Energy XXI to Buy Pogo's GoM Shelf Properties
Energy XXI (Bermuda) Limited has conditionally agreed to purchase certain Gulf of Mexico shelf oil and natural gas properties from Pogo Producing Company for a cash consideration of $419.5 million.
The properties include 28 fields currently producing approximately 7,400 net barrels of oil equivalent (BOE) per day, and with net proved reserves of approximately 20 million BOE. About 62 percent of the production and 70 percent of the reserves are oil. On a reserves basis, 73 percent of the properties are operated and 74 percent of the reserves are proved developed. Offshore leases included in the purchase agreement total nearly 282,000 gross acres (91,600 net acres).
"The Pogo properties are an excellent addition to our existing asset base," Energy XXI Chairman and CEO John Schiller said. "These properties largely overlap our current offshore holdings from both a geographic and geologic standpoint, which offers significant operating synergies. This transaction will boost our recent production run rate by more than 40 percent and our proved reserve base by about 50 percent.
"Given current oil and gas prices, we consider this an attractive investment based solely on the proved properties, and we expect the deal to be immediately accretive to cash flow," he said. "We also see upside potential as more than 1,500 BOE per day of net production is restored at hurricane-affected facilities and as we drill the inventory of identified development and exploration locations."
The transaction will be funded through a combination of bank debt and a private placement of debt. Jefferies & Company, The Royal Bank of Scotland and BNP Paribas are jointly arranging the required financing. Energy XXI has placed a 5 percent deposit into escrow, which includes cash and 3.98 million newly issued shares that will be returned to the company for cancellation upon closing of the transaction.
The purchase is subject to customary closing conditions and adjustments, such as adjustments to the purchase price to reflect revenues generated between the effective date of April 1, 2007 and the closing, which is expected by June 1, 2007.
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Company: Energy XXI more info
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