Note V – Business Segments

Murphy’s reportable segments are organized into geographic areas of operations. The Company’s exploration and production activity is subdivided into segments for the United States, Canada, Malaysia, Republic of the Congo and all other countries. Each of these segments derives revenues primarily from the sale of crude oil and/or natural gas. The Company’s management evaluates segment performance based on income from operations, excluding interest income and interest expense. Intersegment transfers of crude oil, natural gas and petroleum products are at market prices and intersegment services are recorded at cost.

The Company has announced an intention to sell its U.K. refining and marketing operations. The Company carries the assets and liabilities of the U.K. business as held for sale at December 31, 2013, and the associated results of operations are reported as discontinued operations for all periods presented.

The Company sold all of its oil and natural gas producing assets in the United Kingdom during the first half of 2013. The Company also completed the separation of its U.S. retail marketing business on August 30, 2013. In 2011, the Company sold its two U.S. oil refineries. All of these operations have also been reported as discontinued operations for all periods presented in these consolidated financial statements.

The Company has several customers that purchase a significant portion of its oil and natural gas production. During 2013, sales to Phillips 66 and affiliated companies represented approximately 17% of the Company’s total sales revenue, and sales to Shell Oil and its affiliates represented approximately 14% of total sales revenue. In 2012, Shell Oil, BP and Petronas represented approximately 17%, 13% and 12%, respectively, of consolidated sales. In 2011, Shell Oil, BP and Petronas represented approximately 16%, 15% and 11%, respectively, of consolidated sales. Due to the quantity of active oil and natural gas purchasers in the markets where it produces hydrocarbons, the Company does not foresee any difficulty with selling its hydrocarbon production at fair market prices.

Information about business segments and geographic operations is reported in the following tables. For geographic purposes, revenues are attributed to the country in which the sale occurs. Corporate and other activities, including interest income, miscellaneous gains and losses, interest expense and unallocated overhead, are shown in the tables to reconcile the business segments to consolidated totals. As used in the table on the following page, Certain Long-Lived Assets at December 31 exclude investments, noncurrent receivables, deferred tax assets and goodwill and other intangible assets.


Segment Information	Exploration and Production
(Millions of dollars)	United States		Canada			Malaysia		Republic of the Congo			Other			Total
Year ended December 31, 2013
Segment income (loss)	$	435.4		180.8			786.4		(9.0	)		(364.8	)		1,028.8
Revenues from external customers		1,803.8		1,144.7			2,280.5		83.5			0.1			5,312.6
Interest income		0.0		0.0			0.0		0.0			0.0			0.0
Interest expense, net of capitalization		0.0		0.0			0.0		0.0			0.0			0.0
Income tax expense (benefit)		241.6		57.8			477.7		(109.9	)		(10.9	)		656.3
Significant noncash charges (credits)
Depreciation, depletion, amortization		576.3		374.6			588.2		0.2			4.3			1,543.6
Accretion of asset retirement obligations		13.5		16.2			15.0		4.3			0.0			49.0
Amortization of undeveloped leases		30.3		21.0			0.0		0.0			15.6			66.9
Impairment of long-lived assets		0.0		21.6			0.0		0.0			0.0			21.6
Deferred and noncurrent income taxes		99.6		26.1			48.1		0.0			0.0			173.8
Additions to property, plant, equipment		1,785.9		334.5			1,323.4		(5.7	)		70.5			3,508.6
Total assets at year-end		4,530.0		4,087.8			6,121.0		51.6			128.8			14,919.2

Year ended December 31, 2012
Segment income (loss)	$	168.0		208.1			894.2		(241.1	)		(124.2	)		905.0
Revenues from external customers		1,038.0		1,084.3			2,428.1		57.6			0.1			4,608.1
Interest income		0.0		0.0			0.0		0.0			0.0			0.0
Interest expense, net of capitalization		0.0		0.0			0.0		0.0			0.0			0.0
Income tax expense (benefit)		99.8		65.1			544.7		(64.5	)		(40.1	)		605.0
Significant noncash charges (credits)
Depreciation, depletion, amortization		330.2		345.8			532.1		33.9			2.4			1,244.4
Accretion of asset retirement obligations		11.4		13.6			12.5		0.9			0.0			38.4
Amortization of undeveloped leases		71.6		29.3			0.0		0.0			28.9			129.8
Impairment of long-lived assets		0.0		0.0			0.0		200.0			0.0			200.0
Deferred and noncurrent income taxes		231.0		72.3			73.3		(0.3	)		(1.2	)		375.1
Additions to property, plant, equipment		1,615.9		887.2			1,426.7		(20.7	)		24.7			3,933.8
Total assets at year-end		3,625.9		4,477.7			4,811.5		112.2			75.6			13,102.9

