Murphy Oil (MUR)

Note Q – Commitments

The Company leases land, gasoline stations, and production and other facilities under operating leases. The most significant operating lease is associated with the Kikeh field floating, production, storage and offloading facility in Malaysia, which was initiated in 2007 for an eight-year term prior to start-up of this significant oil field. During the next five years, expected future rental payments under all operating leases are approximately $96,276,000 in 2009, $94,435,000 in 2010, $86,570,000 in 2011, $82,841,000 in 2012 and $82,260,000 in 2013. Rental expense for noncancellable operating leases, including contingent payments when applicable, was $88,890,000 in 2008, $61,439,000 in 2007 and $46,336,000 in 2006.

To assure long-term supply of hydrogen at its Meraux, Louisiana refinery, the Company has contracted to purchase up to 35 million standard cubic feet of hydrogen per day at market prices through 2021. The contract requires the payment of a base facility charge for use of the facility. Future required minimum annual payments for base facility charges for the next five years are $6,625,000 in 2009, $6,890,000 in 2010, $7,166,000 in 2011, $7,452,000 in 2012 and $7,750,000 in 2013. Base facility charges and hydrogen costs incurred in 2008, 2007 and 2006 totaled $45,396,000, $42,512,000 and $23,903,000, respectively. There were no base facility charges or hydrogen costs incurred at the Meraux refinery for the first four months of 2006 while the facility was shut-down for repairs after Hurricane Katrina.

The Company has operating, production handling and transportation agreements providing for processing, production handling and transportation services for hydrocarbon production from certain fields in the Gulf of Mexico and Western Canada. These agreements require minimum monthly or annual payments for processing or transportation charges through 2013. Future required minimum monthly payments for the next five years are $4,654,000 in 2009, $9,036,000 in 2010, $10,512,000 in 2011, $7,770,000 in 2012 and $2,249,000 in 2013. Under certain circumstances, the Company is required to pay additional amounts depending on the actual hydrocarbon quantities processed under the agreement. Costs incurred under these arrangements were $9,276,000 in 2008, $13,476,000 in 2007 and $27,007,000 in 2006.

Additionally, the Company has a Reserved Capacity Service Agreement providing for the availability of needed crude oil storage capacity for certain oil fields through 2020. Under the agreement, the Company must make specified minimum payments monthly. Future required minimum annual payments are approximately $3,500,000 in 2009 through 2013. In addition, the Company is required to pay additional amounts depending on actual crude oil quantities under the agreement. Total payments under the agreement were $3,703,000 in 2008, $3,992,000 in 2007 and $3,666,000 in 2006.

In 2006, the Company committed to fund an educational assistance program known as the “El Dorado Promise.” Under this commitment, the Company will pay $5,000,000 per year from 2007 to 2016 to cover a specified amount of college expenses for eligible graduates of El Dorado High School in Arkansas. The first three payments have been made through January 2009. Based on SFAS 116, Accounting for Contributions Received and Contributions Made, the Company recorded a discounted liability of $38,700,000 in 2006 for this unconditional commitment. The liability was discounted at the Company’s 10-year borrowing rate and the discounted liability will increase for accretion monthly with a corresponding charge to Selling and General Expense in the Consolidated Statement of Income. Total accretion cost included in Selling and General Expense in 2008 and 2007 was $1,931,000 and $2,112,000, respectively.

Commitments for capital expenditures were approximately $2,129,136,000 at December 31, 2008, including $172,900,000 for costs to develop deepwater Gulf of Mexico fields, $1,015,755,000 for field development and future work commitments in Malaysia, and $322,528,000 for field development and a work commitment in the Republic of the Congo.

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The Company has entered into contracts to hire various drilling rigs and associated equipment for periods beyond December 31, 2008. These rigs are primarily utilized for deepwater drilling operations in the Gulf of Mexico, Malaysia, Canada, Australia and the Republic of the Congo. Future commitments under these contracts, all of which expire by 2012, total approximately $865,000,000. A significant portion of these costs are expected to be borne by other working interest owners as partners of the Company when the wells are drilled. These drilling costs are generally expected to be accounted for as capital expenditures as incurred during the contract periods.

