us through bad times and guided us during boom years, helped
cushion the blows in 1998 and gives us important advantages as we look ahead to
1999 and beyond.
In fact, I believe our Company established a platform in 1998 from which we will
profitably grow for many years. Let's review the past year.
*During 1998, two low-cost U.K. oil fields, Mungo/Monan and Schiehallion,
started up. In Canada, the Hibernia oil field was on stream for its first full
year and will hit plateau production rates this year. Cash lifting costs at
plateau are now projected at around $2.00 a barrel. Syncrude set a new
production record of 210,000 barrels a day and reduced cash lifting cost to a
record low of $8.99 a barrel. Overall, as new lower-cost fields are added to our
mix, costs are driven down even more. Cash lifting costs across all of Murphy's
barrels are estimated to be $4.10 a barrel in 1999, $3.54 a barrel if
[GRAPH - HYDROCARBON PRODUCTION REPLACEMENT]
4
Syncrude (a mining operation) is excluded, compared to $4.35 in 1998 ($3.79
excluding Syncrude), and are the lowest in six years. Production should average
107,000 equivalent barrels a day in 1999, a Company record.
*Exploration results in 1998 were excellent. Onshore South Louisiana, we
extended the N.E. Wright field with the Guidry No. 1 well, penetrating 150 feet
of pay in four sands. A likely 50 billion cubic feet (BCF) of natural gas
reserves were proved up and another potentially equal sized offset spuds in the
second quarter. Gulf of Mexico shelf results reflect hitting on 14 of 16 wells.
While no single shelf discovery made an impact, collectively these reserve
additions will maintain our 1999 U.S. natural gas production at 1998 levels.
Deepwater exploration in the Gulf of Mexico kicked off in 1998. Four wells were
drilled and two, the last two, were discoveries. Boomslang, in Ewing Bank Block
994, encountered 185 feet of pay, and importantly, sets up a much larger
prospect called Sidewinder in the cornering block. The North Marlin wildcat on
Viosca Knoll Block 827 found reserves of around 100 BCF and has an offset with
the same potential that spuds in the third quarter of 1999. Most importantly,
the Habanero wildcat in Garden Banks Block 341 penetrated over 200 feet of
excellent reservoir rock to provide Murphy's third consecutive, and first
marquee, deepwater discovery. A separate and potentially larger prospect named
Moccasin, at Garden Banks Block 253, will be drilled later this year. Success at
Habanero lowers the risk at Moccasin.
*Murphy Oil Corporation added 53 million equivalent barrels of reserves in 1998
and ended the year with 380 million equivalent barrels of proved reserves, the
highest in the Company's history, and the eighth consecutive year for an
increase.
*Murphy's downstream business expanded its arrangement with Wal-Mart as 1998
ended. I fully expect that over 100 sites will be in operation before the end of
1999, up from 35 today. The capital cost per unit is extraordinarily low because
no real estate is purchased nor is a convenience store built. In addition,
volumes are much higher than traditional SPUR stations, resulting in quite low
operating costs, and most importantly, a competitive advantage.
I am proud of what was accomplished in 1998 although the near depression level
conditions existing in our industry at year-end masked our successes. In 1999,
we will control those areas within our grasp -- production volume and cost, as
well as capital spending. In addition, we will continue to search for
opportunities. Cash-strapped companies are facing difficult choices and asset
sales will likely result. On the plus side, world oil demand climbed in 1998
despite the Asian meltdown and is forecast to increase by 1.1 million barrels a
day in 1999. This increase, when coupled with high-cost production shut-ins and
the significant reduction in new investment, means recovery is under way. Our
Company will work out of this, and Murphy Oil Corporation will be a leaner, more
efficient and much, much stronger company on the other side.
I appreciate your patience and predict it will be rewarded.
/s/ Claiborne P. Deming
Claiborne P. Deming
President and Chief Executive Officer
March 1, 1999
El Dorado, Arkansas
5
EXPLORATION AND PRODUCTION
THE YEAR IN REVIEW
A successful exploration program, a full year of production from the Hibernia
oil field (6.5%) offshore eastern Canada, and commencement of production from
two new fields in the United Kingdom highlighted 1998 exploration and production
activity. Economic woes that began in Asia, spread to Latin America and
suppressed the demand for crude oil worldwide contributed to a significant
decline in crude oil prices during the year. However, Murphy's exploration and
production team managed to stay focused by growing the Company with the drill
bit and improving an already impressive production profile, and by making
significant additions to its international frontier exploration acreage.
Earnings from the Company's exploration and production activities, before
special items, totaled $5.8 million in 1998. Proved reserves at the end of 1998
increased to 380 million barrels of oil equivalent, marking the eighth
consecutive year that Murphy has more than replaced its hydrocarbon production.
Although worldwide production of 97,612 barrels of oil equivalent a day
represented a reduction of approximately 5% from 1997's record levels, crude oil
production increased 3%. Expectations for an overall 10% increase in 1999 should
once again propel the Company into record territory.
Murphy's core operating areas include four of the world's premier, politically
secure oil and natural gas basins: the Gulf of Mexico, the Jeanne d'Arc basin
off the east coast of Canada, western Canada and the United Kingdom.
Over 65% of Murphy's exploration capital was invested in the Gulf of Mexico and
onshore South Louisiana in 1998, and a similar allocation is anticipated for
1999. In addition to its established production base on the Gulf of Mexico
continental shelf, Murphy has amassed a significant leasehold acreage position
in the burgeoning, and ever more important, deepwater play. The year 1998 proved
to be a breakthrough year, as the Company made its first deepwater discoveries.
[GRAPH - NET HYDROCARBONS PRODUCED]
6
Offshore eastern Canada in the Jeanne d'Arc basin, the Hibernia field produced
at an average gross rate of 65,000 barrels a day. Planned plateau production of
135,000 barrels a day is expected to be achieved in 1999. Elsewhere in the
basin, the Terra Nova oil development project (12%) remains on schedule to
deliver first oil, within budget, before the end of the year 2000. Construction
and fabrication of the floating production system commenced in 1998. Terra Nova
is currently expected to achieve gross peak production of 115,000 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. This light, sweet crude oil could eventually provide half of Canada's
crude oil production.
