Murphy Oil and Petrobras to Form Gulf of Mexico JV
Murphy Oil Corporation’s subsidiary Murphy Exploration & Production Company and Petrobras subsidiary Petrobras America Inc. (PAI) have entered into a joint agreement made up of Gulf of Mexico assets, the companies announced Oct. 10.
Murphy will pay $900 million to PAI and the joint venture will include Gulf of Mexico-producing assets from both companies. Murphy will have an 80 percent stake in the company while PAI will own 20 percent.
PAI will also earn an additional contingent consideration up to $150 million if certain price and production thresholds are exceeded beginning in 2019 through 2025. Murphy will carry $50 million of PAI costs in the St. Malo Field if certain enhanced oil recovery projects are undertaken.
The transaction will add 41,000 net barrels of oil equivalent per day to Murphy’s Gulf of Mexico production – 97 percent of that being oil – with total production anticipated to be 60,000 net barrels of oil production per day.
Murphy’s CEO Roger W. Jenkins said he believes the combined strengths of Petrobras and Murphy will yield long-term value for both companies.
“The addition of high quality, oil-weighted assets, such as the St. Malo Field, complements our existing Gulf of Mexico portfolio,” Jenkins said in a company statement. “We expect the production from this joint venture to generate meaningful incremental free cash flow that provides us with options for future capital allocation.”
The transaction is expected to close by the end of the year.
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