W&T Closes Purchase Of Exxonmobil’s Gulf Of Mexico Assets

Houston-based W&T Offshore has closed the purchase of ExxonMobil’s interests in and operatorship of oil and gas producing properties in the eastern region of the Gulf of Mexico, offshore Alabama, and related onshore and offshore facilities and pipelines.

According to Offshoreenergytoday.com, W&T Offshore entered into a purchase and sale agreement with ExxonMobil to acquire its interests in the Gulf of Mexico assets for $200 million in June 2019.

After taking into account customary closing adjustments and an effective date of January 1, 2019, cash consideration paid by W&T was $167.6 million which includes a previously-funded $10 million deposit, W&T said on Tuesday.

The company added that the acquisition was funded by cash on hand and borrowings on its previously-undrawn revolving bank credit facility. W&T will also assume asset retirement obligations associated with these assets.

The deal includes working interests in nine GOM offshore producing fields and an onshore treatment facility that are adjacent to existing properties owned and operated by W&T.

The transaction adds net proved reserves of approximately 74 million barrels of oil equivalent (Boe) of which 99% are proved developed producing and 22% are liquids estimated as of the effective date.

The acquired properties produced approximately 19,800 net Boe per day (25% liquids) in the first quarter of 2019.

In addition, the company announced it is the apparent high bidder on two shallow water blocks in the GOM Outer Continental Shelf (OCS) Region-wide Oil and Gas Lease Sales 253 held by the Bureau of Ocean Energy Management (BOEM) on August 21, 2019.

The two shallow water blocks, Ship Shoal 332 and 367, cover approximately 10,300 acres and, if awarded, the company will pay approximately $0.3 million for the awarded leases, which reflects a 100% working interest in the acreage and a royalty rate of 12.5%. The blocks have a five-year lease term and are in close proximity to current W&T acreage.

Tracy W. Krohn, Chairman and Chief Executive Officer, stated, “We are pleased to have closed our purchase of free cash flow positive, producing properties in the GOM from ExxonMobil exactly as scheduled. These low-decline assets add significant reserves and production to our portfolio and are adjacent to our current operations. This provides us the opportunity to recognize increased scale, rationalize operations and capture cost efficiencies to further grow cash flow.

“In addition, we remain active in seeking other new GOM opportunities through our participation in the BOEM lease sale earlier this month where we were named apparent high bidders on two shallow water blocks. We will continue to focus on maximizing value through accretive acquisitions, organic growth and operational excellence.”