W&T buys Magnolia field from ConocoPhillips for $20 million

U.S.-based oil and gas company W&T Offshore has bought ConocoPhillips’ stake in the Magnolia field, located in the central region of the deepwater Gulf of Mexico, offshore Louisiana, for $20 million.

W&T said on Thursday it had completed an oil-weighted producing property acquisition from ConocoPhillips.

The acquisition is comprised of a 75% working interest in and operatorship of the Magnolia field located at Garden Banks blocks 783 and 784 for $20 million, and the assumption of all abandonment obligations associated with the properties, as of the effective date of October 1, 2019, subject to normal and customary adjustments.

Tracy W. Krohn, Chairman and Chief Executive Officer, commented, “We are pleased to announce another purchase of producing properties that meets all the criteria we have outlined in the past as necessary to drive increased shareholder value from acquisitions. At the beginning of the year, we announced that we were looking closely at acquisition opportunities and that the current environment for acquisitions in the Gulf of Mexico was very good. We have now executed two accretive transactions in 2019. We will continue to actively pursue any opportunities that meet our criteria and are accretive to W&T.”

The acquisition consists of ConocoPhillips’ 75% working interest in the Magnolia field which is located in approximately 4,700 feet of water about 180 miles south of Cameron, Louisiana. It was discovered in 1999 and developed through a Tension Leg Platform (TLP) which currently includes six producing wells that are tied back to a regional production hub at the Enchilada platform at Garden Banks 128, approximately 50 miles away.

The effective date is October 1, 2019, and the transaction closed on December 12, 2019. W&T’s reported production volumes will reflect Magnolia’s production immediately following the date of closing. The cash acquisition cost was funded from W&T’s available cash on hand and revolving credit facility.

Total net proved reserves to be acquired are 4.1 million barrels of oil equivalent, of which 67% are oil and 5% natural gas liquids. Current reserves are proved developed and 73% of the reserves are classified as proved developed producing.

The Magnolia field produced approximately 2,300 Boe per day (82% oil) net to ConocoPhillips in the month of October 2019. The transaction added 11,500 gross deepwater acres (8,600 net acres).