11-K 1 a11-kthriftmoc12312019.htm 11-K Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 11-K

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2019

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                                

Commission file number 1-8590


THRIFT PLAN FOR EMPLOYEES OF MURPHY OIL CORPORATION
(Full title of the Plan)

mur-201812311.jpg 

MURPHY OIL CORPORATION
(Name of issuer of securities held pursuant to Plan)


300 Peach Street, P. O. Box 7000, El Dorado, Arkansas 71731-7000
(Address of issuer’s principal executive office) (Zip Code)








Thrift Plan for Employees of Murphy Oil Corporation
 
Table of Contents
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*All other supplemental schedules required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 are omitted, as they are inapplicable or not required


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Report of Independent Registered Public Accounting Firm

Plan Administrator, Plan Participants and Board of Directors
Thrift Plan for Employees of Murphy Oil Corporation
El Dorado, Arkansas


Opinion on the Financial Statements
We have audited the accompanying statements of net assets available for benefits of the Thrift Plan for Employees of Murphy Oil Corporation (the Plan) as of December 31, 2019 and 2018, and the related statement of changes in net assets available for benefits for the year ended December 31, 2019, and the related notes (collectively referred to as the “financial statements”).  In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2019 and 2018, and the changes in net assets available for benefits for the year ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

Basis of Opinion
These financial statements are the responsibility of the Plan’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.  The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.  Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.  Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.  We believe that our audits provide a reasonable basis for our opinion.

Report on Supplementary Information
The supplemental information in the accompanying Schedule H, Line 4i Schedule of Assets (Held at End of Year) has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements.  The supplemental schedule is the responsibility of the Plan’s management.  Our audit procedures included determining whether the supplemental schedule reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental schedule.  In forming our opinion on the supplemental schedule, we evaluated whether the supplemental schedule, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974.  In our opinion, the supplemental schedule is fairly stated, in all material respects, in relation to the financial statements taken as a whole.

/s/ BKD, LLP

We have served as the Plan’s auditor since 2005.

Little Rock, Arkansas
June 23, 2020

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Thrift Plan for Employees of Murphy Oil Corporation
 
Statements of Net Assets Available for Benefits
December 31, 2019 and 2018
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20192018
ASSETS  
Investments at fair value$181,774,798  152,961,739  
Participant notes receivable1,717,093  1,564,734  
Net assets available for benefits$183,491,891  154,526,473  

໿໿See accompanying notes to financial statements, page 6.
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Thrift Plan for Employees of Murphy Oil Corporation
 
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2019 
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Investment activity for the year 
Interest and dividend income$7,860,768  
Net appreciation in market value of investments24,130,480  
Participant notes interest income70,919  
Contributions
Employer4,864,816  
Employee6,794,830  
Rollover from other plans3,240,585  
Total contributions14,900,231  
Administrative expense credit29,756  
Benefits paid directly to participants(18,026,736) 
Net change for the year28,965,418  
Net assets available for benefits at beginning of year154,526,473  
Net assets available for benefits at end of year$183,491,891  

See accompanying notes to financial statements, page 6.
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Thrift Plan for Employees of Murphy Oil Corporation

Notes to Financial Statements
1. Summary of Significant Accounting Policies and Provisions of the Plan

Basis of Presentation

The accompanying financial statements of the Thrift Plan for Employees of Murphy Oil Corporation (the Plan) have been prepared on the accrual basis of accounting and present the net assets available for benefits to participants in the Plan and changes in net assets available for benefits.  Investments are reported at fair value, including the investment in the common collective trust which is valued using net asset value as a practical expedient.

Benefits are recorded when paid.  The Plan has made estimates in preparing the accompanying financial statements in accordance with accounting principles generally accepted in the United States of America.  Actual results could differ from those estimates.

Significant Provisions

The following is a summary of certain information related to the Plan, which is sponsored by Murphy Oil Corporation (Murphy) and administered by Murphy’s Employee Benefits Committee (the Committee). The Plan documents should be referred to for a complete description of the Plan’s provisions. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).

Each employee, except leased or contract employees, of one of the following companies (identified herein collectively as the Companies and individually as the Company) who is in Covered Employment as defined by the Plan may participate in the Plan. 
A. Murphy Oil Corporation. 
B. Murphy Exploration & Production Company, a wholly owned subsidiary of Murphy.

