Petroleum and natural gas exploration company Murphy Oil will soon acquire LLOG Exploration’s assets in 26 Gulf of Mexico blocks containing seven producing fields and four development projects for $1.38 billion in cash. The acquisition comes at a time when Murphy Oil is seeking to boost its presence in the region.
After the acquisition, the company will add 32,000 to 35,000 net boed to its production this year. Murphy hopes its Gulf of Mexico annualised production will reach 85,000 net boed. The deal will expand Murphy’s daily production in the Gulf of Mexico to 66 percent from 49 percent, excluding non-controlling interest. The lease operating expense for the acquired assets is estimated between $10 and $12 per boed.
Additionally, there might be contingent payments depending on the following factors: $50 million after the first oil production from certain development projects and up to $200 million in case the revenue generated from select projects exceeds specific contractual thresholds between 2019 and 2022.
Imran Khan, senior research manager at Wood Mackenzie, said, “With this transaction, Murphy becomes the eighth-highest producer in the Gulf of Mexico. Only a year ago, they were No. 20.”
With a presence in Brazil, Canada and other regions, Murphy Oil has said that it plans to target the Western Hemisphere for exploration and production deals in the future. Mainly, the company’s focus is on Eagle Ford basin in Texas and the Gulf of Mexico.