KUALA LUMPUR: Murphy Oil Corp is exiting Malaysia after two decades of operations, with the divestment of its Malaysian oil and gas assets in an all-cash transaction worth US$2.127 billion (RM8.62 billion).
The transaction value has yet to include an up to US$100 million bonus payment contingent upon certain future exploratory drilling results prior to October 2020, the group said in a statement yesterday.
Murphy said its subsidiaries — Murphy Sabah Oil Co Ltd and Murphy Sarawak Oil Co Ltd — will be sold to Thailand’s PTT Exploration and Production Public Co Ltd (PTTEP) by the end of the second quarter of this year.
It said its exit from Malaysia simplifies the company and enables it to enhance focus on its western hemisphere assets.
Murphy said it will allocate proceeds from the transaction to advance “strategic priorities”, including returning cash to shareholders and reducing debt.
“Under the terms of the transaction, Murphy will exit the country of Malaysia. Beginning with the first quarter 2019 earnings release, the Malaysian operations will be reported as a ‘discontinued operation’ and classified as ‘held for sale’ for financial reporting purposes.
“After 20 years of successful operations in Malaysia, I am pleased to announce this all-cash transaction benefitting our shareholders by fully monetising our proved and probable reserves. The transaction will provide us with greater financial flexibility and allow us to continue returning cash to our shareholders through share repurchases,” Murphy president and chief executive officer Roger W Jenkins said in a statement.
“I would like to thank our long-term partners in Malaysia, Petronas, Petronas Carigali and Pertamina. Most importantly, I would like to thank our committed Malaysian staff for their hard work and endless dedication to our company and we look forward to their successful transition to PTTEP,” Jenkins added.
According to Murphy, proved reserves net to Murphy at year-end 2018 were 816 million barrels of oil equivalent (mmboe), of which 16% or 129mmboe were attributable to Malaysia. And of the 129mmboe of proved reserves, 70mmboe are characterised as proved undeveloped.