Murphy Malaysia suitors reported

The sale of a portion of Murphy Oil Corp.'s oil and gas assets in Malaysia would extend the reserve life of the company's resources, industry analysts said Monday.

Three international companies are interested in purchasing a stake of Murphy Oil's Malaysian assets, according to a report last week by the Reuters news service. The report said Mitsubishi Corp, a trading company in Japan, has submitted a bid to buy the assets. Oil India Ltd. and Oil & Natural Gas Corp., a state-owned company in India, are also in the process of drawing up a bid -- possibly jointly, people familiar with the matter told Reuters.

Murphy Oil has encouraged bids for a 30 percent stake in the Malaysian assets, which are valued at about $2.5 billion, according to the report.

Mitsubishi Corp. did not respond Monday to questions about the bid. Oil India Ltd. and Oil and Natural Gas Corp. did not respond to email messages requesting comment.

Asked Monday about the possible sale of assets, Murphy Oil spokesman Barry Jeffery said in an email that, "Murphy does not comment about rumors or stories in the news."

"We frequently review our global portfolio of assets to ensure they fit well within our overall corporate goals and strategy," Jeffery said.

Analysts said some of the Malaysian wells are short-lived and tend to play out quickly so the sale of the assets would extend Murphy Oil's reserve life by allowing the company to focus on areas with long-term resources.

"It tends to be the case that offshore fields have a short reserve life, and Malaysia is all off shore," said Pavel Molchanov, an analyst for Raymond James and Associates, in an email. "If some of the Malaysian assets were to be sold, Murphy's reserve life would get longer."

The sale of the assets would allow Murphy Oil to "recycle cash into onshore U.S. assets," said Leo Mariani, an analyst for RBC Capital Markets.

He said oil and gas assets in Canada and the Eagle Ford shale in Texas have longer playing reserves.

Murphy Oil owns about 150,000 acres in the Eagle Ford where production was about 35,600 barrels of oil a day and 21 million of cubic feet of natural gas per day in 2013, according to the company's website.

Murphy Oil also has onshore and offshore Canadian assets.

In Malaysia, production for the company was about 86,000 barrels of oil equivalent per day in 2013.

Almost half of Murphy Oil's production comes from Malaysia. So, "if some of the Malaysian assets were to be sold, the market's risk perception of Murphy would improve," Molchanov said.

Business on 07/22/2014

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