Murphy to Exit Malaysia

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On March 21, 2019, Murphy Oil Corp announced that it had signed a Sale and Purchase Agreement (SPA) with PTT Exploration and Production Public Co Ltd (PTTEP) for the sale of its wholly owned subsidiaries Murphy Sabah Oil Co Ltd and Murphy Sarawak Oil Co Ltd for an all-cash consideration of US$ 2.127 billion. The transaction has an effective date of January 1, 2019, with the transaction expected to be completed by 2Q 2019. The cash consideration is payable upon closing and will be subject to customary closing adjustments including up to a US$ 100 million bonus payment contingent upon certain future exploratory drilling results before October 2020. The closing of the transaction is subject to all necessary regulatory endorsements with Murphy exiting Malaysia under the terms of the transaction upon approval. As of reports in late November 2018, Murphy was understood to be in talks to sell all of its Malaysian oil & gas assets after receiving an unsolicited bid valued at US$ 2-3 billion.

Murphy to Exit Malaysia

Figure 1. Murphy South East Asia Assets

In Sarawak, Murphy holds 59.5 percent operating equity in SK-309 (553.4 sq km), SK-311 (175.2 sq km), SK-314A (2,419.4 sq km), SK-405B (2,282.1 sq km), and 80 percent equity in the 2.8 sq km ring-fenced Deepwater 2C Paus Field block. SK-309 contains the Geduk, Gambang, Serunai, and West Patricia oil, gas, and condensate fields producing 8,675 bo/d with 206.4 MMcfg/d in August 2018. SK-311 contains the Mahkota, Permas, Sapih, Serampang, Tiram, and Wangsa oil, gas, and condensate fields which produced 19,644 bo/d with 76.6 MMcfg/d in August 2018. In Sabah, Murphy operates the 286.6 sq km Deepwater Block K holding 56 percent equity and 2,711.2 sq km Deepwater Block H holding 42 percent working interest. Deepwater Block K contains the Gumusut-Kakap, Kikeh, Kikeh Kecil, Kerisi, Senangin, Siakap, and Siakap North oil & gas fields which produced 22,142 bo/d plus 9.25 MMcfg/d in August 2018. Deepwater Block H contains the Alum, Bemban, Buluh, Bunga Lili, Dolfin, and Rotan gas discoveries. Of the 129 MMboe of 1P reserves in Malaysia attributed to Murphy, 70 MMboe has been characterized as proved undeveloped. The proved reserves comprise 468 Bcf of gas and 51 MMb of liquids. Total production net to Murphy in 2018 in Malaysia was more than 48,000 boe/d, comprising 62 percent liquids and 38 percent gas.

 

PTTEP had announced that the Deepwater Block K in Sabah and the Sarawak blocks SK-309 and SK-311 as being major contributors to net production with an estimated gross production volume of 100,000 boe/d. The Deepwater Block H project is expected to be brought onstream in 2H 2020 with production expected at a rate of 270 MMcfg/d via the Petronas Floating Natural Gas Dua (PFLNG Dua) vessel with PTTEP’s expected production estimated to be about 140,000 boe/d by 2023. SK-314A and SK-405B blocks are in the exploration phase currently with planned exploration drilling in these blocks possible.

 

Murphy also holds assets in Australia, Brunei, and Vietnam and is currently drilling a key well within the 3,852 sq km Cuu Long Basin Block 15-1/05 where Murphy is the operator holding 40 percent equity. Lac Da Trang 1 (White Camel) wildcat is being drilled with a primary target within the “G” Sequence prognosed to be intersected at a top depth of 3,500m. Secondary targets, within the “C” and “D” sections, are expected to be intersected at a top depth of 2,700m. The LDT Prospect is estimated to contain a Gross Mean Resource Potential of 30 MMboe with an upside potential of up to 250 MMboe and is estimated to cost US $42.5 million to drill. In Brunei, Murphy, via wholly owned subsidiary Canam Brunei Oil Ltd, holds 30 percent equity in the 5,893.6 sq km Baram Delta Basin Block CA-2 and 8.051 percent in the adjacent CA-1 block. Murphy announced that it may be looking to make business exits in these areas as well.

 

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Shankar Krishnan