U.S. oil and gas company Murphy Oil has closed the sale of its entire 50 per cent interest in the King’s Quay floating production system (FPS) and associated export lateral pipelines to be located in the Gulf of Mexico.
The sale of the stake to a fund managed by ArcLight Capital Partners was conducted by a Murphy Oil subsidiary – Murphy Exploration & Production Company – USA.
The King’s Quay FPS and Associated Laterals will be co-owned in a joint venture with entities managed by Ridgewood Energy Corporation, including ILX Holdings III.
Murphy Oil said that this transaction reimburses its past capital expenditures of around $270 million related to the King’s Quay FPS and the pipelines.
The company added that it intends to use the proceeds to repay borrowings under the $1.6 billion senior unsecured credit facility, with the remainder to be held for general corporate purposes.
With the pending redemption of its 2022 Notes, Murphy will have no near-term debt maturities before the November 2023 expiration of its revolving credit facility.
Roger W. Jenkins , president and CEO of Murphy Oil, said: “ We are pleased to announce the completion of this transaction. Coupled with the receipt of necessary regulatory permits for our entire drilling campaign to begin on April 1, 2021, we remain on target for first oil in mid-2022 in the Khaleesi / Mormont and Samurai fields.
“ By utilizing the King’s Quay FPS transaction proceeds to repay our revolver borrowings, along with our recent bond issuance to extend our debt maturity profile, Murphy has a well-positioned balance sheet with ample liquidity as we enter the execution phase of this key project ”.
The King’s Quay FPS is more than 90 per cent built and is scheduled to go into service in mid-2022. King’s Quay FPS is designed to process 80 thousand barrels of oil per day and 100 million cubic feet of natural gas per day and will handle the anticipated production from the Khaleesi / Mormont and Samurai fields.
Construction of the FPS hull has been underway at Hyundai Heavy Industries’ Ulsan facility in South Korea since July 2019.
The King’s Quay FPS project was initiated by LLOG in 2018 as part of its plan to develop mid-size oil and gas discoveries in the Green Canyon area. Murphy Oil acquired LLOG’s Gulf of Mexico oil and gas assets as well as King’s Quay FPS project in June 2019.
As for the Khaleesi / Mormont development project, it will include a total of seven subsea wells tied-back to the King’s Quay FPS. Of the seven wells, four development were already drilled by LLOG before Murphy Oil acquired operatorship. The Samurai field will be developed through four subsea wells tied-back to the FPS.