W&T Offshore, Inc. has entered into an agreement with Callon Petroleum Operating Company (“Callon”) to acquire substantially all of Callon’s exploration and production properties in the Gulf of Mexico.
The transaction includes a 15% working interest in the Medusa field (deepwater Mississippi Canyon blocks 538 and 582), a 10% membership interest in Medusa Spar LLC (which owns a 75% interest in the Medusa field’s production facilities) and various interests in 12 non-operated Gulf of Mexico fields. The purchase price is $100 million (subject to customary post-effective date adjustments) and the assumption of $6.4 million of future asset retirement obligations. The effective date is July 1, 2013, and the transaction is expected to close on or about November 30, 2013. The acquisition will be funded from W&T’s available cash on hand and revolving credit facility.
Total net proved reserves to be acquired are 2.4 million barrels of oil equivalent, all of which are classified as proved developed reserves; probable reserves of 2.3 million barrels of oil equivalent; and possible reserves of 2 million barrels of oil equivalent. These reserves were determined by Netherland, Sewell and Associates, Inc., as of July 1, 2013, based on SEC reserves definitions and recent NYMEX pricing. During September, average gross daily production from the interests being acquired in the Medusa field was approximately 7,000 barrels of oil equivalent (1,050 barrels of oil equivalent net), of which 88% is oil; and the average net daily production from the remaining properties being acquired was approximately 5.1 million cubic feet of natural gas equivalent, of which 98% is natural gas.
Tracy W. Krohn, Chairman and Chief Executive Officer, stated, “We are pleased to add yet another quality deepwater field to our growing portfolio. The addition of reserves, production and infrastructure from this acquisition, coupled with the significant exploration opportunities in addition to our 3P reserve estimates, supports our ongoing efforts to expand the deepwater footprint of the company.”
Press Release, October 22, 2013