Murphy Oil referred questions from FocusM to Tudor, Pickering, Holt & Co (TPH & Co), an integrated energy investment and merchant bank providing high quality advice and services to institutional and corporate clients.
“Yes, they [TPH & Co] are working for us,” confirms an official from El Dorado, Arkansas-based Murphy Oil.
When contacted in Kuala Lumpur, a vice-president from TPH & Co’s investment banking arm says: “I cannot comment.”
Regional oil & gas (O&G) analysts say the presence of an official from an energy investment bank in town signals due diligence could be under way.
“This could mean the bank is conducting due diligence or advising on a sale of an asset,” says Adrian Loh, head of research, Daiwa Capital Markets Singapore.
TPH & Co’s broker-dealers offer securities and investment banking services to the energy community and provide research coverage on more than 140 issuers worldwide, according to its website.
Energy companies typically rejig their portfolio every two to three years and the boom in shale gas in the US is encouraging American firms to return home, according to Loh.
“These companies will look at whether their overseas operations give good returns versus the US which has a much lower tax regime,” he says.
“Malaysia and Indonesia have one of the highest oil and gas tax regimes in the world,” Loh adds.
Murphy’s Southeast Asian operations are located in Malaysia, Indonesia, Brunei and Vietnam.
In a presentation to Credit Suisse’s 19th Annual Energy Summit on Feb 13, Murphy Oil listed the 2013 netback oil prices from its global operations showing Malaysia as having the lowest price.
“Malaysia’s oil had the lowest price, this could partially be due to the taxation,” says Loh.
Canada offshore netback price was US$108.64 (RM355.25) per barrel, US offshore US$103.66 per barrel, and Malaysia Block K (offshore) US$92.37, according to Murphy’s presentation.
A company calculates a netback price by subtracting all of the costs of delivering a barrel of oil to the marketplace from all of the revenues produced from the sale of oil or hydrocarbon by-products.
Costs included in the netback calculation may include finding and extraction costs, refining and production plus distribution costs. Other costs involved in the delivery of oil to the market include taxes, royalties and marketing.
Murphy also projected its Malaysian oil operations offshore Sabah and Sarawak to pick up production this year during the Credit Suisse presentation.
“This should get the [Malaysian] asset a good price since the new owners will get growth,” says Loh.
Murphy’s move comes on the heels of American firm, Newfield Exploration Co, exiting the country when it sold its interests in Malaysia for US$898 mil last year to SapuraKencana Petroleum Bhd as part of its plan to concentrate on its assets in the US.
Analysts are not concerned with what appears to be an emerging trend of US companies exiting the market to return home and expect their departure to have a neutral-to-positive impact on Malaysia’s O&G industry.
“First of all, it is quite common for exploration & production [E&P] companies to enter or exit a country as they optimise their capital based on their portfolio allocation strategies,” says Danny Chan Tzu Zhung, UOB KayHian’s Kuala Lumpur-based senior analyst, oil & gas.
“The asset will merely fall into another E&P player which could be foreign, such as Shell, ExxonMobil, etc or even local, as evidenced by SapuraKencana’s recent purchase of Newfield, if it is the right candidate identified by Petronas. So the impact is minimal as these assets will still be put into good use once they exchange hands,” adds Chan.
Any potential sale of Murphy’s assets could be positive for Malaysia as it would provide an opportunity to the local service providers which intend to expand their business in the E&P segment, to become a production-sharing contractor (PSC), says Chan.
Murphy’s entry into Malaysia helped the country develop its first deepwater operation, off the shore of Sabah waters, in the Kikeh field.
Asked whether any future departure of Murphy would impact Malaysia’s efforts to acquire hi-tech technical know-how, Chan says: “Yes in a way but there are still other PSCs in the country such as Shell and ExxonMobil which would offset the negative impact from a technical perspective.”