A participant may have the following Plan accounts to which amounts may be allotted by the participant or contributed by the Company, with limitations as indicated.
A. Salary Deferral Account – participant’s allotments up to a maximum of 25% of base pay for the year, but not to exceed $19,000 annually in 2019.
B. Matching Employer Contribution Account – Company contributions, dollar-for-dollar, based on the participant’s allotments (up to a maximum of 6% of regular earnings including overtime) made to the Salary Deferral Account.
C. Employee Contribution Account – a non-highly paid participant’s after-tax allotments up to a maximum of 10% of base pay for the year.  If highly paid, no after-tax allotments are allowed.
D. Deductible Contribution Account – participant’s allotments to this account have not been allowed after December 31, 1986, but established accounts have been allowed to remain.
E. Minimum 401(k) Contribution Account – participant’s allotments to this account have not been allowed after March 31, 1992, but established accounts have been allowed to remain.
F. Rollover Account – contributions made by an employee from a prior qualified plan.
G. Discretionary Employer Contribution Account – Company discretionary contributions on a quarterly basis beginning January 1, 2000, of similar amounts to each of certain Retail Business store managers for initial investment in the Murphy Stock Fund (see Note 4).  A vested participant may redirect this investment to the other options described in Note 4.  Participation in
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Thrift Plan for Employees of Murphy Oil Corporation

Notes to Financial Statements
this account became frozen as of September 1, 2003.  Employees eligible to receive Company discretionary contributions as of September 1, 2003 continued to receive such contributions after this date until their full entitlement was made as of September 30, 2004.
H. Catch-Up Contribution Account – participant’s allotments for all eligible employees who have attained age 50 before the close of the Plan year and are contributing the maximum pre-tax amount permitted by the Plan, up to a maximum of 75% of base pay for the year, but not to exceed $6,000 for 2019.

Each participant’s account is credited with the participant’s contribution and allocations of (a) the Company’s contribution (b) Plan earnings and (c) administrative expenses.  Additionally, each participant’s account can be allocated revenue sharing credits upon the Company’s election.  Allocations are based on participant earnings or account balances, as defined.  The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

Employees are eligible to participate in the Plan on the first day of the month following their date of hire or immediately, if hired on the first day of the month.  All active participants in the Plan are immediately vested in their voluntary contributions and all Company contributions.

A vested participant who enrolled prior to January 1, 2008 may withdraw from the Matching Employer Contribution (Matching Employer) Account either totally or partially (limited to at least 10%, but no less than $250, or any higher multiple of 5% up to 50% of the account balance) once every 24 months or at any time after reaching age 59½.  Any participant enrolled after December 31, 2007 can only withdraw from the Matching Employer Account after reaching age 59½.

A withdrawal from either a Salary Deferral Account or Catch-up Contribution Account is not permissible except upon a finding that a hardship exists as defined by federal tax regulations, upon the attainment of age 59½ or upon termination.  

A withdrawal from a Rollover Account is permitted at any time without any penalty.

Withdrawals from Employee Contribution Accounts or Deductible Contribution Accounts must be at least $250 and may not be made until at least 12 months after the most recent such withdrawal.  No participation penalty is applied to such a withdrawal.

A withdrawal from a Minimum 401(k) Contribution Account is not permissible except upon termination.

A vested participant may withdraw from a Discretionary Employer Contribution Account under guidelines established by the Committee that are uniformly applicable to all participants.

Any taxable income distributed to a participant may be subject to a 10% penalty tax under the Tax Reform Act of 1986.  A $20 fee is charged for an in-service non-hardship withdrawal.

A vested in-service participant may borrow a minimum of $500 and a maximum equal to the lesser of (a) $50,000 less the highest outstanding loan balance(s) in the last twelve months or (b) 50% of their vested account balance.  A participant may have one general-purpose loan and one residential loan outstanding at any one time.  A residential loan must be approved by the Committee.  The term of each
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Thrift Plan for Employees of Murphy Oil Corporation

Notes to Financial Statements
loan will be in whole years, with maximums of five years for a general-purpose loan and 15 years for a residential loan.  Loan repayments, including interest at the prime rate as of the beginning of the loan period, are made into the participant’s account through after-tax payroll deductions.  Each loan has a $35 initiation fee and a $15 annual maintenance fee.  Interest rates on outstanding notes receivable at December 31, 2019 range from 3.25% to 7.5%.

