By Denny Thomas
HONG KONG (Reuters) - Murphy Oil Corp (MUR) is considering selling some of its Asian oil and gas assets in a deal that could fetch up to $3 billion, sources said, as it looks to scale down in the region like some other U.S. energy companies.
Energy majors from BP (BP.L) to Shell (RDSa.L) have faced pressure from shareholders to control spending and return spare cash amid concerns over the impact of rising costs and the returns available if oil prices drop.
Murphy's planned sale comes after Newfield Exploration Co (NFX) and Hess Corp (HES) sold their Southeast Asia operations, partly to address share price underperformance. The move has been prompted in part by the strong demand generated for the Newfield and Hess auctions last year, the sources, who had knowledge of the plan, said.
The advent of "fracking" shale formations is leading to a boom in U.S. crude production which is expected to approach historic highs by the turn of the decade to levels that would have been unforeseen just a few years ago.
"There is a possibility that these smaller producers are looking at their U.S. home market and see good prospects with the development we are seeing of tight oil," said Victor Shum, vice-president of energy consultancy IHS Energy Insight, referring to the shale boom.
"That could be one factor driving them out of the Asian market, back to their home market. We are not seeing that as a trend as yet, but this could be the beginning as companies always evaluate their business options and portfolios," Shum added.
Murphy's potential sale process, however, was still in the early stages and it could, in the end, decide not to sell, the sources said.
The Arkansas-based company has interests in oil and gas fields in Malaysia, Vietnam, Indonesia, Brunei and Australia. 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).
As on December 31, 2012, the company had majority interests in six separate production contracts in Malaysia, covering approximately 2.79 million gross acres, and held interests in four exploration licenses in Indonesia over a total of 3.381 million gross acres, according to the website.
The planned sale is driven less by share price underperformance and more by the desire to monetize part of the business at the valuation secured by Newfield, the sources said.
In October, Newfield sold its Malaysian assets for $898 million, which translates into $59.87/barrell for 15 million barrels of proved reserves.
One of the deal structures being discussed was to sell just 30 percent of the Malaysian operations, one of the sources said.
A Murphy spokesman did not immediately reply to an email and return a call to his office seeking comment. The sources declined to be identified as the company's plans are confidential.
Murphy, which has a $10.7 billion market value, is working with a U.S.-based consultant who has informally reached out to potential buyers, including some sovereign wealth funds in the Middle East and Asian energy companies, which are relishing the opportunity to expand in their region.
Brightoil Petroleum Holdings Ltd is one such company that has been keen to buy upstream assets for years.
The Hong Kong-listed oil trader and shipping firm has held talks with U.S. oil companies Anadarko Petroleum Corp (APC) and Newfield to buy their China operations, sources said.
Trading in Brightoil's shares has been suspended since February 11 pending an announcement of a "very substantial acquisition".
(Additional reporting by Charlie Zhu in HONG KONG and Jane Xie and Manash Goswami SINGAPORE; Editing by Michael Flaherty, Miral Fahmy and Muralikumar Anantharaman)
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