LLOG Exploration Offshore LLC signed a deal on April 29 to collaborate with an affiliate of Spain’s Repsol SA on the development of deepwater assets in the U.S. Gulf of Mexico (GoM).

LLOG, based in Convington, La., is one of the largest privately-owned E&P companies in the U.S. Its deal with Repsol follows a multibillion-dollar sale of deepwater assets in the GoM region to Murphy Oil Corp. announced last week.

The agreement with Repsol covers Keathley Canyon blocks including the exchange of working interest in the Leon and Moccasin deepwater discoveries. The companies currently collaborate on the Buckskin development, also located within the Keathley Canyon.

Leon is a discovery drilled by Repsol in late 2014 on Keathley Canyon block 642 and is located about 200 miles offshore Louisiana in about 1,829 m (6,000 ft) of water. Meanwhile, Moccasin, operated by LLOG, is a discovery made on Keathley Canyon 736 in 2011 in over 1,981 m (6,500 ft) of water.

A part of the agreement, Repsol will acquire a 30% working interest in the Moccasin discovery with LLOG retaining a 31.35% interest. In exchange, LLOG will take a 33% interest in Leon while Repsol will have a 50% interest.

Moccasin and Leon are less than 32 km (20 miles) apart, which Philip LeJeune, president and CEO of LLOG, said provides the “perfect” opportunity for co-development.

The agreement will provide for the drilling of a delineation well in the Leon discovery this coming summer, which will be operated by LLOG. Following the scheduled delineation drilling, potential development options will be evaluated for the field.

“We have worked well together at Buckskin and the delineation of the potentially significant discoveries at Leon and Moccasin is another perfect match for the deepwater technical knowledge and development expertise that both our companies possess,” LeJeune said in a statement. “These highly prospective deepwater discoveries are in close proximity and are targeting the same Lower Tertiary formation that we are exploiting at Buckskin.”

The Leon discovery well was drilled to a total depth of about 9,754 m (32,000 ft) and encountered nearly 152 m (500 ft) of high-quality net oil pay in multiple sands in the Lower Tertiary formation.

The Moccasin discovery well was drilled to a total depth of over 9,449 m (31,000 ft) finding nearly 122 m (400 ft) of net oil in the Lower Tertiary. LLOG subsequently licensed the block in a 2017 lease sale. 

RELATED: Murphy Oil To Buy LLOG Deepwater Gulf Of Mexico Assets For Up To $1.6 Billion

The transaction with Murphy, expected to close during the second quarter, included 26 deepwater blocks in the GoM’s Mississippi Canyon and Green Canyon areas. Consideration for the transaction comprised roughly $1.4 billion cash plus up to $250 million in contingency payments.

Emily Patsy can be reached at epatsy@hartenergy.com.