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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Taxes [Abstract] |
Income Taxes | ﻿ Note I – Income Taxes ﻿ The components of income (loss) from continuing operations before income taxes for each of the three years presented and income tax expense (benefit) attributable thereto were as follows. ﻿ ﻿
﻿ |  |  |  |  |  |
﻿ |  |  |  |  |  |
﻿(Thousands of dollars) | 2017 |  | 2016 |  | 2015
﻿Income (loss) from continuing operations before income taxes |  |  |  |  |  |
﻿ United States | $ | (299,349) |  | (595,196) |  | (1,259,268)
﻿ Foreign |  | 371,151 |  | 102,081 |  | (2,022,994)
﻿ Total | $ | 71,802 |  | (493,115) |  | (3,282,262)
﻿Income tax expense (benefit) |  |  |  |  |  |
﻿ Federal – Current | $ | – |  | – |  | (9,435)
﻿ – Deferred |  | 156,065 |  | (197,450) |  | (241,127)
﻿ Total Federal |  | 156,065 |  | (197,450) |  | (250,562)
﻿ State |  | 4,230 |  | 13,984 |  | (5,294)
﻿ Foreign – Current |  | 122,318 |  | 146,861 |  | (40,550)
﻿ – Deferred |  | 100,125 |  | (182,567) |  | (730,084)
﻿ Total Foreign |  | 222,443 |  | (35,706) |  | (770,634)
﻿ Total | $ | 382,738 |  | (219,172) |  | (1,026,490)
﻿ The following table reconciles income taxes based on the U.S. statutory tax rate to the Company’s income tax expense. ﻿ ﻿
﻿ |  |  |  |  |  |
﻿(Thousands of dollars) | 2017 |  | 2016 |  | 2015
﻿Income tax expense (benefit) based on the U.S. statutory tax rate | $ | 25,131 |  | (172,590) |  | (1,148,792)
﻿Revaluation of deferred tax (US tax reform) |  | 118,004 |  | – |  | –
﻿Deferred tax effect of deemed repatriation of foreign invested earnings (U.S. tax reform) |  | 156,000 |  | – |  | –
﻿Deferred tax effect on Canadian earnings no longer indefinitely invested |  | 65,000 |  | – |  | –
﻿Foreign income (loss) subject to foreign tax rates different than the U.S. statutory rate |  | 12,658 |  | 8,582 |  | 49,739
﻿State income taxes, net of federal benefit |  | 2,438 |  | 9,090 |  | (3,441)
﻿U.S. tax benefit on certain foreign upstream investments |  | (32,926) |  | (21,336) |  | (16,939)
﻿Deferred tax on distribution of foreign earnings |  | – |  | – |  | 188,461
﻿Tax effects on sale of Canadian assets |  | – |  | (89,473) |  | –
﻿Tax effects on sale of Malaysian assets |  | – |  | 2,080 |  | (122,559)
﻿Increase in deferred tax asset valuation allowance related to other foreign exploration expenditures |  | 18,601 |  | 25,734 |  | 40,788
﻿Other, net |  | 17,832 |  | 18,741 |  | (13,747)
﻿ Total | $ | 382,738 |  | (219,172) |  | (1,026,490)
﻿ The Tax Cuts and Jobs Act On December 22, 2017, the U.S. enacted into legislation the Tax Cuts and Jobs Act (2017 Tax Act). For the year ended December 31, 2017, the Company recorded a tax expense of $274.0 million directly related to the impacts of the 2017 Tax Act. The charge includes the impact of a deemed repatriation of foreign earnings and the re-measurement of deferred tax assets and liabilities. Separately, Murphy expects to receive cash refunds or credits of $29.7 million over the next four years relating to Alternative Minimum Tax credits generated in earlier years. Murphy continues to assess the impact of this legislation including, among other things, the carryforward of 2017 net operating losses, refinement of post-1986 accumulated foreign earnings and profits computations, the change to U.S. federal tax rates, the possible limitations on the deductibility of interest expense, the option for expensing of ﻿ capital expenditures, the migration from a worldwide system of taxation to a territorial system, and the use of new anti-base erosion provisions. The tax expense recorded in 2017 is a reasonable estimate based on published guidance available at this time and is considered provisional. The ultimate impact of the 2017 Tax Act may differ from these estimates due to changes in interpretations and assumptions made by the company, as well as additional regulatory guidance that may be issued. The Company’s statutory U.S. federal income tax rate will be 21% beginning in 2018, a decrease from the previous rate of 35%. ﻿ As part of the transition of the U.S. tax system to a territorial system, the 2017 Tax Act provides that certain past accumulated undistributed foreign earnings are deemed repatriated. The territorial system is effective January 1, 2018. For financial statement reporting purposes, the Company believes the 2016 tax net operating