<PAGE>
 
                                                                    EXHIBIT 99.1

================================================================================

               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            Washington, D. C. 20549



                                   FORM 11-K



  (Mark One)
         [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
                             EXCHANGE ACT OF 1934

                  For the fiscal year ended DECEMBER 31, 1997

                                      OR

       [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
                             EXCHANGE ACT OF 1934

          For the transition period from ____________ to ____________

                        Commission file number 1-12147



                     THRIFT PLAN FOR SALARIED EMPLOYEES OF
                           DELTIC TIMBER CORPORATION
                           (Full title of the Plan)



                           DELTIC TIMBER CORPORATION
          (Exact name of issuer of securities held pursuant to Plan)


210 East Elm Street, P. O. Box 7200, El Dorado, Arkansas         71731-7200
       (Address of principal executive offices)                  (Zip Code)


================================================================================

                                  Ex. 99.1-0
<PAGE>
 
                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------



The Board of Directors
Deltic Timber Corporation:



We have audited the accompanying statement of net assets available for benefits
of the Thrift Plan for Salaried Employees of Deltic Timber Corporation as of
December 31, 1997, and the related statement of changes in net assets available
for benefits for the year ended December 31, 1997. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above presents fairly, in
all material respects, the net assets available for benefits of the Thrift Plan
for Salaried Employees of Deltic Timber Corporation as of December 31, 1997, and
the changes in net assets available for benefits for the year ended December 31,
1997, in conformity with generally accepted accounting principles.

Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole.  The fund information related to the
statement of net assets available for benefits and the statement of changes in
net assets available for benefits, included in Note 4 -Net Increase in Murphy
Oil Master Trust Net Assets, is presented for purposes of additional analysis
rather than to present the net assets available for benefits and the changes in
net assets available for benefits of each fund.  The fund information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the basic financial statements taken as a whole.


KPMG Peat Marwick LLP

/s/KPMG Peat Marwick LLP

Shreveport, Louisiana
July 10, 1998


                                  Ex. 99.1-1
<PAGE>
 
        THRIFT PLAN FOR SALARIED EMPLOYEES OF DELTIC TIMBER CORPORATION
                Statement of Net Assets Available for Benefits
                               December 31, 1997



Investments at fair value
 Common Stock
   Deltic Timber Corporation                                $       - 
   Murphy Oil Corporation                                           - 
                                                            --------- 
     Total Common Stock                                             - 
                                                                     
 Balanced portfolio - equity securities/bonds                       - 
                                                                     
 U.S. Treasury bills                                                - 
                                                                     
 Short-term money market portfolio                                  - 
                                                                     
Investments at contract value                                        
 Guaranteed investment contracts                                    - 
 Repurchase agreement                                               - 
                                                            --------- 
                                                                     
     Total investments                                               
                                                                     
Accrued interest and dividends                                      - 
Contributions receivable - employee                                 - 
Contributions receivable - employer                                 - 
                                                            ---------
                                                                     
     Total net assets                                       $       -
                                                            ========= 



See accompanying notes to financial statements.


                                  Ex. 99.1-2
<PAGE>
 
        THRIFT PLAN FOR SALARIED EMPLOYEES OF DELTIC TIMBER CORPORATION
           Statement of Changes in Net Assets Available for Benefits
                         Year Ended December 31, 1997

<TABLE> 
<S>                                                                     <C> 
Additions to assets
 Transfer from Murphy Oil Corporation Plan                              $3,844,309
                                                                        ----------
 
 Contributions
   Employee                                                                176,791
   Employer                                                                 89,400
   Rollovers from previous employer plans                                        -
                                                                        ----------
     Total contributions                                                   266,191
                                                                        ----------
 
 Beneficial interest in the net increase of Murphy
   Oil Master Trust net assets*                                            470,429
                                                                        ----------
 
     Total additions to assets                                           4,580,929
Deductions from assets                                                   
 Distributions of benefits                                                 (15,578)
                                                                         
 Transfer of net assets to the Thrift Plan of Deltic 
   Timber Corporation                                                   (4,565,351)
                                                                        ----------

     Net change for the year                                                     -
Net assets available for benefits                                        
 Beginning of year                                                               -
                                                                        ----------

 End of year                                                            $        -
                                                                        ==========
</TABLE> 


* For details, See Note 4 - Net Increase in Murphy Oil Master Trust Net Assets.


See accompanying notes to financial statements.



