MURPHY OIL CORP - FORM 8-K - EX-99.2 - December 22, 2014

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Exhibit 99.2

 

 

Murphy Oil Corporation

Unaudited Pro Forma Consolidated Financial Statements

 

On December 18, 2014, a subsidiary of Murphy Oil Corporation (Murphy) completed the sale of 20% of most of its Malaysian assets to PT Pertamina Malaysia Eksplorasi Produksi, a wholly-owned subsidiary of PT Pertamina (collectively “Pertamina”).

 

The unaudited pro forma consolidated financial statements of Murphy presented in this Exhibit were derived from our historical consolidated financial statements and are being presented to give effect to this sale of assets to Pertamina.  The unaudited pro forma condensed consolidated balance sheet assumes the sale to Pertamina occurred on September 30, 2014.  The unaudited pro forma condensed consolidated statements of income are presented as if the sale of assets to Pertamina occurred on January 1, 2013.  The following unaudited pro forma condensed consolidated financial statements should be read in conjunction with our historical financial statements and accompanying notes.

 

The pro forma adjustments are based on available information and assumptions management believes are factually supportable and for income statement purposes are recurring in nature.  The pro forma adjustments to reflect the sale of Malaysia assets to Pertamina include:

 

 

 

–

the associated assets, liabilities, revenue and expenses associated with assets sold to Pertamina on December 18, 2014

–

collection of anticipated cash proceeds in the unaudited pro forma condensed consolidated balance sheet as if the sale had occurred on September 30, 2014, net of transaction fees

–

the costs of effecting the sale of assets to Pertamina that are factually supportable, primarily legal and advisor fees

 

The unaudited pro forma condensed consolidated financial statements are for illustrative purposes only, and do not reflect what our financial position and results of operations would have been had the separation occurred on the dates indicated and these statements are not indicative of our future financial position and future results of operations.

 

 

 

 

Murphy Oil Corporation

Unaudited Pro Forma Consolidated Balance Sheet

September 30, 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Historical

 

Pro forma adjustments

 

 

Pro forma

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

    Cash and cash equivalents

 

$
674,021 

 
1,251,092 

(a)

 
1,925,113 

    Canadian government securities with maturities greater
        than 90 days at the date of acquisition

 

 
460,190 

 

 

 

 
460,190 

    Accounts receivable, less allowance for doubtful accounts
        of $1,609

 

 
970,286 

 

 

 

 
970,286 

   Inventories, at lower of cost or market

 

 

 

 

 

 

 

 

    Crude oil

 

 
40,311 

 
(3,258)

(b)

 
37,053 

    Materials and supplies

 

 
259,644 

 
(35,040)

(b)

 
224,604 

    Prepaid expenses

 

 
86,091 

 
(1,238)

(b)

 
84,853 

    Deferred income taxes

 

 
60,700 

 

 

 

 
60,700 

    Assets held for sale

 

 
735,875 

 

 

 

 
735,875 

                    Total current assets

 

 
3,287,118 

 
1,211,556 

 

 
4,498,674 

Property, plant and equipment, at cost less accumulated 
    depreciation, depletion and amortization of $9,698,266

 

 
14,372,837 

 
(1,167,488)

(b)

 
13,205,349 

Goodwill

 

 
38,198 

 

 

 

 
38,198 

Deferred charges and other assets

 

 
87,106 

 
(3,099)

(b)

 
84,007 

Assets held for sale

 

 
60,507 

 

 

 

 
60,507 

                    Total assets

 

$
17,845,766 

 
40,969 

 

 
17,886,735 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

    Current maturities of long-term debt

 

$
39,607 

 
(7,921)

(b)

 
31,686 

    Accounts payable

 

 
2,249,579 

 

 

 

 
2,249,579 

    Income taxes payable

 

 
145,185 

 

 

 

 
145,185 

    Liabilities associated with assets held for sale

 

 
185,846 

 

 

 

 
185,846 

                    Total current liabilities

 

 
2,620,217 

 
(7,921)

 

 
2,612,296 

 

 

 

 

 

 

 

 

 

Long-term debt, including capital lease obligation

 

 
3,986,261 

 
(68,267)

(b)

 
3,917,994 

Deferred income taxes

 

 
1,519,677 

 
(183,040)

(b)

 
1,336,637 

Asset retirement obligations

 

 
897,765 

 
(51,336)

(b)

 
846,429 

Deferred credits and other liabilities

 

 
344,301 

 
(202)

(b)

 
344,099 

Liabilities associated with assets held for sale

 

 
75,037 

 

 

 

