Murphy Oil's Malaysia assets Draw Wide Interest

ONGC and Oil India may team up for joint bid; Kuwait Petroleum, Mitsui among others eying Murphy's assets. Thailand's PTT decides not to bid.

Japan's biggest trading house Mitsubishi Corp has submitted a non-binding bid to buy Murphy Oil Corp's Malaysian oil and gas assets valued at about $2.5 billion, a person familiar with the matter told Reuters.

India's state-owned Oil & Natural Gas Corp and Oil India Ltd are among the other suitors preparing to submit bids for the Murphy assets, separate sources said.

It was not immediately clear if the two Indian companies would submit a joint bid as they have done in the past for overseas energy assets. A final decision will be made by the Indian government, a person familiar with the process said.

The Indian companies are likely to submit preliminary bids for the Murphy stake by the end of this month after getting mandatory internal approvals, said the sources, declining to be named as the process is not public.

"We want energy security. The focus of energy security should be to get the resources to India if need be. It should not be for investment sake only," a senior Indian government official told Reuters.

Arkansas-based Murphy, which has interests in oil and gas fields in Malaysia, Vietnam, Indonesia, Brunei and Australia, has invited bids for a 30 percent stake in its Malaysian assets, Reuters previously reported.

"ONGC's strategy has always been to increase production overseas and it has largely been because in the domestic market, they have not had much success," said Prakash Joshi, director of equity research at IDFC Institutional Equities.

"It's business as usual for (ONGC Videsh) ... but it may not come cheap because these are probably developed assets. It's not going to be a game-changer, but it's something they need to keep doing," he said.

FOLLOWS EXITS BY OTHER U.S. PRODUCERS

Malaysia is the biggest of Murphy's Asian portfolios, and accounted for more than 45 percent of its total 2012 net production, according to the company's website (www.murphyoilcorp.com).

"These are world class assets producing significant amount of liquids and it has some upside through gas," one person familiar with the process said.

"You get access to quality oil production immediately, in substantial quantity. It has got more than 10 years' of life," the person added.

Murphy's net oil and gas production from Malaysia was about 86,000 barrels of oil equivalent per day in 2013, with total proved reserves of 125 million barrels of oil and 406 billion cubic feet (11 billion cubic meters) of gas, according to its website.

Kuwait Petroleum Corp and Japan's Mitsui & Co were among the other suitors considering a bid.

Thailand's state energy company PTT Pcl did not take part in the bidding, a senior company official told Reuters, without giving any reasons.

Kuwait Petroleum did not reply to an email seeking response, while a Mitsui spokesman declined comment.

Murphy's planned sale follows similar exits by other independent U.S. energy producers such as Hess Corp, Newfield Exploration Co, both of which have offloaded their Southeast Asian operations partly to address share price underperformance.

The move is also prompted in part by the strong demand generated for the Newfield and Hess auctions last year, the sources added.

A Mitsubishi spokeswoman declined to comment. ONGC Videsh, the overseas business arm of ONGC, also declined to comment.

Oil India and Murphy did not respond to e-mails seeking comment. Sources declined to be identified as the sale process is confidential.

Reporting by Denny Thomas, Nidhi Verma and James Topham