Murphy Oil Corporation (NYSE: MUR) announced today that its
wholly owned subsidiary, Murphy Exploration & Production
Company - USA, has closed the previously announced strategic deep
water Gulf of Mexico joint venture with Petrobras America Inc.
(“PAI”), a subsidiary of Petrobras (NYSE: PBR) for net cash
consideration of approximately $795 million. The transaction has an
effective date of October 1, 2018.
Murphy’s net cash consideration, after adjustments provided for
in the contract, of approximately $795 million is funded by $470
million of cash-on-hand with the remaining $325 million being drawn
on the company’s new senior credit facility.
Under the terms of the transaction, both companies contributed
all their current producing Gulf of Mexico assets to the joint
venture company, MP Gulf of Mexico, LLC (“MPGOM”). MPGOM will be
owned 80 percent by Murphy and 20 percent by PAI, with Murphy
overseeing the operations. The company expects to account for the
PAI share of this transaction as a noncontrolling interest.
BENEFITS OF THE TRANSACTION
- Increasing total Gulf of Mexico
production to approximately 60,000 net barrels of oil equivalent
per day at closing, net to Murphy’s interest
- Providing high-margin production with
Gulf Coast prices
- Accelerating activity in the
oil-weighted Eagle Ford Shale with cash flow generated from new
joint venture assets
“We are excited to close this transformational joint venture and
form a strategic partnership with Petrobras. Our newly expanded
Gulf of Mexico portfolio is consistent with Murphy’s long-term
vision of increasing profitable oil-weighted production in an area
where we have a long history of success. We plan to allocate a
portion of the cash flow generated by the joint venture to
accelerate further high-value oil-weighted activity in our Eagle
Ford Shale asset,” stated Roger W. Jenkins, Murphy Oil President
and Chief Executive Officer.
UPDATED GUIDANCE
As a result of the transaction and other operational events,
Murphy is providing updated fourth quarter and full year production
guidance. The company expects fourth quarter production to be
approximately 176,000 barrels of oil equivalent per day (BOEPD) and
full year production to be approximately 171,000 BOEPD, net to
Murphy’s interest.
Following the November 30, 2018 closing of the joint venture,
average fourth quarter production in the Gulf of Mexico will
increase by approximately 13,000 BOEPD, net to Murphy’s interest.
Across several of the company’s assets, fourth quarter production
was impacted by recent unplanned events, including severe storms in
non-operated offshore Canada (2,000 BOEPD); third-party processing,
facility de-bottlenecking start-up delays in Malaysia (1,500
BOEPD); and non-operated facility downtime in the Gulf of Mexico
(1,500 BOEPD).
In conjunction with the previously announced plan to accelerate
activity in the Eagle Ford Shale, full year capital expenditures
are being increased by approximately $48 million to $1.23 billion.
In order to jump-start activity for 2019, the company plans to
drill ten and complete eight additional wells in 2018.
SENIOR UNSECURED CREDIT FACILITY
Murphy also announced today the closing of its new $1.6 billion
five-year senior unsecured revolving credit facility. Effective
November 28, 2018, the new revolving credit facility replaces the
previous $1.1 billion unsecured facility.
The new revolving credit facility has enhanced terms that are
more consistent with investment grade-rated companies. Murphy
intends to use this credit facility for working capital, capital
expenditures, acquisitions, the issuance of letters of credit and
general corporate purposes.
“The new credit facility allows for additional financial
flexibility should we need to access capital as we execute on our
business plan through the commodity price cycles. The attractive
pricing and relaxed covenants place Murphy in a position of
significant strength with increased liquidity following the closing
of our Gulf of Mexico joint venture,” stated Jenkins.
FINANCIAL REPORTING
For financial reporting purposes, beginning with the fourth
quarter 2018 earnings release and 2018 10-K, with respect to the
Gulf of Mexico joint venture, Murphy expects to report 100 percent
of the joint venture’s production, revenues, and costs (including
the 20 percent noncontrolling interest in MPGOM held by PAI) in
accordance with accounting for noncontrolling interests as
prescribed by ASC 810-10-45. The production numbers reflected in
the body of this press release, however, only reflect Murphy’s 80
percent interest in MPGOM volumes attributable to Murphy’s economic
interest.
ABOUT MURPHY OIL CORPORATION
Murphy Oil Corporation is a global independent oil and natural
gas exploration and production company. The company’s diverse
resource base includes offshore production in Southeast Asia,
Canada and Gulf of Mexico, as well as North America onshore plays
in the Eagle Ford Shale, Kaybob Duvernay and Montney. Additional
information can be found on the company’s website at
http://www.murphyoilcorp.com.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are generally identified through the
inclusion of words such as “aim”, “anticipate”, “believe”, “drive”,
“estimate”, “expect”, “expressed confidence”, “forecast”, “future”,
“goal”, “guidance”, “intend”, “may”, “objective”, “outlook”,
“plan”, “position”, “potential”, “project”, “seek”, “should”,
“strategy”, “target”, “will” or variations of such words and other
similar expressions. These statements, which express management’s
current views concerning future events or results, are subject to
inherent risks and uncertainties. Factors that could cause one or
more of these future events or results not to occur as implied by
any forward-looking statement include, but are not limited to,
increased volatility or deterioration in the level of crude oil and
natural gas prices, deterioration in the success rate of our
exploration programs or in our ability to maintain production rates
and replace reserves, reduced customer demand for our products due
to environmental, regulatory, technological or other reasons,
adverse foreign exchange movements, political and regulatory
instability in the markets where we do business, natural hazards
impacting our operations, any other deterioration in our business,
markets or prospects, any failure to obtain necessary regulatory
approvals, any inability to service or refinance our outstanding
debt or to access debt markets at acceptable prices, and adverse
developments in the U.S. or global capital markets, credit markets
or economies in general. For further discussion of factors that
could cause one or more of these future events or results not to
occur as implied by any forward-looking statement, see “Risk
Factors” in our most recent Annual Report on Form 10-K filed with
the U.S. Securities and Exchange Commission (SEC) and any
subsequent Quarterly Report on Form 10-Q or Current Report on Form
8-K that we file, available from the SEC’s website and from Murphy
Oil Corporation’s website at http://ir.murphyoilcorp.com. Murphy
Oil Corporation undertakes no duty to publicly update or revise any
forward-looking statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181203005388/en/
Murphy Investor Contacts:Kelly Whitley,
kelly_whitley@murphyoilcorp.com, 281-675-9107Bryan Arciero,
bryan_arciero@murphyoilcorp.com, 832-319-5374Emily McElroy,
emily_mcelroy@murphyoilcorp.com, 870-864-6324
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