EXPLORATION AND PRODUCTION
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(Thousands of dollars) 1998 1997
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Income contribution* $ 5,809 84,984
Total assets 1,385,879 1,402,684
Capital expenditures 331,647 423,181
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Crude oil and liquids produced - barrels a day 59,128 57,494
Natural gas sold - MCF a day 230,901 268,669
Net proved hydrocarbon reserves - thousands
of oil equivalent barrels 379,900 362,100
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*Before special items
Since the discovery of the giant Ninian field in the early 1970s, the United
Kingdom has been an integral part of Murphy's portfolio. Production from the
Schiehallion (5.9%) and Mungo/Monan (12.7%) fields came on stream during the
third quarter of 1998 and provides the catalyst for what is expected to be a 45%
increase in the Company's oil production from the area.
[PHOTOGRAPH APPEARS HERE]
7
Although Murphy's exploration programs emphasize those areas where significant
production has been established, the Company also possesses the technical
expertise to identify frontier prospects, along with the resources to acquire
significant ownership positions therein. Utilizing that ownership position to
fund exploratory drilling has been an available option that will continue to be
implemented when warranted. Frontier areas of particular note include the U.K.
Atlantic Margin, Philippines, Pakistan, Alaska, and most recently, Malaysia,
where production sharing contracts covering three offshore blocks were recently
signed.
Murphy has been well served by its strategy to use long-lived, low-cost oil
properties in secure, established basins around the world to fund an active, yet
focused, exploration program that seeks meaningful growth opportunities. Coupled
with the Company's conservative financial practices, this strategy has put
Murphy in a position, both operationally and financially, to use the exploration
and production side of its business as its primary growth vehicle.
A review of the Company's principal exploration and production activities is
presented in the sections that follow. Unless otherwise indicated, average daily
production rates are net to the Company after deduction for royalty interests.
The terms crude oil production and oil production include natural gas liquids
where applicable.
Murphy's U.S. operations are concentrated in the Gulf of Mexico region and
onshore South Louisiana. The Company participated in 20 exploratory wells during
1998, 17 of which were successful, for an 85% success ratio. Additions to the
Company's U.S. proved reserves totaled 107 billion cubic feet of natural gas
[GULF OF MEXICO MAP]
8
equivalents in 1998, which amounted to 136% of U.S. hydrocarbon production.
Murphy upgraded its leasehold position in the Gulf by participating in two 1998
federal lease sales, acquiring interests ranging from 33% to 100% in 21 blocks,
15 of which are in deep water, where the Company now has an interest in 97
leases.
The DEEPWATER GULF OF MEXICO continues to offer the potential for impact
reserves in areas where infrastructure is growing. Murphy intends to dedicate a
larger percentage of exploratory drilling capital to this play. Discoveries at
Ewing Bank Block 994 (Boomslang, 45%) and at Viosca Knoll Block 827 (North
Marlin, 30%) highlighted 1998 activity. The Boomslang well, located in
approximately 850 feet of water, penetrated 185 feet of net oil pay and enhanced
the prospects located on five adjacent blocks in which Murphy has a working
interest of 42.5%. The North Marlin well encountered a hydrocarbon-bearing
interval similar to the predominantly natural gas reservoirs in the Company's
nearby Tahoe field (30%). Water depth at North Marlin exceeds 2,500 feet. Both
of these areas contain significant additional reserve potential that will be
explored over the next 18 months. Two additional deepwater wildcats spudded in
the fourth quarter of 1998, one in the "Auger" basin at Garden Banks Block 341
(Habanero, 33.8%) and one in the "Enchilada" basin at Garden Banks Block 168
(Wadden Zee, 33.3%). In early 1999, it was announced that the Habanero well,
located in approximately 2,000 feet of water, had encountered over 200 feet of
net oil pay in two zones. Evaluation work to determine the extent of this
discovery continues.
Although the drop in oil and natural gas prices will curtail exploration
activity, Murphy remains active on the GULF OF MEXICO OUTER CONTINENTAL SHELF.
Positive drilling outcomes resulted in 14 successful wells, all of which will be
on stream by the end of 1999. Initial gross production from the larger
discoveries at Vermilion Block 130 (75%), Ship Shoal Block 59 (50%), South Pelto
Block 18 (25%), Matagorda Island Block 565 (40%), Vermilion Block 335 (35%) and
East Cameron Block 38 (33.3%) will total approximately 57 million cubic feet of
natural gas a day.
[PHOTOGRAPH APPEARS HERE]
9
The Destin Dome Block 56 unit (33.3%) is one of the largest undeveloped natural
gas discoveries remaining in the United States. Located in federal waters 30
miles off the coast of Florida, three previously drilled exploratory wells have
confirmed a significant reservoir of dry natural gas in the Norphlet sandstone.
Murphy and its two partners filed a development plan with the U.S. Minerals
Management Service in November 1996. A rigorous regulatory process designed to
protect the environment and ensure compatibility with other uses of surrounding
areas is under way. Completion of the regulatory review process could extend
into late 1999.
ONSHORE SOUTH LOUISIANA, a significant natural gas discovery at the N.E. Wright
field (50%) is currently producing, through temporary facilities, at a gross
rate of approximately 10 million cubic feet a day. The well logged 150 feet of
net natural gas pay in four sands and confirmed a large structure underlying the
field. Delineation drilling is slated for 1999 to determine the magnitude of the
discovery and the development plan.
