Pertamina buys part of Murphy Malaysia stake for $2 billion

Pertamina buys part of Murphy Malaysia stake for $2 billion

JIM POLSON

JAKARTA, Indonesia (Bloomberg) -- PT Pertamina agreed to buy a 30% stake in Murphy Oil’s oil and natural gas assets in Malaysia for $2 billion in cash.

Closing with the Pertamina Malaysia Eksplorasi Produks unit is expected to take place in two phases, with the first completed this year and the second in the first quarter of 2015, El Dorado, Arkansas-based Murphy said in a statement. Murphy, which entered Malaysia in 1999, will remain operator of the developments.

Proceeds may be used for drilling in the oil-rich Eagle Ford shale in Texas, acquisitions, debt reduction and share buybacks, Roger W. Jenkins, CEO of Murphy, said in a statement on Sept. 30. The company wants to complement its riskier offshore oil and gas businesses by developing onshore fields in North America, according to its website.

“The sales price is on the upper end of our expectations,” Roger Read, a Houston-based analyst for Wells Fargo Securities, said Sept. 30 in an interview. He rates the shares buy and owns none. “A high percentage of these proceeds can be redeployed toward positive growth opportunities and other shareholder friendly efforts.”

Murphy’s assets in Malaysia produced the equivalent of about 86,000 bpd, more than 40% of the company’s net production last year, according to its website. Murphy has interests in seven separate production sharing contracts in Malaysia.

Tudor, Pickering, Holt & Co. advised Murphy on the transaction.

The deal is subject to approval from Malaysia’s state-owned Petroliam Nasional, also known and Petronas, which is both a partner in Murphy’s operations there and oversees the Southeast Asian nation’s oil reserves, Barry Jeffery, a Murphy spokesman, said in an email.

Murphy slid 0.2% to close at $56.91 in New York. The stock has dropped 12% this year.