Results of Operations

Murphy's net income in the second quarter of 2009 was $158.8 million ($0.83 per diluted share) compared to net income of $619.2 million ($3.22 per diluted share) in the second quarter of 2008. The lower income in 2009 primarily related to lower sales prices for the Company's crude oil and natural gas production and lower earnings in the refining and marketing operations. Discontinued operations, associated with the Ecuador properties sold in March 2009, had an after-tax loss of $2.1 million ($0.01 per diluted share) in the second quarter 2009 and after-tax income of $0.7 million (nil per diluted share) in the 2008 quarter. Income from continuing operations was $160.9 million ($0.84 per diluted share) in 2009 quarter compared to $618.5 million ($3.22 per diluted share) in the 2008 quarter. The second quarter 2009 included a $24.7 million after-tax charge associated with an anticipated reduction of the Company's working interest in the Terra Nova field, offshore Eastern Canada. The quarter also included after-tax gains of $13.4 million from settlements with insurers related to property damaged by a fire and hurricane in prior years at the Meraux, Louisiana refinery. Net income in the second quarter 2008 included an after-tax gain of $67.9 million on sale of Lloydminster heavy oil properties in Western Canada.

For the first six months of 2009, net income totaled $329.9 million ($1.72 per diluted share) compared to net income of $1,028.2 million ($5.36 per diluted share) for the same period in 2008. The lower six-month net income in 2009 compared to 2008 was also primarily attributable to lower crude oil and natural gas sales prices. The 2009 six-month net income included income from discontinued operations of $97.8 million ($0.51 per diluted share) with this amount primarily being generated from a gain on sale of operations in Ecuador in March 2009. Income from discontinued operations in the six-month period of 2008 was $1.5 million ($0.01 per diluted share). The six-month period in 2009 included the aforementioned $24.7 million after-tax charge for an anticipated Terra Nova working interest reduction and the $13.4 million of after-tax gains from insurance settlements. The six-month period in 2008 included after-tax gains of $108.3 million on sale of the Company's interest in Berkana Energy Corporation and Lloydminster properties.

Murphy's income from continuing operations by operating segment is presented below.

                                                       Income (Loss)
                                        Three Months Ended          Six Months Ended
                                             June 30,                   June 30,
  (Millions of dollars)                  2009          2008         2009       2008
  Exploration and production          $     118.3       576.5        168.6    1,003.7
  Refining and marketing                     27.8        77.3         38.6       87.5
  Corporate                                  14.8       (35.3 )       24.9      (64.5 )

  Income from continuing operations   $     160.9       618.5        232.1    1,026.7

In the 2009 second quarter, the Company's continuing exploration and production operations earned $118.3 million compared to $576.5 million in the 2008 quarter. Income in the 2009 quarter was unfavorably affected by lower crude oil and natural gas sales prices compared to 2008, a $24.7 million after-tax charge for an anticipated reduction in the Company's working interest in the Terra Nova field, and lower gains on property disposals. The 2008 second quarter included a $67.9 million after-tax gain on sale of Lloydminster properties. Exploration expenses were $35.0 million in the second quarter of 2009 compared to $60.4 million in the same period of 2008. The Company's refining and marketing operations generated income of $27.8 million in the 2009 second quarter compared to income of $77.3 million in the same quarter of 2008. Refining and marketing margins improved and gains from insurance settlements were realized in North America in the second quarter 2009, but income for the United Kingdom downstream business was significantly lower in the 2009 second quarter due mostly to much weaker refining margins. The 2009 quarter included after-tax gains of $13.4 million from insurance settlements at the Meraux refinery. The corporate function generated after-tax benefits of $14.8 million in the 2009 second quarter compared to after-tax costs of $35.3 million in the 2008 period with the improvement in 2009 mostly due to favorable foreign currency exchange effects and lower net interest expense.