CANADA continues to be Murphy's largest source of crude oil reserves and
production and set a production record of 28,199 barrels a day in 1998. An
increasing proportion of this supply (57% in the fourth quarter of 1998) is
provided by premium properties, namely the Hibernia field and Syncrude. With the
Terra Nova field to follow, Murphy can look forward to long-lived, stable
volumes of profitable production, augmenting its large resource base in the more
traditional areas of western Canada, where the Company set a record of 49
million cubic feet a day of natural gas production in 1998.
[GRAPH - CAPITAL EXPENDITURES--EXPLORATION AND PRODUCTION]
[PHOTOGRAPH APPEARS HERE]
10
Murphy enjoyed its first full year of production in the Jeanne d'Arc basin off
the EAST COAST OF CANADA following start-up of the Hibernia field in late 1997.
Early performance exceeded expectations, resulting in production curtailment
while awaiting placement of water and gas injection wells. Later in 1998,
mechanical problems with the first gas injection well necessitated additional
curtailment for conservation of produced gas. A second gas injector was
completed in early 1999. Despite these temporary reservoir management issues,
the field produced 23.9 million barrels during the year, or 4,192 barrels a day
net to Murphy, exceeding budget expectations. More importantly, performance data
collected during the year increased confidence in the capability of the
reservoir and platform. As a result, 1999 performance is expected to continue to
exceed Murphy's original projections, in terms of both higher production and
lower operating cost per unit.
The Hibernia reservoir is the source of current production from the field and
accounts for 485 million barrels of the 615 million barrels of reserves
projected to be recovered from the field. The remaining oil is contained within
the Avalon reservoir, which also offers new exploratory opportunities that have
been identified and are being considered. Such efforts have the potential to add
significant new reserves and to maintain plateau production levels well into the
next decade.
Development of the Terra Nova oil field was approved in early 1998. Key
components, including the production vessel, turret and topsides, are under
construction and include debottlenecking of the facility from a design capacity
of 125,000 to 150,000 barrels a day. This will accelerate production of the 300
to 400 million barrels estimated to be recoverable from the field. First oil is
anticipated near the end of the year 2000.
Murphy earned a 20% interest in additional acreage off Canada's east coast in
1998 by joining in the drilling of an exploratory well on the Scotian Shelf in a
region close to the Sable Island producing area. Although the initial well was
unsuccessful, further evaluation of this acreage position, along with an
existing parcel in the Jeanne d'Arc basin at Cape Race (25%), should yield
additional exploration prospects in future years.
[GRAPH - WORLDWIDE EXTRACTION COSTS]
11
[WESTERN CANADA MAP]
Murphy has been active in WESTERN CANADA for many years. By late 1998, supply
and demand for Canadian natural gas became much more balanced as a result of
pipeline expansions, and prices rose accordingly. In anticipation of this,
Murphy's exploration effort in western Canada has been directed toward natural
gas in northern Alberta and British Columbia. Successful delineation of the 1997
discovery at Josephine (50-63%) and drilling successes at Cranberry (100%) and
Birley (50%) contributed to the Company's record Canadian gas production in
1998. Exploration and development activities will continue in 1999, and further
increases in natural gas deliverability are anticipated.
In early 1998, Murphy responded quickly to low prices for heavy crude oil by
significantly curtailing heavy oil production. Higher cost wells were shut in
and thermal pilot programs were suspended. Similar reactions throughout the
industry reduced availability of heavy crude oil and led to modest price
improvements, allowing some production to be reactivated later in 1998. The
Company's light oil portfolio in western Canada is mature and continues to be
managed with a "harvesting" mentality.
SYNCRUDE, Canada's largest source of crude oil production, combines mining,
extraction and upgrading technologies to produce a light, sweet synthetic crude
product. During 1998, the project laid the foundation for future expansion by
approving construction of the Aurora mine. This mine, located on one of the most
attractive leases in the Athabasca deposit, will exploit newly developed
technologies and provide a less costly source of oil sand for decades to come.
Additional expansion stages have been identified that, when completed, will
increase production to 400,000 gross barrels a day by 2007. The actual pace of
development has yet to be determined.
Murphy's exploration and production operations in the UNITED KINGDOM are
centered in the North Sea and Atlantic Margin basins. Production averaged
[PHOTOGRAPH APPEARS HERE]
12
17,475 barrels of oil equivalent a day in 1998, an increase of more than 9% from
a year ago. In addition to evaluating existing acreage, the Company's strategy
is to build a portfolio of moderate-risk, moderate-reward prospects, with an
emphasis on increasing ownership interest levels and securing operatorship where
feasible.
The increase in U.K. production in 1998, along with an anticipated additional
35% increase in 1999, is attributable to new low-cost fields that came on stream
during 1998. Gross production from Mungo/Monan reached peak levels of 65,000
barrels of oil a day by the end of the year. Mungo is produced from a normally
unmanned platform, while Monan uses a subsea system. Both fields produce to a
central processing facility. Development drilling will continue over the next
two years.
Similarly, production from the Schiehallion field, west of the Shetland Islands,
commenced during 1998. Gross production by the end of 1998 totaled approximately
86,000 barrels of oil a day. Development drilling will continue throughout 1999,
building to peak gross production of 147,000 barrels of oil a day during the
year.
[PHOTOGRAPH APPEARS HERE]
[PHOTOGRAPH APPEARS HERE]
13
[UNITED KINGDOM MAP]
In 1998, Murphy acquired five additional blocks, with interests ranging from 20%
to 37.5%, through U.K. licensing rounds. The Company's 1999 exploration program
will concentrate on acquisition and evaluation of seismic data along with
evaluation of acreage being offered in 1999 for licenses offshore the Faroe
Islands and in the United Kingdom.
An important milestone in Murphy's frontier program culminated with the signing
of production sharing contracts covering three blocks, which Murphy will
operate, offshore MALAYSIA. Blocks SK 309 (85%) and SK 311 (85%) are contiguous
blocks covering 2.4 million acres in shallow waters offshore Sarawak. Previous
exploration has identified a number of attractive features and both blocks
contain oil and gas discoveries. Work commitments over the next five years
include acquisition of seismic data and drilling of four exploratory wells, for
a minimum total expenditure of $15 million. Block K (80%) covers 4.1 million
undrilled acres in deep waters offshore Sabah. It adjoins two blocks held by
major oil companies, one of which contains a recently announced discovery.
