EPL acquires oil, gas assets in central GOM
HOUSTON -- EPL Oil & Gas, Inc. has executed a purchase and sale agreement to acquire oil and natural gas assets in the shallow-water central Gulf of Mexico (GOM) from Nexen Petroleum Offshore U.S.A. Inc. for $70.4 million.
The Eugene Island 258/259 field consists of five leases, namely 254, 255, 257, 258, and 259, all at 100% working interest. The assets are currently producing approximately 900 net Boe per day, about 95% of which is oil.
EPL estimates the proved reserves, as of the September 1, 2013, effective date, consist of approximately 2.6 million Boe of proved developed producing reserves, about 91% of which is oil. The field areas exhibit shallow decline and EPL has identified upside potential beyond the current proved reserves. The company also estimates the asset retirement obligation to be assumed in the acquisition is expected to total approximately $27 million.
Gary Hanna, EPL's President and CEO commented, "This purchase adds another layer of long-lived oil production to our current asset base and additional upside. The assets are within our shallow water Central GOM focus area, which allows for excellent operational synergies and efficient integration.”
“This purchase dovetails nicely into our commitment to acquire new 3D datasets. A new Full Azimuth Nodal dataset is currently being shot covering these field areas, and we expect to have the data in house during the second half of 2014. Additionally, post transaction, we will maintain substantial liquidity through our expanded revolving credit facility," he added.
The closing of the transaction is subject to customary closing conditions and adjustments. The economic effective date is September 1, 2013, with closing expected late January.