When I did my weekly Murasaki Masterclasses, many were not able to pinpoint what I regarded was a most important development over the past week. Below was a decent blurb from Arab research:
The Star reported that SapuraKencana Petroleum, Hibiscus Petroleum, Sona Petroleum, CLIQ Energy and Coastal Energy are interested to bid for US-based Murphy Oil Corp’s proposed sale of a 30% stake in its Malaysian oil & gas assets, which could be worth US$2bil-US$3bil (RM6.6bil-RM9.9bil). The indicative market value translates to up to 3.3x the US$898mil (RM3bil) acquisition value of Newfield’s Malaysian assets by SapuraKencana, which was completed recently.
Murphy currently has majority interests in five separate production sharing contracts – Block K, Block H, Block SK309, Block SK311 and SK 314, as well as three gas holding agreements in Block PM311. In 2012. Murphy’s Malaysian assets generated revenue of US$2.4bil and operating profit of US$894mil. As at 31 Dec 2012, its assets were worth US$4.8bil, with oil reserves of 95.7mil barrels of oil and natural gas reserves of 357.6bil cubic feet.
Murphy holds an 80% stake in the Kikeh field, Block K offshore Sabah, which is Malaysia’s first deepwater production field, and is one of Murphy’s key assets. Other significant assets are the shallow oil fields in Block SK, Sarawak, and the yet-untapped Block H, where Petronas is planning to deploy its second floating liquefied natural gas vessel (FLNG) in the Rotan field by 2018. The engineering, procurement, construction, installation and commissioning job for the Rotan FLNG has been awarded to a consortium of JGC Corp and Samsung Heavy Industries Co Ltd.
One of the interested bidders are Houston-based Coastal Energy Co, a firm linked to Malaysian investor Taek Jho Low. Coastal Energy has interests in upstream blocks in Thailand and Malaysia, including a 70% stake in the Kapal, Banang and Meranti (KBM) cluster of marginal fields. Petra Energy Bhd owns the remaining 30% stake in the KBM field.
Amongst the Malaysian operators, only SapuraKencana appears to be sufficiently capitalised to take on Murphy’s assets. But this would not be an easy contest as we expect other international players such as Shell and Exxon Mobil to enter the fray.
My comments:
a) the size of the assets are significant, its almost as if another Petronas has decided to hive off marginal oil fields - its as significant
b) these are Murphy Oil's assets which may be deemed as "pre-qualified" thus elevating their attractiveness
c) I do not think Murphy is exiting but rather concentrating on "bigger things" with the big boys
d) I do not think the assets will end up with foreign parties as I see a deeper agenda
e) A new light has shone on SPACs looking for decent assets, no need to scrounge off Indonesian waters, to that end the fortunes for Sona, CLIQ and upcoming oil and gas SPACs have brightened
f) The last year and a half saw numerous listed counters benefiting from Petronas marginal oil fields strategy - this is as significant if not more so
g) However, I do not see these assets going to the same parties who have benefited last year, I think its a strategy from the top to farm out these assets to a more diversified base thus boosting the breadth and depth of the local oil and gas players
h) I don't think SapKen will get it as it does not make much sense, especially since they can already go regional and even global, its pretty obvious the strategy is to broaden the number of players
g) SONA, CLIQ and some of the upcoming players such as TH Heavy, Scomi group of companies, Yinson may a better chance
h) the "rush" for some of the local smaller oil and gas operators to go via RTO may be a strong indication of the need to tap capital markets to bid for such assets )e.g. Barakah and the recent on=off PDZ deal)
i) overall its a very significant multiplier effect on the overall markets, read it however you think I meant it be
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