                                  Ex. 99.1-3
<PAGE>
 
        THRIFT PLAN FOR SALARIED EMPLOYEES OF DELTIC TIMBER CORPORATION
                         Notes to Financial Statements


NOTE 1 - TRANSFER FROM MURPHY OIL CORPORATION PLANS

 On December 31, 1996, Murphy Oil Corporation ("Murphy Oil") distributed the
 Common Stock of wholly-owned Deltic Farm & Timber Co., Inc., which had been
 renamed Deltic Timber Corporation ("Deltic or the Company"), to Murphy Oil's
 stockholders.  At that time, Deltic's hourly employees were participants in the
 Thrift Plan for Hourly Employees of Deltic Farm & Timber Co., Inc. ("the Deltic
 Hourly Plan") and Deltic's salaried employees were participants in the Thrift
 Plan for Employees of Murphy Oil Corporation ("the Murphy Oil Plan").
 Effective January 1, 1997, Murphy transferred sponsorship of the Deltic Hourly
 Plan to the Company.  In conjunction with the transfer of sponsorship, net
 assets equal to the beneficial interests of inactive Deltic hourly employees
 were transferred from the Deltic Hourly Plan to a plan sponsored by Murphy Oil.
 On that same date, Deltic also created the Thrift Plan for Salaried Employees
 of Deltic Timber Corporation ("the Plan") and adopted similar provisions of the
 Murphy Oil Plan, with minor revisions.  At that time, the net assets of the
 Murphy Oil Plan for active, salaried employees of Deltic were transferred to
 the Deltic Salaried Plan.

 On July 31, 1997, the net assets of the Deltic Salaried Plan were transferred
 to the Deltic Hourly Plan.  In conjunction with this transfer, the Deltic
 Hourly Plan was amended, restated, and renamed the Thrift Plan of Deltic Timber
 Corporation ("the Combined Plan"), and the Deltic Salaried Plan was dissolved.
 The net assets for the two Deltic sponsored plans remained in the Murphy Oil
 Master Trust, commingled with the net assets of three other plans sponsored by
 Murphy Oil with First Tennessee Bank National Association ("First Tennessee"),
 Memphis, Tennessee, as the Trustee, until August 1, 1997, at which time net
 assets equal to the beneficial interests of Deltic's active employees in the
 Combined Plan were transferred to Central Bank/First Commerce Corporation as
 new Trustee.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PROVISIONS OF THE PLAN

 BASIS OF PRESENTATION

 The accompanying financial statement of the Plan has been prepared on an
 accrual basis of accounting and presents the changes in net assets available
 for benefits to participants in the Plan until the Plan was dissolved.  The
 Plan made estimates in preparing the accompanying financial statements in
 accordance with generally accepted accounting principles.

 SIGNIFICANT PROVISIONS

 The following is a summary of certain information related to the Plan, which
 was sponsored by Deltic and administered by its Employee Benefits Committee
 (members which were appointed by the Company's Board of Directors) prior to
 dissolution of the Plan.  The Plan document should be referred to for a
 complete description of the Plan's provisions.

 Each salaried employee of the Company who worked 1,000 or more hours in a year
 could have participated in the Plan.

 A participant could have the following Plan accounts to which amounts could
 have been allotted or contributed, with limitations as indicated.
   A. Tax-Deferred  --  participant's pre-tax allotments up to a maximum of 8%
     of base pay not to exceed $9,500 annually in 1997.


                                  Ex. 99.1-4
<PAGE>
 
        THRIFT PLAN FOR SALARIED EMPLOYEES OF DELTIC TIMBER CORPORATION
                         Notes to Financial Statements


   B. Matching  --  Company contributions based on the participant's allotments
        (up to a maximum of 5% of base pay) to the Tax-Deferred account and
        calculated as 50% of such allotments during the first five years of
        participation, 75% during the second five years, and 100% thereafter.
   C. Supplemental  --  participant's allotments up to a maximum of 5% of base
        pay for the year, except that if annualized salary was less than $80,000
        in 1997, a maximum of 10% of base pay.
   D. Deductible  --  participant's allotments to this account have not been
        allowed after December 31, 1986, but established accounts have been
        allowed to remain.
   E. Rollover  --  a lump-sum investment of taxable assets that a participant
        has accumulated from a previous employer's plan.