Commitments include a seismic program plus one exploratory well over seven
years, with a minimum expenditure of $14 million.
[MALAYSIA MAP]
14
In 1998, Murphy was awarded a Geophysical Survey and Exploration Contract (GSEC)
(80%) covering approximately 3.7 million acres in the northern Sulu Sea offshore
PHILIPPINES. Under the GSEC, acquisition of seismic data is under way, with an
option to drill an exploratory well.
After 20 years of force majeure, Murphy gained access to part of the 3.8 million
acres included in the Kharan concession (100%) in PAKISTAN during 1998. The
agreement gives the Company the right to explore the southern half of Kharan and
to retain rights to explore in the northern half of the concession when access
can be obtained. Activity during 1999 will include acquisition of seismic data
and regional studies.
Murphy's holdings in ALASKA continue to position the Company in an area of
renewed interest to the industry. New 3-D seismic surveys were acquired over the
Challenge Island leases (25%), and a well spudded on the Red Dog prospect
(12.5%) in early 1999. Development of the Northstar field (2%) was approved
during 1998, but has been delayed due to presently deteriorating industry
conditions. A successful farmout to an industry partner, in exchange for new 3-D
seismic data and a carried interest in an optional well, reduced Murphy's
interest in the Sandpiper project (28.8%).
Murphy's production from Block 16 (20%) in ECUADOR totaled 7,720 barrels of oil
a day in 1998, essentially flat with 1997. Additional 3-D seismic data was
acquired during the year and six development wells were drilled. Plans to expand
pipeline capacity could allow for significant production increases.
Other frontier activity in 1998 included two unsuccessful wells in an unexplored
basin north of the FALKLAND ISLANDS. Both wells indicated the presence of
hydrocarbons but no commercial accumulation was found.
[PHOTOGRAPH APPEARS HERE]
15
REFINING, MARKETING & TRANSPORTATION
THE YEAR IN REVIEW
Murphy Oil Corporation's refining, marketing and transportation strategy has
been clear and effective over the past several years: lowering operating costs
while increasing operational efficiency and reliability; improving the return on
assets through strategic capital investments; targeting and developing prudent,
cost-effective means to supply the end user; entering into joint ventures where
appropriate; and continuing the Company's commitment to environmental protection
and performance.
The difficult environment experienced by Murphy and the entire oil industry in
1998 gave added significance to downstream operations, as the ability to convert
crude oil into finished products and provide a steady, secure market became more
important and made downstream assets relatively more valuable. In 1998, Murphy's
downstream segment enjoyed a number of successes. One of the most promising was
the ongoing endeavor with Wal-Mart. That program -- building high volume retail
gasoline stations in the parking areas of Wal-Mart Supercenters under the Murphy
USA(R) brand -- is successful and growing. As a result, Murphy now enjoys a
leading position in the rapidly expanding market niche of gasoline sales at
nontraditional outlets. In early 1999, 35 stations were in operation and plans
call for a significant expansion during the year.
Earnings from Murphy's downstream activities, before special items, totaled
$49.2 million in 1998. Although refining margins retreated significantly during
the fourth quarter of 1998 and into 1999, respectable levels were achieved for
most of the year. Combined with record throughputs, the Company was able to post
downstream profits second only to the record year of 1997.
[PHOTOGRAPH APPEARS HERE]
[MAP OF WAL-MART SITES]
16
Murphy has built an integrated presence in each of its refinery markets by
providing products to 59 terminals serving approximately 550 retail and
wholesale stations and numerous unbranded customers in the United States, and 10
terminals supplying almost 400 retail and wholesale stations in the United
Kingdom. The Company has refineries located in Meraux, Louisiana; Superior,
Wisconsin; and Milford Haven, Wales.
REFINING, MARKETING & TRANSPORTATION
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(Thousands of dollars) 1998 1997
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Income contribution* $ 49,230 56,738
Total assets 676,517 750,626
Capital expenditures 55,025 37,483
- - -----------------------------------------------------------
Crude oil processed - barrels a day 165,580 161,560
Products sold - barrels a day 174,152 163,430
Average gross margin on products sold -
dollars a barrel
United States $ 1.47 1.79
United Kingdom 2.81 2.90
- - -----------------------------------------------------------
*Before special items.
The MERAUX REFINERY is capable of processing 100,000 barrels of crude oil a day
and distributes petroleum products via pipeline and barge to an area covering 11
states. This distribution system consists of 35 terminals, 22 of which are
wholly or jointly owned, and at the end of the year, supplied gasoline to 326
owned and wholesale branded stations.
In 1998, the Meraux refinery set its fourth consecutive record for annual
throughput, averaging 101,834 barrels of crude oil a day. The refinery posted a
composite 98% onstream time during 1998. Meraux successfully completed its
transition to
[PHOTOGRAPH APPEARS HERE]
17
[U.S. DISTRIBUTION SYSTEM MAP]
processing a medium, sour crude oil imported from Latin America in place of a
more expensive light, sweet crude. Murphy realized savings in freight costs
through the use of large capacity tankers able to unload at the Louisiana
Offshore Oil Port (3.2%), which is connected to the refinery by pipeline.
Murphy invested approximately $18 million in capital projects at Meraux in 1998
to improve efficiencies and meet U.S. Environmental Protection Agency (EPA)
mandates, including completion of an upgrade to the Middle Distillate
Hydrotreater that improved the refinery's ability to produce environmentally
friendly products. Meraux's ongoing "green" fuels initiative is designed to
produce lower sulfur gasoline and diesel fuel that will meet anticipated
mandates from the EPA. This project is currently in the engineering phase,
during which alternatives are being evaluated and preliminary equipment
specifications and costs are being developed.
