Offshore staff
EL DORADO, Arkansas – Murphy Exploration & Production Company - USA has entered into a definitive agreement to form a new joint venture company with Petrobras America Inc. (PAI).
Both companies will contribute all their currentproducing Gulf of Mexico assets to the joint venture, which will be owned 80% by Murphy and 20% by PAI. The transaction excludes exploration blocks from both companies, except for PAI’s blocks that hold deep exploration rights. The transaction is expected to close by the end of the year.
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.
Petrobras said that the joint venture will have an estimated average production of 75,000 boe/d in 4Q 2018, and will comprise the following assets:
- Deepwater fields: Cascade, Chinook, St. Malo, Lucius and Hadrian North, Cottonwood, Hadrian South, Dalmatian, Front Runner, Clipper, Habanero, Kodiak, Medusa and Thunder Hawk.
- Shallow-water fields: South Marsh Island 280, Garden Banks 200/201 and Tahoe.
According to Murphy, the transaction:
- Adds approximately 41,000 net boe/d to its Gulf of Mexico production, of which 97% is oil
- Total Murphy Gulf of Mexico production is anticipated to be approximately 60,000 net boe/d, post-closing
- Provides high-margin production with Gulf Coast prices and expected lease operating expense of about $10 to $12/boe
- Increases Murphy’s corporate oil-weighted production by approximately nine percentage points to 61% post-closing
- Adds approximately 60 MMboe of Proven (1P) reserves and 86 MMboe 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.
10/11/2018