 A participant vested in Company contributions upon occurrence of any of the
 following circumstances:  completion of 60 months of employment, retirement on
 or after age 65, death, permanent disability, or discontinuance of the Plan.
 Any amounts contributed by the Company that were forfeited by participants in
 accordance with provisions of the Plan were applied to reduce subsequent
 contributions by the Company.

 A vested participant could have withdrawn from a Matching account either
 totally or partially (limited to at least $250, or any higher multiple of 10%
 up to 50% of the Employee and/or Employer account balances). A nonvested
 participant could have only withdrawn his/her Tax-Deferred allotments without
 any adjustment for subsequent changes in value but did not forfeit Company
 contributions to the Matching account unless terminated from employment. After
 a total withdrawal from a Matching account, a participant was not eligible for
 reinstatement of Company contributions until 12 months later; for a partial
 withdrawal, the suspension period was six months, and another such withdrawal
 cannot be made until at least 24 months after the most recent withdrawal.
 Allotments by a participant to a Tax-Deferred account could have continued
 without interruption after a total or partial withdrawal from a Matching
 account. Any taxable income distributed from a Matching account or a Tax-
 Deferred account was subject to a 10% penalty tax under the Tax Reform Act of
 1986.

 A withdrawal from either a Tax-Deferred account or a Rollover account was not
 permissible except upon a finding that a hardship exists pursuant to
 regulations issued by the IRS, upon the attainment of age 59 1/2 or upon
 termination.  After such a withdrawal from a Tax-Deferred account,
 participation in all accounts was suspended for 12 months.  "Hardship" was an
 immediate and heavy financial need in one of the following areas:  (1) large
 medical expenses not covered by insurance for the employee or family, (2)
 purchase of a principal residence (not regular mortgage payments), (3)
 preventing foreclosure or eviction from employee's principal residence, (4)
 tuition and related education fees for the next 12 months of post-secondary
 education for employee or family, or (5) other events as determined by the IRS.

 A withdrawal from a Supplemental account must have been at least the greater of
 10% of the account balance or $250 and could not be made until at least 12
 months after the most recent such withdrawal.  No participation penalty was
 applied to such a withdrawal.



                                  Ex. 99.1-5
<PAGE>
 
        THRIFT PLAN FOR SALARIED EMPLOYEES OF DELTIC TIMBER CORPORATION
                         Notes to Financial Statements


 A withdrawal from a Deductible account must have been at least the greater of
 10% of the account balance or $250 and could not be made until at least 12
 months after the most recent such withdrawal.  No participation penalty was
 applied to such a withdrawal, but unless the participant was 59 1/2 years old,
 was permanently disabled, or had died, the withdrawal was subject to a 10%
 penalty tax as required by federal tax regulations.

 Upon retirement, disability, or death of a participant, the participant or
 his/her spouse, if the designated beneficiary, had the option to receive
 settlement in a lump sum or installment payments not to exceed 20 years or
 actuarial life if less than 20 years.

 OBLIGATION FOR CONTRIBUTIONS TO THE PLAN

 The Company had voluntarily agreed to make contributions to the Plan based on
 each participant's allotments to a Tax-Deferred account subject to a maximum of
 5% of the participant's base pay.

 ADMINISTRATIVE EXPENSES

 Most costs of Plan administration were paid by Murphy Oil and later billed to
 the Company.

NOTE 3 - INVESTMENT FUNDS

 Each Plan participant could have had investments in one or more of five
 separate investment options within the Master Trust.  These options were
 designated as Funds A, B, C, C1, and D and are briefly described in the
 following paragraphs.  Except for certain contribution and transfer
 restrictions on Fund C (See description of Fund C below.), a participant
 determined how each of his/her accounts was divided among the different Funds,
 but any division of a participant's allotments, Company contributions or
 account balance transfers must have been in multiples of 10%.

 Fund A was a fixed income portfolio primarily invested in Guaranteed Investment
 Contracts ("GIC's") so that a portion matured each year over several years.
 Maturing amounts were reinvested in a new contract or contracts at the highest
 bid rate(s) received from insurance companies selected to bid because of having
 the best ratings (indicative of financial strength to meet contractual
 obligations) from well-known rating services.  All cash flows were processed
 through the most recent contract(s) during the six to 12 months following the
 awarding of such contract(s) except that withdrawals could have been prorated
 over several recent contracts.  Each interest rate and principal amount was
 guaranteed by the contracting company.  The average yields of the GIC's were
 7.24% for 1997.  All interest earned under Fund A was commingled, and a
 composite rate was used to determine the amount credited to each participant's
 account.


