Murphy Oil Corporation announced that its wholly owned subsidiary, Murphy Exploration & Production Company - USA, has closed the previously announced strategic deep water Gulf of Mexico joint venture with Petrobras America Inc., a subsidiary of Petrobras, for net cash consideration of approximately $795 million. The transaction has an effective date of October 1, 2018.
Murphy’s net cash consideration, after adjustments provided for in the contract, of approximately $795 million is funded by $470 million of cash-on-hand with the remaining $325 million being drawn on the company’s new senior credit facility.
Under the terms of the transaction, both companies contributed all their current producing Gulf of Mexico assets to the joint venture company, MP Gulf of Mexico, LLC. MPGOM will be owned 80 percent by Murphy and 20 percent by PAI, with Murphy overseeing the operations. The company expects to account for the PAI share of this transaction as a non-controlling interest.
In connection with the agreement, Murphy also announced today the closing of its new $1.6 billion five-year senior unsecured revolving credit facility. Effective November 28, 2018, the new revolving credit facility replaces the previous $1.1 billion unsecured facility.
The new revolving credit facility has enhanced terms that are more consistent with investment grade-rated companies. Murphy intends to use this credit facility for working capital, capital expenditures, acquisitions, the issuance of letters of credit and general corporate purposes. JPMorgan Chase Bank, N.A., served as administrative agent for the amended credit facility, which will become effective at the closing of the transaction.
“The new credit facility allows for additional financial flexibility should we need to access capital as we execute on our business plan through the commodity price cycles. The attractive pricing and relaxed covenants place Murphy in a position of significant strength with increased liquidity following the closing of our Gulf of Mexico joint venture,” stated Jenkins.