loss can be carried forward into 2018 and later years to offset U.S. taxable income. The legislation is inconclusive regarding whether the estimated 2017 tax operating loss incurred by the Company prior to the 2017 Tax Act’s required deemed repatriation at December 31, 2017 may be excluded from the deemed repatriation tax computation (Internal Revenue Code Section 965(n)). ﻿ Based on interpretation and guidance at this time and uncertainty regarding whether the new Section 965(n) election applies to a 2017 loss, the Company’s tax provision reflects the estimated 2017 tax operating loss being applied fully against the deemed income inclusion. This results in the inability to carryforward the 2017 tax operating loss and the creation of unused foreign tax credit carryforwards with a limited ten-year life. A full valuation allowance has been provided against these unused foreign tax credits to be carried forward. If the Company had prepared the 2017 tax provision preserving the 2017 tax loss as a carryforward, the unused foreign tax credits would have been available to offset a large portion of the tax resulting from the deemed inclusion of foreign earnings, and the U.S. deferred tax charge would have been reduced by approximately $120.0 million with the $36 million residual balance reclassified from deferred tax to a deemed repatriation tax payable over eight years. In the event the Internal Revenue Service or other guidance subsequently determines that the 2017 tax operating loss can be preserved as a carryforward to subsequent years with a twenty-year life, the Company will adjust its financial statements in future periods. ﻿ An analysis of the Company’s deferred tax assets and deferred tax liabilities at December 31, 201 7 and 201 6 showing the tax effects of significant temporary differences follows. ﻿
﻿ |  |  |  |
﻿ |  |  |  |
﻿(Thousands of dollars) | 2017 |  | 2016
﻿Deferred tax assets |  |  |  |
﻿ Property and leasehold costs | $ | 488,584 |  | 572,481
﻿ Liabilities for dismantlements |  | 98,444 |  | 170,946
﻿ Postretirement and other employee benefits |  | 134,444 |  | 214,288
﻿ Alternative minimum tax |  | 29,710 |  | 29,710
﻿ Foreign tax credit carryforwards |  | 228,159 |  | 33,295
﻿ U. S. net operating loss |  | 272,930 |  | 454,231
﻿ Other deferred tax assets |  | 13,892 |  | 16,541
﻿ Total gross deferred tax assets |  | 1,266,163 |  | 1,491,492
﻿ Less valuation allowance |  | (476,256) |  | (305,389)
﻿ Net deferred tax assets |  | 789,907 |  | 1,186,103
﻿Deferred tax liabilities |  |  |  |
﻿ Deferred tax on undistributed foreign earnings |  | (65,000) |  | –
﻿ Accumulated depreciation, depletion and amortization |  | (669,638) |  | (867,343)
﻿ Other deferred tax liabilities |  | (2,824) |  | (21,908)
﻿ Total gross deferred tax liabilities |  | (737,462) |  | (889,251)
﻿ Net deferred tax assets | $ | 52,445 |  | 296,852
﻿ In management’s judgment, the net deferred tax assets in the preceding table are more likely than not to be realized based on the consideration of deferred tax liability reversals and future taxable income. The valuation allowance for ﻿ deferred tax assets relates primarily to tax assets arising in foreign tax jurisdictions and foreign tax credit carryforwards; in the judgment of management at the present time, these tax assets are more likely than not unexpected to be realized. The foreign tax credit carryforwards expire in 2018 through 2027. The valuation allowance increased $170.9 million in 2017 primarily due to foreign tax credit carryforwards realized from the deemed repatriation of accumulated undistributed foreign earnings under the 2017 Tax Act. Subsequent reductions of the valuation allowance are expected to be reported as reductions of tax expense assuming no offsetting change in the deferred tax asset. ﻿ The Company has an estimated U.S. net operating loss of $1.29 billion at year-end 2017 with a corresponding deferred tax asset of $272.9 million. The Company believes the U.S. net operating loss being carried forward will be utilized in future periods prior to expiration in 2036. ﻿ Under present law, if the Company repatriates earnings from Canada to the United States in the future, it would incur a 5% withholding tax on the amounts repatriated. A provision of $65.0 million is recorded in the Company’s financial statements for future repatriation of $1.3 billion of Canada’s past foreign earnings no