A Houston-based energy investment bank is in Kuala Lumpur “on a project” for Murphy Oil Corp, further fuelling speculation the US company which pioneered Malaysia’s first deepwater development, is mulling selling its assets in the country.
Murphy Oil referred questions from FocusM to Tudor, Pickering, Holt & Co (TPH & Co), an integrated energy investment and merchant bank providing high quality advice and services to institutional and corporate clients.
“Yes, they [TPH & Co] are working for us,” confirms an official from El Dorado, Arkansas-based Murphy Oil.
When contacted in Kuala Lumpur, a vice-president from TPH & Co’s investment banking arm says: “I cannot comment.”
Regional oil & gas (O&G) analysts say the presence of an official from an energy investment bank in town signals due diligence could be under way.
“This could mean the bank is conducting due diligence or advising on a sale of an asset,” says Adrian Loh, head of research, Daiwa Capital Markets Singapore.
TPH & Co’s broker-dealers offer securities and investment banking services to the energy community and provide research coverage on more than 140 issuers worldwide, according to its website.
Energy companies typically rejig their portfolio every two to three years and the boom in shale gas in the US is encouraging American firms to return home, according to Loh.
“These companies will look at whether their overseas operations give good returns versus the US which has a much lower tax regime,” he says.
“Malaysia and Indonesia have one of the highest oil and gas tax regimes in the world,” Loh adds.
Murphy’s Southeast Asian operations are located in Malaysia, Indonesia, Brunei and Vietnam.
In a presentation to Credit Suisse’s 19th Annual Energy Summit on Feb 13, Murphy Oil listed the 2013 netback oil prices from its global operations showing Malaysia as having the lowest price.
“Malaysia’s oil had the lowest price, this could partially be due to the taxation,” says Loh.
Canada offshore netback price was US$108.64 (RM355.25) per barrel, US offshore US$103.66 per barrel, and Malaysia Block K (offshore) US$92.37, according to Murphy’s presentation.
A company calculates a netback price by subtracting all of the costs of delivering a barrel of oil to the marketplace from all of the revenues produced from the sale of oil or hydrocarbon by-products.
Costs included in the netback calculation may include finding and extraction costs, refining and production plus distribution costs. Other costs involved in the delivery of oil to the market include taxes, royalties and marketing.
Murphy also projected its Malaysian oil operations offshore Sabah and Sarawak to pick up production this year during the Credit Suisse presentation.
“This should get the [Malaysian] asset a good price since the new owners will get growth,” says Loh.
Murphy’s move comes on the heels of American firm, Newfield Exploration Co, exiting the country when it sold its interests in Malaysia for US$898 mil last year to SapuraKencana Petroleum Bhd as part of its plan to concentrate on its assets in the US.
Analysts are not concerned with what appears to be an emerging trend of US companies exiting the market to return home and expect their departure to have a neutral-to-positive impact on Malaysia’s O&G industry.
“First of all, it is quite common for exploration & production [E&P] companies to enter or exit a country as they optimise their capital based on their portfolio allocation strategies,” says Danny Chan Tzu Zhung, UOB KayHian’s Kuala Lumpur-based senior analyst, oil & gas.
“The asset will merely fall into another E&P player which could be foreign, such as Shell, ExxonMobil, etc or even local, as evidenced by SapuraKencana’s recent purchase of Newfield, if it is the right candidate identified by Petronas. So the impact is minimal as these assets will still be put into good use once they exchange hands,” adds Chan.
Any potential sale of Murphy’s assets could be positive for Malaysia as it would provide an opportunity to the local service providers which intend to expand their business in the E&P segment, to become a production-sharing contractor (PSC), says Chan.
Murphy’s entry into Malaysia helped the country develop its first deepwater operation, off the shore of Sabah waters, in the Kikeh field.
Asked whether any future departure of Murphy would impact Malaysia’s efforts to acquire hi-tech technical know-how, Chan says: “Yes in a way but there are still other PSCs in the country such as Shell and ExxonMobil which would offset the negative impact from a technical perspective.”
