W&T Offshore, Inc. has closed the previously-announced purchase of ExxonMobil Corporation’s interests in and operatorship of oil and gas producing  properties in the eastern region of the Gulf of Mexico (“GOM”), offshore Alabama, and related onshore and offshore facilities and pipelines. After taking into account customary closing adjustments and an effective date of January 1, 2019, cash consideration paid by W&T was $167.6 million which includes a previously-funded $10 million deposit. The acquisition was funded  by cash on hand and borrowings on its previously-undrawn revolving bank credit facility; W&T will also assume asset retirement obligations associated with these assets.

Key highlights of the ExxonMobil transaction include:

• Adds net proved reserves of approximately 74 million barrels of oil equivalent (“Boe”) of which 99% are proved developed producing and 22% are liquids estimated as of the effective date
• Produced approximately 19,800 net Boe per day (25% liquids) from the acquired properties in the first quarter of 2019
• Includes working interests in nine GOM offshore producing fields and an onshore treatment facility that are adjacent to existing properties owned and operated by W&T
• Creates significant opportunities for synergies, consolidations and cost savings as W&T will become the largest operator in the area
• Allows for potential to add incremental reserves with little or no capital by consolidating operations and extending field life
• Provides additional upside opportunities from potential future drilling locations and facility modifications
• In addition, the Company announced it is the apparent high bidder on two shallow water blocks in the GOM Outer Continental Shelf (OCS) Region-wide Oil and Gas Lease Sale 253 held by the Bureau of Ocean Energy Management ("BOEM") on August 21, 2019.

Tracy W. Krohn, Chairman and Chief Executive Officer, stated, 
"We are pleased to have closed our purchase of free cash flow positive, producing properties in the GOM from ExxonMobil exactly as scheduled.  These low-decline assets add significant reserves and production to our portfolio and are adjacent to our current operations. This provides us the opportunity to recognize increased scale, rationalize operations and capture cost efficiencies to further grow cash flow.  In addition, we remain active in seeking other new GOM opportunities through our participation in the BOEM lease sale earlier this month where we were named apparent high bidders on two shallow water blocks. We will continue to focus on maximizing value through accretive acquisitions, organic growth and operational excellence. We have a premier portfolio of both shallow water and deepwater properties that generate a solid and consistent source of cash flow with significant upside that will be further enhanced by this acquisition.”

GOM Lease Sale 253

W&T is the apparent high bidder on two shallow water blocks, Ship Shoal 332 and 367.  These two blocks cover approximately 10,300 acres and, if awarded, the Company will pay approximately $0.3 million for the awarded leases, which reflects a 100% working interest in the acreage and a royalty rate of 12.5%.  The blocks have a five-year lease term and are in close proximity to current W&T acreage.

Link to W&T Offshore US Gulf of Mexico country profile