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Murphy Oil Plans to Sell Less Essential Canadian Assets for $112 Million

Murphy Oil has entered into a purchase and sale agreement to sell a section of its Kaybob Duvernay assets and entire Placid Montney assets.

A subsidiary of Murphy Oil Corp. has entered into an agreement to sell a "non-core segment" of its operated Kaybob Duvernay assets and its entire non-operated Placid Montney assets to a private company, as stated in the company's earnings report released on August 3rd.

The transaction is set to take effect from March 1, 2023, and the closing is expected to be finalized in the third quarter of the same year.

Roger W. Jenkins, President and CEO of Murphy, stated, "Through this transaction, we are accelerating the value realization of a minor, non-essential segment within our Canadian onshore portfolio. These particular locations were not part of our immediate development plans. With the funds generated from this divestment, we are excited to advance our capital allocation objectives within Murphy 2.0. We remain committed to providing returns to our steadfast, long-standing shareholders in the forthcoming quarters."

Deal Details

However, Murphy will not have any holdings left in the Placid Montney area.

According to the terms of the purchase and sale agreement, Murphy will receive CA$150 million (US$112.3 million) from the buyer upon completion of the transaction.
The assets being divested encompass the Saxon and Simonette regions within the Kaybob Duvernay area. Murphy currently operates these areas with a 70% working interest. Murphy's 30% working interest in the Placid Montney assets, which are operated by Athabasca Oil Corp, is also part of the divestiture. The deal encompasses batteries, pipelines, and the transfer of associated processing and marketing contracts.
Collectively, these assets are presently generating around 1,700 barrels of oil equivalent per day (boe/d), with oil accounting for 39% of this production. Notably, the net proved reserves as of December 31, 2022, amount to 5.3 million barrels of oil equivalent (MMboe).
The transaction encompasses 138 net drilling locations spread across 42,000 net acres within the Kaybob Duvernay area, as well as an additional 26,000 net acres within the Placid Montney region.

Once the deal is finalized, Murphy will retain around 488 total drilling spots in Kaybob Duvernay, with most of them, about 75%, focused on oil. Murphy will still be in charge of these assets, holding a 70% working interest.

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Non-Core Canadian Assets of Murphy Oil Successfully Divested for $104M

Houston-based Murphy Oil Corp. has successfully concluded the divestiture of its non-core operated assets located across its Western Canadian terrain, including the assets in the Kaybob Duvernay region and the complete non-operated Placid Montney position through a subsidiary. The divestiture was initially made public in August and was concluded. The transaction yielded cash proceeds of around US$104 million (CA$141 million), slightly lower than the originally anticipated US$112 million.

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