XML 21 R11.htm IDEA: XBRL DOCUMENT v3.22.1
Revenue from Contracts with Customers
 3 Months Ended
Mar. 31, 2022
Revenue from Contract with Customer [Abstract]  
Revenue from Contracts with Customers Note C – Revenue from Contracts with Customers
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 include long-term floating commodity index priced and 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. The Company also purchases natural gas in Canada to meet certain sales commitments.
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 three-month periods ended March 31, 2022, and 2021, the Company recognized $871.4 million and $592.5 million, respectively, from total revenue from sales to customers, from sales of oil, natural gas liquids and natural gas.
For the three-month periods ended March 31, 2022, and 2021, the Company recognized $834.5 million and $592.5 million, respectively, from sales of oil, natural gas liquids and natural gas from production.
Three Months Ended
March 31,
(Thousands of dollars)20222021
Net crude oil and condensate revenue
United States
Onshore$171,696 114,490 
                     Offshore465,621 328,341 
Canada    
Onshore36,697 29,903 
Offshore28,832 18,062 
Total crude oil and condensate revenue702,846 490,796 
Net natural gas liquids revenue
United States
Onshore16,685 7,528 
 
Offshore13,979 10,054 
Canada
Onshore4,867 3,987 
Total natural gas liquids revenue35,531 21,569 
Net natural gas revenue
United States
Onshore11,369 6,443 
Offshore26,201 22,138 
Canada
Onshore58,581 51,581 
Total natural gas revenue96,151 80,162 
Revenue from production834,528 592,527 
Sales of purchased natural gas1
36,846 — 
Total revenue from sales to customers871,374 592,527 
Loss on crude contracts(320,777)(214,385)
Gain on sale of assets and other income2,364 1,843 
Total revenues and other income$552,961 379,985 
1  Sales of purchase natural gas are associated with Canada Onshore.

In 2022, the Company included additional line items on the face of the Consolidated Statements of Operations to report Sales of purchased natural gas and Costs of purchased natural gas. Sales and purchases of natural gas are reported on a gross basis when Murphy takes control of the products and has risks and rewards of ownership.
Contract Balances and Asset Recognition
As of March 31, 2022, and December 31, 2021, receivables from contracts with customers, net of royalties and associated payables, on the balance sheet from continuing operations, were $258.6 million and $169.8 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 a forward-looking expected loss model in accordance with ASU 2016-13, 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 revenue contracts that have financing components as of March 31, 2022.
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 March 31, 2022, the Company had the following sales contracts in place which are expected to generate revenue from sales to customers for a period of more than 12 months starting at the inception of the contract:
Current Long-Term Contracts Outstanding at March 31, 2022
LocationCommodityEnd DateDescriptionApproximate Volumes
U.S.Natural Gas and NGLQ1 2023Deliveries from dedicated acreage in Eagle FordAs produced
CanadaNatural GasQ4 2022Contracts to sell natural gas at USD index pricing8 MMCFD
CanadaNatural GasQ4 2022Contracts to sell natural gas at CAD fixed prices5 MMCFD
CanadaNatural GasQ4 2022Contracts to sell natural gas at USD fixed pricing20 MMCFD
CanadaNatural GasQ4 2023Contracts to sell natural gas at USD index pricing25 MMCFD
CanadaNatural GasQ4 2023Contracts to sell natural gas at CAD fixed prices38 MMCFD
CanadaNatural GasQ4 2024Contracts to sell natural gas at USD index pricing31 MMCFD
CanadaNatural GasQ4 2024Contracts to sell natural gas at CAD fixed prices100 MMCFD
CanadaNatural GasQ4 2024Contracts to sell natural gas at CAD fixed prices34 MMCFD
CanadaNatural GasQ4 2024Contracts to sell natural gas at USD fixed pricing15 MMCFD
CanadaNatural GasQ4 2026Contracts to sell natural gas at USD index pricing49 MMCFD
CanadaNGLQ3 2023Contracts to sell natural gas liquids at CAD pricing952 BOED
Fixed price contracts are accounted for as normal sales and purchases for accounting purposes.