W&T Offshore announces closing of accretive acquisition of six Gulf of Mexico fields

W&T was the successful bidder for certain synergistic assets in the Gulf of Mexico offered by MLCJR LLC, Cox Oil Offshore, L.L.C., Cox Operating, L.L.C., Energy XXI GOM, LLC, Energy XXI Gulf Coast, LLC, EPL Oil & Gas, LLC and M21K, LLC (collectively, the “Debtors”), as described in the order approving the purchase and sale agreement with W&T Offshore, Inc. issued on January 16, 2024, the closing and effective date of the transaction. The final purchase price for the assets was US$72.0 million, excluding certain closing costs, which was funded from the Company’s cash on hand.

Tracy W. Krohn, Chairman, President and CEO, commented, “We are very pleased to announce our second accretive acquisition of GOM producing properties in the last four months. As was the case with the purchase announced in September 2023, the producing properties included in the acquisition announced today meet the time-tested investment criteria we have used for all acquisitions. 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 realise 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. Combined with our acquisition last fall, we have added almost 22 million boe of proved reserves for about US$104 million, or around US$4.75 per boe, which we believe is a very attractive price for properties with significant upside. We plan to continue to utilise our strong balance sheet and expertise in acquiring complementary GOM assets to further enhance the scale of W&T. Acquisitions continue to be a key component of how we build and grow value, reserves and production at W&T, and we are well positioned to continue to execute on our successful strategy.”

The six fields acquired include Eugene Island 064, Main Pass 061, Mobile 904, Mobile 916, South Pass 049 and West Delta 073, all of which include a 100% working interest and an average 82% net revenue interest. They are located in water depths ranging between approximately 15 – 400 ft. Their proximity to W&T’s areas of existing operations provide the ability for W&T to capture synergies. Recent estimated production for the fields has ranged from approximately 3700 – 5700 boe/d (around 68% liquids) during the period month-to-date January 19, 2024. W&T plans to implement a series of workovers, recompletions and general maintenance work that the Company expects will increase total production from the fields.

As a result of this additional accretive acquisition, W&T plans to invest additional funds for increasing production and reducing costs in these assets long term. The Company now plans to defer the drilling of Holy Grail, which is a proven undeveloped well in our Magnolia field. The Company will be exploring a Drilling Joint Venture, similar to what it did with investors in 2018 through Monza Energy LLC, that may include certain of the Company’s 100% owned and operated deepwater wells, including Holy Grail (approximately 3900 ft of water), Thunderbolt (approximately 500 ft of water), Zeus (approximately 500 ft of water) and Redbolt (approximately 500 ft of water). Additionally, the Company plans to drill at least one shelf exploratory well in the Drilling Joint Venture. The Company believe that such a structure aligns investor interests and provides ongoing liquidity through cash distributions.

Read the article online at: https://www.oilfieldtechnology.com/offshore-and-subsea/23012024/wt-offshore-announces-closing-of-accretive-acquisition-of-six-gulf-of-mexico-fields/