W&T Offshore has agreed to acquire ExxonMobil’s interests and operatorship of oil and gas producing properties in the eastern region of the Gulf of Mexico, offshore Alabama, and related onshore processing facilities, for $200m.
The acquisition includes interests in nine US Gulf offshore producing fields.
The company believes the acquisitions will allow significant synergies, consolidations and cost savings as W&T will become the largest operator in the area and provide additional upside opportunities from potential future drilling locations and facility modifications.
Total net proved reserves to be acquired are 74 million barrels of oil equivalent, of which 22% are liquids.
“We are pleased with this purchase of producing properties which meets all the criteria we have outlined in the past as necessary to drive increased shareholder value from acquisitions. These low decline assets are highly accretive, free cash flow positive, and adjacent to our current operations thereby providing us the opportunity to recognize increased scale, rationalize operations and capture cost efficiencies to further grow cash flow. In addition, we also have the opportunity for further growth in reserves from potential field life extensions and drilling and facility upgrade opportunities. We believe this acquisition, with its long-life reserves, production and infrastructure, complements our ongoing strategy to recognize value for our shareholders through drill bit success, effective risk and cost management, and joint venture partnership,” said Tracy Krohn, chairman and chief executive officer of the company.