Newfield to sell offshore Malaysian business for $898 million

Oct 22, 2013 12:00 AM

Houston independent Newfield Exploration Co. has signed a share purchase agreement to sell all of its equity interests in Newfield Malaysia Holdings to SapuraKencana Petroleum Bhd. for $898 million. The deal is expected to close in early 2014.

The agreement is subject to the approval of state-owned Petronas under the applicable production-sharing contracts, the buyer’s shareholder approval, and customary closing conditions. Newfield plans to offer preferential rights to its partners under the joint operating agreements. Newfield said the agreement was executed after it conducted a bidding exercise involving more than 40 companies.

Lee K. Boothby, Newfield chairman, president, and chief executive officer commented that the sale is in accordance with the company’s plans announced earlier this year to exit its international businesses and focus its investments on domestic resource plays. Newfield said it plans to use the proceeds from the sale to pay down existing debt and general corporate purposes.

In 2004, the subsidiary signed two PSCs off Malaysia in partnership with Petronas Carigali Sdn. Bhd. David A. Trice, then-Newfield’s president and chief executive officer, remarked at the time, “This transaction establishes a new international growth area for Newfield.” A year later, the subsidiary signed a third PSC with Petronas Carigali, this time for the PM 323 area off Malaysia.

In April, Newfield gauged gas at a second pinnacle reef discovery on Block SK 310 offshore Sarawak, Malaysia, estimating initial gas in place at 1.5-3 tcf, the largest conventional exploratory success in the company’s 25-year history. Newfield signed a PSC for Block SK 408 and completed farming into Block SK 319 in Dec. 2012 covering a combined 1.7 million acres and almost doubling the company’s position offshore Malaysia.

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