W&T Offshore Acquires Producing Properties in the Gulf of Mexico

Source: www.gulfoilandgas.com 1/10/2022, Location: North America

W&T Offshore has entered into a definitive purchase and sale agreement to acquire working interests in and operatorship of oil and gas producing properties in Federal shallow waters in the central region of the Gulf of Mexico ('GOM') for total cash consideration of $47 million, subject to normal and customary post-effective date adjustments. The transaction will have an effective date of July 1, 2021, and is anticipated to close by the end of the first quarter of 2022. Key highlights of the transaction are as follows:

- Adds internally-estimated proved reserves of 5.5 million barrels of oil equivalent (Boe) (69% oil) and proved and probable, or 2P, reserves of 7.6 million Boe (75% oil) as of July 1, 2021 assuming strip pricing as of December 7, 2021;

- Current estimated production of approx. 3.4 MBoe per day (74% oil);

- Adds over 50 gross producing wells (average working interest of 80%) in three shallow water fields;

- Provides potential upside through recompletions and operational synergies; and

- Will be funded using cash on hand.

Tracy W. Krohn, Chairman and Chief Executive Officer, commented, 'I am pleased to announce this acquisition of oil-weighted operated producing properties that are generating positive cash flow. 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. It meets all of our selection criteria, has a strong base of proved developed reserves, provides us with identified upside potential without significant capital costs, and allows us the ability to reduce costs to further increase free cash flow. 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. 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.'

Transaction Details

W&T is acquiring operated, producing shallow water assets in the central region of the GOM at Ship Shoal 230, South Marsh Island 27/Vermilion 191, and South Marsh Island 73 fields from privately-held ANKOR E&P Holdings Corporation and KOA Energy LP for cash consideration of $47 million and assumption of related asset retirement obligations, subject to normal and customary post-effective date adjustments. The acquisition includes 53 producing wells and 16 structures. The effective date of the transaction is July 1, 2021 and is anticipated to close by the end of the first quarter of 2022. The acquisition will be funded entirely using cash on hand.

Production volumes, sales, and costs associated with the acquired properties will be included in W&T’s results following the closing of the transaction. Current estimated production from the properties is 2.5 MBbl per day of oil and 5.4 MMcf per day of natural gas, or a total of 3.4 MBoe per day. The Company estimates proved reserves as of July 1, 2021 (assuming strip pricing as of December 7, 2021) were 5.5 MMBoe, of which 69% is oil. Substantially all of the proved reserves are proved developed. Using the same assumptions described above, estimated proved and probable, or 2P, reserves were 7.6 MMBoe (75% oil). 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 transaction will increase W&T’s Federal shallow water acreage by approximately 57,500 gross acres (46,000 net acres).

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