Upon retirement, disability, or death of a participant, the participant or his/her designated beneficiary has the option to receive settlement in a lump sum or installment payments over a period of time not to exceed the actuarial life of the participant.

Obligation for Contributions to the Plan

The Company  makes contributions to the Plan based on each participant’s allotments to the Salary Deferral Account subject to a maximum of 6% of the participant’s regular earnings including overtime.  Although the Company has not expressed any intent to terminate the Plan, it may do so at any time.

Voting Rights

Each participant is entitled to exercise voting rights attributable to the shares of the Murphy Oil Corporation common stock and Murphy USA Inc. common stock allocated to his or her account and is notified by the trustee prior to the time that such rights are to be exercised.  The trustee is not permitted to vote any shares for which instructions have not been given by the participant.

Administrative Expenses

Murphy pays certain costs of Plan administration.  Trustee fees and related expenses will be paid by either the Plan or by participants’ fees.

Transfers Between Fair Value Hierarchy Levels

Transfers in and out of Level 1 (quoted market prices), Level 2 (other significant observable inputs) and Level 3 (significant unobservable inputs) are recognized on the actual transfer date.

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Thrift Plan for Employees of Murphy Oil Corporation

Notes to Financial Statements
2. Recent Accounting Pronouncements

Fair Value Measurement.  In August 2018, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which modifies disclosure requirements related to fair value measurement.  The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.  Implementation on a prospective or retrospective basis varies by specific disclosure requirement.  Early adoption is permitted. The standard also allows for early adoption of any removed or modified disclosures upon
issuance of this ASU while delaying adoption of the additional disclosures until their effective date. The Company is currently assessing the potential impact of this ASU to the Plan’s financial statements. 

3. Net Assets and Investments

All assets in the Plan sponsored by Murphy Oil Corporation are associated only with the Thrift Plan for Employees of Murphy Oil Corporation.  Fidelity Management Trust Company (FMTC), Boston, Massachusetts, is the Trustee for Plan assets.  The Trusts had no nonparticipant-directed investments related to the Plan.

The following table presents the net assets of the Plan as of December 31, 2019 and 2018.
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20192018
Investments at fair value  
Common Stock  
Murphy Oil Corporation$23,284,639  19,188,745  
Murphy USA Inc.7,162,084  5,654,048  
Total common stock30,446,723  24,842,793  
Common/collective trust22,368,043  25,487,639  
Registered investment companies128,960,032  102,631,307  
Participant notes receivable1,717,093  1,564,734  
Net assets$183,491,891  154,526,473  

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Quoted market prices are used to determine the fair value of investments in the registered investment companies and the common stock.  Participant notes receivable are valued at cost plus accrued interest. Purchases and sales of securities are recorded on a trade date basis. Interest is recorded as earned and dividends are recorded on the ex-dividend date.  Net appreciation in market value of common stock and registered investment companies includes realized gains (losses) and unrealized appreciation (depreciation) in the fair value of these investments.






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Thrift Plan for Employees of Murphy Oil Corporation

Notes to Financial Statements
The Plan invests in a common collective trust fund (CCT) with FMTC (Management Income Portfolio II or MIP II).  FMTC maintains the contributions in a general account.  The Plan’s interest in the CCT is valued at the net asset value (NAV) as a practical expedient.  This practical expedient would not be used if it is determined to be probable that the investment contract would sell the investment for an amount different from the reported NAV.  Participant transactions (purchases and sales) may occur daily.  The CCT had no unfunded commitments as of December 31, 2019.  The CCT has no redemption notice period, but does have a 90 day restriction for amounts transferred to a competing fund.    

NAV as reported to the Plan by FMTC, represents contributions made under the contract, plus earnings, less participant withdrawals and administrative expenses.  Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value.  There are no reserves against NAV for credit risk of the contract issuer or otherwise.

