W&T Offshore Adds Six Gulf of Mexico Fields Through Bankruptcy Auction

The operator was the successful bidder on former shallow-water assets of Cox Oil, Energy XXI, and others.

Flying Crane and Oil Rig
W&T Offshore initially plans to boost production from the new assets via workovers and other repair work.
SOURCE: Michael Watkins/Getty Images/iStockphoto.

W&T Offshore completed the acquisition of six fields in shallow waters of the Gulf of Mexico (GOM) following a successful bid for the assets offered by MLCJR, Cox Oil Offshore, Cox Operating, Energy XXI GOM, Energy XXI Gulf Coast, EPL Oil & Gas, and M21K—all companies that filed for bankruptcy last year.

The operated paid $72 million for six fields, excluding certain closing costs. The deal was funded from the company’s cash on hand. The six fields acquired include Eugene Island 64, Main Pass 61, Mobile 904, Mobile 916, South Pass 49, and West Delta 73.

The estimated production that has ranged from approximately 3,700 to 5,700 BOE/D (around 68% liquids) during the period month-to-date 19 January 2024. W&T believes that it can increase production on these properties through workovers, recompletions and facility repairs.

The six fields produced around 8,300 BOP/D (48% liquids) on average in April 2023, the month prior to the bankruptcy filing by the debtors in May 2023.

The assets add proved reserves of 18.7 million BOE (62% liquids) as of 1 January 2024. Proved plus probable reserves are estimated at 60.6 million BOE (78% liquids) based on an independent engineering report prepared by Netherland Sewell & Associates.

Tracy W. Krohn, chairman, president, and CEO of W&T Offshore, said, “We plan to increase production in the near term with capital-efficient, low-cost workover, recompletion, and maintenance projects. We expect to realize synergies on these new assets due to their proximity to our existing fields, which can reduce operating costs and further increase free cash flow. Acquisitions continue to be a key component of how we build and grow value, reserves, and production at W&T."

The six fields acquired all include a 100% working interest and an average 82% net revenue interest. They are in water depths ranging between approximately 15 and 400 ft.

As a result of the acquisition, W&T plans to invest additional funds for increasing production and reducing costs in these assets long term.

The company now plans to defer the drilling of Holy Grail, which is a proven undeveloped well in its Magnolia field. The operator said it will be exploring a drilling joint venture, similar to what it did with investors in 2018 through Monza Energy that may include some of the company’s 100% owned and operated deepwater wells, including the Holy Grail, Thunderbolt, Zeus, and Redbolt prospects.