W&T Offshore Inc. on Jan. 10 agreed to a $47 million cash acquisition of producing properties in the Gulf of Mexico Shelf as the region’s A&D environment improves, according to CEO Tracy W. Krohn.
“Acquisitions are a core component of how we create value at W&T and this transaction is another great example of an acquisition that adds value for our stockholders,” commented Krohn, who also serves as chairman of the W&T Offshore board, in the company release.
The Houston-based company entered a definitive purchase and sale agreement to purchase the oil-weighted operated producing properties from privately-held ANKOR E&P Holdings Corp. and KOA Energy LP. The pair of companies had previously retained Detring Energy Advisors and Oil & Gas Asset Clearinghouse LLC to market for sale the assets located in the central region of the Gulf of Mexico Shelf.
“These assets complement our existing high quality portfolio extremely well, and given we operate other assets near these properties, we believe we’ll be able to leverage our scale and expertise to capture synergies and maximize the value of these assets,” Krohn said.
The transaction will increase W&T’s federal shallow-water acreage in the Gulf of Mexico by approximately 57,500 gross (46,000 net) acres and add over 50 gross producing wells in three shallow-water fields: the Ship Shoal 230, South Marsh Island 27/Vermilion 191 and South Marsh Island 73 fields.
Average working interest is 80% and current estimated production is approximately 3,400 boe/d (74% oil). W&T Offshore estimates proved reserves as of the transaction effective date of July 1 were 5.5 MMboe, of which 69% is oil. Substantially all of the proved reserves are proved developed, according to the company release.
“The current environment for acquisitions in the Gulf of Mexico continues to be very good and we are well positioned to pursue additional attractive opportunities that present themselves,” Krohn added in the release.
W&T Offshore will fund its latest acquisition using entirely cash on hand. The transaction is anticipated to close by the end of the first quarter.
Since the transaction is expected to close in early 2022, net reserves added from the transaction will be included in W&T’s mid-year 2022 reserve report, the company release said.
W&T Offshore currently has working interests in 41 producing fields in federal and state waters and has under lease approximately 611,000 gross acres, including approximately 424,000 gross acres on the Gulf of Mexico Shelf and approximately 187,000 gross acres in the Gulf of Mexico deepwater.