4. Investment Options

Each Plan participant may invest contributions in one or more of 26 investment options. A participant determines how each of his/her accounts is divided among the different options, but any division of a participant’s allotment and Company contributions must be in whole percentages. Account balance transfers must be at least the greater of 1% of the account balance or $250.

The Murphy Stock Fund (MSF), which is managed by FMTC, is a fund comprised of common stock of Murphy Oil Corporation. A participant withdrawing from MSF may elect to receive either cash or Murphy stock. If the participant elects to receive stock, the value of his/her MSF withdrawal is converted to equivalent shares of stock based on the market price at the effective date of withdrawal, and the participant receives the whole shares and cash for any fractional share.

5.  Risk and Uncertainties

The Plan provides for investment in various investment securities.  Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility risks.  Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term, and such changes could materially affect participants’ account balances and the amounts reported in the financial statements.

6.  Related Party Transactions

Fidelity Investments Institutional Operations Company, Inc. (FIIOC) handles record keeping and administration of the Plan.  Certain of the Plan’s investment options are in mutual funds managed by FMRC.  FIIOC and FMRC are both affiliates of FMTC, who is the Trustee for the Plan and also manages the Managed Income Portfolio II, the MSF and the Murphy USA Stock Fund.  FMRC’s fees were deducted from the earnings of the mutual funds it manages.  The Plan received a net credit of $29,756 in net trustee and administrative fees from FMTC and FIIOC in 2019. In addition, the Plan provides for investment in Murphy Oil Corporation common stock and participant notes receivable, which also qualify as party-in-interest transactions. 
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Thrift Plan for Employees of Murphy Oil Corporation

Notes to Financial Statements

For the year ended December 31, 2019, contributions into the MSF totaled $1,322,401, while distributions out of the MSF totaled $1,594,498.  During the year ended December 31, 2019, the Plan recorded $852,310 of dividend income from the MSF.  These transactions are covered by exemptions from the prohibited transactions provisions of ERISA and the Internal Revenue Code of 1986, as amended.

7.  Income Taxes

Although the Plan has been amended since receiving a favorable determination letter dated July 1, 2014, the Committee believes that the Plan meets the necessary requirements of Section 401(a) of the Internal Revenue Code of 1986, as amended, and accordingly, the  Plan is exempt from taxation under the provisions of Section 501(a) of the Internal Revenue Code of 1986, as amended.  With few exceptions, the Plan is no longer subject to U.S. Federal income tax examinations by tax authorities prior to 2016.

8.  Investments at Fair Value

The Company carries certain assets at fair value in its Statements of Net Assets Available for Benefits.

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 Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.  Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis and recognized in the accompanying Statements  of Net Assets Available for Benefits, as well as the general classification of such instruments pursuant to the valuation hierarchy.  There have been no significant changes in the valuation techniques during the year ended December 31, 2019.

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy.  Level 1 securities include common stock and mutual funds.  If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows.  In certain cases where Level 1 inputs are not available, securities or other investments would be classified within Level 2 or Level 3 of the hierarchy. The Plan had no Level 2 or Level 3 investments at December 31, 2019 or 2018.

There are no assets or liabilities measured at fair value on a nonrecurring basis.







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Thrift Plan for Employees of Murphy Oil Corporation

Notes to Financial Statements



The following table presents the fair value measurements of assets recognized in the accompanying Statements of Net Assets Available for Benefits measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 31, 2019 and 2018.
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Fair Value Measurements Using
 Quoted PricesSignificant 
 in ActiveOtherSignificant
 Markets forObservableUnobservable
 Identical AssetsInputsInputs
December 31, 2019Fair Value(Level 1)(Level 2)(Level 3)
Common Stock$30,446,723  30,446,723  —  —  
Mutual Funds128,960,032  128,960,032  —  —  
Total assets in fair value hierarchy159,406,755  159,406,755  —  —  
Investments measured at net asset value*22,368,043  —  —  —  
Investments at Fair Value$181,774,798  159,406,755  —  —  
December 31, 2018    
Common Stock$24,842,793  24,842,793  —  —  
Mutual Funds102,631,307  102,631,307  —  —  
Total assets in fair value hierarchy127,474,100  127,474,100  —  —  
Investments measured at net asset value*25,487,639  —  —  —  
Investments at Fair Value$152,961,739  127,474,100  —  —  
*Certain investments that are measured at fair value using the NAV per share (or its equivalent) as a practical expedient have not been categorized in the fair value hierarchy.  The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented on the Statements of Net Assets Available for Benefits.

