Murphy Oil Corp. announced its Murphy Exploration & Production Company – USA unit is acquiring deepwater Gulf of Mexico assets from LLOG Exploration Offshore and LLOG Bluewater Holdings for $1.38 billion in cash, Kallanish Energy reports.
Additional contingent consideration payments are based on the following: up to $200 million in the event revenue from certain properties exceeds contractual thresholds between 2019 and 2022; and $50 million following first oil from certain development projects.
The accretive, cash flow-providing Gulf of Mexico assets currently produce roughly 38,000 barrels of oil-equivalent per day (Boe/d), and are expected to add approximately 66 million barrels of oil-equivalent net (Mmboe) of proven (1P) reserves, and 122 Mmboe of proven and probable (2P) reserves to Murphy’s portfolio.
“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,” stated Roger W. Jenkins, president and CEO.
According to Murphy, the deal:
* Adds roughly 32,000 to 35,000 net Boe/d on an annualized basis for full year 2019 to Murphy’s Gulf of Mexico production, comprised of approximately 60% oil
* Total Murphy Gulf of Mexico full-year annualized 2019 production is anticipated to be roughly 85,000 net Boe/d, excluding non-controlling interest
* Increases deepwater offshore footprint with the addition of 26 Gulf of Mexico blocks containing seven producing fields, four development projects with future start-ups, in the Mississippi Canyon and Green Canyon areas
* Expands operated production throughout the Gulf of Mexico to 66% of daily production, an increase from the current 49%, excluding non-controlling interest.
“The transaction is part of Murphy’s aggressive plan to expand its footprint in the Gulf of Mexico,” said Imran Khan, senior research manager, U.S. Gulf of Mexico Upstream Oil and Gas at analytics/consulting firm Wood Mackenzie, in a release.
“The company has a large war chest after disposing of over $2 billion in Malaysian assets earlier this year. Murphy also acquired a majority of Petrobras’s Gulf of Mexico portfolio last year, on top of starting a robust exploration and appraisal campaign. With this transaction, Murphy becomes the eighth-highest (largest) producer in the Gulf of Mexico. Only a year ago, they were number 20.”
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