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W&T Offshore Inc. has completed its acquisition of working interests in eight shallow water oil and gas-producing assets in the central and eastern shelf region of the Gulf of Mexico (GOM) from an undisclosed private seller.
The assets were acquired for a gross consideration of $32 million, subject to customary post-effective date purchase price adjustments, W&T said in a news release Thursday. W&T used its cash on the balance sheet to pay the net purchase price. The acquisition has a closing date of September 20 and an effectivity date of June 1.
W&T said the assets, which encompass eight properties, include 30,646 gross acres (22,079 net acres) and are currently producing approximately 2,400 barrels of oil equivalent per day (boepd), of which 42 percent are oil. According to an internal report using September 12 NYMEX strip pricing, estimated proved reserves as of June 1 for the eight properties totaled 3.2 million barrels of oil equivalent (MMboe) of which 100 percent are proved developed. The 2P reserves for the acquired properties are estimated to be 5.1 MMboe, of which 48 percent is oil.
The acquisition adds producing properties located within W&T’s existing area of operations in water depths ranging from 25 to 265 feet, according to the release.
“All of the producing properties included in the acquisition announced today meet the time-tested investment criteria we have used for our prior successful acquisitions”, W&T Chairman, President, and CEO Tracy Krohn said, “These assets have strong production rates, are generating positive free cash flow, and have a solid base of proved developed reserves and identified upside potential with strong 2P reserves. We also see the opportunity to reduce operating costs to further increase free cash flow. We continue to utilize our strong cash position and expertise in acquiring complementary GOM assets to enhance the scale of W&T. Acquisitions have been a key component of how we have grown reserves and production at W&T.”
In August, W&T reported a net loss of $12.1 million for the second quarter, compared to a net income of $123.4 million for the comparable period in 2022. The company posted total revenues of $126.2 million for the quarter, compared to $273.8 million for the prior-year quarter.
W&T increased its second-quarter 2023 production by 14 percent compared to the previous quarter to 37,000 boepd, or 3.4 MMboe, the company said in a separate earnings release.
“With our financial flexibility and strong liquidity position, we believe we are very well positioned to take advantage of potential acquisitions that may present themselves in the near term and poised to continue delivering on our strategic vision… We remain committed to enhancing shareholder value through a proven strategy focused on free cash flow generation and operational excellence, which we believe positions us well for the future”, Krohn said.
In the release, the company also highlighted the awarding of two shallow water blocks in the GOM Lease Sale 259 held by the Bureau of Ocean Energy Management in March. The two blocks, Eugene Island South Addition block 371 and Eugene Island South Addition block 387, cover a total of approximately 10,000 gross acres.
W&T will pay approximately $340,000 in total for the awarded leases combined, which reflects a 100 percent working interest in the acreage. The blocks have a lease term of five years and an 18.75 percent royalty, according to an earlier news release from the company.
To contact the author, email rocky.teodoro@rigzone.com
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