It's been whipped by hurricanes, squeezed by rising insurance costs and nostalgic for the days of cheap dayrates, which were only a couple of years ago. Yet, the shallow Gulf of Mexico remains unbeaten. It does tend to offer smaller finds than long ago, but higher oil and gas futures have shined that up. Many E&P companies are exiting the Gulf, yet for every seller, there has been a buyer, and they're paying up-an average of $2.06 per proved thousand cubic feet equivalent (Mcfe) in third-quarter 2005-according to investment banker Scotia Waterous. The average price is higher than that of any of the eight other U.S. regions the firm tracks. Acquisitions announced in just the past few weeks are even pricier. W&T Offshore Inc. will pay $3.59 per proved Mcfe for Kerr-McGee Corp.'s shelf properties. Cal Dive International Inc. has offered $5 per proved Mcfe for Remington Oil and Gas Corp. (For more on these deals, see "Company Briefs" in this issue.) Northstar Interests Inc. has bid $52.5 million for some 26 billion cubic feet equivalent (Bcfe) of proved for Petrohawk Energy Corp.'s Gulf properties. Total E&P USA Inc. swapped net production of 107 million cubic feet equivalent per day in South Texas for Shell E&P's 17% nonoperated interest in the deepwater Tahiti Field. They're bulls in this gas basin. "Recent M&A transactions in the Gulf of Mexico region have taken place at eye-opening prices as compared to public market values and historical comparable transactions," says Shannon Nome, E&P analyst with JPMorgan in Houston. For more on this, see the March issue of Oil and Gas Investor. For a subscription, call 713-993-9325, ext. 129.
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