MURPHY OIL CORPMUR
MURPHY OIL CORP Income Taxes Disclosure
Note H – 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) | 2025 | 2024 | 2023 | ||||||||||||||
| Income (loss) from continuing operations before income taxes | |||||||||||||||||
| United States | $ | 195,245 | $ | 468,202 | $ | 901,761 | |||||||||||
| Foreign | (12,379) | 99,367 | 19,308 | ||||||||||||||
| Total | $ | 182,866 | $ | 567,569 | $ | 921,069 | |||||||||||
Income tax expense | |||||||||||||||||
Current tax expense | |||||||||||||||||
U.S. State and Local | $ | 468 | $ | 1,153 | $ | 2,916 | |||||||||||
Foreign | 9,411 | 4,685 | 13,182 | ||||||||||||||
Total current tax expense | 9,879 | 5,838 | 16,098 | ||||||||||||||
Deferred tax expense | |||||||||||||||||
U.S. Federal | 37,825 | 55,377 | 170,115 | ||||||||||||||
U.S. State and Local | (1,214) | (5,641) | 3,706 | ||||||||||||||
Foreign | (1,938) | 22,698 | 6,002 | ||||||||||||||
Total deferred tax expense | 34,673 | 72,434 | 179,823 | ||||||||||||||
Total income tax expense | |||||||||||||||||
U.S. Federal | 37,825 | 55,377 | 170,115 | ||||||||||||||
U.S. State and Local | (746) | (4,488) | 6,622 | ||||||||||||||
Foreign | 7,473 | 27,383 | 19,184 | ||||||||||||||
Total income tax expense | $ | 44,552 | $ | 78,272 | $ | 195,921 | |||||||||||
The following table reconciles income taxes based on the U.S. statutory tax rate to the Company’s income tax expense for each of the three years presented.
(Thousands of dollars) | 2025 | 2024 | 2023 | |||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||||||||
| Income tax expense based on the U.S. statutory tax rate | $ | 38,402 | 21.0 | % | $ | 119,190 | 21.0 | % | $ | 193,424 | 21.0 | % | ||||||||||||||
| Domestic Federal | ||||||||||||||||||||||||||
| Tax Credits | ||||||||||||||||||||||||||
| Research and development tax credits | 2,521 | 1.4 | (6,841) | (1.2) | (8,805) | (1.0) | ||||||||||||||||||||
| Nontaxable or Nondeductible Items | ||||||||||||||||||||||||||
| Tax effect on income attributable to NCI | (7,259) | (4.0) | (16,656) | (2.9) | (13,046) | (1.4) | ||||||||||||||||||||
| U.S. tax benefit on certain foreign upstream investments | — | — | (33,677) | (5.9) | — | — | ||||||||||||||||||||
| Other | (397) | (0.2) | 2,398 | 0.4 | (293) | — | ||||||||||||||||||||
| Share-based payment awards | 5,595 | 3.1 | 2,340 | 0.4 | 2,636 | 0.3 | ||||||||||||||||||||
State and Local Income Taxes, Net of Federal Income Tax Effect 1 | (589) | (0.3) | (3,546) | (0.6) | 4,725 | 0.5 | ||||||||||||||||||||
| Foreign Tax Effects | ||||||||||||||||||||||||||
| Canada | ||||||||||||||||||||||||||
| Statutory tax rate differential | 2,629 | 1.4 | 5,428 | 1.0 | 3,732 | 0.4 | ||||||||||||||||||||
| Research and development tax credits | (3,875) | (2.1) | (3,547) | (0.6) | (3,982) | (0.4) | ||||||||||||||||||||
| Other Foreign jurisdictions | ||||||||||||||||||||||||||
| Statutory tax rate differential | 4,960 | 2.7 | 9,127 | 1.6 | 2,844 | 0.3 | ||||||||||||||||||||
| Changes in valuation allowances | ||||||||||||||||||||||||||
| Côte d’Ivoire | 13,140 | 7.2 | — | — | — | — | ||||||||||||||||||||
| Other Foreign Jurisdictions | (2,922) | (1.6) | 2,636 | 0.5 | 10,853 | 1.2 | ||||||||||||||||||||
| Other | (5,825) | (3.2) | (532) | (0.2) | 1,377 | 0.1 | ||||||||||||||||||||
| Worldwide Changes in Unrecognized Tax Benefits | (1,828) | (1.0) | 1,952 | 0.3 | 2,456 | 0.3 | ||||||||||||||||||||
| Effective Tax Rate | $ | 44,552 | 24.4 | % | $ | 78,272 | 13.8 | % | $ | 195,921 | 21.3 | % | ||||||||||||||
1 State taxes primarily include Texas and Louisiana.
The following table displays cash taxes paid, net of refunds, for each of the three years presented.
