W&T Offshore Completes Deepwater GoM Shopping

W&T Offshore, Inc. announced today that it has closed its previously announced acquisition of exploration and production properties in the Gulf of Mexico from Newfield Exploration Company and its subsidiary, Newfield Exploration Gulf Coast LLC (“Newfield”).  

W&T acquired 78 federal offshore lease blocks (two of which are held in escrow subject to the exercise or expiration of preferential rights held by a third party) on approximately 432,700 gross acres (416,000 gross acres excluding overriding royalty interests), which includes 65 blocks in the deepwater, six of which are producing; 10 blocks on the conventional shelf, four of which are producing; and an overriding royalty interest in three deepwater blocks, two of which are producing.  W&T acquired total undeveloped leasehold acreage of approximately 312,000 gross acres, 91% of which is in deepwater.  As of the closing date, the adjusted purchase price paid for the Newfield properties, as reflected on the preliminary closing statement, was approximately $208 million, subject to further post-effective date adjustments and assumption of asset retirement obligations associated with these properties.  The acquisition was funded from W&T’s available cash on hand and revolving credit facility.

Total proved and probable reserves acquired include 7.7 million barrels of oil equivalent (MMBoe) and 1.2 MMBoe, respectively, per third-party engineers’ estimates as of July 1, 2012.  During July, average production from these properties was approximately 8,350 Boe per day net, of which 37% was oil and approximately 75% was from the deepwater.  W&T expects to take over operations of approximately 90% of the production.

The producing deepwater blocks are in the Garden Banks, Mississippi Canyon and Viosca Knoll areas.  In addition to the production in those deepwater blocks, W&T Offshore acquired exploration potential in each of those areas, as well as in the Green Canyon and Atwater Valley areas.  The producing conventional shelf leases are in Ship Shoal, West Cameron, Vermilion, and West Delta.

Tracy W. Krohn, Chairman and Chief Executive Officer, commented, “This acquisition adds production, reserves, cash flow and several hundred million barrels of unrisked exploratory potential to our portfolio.  With the addition of these primarily deepwater properties, we have substantially expanded our footprint in an area that offers significant upside potential.”  

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Press Release, October 8, 2012