 
75,037 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

 

    Cumulative Preferred Stock, par $100, authorized
      400,000 shares, none issued

 

 

– 

 

 

 

 

– 

    Common Stock, par $1.00, authorized 450,000,000
      shares, issued 195,036,689 shares

 

 
195,037 

 

 

 

 
195,037 

    Capital in excess of par value

 

 
896,567 

 

 

 

 
896,567 

    Retained earnings

 

 
8,414,917 

 
351,735 

(c)

 
8,766,652 

    Accumulated other comprehensive income

 

 
(17,809)

 

 

 

 
(17,809)

    Treasury Stock, 17,541,917 shares of Common Stock,
      at cost

 

 
(1,086,204)

 

 

 

 
(1,086,204)

                    Total stockholders’ equity

 

 
8,402,508 

 
351,735 

 

 
8,754,243 

                    Total liabilities and stockholders’ equity

 

$
17,845,766 

 
40,969 

 

 
17,886,735 

 

 

 

 

 

 

 

 

 

Murphy Oil Corporation

Unaudited Pro Forma Consolidated Statement of Income

Nine Months Ended September 30, 2014

 

 

 

 

 

 

 

 

 

 

 

 

Historical

 

Pro forma adjustments

 

 

Pro forma

 

Revenues

 

 

 

 

 

 

 

 

Sales and other operating revenues

$
4,070,120 

 
(318,536)

 (d)

 
3,751,584 

 

Loss on sale of assets

 
(5,130)

 
(10)

 (d)

 
(5,140)

 

Interest and other income

 
3,468 

 
(606)

 (d)

 
2,862 

 

           Total revenues

 
4,068,458 

 
(319,152)

 

 
3,749,306 

 

 

 

 

 

 

 

 

 

 

Costs and Expenses

 

 

 

 

 

 

 

 

Operating expenses

 
813,638 

 
(53,663)

 (d)

 
759,975 

 

Severance and ad valorem taxes

 
83,793 

 

 

 

 
83,793 

 

Exploration expenses, including undeveloped
   lease amortization

 
390,711 

 
(98)

 (d)

 
390,613 

 

Selling and general expenses

 
269,986 

 
(2,259)

 (d)

 
266,335 

 

 

 

 

 
(1,392)

 (e)

 

 

 

Depreciation, depletion and amortization

 
1,354,393 

 
(104,260)

 (d)

 
1,250,133 

 

Accretion of asset retirement obligations

 
36,992 

 
(2,498)

 (d)

 
34,494 

 

Interest expense

 
101,625 

 
(2,538)

 (d)

 
99,087 

 

Interest capitalized

 
(19,244)

 
3,285 

 (d)

 
(15,959)

 

Other expense

 
1,297 

 

 

 

 
1,297 

 

           Total costs and expenses

 
3,033,191 

 
(163,423)

 

 
2,869,768 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 
1,035,267 

 
(155,729)

 (d)

 
879,538 

 

Income tax expense

 
452,255 

 
(59,692)

 (d)

 
392,563 

 

Income from continuing operations

 
583,012 

 
(96,037)

 

 
486,975 

 

Income (loss) from discontinued operations, net of taxes

 
(52,639)

 

 

 

 
(52,639)

 

NET INCOME

$
530,373 

 
(96,037)

 

 
434,336 

 

 

 

 

 

 

 

 

 

 

PER COMMON SHARE – BASIC

 

 

 

 

 

 

 

 

    Income from continuing operations

$
3.25 

 

 

 

 
2.71 

 

    Income (loss) from discontinued operations

 
(0.29)

 

 

 

 
(0.29)

 

           Net income – Basic

$
2.96 

 

 

 

 
2.42 

 

 

 

 

 

 

 

 

 

 

PER COMMON SHARE – DILUTED

 

 

 

 

 

 

 

 

    Income from continuing operations

$
3.23 

 

 

 

 
2.69 

 

    Income from discontinued operations

 
(0.29)

 

 

 

 
(0.29)

 

           Net income – Diluted

$
2.94 

 

 

 

 
2.40 

 

 

 

 

 

 

 

 

 

 

Average Common shares outstanding

 

 

 

 

 

 

 

 

    Basic

 
179,259,573 

 

 

 

 
179,259,573 

 

    Diluted

 
180,578,085 

 

 

 

 
180,578,085 

 

 

 

 

 

Murphy Oil Corporation

Unaudited Pro Forma Consolidated Statement of Income

Year Ended December 31, 2013

 

 

 

 

 

 

 

 

 

 

 

 

Historical

 

