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| <NonNumbericText> <div> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"></p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>Note B – New Accounting Principles and Recent Accounting Pronouncements</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i><u>New Accounting Principles Adopted</u></i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2">The Company adopted new accounting guidance issued by the Financial Accounting Standards Board (FASB) for noncontrolling interests in consolidated financial statements effective January 1, 2009. This guidance is to be applied prospectively, except for presentation and disclosure requirements which are applied retrospectively. This guidance required noncontrolling interests to be reclassified as equity, and consolidated net income and comprehensive income shall include the respective results attributable to noncontrolling interests. The adoption of this guidance did not have a significant effect on the Company’s consolidated financial statements.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2">The Company adopted new accounting guidance covering business combinations effective January 1, 2009. The new guidance established principles and requirements for how an acquirer in a business combination recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquired business. It also established how to recognize and measure goodwill acquired in the business combination or a gain from a bargain purchase, if applicable. This guidance impacts the recognition and measurement of assets and liabilities in business combinations that occur beginning in 2009. Assets and liabilities that arose from business combinations that occurred prior to 2009 are not affected by this guidance. The adoption of this guidance did not have a significant effect on the Company’s financial statements for the year ended December 31, 2009. The Company is unable to predict how the application of this guidance will affect its financial statements in future periods.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2">The Company adopted new accounting guidance which addresses disclosures about derivative instruments and hedging activities in January 2009. This guidance expands required disclosures regarding derivative instruments to include qualitative information about objectives and strategies for using derivatives, quantities disclosures about fair value amounts and gains and losses on derivative instruments, and disclosures about credit-risk related contingent features in derivative agreements. See Note L for further disclosures.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2">In 2009, the Company adopted new accounting guidance for determining whether instruments granted in share-based payment transactions are participating securities. This guidance specifies that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and, therefore, need to be included in the earnings per share (EPS) calculation under the two-class method, and also requires that all prior-period EPS calculations be adjusted retrospectively. The adoption of this guidance did not have a significant impact on the Company’s prior-period EPS calculations.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2">The Company adopted new accounting guidance addressing certain equity method investment accounting considerations in January 2009, which has been applied prospectively. The guidance addresses how to initially measure contingent consideration for an equity method investment, how to recognize other-than-temporary impairments of an equity method investment, and how an equity method investor is to account for a share issuance by an investee. The adoption of this guidance did not have a significant impact on the Company’s consolidated financial statements.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2">The Company adopted new accounting guidance addressing subsequent events effective June 30, 2009. The guidance clarified the accounting for and disclosure of subsequent events that occur after the balance sheet date through the date of issuance of the applicable financial statements. The adoption of this guidance did not have a significant effect on the Company’s consolidated financial statements. See Note U for further disclosures.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2">The FASB’s Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles guidance became effective for interim and annual periods ended after September 15, 2009 (the third calendar quarter for Murphy Oil) and it recognized the FASB Accounting Standards Codification as the single source of authoritative nongovernment U.S. generally accepted accounting principles. The codification superseded all existing accounting standards documents issued by the FASB, and established that all other accounting literature not included in the codification is considered nonauthoritative. Although the codification does not change U.S. generally accepted accounting principles, it does reorganize the principles into accounting topics using a consistent structure. The codification also includes relevant U.S. Securities and Exchange Commission guidance following the same topical structure. For periods ending after September 15, 2009, all references to U.S. generally accepted accounting principles will use the new topical guidelines established with the codification. Otherwise, this new standard is not expected to have a material impact on the Company’s consolidated financial statements in future periods.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2">The FASB has provided additional guidance regarding disclosures about postretirement benefit plan assets, including how asset investment allocation decisions are made, the fair value of each major category of plan assets, and how fair value is determined for each major asset category. This guidance was effective for the Company as of December 31, 2009. Upon adoption, no comparative disclosures are required for earlier years presented. See Note K for these disclosures.