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Murphy Oil to acquire Gulf of Mexico assets from LLOG for $1.38bn

Christian Fernsby ▼ | April 24, 2019
Murphy Oil Corporation announced today that its wholly owned subsidiary, Murphy Exploration and Production Company USA, has entered into a definitive agreement to acquire deep water Gulf of Mexico assets from LLOG Exploration Offshore, L.L.C. and LLOG Bluewater Holdings.
Murphy Oil
Acquisition   Murphy will pay a cash consideration of $1.375 billion
The accretive, cash flow providing Gulf of Mexico assets currently produce approximately 38,000 barrels of oil equivalent per day net (Boepd) and are expected to add approximately 66 million barrels of oil equivalent net (Mmboe) of Proven (1P) reserves and 122 Mmboe of Proven and Probable (2P) reserves.

The transaction will have an effective date of January 1, 2019 and is expected to close in the second quarter, subject to normal closing adjustments.

Murphy will pay a cash consideration of $1.375 billion.

Additional contingent consideration payments are based on the following: up to $200 million in the event that revenue from certain properties exceeds certain contractual thresholds between 2019 and 2022; and $50 million following first oil from certain development projects.

The acquisition will be funded by a combination of cash on hand and availability under the company’s $1.6 billion revolving credit facility.

Total outstanding borrowings under the revolving credit facility, including the current balance of $325 million, are expected to be fully repaid immediately following the closing of the previously announced $2.127 billion divestiture of Murphy’s Malaysian assets.

The company still intends to execute the previously announced $500 million share repurchase program, expiring on December 31, 2020, of which $300 million is planned in the first tranche, with the remaining $200 million expected in the second tranche.

The previously announced $750 million debt repayment has been revised to only include the $325 million that was drawn on the revolving credit facility as the company will no longer plan to repurchase or redeem outstanding senior notes at this time.