Note P – Commitments

The Company leases land, gasoline stations, and production and other facilities under operating leases. The most significant operating lease is associated with the Kikeh field floating, production, storage and offloading facility in Malaysia, which was initiated in 2007 for an eight-year term prior to start-up of this significant oil field. During the next five years, expected future rental payments under all operating leases are approximately $96,276,000 in 2009, $94,435,000 in 2010, $86,570,000 in 2011, $82,841,000 in 2012 and $82,260,000 in 2013. Rental expense for noncancellable operating leases, including contingent payments when applicable, was $88,890,000 in 2008, $61,439,000 in 2007 and $46,336,000 in 2006.

To assure long-term supply of hydrogen at its Meraux, Louisiana refinery, the Company has contracted to purchase up to 35 million standard cubic feet of hydrogen per day at market prices through 2021. The contract requires the payment of a base facility charge for use of the facility. Future required minimum annual payments for base facility charges for the next five years are $6,625,000 in 2009, $6,890,000 in 2010, $7,166,000 in 2011, $7,452,000 in 2012 and $7,750,000 in 2013. Base facility charges and hydrogen costs incurred in 2008, 2007 and 2006 totaled $45,396,000, $42,512,000 and $23,903,000, respectively. There were no base facility charges or hydrogen costs incurred at the Meraux refinery for the first four months of 2006 while the facility was shut-down for repairs after Hurricane Katrina.

The Company has operating, production handling and transportation agreements providing for processing, production handling and transportation services for hydrocarbon production from certain fields in the Gulf of Mexico and Western Canada. These agreements require minimum monthly or annual payments for processing or transportation charges through 2013. Future required minimum monthly payments for

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the next five years are $4,654,000 in 2009, $9,036,000 in 2010, $10,512,000 in 2011, $7,770,000 in 2012 and $2,249,000 in 2013. Under certain circumstances, the Company is required to pay additional amounts depending on the actual hydrocarbon quantities processed under the agreement. Costs incurred under these arrangements were $9,276,000 in 2008, $13,476,000 in 2007 and $27,007,000 in 2006.

Additionally, the Company has a Reserved Capacity Service Agreement providing for the availability of needed crude oil storage capacity for certain oil fields through 2020. Under the agreement, the Company must make specified minimum payments monthly. Future required minimum annual payments are approximately $3,500,000 in 2009 through 2013. In addition, the Company is required to pay additional amounts depending on actual crude oil quantities under the agreement. Total payments under the agreement were $3,703,000 in 2008, $3,992,000 in 2007 and $3,666,000 in 2006.

In 2006, the Company committed to fund an educational assistance program known as the “El Dorado Promise.” Under this commitment, the Company will pay $5,000,000 per year from 2007 to 2016 to cover a specified amount of college expenses for eligible graduates of El Dorado High School in Arkansas. The first three payments have been made through January 2009. Based on SFAS 116, Accounting for Contributions Received and Contributions Made, the Company recorded a discounted liability of $38,700,000 in 2006 for this unconditional commitment. The liability was discounted at the Company’s 10-year borrowing rate and the discounted liability will increase for accretion monthly with a corresponding charge to Selling and General Expense in the Consolidated Statement of Income. Total accretion cost included in Selling and General Expense in 2008 and 2007 was $1,931,000 and $2,112,000, respectively.

Commitments for capital expenditures were approximately $2,129,136,000 at December 31, 2008, including $172,900,000 for costs to develop deepwater Gulf of Mexico fields, $1,015,755,000 for field development and future work commitments in Malaysia, and $322,528,000 for field development and a work commitment in the Republic of the Congo.

The Company has entered into contracts to hire various drilling rigs and associated equipment for periods beyond December 31, 2008. These rigs are primarily utilized for deepwater drilling operations in the Gulf of Mexico, Malaysia, Canada, Australia and the Republic of the Congo. Future commitments under these contracts, all of which expire by 2012, total approximately $865,000,000. A significant portion of these costs are expected to be borne by other working interest owners as partners of the Company when the wells are drilled. These drilling costs are generally expected to be accounted for as capital expenditures as incurred during the contract periods.

Note R – Commitments

The Company leases land, gasoline stations, and production and other facilities under operating leases. The most significant operating lease is associated with the Kikeh field floating, production, storage and offloading facility in Malaysia, which was initiated in 2007 for an eight-year term prior to start-up of this significant oil field. During the next five years, expected future rental payments under all operating leases are approximately $93,322,000 in 2008, $94,673,000 in 2009, $92,818,000 in 2010, $87,363,000 in 2011, and $86,462,000 in 2012. Rental expense for noncancellable operating leases, including contingent payments when applicable, was $61,439,000 in 2007, $46,336,000 in 2006 and $33,379,000 in 2005.