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2">In December 2008, the U.S. Securities and Exchange Commission adopted revisions to oil and natural gas reserves reporting requirements which became effective for the Company at year-end 2009. The primary changes to reserves reporting included:</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; FONT-SIZE: 6px"> </p> <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td width="5%"><font size="1"> </font></td> <td valign="top" width="2%" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">•</font></td> <td valign="top" width="1%"><font size="1"> </font></td> <td valign="top" align="left"> <p align="left"><font style="FONT-FAMILY: Times New Roman" size="2">A revised definition of proved reserves, including the use of unweighted average oil and natural gas prices in effect at the beginning of each month during the year to compute such reserves,</font></p> </td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; FONT-SIZE: 6px"> </p> <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td width="5%"><font size="1"> </font></td> <td valign="top" width="2%" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">•</font></td> <td valign="top" width="1%"><font size="1"> </font></td> <td valign="top" align="left"> <p align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Expanding the definition of oil and gas producing activities to include non-traditional and unconventional resources, which includes the Company’s synthetic oil operations in Alberta,</font></p> </td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; FONT-SIZE: 6px"> </p> <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td width="5%"><font size="1"> </font></td> <td valign="top" width="2%" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">•</font></td> <td valign="top" width="1%"><font size="1"> </font></td> <td valign="top" align="left"> <p align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Allowing companies to voluntarily disclose probable and possible reserves in SEC filings,</font></p> </td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; FONT-SIZE: 6px"> </p> <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td width="5%"><font size="1"> </font></td> <td valign="top" width="2%" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">•</font></td> <td valign="top" width="1%"><font size="1"> </font></td> <td valign="top" align="left"> <p align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Amending required proved reserve disclosures to include separate amounts for synthetic oil and gas,</font></p> </td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; FONT-SIZE: 6px"> </p> <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td width="5%"><font size="1"> </font></td> <td valign="top" width="2%" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">•</font></td> <td valign="top" width="1%"><font size="1"> </font></td> <td valign="top" align="left"> <p align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Expanding disclosures of proved undeveloped reserves, including discussion of such proved undeveloped reserves five years old or more, and</font></p> </td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; FONT-SIZE: 6px"> </p> <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td width="5%"><font size="1"> </font></td> <td valign="top" width="2%" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">•</font></td> <td valign="top" width="1%"><font size="1"> </font></td> <td valign="top" align="left"> <p align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Disclosure of the qualifications of the chief technical person who oversees the Company’s overall reserve process.</font></p> </td> </tr> </table> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2">The Company utilized this new guidance at year-end to determine its proved reserves and to develop associated disclosures. The Company chose not to provide voluntary disclosures of probable and possible reserves in this Form 10-K.</font></p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i><u>Recent Accounting Pronouncements</u></i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2">In June 2009, the FASB issued new guidance regarding accounting for transfers of financial assets. This guidance makes the concept of a qualifying special-purpose entity as defined previously no longer relevant for accounting purposes. Therefore, formerly qualifying special-purpose entities must be reevaluated for consolidation by reporting entities in accordance with the applicable consolidation guidance. This guidance is effective for the Company beginning on January 1, 2010. The Company is currently evaluating this guidance and is unable to predict at this time how it will impact its consolidated financial statements in futu periods.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2">In June 2009, the FASB issued new guidance that requires a company to perform an analysis to determine whether its variable interests give it a controlling financial interest in a variable interest entity. The primary beneficiary of a variable interest entity has both the power to direct the activities of the entity that most significantly impact the entity’s economic performance and the obligation to absorb potentially significant losses of the entity or the right to receive potentially significant benefits from the entity. A company is required to make ongoing reassessments of whether it is the primary beneficiary of a variable interest entity. This guidance also amends previous guidance for determining whether an entity is considered a variable interest entity. This guidance is effective for the Company beginning on January 1, 2010. The Company is currently evaluating this guidance and is unable to predict at this time how it will impact its consolidated financial statements in future periods.</font></p> </div> </NonNumbericText> |
| <NonNumericTextHeader> Note B – New Accounting Principles and Recent Accounting Pronouncements New Accounting Principles Adopted The Company adopted new accounting guidance </NonNumericTextHeader> |
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