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Revenue from Contracts with Customers | 3 Months Ended
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Mar. 31, 2018
Revenue from Contracts with Customers [Abstract] |
Revenue from Contracts with Customers | Note C – Revenue from Contracts with Customers Significant Accounting Policy Revenue is recognized when the Company satisfies a performance obligation by transferring control over a commodity to a customer; the amount of revenue recognized reflects the consideration expected in exchange for those commodities. The Company measures revenue based on consideration specified in a contract and excludes taxes and other amounts collected on behalf of third parties. Revenue is presented as Company share net of certain costs associated with generation of Revenue. Examples of costs that reduce revenue include transportation, gathering, compression, and processing fees in U.S. and Canada, as well as certain required payments associated with production sharing contracts (PSCs) and export taxes in Malaysia. Note C – Revenue from Contracts with Customers (Contd.) Nature of Goods and Services The Company explores for and produces crude oil, natural gas and natural gas liquids (collectively oil and gas) worldwide. The Company’s revenue from sales of oil and gas production activities are subdivided into three key geographic segments: the U.S., Canada, and Malaysia. Additionally, revenue from sales to customers is generated from three primary revenue streams: crude oil and condensate, natural gas liquids, and natural gas. For operated oil and gas production where the non-operated working interest owner does not take-in-kind its proportionate interest in the produced commodity, the Company acts as an agent for the working interest owner and recognizes revenue only for its own share of the commingled production. U.S.- In the United States, the Company primarily produces oil and gas from fields in the Eagle Ford Shale area of South Texas and in the Gulf of Mexico. Revenue is generally recognized when oil and gas are transferred to the customer at the delivery point. Revenue recognized is largely index based with price adjustments for floating market differentials. Canada- Primarily all long-term contracts in Canada, except for certain natural gas physical forward sales fixed-price contracts, are floating commodity index priced. For the Onshore business in Canada, the recorded revenue is adjusted for transportation and any gain or loss on spot purchases made to meet committed volumes on sales contracts for the month. For the Offshore business in Canada, contracts are based on index prices and revenue is recognized at the time of vessel load based on the volumes on the bill of lading and point of custody transfer. Malaysia- In Malaysia, the Company has interests in nine separate PSCs. The Company serves as the operator of all these areas other than the unitized Kakap-Gumusut field. Crude oil contracts in Malaysia share similar features of largely fixed cargo quantities, variable index-based pricing, and potential discounts at the point of meeting the performance obligation when the vessel is loaded. Malaysia also has three long term Gas Sales Agreements (GSA) with terms until the end of the field life, economic life, or PSC term. Disaggregation of Revenue The Company reviews performance based on three key geographical segments and between onshore and offshore sources of Revenue within these geographies. For the three months ended March 31, 2018 and 2017, the Company recognized $607.0 million and $509.0 million, respectively, from contracts with customers for the sales of oil, natural gas liquids and natural gas. Note C – Revenue from Contracts with Customers (Contd.) ﻿ ﻿ ﻿
﻿ |  |  |  |
﻿ |  | Three Months Ended
﻿ |  | March 31,
﻿(Thousands of dollars) |  | 2018 |  | 2017
﻿Net crude oil and condensate revenue |  |  |  |
﻿United States – Onshore | $ | 182,649 |  | 149,986
﻿ – Offshore |  | 71,528 |  | 53,813
﻿Canada – Onshore |  | 21,293 |  | 9,121
﻿ – Offshore |  | 54,315 |  | 37,014
﻿Malaysia – Sarawak |  | 77,306 |  | 65,783
﻿ – Block K |  | 94,572 |  | 87,831
﻿Total crude oil and condensate revenue |  | 501,663 |  | 403,548
﻿ |  |  |  |
﻿Net natural gas liquids revenue |  |  |  |
﻿United States – Onshore |  | 12,134 |  | 9,647
﻿ – Offshore |  | 1,639 |  | 1,916
﻿Canada – Onshore |  | 3,469 |  | 432
