W&T Offshore Announces Acquisition of Producing Properties in the Gulf of Mexico

Source Press Release
Company W & T OffshoreExxonMobil 
Tags Pipelines/ tankers/ distribution, Asset Deals, Deals, Upstream Activities
Date June 27, 2019

W&T Offshore, Inc. (NYSE: WTI) (“W&T” or the “Company”) announced today that it has entered into a and sale with ExxonMobil Corporation" (ExxonMobil") to their interests in and operatorship of oil and gas producing properties in the eastern region of the Gulf of Mexico (“GOM”), offshore Alabama, and related onshore processing facilities for $200 million. Key highlights of the transaction are as follows:

  • Includes working interests in nine GOM offshore producing fields and an onshore treating that are immediately adjacent to existing properties owned and operated by W&T

  • Allows for significant synergies, consolidations and cost savings as W&T will become the largest operator in the area

  • Adds net proved reserves of 74 million barrels of oil equivalent (“Boe”) of which 99% are proved developed producing and 22% are liquids as of the effective date

  • Potential to add incremental reserves with little or no capital by consolidating operations and extending field life

  • Produced approximately 19,800 net Boe per day (25% liquids) from the properties in the first quarter of 2019

  • Provides additional upside opportunities from potential future drilling locations and modifications

Tracy W. Krohn, Chairman and Chief Executive Officer, stated, "We are pleased with this of producing properties which meets all the criteria we have outlined in the past as necessary to drive increased shareholder value from . These low decline assets are highly accretive, free cash flow positive, and adjacent to our current operations thereby providing us the opportunity to recognize increased scale, rationalize operations and capture cost efficiencies to further grow cash flow.  In addition, we also have the opportunity for further growth in reserves from potential field life extensions and drilling and upgrade opportunities. We believe this , with its long-life reserves, production and infrastructure, complements our ongoing strategy to recognize value for our shareholders through drill bit success, effective risk and cost management, and joint venture partnership."

The consists of working interests in nine shallow water producing fields and related operatorship in the Mobile Bay area and will expand W&T’s presence to become the largest operator in the area.  The also includes ExxonMobil’s onshore treating which, along with the Company’s existing treating , will allow for flexibility in processing the produced gas and allow for future consolidation of operations.  The total price is $200 million subject to customary post-effective date adjustments.  The effective date is January 1, 2019, and the transaction is expected to close on or about August 30, 2019.  The will be funded from W&T's available cash on hand and revolving credit .

Total net proved reserves to be are 74 million barrels of oil equivalent, of which 22% are liquids. The vast majority of the reserves are classified as proved developed producing. These reserves were determined by the third-party independent reserve engineering firm, Netherland, Sewell and Associates, Inc., as of the effective date, based on October 15, 2018 NYMEX Henry Hub gas and NYMEX WTI oil . For the first quarter of 2019, the average production from the offshore properties being in the Mobile Bay area was approximately 19,800 net Boe per day, of which 25% was liquids.

Source: EvaluateEnergy® ©2019 EvaluateEnergy Ltd