The Company's continuing exploration and production operations earned $168.6 million in the first half of 2009 compared to $1,003.7 million in the same period of 2008. Earnings in 2009 were adversely impacted by significantly lower realized oil and natural gas sales prices, the aforementioned charge for an anticipated working interest redetermination at the Terra Nova field, and lower gains on sale of assets. The Company's refining and marketing operations had earnings of $38.6 million in the first six months of 2009 compared to earnings of $87.5 million in the same 2008 period. The 2009 period included stronger results in the North American downstream business compared to a year ago based on better operating margins and insurance settlements, but income

Results of Operations (Contd.)

from downstream operations in the U.K. were significantly lower in 2009 compared to 2008 due to weaker margins in refining operations. Corporate after-tax benefits were $24.9 million in the 2009 period compared to after-tax costs of $64.5 million in the 2008 period. Favorable foreign currency exchange results and lower net interest expense accounted for the improved results in 2009.

Exploration and Production

Results of exploration and production continuing operations are presented by
geographic segment below.



                                                     Income (Loss)
                                      Three Months Ended         Six Months Ended
                                           June 30,                  June 30,
       (Millions of dollars)           2009          2008        2009        2008
       Exploration and production
       United States                $      3.9        71.4        (3.4 )      118.5
       Canada                             (6.4 )     236.4        (5.8 )      387.7
       United Kingdom                      3.6        14.4         7.0         46.5
       Malaysia                          127.2       263.4       244.7        468.1
       Other International               (10.0 )      (9.1 )     (73.9 )      (17.1 )

       Total                        $    118.3       576.5       168.6      1,003.7

Second quarter 2009 vs. 2008

United States exploration and production operations reported quarterly earnings of $3.9 million in the second quarter of 2009 compared to earnings of $71.4 million in the 2008 quarter. Earnings were lower in the 2009 period due mostly to weaker oil and natural gas sales prices. Depreciation expense was $15.8 million higher in 2009 due to higher oil and natural gas production volumes and higher per unit depletion rates in 2009. Exploration expenses in the 2009 period decreased $11.0 million from the prior year primarily due to lower seismic acquisition costs.

Operations in Canada lost $6.4 million in the second quarter 2009 compared to a profit of $236.4 million in the 2008 quarter. Canadian earnings decreased in the 2009 quarter mostly due to lower oil sales prices, an after-tax charge of $24.7 million in 2009 associated with an anticipated reduction of the Company's working interest at the Terra Nova field, and no repeat of a $67.9 million after-tax gain on sale of Lloydminster heavy oil properties in the 2008 quarter in Western Canada. Oil production and sales volumes declined in the 2009 period compared to 2008 primarily due to lower oil produced offshore Eastern Canada and at Syncrude and sale of the Lloydminster heavy oil field late in the second quarter of 2008. Natural gas volumes increased in 2009 mostly due to start-up of Tupper area production in December 2008. Production expenses in Canada were favorable in 2009 due primarily to lower energy costs at Syncrude, partially offset by expenses at the Tupper area that was not producing in the 2008 period. Depreciation expenses were higher in the 2009 quarter primarily due to the new natural gas production at Tupper. Exploration expenses were $4.2 million lower in the 2009 period due to less geophysical expense at the Tupper area.

United Kingdom operations earned $3.6 million in the 2009 quarter, down from $14.4 million in the 2008 quarter. The decline was primarily due to lower crude oil and natural gas sales prices and lower natural gas sales volumes in the 2009 quarter compared to 2008.

Operations in Malaysia reported earnings of $127.2 million in the 2009 quarter compared to earnings of $263.4 million during the same period in 2008. The earnings reduction in 2009 in Malaysia was primarily caused by lower crude oil sales prices. The 2009 quarter benefited from higher sales volumes of crude oil and natural gas. Production expense was lower in the 2009 period due to no sales volumes in the current quarter at the West Patricia field. Depreciation expense increased in the 2009 period due to higher oil and natural gas sales volumes compared to the 2008 quarter. Exploration expense was lower in 2009 due to costs for an unsuccessful exploration well in Block K during the 2008 period.

Results of Operations (Contd.)

Exploration and Production (Contd.)

Second quarter 2009 vs. 2008 (Contd.)

Other international operations reported a loss of $10.0 million in the second quarter of 2009 compared to a loss of $9.1 million in the 2008 period. The unfavorable variance was primarily related to higher costs of administration in other foreign jurisdictions in the 2009 period.

