One of the largest independent oil producers in the world is joining forces with a Brazilian petro giant for Gulf of Mexico assets worth over $1 billion.
Announced last week, the Rio de Janeiro-based Petrobras, through its subsidiary Petrobras America Inc. (PAI), has inked a definitive agreement with El Dorado’s Murphy Exploration & Production Company – USA to form a “joint venture” company of oil and gas production assets in the Gulf of Mexico.
Murphy Oil will contribute the bulk of the funds to the operation.
“The establishment of the Joint Venture will be through the contribution by both companies of their current producing Gulf of Mexico assets, with Murphy overseeing the operations with 80-percent interest and PAI with 20 percent,” said an Oct. 11 Petrobras statement.
For 2018’s fourth quarter alone, the estimated average production of the new joint company will equal roughly 75,000 barrels of oil daily.
In the deal, Murphy is set to owe PAI a total of $1.1 billion. A $900 million cash payment will be made from the El Dorado company “corresponding to the difference in value between the assets contributed by both companies at the closing of the transaction,” the statement said.
Payments up to $150 million will also be made by Murphy until 2025, with side investments of up to $50 million to PAI production costs in the development of the deepwater St. Milo field, located approximately 190 miles south of Louisiana’s coastline.
The deal includes assets in deepwater fields: Cascade, Chinook, Lucius and Hadrian North, Cottonwood, Hadrian South, Dalmatian, Front Runner, Clipper, Habanero, Kodiak, Medusa and Thunder Hawk; and the shallow water fields of South Marsh Island 280, Garden Banks 200/201 and Tahoe.
Murphy Oil Corporation, as of Wednesday, was ranked 291st on the American Fortune 500 list and saw $2.097 billion in 2017 revenues, according to NASDAQ. Petrobras, which half-owned by the Brazilian government, is listed as the 73rd largest company on the Global 500, with $81.233 billion in revenues last year.
Petrobras this week was not finished with its joint venture business partnerships. According to S&P Global, the South American petroleum company on Oct. 16 entered another joint agreement, only this one with China’s CNPC (China National Petroleum Corp.) to form a refinery giant to handle production and “revitalize” the Campos Basin located off the Brazilian coast.
In that deal, contrary to the Murphy USA agreement, Petrobras is supplying 80 percent of the assets, while CNPC supplies 20 percent. The state-owned, Beijing-based energy behemoth is ranked fourth on the Global 500 list for 2017, with over $326 billion in revenues.
The Chinese and Brazilian companies have also been partners since 2013 in another production sharing contract for assets in the Santos Basin pre-salt area off the São Paulo coastline.