longer de emed indefinitely reinvested. ﻿ Other Information ﻿ The Company currently expects in 2018 to repatriate cash to the U.S. of $700 million of Canada’s past earnings not indefinitely invested, which will lead to a tax withholding payment of $35.0 million (provided for as part of the $65.0 million for future repatriation). In December 2015, one of the Company’s foreign subsidiaries declared a $2.0 billion dividend payable to its parent. The dividend represented substantially all of the foreign subsidiary’s accumulated retained earnings under U.S. GAAP. The foreign subsidiary’s dividend was settled with an $800 million cash payment plus issuance of a $1.2 billion note payable to its U.S. parent that was settled in June 2016. The dividend was completed without a U.S. current tax impact due to the utilization of the 2015 U.S. tax net operating loss combined with the shareholder’s ability to use foreign tax credits that attached to the dividend. Based on the usage of the 2015 U.S. tax net operating loss, a noncash tax expense of $188.5 million was recorded in 2015, primarily associated with using a U.S. deferred tax asset that without the dividend would otherwise have carried forward to future years. ﻿ Uncertain Income Tax Positions The FASB’s rules for accounting for income tax uncertainties clarify the criteria for recognizing uncertain income tax benefits and require additional disclosures about uncertain tax positions. Under current rules the financial statement recognition of the benefit for a tax position is dependent upon the benefit being more likely than not to be sustainable upon examination. If this threshold is met, the tax benefit is then measured and recognized at the largest amount that is greater than 50% likely of being realized upon ultimate settlement. Liabilities associated with uncertain income tax positions are included in Deferred credits and other liabilities in the Consolidated Balance Sheets. A reconciliation of the beginning and ending amount of the consolidated liability for unrecognized income tax benefits during the three years presented is shown in the following table. ﻿ ﻿ ﻿
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﻿(Thousands of dollars) | 2017 |  | 2016 |  | 2015
﻿Balance at January 1 | $ | 7,417 |  | 6,631 |  | 6,011
﻿Additions for tax positions related to current year |  | 769 |  | 756 |  | 821
﻿Settlements due to lapse of time |  | (4,834) |  | – |  | –
﻿Foreign currency translation effect |  | 85 |  | 30 |  | (201)
﻿ Balance at December 31 | $ | 3,437 |  | 7,417 |  | 6,631
﻿ All additions or settlements to the above liability affect the Company’s effective income tax rate in the respective period of change. The Company accounts for any applicable interest and penalties on uncertain tax positions as a component of income tax expense. The Company also had other recorded liabilities as of December 31, 2017, 2016 and 2015 for interest and penalties of $0.1 million, $0.3 million and $0.2 million, respectively, associated with uncertain tax positions. Income tax expense for the years ended December 31, 2017, 2016 and 2015 included net benefits for interest and penalties of $0.2 million, $0.1 million and $0.1 million, respectively, associated with uncertain tax positions. ﻿ ﻿ During the next twelve months, the Company currently expects to add between $1.0 million and $2.0 million to the liability for uncertain taxes for 2018 events. Although existing liabilities could be reduced by settlement with taxing authorities or lapse due to statute of limitations, the Company believes that the changes in its unrecognized tax benefits due to these events will not have a material impact on the Consolidated Statement of Operations during 2018. ﻿ The Company’s tax returns in multiple jurisdictions are subject to audit by taxing authorities. These audits often take years to complete and settle. Although the Company believes that recorded liabilities for unsettled issues are adequate, additional gains or losses could occur in future years from resolution of outstanding unsettled matters. As of December 31, 2017, the earliest years remaining open for audit and/or settlement in the Company’s major taxing jurisdictions are as follows: United States – 2014; Canada – 2012; Malaysia – 2011; and United Kingdom – 2016.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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