U.S. Gulf of Mexico-focused oil and gas company W&T Offshore has completed the accretive acquisition of six oil fields in shallow waters of the Gulf of Mexico for $72 million.
W&T Offshore was the successful bidder for certain synergistic assets in the Gulf of Mexico offered by MLCJR, Cox Oil Offshore, Cox Operating, Energy XXI GOM, Energy XXI Gulf Coast, EPL Oil & Gas, and M21K, with January 16, 2024, being the closing and effective date of the transaction.
The final purchase price for the assets was $72 million, excluding certain closing costs, which was funded from the company’s cash on hand.
According to W&T Offshore, the acquisition provides strong producing properties, all of which are 100% working interest (average 82% net revenue interest) and are located adjacent to W&T Offshore’s existing area of operations.
The six fields acquired include Eugene Island 064, Main Pass 061, Mobile 904, Mobile 916, South Pass 049 and West Delta 073.
This includes estimated production that has ranged from approximately 3,700 to 5,700 barrels of oil equivalent per day (boepd), out of which around 68% liquids, during the period month-to-date January 19, 2024.
The company said it believes that it can meaningfully increase production on these properties through workovers, recompletions and facility repairs.
The six fields acquired produced approximately 8,300 boepd, with 48% liquids, on average in April 2023, the month prior to the bankruptcy filing by the companies in May 2023.
The acquisition adds significant proved reserves (1P) of 18.7 million barrels of oil equivalent (mmboe), out of which 62% liquids, as of January 1, 2024.
Provides material upside with proved plus probable reserves (2P) of 60.6 mmboe (78% liquids) as of January 1, 2024 at year-end 2023 SEC pricing with a PV-10 value of $629.2 million based on an independent engineering report prepared by NSAI.
“We are very pleased to announce our second accretive acquisition of GoM producing properties in the last four months.
“These assets have attractive production rates, are generating positive free cash flow, and have a solid base of proved developed reserves and identified upside potential with strong 2P reserves.
“We plan to increase production in the near-term with capital-efficient, low-cost workover, recompletion and maintenance projects. We expect to realize synergies on these new assets due to their close proximity to our existing fields, which can reduce operating costs and further increase free cash flow,” said Tracy Krohn, President and CEO of W&T Offshore.
Krohn added that in combination with the acquisition of eight shallow water oil and gas fields in the U.S. Gulf of Mexico from September 2023, the company added almost 22 million barrels of oil equivalent of proved reserves for about $104 million, or around $4.75 per boe.