Murphy Oil sells Malaysia assets for $2.13 billion to focus on U.S. shale

Murphy Oil Corp is selling two of its Malaysian assets to a Thai energy company for $2.13 billion in cash, the U.S. based independent oil and gas producer said as it exits Malaysia after two decades to focus on U.S. shale oilfields.

The buyer, PTT Exploration and Production Public Co Ltd, will also pay Murphy up to $100 million in bonus if certain exploratory projects show results before October 2020, the company said.

The deal follows moves by other U.S. oil majors to focus their investment and effort in high-yielding shale fields at home after U.S. oil production rose to a record high of 12 million barrels a week.

Murphy Oil also announced a $500 million share buyback funded by the deal, helping drive shares in the company rose 3 percent to $31.50 in early trading

Chief Executive officer Roger Jenkins said the rest of the proceeds would go toward cutting down debt by about $750 million and for potential deals in the United States. The company had about $3 billion in debts as of Dec. 2018, according to regulatory filings.

Murphy Oil said it will now focus more on Texas’ Eagle Ford basin and the U.S. Gulf of Mexico. “The tactical repositioning of Murphy allows us to simplify our business and focus on our core assets in the Western Hemisphere,” Jenkins said in a statement.

Shale oilfield’s high returns had prompted Houston’s Marathon Oil Corp to exit the United Kingdom’s North Sea oilfields in February, also making the call to focus on the United States instead.

Reuters had reported earlier in the day that Murphy Oil was nearing a deal to sell its Malaysian assets.

Bank of America Merrill Lynch served as advisor to Murphy and Tudor, Pickering, Holt & Co. was its financial advisor. Jefferies Group LLC was the financial advisor to PTTEP.

Source: Reuters