On a worldwide basis, the Company's crude oil, condensate and gas liquids prices averaged $53.55 per barrel in the second quarter 2009 compared to $115.35 in the 2008 period. Average crude oil and liquids production was 118,145 barrels per day in the second quarter of 2009 compared to 111,493 barrels per day in the second quarter of 2008, with the increase primarily attributable to ramp-up of the Kikeh field in Malaysia. Crude oil production in the heavy oil area in Canada was lower in 2009 mostly due to sale of the Lloydminster field late in the second quarter of 2008. Canadian offshore crude oil production fell in 2009 due to decline at the Hibernia field and more equipment downtime and a higher royalty rate at the Terra Nova field. Synthetic oil production was lower in 2009 than 2008 due to more downtime at Syncrude. There was no oil production from discontinued operations in the 2009 quarter due to the Company selling its Ecuador operations in March 2009. North American natural gas sales prices averaged $3.25 per thousand cubic feet (MCF) in the most recent quarter compared to $11.70 per MCF in the same quarter of 2008. Natural gas sales volumes averaged 147 million cubic feet per day in the second quarter 2009, up from 55 million cubic feet per day in the 2008 quarter, primarily due to new production volumes at the Tupper area in Canada and the Kikeh field offshore Malaysia, both of which commenced production in December 2008. U.S. natural gas sales volumes increased in the 2009 quarter due to higher volumes at the Front Runner field. Natural gas sales volumes declined in the U.K. in 2009 primarily due to downtime for repairs at the Amethyst field in the North Sea.

Six months 2009 vs. 2008

U.S. E&P operations had a loss of $3.4 million for the six months ended June 30, 2009 compared to income of $118.5 million in the 2008 period. The 2009 period had lower oil and natural gas sales prices, but benefited from higher oil sales volumes. Production expenses were lower in 2009 mostly due to less costs for workovers and other field maintenance. Depreciation expense increased in 2009 due to the higher sales volumes plus higher per-unit depletion rates compared to 2008. Exploration expense in the 2009 period was $8.6 million below 2008 levels due to significantly lower geological and geophysical expenses in the current period, but partially offset by higher dry hole costs in 2009.

Canadian operations lost $5.8 million in the first half of 2009 compared to a profit of $387.7 million a year ago. Lower sales prices for crude oil and natural gas, an after-tax charge of $24.7 million in 2009 for an anticipated reduction of the Company's working interest in the Terra Nova field, and a 2008 after-tax gain of $108.3 million on sales of properties primarily led to the reduction in 2009 earnings. Lower production expense in 2009 was mostly related to lower energy costs at Syncrude. Higher depreciation expense in 2009 was attributable to more natural gas sales volumes after start-up of production at Tupper. Exploration expenses were $16.5 million lower in 2009 primarily due to less seismic costs in the current period.

Income in the U.K. for the six-month period in 2009 was $7.0 million compared to $46.5 million a year ago with the decline in earnings primarily due to lower oil and natural gas sales prices and lower crude oil and natural gas sales volumes. Production and depreciation expenses were down in 2009 compared to 2008 in association with the lower oil and gas sales volumes.

Malaysia operations earned $244.7 million in the first half of 2009 compared to earnings of $468.1 million in the 2008 period. Earnings were down in 2009 primarily due to lower crude oil sales prices. Sales volumes for oil and natural gas were higher in the 2009 period than 2008 due to ramp-up of oil production at Kikeh and start-up of natural gas production at Kikeh in December 2008. Production expense was lower in the 2009 period due to lower sales volumes and cost reductions in the current period at the West Patricia field. Depreciation expense was higher in 2009 and related to the additional Kikeh field production. Exploration expense was $9.1 million lower in 2009 mostly due to costs for 3-D seismic acquisition and processing in Block P, offshore Sabah, in 2008 that did not repeat. Selling and general expense declined in 2009 due to higher levels of costs charged to production and development operations.

Results of Operations (Contd.)

Exploration and Production (Contd.)

Six months 2009 vs. 2008 (Contd.)

Other international operations reported a loss of $73.9 million in the first six months of 2009 compared to a loss of $17.1 million in the 2008 period. The larger loss in the 2009 period was primarily due to higher dry hole costs in Australia and higher geophysical expenses offshore Suriname in 2009. Higher administrative costs in 2009 primarily related to more office costs in the Republic of the Congo.

