Callon to Acquire BP's Stake in Entrada
Callon Petroleum Co. has signed an agreement with BP Exploration and Production Co. to purchase BP's 80% working interest in the Entrada Field in the US Gulf of Mexico for total cash consideration of $190 million.
The purchase price includes $150 million payable at closing and an additional $40 million payable after the achievement of certain production milestones. The purchased interests include five federal offshore blocks at Garden Banks Blocks 738,782,785,826 and 827, subject to certain depth limitations. Upon the completion of the acquisition, Callon will own a 100% working interest in the Entrada Field and will become operator of the development project.
The company's independent petroleum engineers have estimated that net proved reserves attributable to the interests being purchased from BP are approximately 13.7 million barrels of crude oil (MMbo) and 68.1 billion cubic feet of natural gas (Bcf). In addition, associated net probable reserves are estimated to be 13.7 MMbo and 32.9 Bcf representing a total proved plus probable net reserve base of approximately 44.2 million barrels of oil equivalent to be acquired.
The company has received a commitment from Merrill Lynch Capital Corporation to make available to Callon a 7-year, $200 million revolving credit facility secured by a lien on the Entrada properties, to finance the initial purchase price of the acquisition and a portion of the related development costs. The acquisition is expected to close within the next 45 days.
According to Fred Callon, Chairman and CEO, "We are very excited about the opportunity this presents for Callon Petroleum Company to manage the development of the Entrada Field and to significantly increase the company's production once the Entrada Field commences production."
Callon Petroleum Company is engaged in the exploration, development, acquisition and operation of oil and gas properties primarily in the Gulf Coast region. Callon's properties and operations are geographically concentrated in Louisiana, Alabama and the offshore waters of the Gulf of Mexico.
Operates 28 Offshore Rigs
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