The above table does not include Participant notes receivable in the amount of $1,717,093 and $1,564,734 at December 31, 2019 and 2018, respectively.

9. Subsequent Event

As a result of the global COVID-19 pandemic, economic uncertainties have arisen which could negatively affect the value of investment securities of the Plan. The duration of these uncertainties and the ultimate financial effects cannot be reasonably estimated at this time.


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Thrift Plan for Employees of Murphy Oil Corporation
 
Schedule H, Line 4i – Schedule of Assets (Held at End of Year)
December 31, 2019


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Identity of IssuerDescription of InvestmentCurrent Value
FMI Large Cap Inst. ¹Registered Investment Co., 1,404,666 shares$27,700,011  
Murphy Stock Fund ¹Common Stock Fund, 868,749 shares23,284,639  
Managed Income Portfolio II Class 1Common/Collective Trust, 22,368,043 shares22,368,043  
FID 500 Index Inst. ¹Registered Investment Co., 149,661 shares16,765,081  
FID Mid Cap Index ¹Registered Investment Co., 447,558 shares10,575,784  
FID Freedom 2035 ¹Registered Investment Co., 616,955 shares9,316,021  
FID Freedom 2020 ¹Registered Investment Co., 486,570 shares7,887,294  
Murphy USA Stock Fund ²Common Stock Fund, 61,204 shares7,162,084  
FID Freedom 2025 ¹Registered Investment Co., 492,618 shares7,054,283  
FID Diversified Intl. ¹Registered Investment Co., 148,319 shares6,006,908  
FID Freedom 2040 ¹Registered Investment Co., 560,141 shares5,931,897  
FID Freedom 2030 ¹Registered Investment Co., 328,572 shares5,858,444  
FID Freedom 2045 ¹Registered Investment Co., 449,141 shares5,407,663  
PIMCO Total Return Inst.Registered Investment Co., 464,053 shares4,798,308  
FID Freedom 2050 ¹Registered Investment Co., 369,727 shares4,481,087  
PIMCO Income Inst.Registered Investment Co., 295,600 shares3,559,022  
FID Freedom 2055¹Registered Investment Co., 240,268 shares3,320,505  
Vulcan Value Ptrs. Smcp.Registered Investment Co., 159,767 shares2,949,300  
FID Small Cap Index ¹Registered Investment Co., 112,447 shares2,364,766  
FID Freedom 2015 ¹Registered Investment Co., 118,889 shares1,531,296  
FID Freedom 2005 ¹Registered Investment Co., 76,555 shares953,116  
FID U.S. Bond Index ¹Registered Investment Co., 71,590 shares852,641  
FID Freedom 2010 ¹Registered Investment Co., 40,641 shares634,399  
FID Freedom Income ¹Registered Investment Co., 41,370 shares484,855  
FID GNMA ¹Registered Investment Co., 35,763 shares413,065  
FID Freedom 2060 ¹Registered Investment Co., 9,180 shares114,286  
Participant notes receivableInterest rates between 3.25% and 7.50%1,717,093  
Net assets at fair value 183,491,891  
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1 Party-in-interest.
2 This fund is comprised of common stock of Murphy USA Inc. (MUSA).  MUSA was wholly owned by Murphy prior to August 30, 2013, when Murphy’s stockholders received MUSA common stock in a spin-off transaction.  These investments resulted from the spin-off of MSF held in the Master Trust at the date of distribution.  The Master Trust was dissolved at the time of the spin-off transaction.  No new investments are allowed in this fund.
 
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Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the Employee Benefits Committee has duly caused this Annual Report to be signed on its behalf by the undersigned hereunto duly authorized.

THRIFT PLAN FOR EMPLOYEES OF
MURPHY OIL CORPORATION



Date: June 23, 2020
By:   /s/ Maria A. Martinez
Maria A. Martinez
Vice President, Human Resources and Administration, Chair of Employee Benefits Committee
Murphy Oil Corporation

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