Murphy's SUPERIOR REFINERY can process 35,000 barrels of crude oil a day and
distributes gasoline and distillates through 21 terminals. It supplied gasoline
to 226 owned and SPUR(R) branded stations in the Upper Midwest at the end of
1998.
Taking advantage of the weak market for heavy sour crude, Superior processed
over 9,000 barrels a day of heavy Canadian asphaltic crude, an increase of 25%
over the average for recent years. As a result, 1998 was a record year for
asphalt sales, as 1.8 million barrels were sold through three Company terminals
in the Upper Midwest.
[GRAPH - CAPITAL EXPENDITURES--REFINING, MARKETING AND TRANSPORTATION]
18
In keeping with the Company's strategy to continuously improve operating
efficiencies and to comply with federal government mandates, Murphy invested
over $9 million in capital projects, including a $2.3 million asphalt polymer
modification project at Superior. This modification enables the refinery to
produce improved asphalt grades required by the federal government to extend
road life and minimize repair costs. Furthering Murphy's strategy to supply the
end user, the Company opened a marine fueling terminal in Duluth, Minnesota to
directly service the active Lake Superior shipping traffic.
Murphy's U.K. operation includes an effective 30% interest in a refinery at
MILFORD HAVEN, Wales that can process 108,000 barrels a day. Murphy transports
products by rail to three distribution terminals, which in turn supply products
to approximately 400 MURCO branded retail stations.
At the U.K. refinery, the 1996 installation of a high-pressure hydrotreating
unit has enabled the Company to expand sales of cleaner-burning diesel fuel with
a sulfur content of less than 50 parts per million. The refinery was one of only
three in the United Kingdom with the capability to produce this highly
profitable product in 1998.
Murphy produces, transports and resells crude oil in western CANADA. The Company
owns interests in five crude oil pipeline systems, including the Manito (52.5%),
Cactus Lake (13.1%), and North-Sask (36.1%) lines. In addition, Murphy operates
a fleet of trucks that haul crude oil and natural gas liquids.
[GRAPH - REFINED PRODUCTS SOLD]
[U.K. DISTRIBUTION SYSTEM MAP]
[PHOTOGRAPH APPEARS HERE]
19
CORPORATE RESPONSIBILITY
Murphy Oil Corporation understands that its responsibilities extend beyond the
bottom line. A healthy company depends on a healthy community, and a successful
company creates a safe work environment. Murphy has developed and implemented
operating procedures and invested in equipment upgrades that have earned
excellent environmental and safety records for its operations. In addition,
Murphy's investments in ongoing environmental improvements are part of a long-
term commitment by the Company to address public concerns about the possible
effects of carbon dioxide and other greenhouse gases on the environment.
ENVIRONMENTAL IMPROVEMENTS
In all of its downstream operations and surrounding communities, Murphy has
achieved an outstanding record of environmental stewardship. Over the past
decade, throughout the downstream segment of its business, the Company has
invested more than $200 million in environmental improvement projects. In recent
years, Murphy's refineries have reduced emissions of chemicals on the EPA's
Toxic Release Inventory by 47%, maintained water emissions at less than 25% of
permitted levels and reduced overall air emissions by more than 60%. In the
United States, Murphy's marine terminal operations have achieved a 99.997%
record of containment over the past 10 years.
Murphy's exploration and production operations on the Outer Continental Shelf of
the Gulf of Mexico have a 99% or better compliance record for meeting the
aqueous discharge levels defined in its permits. In Canada, the Company's
ongoing improvements in its oil and gas operations include replacing flare pits
with more environmentally friendly aboveground tanks and flarestacks.
EMPLOYEE SAFETY
Murphy has developed operational procedures and employee training programs that
have kept the number of its lost-time accidents below industry averages. These
programs have won refinery safety awards at both Meraux, Louisiana and Superior,
Wisconsin. In 1998, the Company's terminal operations surpassed eight
consecutive years without a lost-time injury. The Company also participates in
federal and local emergency response drills coordinated by the Federal Emergency
Management Agency and local emergency response teams. Each year, Murphy conducts
nearly 30,000 hours of employee training including first aid, marine survival,
firefighting and transportation of hazardous materials.
COMMUNITY PARTNERSHIPS
Everywhere Murphy operates, people benefit. The Company's 1,566 employees
support the educational, cultural and charitable organizations in their local
communities. The Company is also active in the civic life of the areas where it
operates. From scholarship programs to support for the United Way, Murphy
remains committed to being a good neighbor and a responsible corporate citizen.