﻿ – Offshore |  | – |  | –
﻿Malaysia – Sarawak |  | 6,192 |  | 5,182
﻿ – Block K |  | – |  | –
﻿Total natural gas liquids revenue |  | 23,434 |  | 17,177
﻿ |  |  |  |
﻿Net natural gas revenue |  |  |  |
﻿United States – Onshore |  | 6,770 |  | 7,036
﻿ – Offshore |  | 2,937 |  | 2,663
﻿Canada – Onshore |  | 39,594 |  | 39,847
﻿ – Offshore |  | – |  | –
﻿Malaysia – Sarawak |  | 32,383 |  | 38,589
﻿ – Block K |  | 173 |  | 175
﻿Total natural gas revenue |  | 81,857 |  | 88,310
﻿Total revenue from contracts with customers |  | 606,954 |  | 509,035
﻿ |  |  |  |
﻿Gain (loss) on crude contracts |  | (29,502) |  | 37,077
﻿Other operating income (loss) |  | 8,492 |  | (1,454)
﻿Gain (loss) on sale of assets |  | (339) |  | 131,982
﻿Total revenue | $ | 585,605 |  | 676,640
﻿ Contract Balances and Asset Recognition As of March 31, 2018, and December 31, 2017, receivables from contracts with customers, net of royalties and associated payables, on the balance sheet, were $178.7 million and $203.4 million, respectively. Payment terms for Murphy’s sales vary across contracts and geographical regions, with the majority of the cash receipts required within 30 days of billing. Based on historical collections and ability of customers to pay, the Company did not recognize any impairment losses on receivables or contract assets arising from customer contracts during the reporting periods. The Company has not entered into any upstream oil and gas sale contracts that have financing components as at March 31, 2018. The Company does not employ sales incentive strategies such as commissions or bonuses for obtaining sales contracts. For the periods presented, the Company did not identify any assets to be recognized associated with the costs to obtain a contract with a customer. Note C – Revenue from Contracts with Customers (Contd.) Performance Obligations The Company recognizes oil and gas revenue when it satisfies a performance obligation by transferring control over a commodity to a customer. Judgment is required to determine whether some customers simultaneously receive and consume the benefit of commodities. As a result of this assessment for the Company, each unit of measure of the specified commodity is considered to represent a distinct performance obligation that is satisfied at a point in time upon the transfer of control of the commodity. For contracts with market or index-based pricing, which represent the majority of Murphy’s sales contracts, the Company has elected the allocation exception and allocates the variable consideration to each single performance obligation in the contract. As a result, there is no price allocation to unsatisfied remaining performance obligations for delivery of commodity product in subsequent periods. The Company has entered into several long-term, fixed-price contracts in Canada. The underlying reason for entering a fixed price contract is generally unrelated to anticipated future prices or other observable data and serves a particular purpose in the company’s long-term strategy. The contractually stated price for each unit of commodity transferred under these contracts represents the stand-alone selling price of the commodity. As at March 31, 2018, the Company had the following sales contracts in place which are expected to generate revenue from sales to customers for a period of 12 months or more starting at the inception of the contract: ﻿ ﻿
﻿ |  |  |  |  |  |  |  |
﻿Current Long-Term Contracts Outstanding at March 31, 2018
﻿Location |  | Commodity |  | End Date |  | Description |  | Approximate Net Volumes
﻿U.S. Onshore |  | Oil |  | Q2 2019 |  | Fixed quantity delivery in Eagle Ford |  | 4,000 BOE/Day
﻿U.S. Onshore |  | Oil |  | Q3 2019 |  | Fixed quantity delivery in Eagle Ford |  | 2,000 BOE/Day
﻿U.S. Onshore |  | Oil |  | Q4 2021 |  | Fixed quantity delivery in Eagle Ford |  | 2018: 19,000 BOE/Day 2019-2021: 13,000 BOE/Day
﻿U.S. Onshore |  | Gas and NGL |  | Q2 2026 |  | Deliveries from dedicated acreage in Eagle Ford |  | As produced
﻿Canada Onshore |  | Gas |  | Q4 2020 |  | Contracts to sell natural gas at Alberta AECO Cdn dollar 2.81/MCF |  | 59 MMCF/Day
﻿Canada Onshore |  | Gas |  | Q4 2020 |  | Contracts to sell natural gas at USD Index pricing |  | 59 MMCF/Day
﻿ ﻿

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 + Details
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