Energy Partners To Add Interest In Shallow GOM Assets Originally Gained From Anglo-Suisse
To acquire shallow-water central GOM interests in Main Pass 296/311 complex along with other unit interests in MP complex and an interest in MP 295 primary term lease, gaining 900 BOE/d, 2.6 MMBOE proved.
Energy Partners Ltd., New Orleans, (NYSE: EPL) plans to acquire oil and gas assets in the shallow-water central Gulf of Mexico from a subsidiary of Stone Energy Corp., Lafayette, La., (NYSE: SGY) for $80 million.
The assets involve additional interests in the Main Pass (MP) 296/311 complex that was included in the assets Energy Partners purchased from Anglo-Suisse Offshore Partners LLC for $200.7 million in February 2011, along with other unit interests in the MP complex and an interest in a MP 295 primary term lease. Energy Partners also estimates the asset retirement obligation to be assumed in the acquisition is expected to total approximately $4 million.
The assets feature production of approximately 900 net barrels of oil equivalent per day (96% oil). Proved reserves as of the Nov. 1 effective date totals approximately 2.6 million barrels equivalent (96% oil, 100% proved developed producing).
The properties in the original Anglo-Suisse deal included three main complexes and field areas in Main Pass blocks 296/301/311, South Pass blocks 33/49, and West Delta blocks 26/27/28/29/47 on the Gulf shelf near Energy Partners' existing core South Timbalier and East Bay operations.
Energy Partners plans to fund the acquisition with cash on hand, currently estimated to be more than $90 million. Additionally, the company has worked with its lenders to expand the borrowing base under its undrawn senior secured credit facility from $150 million to $200 million, which maintains substantial liquidity for the company.
Energy Partners president and chief executive Gary Hanna says, “The original ASOP property acquisition was an excellent transaction for EPL, and the acquisition announced today will more than double our interests in the MP complex. This purchase adds another layer of long-lived oil production to our current asset base, and additional upside without incremental overhead.”
The deal is expected to close in November.
Global Hunter Securities analyst Michael Bodino says the deal values production at $89,000 per flowing barrel equivalent and proved reserves at $30.77 per barrel equivalent.
“Given the run rate of current production, this transaction only modestly moves Energy Partners’ financial metrics higher for fourth-quarter 2011, but could boost 2012 earnings per share and cash-flow per share by about 6%.”
He adds the deal has only slightly dilutive impact to Stone Energy’s 2011 earnings per share, cash-flow per share and EBITDA, and that Stone may use the cash to accelerate drilling in the Marcellus or to fund development of its deepwater Gulf of Mexico assets.