[PHOTOGRAPH APPEARS HERE]
20
STATISTICAL SUMMARY
1998 1997 1996 1995 1994
- - ------------------------------------------------------------------------------------------------------------------------------------
EXPLORATION AND PRODUCTION
Net crude oil and condensate production - barrels a day
United States 7,025 9,565 10,614 12,772 12,503
Canada - light 3,219 3,351 3,774 4,417 4,775
- heavy 9,676 11,538 9,670 8,864 6,840
- offshore 4,192 224 -- -- --
- synthetic 10,500 9,341 8,163 8,832 9,065
United Kingdom 14,975 13,438 12,918 14,588 13,389
Ecuador 7,720 7,802 6,005 5,274 1,967
Other -- -- -- 117 1,038
Net natural gas liquids production - barrels a day
United States 773 1,195 1,031 964 852
Canada 612 617 689 740 748
United Kingdom 436 423 346 447 151
- - ------------------------------------------------------------------------------------------------------------------------------------
Total 59,128 57,494 53,210 57,015 51,328
====================================================================================================================================
Net natural gas sold - thousands of cubic feet a day
United States 169,519 211,207 155,017 189,250 195,555
Canada 48,998 44,853 43,031 40,907 37,945
United Kingdom 12,384 12,609 15,247 10,671 10,138
Spain -- -- 7,338 10,898 12,620
- - ------------------------------------------------------------------------------------------------------------------------------------
Total 230,901 268,669 220,633 251,726 256,258
===================================================================================================================================
Total hydrocarbons produced - equivalent barrels/1/ a day 97,612 102,272 89,982 98,969 94,038
- - ------------------------------------------------------------------------------------------------------------------------------------
Estimated net hydrocarbon reserves - million equivalent barrels/1/,/2/ 379.9 362.1 337.6 333.8 327.6
- - ------------------------------------------------------------------------------------------------------------------------------------
Weighted average sales prices/3/
Crude oil and condensate - dollars a barrel
United States $ 12.76 19.43 20.31 16.61 15.36
Canada/4/ - light 12.03 17.74 19.97 16.45 14.61
- heavy 6.56 10.76 14.27 12.10 10.56
- offshore 10.49 15.15 -- -- --
- synthetic 13.73 19.92 21.20 17.28 15.92
United Kingdom 12.52 18.89 21.08 16.96 15.77
Ecuador 6.76 12.17 15.96 13.03 12.07
Other -- -- -- 15.12 14.80
Natural gas liquids - dollars a barrel
United States 11.50 15.82 17.00 12.62 12.19
Canada/4/ 9.16 14.87 13.69 9.70 9.21
United Kingdom 11.04 18.02 18.54 13.99 12.16
Natural gas - dollars a thousand cubic feet
United States 2.18 2.57 2.60 1.64 1.91
Canada/4/ 1.34 1.35 1.10 .97 1.42
United Kingdom/4/ 2.23 2.65 2.58 2.53 2.43
Spain/4/ -- -- 2.89 2.88 2.55
- - ------------------------------------------------------------------------------------------------------------------------------------
Net wells drilled
Oil wells - United States 1.8 .8 3.7 3.0 2.6
- Canada 6.0 78.9 41.6 29.6 20.7
- Other 3.1 3.3 3.6 3.7 2.7
Gas wells - United States 7.8 9.7 14.7 3.6 4.0
- Canada 4.2 19.9 33.9 2.3 14.5
- Other -- .1 -- .2 .4
Dry holes - United States .8 6.8 3.9 1.9 4.1
- Canada 7.5 8.3 6.5 5.9 6.5
- Other 1.0 1.9 1.2 .6 .5
- - ------------------------------------------------------------------------------------------------------------------------------------
Total 32.2 129.7 109.1 50.8 56.0
===================================================================================================================================
/1/ Natural gas converted on an energy equivalent basis of 6:1.
/2/ At December 31.
/3/ Includes intracompany transfers at market prices.
/4/ U.S. dollar equivalent.
21
1998 1997 1996 1995 1994
- - ------------------------------------------------------------------------------------------------------------------------------------
REFINING
Crude capacity/1/ of refineries - barrels per stream day 167,400 167,400 167,400 167,400 167,400
- - ------------------------------------------------------------------------------------------------------------------------------------
Inputs/yields at refineries - barrels a day
Crude - Meraux, Louisiana 101,834 101,150 93,929 91,940 78,252
- Superior, Wisconsin 32,966 33,704 32,657 33,217 30,592
- Milford Haven, Wales 30,780 26,706 31,300 30,346 32,038
Other feedstocks 11,404 8,178 6,315 8,280 8,731
- - ------------------------------------------------------------------------------------------------------------------------------------
Total inputs 176,984 169,738 164,201 163,783 149,613
===================================================================================================================================
Gasoline 73,482 72,672 69,658 73,964 67,746
Kerosine 15,394 14,959 14,965 15,113 16,989
Diesel and home heating oils 50,506 44,681 43,514 39,351 35,553
Residuals 21,310 20,852 19,756 19,641 15,444
Asphalt, LPG and other 12,565 13,139 12,513 10,158 10,077
Fuel and loss 3,727 3,435 3,795 5,556 3,804
- - ------------------------------------------------------------------------------------------------------------------------------------
Total yields 176,984 169,738 164,201 163,783 149,613
===================================================================================================================================
Average cost of crude inputs to refineries - dollars a barrel
United States $ 12.55 18.54 21.05 17.34 15.81
United Kingdom 13.62 20.12 21.66 17.59 16.32
- - ------------------------------------------------------------------------------------------------------------------------------------
MARKETING
Products sold - barrels a day
United States/2/ - Gasoline 60,990 62,244 58,726 61,690 56,310
- Kerosine 10,170 9,301 9,644 9,626 11,355
- Diesel and home heating oils 40,403 36,192 34,797 31,237 27,318
- Residuals 16,170 16,527 15,415 14,775 10,454
- Asphalt, LPG and other 9,887 9,945 9,008 8,815 7,754
- - ------------------------------------------------------------------------------------------------------------------------------------
137,620 134,209 127,590 126,143 113,191
- - ------------------------------------------------------------------------------------------------------------------------------------
United Kingdom - Gasoline 14,058 11,467 13,919 14,277 16,601
- Kerosine 4,369 3,795 4,353 4,387 6,044
- Diesel and home heating oils 10,884 7,638 8,981 6,647 9,200
- Residuals 5,203 4,215 4,351 4,993 5,157
- LPG and other 1,579 1,862 2,011 930 3,264
- - ------------------------------------------------------------------------------------------------------------------------------------
36,093 28,977 33,615 31,234 40,266
- - ------------------------------------------------------------------------------------------------------------------------------------
Canada 439 244 254 283 246
- - ------------------------------------------------------------------------------------------------------------------------------------
Total products sold/2/ 174,152 163,430 161,459 157,660 153,703
===================================================================================================================================
Average gross margin on products sold - dollars a barrel
United States/2/ $ 1.47 1.79 .27 .47 1.14
United Kingdom 2.81 2.90 2.08 2.26 2.17
- - ------------------------------------------------------------------------------------------------------------------------------------
Branded retail outlets/1/
United States 552 585 527 514 588
United Kingdom 389 396 424 465 470
Canada 8 6 7 7 8
- - ------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION
Pipeline throughputs of crude oil - Canada - barrels a day 170,236 188,685 183,130 173,720 159,517
- - ------------------------------------------------------------------------------------------------------------------------------------
STOCKHOLDER AND EMPLOYEE DATA
Common shares outstanding/1/ (thousands) 44,950 44,891 44,862 44,833 44,832
Number of stockholders of record/1/ 3,684 3,899 4,093 4,873 4,778
Number of full-time and part-time employees/1/ 1,566 1,446 1,406 1,889 1,827
Average number of full-time and part-time employees 1,498 1,421 1,777 1,874 1,852
Salaries, wages and benefits (thousands) $ 97,307 92,495 95,583 96,035 93,216
- - ------------------------------------------------------------------------------------------------------------------------------------
/1/ At December 31.
