London — Thailand's PTT Exploration and Production Public Co Ltd (PTTEP) has signed a sale and purchase agreement to acquire the Malaysian oil and gas assets of Murphy Oil Corp. for $2.127 billion in an all-cash transaction, the US oil company said in a statement Thursday.
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The deal aligns with PTTEP's attempts to boost its reserves and production profile, as it has been facing declining oil and gas output levels. It has been building its war chest with strong cash flows and had been keen on producing assets within the region for some time.
"This transaction is the largest upstream transaction in Southeast Asia in the past five years, and Malaysia's largest ever upstream transaction," Jefferies, which was the sole financial adviser on the deal, said in an emailed statement.
It also said the transaction is PTTEP's largest acquisition in Southeast Asia, and its first significant acquisition in Malaysia.
PTTEP will acquire Murphy Sabah Oil Co and Murphy Sarawak Oil Co, the Malaysian subsidiaries of Murphy Oil, the statement said.
PTTEP could not be immediately reached for comment due to out-of-office hours.
The deal amount, payable upon closing of the deal, is supplemented by a "$100 million bonus payment contingent upon certain future exploratory drilling results prior to October 2020," the statement said.
The transaction is expected to close by the end of the second quarter.
For Murphy Oil, the sale to PTTEP means that it will exit Malaysia after monetizing its assets and reshuffle its oil portfolio in favor of opportunities in the US energy sector, including both deep water and onshore acreage.
"The company plans to continue its current oil-weighted strategy in both the Eagle Ford Shale and the Gulf of Mexico, while maintaining its focused exploration plan," Murphy Oil said.
It said its board has authorized a $500 million share repurchase program, expects to record a book gain on the sale between $0.9 billion to $1.0 billion, and plans to repatriate nearly all the cash proceeds to the US.
Murphy Oil said as of year-end 2018, its net proved reserves were 816 million barrels of oil equivalent, of which 16% or 129 million boe were attributable to Malaysia. Of the 129 million boe of proved reserves, 70 million boe are characterized as proved undeveloped, it said.
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