Murphy Oil Announces Strategic Deep Water Gulf of Mexico Joint Venture with Petrobras
October 10 2018 - 5:05PM
Business Wire
Murphy Oil Corporation (NYSE: MUR) announced today that its
wholly owned subsidiary, Murphy Exploration & Production
Company - USA, has entered into a definitive agreement to form a
new joint venture company with Petrobras America Inc. (“PAI”), a
subsidiary of Petrobras (NYSE: PBR). The joint venture company will
be comprised of Gulf of Mexico producing assets from Murphy and PAI
with Murphy overseeing the operations. The transaction will have an
effective date of October 1, 2018 and is expected to close by
year-end 2018.
Both companies will contribute all their current producing Gulf
of Mexico assets to the joint venture, which will be owned 80
percent by Murphy and 20 percent by PAI. The transaction excludes
exploration blocks from both companies, with the exception of PAI’s
blocks that hold deep exploration rights. Murphy will pay cash
consideration of $900 million to PAI, subject to normal closing
adjustments. Additionally, PAI will earn an additional contingent
consideration up to $150 million if certain price and production
thresholds are exceeded beginning in 2019 through 2025. Also,
Murphy will carry $50 million of PAI costs in the St. Malo Field if
certain enhanced oil recovery projects are undertaken. Upon
closing, Murphy expects to fund the transaction through a
combination of cash-on-hand and the company’s senior credit
facility.
TRANSACTION HIGHLIGHTS
- Adds approximately 41,000 net barrels
of oil equivalent per day to Murphy’s Gulf of Mexico production, of
which 97 percent is oil
- Total Murphy Gulf of Mexico production
is anticipated to be approximately 60,000 net barrels of oil
equivalent per day, post-closing
- Provides high-margin production with
Gulf Coast prices and expected lease operating expense of
approximately $10 to $12 per barrel of oil equivalent
- Increases Murphy’s corporate
oil-weighted production by approximately nine percentage points to
61 percent, post-closing
- Adds approximately 60 million barrels
of oil equivalent of Proven (1P) reserves and 86 million barrels of
oil equivalent of Proven and Probable (2P) reserves, of which 97%
is oil
- Allocating a portion of the incremental
free cash flow to increase oil-weighted Eagle Ford Shale
production
Murphy President and Chief Executive Officer Roger W. Jenkins
stated, “We are very pleased to partner with Petrobras, a global
leader in deep water developments, in our new Gulf of Mexico joint
venture. We believe the combined strengths of Petrobras and Murphy
will yield significant long-term value for both companies. The
addition of high quality, oil-weighted assets, such as the St. Malo
Field, complements our existing Gulf of Mexico portfolio. We expect
the production from this joint venture to generate meaningful
incremental free cash flow that provides us with options for future
capital allocation.”
An investor presentation is available on the company’s website
at http://www.murphyoilcorp.com.
Tudor, Pickering, Holt & Co. and Gibson, Dunn & Crutcher
LLP are serving as advisors to Murphy on the joint venture.
CONFERENCE CALL AND WEBCAST SCHEDULED FOR OCTOBER 11,
2018
Murphy will host a conference call and webcast to discuss the
transaction on October 11, 2018, at 9:00 a.m. (EDT). The call can
be accessed either via the Internet through the Investor Relations
section of Murphy’s website at http://ir.murphyoilcorp.com or via
the telephone by dialing toll free 1-888-886-7786, reservation
number 35624274.
ABOUT MURPHY OIL CORPORATION
Murphy Oil Corporation is a global independent oil and natural
gas exploration and production company. The company’s diverse
resource base includes offshore production in Southeast Asia,
Canada and Gulf of Mexico, as well as North America onshore plays
in the Eagle Ford Shale, Kaybob Duvernay and Montney. Additional
information can be found on the company’s website at
http://www.murphyoilcorp.com.
ABOUT PETROBRAS
Petrobras is an integrated energy company with focus in oil and
gas, recognized as a leader in deep and ultra-deep water
exploration and production, operating mainly in Brazil. Currently,
Petrobras produces around 2.6 million barrels of oil equivalent a
day. The company’s core values are respect for life, people and the
environment; ethics and transparency; market orientation;
excellence and trust; and results. For more information, visit
www.petrobras.com.br/en/.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are generally identified through the
inclusion of words such as “aim”, “anticipate”, “believe”, “drive”,
“estimate”, “expect”, “expressed confidence”, “forecast”, “future”,
“goal”, “guidance”, “intend”, “may”, “objective”, “outlook”,
“plan”, “position”, “potential”, “project”, “seek”, “should”,
“strategy”, “target”, “will” or variations of such words and other
similar expressions. These statements, which express management’s
current views concerning future events or results, are subject to
inherent risks and uncertainties. Factors that could cause one or
more of these future events or results not to occur as implied by
any forward-looking statement include, but are not limited to,
increased volatility or deterioration in the level of crude oil and
natural gas prices, deterioration in the success rate of our
exploration programs or in our ability to maintain production rates
and replace reserves, reduced customer demand for our products due
to environmental, regulatory, technological or other reasons,
adverse foreign exchange movements, political and regulatory
instability in the markets where we do business, natural hazards
impacting our operations, any other deterioration in our business,
markets or prospects, any failure to obtain necessary regulatory
approvals, any inability to service or refinance our outstanding
debt or to access debt markets at acceptable prices, and adverse
developments in the U.S. or global capital markets, credit markets
or economies in general. For further discussion of factors that
could cause one or more of these future events or results not to
occur as implied by any forward-looking statement, see “Risk
Factors” in our most recent Annual Report on Form 10-K filed with
the U.S. Securities and Exchange Commission (SEC) and any
subsequent Quarterly Report on Form 10-Q or Current Report on Form
8-K that we file, available from the SEC’s website and from Murphy
Oil Corporation’s website at http://ir.murphyoilcorp.com. Murphy
Oil Corporation undertakes no duty to publicly update or revise any
forward-looking statements. NOTE: All reserves are based on
internally prepared engineering estimates using prices in effect on
July 11, 2018.
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version on businesswire.com: https://www.businesswire.com/news/home/20181010005981/en/
Murphy Oil CorporationKelly Whitley,
281-675-9107kelly_whitley@murphyoilcorp.comorEmily McElroy,
870-864-6324emily_mcelroy@murphyoilcorp.com
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