Murphy Oil sells Malaysia portfolio to PTTEP
Murphy Oil has sold its Malaysian subsidiaries Murphy Sabah Oil and Murphy Sarawak Oil to Thailand's national oil company PTTEP for $2.127bn. The all-cash deal is subject to an additional $100mn contingent payment based on certain exploration drilling results up to October 2020.
Year-end 2018 proved reserves (1P) net to Murphy were 816mn boe, of which 16% (129mn boe) were attributable to Malaysia. Of the 129mn boe of proved reserves, 70mn boe are characterised as proved undeveloped. The proved reserves comprise 468bn cf of natural gas and 51mn barrels of liquids. Total production net to Murphy in 2018 for the properties to be divested was over 48,000 boe/d, comprised of 62% liquids.
Commenting on the news, Wood Mackenzie Research Analyst Alex Siow says: ‘The deal underscores Murphy's strategic pivot to the US Gulf of Mexico, US unconventionals and Latin America exploration, and brings to an end Murphy's 20-year involvement in Malaysia, during which time it discovered and developed the country's first deepwater oil field, Kikeh.’
‘Like many Asian national companies, PTTEP suffers from a maturing domestic portfolio. To improve its production outlook the company has been on the hunt for licence extensions and counter-cyclical M&A opportunities, with a focus on Southeast Asia.’
‘The proceeds from the sale will go to Murphy’s unconventional assets in the Eagle Ford, Montney and Duvernay in North America. The company will also initiate a $500mn share buyback programme. Focus will now turn to Murphy’s new cash engine – the Gulf of Mexico, where the company established a joint venture with Petrobras in late-2018.’
Siow concludes: ‘Murphy's Malaysian assets strengthens PTTEP's near-term production profile, and reinforces its “Coming Home” strategy, following its winning bids on the Erawan and Bongkot contract extensions in late-2018. The deal also provides exposure to important growth resource themes – deepwater and LNG – which the company has identified as core.
At $2.127bn, this is the biggest oil and gas deal in Southeast Asia for over five years, and supports our view that 2019 is set to be a big year for M&A activity in the region. Murphy's Vietnam and Brunei positions will now become divestment candidates, but it is unclear whether PTTEP will continue its Southeast Asia spending spree.’
West Patricia, offshore Malaysia
Photo: Murphy Oil