Murphy Oil Corporation has entered into a definitive agreement to form a new joint venture company with Brazil’s Petrobras focused on deep water projects in the Gulf of Mexico.
The joint venture company will be comprised of Gulf of Mexico producing assets from Murphy and Petrobras American subsidy, PAI, with Murphy overseeing the operations. The transaction will have an effective date of October 1, 2018 and is expected to close by year-end 2018.
Murphy President and Chief Executive Officer Roger W. Jenkins said: “We are very pleased to partner with Petrobras, a global leader in deep water developments, in our new Gulf of Mexico joint venture. We believe the combined strengths of Petrobras and Murphy will yield significant long-term value for both companies.”
Both companies will contribute all their current producing Gulf of Mexico assets to the joint venture, which will be owned 80 per cent by Murphy and 20 per cent by PAI. The transaction excludes exploration blocks from both companies, with the exception of PAI’s blocks that hold deep exploration rights.
Murphy will pay cash consideration of $900 million to PAI, subject to normal closing adjustments. Additionally, PAI will earn an additional contingent consideration up to $150 million if certain price and production thresholds are exceeded beginning in 2019 through 2025.