Year ended December 31, 2011
Segment income (loss)	$	152.7		328.0			812.7		(385.3	)		(293.9	)		614.2
Revenues from external customers		737.7		1,288.6	*		2,045.6		148.8			24.6			4,245.3
Interest income		0.0		0.0			0.0		0.0			0.0			0.0
Interest expense, net of capitalization		0.0		0.0			0.0		0.0			0.0			0.0
Income tax expense (benefit)		86.5		135.5			434.9		16.4			7.5			680.8
Significant noncash charges (credits)
Depreciation, depletion, amortization		183.0		326.0			357.3		87.8			1.9			956.0
Accretion of asset retirement obligations		9.9		12.5			10.6		0.5			0.3			33.8
Amortization of undeveloped leases		62.2		28.8			0.0		0.0			27.2			118.2
Impairment of long-lived assets		0.0		0.0			0.0		368.6			0.0			368.6
Deferred and noncurrent income taxes		54.2		39.6			84.6		(0.9	)		(0.1	)		177.4
Additions to property, plant, equipment		696.6		885.2			694.8		79.6			20.6			2,376.8
Total assets at year-end		2,227.6		3,746.8			3,826.9		257.5			74.1			10,132.9


Geographic Information	Certain Long-Lived Assets at December 31
(Millions of dollars)	United States		Canada		Malaysia		United Kingdom		Republic of the Congo		Other		Total
2013	$	4,267.9		3,834.9		5,301.7		0.4		0.0		76.6		13,481.5
2012		4,177.4		4,190.5		4,101.2		703.2		5.9		39.2		13,217.4
2011		2,953.1		3,493.4		3,154.8		694.7		133.7		52.2		10,481.9

*	Reclassified to conform to current presentation.


Segment Information (Continued)
(Millions of dollars)	Corporate and Other			Discontinued Operations		Consolidated
Year ended December 31, 2013
Segment income (loss)	$	(140.6	)		235.3		1,123.5
Revenues from external customers		77.5			0.0		5,390.1
Interest income		3.9			0.0		3.9
Interest expense, net of capitalization		71.9			0.0		71.9
Income tax expense (benefit)		(71.7	)		0.0		584.6
Significant noncash charges (credits)
Depreciation, depletion, amortization		9.8			0.0		1,553.4
Accretion of asset retirement obligations		0.0			0.0		49.0
Amortization of undeveloped leases		0.0			0.0		66.9
Impairment of long-lived assets		0.0			0.0		21.6
Deferred and noncurrent income taxes		(15.7	)		0.0		158.1
Additions to property, plant, equipment		15.5			8.1		3,532.2
Total assets at year-end		1,265.2			1,325.1		17,509.5

Year ended December 31, 2012
Segment income (loss)	$	(98.5	)		164.4		970.9
Revenues from external customers		11.5			0.0		4,619.6
Interest income		6.5			0.0		6.5
Interest expense, net of capitalization		14.9			0.0		14.9
Income tax expense (benefit)		(43.5	)		0.0		561.5
Significant noncash charges (credits)
Depreciation, depletion, amortization		8.7			0.0		1,253.1
Accretion of asset retirement obligations		0.0			0.0		38.4
Amortization of undeveloped leases		0.0			0.0		129.8
Impairment of long-lived assets		0.0			0.0		200.0
Deferred and noncurrent income taxes		(32.3	)		0.0		342.8
Additions to property, plant, equipment		8.2			191.8		4,133.8
Total assets at year-end		1,009.6			3,410.1		17,522.6

Year ended December 31, 2011
Segment income (loss)	$	(75.0	)		333.5		872.7
Revenues from external customers		33.4			0.0		4,278.7
Interest income		10.1			0.0		10.1
Interest expense, net of capitalization		40.7			0.0		40.7
Income tax expense (benefit)		(52.1	)		0.0		628.7
Significant noncash charges (credits)
Depreciation, depletion, amortization		8.7			0.0		964.7
Accretion of asset retirement obligations		0.0			0.0		33.8
Amortization of undeveloped leases		0.0			0.0		118.2
Impairment of long-lived assets		0.0			0.0		368.6
Deferred and noncurrent income taxes		(43.6	)		0.0		133.8
Additions to property, plant, equipment		5.3			190.1		2,572.2
Total assets at year-end		790.8			3,214.4		14,138.1


Geographic Information	Revenues from External Customers for the Year
(Millions of dollars)	United States		Canada		Malaysia		Republic of the Congo		Other		Total
2013	$	1,798.5		1,150.2		2,337.5		83.5		20.4		5,390.1
2012		1,038.1		1,088.4		2,415.6		57.6		19.9		4,619.6
2011		741.8		1,293.4		2,063.0		148.8		31.7		4,278.7