U.S. player consolidates ownership of Gulf of Mexico assets by increasing its stake

Houston-based oil and gas producer W&T Offshore has consolidated its ownership of the recently acquired shallow-water assets in the Gulf of Mexico following the acquisition of remaining interests.

Back in January 2022, W&T Offshore entered into a deal worth $47 million to acquire more acreage in the Gulf of Mexico and the acquisition was successfully completed in February 2022.

In a statement on Tuesday, W&T Offshore informed that it had acquired the remaining working interests in the oil and gas producing properties purchased earlier during the year from an undisclosed private seller.

Located in federal shallow waters in the central region of the Gulf of Mexico at Ship Shoal 230, South Marsh Island 27/Vermilion 191, and South Marsh Island 73 fields, the additional interests in these assets were acquired for a cash consideration of approximately $17.5 million using cash on hand.

Tracy W. Krohn, Chairman and Chief Executive Officer, commented: “We were pleased when we were able to purchase our initial interests in these fields in the first quarter of the year and this transaction further consolidates our ownership over those assets.”

According to the U.S. player, this transaction had an effective date and closing date of 1 April 2022 and it adds internally-estimated proved reserves of approximately 1.4 million barrels of oil equivalent (Boe) – 70 per cent oil – and proved and probable, or 2P, reserves of 2.0 million Boe – 75 per cent oil – as of 31 December 2021 assuming strip pricing as of 2 March 2022.

Furthermore, the acquisition with an estimated net sales rate of approximately 900 Boe per day – ~80 per cent oil – adds an average of 20 per cent working interest in over 50 gross producing wells currently operated by W&T Offshore across three shallow-water fields. In addition, it provides additional upside from additional pay sands in existing wellbores and potential opportunities for future drilling.

“As was noted when we announced the original acquisition earlier this year, the assets are very complementary to our existing assets with a solid base of proved reserves and strong free cash flow and upside potential. Acquisitions such as this one are one way that we create value for our shareholders, and we will continue to seek other accretive transactions,” added Krohn.

As of 31 December 2021, W&T Offshore had working interests in 43 fields in federal and state waters and has under lease approximately 606,000 gross acres, including approximately 419,000 gross acres on the Gulf of Mexico Shelf and approximately 187,000 gross acres in the Gulf of Mexico deepwater.

When it comes to the firm’s recent executive changes, it is worth reminding that the U.S. company decided to fill the Chief Operating Officer (COO) role by promoting internally last month to turn its growth goals into reality.