Murphy Oil Corporation Announces Strategic Deep Water, Oil-Weighted Gulf of Mexico Acquisition
April 23, 2019
Murphy Oil Corporation (NYSE: MUR) announced today that its wholly owned subsidiary, Murphy Exploration & Production Company – USA (“Murphy”), has entered into a definitive agreement to acquire deep water Gulf of Mexico assets from LLOG Exploration Offshore, L.L.C. and LLOG Bluewater Holdings, L.L.C., (“LLOG”). The accretive, cash flow providing Gulf of Mexico assets currently produce approximately 38,000 barrels of oil equivalent per day net (Boepd) 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) reserves1. The transaction will have an effective date of January 1, 2019 and is expected to close in the second quarter, subject to normal closing adjustments.
Murphy will pay a cash consideration of $1.375 billion. Additional contingent consideration payments are based on the following: up to $200 million in the event that revenue from certain properties exceeds certain contractual thresholds between 2019 and 2022; and $50 million following first oil from certain development projects.
The acquisition will be funded by a combination of cash on hand and availability under the company’s $1.6 billion revolving credit facility. Total outstanding borrowings under the revolving credit facility, including the current balance of $325 million, are expected to be fully repaid immediately following the closing of the previously announced $2.127 billion divestiture of Murphy’s Malaysian assets. The company still intends to execute the previously announced $500 million share repurchase program, expiring on December 31, 2020, of which $300 million is planned in the first tranche, with the remaining $200 million expected in the second tranche. The previously announced $750 million debt repayment has been revised to only include the $325 million that was drawn on the revolving credit facility as the company will no longer plan to repurchase or redeem outstanding senior notes at this time.
TRANSACTION HIGHLIGHTS
Murphy Oil Corporation (NYSE: MUR) announced today that its wholly owned subsidiary, Murphy Exploration & Production Company – USA (“Murphy”), has entered into a definitive agreement to acquire deep water Gulf of Mexico assets from LLOG Exploration Offshore, L.L.C. and LLOG Bluewater Holdings, L.L.C., (“LLOG”). The accretive, cash flow providing Gulf of Mexico assets currently produce approximately 38,000 barrels of oil equivalent per day net (Boepd) 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) reserves1. The transaction will have an effective date of January 1, 2019 and is expected to close in the second quarter, subject to normal closing adjustments.
Murphy will pay a cash consideration of $1.375 billion. Additional contingent consideration payments are based on the following: up to $200 million in the event that revenue from certain properties exceeds certain contractual thresholds between 2019 and 2022; and $50 million following first oil from certain development projects.
The acquisition will be funded by a combination of cash on hand and availability under the company’s $1.6 billion revolving credit facility. Total outstanding borrowings under the revolving credit facility, including the current balance of $325 million, are expected to be fully repaid immediately following the closing of the previously announced $2.127 billion divestiture of Murphy’s Malaysian assets. The company still intends to execute the previously announced $500 million share repurchase program, expiring on December 31, 2020, of which $300 million is planned in the first tranche, with the remaining $200 million expected in the second tranche. The previously announced $750 million debt repayment has been revised to only include the $325 million that was drawn on the revolving credit facility as the company will no longer plan to repurchase or redeem outstanding senior notes at this time.
TRANSACTION HIGHLIGHTS
- The acquired assets will be fully owned by Murphy and not part of MP Gulf of Mexico, LLC (“MP GOM”), the entity which currently owns all of Murphy’s producing Gulf of Mexico assets.Adds approximately 32,000 to 35,000 net Boepd on an annualized basis for full year 2019 to Murphy’s Gulf of Mexico production, comprised of approximately 60 percent oil
- Total Murphy Gulf of Mexico full year annualized 2019 production is anticipated to be approximately 85,000 net Boepd, excluding non-controlling interest
- Increases deep water 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 percent of daily production, an increase from the current 49 percent, excluding non-controlling interest
- Lease operating expense for acquired assets of approximately $10 to $12 per barrel of oil equivalent
- Adds approximately 66 Mmboe of Proven (1P) reserves and 122 Mmboe of Proven and Probable (2P) reserves1, of which 72 percent is oil
Assets include
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