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Financial Instruments and Risk Management | 12 Months Ended
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Dec. 31, 2018
Financial Instruments and Risk Management [Abstract] |
Financial Instruments and Risk Management | Note M – Financial Instruments and Risk Management ﻿ DERIVATIVE INSTRUMENTS – Murphy often uses derivative instruments to manage certain risks related to commodity prices, foreign currency exchange rates and interest rates. The use of derivative instruments for risk management is covered by operating policies and is closely monitored by the Company’s senior management. The Company does not hold any derivatives for speculative purposes and it does not use derivatives with leveraged or complex features. Derivative instruments are traded primarily with creditworthy major financial institutions or over national exchanges such as the New York Mercantile Exchange (NYMEX). The Company has a risk management control system to monitor commodity price risks and any derivatives obtained to manage a portion of such risks. For accounting purposes, the Company has not designated commodity and foreign currency derivative contracts as hedges, and therefore, it recognizes all gains and losses on these derivative contracts in its Consolidated Statements of Operations. Certain interest rate derivative contracts were accounted for as hedges and the gain or loss associated with recording the fair value of these contracts was deferred in AOCL until the anticipated transactions occur. ﻿ Commodity Purchase Price Risks ﻿ The Company is subject to commodity price risk related to crude oil it produces and sells. During the last three years, the Company had West Texas Intermediate (WTI) crude oil price swap financial contracts to economically hedge a portion of its United States production. Under these contracts, which matured monthly, the Company paid the average monthly price in effect and received the fixed contract prices. At December 31, 2018, the Company had no open WTI crude oil swap financial contracts. At December 31, 201 7, the Company had 21,000 barrels per day in WTI crude oil swap financial contracts maturing ratably during 201 8 at an average price of $54.88. ﻿ Foreign Currency Exchange Risks ﻿ The Company is subject to foreign currency exchange risk associated with operations in countries outside the U.S. The Company had no foreign currency exchange short-term derivative instruments outstanding as of December 31, 2018 and 2017. ﻿ Note M – Financial Instruments and Risk Management (Contd.) ﻿ At December 31, 201 8 and 201 7, the fair value of derivative instruments not designated as hedging instruments are presented in the following table.
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﻿ |  | December 31, 2018 |  | December 31, 2017
﻿(Thousands of dollars) |  | Asset (Liability) Derivatives |  | Asset (Liability) Derivatives
﻿Type of Derivative Contract |  | Balance Sheet Location |  | Fair Value |  | Balance Sheet Location |  | Fair Value
﻿Commodity |  | Accounts receivable | $ | 3,837 |  | Accounts payable | $ | (39,093)
﻿ For the years ended December 31, 201 8, 2017 and 201 6, the gains and losses recognized in the Consolidated Statements of Operations for derivative instruments not designated as hedging instruments are presented in the following table.
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﻿ |  |  |  | Gain (Loss)
﻿(Thousands of dollars) |  |  |  |  | Year Ended December 31,
﻿Type of Derivative Contract |  | Statement of Operations Locations |  | 2018 |  | 2017 |  | 2016
﻿Commodity |  | (Loss) gain on crude contracts |  | $ | (41,975) |  | 9,566 |  | (63,412)
﻿Foreign exchange |  | Interest and other income (loss) |  |  | – |  | – |  | 26,714
﻿ |  |  |  | $ | (41,975) |  | 9,566 |  | (36,698)
﻿ Interest Rate Risks ﻿ Under hedge accounting rules, the Company deferred the net cost associated with derivative contracts purchased to manage interest rate risk associated with 10-year notes sold in May 2012 to match the payment of interest on these notes through 2022. During each of the three years ended December 31, 201 8, $3.0 million of the deferred loss on the interest rate swaps was charged to I nterest expense in the Consolidated Statements of Operations. The remaining loss (net of tax) deferred on these matured contracts at December 31, 201 8 was $7.9 million, which is recorded, net of income taxes of $2.1 million, in Accumulated o ther c omprehensive l oss in the Consolidated Balance Sheets. The Company expects to charge approximately $3.0 million of this deferred loss to Interest expense in the Consolidated Statements of Operations during 201 9. ﻿ CREDIT RISKS – The Company’s primary credit risks are associated with trade accounts receivable, cash equivalents and derivative instruments. Trade receivables arise mainly from sales of oil and natural gas in the U.S., Canada and Malaysia, and cost sharing amounts of operating and capital costs billed to partners for oil and natural gas fields operated by Murphy. The credit history and financial condition of potential customers are reviewed before credit is extended, security is obtained when deemed appropriate based on a potential customer’s financial condition, and routine follow-up evaluations are made. The combination of these evaluations and the large number of customers tends to limit the risk of credit concentration to an acceptable level. Cash equivalents are placed with several major financial institutions, which limit the Company’s exposure to credit risk. The Company controls credit risk on derivatives through credit approvals and monitoring procedures and believes that such risks are minimal because counterparties to the majority of transactions are major financial institutions. ﻿ ﻿ ﻿ ﻿ ﻿ ﻿ ﻿ ﻿ ﻿ ﻿ ﻿ ﻿ ﻿ ﻿

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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