SINGAPORE (Nov 28): Murphy Oil Corporation is in talks to sell its Malaysian oil and gas assets after an unsolicited bid that could fetch between US$2 billion to US$3 billion, people familiar with the matter said, in the latest energy M&A deal in the Southeast Asian nation.
The independent US oil and gas exploration and production company has tapped banks for the potential sale of its majority interests in eight separate offshore production sharing contracts in Malaysia, said the people, who declined to be identified because the matter is confidential.
"Murphy wasn't considering a sale but was approached by a party that put forward a very compelling bid. They are in negotiations," said one of the people.
Murphy, which has been in Malaysia since 1999, could agree on a deal in a couple of weeks, the person said.
Others familiar with the matter suggested Spanish oil major Repsol, whose presence in Malaysia is focused on its upstream business, or other global majors could be potential buyers for Murphy's assets.
The possible transaction comes as M&A activity is heating up in Malaysia's oil and gas sector, where international companies pursuing expansion plans are spotting opportunities.
Repsol and Murphy declined to comment on any potential transaction or talks. There was no response to a query sent by Reuters to Malaysian state-owned Petronas, who partners Murphy in Malaysia.
"This is a good, balanced portfolio and offers a smart way for someone looking to grow quickly in the region. Otherwise, it'll take a decade to start from scratch," said Alex Siow, upstream oil and gas analyst at energy research firm Wood Mackenzie.
"The buyer will be buying into an operatorship position with Murphy's stake, therefore having the know-how and will to be an operator is important," Siow said.
In September, Austrian oil and gas company OMV agreed on a joint venture with Sapura Energy Bhd, paying US$540 million for a 50% stake in the exploration assets of the Malaysian firm.
In August, citing sources, Reuters reported that US company Hess Corp's Southeast Asian offshore natural gas assets had attracted bid interest from the likes of Thailand's PTTEP PCL and OMV. Hess later said it had no plans to sell its Southeast Asian assets.
People familiar with Murphy's business said the company could use the sale proceeds to fund its global expansion plans. Last month, Brazil's state-controlled oil company Petrobras and Murphy announced a joint venture to explore oil and gas fields in the Gulf of Mexico.
Murphy produced nearly 46,700 barrels of oil equivalent a day in the quarter ended Sept 30 in Malaysia, the company said in response to a query from Reuters. In Southeast Asia, it also has production sharing agreements in Brunei and assets in Vietnam.
"The potential exit seems like a strategic decision based on where Murphy sees greater growth potential. These are high quality assets and of a good size for companies looking for a strong footprint in the region," said one banker familiar with Murphy's business, referring to the assets in Malaysia.
In September 2014, Murphy announced the sale of a 30% stake in its Malaysian assets to Indonesian state-oil company Pertamina for US$2 billion as it cut its overseas holdings.
Oil prices, which were hovering around US$91 a barrel at that time, have fallen to near US$52 a barrel. Prices have shed almost a third of their value since early last month.