Murphy Oil Corp. Wednesday (July 10) announced that its Malaysian subsidiary has completed the $2.13 billion sale of deep-water oil and gas assets in Southeast Asia. The deal allows the El Dorado independent energy firm to further focus its operations on its growing Gulf of Mexico operations and the Eagle Ford shale play in West Texas, company officials said.
Murphy first announced in late March that it had penned a sale and purchase agreement to divest its two primary Malaysian subsidiaries, Murphy Sabah Oil Company Ltd. and Murphy Sarawak Oil Company Ltd., to a subsidiary of Bangkok, Thailand-based PTT Exploration and Production Public Company Limited.
After closing today, PTTEP will pay Murphy $2.035 billion in an all-cash transaction. Murphy officials said Arkansas’ lone publicly traded oil and gas firm is expected to report a $1 billon gain from its plan to exit Malaysia, which has served as the core of the company’s international drilling and production operations for nearly 20 years.
“We would like to congratulate PTTEP on the purchase of their new asset. As our talented and committed Malaysia team transitions to their new owner, I am confident they will diligently work to ensure continued success in the country,” said Murphy Oil President and CEO Roger Jenkins. “Also, I would like to thank our long-term partners Petronas, Petronas Carigali and Pertamina. They too have diligently worked to ensure our long-term success in the region.”
The deal with PTTEP, the national oil conglomerate for Thailand, also included an arrangement that will allow Murphy to receive an extra $100 million bonus payment contingent upon certain future exploratory drilling results prior to October 2020. The deal has an effective economic valuation date of Jan. 1, 2019.
Along with the Malaysian exit plan, Murphy has said it will continue the company’s oil-weighted strategy in both the Eagle Ford Shale and the Gulf of Mexico, while maintaining its focused exploration plan. To achieve that goal, Murphy said $750 million of the remaining proceeds will remain on the balance sheet earmarked for U.S. oil-weighted opportunities through potential acquisitions and funding of both deep-water projects and U.S. onshore deals.
Murphy also announced today that it has completed $300 million in share repurchases as of the end of the second quarter, which is part of a previously authorized and disclosed $500 million stock buyback program. Murphy purchased 11.4 million shares outstanding, a 6.6% reduction from 173.6 million shares outstanding as of April 30, 2019, at an average price of $26.34 per share. The current share repurchase program expires year-end 2020.
“Murphy remains committed to spending within cash flow while investing in our new Gulf of Mexico assets. We continue to strongly support our shareholders with industry-leading dividend and share buybacks this year. Murphy’s recent transactions further align our high-margin and oil-weighted production, with approximately 90% of oil volumes expected to receive premium realizations to WTI (West Texas Intermediate),” Jenkins said of benchmark U.S. crude prices.