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Murphy Closes $2B Exit From Malaysia, Buys Back Stock

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Murphy Oil Corp. of El Dorado has closed on its $2 billion deal to shed its offshore operations in Malaysia, the company announced Wednesday morning, adding that it has also repurchased $300 million in stock.

Murphy (NYSE: MUR) said in a company release that it had completed the sale to a subsidiary of PTT Exploration & Production Public Co. Ltd., based in Bangkok. The sale was part of a strategy focusing anew on the oil exploration and production titan’s offshore holdings in the Gulf of Mexico.

After closing adjustments, Murphy will reap about $2.03 billion and expects to report a gain of $1 billion on the deal, which was first announced in March. The company expects no tax liabilities from the sale.

“We would like to congratulate PTTEP on the purchase of their new asset,” Murphy CEO Roger W. Jenkins said in a statement. “As our talented and committed Malaysia team transitions to their new owner, I am confident they will diligently work to ensure continued success in the country. Also, I would like to thank our long-term partners PETRONAS, PETRONAS Carigali and Pertamina. They too have diligently worked to ensure our long-term success in the region.” 

In the share repurchase, Murphy bought $300 million in stock as part of a previously authorized $500 million buyback program. “Murphy purchased 11.4 million shares outstanding, a 6.6% reduction from 173.6 million shares outstanding as of April 30, 2019, at an average price of $26.34 per share,” the company said. The share repurchase program will expire at the end of 2020.

“Murphy remains committed to spending within cash flow while investing in our new Gulf of Mexico assets,” Jenkins said. “We continue to strongly support our shareholders with industry-leading dividend and share buybacks this year.”

He noted Murphy’s recent transactions, including a joint venture with the Brazilian petroleum conglomerate Petrobras that’s seen as a major new partnership in the Gulf of Mexico. The late 2018 alliance included a $795 million cash commitment by Murphy, which owns 80 percent of the project. The deal, involving subsidiaries Murphy Exploration & Production USA and Petrobras America Inc., involved $470 million cash-on-hand and $325 million from Murphy’s new senior credit facility, the company said at the time.

“We have repositioned our portfolio with multiple successful transactions while maintaining our strong balance sheet and liquidity position,” Jenkins said. “Following our three major transactions over the last nine months, we are now set up for a transformed future with no revolver borrowings and liquidity of more than $2 billion.”

Murphy’s resource base includes production from North America onshore operations in the Eagle Ford Shale, Kaybob Duvernay, Tupper Montney and Placid Montney production regions, as well as offshore operations in the Gulf of Mexico, Canada and Southeast Asia.

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