W&T Offshore Inc. has taken over operatorship of Magnolia field in the central region of the deepwater Gulf of Mexico about 180 mi south of Cameron, La., following the Dec. 12 close of an acquisition from ConocoPhillips.
For $20 million, the company acquired a 75% working interest in the field and has assumed all abandonment obligations associated with the properties at Garden Banks Blocks 783 and 784 as of the effective date of Oct. 1, 2019. Discovered in 1999 in 4,700 ft of water, Magnolia is developed through a Tension Leg Platform which currently includes six producing wells tied back to a regional production hub at the Enchilada Platform 50 miles away at Garden Banks 128.
The transaction adds net proved reserves of 4.1 MMboe (73% proved developed producing, 67% oil, 5% natural gas liquids) and increases W&T’s deepwater acreage by 11,500 gross acres (8,600 net acres). The assets produced 2,300 net boe/d (82% oil) to ConocoPhillips’ interest in October 2019.
The properties provide additional upside from additional pay sands in existing well bores and potential opportunities for future drilling, W&T Offshore said in a press statement.
“At the beginning of the year, we announced that we were looking closely at acquisition opportunities and that the current environment for acquisitions in the Gulf of Mexico was very good,” said Tracy W. Krohn, chairman and chief executive officer. The company has executed two transactions this year and will pursue additional opportunities, he said.
In 2019’s third quarter, the company closed a deal to acquire interests in and operatorship of oil and gas producing properties in the eastern region of the Gulf of Mexico offshore Alabama and related onshore processing facilities from ExxonMobil Corp. for $200 million, which included 74 MMboe of net proved reserves (OGJ Online, July 1, 2019).
Also in 2019’s third quarter, the company was awarded two shallow water blocks (Ship Shoal 332 and 367) in Gulf of Mexico Lease Sale 253 held in August, adding some 10,300 gross and net acres. The leases, in close proximity to current W&T acreage, are effective as of Nov. 1, 2019, with a 5-year lease term.
