Murphy Oil Announces Strategic Deep Water Gulf of Mexico Joint Venture with Petrobras

EL DORADO, Ark.–(BUSINESS WIRE)–Murphy Oil Corporation (NYSE: MUR) announced today that its wholly owned
subsidiary, Murphy Exploration & Production Company – USA, has entered
into a definitive agreement to form a new joint venture company with
Petrobras America Inc. (“PAI”), a subsidiary of Petrobras (NYSE: PBR).
The joint venture company will be comprised of Gulf of Mexico producing
assets from Murphy and PAI with Murphy overseeing the operations. The
transaction will have an effective date of October 1, 2018 and is
expected to close by year-end 2018.

Both companies will contribute all their current producing Gulf of
Mexico assets to the joint venture, which will be owned 80 percent by
Murphy and 20 percent by PAI. The transaction excludes exploration
blocks from both companies, with the exception of PAI’s blocks that hold
deep exploration rights. Murphy will pay cash consideration of $900
million to PAI, subject to normal closing adjustments. Additionally, PAI
will earn an additional contingent consideration up to $150 million if
certain price and production thresholds are exceeded beginning in 2019
through 2025. Also, Murphy will carry $50 million of PAI costs in the
St. Malo Field if certain enhanced oil recovery projects are undertaken.
Upon closing, Murphy expects to fund the transaction through a
combination of cash-on-hand and the company’s senior credit facility.

TRANSACTION HIGHLIGHTS

  • Adds approximately 41,000 net barrels of oil equivalent per day to
    Murphy’s Gulf of Mexico production, of which 97 percent is oil
  • Total Murphy Gulf of Mexico production is anticipated to be
    approximately 60,000 net barrels of oil equivalent per day,
    post-closing
  • Provides high-margin production with Gulf Coast prices and expected
    lease operating expense of approximately $10 to $12 per barrel of oil
    equivalent
  • Increases Murphy’s corporate oil-weighted production by approximately
    nine percentage points to 61 percent, post-closing
  • Adds approximately 60 million barrels of oil equivalent of Proven (1P)
    reserves and 86 million barrels of oil equivalent of Proven and
    Probable (2P) reserves, of which 97% is oil
  • Allocating a portion of the incremental free cash flow to increase
    oil-weighted Eagle Ford Shale production

Murphy President and Chief Executive Officer Roger W. Jenkins stated,
“We are very pleased to partner with Petrobras, a global leader in deep
water developments, in our new Gulf of Mexico joint venture. We believe
the combined strengths of Petrobras and Murphy will yield significant
long-term value for both companies. The addition of high quality,
oil-weighted assets, such as the St. Malo Field, complements our
existing Gulf of Mexico portfolio. We expect the production from this
joint venture to generate meaningful incremental free cash flow that
provides us with options for future capital allocation.”

An investor presentation is available on the company’s website at http://www.murphyoilcorp.com.

Tudor, Pickering, Holt & Co. and Gibson, Dunn & Crutcher LLP are serving
as advisors to Murphy on the joint venture.

CONFERENCE CALL AND WEBCAST SCHEDULED FOR OCTOBER 11, 2018

Murphy will host a conference call and webcast to discuss the
transaction on October 11, 2018, at 9:00 a.m. (EDT). The call can be
accessed either via the Internet through the Investor Relations section
of Murphy’s website at http://ir.murphyoilcorp.com
or via the telephone by dialing toll free 1-888-886-7786, reservation
number 35624274.

ABOUT MURPHY OIL CORPORATION

Murphy Oil Corporation is a global independent oil and natural gas
exploration and production company. The company’s diverse resource base
includes offshore production in Southeast Asia, Canada and Gulf of
Mexico, as well as North America onshore plays in the Eagle Ford Shale,
Kaybob Duvernay and Montney. Additional information can be found on the
company’s website at http://www.murphyoilcorp.com.

ABOUT PETROBRAS

Petrobras is an integrated energy company with focus in oil and gas,
recognized as a leader in deep and ultra-deep water exploration and
production, operating mainly in Brazil. Currently, Petrobras produces
around 2.6 million barrels of oil equivalent a day. The company’s core
values are respect for life, people and the environment; ethics and
transparency; market orientation; excellence and trust; and results. For
more information, visit www.petrobras.com.br/en/.

FORWARD-LOOKING STATEMENTS

This news release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are generally identified through the
inclusion of words such as “aim”, “anticipate”, “believe”, “drive”,
“estimate”, “expect”, “expressed confidence”, “forecast”, “future”,
“goal”, “guidance”, “intend”, “may”, “objective”, “outlook”, “plan”,
“position”, “potential”, “project”, “seek”, “should”, “strategy”,
“target”, “will” or variations of such words and other similar
expressions. These statements, which express management’s current views
concerning future events or results, are subject to inherent risks and
uncertainties. Factors that could cause one or more of these future
events or results not to occur as implied by any forward-looking
statement include, but are not limited to, increased volatility or
deterioration in the level of crude oil and natural gas prices,
deterioration in the success rate of our exploration programs or in our
ability to maintain production rates and replace reserves, reduced
customer demand for our products due to environmental, regulatory,
technological or other reasons, adverse foreign exchange movements,
political and regulatory instability in the markets where we do
business, natural hazards impacting our operations, any other
deterioration in our business, markets or prospects, any failure to
obtain necessary regulatory approvals, any inability to service or
refinance our outstanding debt or to access debt markets at acceptable
prices, and adverse developments in the U.S. or global capital markets,
credit markets or economies in general. For further discussion of
factors that could cause one or more of these future events or results
not to occur as implied by any forward-looking statement, see “Risk
Factors” in our most recent Annual Report on Form 10-K filed with the
U.S. Securities and Exchange Commission (SEC) and any subsequent
Quarterly Report on Form 10-Q or Current Report on Form 8-K that we
file, available from the SEC’s website and from Murphy Oil Corporation’s
website at http://ir.murphyoilcorp.com.
Murphy Oil Corporation undertakes no duty to publicly update or revise
any forward-looking statements. NOTE: All reserves are based on
internally prepared engineering estimates using prices in effect on July
11, 2018.

Contacts

Murphy Oil Corporation
Kelly Whitley, 281-675-9107
kelly_whitley@murphyoilcorp.com
or
Emily
McElroy, 870-864-6324
emily_mcelroy@murphyoilcorp.com