A Murphy Oil subsidiary company is acquiring deep water oil assets in the Gulf of Mexico.
Murphy Exploration & Production Company – USA has agreed to purchase Gulf of Mexico assets from LLOG Exploration Offshore, L.L.C. and LLOG Bluewater Holdings. Murphy will pay $1.375 billion for the assets with additional payments based on potential revenue thresholds. If the properties yield certain production thresholds between 2019 and 2020, Murphy will pay an additional $200 million and will pay $50 million “following first oil from certain development projects.”
The transaction is expected to close in the second quarter of 2019.
The Gulf of Mexico properties, which will be fully owned by Murphy, are expected to add 32,000 to 35,000 barrel of oil equivalent (Boepd) on an annual basis to Murphy’s Gulf of Mexico production. This will be 60 percent oil. Murphy’s total Gulf of Mexico production for 2019 is expected to be 85,000 Boepd.
“This immediately accretive transaction continues to strengthen our Gulf of Mexico portfolio by adding quality assets at a very attractive price. We expect these newly acquired assets to generate meaningful cash flow over the next several years that will provide us with additional flexibility for future capital allocation,” Roger W. Jenkins, Murphy Oil President and CEO, said.
This is the second major transaction Murphy has made recently. The company sold two of its Malaysian subsidiaries for over $2 billion in March. Murphy sold Murphy Sabah Oil Co. and Murphy Sarawak Oilto PTT Exploration and Production Public Company Limited for $2.127 billion.
“Since welling our refining business and successfully spinning-out our retail gasoline business over five years ago, we have implemented significant strategic changes in revamping Murphy’s portfolio. Specifically, over the last few months alone we have increased our deepwater, oil-weighted, tax-advantaged, Gulf of Mexico assets while we simplified our company by divesting our Malaysian portfolio, again at a very attractive price.”
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