To assure long-term supply of hydrogen at its Meraux, Louisiana refinery, the Company has contracted to purchase up to 35 million standard cubic feet of hydrogen per day at market prices through 2021. The contract requires the payment of a base facility charge for use of the facility. Future required minimum annual payments for base facility charges for the next five years are $6,824,000 in 2008, $7,097,000 in 2009, $7,380,000 in 2010, $7,676,000 in 2011, and $7,983,000 in 2012. Base facility charges and hydrogen costs incurred in 2007, 2006 and 2005 totaled $42,512,000, $23,903,000 and $21,595,000, respectively. As a result of the refinery being shut down for several months following Hurricane Katrina, the Company notified the hydrogen supplier of a force majeure event. The hydrogen supply agreement permits the base facility charge to be suspended for the period under force majeure and the contract supply period to be extended for the same period, but in no event shall the extension of the supply period exceed 1,375 days. The Company completed repairs to its refinery and began purchasing hydrogen under this agreement within the period permitted in the contract. There were no base facility charges or hydrogen costs incurred for the last four months of 2005 and the first four months of 2006.

The Company has Operating and Production Handling Agreements providing for processing and production handling services for hydrocarbon production from certain fields in the Gulf of Mexico. These agreements require minimum annual payments for processing charges through 2012. Future required minimum payments for the next five years are $10,968,000 in 2008, $14,360,000 in 2009, $1,128,000 in 2010 and 2011, and $188,000 in 2012. In addition, the Company is required to pay additional amounts depending on the actual hydrocarbon quantities processed under the agreement. Processing and handling costs incurred were $13,476,000 in 2007, $27,007,000 in 2006 and $24,297,000 in 2005.

Additionally, the Company has a Reserved Capacity Service Agreement providing for the availability of needed crude oil storage capacity for certain oil fields through 2020. Under the agreement, the Company must make specified minimum payments monthly. Future required minimum annual payments are approximately $3,000,000 in 2008 through 2013. In addition, the Company is required to pay additional amounts depending on actual crude oil quantities under the agreement. Total payments under the agreement were $3,992,000 in 2007, $3,666,000 in 2006 and $2,521,000 in 2005.

In 2006, the Company committed to fund an educational assistance program known as the “El Dorado Promise.” Under this commitment, the Company will pay $5,000,000 per year from 2007 to 2016 to cover a specified amount of college tuition for eligible graduates of El Dorado High

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School in Arkansas. The first payment was made in January 2007. Based on SFAS 116, Accounting for Contributions Received and

Contributions Made, the Company recorded a discounted liability of $38,700,000 in 2006 for this unconditional commitment. The liability was discounted at the Company’s 10-year borrowing rate and the discounted liability will increase for accretion monthly with a corresponding charge to Selling and General Expense in the Consolidated Statement of Income. Total accretion cost included in Selling and General Expense in 2007 was $2,112,000.

Commitments for capital expenditures were approximately $2,129,000,000 at December 31, 2007, including $84,000,000 for lease acquisitions in a recent Gulf of Mexico sale, $71,400,000 for costs to develop deepwater Gulf of Mexico fields, $850,300,000 for field development and future work commitments in Malaysia, $561,200,000 for field development and a work commitment in the Republic of Congo, and $157,100,000 for purchases of land underlying certain U.S. retail gasoline stations. A partial sale of the Company’s working interest in the Republic of Congo was pending government approval at December 31, 2007. Once approved, the Company’s commitment for field development will be reduced by approximately $178,000,000.

The Company has entered into contracts to hire various drilling rigs and associated equipment for periods beyond December 31, 2007. These rigs are primarily utilized for deepwater drilling operations in the Gulf of Mexico, Malaysia and the Republic of Congo. Future commitments under these contracts, all of which expire by 2012, total approximately $1,163,000,000. A significant portion of these costs are expected to be borne by other working interest owners as partners of the Company when the wells are drilled. These drilling costs are generally expected to be accounted for as capital expenditures as incurred during the contract periods.

