W&T Offshore closes Gulf of Mexico deal

U.S. player closes Gulf of Mexico deal ahead of schedule

Houston-based oil and natural gas producer W&T Offshore has increased its Gulf of Mexico footprint following the acquisition of producing shallow-water assets in the area.

Illustration; Source: W&T Offshore

W&T Offshore entered into a deal worth $47 million in January 2022 to acquire more acreage in the Gulf of Mexico in a bid to further increase free cash flow while optimizing the value of its nearby operated assets.

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The company announced on Wednesday that it had closed the previously announced acquisition of oil and gas producing properties in federal shallow waters in the central region of the Gulf of Mexico at Ship Shoal 230, South Marsh Island 27/Vermilion 191, and South Marsh Island 73 fields from privately-held Ankor E&P Holdings Corporation and KOA Energy LP.

Tracy W. Krohn, W&T Offshore Chairman and Chief Executive Officer, remarked: “I am pleased we were able to close this transaction ahead of schedule. As I noted when we announced the acquisition at the beginning of the year, the assets are very complementary to our existing asset base. They provide a solid base of proved reserves with strong free cash flow and upside potential, without significant amounts of capital costs.”

The firm confirmed that a cash consideration of approximately $30.2 million was paid to the sellers using cash on hand, after normal and customary post-effective date adjustments were carried out to reflect an effective date of 1 July 2021.

Furthermore, this transaction adds internally-estimated proved reserves of 5.5 million barrels of oil equivalent (Boe) – 69 per cent oil – and proved and probable, or 2P, reserves of 7.6 million Boe – 75 per cent oil – assuming strip pricing as of 7 December 2021.

In addition, the transaction adds estimated production of approximately 3.4 MBoe per day – 74 per cent oil – along with over 50 gross producing wells – average working interest of 80 per cent – in three shallow-water fields.

“Now that we’ve closed the transaction, we’ll begin working on realizing the synergies we’ve identified and maximising the value of these assets. We will continue to seek other accretive transactions that can further enhance shareholder value,” added Krohn.

Currently, W&T Offshore has working interests in 41 producing fields in federal and state waters and has under lease approximately 669,000 gross acres. This includes approximately 482,000 gross acres on the Gulf of Mexico Shelf and around 187,000 gross acres in the Gulf of Mexico deepwater.