Newfield Sells GoM Assets To WTI
Sale of 78 federal offshore lease blocks, 65 of which are in the deepwater Gulf, on 432,700 gross acres.
W&T Offshore Inc (NYSE: WTI) plans to buy the Gulf of Mexico exploration and production properties from Newfield Exploration Co. (NYSE: NFX) for about $228 million.
The transaction includes 78 federal offshore lease blocks on about 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 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.
Third party engineers have determined that total proved and probable reserves are 7.7 million barrels of oil equivalent (BOE) and 1.2 million BOE, respectively. 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 of Houston-based W&T Offshore said, "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."
W&T Offshore, Inc. is an independent oil and natural gas producer focused primarily in the Gulf of Mexico and Texas.
For Houston-based Newfield, the sale represents its remaining assets in the Gulf of Mexico. Including the expected closing of this transaction, total year-to-date proceeds to Newfield from non-strategic asset sales will be approximately $580 million, about $300 million of which will come from GoM sales.
"This is another positive step along our path of better aligning our people and capital investments on our plays of the future," said Lee K. Boothby, Newfield’s chairman, president and chief executive. "Our focus today is on driving strong oil and liquids growth and increasing cash flow from our core assets onshore U.S. and in Southeast Asia."