/2/ Restated for 1997, 1996, 1995 and 1994.
22
DIRECTORS
R. Madison Murphy/1/
Chairman
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
Vester T. Hughes Jr./2/,/4/
Partner
Hughes & Luce
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/,/2/,/3/
President
Marmik Oil Company
El Dorado, Arkansas
Director since 1977
William C. Nolan Jr./1/,/2/,/3/
Partner
Nolan and Alderson
El Dorado, Arkansas
Director since 1977
Caroline G. Theus/3/,/4/
President
Inglewood Land and Development Company
Alexandria, Louisiana
Director since 1985
Lorne C. Webster/2/,/3/
Chairman and Chief Executive Officer
Prenor Group Ltd.
Montreal, Quebec, Canada
Director since 1989
OFFICERS
R. Madison Murphy
Chairman
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
Ronald W. Herman
Controller
Walter K. Compton
Secretary
DIRECTORS EMERITI
William C. Nolan
George S. Ishiyama
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.
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
S. J. Carboni Jr.
Vice President, U.S. Production
James R. Murphy
Vice President, U.S. Exploration
David M. Wood
Vice President, Frontier Exploration and Production
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
Vice President, Marketing
Frederec C. Green
Vice President, Manufacturing and Crude Oil Supply
Steven A. Cosse'
Vice President and General Counsel
Odie F. Vaughan
Treasurer
Ronald W. Herman
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
W. Patrick Olson
Vice President, Production
R. D. Urquhart
Vice President, Supply and Transportation
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 OFFICES
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
The 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
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
12, 1999, 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
(312) 461-2457
inside back cover
EXHIBIT 13 APPENDIX
MURPHY OIL CORPORATION - CIK 0000717423
Appendix to Electronically Filed Exhibit 13
(1998 Annual Report to Security Holders, Which is Incorporated in This
Form 10-K) Providing a Narrative of Graphic and Image Material Appearing on
Pages 1 Through 20 of Paper Format
Exhibit 13
Page No. Map Narrative
- - ---------- -------------
8 Gulf of Mexico - The locations and areal extent of acreage
leased by the Company in the Gulf of Mexico (offshore Texas,
Louisiana, Mississippi, Alabama and Florida) are shown. Each
lease is colored to denote either (1) production or (2)
exploration.
12 Western Canada - The locations of the Company's productive oil
and gas fields in the Canadian provinces of British
Columbia, Alberta, Saskatchewan and Manitoba are shown. Each
field is colored to denote (1) natural gas, (2) light oil,
(3) heavy oil, or (4) oil sands.
14 United Kingdom - The locations and areal extent of acreage
under license by the Company are shown in the U.K. sector of
the North Sea and the Atlantic Margin area west of Britain
and Ireland. Each lease is colored to denote either (1)
production or (2) exploration.
14 Malaysia - The locations and areal extent of the Company's
recently acquired Malaysian acreage offshore Sarawak and
Sabah are shown.
16 Wal-Mart Sites Operational as of February 1999 - The locations
of the Company's 35 gasoline stations in the parking areas
of Wal-Mart stores in the southeastern United States are
shown.
18 United States - The locations of the Company's refineries in
Superior, Wisconsin and Meraux, Louisiana are shown along
with depictions of the routes and means of moving finished
products from the refineries into marketing areas and
depictions of the locations of terminal facilities used to
store and/or distribute products to retail outlets,
wholesalers and consumers in the Upper Midwest and the
Southeast.
19 United Kingdom - The Company's jointly owned refinery in
Milford Haven, Wales is shown along with depictions of the
routes and means of moving finished products from the
refinery into U.K. marketing areas and depictions of the
locations of terminal facilities used to store and/or
distribute products to retail outlets, wholesalers and
consumers.
Ex. 13A-1
MURPHY OIL CORPORATION - CIK 0000717423
Appendix to Electronically Filed Exhibit 13 (Contd.)
Exhibit 13
Page No. Picture Narrative
- - ---------- -----------------
4 Claiborne P. Deming, President and Chief Executive Officer of
Murphy Oil Corporation, is pictured.
7 A nighttime view of the production platform for the Hibernia
oil field offshore eastern Canada is shown.
9 A semisubmersible drilling rig is shown at Ewing Bank Block
994 in the deepwater Gulf of Mexico. This successful well
resulted in an important discovery for the Company in 1998.
10 An onshore drilling rig is shown completing the successful
Guidry No. 1 well in Vermilion Parish, Louisiana. This well
will likely prove up 50 billion cubic feet of reserves.
12 A view is shown of the processing and upgrading facility at
Syncrude Canada Ltd. near Fort McMurray, Alberta. Based on
current expansion plans, total synthetic oil production at
Syncrude will increase to 400,000 barrels a day by 2007.
13 The floating production storage and offloading vessel on
location at the Schiehallion field west of the Shetland
Islands is shown.
13 The Mungo field's unmanned production platform, flanked by a
jack-up rig used to continue development drilling, is shown
on location in the U.K. North Sea.
15 An oil processing facility in Block 16 Ecuador is shown.
Murphy's production in Ecuador could increase significantly
upon completion of a planned crude oil pipeline expansion.