Note R – Commitments

SIZE="2">The Company leases land, gasoline stations, and production and other facilities under operating leases. The most significant operating lease is associated with the Kikeh field floating, production, storage and offloading facility in
Malaysia, which was initiated in 2007 for an eight-year term prior to start-up of this significant oil field. During the next five years, expected future rental payments under all operating leases are approximately $93,322,000 in 2008, $94,673,000
in 2009, $92,818,000 in 2010, $87,363,000 in 2011, and $86,462,000 in 2012. Rental expense for noncancellable operating leases, including contingent payments when applicable, was $61,439,000 in 2007, $46,336,000 in 2006 and $33,379,000 in 2005.

To assure long-term supply of hydrogen at its Meraux, Louisiana refinery, the Company has contracted to purchase up to 35 million standard cubic feet
of hydrogen per day at market prices through 2021. The contract requires the payment of a base facility charge for use of the facility. Future required minimum annual payments for base facility charges for the next five years are $6,824,000 in 2008,
$7,097,000 in 2009, $7,380,000 in 2010, $7,676,000 in 2011, and $7,983,000 in 2012. Base facility charges and hydrogen costs incurred in 2007, 2006 and 2005 totaled $42,512,000, $23,903,000 and $21,595,000, respectively. As a result of the refinery
being shut down for several months following Hurricane Katrina, the Company notified the hydrogen supplier of a force majeure event. The hydrogen supply agreement permits the base facility charge to be suspended for the period under force majeure
and the contract supply period to be extended for the same period, but in no event shall the extension of the supply period exceed 1,375 days. The Company completed repairs to its refinery and began purchasing hydrogen under this agreement within
the period permitted in the contract. There were no base facility charges or hydrogen costs incurred for the last four months of 2005 and the first four months of 2006.

FACE="Times New Roman" SIZE="2">The Company has Operating and Production Handling Agreements providing for processing and production handling services for hydrocarbon production from certain fields in the Gulf of Mexico. These agreements require
minimum annual payments for processing charges through 2012. Future required minimum payments for the next five years are $10,968,000 in 2008, $14,360,000 in 2009, $1,128,000 in 2010 and 2011, and $188,000 in 2012. In addition, the Company is
required to pay additional amounts depending on the actual hydrocarbon quantities processed under the agreement. Processing and handling costs incurred were $13,476,000 in 2007, $27,007,000 in 2006 and $24,297,000 in 2005.

Note M – Commitments

In 2007, the Company entered into contracts for drilling rigs and associated equipment for periods beyond September 30, 2007. The rigs are to be utilized for drilling operations in Malaysia, the United States and the Republic of Congo. The commitments, which expire in 2010 through 2012, total approximately $1,021 million. A portion of these costs will be borne by other working interest owners when the wells are drilled. These drilling costs are expected to be accounted for as capital expenditures as incurred during the contract periods.

The Company leases land, gasoline stations and other facilities under operating leases. During 2007, the Company entered into an eight-year operating lease for certain equipment used at the Kikeh field offshore Sabah, Malaysia. The Company’s annual rental costs over the term of this lease are approximately $65.3 million.

Note M – Commitments

In the first six months of 2007, the Company entered into contracts for drilling rigs and associated equipment for periods beyond June 30, 2007. The rigs are to be utilized for drilling operations in Malaysia and the United States. The commitments, which expire in 2010 through 2012, total approximately $959 million. A portion of these costs will be borne by other working interest owners when the wells are drilled. These drilling costs are expected to be accounted for as capital expenditures as incurred during the contract periods.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

Note L – Commitments

In the first quarter 2007, the Company entered into a contract for a drilling rig and associated equipment for periods beyond March 31, 2007. The rig is to be utilized for drilling operations in Malaysia. The commitment, which expires in 2010, totals $115.0 million. A portion of these costs will be borne by other working interest owners when the wells are drilled. These drilling costs are expected to be accounted for as capital expenditures as incurred during the contract periods.

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Note P – Commitments

The Company leases land, gasoline stations and other facilities under operating leases. During the next five years, expected future rental payments under operating leases are approximately $46,634,000 in 2007; $45,223,000 in 2008; $43,441,000 in 2009; $42,181,000 in 2010; and $36,943,000 in 2011. Rental expense for noncancellable operating leases, including contingent payments when applicable, was $46,336,000 in 2006, $33,379,000 in 2005 and $27,943,000 in 2004.

