Energy Voice | Murphy Oil announces sale of Malaysian portfolio for £1.5bn

US oil and gas firm Murphy OIl has announced the £21.5 billion sale of it’s Malaysian portfolio to Thailand’s national oil company PTTEP.

The cash deal, is subject to an additional £76 million contingent payment based on certain exploration drilling results up to October 2020.

Energy research group Wood Mackenzie (WoodMac) claim the deal is part of Murphy Oil’s plan to shift focus back to the Gulf of Mexico.

WoodMac research analyst, Alex Siow said:”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 £1.5bn deal is the biggest in oil and gas in South East Asia for over five years.

WoodMac claim the deal could suggest that 2019 will be a “big year” for mergers and acquisitions (M&A).

Mr Siow said: “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 US$500 million share buyback programme.

“Focus will now turn to Murphy’s new cash engine – the Gulf of Mexico, where the company established a JV with Petrobras in late-2018.

“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.”

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