W&T Offshore to acquire offshore blocks from Newfield Exploration
HOUSTON -- W&T Offshore, Inc, announced that it has entered into an agreement with Newfield Exploration Company and its subsidiary, Newfield Exploration Gulf Coast LLC to acquire all of Newfield's exploration and production properties in the Gulf of Mexico. The transaction includes 78 federal offshore lease blocks on approximately 432,700 gross acres.
There are 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. Total undeveloped acreage is approximately 312,000 gross acres, 91% of which is in deepwater. The purchase price is $228 million (subject to customary effective date adjustments) and the assumption of future asset retirement obligations. The effective date of the transaction is July 1, 2012. The transaction is estimated to close on or around October 1, 2012. The acquisition will be funded from W&T's available cash on hand and revolving credit facility.
Total proved and probable reserves are 7.7 million bbl of oil equivalent (MMBoe) and 1.2 MMBoe, respectively, per third-party engineers. During July, average production from these properties was approximately 8,350 Boe per day net, of which 37% is oil and approximately 75% is from the deepwater. W&T will 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, there is 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, Vermillion, and West Delta.
Tracy W. Krohn, Chairman and Chief Executive Officer, stated, "This acquisition will substantially increase our current production, provide numerous development and exploration opportunities in the deepwater Gulf of Mexico, as well as significantly expand our deepwater acreage holdings."