To assure long-term supply of hydrogen at its Meraux, Louisiana refinery, the Company has contracted to purchase up to 35 million standard cubic feet of hydrogen per day at market prices through 2019. The contract requires the payment of a base facility charge for use of the facility. Future required minimum annual payments for base facility charges for the next five years are $6,523,000 in 2007; $6,784,000 in 2008; $7,056,000 in 2009; $7,338,000 in 2010; and $7,631,000 in 2011. Base facility charges and hydrogen costs incurred in 2006, 2005 and 2004 totaled $23,903,000, $21,595,000 and $27,141,000, respectively. As a result of the refinery being shut down for several months following Hurricane Katrina, the Company notified the hydrogen supplier of a force majeure event. The hydrogen supply agreement permits the base facility charge to be suspended for the period under force majeure and the contract supply period to be extended for the same period, but in no event shall the extension of the supply period exceed 1,375 days. The Company completed repairs to its refinery and began purchasing hydrogen under this agreement within the period permitted in the contract. There were no base facility charges or hydrogen costs incurred for the last four months of 2005 and the first four months of 2006.

The Company has Operating and Production Handling Agreements providing for processing and production handling services for hydrocarbon production from certain fields in the Gulf of Mexico. These agreements require minimum annual payments for processing charges through 2013. Future required minimum payments for the next five years are $12,596,000 in 2007; $11,078,000 in 2008; $32,116,000 in 2009; and $18,844,000 in 2010 and 2011. In addition, the Company is required to pay additional amounts depending on the actual hydrocarbon quantities processed under the agreement. Processing and handling costs incurred were $27,007,000 in 2006, $24,297,000 in 2005 and $23,430,000 in 2004.

Additionally, the Company has a Reserved Capacity Service Agreement providing for the availability of needed crude oil storage capacity for certain oil fields through 2020. Under the agreement, the Company must make specified minimum payments monthly. Future required minimum annual payments are approximately $3,000,000 in 2007 through 2012. In addition, the Company is required to pay additional amounts depending on actual crude oil quantities under the agreement. Total payments under the agreement were $3,666,000 in 2006, $2,521,000 in 2005 and $2,390,000 in 2004.

In 2006, the Company committed to fund an educational assistance program known as the “El Dorado Promise.” Under this commitment, the Company will pay $5,000,000 per year from 2007 to 2016 to cover a specified amount of college tuition for eligible graduates of El Dorado High School in Arkansas. The first payment was made in January 2007. Based

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on SFAS 116, Accounting for Contributions Received and Contributions Made, the Company recorded a discounted liability of $38,700,000 in 2006 for this unconditional commitment. The liability was discounted at the Company’s 10-year borrowing rate and the discounted liability will increase for accretion monthly with a corresponding charge to Selling and General Expense in the Consolidated Statement of Income.

Commitments for capital expenditures were approximately $922,600,000 at December 31, 2006, including $105,900,000 for costs to develop deepwater Gulf of Mexico fields, $555,200,000 for field development and future work commitments in Malaysia, $69,500,000 for exploration drilling and field development in the Republic of Congo and $18,100,000 for future work commitments on the Scotian Shelf offshore eastern Canada.

The Company has entered into contracts to hire various drilling rigs and associated equipment for periods beyond December 31, 2006. These rigs are primarily utilized for deepwater drilling operations in the Gulf of Mexico and Malaysia. Future commitments under these contracts, all of which expire by 2008, total $294,800,000. A significant portion of these costs are expected to be borne by other working interest owners as partners of the Company when the wells are drilled. These drilling costs are generally expected to be accounted for as capital expenditures as incurred during the contract periods.

Note L – Commitments

The Company has entered into contracts to hire various drilling rigs and associated equipment for periods beyond March 31, 2006. These rigs are primarily utilized for deepwater drilling operations in the Gulf of Mexico and Malaysia. These commitments, all of which expire by 2008, total $423 million. A portion of these costs will be borne by other working interest owners when the wells are drilled. These drilling costs are expected to be accounted for as capital expenditures as incurred during the contract periods.

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Note P – Commitments

The Company leases land, gasoline stations and other facilities under operating leases. During the next five years, expected future rental payments under operating leases are approximately $19,707,000 in 2006; $18,417,000 in 2007; $18,235,000 in 2008; $17,071,000 in 2009; and $15,981,000 in 2010. Rental expense for noncancellable operating leases, including contingent payments when applicable, was $33,379,000 in 2005, $27,943,000 in 2004, and $32,859,000 in 2003.