16 A Murphy USA station located in the parking area of the
Wal-Mart Supercenter in Callaway, Florida is shown. The
Company will significantly expand the number of its stations
at Wal-Mart stores during 1999.
17 Processing units are shown at the Company's Meraux, Louisiana
refinery, which posted its fourth consecutive record for
annual crude oil throughput in 1998.
19 Storage tanks and a ship fueling at the Company's new marine
terminal at Duluth, Minnesota are shown. The terminal was
opened in 1998 to service shipping traffic on Lake Superior.
Ex. 13A-2
MURPHY OIL CORPORATION - CIK 0000717423
Appendix to Electronically Filed Exhibit 13 (Contd.)
Exhibit 13
Page No. Picture Narrative (Contd.)
- - ---------- --------------------------
20 Claiborne Deming, President and CEO, is shown
presenting Judy Quick, an employee at the Company's
Meraux refinery, with the 1998 Community Spirit
Award in recognition of her outstanding volunteer
activities as an employee at the refinery.
Graph Narrative
---------------
1 INCOME CONTRIBUTION FROM CONTINUING
OPERATIONS BY FUNCTION
Excludes special items and Corporate activities.
Scale 0 to 160 (millions of dollars)
1994 1995 1996 1997 1998
---- ----- ----- ----- ----
Refining, Marketing and
Transportation (top) 30 2 14 57 49
Exploration and Production (bottom) 45 30 102 85 6
---- ----- ----- ----- ----
Totals 75 32 116 142 55
==== ===== ===== ===== ====
This stacked vertical bar graph has totals
printed above bars.
1 ESTIMATED NET PROVED HYDROCARBON RESERVES
Scale 0 to 450 (millions of oil equivalent barrels)
1994 1995 1996 1997 1998
---- ----- ----- ----- ----
Ecuador and Other (top) 36 30 27 31 32
United Kingdom 30 48 58 63 63
Canada 166 159 157 176 188
United States (bottom) 96 97 96 92 97
---- ----- ----- ----- ----
Totals 328 334 338 362 380
==== ===== ===== ===== ====
This stacked vertical bar graph has totals
printed above bars.
2 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)
1994 1995 1996 1997 1998
---- ----- ----- ----- ----
Refining, Marketing and
Transportation (top) 38 51 59 100 89
Exploration and Production (bottom) 316 270 343 365 268
---- ----- ----- ----- ----
Totals 354 321 402 465 357
===== ===== ===== ===== ====
This stacked vertical bar graph has totals
printed above bars.
Ex. 13A-3
MURPHY OIL CORPORATION - CIK 0000717423
Appendix to Electronically Filed Exhibit 13 (Contd.)
Exhibit 13
Page No. Graph Narrative (Continued)
-------- ---------------
2 CAPITAL EXPENDITURES BY FUNCTION
Scale 0 to 500 (millions of dollars)
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
Corporate (top) 5 2 1 7 2
Refining, Marketing and
Transportation 95 53 43 38 55
Exploration and Production (bottom) 286 232 374 423 332
---- ---- ---- ---- ----
Totals 386 287 418 468 389
==== ==== ==== ==== ====
This stacked vertical bar graph has totals
printed above bars.
4 HYDROCARBON PRODUCTION REPLACEMENT
Scale 0 to 180 (percent of production)
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
147 117 111 165 150
This vertical bar graph has values printed
above bars.
6 NET HYDROCARBONS PRODUCED
Scale 0 to 120 (thousands of oil equivalent
barrels a day)
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
Ecuador and Other (top) 5 7 7 8 8
United Kingdom 15 17 16 16 18
Canada 28 30 30 32 36
United States (bottom) 46 45 37 46 36
---- ---- ---- ---- ----
Totals 94 99 90 102 98
==== ==== ==== ==== ====
This stacked vertical bar graph has totals
printed above bars.
10 CAPITAL EXPENDITURES - EXPLORATION AND PRODUCTION
Scale 0 to 480 (millions of dollars)
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
Ecuador and Other (top) 62 29 21 38 32
United Kingdom 34 33 69 91 71
Canada 111 99 99 147 108
United States (bottom) 79 71 185 147 121
---- ---- ---- ---- ----
Totals 286 232 374 423 332
==== ==== ==== ==== ====
This stacked vertical bar graph has values
printed above bars.
11 WORLDWIDE EXTRACTION COSTS
Scale 0 to 10.50 (dollars per equivalent barrel)
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
Depreciation, Depletion and
Amortization (top) 4.71 5.06 4.48 4.62 4.58
Production Expense (bottom) 4.72 4.64 4.87 4.41 4.35
---- ---- ---- ---- ----
Totals 9.43 9.70 9.35 9.03 8.93
==== ==== ==== ==== ====
This stacked vertical bar graph has values for
each component printed within bars and totals
printed above bars.
Ex. 13A-4
MURPHY OIL CORPORATION - CIK 0000717423
Appendix to Electronically Filed Exhibit 13 (Contd.)
Exhibit 13
Page No. Graph Narrative (Continued)
- - --------- ---------------
18 CAPITAL EXPENDITURES - REFINING, MARKETING
AND TRANSPORTATION
Scale 0 to 120 (millions of dollars)
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
Canada (top) 3 4 8 5 3
United Kingdom 12 22 14 4 7
United States (bottom) 80 28 21 29 45
---- ---- ---- ---- ----
Totals 95 54 43 38 55
==== ==== ==== ==== ====
This stacked vertical bar graph has totals
printed above bars.
19 REFINED PRODUCTS SOLD
Scale 0 to 200 (thousands of barrels a day)
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
United Kingdom (top) 40 31 33 29 36
United States (bottom) 114 127 128 134 138
---- ---- ---- ---- ----
Totals 154 158 161 163 174
==== ==== ==== ==== ====
This stacked vertical bar graph has totals
printed above bars.
Ex. 13A-5