Entek Energy is selling its Gulf of Mexico portfolio citing challenging market conditions. The company on Monday said it would sell its entire Gulf of Mexico portfolio to Peregrine Oil and Gas.
These portfolio comprises Entek’s respective 38% and 25% interests in the GA A133 and PN 975 blocks, and its overriding royalty interest in the VR 341/342 blocks.
According to Entek the GA A133 and PN 975 gas developments have now both been shut-in following their natural depletion and are scheduled to be plugged and abandoned (P&A) during 2016/17. As part of this transaction, Peregrine the operator of both of these developments, has assumed all of Entek’s P&A obligations in GA A133 and PN 975 including the provision by Peregrine for all bonding requirements which have recently been increased by the relevant US Government authorities.
Entek’s share of these bonding and abandonment obligations is estimated to total in excess of US$1 million, the company said.Furthermore, Peregrine has agreed to pay Entek a cash consideration of approximately US$1.86million.
Entek’s Chairman, Graham Riley, said: “Our decision to exit the Gulf of Mexico follows a strategic review by your Board in light of the continuous challenging oil and gas price and capital market conditions which, coupled with new onerous bonding requirements for future P&A obligations, has significantly restricted the participation of junior companies like Entek in US offshore producing assets. This transaction eliminates the significant and open ended funding obligations for the abandonment of Entek’s two depleted Gulf of Mexico gas interests and stabilises the Company’s working capital position to around US$3 million upon receipt of funds expected shortly.”