Murphy mulls US$2b-US$3b sale of M'sian assets

PETALING JAYA: Spurred by the recent sale of Newfield Exploration Co’s Malaysian operations, American oil major Murphy Oil Corp is looking to hive off a 30% stake in its oil and gas (O&G) assets here at a price tag of US$2bil-US$3bil (RM6.62bil-RM9.93bil), sources said.

A sale by Murphy is potentially more lucrative than the one agreed between Newfield and SapuraKencana Petroleum Bhd last year for US$898mil (RM2.97bil), given its much larger production and reserves, O&G executives told StarBiz.

Several parties have expressed interest, including Houston-based Coastal Energy Co, a firm linked to Malaysian investor Taek Jho Low.

Other possible buyers studying the offer were the “usual suspects,” such as SapuraKencana and the O&G special-purpose acquisition companies, namely Hibiscus Petroleum Bhd, Sona Petroleum Bhd and CLIQ Energy Bhd, said a banker.

Murphy, which was set up here in 1999, has majority interests in five separate production sharing contracts – Block K, Block H, Block SK309, Block SK311 and SK 314, as well as three gas holding agreements in Block PM311 (see map), its website read.

It is the third-largest O&G producer in the country behind Petroliam Nasional Bhd (Petronas) and Shell, industry data showed.

The group’s Malaysian production made up more than 45% of its net production in 2012 at 89,000 barrels of oil equivalent per day (boepd).

One of Murphy’s key assets is said to be the Kikeh oil field in Block K offshore Sabah, as well as shallow oil fields in Block SK, a sizeable gas production in Sarawak, and the yet-untapped Block H, where Petronas is set to deploy its second floating liquefied natural gas facility (FLNG) in the Rotan field.

Murphy is forecast to produce some 100,000 boepd this year, second only to Shell and far ahead of Newfield’s 15,000 boepd, StarBiz was told.

It is also understood that Murphy has proved reserves of 155 million barrels of oil equivalent in Malaysia, the bulk of which is oil, as at end-2012, eclipsing Newfield’s 15 million barrels of proved reserves.

Murphy holds an 80% stake in the Kikeh field, Malaysia’s first deepwater discovery, and Petronas the rest.

Block H, for which the final investment decision was reached last month, is also majority-owned by Murphy.

Its field development plan includes the use of an FLNG to be delivered by Petronas, with first gas targeted in 2018.

The national oil company said last week it had awarded the engineering, procurement, construction, installation and commissioning job for the Rotan FLNG to a consortium of JGC Corp and Samsung Heavy Industries Co Ltd.

The FLNG is expected to produce 1.5 million tonnes per annum (mtpa) of LNG, even larger than the first FLNG bound for the Kanowit field off Sarawak, which has a planned capacity of 1.2 mtpa.

Reuters reported last week that Murphy was mulling a US$3bil (RM9.93bil) sale of some of its Asian assets to scale down in the region, partly because of shareholder activism back home and the attractive valuations Newfield was able to fetch for its Malaysian oil fields.

Coastal Energy was bought out in November by Spain-based, but Abu Dhabi-owned, Cia. Espanola de Petroleos SA (Cepsa) and Strategic Resources (Global) Ltd, a vehicle of Penang businessman and Low’s father Tan Sri Larry Low Hock Peng, in a C$2.3bil (RM6.88bil) deal.

Formerly listed on the Toronto Stock Exchange and London’s AIM, Coastal Energy has interests in upstream blocks in Thailand and Malaysia, including a 70% stake in the Kapal, Banang and Meranti cluster of marginal fields.

The risk service contract for these fields was awarded to it and Petra Energy Bhd in 2012.

Cepsa was acquired by a unit of the Abu Dhabi government in 2011.