BANGKOK, Thailand–PTTEP has acquiredMurphy Oil’s two subsidiaries in Malaysia, Murphy Sabah Oil and Murphy Sarawak Oil, for $2.127 billion.
The acquisition includes five oil and gas projects in shallow and deepwater offshore Sabah. PTTEP expects the transaction, and the transfer of around 600 Murphy personnel, to be completed by mid-year, with the company’s net sales as a result rising by around 48,000 boe/d.
Projects in production include Sabah K,SK309 and SK311, all of which PTTEP will operate, with combined gross output of roughly 100,000 boe/d.
The Sabah H project is in the development phase and should deliver first gas in the second half of 2020, supplying 270 MMcf/d toPetronas’ FLNG 2 project. SK314A and SK405B project are both undergoing exploration.
In addition to these assets, PTTEP HKO has signed production-sharing contracts with Petronas for exploration and production rights to blocks PM407 and PM415, in shallow waters off Peninsular Malaysia, under Malaysia’s 2018 Bidding Round.
PTTEP HKO will operate in both cases, with a 55% stake in PM407 and 70% in PM415, the remainder held by Petronas. Work commitments comprise 3D seismic surveys and drilling of two wells on each of the concessions.
These developments will make Malaysia one of PTTEP’s main investment areas, alongside Thailand and Myanmar, also lifting it to third in terms of reserves and resources offshore Peninsular Malaysia, Sarawak, and Sabah.
The company’s current Malaysian interests include SK410B off Sarawak, where it is assessing resource potential and preparing to drill an exploration well; Sarawak SK417, under evaluation; and Sarawak SK438 where two exploration wells are planned.
In addition, PTTEP also production in blocks B-17 and B-17-01 in the Malaysia–Thailand Joint Development Area, and jointly invests with PTT in the MLNG Train 9 project through PTT Global LNG Co.
Murphy said its net proven reserves off Malaysia at the end of last year were 129 MMboe, comprising 468 bcf of natural gas and 51 MMbbl of liquids.
The company plans to re-invest the proceeds from the sale into its E&P properties in the Gulf of Mexico, where it recently combined withPetrobras in a new joint venture, and the Eagle Ford Shale.
According toWood Mackenzie, PTTEP’s all-cash offer could be subject to an additional $100 million payment based on certain exploration drilling results up to October 2020.
Alex Siow, research analyst, said: “The deal underscores Murphy’s strategic pivot to the US Gulf of Mexico, US unconventionals andLatin America exploration, and brings to an end Murphy’s 20-year involvement in Malaysia, during which time it discovered and developed the country’s first deepwater oil field, Kikeh.
“Like many Asian national companies, PTTEP suffers from a maturing domestic portfolio. To improve its production outlook the company has been on the hunt for license extensions and counter-cyclical M&A opportunities, with a focus on Southeast Asia…
“Murphy’s Malaysian assets strengthen PTTEP’s near-term production profile, and reinforces its ‘Coming Home’ strategy, following its winning bids on theErawan and Bongkot contract extensions [offshore Thailand] in late-2018. The deal also provides exposure to important growth resource themes – deepwater and LNG – which the company has identified as core.”
Siow added that the $2.1-billion transaction represented the biggest for oil and gas properties in Southeast Asia for more than five years.
Murphy may also seek to divest its Vietnam and Brunei holdings.