                                  Ex. 99.1-6
<PAGE>
 
        THRIFT PLAN FOR SALARIED EMPLOYEES OF DELTIC TIMBER CORPORATION
                         Notes to Financial Statements


 Fund B was invested in a diversified portfolio of stocks and other securities.
 Invesco Capital Management Inc., Investment Manager located in Atlanta,
 Georgia, had discretionary authority concerning purchases and sales of
 Investments in Fund B and directed First Tennessee in such transactions.

 Fund C was invested in the Common Stock of Murphy Oil Corporation.  First
 Tennessee acted as Investment Manager of Fund C.  Subsequent to the Spin-off
 (see Note 1), a participant could have directed that all or part of his/her
 Fund C account be either transferred to another Fund or withdrawn but could not
 have directed any allotments, Company contributions or transfers from other
 Funds to Fund C.  A participant withdrawing from Fund C could have elected to
 receive either cash or stock.  If the participant elected to receive stock, the
 value of his/her Fund C withdrawal was converted to equivalent shares of stock
 based on the market price at the effective date of withdrawal, and the
 participant received the whole shares and cash for any fractional shares.

 Fund C1 was invested in the Common Stock of Deltic Timber Corporation and
 resulted from the Spin-off (see Note 1) from the Murphy Stock held by Fund C.
 First Tennessee acted as Investment Manager of Fund C1.  Withdrawals from Fund
 C1 could have been in either cash or stock determined in a similar manner to
 Fund C withdrawals.

 Fund D was invested in a mutual fund that had a balanced portfolio of U.S. and
 international stocks and bonds and could have included futures and options.  At
 least 25% of the portfolio must have been investment-grade debt securities and
 preferred stock.  Fidelity Management & Research Company, Boston,
 Massachusetts, acted as Investment Manager of Fund D.

 The Plan Administrator valued each participant's investment in a Fund by using
 monthly values of the Fund's net assets furnished by the Trustee.  The total
 beneficial interest of the Plan in the net assets of the Master Trust was
 determined from the total value of the investments held by the Plan's
 participants in Funds A, B, C, C1, and D.



                                  Ex. 99.1-7
<PAGE>
 
        THRIFT PLAN FOR SALARIED EMPLOYEES OF DELTIC TIMBER CORPORATION
                         Notes to Financial Statements


NOTE 4 - NET INCREASE IN MURPHY OIL MASTER TRUST NET ASSETS

 The net increase/(decrease) by investment Fund (See Note 3 - Investment Funds.)
 in the net assets of the Murphy Oil Master Trust for the year ended December
 31, 1997, excluding participants' allotments, Company contributions, and
 benefit payments consisted of the following:
<TABLE>
<CAPTION>
 
                                              Fund A       Fund B      Fund C      Fund C1    Fund D       Total
                                           ------------  ----------  -----------  ---------  ---------  -----------
<S>                                        <C>           <C>         <C>          <C>        <C>        <C>
  Investment income
      Dividends                            $     3,027     431,748      263,472      13,642    424,413   1,136,302
      Interest                               5,403,055      51,608          464           -          -   5,455,127
      Net appreciation in market value
        of investments
          Common stock of Murphy Oil                 -           -    1,083,021           -          -   1,083,021
          Common stock of Deltic                     -           -            -     312,011          -     312,011
          Other stock                                -   5,047,686            -           -          -   5,047,686
          Balanced portfolio -
            stocks/bonds                             -           -            -           -    229,750     229,750
                                           -----------   ---------   ----------   ---------  ---------  ----------
              Total investment income        5,406,082   5,531,042    1,346,957     325,653    654,163  13,263,897
  Administrative expenses                            -     (44,462)           -           -          -     (44,462)
  Shares received in spin-off of Deltic              -           -   (1,251,746)  1,251,746          -           -
  Other transfers between Funds             (2,097,693)  2,347,269   (1,140,260)     64,079    826,605           -
                                           -----------   ---------   ----------   ---------  ---------  ----------
              Net increase/(decrease)      $ 3,308,389   7,833,849   (1,045,049)  1,641,478  1,480,768  13,219,435
                                           ===========   =========   ==========   =========  =========  ==========
</TABLE>

 The beneficial interests of the participating plans in the net increase in the
 Murphy Oil Master Trust net assets for the year ended December 31, 1997 were as
 follows:
<TABLE>
<CAPTION>
 
