The Acquisition of Murphy Oil Corporation’s Interests in Malaysia
21 March 2019
Investor Relations Tel. +66(0) 2537 4868, +66(0) 2537 5843
21 March 2019
The Stock Exchange of Thailand
62 Ratchadapisek Road, Klongteoy
Subject: The Acquisition of Murphy Oil Corporation’s Interests in Malaysia
Attachment: Transaction Details
PTT Exploration and Production Public Company Limited (“PTTEP” or the “Company”) is pleased to announce that on 21 March 2019, PTTEP HK Offshore Limited (a subsidiary of PTTEP) has signed a Share Sale and Purchase Agreement (“SSPA”) to acquire the 100% of Murphy Oil Corporation’s (“Murphy”) business in Malaysia through the equity in two subsidiaries of Murphy; Murphy Sarawak Oil Company Limited (“Murphy Sarawak”) and Murphy Sabah Oil Company Limited (“Murphy Sabah”).
These two companies currently hold 5 projects; 2 producing, 1 development and 2 exploration projects with total estimated proved and probable reserves (2P) of approximately 274 million barrels of oil equivalent (BOE), according to working interest. The total net sales volume in 2018 was 48,000 barrels of oil equivalent per day (BOED), comprised of 62% of liquids. Details are as follows;
- The SK309 & SK311 Project consists of Block SK309 and SK311 which are producing oil and natural gas fields located in the shallow water of offshore Sarawak. At present, Murphy Sarawak holds 59.5% interest, except for East Patricia field in Block SK309 of which the interest is 42%. The project contributed net sales volume in 2018 around 30,000 BOED.
- The Sabah K Project consists of Kikeh, Siakap North-Petai (SNP) and Gumusut-Kakap (GK) fields which are producing oil fields located in the deep water of offshore Sabah. At present, Murphy Sabah holds 56%, 22.4% and 6.4% interest, respectively. The project contributed net sales volume in 2018 around 18,000 BOED.
- The Sabah H Project is made up of natural gas fields in development phase located in the deep water of offshore Sabah. At present, Murphy Sabah holds 56% interest in Rotan field and 42% interest in the remaining area. The first production is expected by the second half of 2020 and ramping up to its full capacity of 270 million standard cubic feet per day (MMSCFD). The net sales volume is expected to be 130 MMSCFD or equivalent to 22,000 BOED.
- The SK314A Project is an exploration block located in the shallow water of offshore Sarawak. At present, Murphy Sarawak holds 59.5% interest.
- The SK405B Project is an exploration block located in the shallow water of offshore Sarawak. At present, Murphy Sarawak holds 59.5% interest.
Murphy is the operator of all the assets in Malaysia except the GK field in Sabah K Project which is operated by Shell.
The transaction is based on the enterprise value of USD 2,127 million, and subject to customary net working capital and closing adjustments, plus an additional maximum amount of USD 100 million contingent payment upon discovery at certain significant threshold of oil in SK405B Project. PTTEP plans to use its available cash to fund the acquisition upon the completion date. The transaction completion is subject to customary conditions precedent including, among other things, necessary regulatory approvals as prescribed in the SSPA, with an expected closing date by the end of the second quarter of 2019. After the completion, PTTEP will assume operatorship from Murphy with the same participating interest. PTTEP will work together with Murphy to ensure smooth business transition, and continuity of safe operations under the same experienced personnel.
The acquisition of Murphy’s business in Malaysia strategically fits with PTTEP’s Coming Home strategy, focusing on prolific area in South East Asia. This diversified self-funded portfolio will add a mix of production, development and exploration assets that will provide immediate revenue stream, production and reserves for both short and long term. This investment will secure our position as a major oil and gas producer in Malaysia and create operational synergy with our existing Malaysia assets as well as reinforce our strong partnership with Petronas. Moreover, this will provide an opportunity for PTTEP to enhance its deep water capability to support future deep water developments.
According to the Notification of the Board of Governors of the Stock Exchange of Thailand Re: Disclosure of Information and Other Acts of Listed Companies Concerning the Acquisition and Disposition of Assets, B.E. 2547 and the Notification of the Capital Market Supervisory Board No. Tor Jor. 20/2551 Re: Rules for Significant Transactions Constituting an Acquisition or Disposal of Assets, this transaction is considered an acquisition of assets by PTTEP. In aggregate, with the accumulated scale from other acquisitions during the past six-month period, the total aggregate scale is higher than the 15% threshold criteria but lower than the 50% threshold criteria. As such, the transaction is considered a Class 2 transaction. Therefore, PTTEP has immediately disclosed information regarding this transaction to the Stock Exchange of Thailand and will notify the shareholders of this transaction in writing within 21 days from the date the disclosure was made to the Stock Exchange of Thailand.
Please be informed accordingly
President and Chief Executive Officer