Murphy Oil Corporation announced that it has closed its previously announced deal to form a Gulf of Mexico joint venture with Petrobras.
The global independent oil and natural gas exploration and production company said in a press release 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 (PAI), a subsidiary of Petrobras for net cash consideration of approximately $795 million.
The transaction has an effective date of October 1, 2018, it added.
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.
“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.
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.