For the first six months of 2009, the Company's sales price for crude oil, condensate and gas liquids averaged $47.09 per barrel compared to $101.65 per barrel in 2008. Crude oil, condensate and gas liquids production in the first half of 2009 averaged 128,673 barrels per day compared to 112,416 barrels per day a year ago. The increase was mostly attributable to Kikeh field production, offshore Malaysia, but production volumes were lower in the heavy oil producing area of Western Canada following the sale of the Lloydminster field in 2008, the Terra Nova field offshore Eastern Canada, the U.K. due to lower production levels at the Schiehallion field, and the West Patricia field, offshore Sarawak, Malaysia. Discontinued operations crude oil volumes are associated with oil fields in Ecuador that were sold in March 2009. The average sales price for North American natural gas in the first six months of 2009 was $3.89 per MCF, down from $9.83 per MCF realized in 2008. Natural gas sales volumes were up from 62 million cubic feet per day in 2008 to 129 million cubic feet per day in 2009, with the increase due mostly to natural gas production volumes from the Tupper area in British Columbia and the Kikeh field in Malaysia, both of which came onstream in December 2008.

Additional details about results of oil and gas operations are presented in the tables on pages 23 and 24.

Results of Operations (Contd.)



Exploration and Production (Contd.)



Selected operating statistics for the three-month and six-month periods ended
June 30, 2009 and 2008 follow.



                                                       Three Months Ended      Six Months Ended
                                                            June 30,               June 30,
                                                         2009        2008       2009      2008
Net crude oil, condensate and gas liquids produced
- barrels per day                                         118,145   111,493    128,673   112,416
Continuing operations                                     118,145   103,716    126,017   104,587
United States                                              13,529    12,880     13,399    12,496
Canada - light                                                 -         -          -         93
  - heavy                                                   6,923     9,259      7,178     9,583
  - offshore                                               12,441    16,555     13,983    17,636
  - synthetic                                              10,102    11,305     11,774    11,368
United Kingdom                                              3,556     5,335      4,159     6,031
Malaysia                                                   71,594    48,382     75,524    47,380
Discontinued operations                                        -      7,777      2,656     7,829

Net crude oil, condensate and gas liquids sold -
barrels per day                                           112,538   110,366    123,362   118,649
Continuing operations                                     112,538   103,613    121,020   110,660
United States                                              13,529    12,880     13,399    12,496
Canada - light                                                 -         -          -         93
  - heavy                                                   6,923     9,259      7,178     9,583
  - offshore                                               16,291    16,241     14,883    16,697
  - synthetic                                              10,102    11,305     11,774    11,368
United Kingdom                                              2,638     2,618      2,552     5,695
Malaysia                                                   63,055    51,310     71,234    54,728
Discontinued operations                                        -      6,753      2,342     7,989

Net natural gas sold - thousands of cubic feet per
day                                                       147,433    54,739    129,471    61,861
United States                                              48,702    44,806     50,992    50,845
Canada                                                     52,841     2,068     41,340     3,254
United Kingdom                                              3,093     7,865      2,794     7,762
Malaysia                                                   42,797        -      34,345        -

Total net hydrocarbons produced - equivalent
barrels per day (1)                                       142,717   120,616    150,252   122,726
Total net hydrocarbons sold - equivalent barrels
per day (1)                                               137,110   119,489    144,941   128,959

Weighted average sales prices - Crude oil,
condensate and gas liquids - dollars per barrel (2)
United States                                         $     54.94    117.99      46.37    105.25
Canada (3) - light                                             -         -          -      70.37
     - heavy                                                41.48     81.76      31.50     67.19
     - offshore                                             56.01    121.21      49.79    108.44
     - synthetic                                            58.72    129.51      50.71    114.96
United Kingdom                                              57.51    121.77      51.40    103.86
Malaysia (4)                                                52.95    115.45      49.04    101.86

Natural gas - dollars per thousand cubic feet
United States (2)                                     $      3.54     11.83       4.36      9.98
Canada (3)                                                   2.98      8.80       3.31      7.44
United Kingdom (3)                                           4.48     11.46       5.78     10.98
Malaysia                                                     0.23        -        0.23        -

(1) Natural gas converted on an energy equivalent basis of 6:1.

(2) Includes intracompany transfers at market prices.

(3) U.S. dollar equivalent.

(4) Prices are net of payments under the terms of the production sharing contracts for Blocks SK 309 and K.

