Revenue from Contracts with Customers

12 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

Nature of Goods and Services

The Company explores for and produces crude oil, natural gas and natural gas liquids (collectively oil and natural gas) in select basins around the globe. The Company’s revenue from sales of oil and natural gas production activities are primarily subdivided into two key geographic segments: the U.S and Canada. Additionally, revenue from sales to customers is generated from three primary revenue streams: crude oil and condensate, natural gas liquids, and natural gas.

For operated oil and natural gas production where the non-operated working interest owner does not take-in-kind its proportionate interest in the produced commodity, the Company acts as an agent for the working interest owner and recognizes revenue only for its own share of the commingled production. The exception to this is the reporting of the noncontrolling interest in MP GOM as prescribed by ASC 810-10-45.

U.S.- In the United States, the Company primarily produces oil and natural gas from fields in the Eagle Ford Shale area of South Texas and in the Gulf of Mexico. Revenue is generally recognized when oil and natural gas are transferred to the customer at the delivery point. Revenue recognized is largely index based with price adjustments for floating market differentials.

Canada- In Canada, contracts associated with the Onshore business, are primarily long-term floating commodity index priced, except for certain natural gas physical forward sales fixed-price contracts. For the Offshore business in Canada, contracts are based on index prices and revenue is recognized at the time of vessel load based on the volumes on the bill of lading and point of custody transfer.

In 2019, the Company made an immaterial reclassification to correct its financial statements to report transportation, gathering, and processing costs as a separate line item (previously reported net in revenue) in the Consolidated Statements of Operations and revised the 2018 period to reflect this presentation. There was no resultant change in net income attributable to Murphy. The Company did not revise 2017 as it was presented in accordance with ASC 605.

Disaggregation of Revenue

The Company reviews performance based on two key geographical segments and between onshore and offshore sources of Revenue within these geographies.

For the years ended December 31, 2019, 2018, and 2017 the Company recognized $2,817.1 million, $1,806.5 million and $1,300.5 million, respectively, from contracts with customers for the continuing operations sales of oil, natural gas liquids and natural gas.



		Years Ended December 31,
(Thousands of dollars)		2019			2018		2017
Net crude oil and condensate revenue
United States	Onshore	$	750,278		786,537		644,024
	Offshore	1,477,816			417,527		208,984
Canada	Onshore	116,174			111,836		51,013
	Offshore	159,254			176,291		147,230
Other		11,642			6,079		—
Total crude oil and condensate revenue		2,515,164			1,498,270		1,051,251

Net natural gas liquids revenue
United States	Onshore	30,615			61,810		43,804
	Offshore	26,968			11,832		6,894
Canada	Onshore	12,001			14,670		5,450
Total natural gas liquids revenue		69,584			88,312		56,148

Net natural gas revenue
United States	Onshore	27,668			36,070		27,460
	Offshore	46,259			17,559		10,480
Canada	Onshore	158,436			166,262		155,125
Total natural gas revenue		232,363			219,891		193,065
Total revenue from contracts with customers ¹		2,817,111			1,806,473		1,300,464

Gain (loss) on crude contracts		(856		)	(41,975	)	9,566
Gain on sale of assets and other income²		12,798			26,903		133,958
Total revenue and other income		$	2,829,053		1,791,401		1,443,988

¹ 2019 and2018 include revenue attributable to noncontrolling interest in MP GOM, effective November 30, 2018.

² Gain on sale of Malaysia operations of $985.4 million in 2019 is reported in discontinued operations. See Note E.

Contract Balances and Asset Recognition

As of December 31, 2019, and 2018, receivables from contracts with customers, net of royalties and associated payables, on the balance sheet from continuing operations, were $186.8 million and $147.6 million, respectively. Payment terms for the Company’s sales vary across contracts and geographical regions, with the majority of the cash receipts required within 30 days of billing. Based on historical collections and ability of customers to pay, the Company did not recognize any impairment losses on receivables or contract assets arising from customer contracts during the reporting periods.

The Company has not entered into any upstream oil and natural gas sale contracts that have financing components as of December 31, 2019.

The Company does not employ sales incentive strategies such as commissions or bonuses for obtaining sales contracts. For the periods presented, the Company did not identify any assets to be recognized associated with the costs to obtain a contract with a customer.

Performance Obligations

The Company recognizes oil and natural gas revenue when it satisfies a performance obligation by transferring control over a commodity to a customer. Judgment is required to determine whether some customers simultaneously receive and consume the benefit of commodities. As a result of this assessment for the Company, each unit of measure of the specified commodity is

considered to represent a distinct performance obligation that is satisfied at a point in time upon the transfer of control of the commodity.

For contracts with market or index-based pricing, which represent the majority of sales contracts, the Company has elected the allocation exception and allocates the variable consideration to each single performance obligation in the contract. As a result, there is no price allocation to unsatisfied remaining performance obligations for delivery of commodity product in subsequent periods.

The Company has entered into several long-term, fixed-price contracts in Canada. The underlying reason for entering a fixed price contract is generally unrelated to anticipated future prices or other observable data and serves a particular purpose in the company’s long-term strategy.

As of December 31, 2019, the Company had the following sales contracts in place which are expected to generate revenue from sales to customers for a period of 12 months or more starting at the inception of the contract:



Current Long-Term Contracts Outstanding at December 31, 2019
Location	Commodity	End Date	Description	Approximate Volumes
U.S.	NGL	Q4 2020	Dedicated acreage delivery in GOM	As produced
U.S.	Oil	Q4 2021	Fixed quantity delivery in Eagle Ford	17,000 BOED
U.S.	Natural Gas and NGL	Q2 2026	Deliveries from dedicated acreage in Eagle Ford	As produced
Canada	Natural Gas	Q4 2020	Contracts to sell natural gas at Alberta AECO fixed prices	59 MMCFD
Canada	Natural Gas	Q4 2020	Contracts to sell natural gas at USD Index pricing	60 MMCFD
Canada	Natural Gas	Q4 2021	Contracts to sell natural gas at USD Index pricing	10 MMCFD
Canada	Natural Gas	Q4 2024	Contracts to sell natural gas at USD Index pricing	30 MMCFD
Canada	Natural Gas	Q4 2026	Contracts to sell natural gas at USD Index pricing	38 MMCFD
Canada	Natural Gas	Q4 2026	Contracts to sell natural gas at USD Index pricing	11 MMCFD