Medco Energi has completed the purchase of East Cameron Block 316 from ERT for $18 million. The transaction, with an effective date of Feb. 25, will increase Medco Energi's production by 10 million cubic feet of gas, or 1,667 barrels of oil equivalent, per day.
"The acquisition will significantly increase our production and proven reserves," said President L. Dale Wooddy III. "Additionally, we think the block has a lot of unrealized upside potential and will add several new drilling prospects to our exploration and development well inventory."
East Cameron Block 316 is immediately adjacent to Medco Energi's currently producing Blocks 317 and 318, both of which have platforms on them. Under an existing production handling agreement, Medco Energi processes the natural gas produced from Block 316's two subsea wells.
Once the pipeline that services the sector is operational in mid-to-late March -- after being shutdown since last year's hurricanes -- Medco Energi will realize immediate cash flow from the purchase with very little initial risk.
"This acquisition fits perfectly into Medco Energi's strategy to grow the company through acquisitions, new exploration projects and developing reserves in and around our existing asset base," Wooddy said. "Although we've recently made a shift toward onshore properties, this acquisition shows our commitment to continue investing in the US GOM shelf, especially where there is drilling upside and where we can leverage our existing asset base. We are convinced this area of the Gulf is both under-explored and under-developed, even at today's lower commodity prices."
Medco Energi US, a wholly owned subsidiary of PT Medco Energi Internasional Tbk, is engaged in the exploration, development, acquisition and production of oil and natural gas reserves in the Gulf of Mexico, Louisiana and Texas. The company is headquartered in Lafayette, La., with an exploration and business development office in Houston.
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