To assure long-term supply of hydrogen at its Meraux, Louisiana refinery, the Company has contracted to purchase up to 35 million standard cubic feet of hydrogen per day at market prices through 2019. The contract requires the payment of a base facility charge for use of the facility. Future required minimum annual payments for base facility charges are $5,471,000 in 2006; $6,828,000 in 2007; $7,101,000 in 2008; $7,385,000 in 2009; and $7,680,000 in 2010. Base facility charges and hydrogen costs incurred in the three-year period ended December 31, 2005 totaled $21,595,000, $27,141,000, and $1,128,000, respectively. As a result of the refinery being shut down for several months following Hurricane Katrina, the Company has notified the hydrogen supplier of a force majeure event. The hydrogen supply agreement permits the base facility charge to be suspended for the period under force majeure and the contract supply period to be extended for the same period, but in no event shall the extension of the supply period exceed 1,375 days. The Company currently expects to complete repairs to its refinery and begin purchasing hydrogen under this agreement within the period permitted in the contract. There were no base facility charges or hydrogen costs incurred for the last four months of 2005.

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Index to Financial Statements

The Company has an Operating and Production Handling Agreement providing for processing and production handling services for hydrocarbon production from certain fields in the Gulf of Mexico. This agreement requires minimum annual payments for processing charges for the periods from 2006 through 2009. Under the agreement, the Company must make specified minimum payments quarterly. Future required minimum payments are $15,340,000 in 2006; $12,596,000 in 2007; $9,508,000 in 2008; and $13,272,000 in 2009. In addition, the Company is required to pay additional amounts depending on the actual hydrocarbon quantities processed under the agreement. Processing and handling costs incurred in 2005 and 2004 were $24,297,000 and $23,430,000, respectively.

Additionally, the Company has a Reserved Capacity Service Agreement providing for the availability of needed crude oil storage capacity for certain oil fields through 2020. Under the agreement, the Company must make specified minimum payments monthly. Future required minimum annual payments are $2,006,000 in 2006 through 2010. In addition, the Company is required to pay additional amounts depending on actual crude oil quantities under the agreement. Total payments under the agreement were $2,521,000 in 2005, $2,390,000 in 2004 and $1,965,000 in 2003.

Commitments for capital expenditures were approximately $932,000,000 at December 31, 2005, including $57,000,000 for costs to develop deepwater Gulf of Mexico fields, $585,000,000 for field development and future work commitments in Malaysia, $69,000,000 for exploration drilling in the Republic of Congo and $73,000,000 for future work commitments on the Scotian Shelf offshore eastern Canada.

Note P – Commitments

The Company leases land, gasoline stations and other facilities under operating leases. During the next five years, expected future rental payments under operating leases are approximately $19,707,000 in 2006; $18,417,000 in 2007; $18,235,000 in 2008; $17,071,000 in 2009; and $15,981,000 in 2010. Rental expense for noncancellable operating leases, including contingent payments when applicable, was $33,379,000 in 2005, $27,943,000 in 2004, and $32,859,000 in 2003.

To assure long-term supply of hydrogen at its Meraux, Louisiana refinery, the Company has contracted to purchase up to 35 million standard cubic feet of hydrogen per day at market prices through 2019. The contract requires the payment of a base facility charge for use of the facility. Future required minimum annual payments for base facility charges are $5,471,000 in 2006; $6,828,000 in 2007; $7,101,000 in 2008; $7,385,000 in 2009; and $7,680,000 in 2010. Base facility charges and hydrogen costs incurred in the three-year period ended December 31, 2005 totaled $21,595,000, $27,141,000, and $1,128,000, respectively. As a result of the refinery being shut down for several months following Hurricane Katrina, the Company has notified the hydrogen supplier of a force majeure event. The hydrogen supply agreement permits the base facility charge to be suspended for the period under force majeure and the contract supply period to be extended for the same period, but in no event shall the extension of the supply period exceed 1,375 days. The Company currently expects to complete repairs to its refinery and begin purchasing hydrogen under this agreement within the period permitted in the contract. There were no base facility charges or hydrogen costs incurred for the last four months of 2005.

