W&T Offshore, Inc. has acquired a 35.7% working interest in the Fairway field in Mobile Bay, Alabama and the associated Yellowhammer gas processing plant.
In August 2011, W&T Offshore acquired from Shell 64.3% interest in the Fairway Field along with a 64.3% interest in the associated Yellowhammer gas processing plant.
With the completion of this acquisition, W&T Offshore now holds a 100% working interest in both assets. The adjusted purchase price at closing was $18.2 million, plus assumption of asset retirement obligations associated with these properties.
The Fairway Field is located in the shallow state waters of Mobile Bay, Alabama, and the Yellowhammer plant is located onshore in Alabama about 17 miles northwest of the Fairway Field. Average gross production from the Fairway Field in July 2014, was approximately 36.9 million cubic feet (MMcf) of natural gas per day and 1,477 barrels of natural gas liquids per day or approximately 45.7 MMcf of natural gas equivalent per day. W&T’s internal estimates of proved reserves associated with the acquired property as of July 1, 2014 are 27.3 billion cubic feet equivalent, of which 74% is natural gas, with a PV-10 value of proved reserves of $59 million (excluding any associated abandonment liability). Including W&T’s internal probable reserves estimates, the PV-10 value is $65 million. These reserves were based on SEC reserves definitions and pricing as of June 30, 2014.
Tracy W. Krohn, Chairman and Chief Executive Officer, commented, “Our original acquisition of a 64.3% interest in these two assets in August 2011 has provided a substantial return on our earlier investment. These quality, long-life properties continue to generate substantial cash flow and have identified upside potential. This transaction is expected to be immediately accretive on the basis of both cash flow and production metrics.”