                                Plan Name
   --------------------------------------------------------------------
<S>                                                                        <C>
   Thrift Plan for Employees of Murphy Oil Corporation                     $11,103,065
   Thrift Plan for Employees of Murphy Oil USA, Inc. Represented by
     United Steelworkers of America, AFL-CIO, Local No. 8363                 1,034,242
   Thrift Plan for Employees of Murphy Oil USA, Inc. Represented by
     International Union of Operating Engineers, AFL-CIO, Local No. 305        567,998
   Thrift Plan for Salaried Employees of Deltic Timber Corporation             470,429
   Thrift Plan for Hourly Employees of Deltic Timber Corporation                43,701
                                                                           -----------
        Net increase                                                       $13,219,435
                                                                           ===========
</TABLE>

 The investments and changes in the net assets available for benefits were
 determined by the Trustee and reported to the Plan Administrator based on
 contract values for the GIC's and a repurchase agreement and on market values
 for all other assets.  The carrying values of all financial instruments held by
 the Murphy Oil Master Trust were reasonable estimates of fair value.



                                  Ex. 99.1-8
<PAGE>
 
        THRIFT PLAN FOR SALARIED EMPLOYEES OF DELTIC TIMBER CORPORATION
                         Notes to Financial Statements


NOTE 5 - INCOME TAXES

 The Plan met the necessary requirements of the Tax Reform Act of 1986 as
 documented in Section 401(a) of the Internal Revenue Code, and accordingly, the
 related Trust was exempt from taxation under the provisions of Section 501(a)
 of the Internal Revenue Code.  A favorable determination letter from the
 Internal Revenue Service has not been obtained for the Plan, a request for such
 is to be filed.  Until such time as cash or shares were withdrawn from the Plan
 by a participant or a participant's beneficiary, no income tax was payable by
 the participant/beneficiary on:  contributions made by the Company on the
 participant's behalf, allotments made by the participant pursuant to the
 Economic Recovery Tax Act of 1981, or any amounts added to the participant's
 accounts representing his/her proportional share of the investment income of
 the Trust.

NOTE 6 - RELATED PARTY TRANSACTIONS

 Certain Plan investment Funds consisting of the common stocks of Deltic and
 Murphy Oil were managed by First Tennessee.  First Tennessee was Trustee of the
 Murphy Oil Master Trust as defined by the Plan and, therefore, these
 transactions qualify as party-in-interest transactions. In addition, personnel
 of Murphy Oil, the Company's parent prior to the spin-off, performed the
 required supervision and accounting services for the Murphy Oil Master Trust
 during the period for which the Plan's net assets were commingled with those of
 other plans sponsored by Murphy Oil.

NOTE 7 - PLAN AMENDMENTS DURING THE YEAR

 The Plan was not amended prior to being dissolved.



                                  Ex. 99.1-9
<PAGE>
 
                                   SIGNATURE



Pursuant to the requirements of the Securities Exchange Act of 1934, the
Employee Benefits Committee has duly caused this Annual Report to be signed on
its behalf by the undersigned hereunto duly authorized.


                                       THRIFT PLAN FOR SALARIED EMPLOYEES
                                       OF DELTIC TIMBER CORPORATION



Dated:      July 10, 1998              By:      /s/Clefton D. Vaughan
      --------------------------          -----------------------------------
                                          Clefton D. Vaughan, Vice President
                                          of Finance and Administration and
                                          Chairman of Employee Benefits
                                          Committee, Deltic Timber Corporation


                                  Ex. 99.1-10
<PAGE>
 
                         INDEPENDENT AUDITORS' CONSENT
                         -----------------------------



The Board of Directors
Deltic Timber Corporation:



We consent to incorporation by reference in the Registration Statement (No. 333-
34317) on Form S-8 of Deltic Timber Corporation of our report dated July 10,
1998, relating to the statement of net assets available for benefits of the
Thrift Plan for Salaried Employees of Deltic Timber Corporation as of December
31, 1997, and the related statement of changes in net assets available for
benefits for the year ended December 31, 1997, which report appears in the
December 31, 1997 annual report on Form 11-K of the Thrift Plan for Salaried
Employees of Deltic Timber Corporation.



KPMG Peat Marwick LLP

/s/KPMG Peat Marwick LLP

Shreveport, Louisiana
July 10, 1998



                                  Ex. 99.1-11