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Index to Financial Statements

The Company has an Operating and Production Handling Agreement providing for processing and production handling services for hydrocarbon production from certain fields in the Gulf of Mexico. This agreement requires minimum annual payments for processing charges for the periods from 2006 through 2009. Under the agreement, the Company must make specified minimum payments quarterly. Future required minimum payments are $15,340,000 in 2006; $12,596,000 in 2007; $9,508,000 in 2008; and $13,272,000 in 2009. In addition, the Company is required to pay additional amounts depending on the actual hydrocarbon quantities processed under the agreement. Processing and handling costs incurred in 2005 and 2004 were $24,297,000 and $23,430,000, respectively.

Additionally, the Company has a Reserved Capacity Service Agreement providing for the availability of needed crude oil storage capacity for certain oil fields through 2020. Under the agreement, the Company must make specified minimum payments monthly. Future required minimum annual payments are $2,006,000 in 2006 through 2010. In addition, the Company is required to pay additional amounts depending on actual crude oil quantities under the agreement. Total payments under the agreement were $2,521,000 in 2005, $2,390,000 in 2004 and $1,965,000 in 2003.

Commitments for capital expenditures were approximately $932,000,000 at December 31, 2005, including $57,000,000 for costs to develop deepwater Gulf of Mexico fields, $585,000,000 for field development and future work commitments in Malaysia, $69,000,000 for exploration drilling in the Republic of Congo and $73,000,000 for future work commitments on the Scotian Shelf offshore eastern Canada.

Note K – Commitments

To assure long-term supply of hydrogen at its Meraux, Louisiana refinery, the Company had contracted to purchase up to 35 million standard cubic feet of hydrogen per day at market prices through 2019. The contract requires the payment of a base facility charge for use of the facility. As a result of the refinery being shut down for several months following Hurricane Katrina, the Company has notified the hydrogen supplier of a force majeure event. The hydrogen supply agreement permits the base facility charge to be suspended for the period under force majeure and the contract supply period to be extended for the same period, but in no event shall the extension of the supply period exceed 1,375 days. The Company currently expects to complete repairs to its refinery and begin purchasing hydrogen under this agreement within the period permitted in the contract.

Note O – Commitments

The Company leases land, gasoline stations and other facilities under operating leases. During the next five years, expected future rental payments under operating leases are approximately $19,967,000 in 2005; $17,615,000 in 2006; $16,916,000 in 2007; $16,000,000 in 2008; and $13,193,000 in 2009. Rental expense for noncancellable operating leases, including contingent payments when applicable, was $27,943,000 in 2004, $32,859,000 in 2003 and $32,087,000 in 2002. To assure long-term supply of hydrogen at its Meraux, Louisiana refinery, the Company has contracted to purchase up to 35 million standard cubic feet of hydrogen per day at market prices through 2019. The contract requires the payment of a base facility charge for use of the facility. Future required minimum annual payments for base facility charges are $6,312,000 in 2005, $6,565,000 in 2006; $6,828,000 in 2007; $7,102,000 in 2008; $7,385,000 in 2009; and $92,207,000 in later years. Base facility charges and hydrogen costs incurred in 2004 and 2003 totaled $27,141,000 and $1,128,000, respectively. The Company has an Operating and Production Handling Agreement providing for processing and production handling services for hydrocarbon production from certain fields in the Gulf of Mexico. This agreement requires minimum annual payments for processing charges for the periods from 2005 through 2009. Under the agreement, the Company must make specified minimum payments quarterly. Future required minimum payments are $19,300,000 in 2005; $15,340,000 in 2006; $12,596,000 in 2007; $9,508,000 in 2008; and $13,272,000 in 2009. In addition, the Company is required to pay additional amounts depending on the actual hydrocarbon quantities processed under the agreement. Processing and handling costs incurred in 2004 were $23,430,000. Additionally, the Company has a Reserved Capacity Service Agreement providing for the availability of needed crude oil storage capacity for certain oil fields through 2020. Under the agreement, the Company must make specified minimum payments monthly. Future required minimum annual payments are $1,866,000 in 2005 through 2009 and $13,433,000 in later years. In addition, the Company is required to pay additional amounts depending on actual crude oil quantities under the agreement. Total payments under the agreement were $2,390,000 in 2004, $1,965,000 in 2003, and $1,435,000 in 2002.

Commitments for capital expenditures were approximately $727,400,000 at December 31, 2004, including $28,300,000 for costs to develop deepwater Gulf of Mexico fields, $63,200,000 for continued expansion of synthetic oil operations in Canada, $394,000,000 for field development and future work commitments in Malaysia, and $37,000,000 for exploration drilling in Congo.

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