(Thousands of dollars) | 2025 | 2024 | 2023 | ||||||||||||||
| U.S. State and Local | |||||||||||||||||
| Alabama | $ | (1,868) | $ | — | $ | 4,838 | |||||||||||
| Texas | 1,500 | 2,300 | 1,079 | ||||||||||||||
| Other | 50 | — | 51 | ||||||||||||||
| Total U.S. State and Local | (318) | 2,300 | 5,968 | ||||||||||||||
| Foreign | |||||||||||||||||
| Canada | 2,929 | 6,480 | 3,553 | ||||||||||||||
| Canada - Alberta | 2,809 | 3,269 | 1,756 | ||||||||||||||
| Brunei | 681 | 599 | 1,079 | ||||||||||||||
| Total Foreign | 6,419 | 10,348 | 6,388 | ||||||||||||||
| Total | $ | 6,101 | $ | 12,648 | $ | 12,356 | |||||||||||
An analysis of the Company’s deferred tax assets and deferred tax liabilities for the respective periods presented showing the tax effects of significant temporary differences follows.
(Thousands of dollars) | 2025 | 2024 | |||||||||
| Deferred tax assets | |||||||||||
| Property and leasehold costs | $ | 235,509 | $ | 225,379 | |||||||
| Liabilities for dismantlements | 40,242 | 36,719 | |||||||||
| Postretirement and other employee benefits | 66,418 | 66,293 | |||||||||
| U. S. net operating loss | 224,956 | 289,594 | |||||||||
| Investment in partnership | 20,307 | 9,096 | |||||||||
Other deferred tax assets 1 | 97,660 | 100,352 | |||||||||
| Total gross deferred tax assets | 685,092 | 727,433 | |||||||||
| Less: Valuation allowance | (157,807) | (149,498) | |||||||||
| Net deferred tax assets | 527,285 | 577,935 | |||||||||
| Deferred tax liabilities | |||||||||||
| Deferred tax on undistributed foreign earnings | (5,000) | (5,000) | |||||||||
| Accumulated depreciation, depletion and amortization | (812,727) | (811,178) | |||||||||
Other deferred tax liabilities 1 | (87,895) | (97,547) | |||||||||
| Total gross deferred tax liabilities | (905,622) | (913,725) | |||||||||
| Net deferred tax (liabilities) assets | $ | (378,337) | $ | (335,790) | |||||||
1 Other deferred tax assets and other deferred tax liabilities are primarily comprised of the deferred tax benefit and obligation associated with operating lease liabilities and the associated right of use assets, respectively.
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 that in the judgment of management at the present time are more likely than not to be unrealized. The valuation allowance increased $8.3 million in 2025, related all to non-U.S. items. 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 a U.S. net operating loss carryforward of $1.1 billion at year-end 2025 with a corresponding deferred tax asset of $225.0 million. The Company believes the U.S. net operating loss being carried forward will more likely than not be utilized in future periods prior to expirations in 2037.
Other Information
Currently, the Company considers $100.0 million of Canada’s past foreign earnings not permanently reinvested, with an accompanying $5.0 million liability. At December 31, 2025, $1.6 billion of past foreign earnings are considered permanently reinvested. The Company closely and routinely monitors these reinvestment positions considering underlying facts and circumstances pertinent to our business and the future operation of the Company.
Uncertain Income Tax Positions
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 ultimate settlement. 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 “Other taxes payable” and “Deferred credits and other liabilities” in the Consolidated Balance Sheets for current and long-term portions, respectively. 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.
(Thousands of dollars) | 2025 | 2024 | 2023 | ||||||||||||||
| Balance at January 1 | $ | 9,979 | $ | 6,384 | $ | 3,928 | |||||||||||
| Additions for tax positions related to current year | — | 1,643 | — | ||||||||||||||
| Additions for tax positions related to prior year | — | 1,952 | 2,456 | ||||||||||||||
| Reductions for tax positions related to prior year | (882) | — | — | ||||||||||||||
| Settlements with taxing authorities | (946) | — | — | ||||||||||||||
| Balance at December 31 | $ | 8,151 | $ | 9,979 | $ | 6,384 | |||||||||||
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 of $0.3 million as of December 31, 2025, 2024 and 2023, respectively, for interest and penalties associated with uncertain tax positions. There were no interest or penalties associated with uncertain tax positions included in income tax expense for any period presented.
In 2026, the Company currently does not expect to add to the provision for uncertain tax positions. Although existing liabilities could be reduced by settlement with taxing authorities or due to statute of limitations closing, the Company believes that the changes in its unrecognized tax benefits due to these events will not have a material impact on the Consolidated Statements of Operations during 2026.
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. Additionally, the Company could be required to pay amounts into an escrow account as any matters are identified and appealed with the relevant taxing authorities. As of December 31, 2025, the earliest years remaining open for audit and/or settlement in the Company’s major taxing jurisdictions are as follows: United States – 2016; Canada – 2021; and Malaysia – 2018. The Company has retained certain possible liabilities and rights to income tax receivables relating to Malaysia for the years prior to 2019.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2017 | Feb 26, 2018 | |
| 2016 | Feb 24, 2017 | |
| 2015 | Feb 26, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.