Results of Operations (Contd.)



OIL AND GAS OPERATING RESULTS - THREE MONTHS ENDED JUNE 30, 2009 AND 2008



                                                                                                    Synthetic
                                        United                   United                               Oil -
(Millions of dollars)                   States       Canada      Kingdom   Malaysia      Other       Canada      Total
Three Months Ended June 30, 2009
Oil and gas sales and other revenues    $  82.9       121.2         15.1      306.2         .2           54.0     579.6
Production expenses                        15.7        26.7          3.6       39.6         -            44.9     130.5
Depreciation, depletion and
amortization                               44.2        47.0          3.2       61.8         .3            5.9     162.4
Accretion of asset retirement
obligations                                 1.7         1.0           .3        1.9         .2            1.0       6.1
Exploration expenses
Dry holes                                   (.6 )        -            -          .1        1.5             -        1.0
Geological and geophysical                   .8          .3           -          .4         .7             -        2.2
Other                                       2.8          .1           .2         -          .7             -        3.8

                                            3.0          .4           .2         .5        2.9             -        7.0
Undeveloped lease amortization              7.0        19.7           -          -         1.3             -       28.0

Total exploration expenses                 10.0        20.1           .2         .5        4.2             -       35.0

Terra Nova working interest
redetermination                              -         35.1           -          -          -              -       35.1
Selling and general expenses                5.1         4.3           .8        (.9 )      5.4             .2      14.9

Results of operations before taxes          6.2       (13.0 )        7.0      203.3       (9.9 )          2.0     195.6
Income tax provisions (benefits)            2.3        (4.9 )        3.4       76.1         .1             .3      77.3

Results of operations (excluding
corporate overhead and interest)        $   3.9        (8.1 )        3.6      127.2      (10.0 )          1.7     118.3


Three Months Ended June 30, 2008*
Oil and gas sales and other revenues    $ 182.5       343.0         37.5      544.1        (.6 )        134.0   1,240.5
Production expenses                        15.8        22.6          3.2       55.6         -            52.9     150.1
Depreciation, depletion and
amortization                               28.4        30.0          3.7       51.4         .2            6.5     120.2
Accretion of asset retirement
obligations                                 1.5         1.1           .6        1.3         .2             .2       4.9
Exploration expenses
Dry holes                                   (.3 )        -            -        11.1         -              -       10.8
Geological and geophysical                 11.9         2.1           -         (.5 )       .1             -       13.6
Other                                       2.8          .1           .3         .1        3.7             -        7.0

                                           14.4         2.2           .3       10.7        3.8             -       31.4
Undeveloped lease amortization              6.6        22.1           -          -          .3             -       29.0

Total exploration expenses                 21.0        24.3           .3       10.7        4.1             -       60.4

Selling and general expenses                4.9         3.2           .8        (.7 )      4.3             .2      12.7

Results of operations before taxes        110.9       261.8         28.9      425.8       (9.4 )         74.2     892.2
Income tax provisions (benefits)           39.5        76.5         14.5      162.4        (.3 )         23.1     315.7

Results of operations (excluding
corporate overhead and interest)        $  71.4       185.3         14.4      263.4       (9.1 )         51.1     576.5

* Reclassified to conform to current presentation.

Results of Operations (Contd.)



OIL AND GAS OPERATING RESULTS - SIX MONTHS ENDED JUNE 30, 2009 AND 2008



                                                                                                    Synthetic
                                        United                   United                               Oil -
(Millions of dollars)                   States       Canada      Kingdom   Malaysia      Other       Canada         Total
Six Months Ended June 30, 2009
Oil and gas sales and other revenues    $ 153.9       201.6         26.8      643.6         .7          108.1      1,134.7
Production expenses                        30.9        48.4          5.5       89.1          -           89.8        263.7
Depreciation, depletion and
amortization                               87.5        81.5          5.3      135.5         .7           12.2        322.7
Accretion of asset retirement
obligations                                 3.4         2.0           .8        3.6         .3            2.0         12.1
Exploration expenses
Dry holes                                  10.8          -            -        13.8       43.9             -          68.5
Geological and geophysical                  1.6         1.3           -          .2       12.9             -          16.0
Other                                       4.4          .2           .2         -         3.1             -           7.9

. . .