Petrobras subsidiary, Petrobras America Inc. (PAI), has entered into a definitive agreement with Murphy Exploration & Production Company, USA, a wholly owned subsidiary of Murphy Oil Corporation, to form a joint venture company (JV) comprised of producing oil and gas assets in the Gulf of Mexico.
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% interest and PAI with 20%. The JV will have an estimated average production of approximately 75,000 barrels of oil equivalent per day in the fourth quarter 2018.
The transaction will involve a total amount of up to USD 1.1bn to be received by PAI, with a cash compensation of USD 900M 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 USD 150M to be made until 2025. From 2019, Murphy will also carry investments of up to USD 50M of PAI costs for production development in the St. Malo field if certain enhanced oil recovery projects are undertaken.
The JV represents an important step for Petrobras, as part of its 2018-2022 business and management plan, allowing, in addition to cash inflow, the sharing of investments, resulting in a final portfolio with a better balance of risk-return through a new business model in the US with a partner experience in the region and recognized for its operational and safety expertise, cost discipline and technical qualification.