After 20 years of doing business in Malaysia, Arkansas-based Murphy Oil is getting out and selling its two subsidiaries in the country in a more than $2 billion deal.
The company headquartered in El Dorado, Arkansas announced the sale of Murphy Sabah Oil Co., Ltd. and Murphy Sarawak Oil Co., Ltd to a subsidiary of PTT Exploration and Production Public Company Limited.
PTEEP will pay Murphy $2.127 billion in an all-cash transaction along with up to a $100 million bonus payment contingent upon certain future exploratory drilling results before October 2020.
Under the terms of the transaction, Murphy will exit the country of Malaysia.
The year-end 2018 proved reserves (1P) net to Murphy were 816 million barrels of oil equivalent (Mmboe) of which 16 percent or 129 Mmboe were attributable to Malaysia. Of the 129 Mmboe of proved reserves, 70 Mmboe are characterized as proved undeveloped. The proved reserves are comprised of 468 billion cubic feet (Bcf) of natural gas and 51 million barrels (Mmbbl) of liquids. Total production net to Murphy in 2018 for the properties to be divested was over 48,000 barrel of oil equivalent per day (Boepd), comprised of 62 percent liquids.
Murphy intends to allocate the proceeds from the transaction to advance its strategic priorities. This includes returning cash to shareholders through share repurchases and strengthening the company’s balance sheet by reducing debt.
The company plans to continue its current oil-weighted strategy in both the Eagle Ford Shale and the Gulf of Mexico, while maintaining its focused exploration plan.
Murphy expects to record a book gain on the sale between $0.9 billion to $1.0 billion, and plans to repatriate essentially all of the cash proceeds to the United States.