Pro forma adjustments

 

 

Pro forma

 

Revenues

 

 

 

 

 

 

 

 

Sales and other operating revenues

$
5,312,686 

 
(456,114)

(d)

 
4,856,572 

 

Loss on sale of assets

 
(87)

 
3 

(d)

 
(84)

 

Interest and other income

 
77,490 

 
(10,437)

(d)

 
67,053 

 

           Total revenues

 
5,390,089 

 
(466,548)

 

 
4,923,541 

 

 

 

 

 

 

 

 

 

 

Costs and Expenses

 

 

 

 

 

 

 

 

Operating expenses

 
1,340,143 

 
(76,889)

(d)

 
1,263,254 

 

Severance and ad valorem taxes

 

– 

 

 

 

 

– 

 

Exploration expenses, including undeveloped
   lease amortization

 
502,215 

 
(4,828)

(d)

 
497,387 

 

Selling and general expenses

 
379,167 

 
(398)

(d)

 
378,769 

 

Depreciation, depletion and amortization

 
1,553,394 

 
(117,627)

(d)

 
1,435,767 

 

Impairment of properties

 
21,587 

 

 

 

 
21,587 

 

Accretion of asset retirement obligations

 
48,996 

 
(2,990)

(d)

 
46,006 

 

Interest expense

 
124,423 

 
(2,052)

(d)

 
122,371 

 

Interest capitalized

 
(52,523)

 
8,875 

(d)

 
(43,648)

 

           Total costs and expenses

 
3,917,402 

 
(195,909)

 

 
3,721,493 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 
1,472,687 

 
(270,639)

(d)

 
1,202,048 

 

Income tax expense

 
584,550 

 
(98,521)

(d)

 
486,029 

 

Income from continuing operations

 
888,137 

 
(172,118)

 

 
716,019 

 

Income (loss) from discontinued operations,  net of taxes

 
235,336 

 

 

 

 
235,336 

 

NET INCOME

$
1,123,473 

 
(172,118)

 

 
951,355 

 

 

 

 

 

 

 

 

 

 

PER COMMON SHARE – BASIC

 

 

 

 

 

 

 

 

    Income from continuing operations

$
4.73 

 

 

 

 
3.81 

 

    Income (loss) from discontinued operations

 
1.25 

 

 

 

 
1.25 

 

           Net income – Basic

$
5.98 

 

 

 

 
5.06 

 

 

 

 

 

 

 

 

 

 

PER COMMON SHARE – DILUTED

 

 

 

 

 

 

 

 

    Income from continuing operations

$
4.69 

 

 

 

 
3.78 

 

    Income from discontinued operations

 
1.25 

 

 

 

 
1.25 

 

           Net income – Diluted

$
5.94 

 

 

 

 
5.03 

 

 

 

 

 

 

 

 

 

 

Average Common shares outstanding

 

 

 

 

 

 

 

 

    Basic

 
187,921,062 

 

 

 

 
187,921,062 

 

    Diluted

 
189,271,398 

 

 

 

 
189,271,398 

 

 

 

 

Murphy Oil Corporation

Notes to Unaudited Pro Forma

Condensed Consolidated Financial Statements

 

NOTE 1:  Basis of Presentation

 

The historical information for Murphy Oil Corporation is derived from the historical financial statements of the Company.  The unaudited pro forma condensed consolidated balance sheet as of September 30, 2014, is presented to illustrate the estimated effects of selling 20% of the Company’s interest in most of its Malaysian assets to Pertamina (“sale transaction”) as if the transaction had occurred on September 30, 2014.  The unaudited pro forma condensed consolidated statements of income are presented for the nine months ended September 30, 2014 and the year ended December 31, 2013 as if the sale transaction had occurred at January 1, 2013.

 

NOTE 2:  Pro Forma Adjustments and Assumptions

 

 

 

(a)

Reflects the estimated cash sales proceeds of the sale transaction as if it had occurred on September 30, 2014.  The sale proceeds are presented net of preliminary estimated sale adjustments, mostly related to activities between the transaction’s effective date of January 1, 2014 and the date the transaction occurred on December 18, 2014.

 

 

(b)

Reflects the assets to be acquired and liabilities to be assumed by Pertamina as a result of the sale transaction.

 

 

(c)

Reflects the estimated net impact on Murphy’s stockholders’ equity related to the sale transaction.

 

 

(d)

Reflects the operations for the assets included in the sale transaction for the respective period presented.

 

 

(e)

Reflects the costs of effecting the sale transaction that are factually supportable, including legal and advisor fees.

 

 

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