Murphy Oil to Put $900M Into Joint Venture With Petrobras in Gulf

by Kyle Massey  on Wednesday, Oct. 10, 2018 5:01 pm   1 min read

Murphy Oil Corp. of El Dorado plans to spend $900 million in forming a new joint venture with Petrobras, the Brazilian global petroleum company, to combine offshore operations in the Gulf of Mexico.

Publicly traded Murphy said in a news release Wednesday that its wholly owned subsidiary, Murphy Exploration & Production USA, will join its oil producing assets in the gulf with those of Petrobras America Inc., also a subsidiary.

The deal, which will create an entity owned 80 percent by Murphy and 20 percent by PAI, is expected to close by the end of the year.

Murphy will pay a cash consideration of $900 million to PAI in the transaction, which excludes exploration blocks by both companies. That figure will be subject to normal closing adjustments, and PAI will have a chance to earn an additional $150 million if “certain price and production thresholds” are met, the news release said.

The deal will add about 41,000 net barrels of oil equivalent per day to Murphy’s production in the gulf, and Murphy’s total production in the region is expected to be about 60,000 net barrels per day after the closing.

The company praised high-margin projections associated with the deal, with expected lease operating predicted to be $10 to $12 per barrel of oil equivalent. Tudor, Pickering, Holt & Co. advised Murphy on the venture, along with Gibson, Dunn & Crutcher LLP. An investor presentation is available at murphyoilcorp.com.

“We are very pleased to partner with Petrobras, a global leader in deepwater developments,” Murphy President and CEO Roger W. Jenkins said in a statement. “We believe the combined strengths of Petrobras and Murphy will yield significant long-term value for both companies.”

 

 

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