US-based Murphy Oil has agreed to sell its Malaysian assets to PTTEP HK Offshore, a subsidiary of PTT Exploration and Production (PTTEP), for $2.127bn in an all-cash deal.
Under the terms of the agreement, Murphy Oil will divest 100% of its two main Malaysian subsidiaries Murphy Sabah Oil and Murphy Sarawak Oil to the Thailand-based PTTEP.
The US oil and gas company will also be paid a bonus of $100m bonus that will be subject to certain future exploratory drilling results before October 2020.
Through the transaction, PTTEP will acquire stakes across five exploration and production projects that include the Sabah K project, the SK309 & SK311 project, the Sabah H project, the SK405B project and the SK314A project.
The Sabah K project and the SK309 & SK311 project are currently in production phase in which PTTEP will become the operator.
The Sabah H project is under development with a target to draw the first gas in the second half of 2020, while the SK314A and the SK405B projects are in exploration stage.
All the five projects are contained in shallow and deep water off the coasts of Sarawak and Sabah.
PTTEP president and CEO Phongsthorn Thavisin said: “PTTEP will fully cooperate with Murphy Oil Corporation to ensure the smooth transition of operatorship and maintain the best practice of these strategic business.
“About 600 Murphy staff are warmly welcomed to join us and we will carry on our duties in promoting national energy security and delivering long term benefits to Malaysia.”
According to Murphy Oil, the year-end 2018 proved reserves (1P) of its Malaysian assets were 129 million barrels of oil equivalent (Mmboe), which amounts to 16% of the company’s overall proved reserves of 816Mmboe.
The divested assets produced more than 48,000 barrels of oil equivalent per day (Boepd) in 2018 for the US oil and gas company, out of which 62% are liquids.
The company plans to use the proceeds from the sale to implement its strategic priorities like returning cash to shareholders and consolidating its balance sheet by bringing down debt.
Murphy Oil president and CEO Roger Jenkins said: “After 20 years of successful operations in Malaysia, I am pleased to announce this all-cash transaction benefiting our shareholders by fully monetizing our proved and probable reserves.
“The tactical repositioning of Murphy allows us to simplify our business and focus on our core assets in the Western Hemisphere.”
The transaction, which will be subject to receipt of necessary regulatory approvals and other satisfaction of other preceding conditions, is anticipated to be completed by the end of the second quarter of this year.
In another development, PTTEP said that it has bagged exploration and production rights of the PM407 and PM415 blocks contained in shallow waters off Peninsular Malaysia from Petroliam Nasional Berhad (PETRONAS) under Malaysia 2018 Bidding Round.