W&T Offshore Announces Acquisition of Producing Properties in the Gulf of Mexico

Rhea-AI Summary

W&T Offshore (NYSE: WTI) has announced a definitive agreement to acquire oil and gas properties in the Gulf of Mexico for $47 million. Effective July 1, 2021, the acquisition is expected to close by Q1 2022. Key highlights include the addition of 5.5 million barrels of proved reserves and 3.4 MBoe per day of production. The transaction also encompasses over 50 wells and is set to enhance operational synergy and cash flow, funded entirely in cash. This strategic move aligns with W&T's growth strategy through acquisitions.

Positive

• Acquisition of 5.5 million barrels of oil equivalent reserves (69% oil).
• Current estimated production of 3.4 MBoe per day (74% oil).
• Addition of over 50 gross producing wells (average working interest of 80%).
• Potential for operational synergies and increased free cash flow.
• Acquisition funded entirely with cash on hand.

Negative

• None.

HOUSTON, Jan. 10, 2022 (GLOBE NEWSWIRE) -- W&T Offshore, Inc. (NYSE: WTI) (“W&T” or the “Company”) today announced that it has entered into a definitive purchase and sale agreement to acquire working interests in and operatorship of oil and gas producing properties in Federal shallow waters in the central region of the Gulf of Mexico (“GOM”) for total cash consideration of $47 million, subject to normal and customary post-effective date adjustments. The transaction will have an effective date of July 1, 2021, and is anticipated to close by the end of the first quarter of 2022. Key highlights of the transaction are as follows:

• Adds internally-estimated proved reserves of 5.5 million barrels of oil equivalent (Boe) (69% oil) and proved and probable, or 2P, reserves of 7.6 million Boe (75% oil) as of July 1, 2021 assuming strip pricing as of December 7, 2021;
• Current estimated production of approximately 3.4 MBoe per day (74% oil);
• Adds over 50 gross producing wells (average working interest of 80%) in three shallow water fields;
• Provides potential upside through recompletions and operational synergies; and
• Will be funded using cash on hand.
  

Tracy W. Krohn, Chairman and Chief Executive Officer, commented, “I am pleased to announce this acquisition of oil-weighted operated producing properties that are generating positive cash flow. Acquisitions are a core component of how we create value at W&T and this transaction is another great example of an acquisition that adds value for our stockholders. It meets all of our selection criteria, has a strong base of proved developed reserves, provides us with identified upside potential without significant capital costs, and allows us the ability to reduce costs to further increase free cash flow. These assets complement our existing high quality portfolio extremely well, and given we operate other assets near these properties, we believe we’ll be able to leverage our scale and expertise to capture synergies and maximize the value of these assets. The current environment for acquisitions in the Gulf of Mexico continues to be very good and we are well positioned to pursue additional attractive opportunities that present themselves.”

Transaction Details

W&T is acquiring operated, producing shallow water assets in the central region of the GOM at Ship Shoal 230, South Marsh Island 27/Vermilion 191, and South Marsh Island 73 fields from privately-held ANKOR E&P Holdings Corporation and KOA Energy LP for cash consideration of $47 million and assumption of related asset retirement obligations, subject to normal and customary post-effective date adjustments. The acquisition includes 53 producing wells and 16 structures. The effective date of the transaction is July 1, 2021 and is anticipated to close by the end of the first quarter of 2022. The acquisition will be funded entirely using cash on hand.  

Production volumes, sales, and costs associated with the acquired properties will be included in W&T’s results following the closing of the transaction. Current estimated production from the properties is 2.5 MBbl per day of oil and 5.4 MMcf per day of natural gas, or a total of 3.4 MBoe per day. The Company estimates proved reserves as of July 1, 2021 (assuming strip pricing as of December 7, 2021) were 5.5 MMBoe, of which 69% is oil. Substantially all of the proved reserves are proved developed. Using the same assumptions described above, estimated proved and probable, or 2P, reserves were 7.6 MMBoe (75% oil).   Since the transaction is expected to close in early 2022, net reserves added from the transaction will be included in W&T’s mid-year 2022 reserve report. The transaction will increase W&T’s Federal shallow water acreage by approximately 57,500 gross acres (46,000 net acres).

About W&T Offshore

W&T Offshore, Inc. is an independent oil and natural gas producer with operations offshore in the Gulf of Mexico and has grown through acquisitions, exploration, and development. The Company currently has working interests in 41 producing fields in federal and state waters and has under lease approximately 611,000 gross acres, including approximately 424,000 gross acres on the Gulf of Mexico Shelf and approximately 187,000 gross acres in the Gulf of Mexico deepwater.   A majority of the Company’s daily production is derived from wells it operates. For more information on W&T, please visit the Company’s website at www.wtoffshore.com.

Forward-Looking and Cautionary Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect our current views with respect to future events, based on what we believe are reasonable estimates and assumptions. No assurance can be given, however, that these events will occur or that our estimates will be correct. These statements are subject to risks and uncertainties that could cause actual results to differ materially including, among other things, market conditions, oil and gas price volatility, uncertainties inherent in oil and gas production operations and estimating reserves, uncertainties of the timing and impact of bringing new wells online and repairing and restoring infrastructure hurricane damage, unexpected future capital expenditures, competition, the success of our risk management activities, governmental regulations, uncertainties and other factors discussed in W&T Offshore’s Annual Report on Form 10-K for the year ended December 31, 2020 and subsequent Form 10-Q reports found at www.sec.gov or at our website at www.wtoffshore.com under the Investor Relations section. Investors are urged to consider closely the disclosures and risk factors in these reports. Additionally, the estimates of proved and probable reserves included in this release were not estimated under SEC rules and guidelines, including the SEC’s twelve-month average commodities pricing, the use of which could result in different estimates.

CONTACT:		Al Petrie Investor Relations Coordinator apetrie@wtoffshore.com 713-297-8024		Brent Collins Director of Investor Relations bcollins1@wtoffshore.com 713-624-7364

FAQ

What is the purpose of W&T Offshore's acquisition in the Gulf of Mexico?

The acquisition aims to enhance production and reserves, contributing to increased free cash flow and operational synergies.

How much cash is W&T Offshore spending on this acquisition?

W&T Offshore is acquiring the properties for a total cash consideration of $47 million.

When is the expected closing date for W&T Offshore's acquisition?

The acquisition is anticipated to close by the end of the first quarter of 2022.

What are the estimated reserves acquired by W&T Offshore?

The acquisition adds approximately 5.5 million barrels of proved reserves and 7.6 million barrels of proved and probable reserves.

What is the current production estimate from the acquired properties by W&T Offshore?

The current estimated production from the acquired properties is approximately 3.4 MBoe per day.