Petrobras America Inc. (PAI), a Petrobras subsidiary, signed a definitive agreement to set up a joint venture (JV) company with American Murphy Exploration and Production Company (Murphy), a wholly-owned subsidiary of Murphy Oil Corporation, to produce oil and gas in the Gulf of Mexico, the Brazilian state-run oil company announced Thursday.
'The establishment of the JV 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,' a statement from Petrobras read.
The JV will have an estimated average production of approximately 75 thousand barrels of oil equivalent per day in the fourth quarter of 2018.
It will comprise assets including the deepwater fields of Cascade, Chinook, St. Malo, 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.
According to the statement, PAI will receive up to $1.1 billion for the transaction, with a cash compensation of $900 million corresponding to the difference in value between the assets contributed by both companies at the closing of the transaction, in addition to contingent payments up to $150 million to be made until 2025.
Also, from 2019, Murphy will carry investments of up to $50 million of PAI costs for production development in the St. Malo field 'if certain enhanced oil recovery projects are undertaken'.
The conclusion of the transaction is subject to obtaining applicable U.S. government approvals, and is expected to close this year.
Murphy Oil Corporation is a global independent oil and gas exploration and production company with offshore production in Southeast Asia, Canada and the Gulf of Mexico, as well as onshore production in North America.
The company holds a 20 percent interest in four deepwater blocks in the Sergipe-Alagoas basin. Murphy and its partners were the successful bidders on blocks 430 and 573 in the same basin during Brazil's Round 15 lease sale, according to the statement.
By Hale Turkes
Anadolu Agency
energy@aa.com.tr