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Financial Instruments and Risk Management
 3 Months Ended
Mar. 31, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Financial Instruments and Risk Management
Note L – Financial Instruments and Risk Management
Murphy, at times, uses derivative instruments to manage certain risks related to commodity prices, foreign currency exchange rates and interest rates. The use of derivative instruments for risk management is covered by operating policies and is closely monitored by the Company’s senior management. The Company does not hold any derivatives for speculative purposes, and it does not use derivatives with leveraged or complex features. Derivative instruments are traded with creditworthy major financial institutions or over national exchanges such as the New York Mercantile Exchange (NYMEX). The Company has a risk management control system to monitor commodity price risks and any derivatives obtained to manage a portion of such risks. For accounting purposes, the Company has not designated commodity and foreign currency derivative contracts as
hedges, and therefore, it recognizes all gains and losses on these derivative contracts in its Consolidated Statements of Operations. 
Foreign Currency Exchange Risks
The Company is subject to foreign currency exchange risk associated with operations in countries outside the U.S. The Company had no foreign currency exchange derivatives outstanding at March 31, 2025 and 2024.
Commodity Price Risks
The Company is subject to commodity price risk related to products it produces and sells. During the three months ended March 31, 2025, the Company entered into natural gas swap contracts. Under the swaps contracts, which mature monthly, the Company pays the average monthly price in effect and receives the fixed contract price on a notional amount of sales volume, thereby fixing the price for the commodity sold.
At March 31, 2025, volumes per day associated with outstanding natural gas derivative contracts and the weighted average prices for these contracts are as follows:
NYMEX Henry Hub
AreaCommodityVolumes MMCF/dPrice/MCFStart DateEnd Date
Fixed price derivative swapUnited StatesNatural Gas40$3.58 4/1/20256/30/2025
Fixed price derivative swapUnited StatesNatural Gas60$3.65 7/1/20259/30/2025
Fixed price derivative swapUnited StatesNatural Gas60$3.74 10/1/202512/31/2025
At March 31, 2024, the Company did not have any crude oil or natural gas derivative contracts.
At March 31, 2025 and December 31, 2024, the fair value of derivative instruments not designated as hedging instruments are presented in the following table:
(Thousands of dollars)Asset (Liability) Derivatives Fair Value
Type of Derivative ContractBalance Sheet LocationMarch 31, 2025December 31, 2024
Commodity swapsAccounts payable$(8,916)$(1,707)
For the three-month periods ended March 31, 2025 and 2024, the gains and losses recognized in the Consolidated Statements of Operations for derivative instruments not designated as hedging instruments are presented in the following table:
Gain (Loss)
(Thousands of dollars)Three Months Ended March 31,
Type of Derivative ContractStatement of Operations Location20252024
Commodity swapsLoss on derivative instruments$(9,459)$— 
Fair Values – Recurring
The Company carries certain assets and liabilities at fair value in its Consolidated Balance Sheets. The fair value hierarchy is based on the quality of inputs used to measure fair value, with Level 1 being the highest quality and Level 3 being the lowest quality. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are observable inputs other than quoted prices included within Level 1. Level 3 inputs are unobservable inputs which reflect assumptions about pricing by market participants.
The fair value measurements for these assets and liabilities at March 31, 2025 and December 31, 2024, are shown in the following table:
March 31, 2025December 31, 2024
(Thousands of dollars)Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Liabilities:
Commodity swaps$— $8,916 $— $8,916 $— $1,707 $— $1,707 
Nonqualified employee savings plan18,479 — — 18,479 19,469 — — 19,469 
$18,479 $8,916 $— $27,394 $19,469 $1,707 $— $21,176 
The commodity swaps liability as of March 31, 2025 was $8.9 million and recorded as “Accounts payable” in the Consolidated Balance Sheets. The fair value of commodity swaps was based on active market quotes for NYMEX Henry Hub natural gas. The before tax income effect of changes in the fair value of natural gas derivative contracts is recorded in “Loss on derivative instruments” in the Consolidated Statements of Operations.
The nonqualified employee savings plan is an unfunded savings plan through which participants seek a return via phantom investments in equity securities and/or mutual funds. The fair value of this liability was based on quoted prices for these equity securities and mutual funds. The income effect of changes in the fair value of the nonqualified employee savings plan is recorded in “Selling and general expenses” in the Consolidated Statements of Operations.
The Company offsets certain assets and liabilities related to derivative contracts when the legal right of offset exists. There were no offsetting positions recorded at March 31, 2025 and December 31, 2024.
The following table presents the carrying amounts and estimated fair values of financial instruments held by the Company at March 31, 2025 and December 31, 2024. The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties. The table excludes cash and cash equivalents, trade accounts receivable, trade accounts payable and accrued expenses, all of which had fair values approximating carrying amounts. The fair value of current and long-term debt was estimated based on rates offered to the Company at that time for debt of the same maturities. Substantially all of the Company’s long-term debt is actively traded in open markets, and accordingly, is classified as Level 1 in the fair value hierarchy. The Company has off-balance sheet exposures relating to certain letters of credit. The fair value of these, which represents fees associated with obtaining the instruments, were minimal.
March 31,December 31,
20252024
(Thousands of dollars)Carrying
Amount		Fair
Value		Carrying
Amount		Fair
Value
Financial liabilities:
Current and long-term debt
$1,475,720 $1,379,962 $1,275,374 $1,185,961 
Fair Values – Nonrecurring
There were no impairment expenses incurred in the first quarter of 2025.
In the first quarter of 2024, an impairment charge of $34.5 million was triggered for the Calliope field, due to operational issues that led to reserve reductions.
The fair values were determined by internal discounted cash flow models using estimates of future production, prices, costs and discount rates believed to be consistent with those used by principal market participants in the applicable region.
The fair value information associated with the impaired properties is presented in the following table:
Three Months Ended March 31, 2024
Net Book
Value
Prior to
Impairment		Total
Pretax
Impairment
Fair Value
(Thousands of dollars)
Level 1Level 2Level 3
2024
Assets:
Impaired proved properties
United States - Offshore
$— $— $437 $34,965 $34,528