W&T Offshore Inc. (WTI) said Oct. 15 it has closed the $376 million sale of all of its interest in the Yellow Rose Field in the Permian Basin to Ajax Resources LLC.
W&T's interest in the Yellow Rose Field includes about 25,800 highly contiguous net acres in Andrews, Martin, Gaines and Dawson counties, Texas. In July, net production in the northern Midland Basin averaged about 3,000 barrels of oil equivalent per day (boe/d).
Drilling in the field had been suspended until commodity prices improved and the cost of goods and services fall.
The Houston company said it also reserved an overriding royalty interest based on a sliding scale of 1-4% that is benchmarked to the monthly oil price in the field.
The value of the overriding royalty interest will increase with increases in oil prices and higher production volumes. It is anticipated that higher production volumes should occur in the future with increased drilling activity.
Proceeds from the sale will be used to pay down debt under its secured revolving credit facility and provide additional liquidity for future operations and acquisitions.
Ajax Resources is led by Forrest Wylie, executive chairman and former CEO and chairman of Buckeye Partners LP. The company is an affiliate of private equity firm Kelso & Co.
Jefferies LLC was sole M&A adviser for Kelso and also lead financial adviser for Ajax. Tudor, Pickering, Holt & Co. was a financial adviser to Kelso. Kirkland & Ellis LLP and Debevoise & Plimpton LLP were legal advisers to Kelso. Thompson & Knight LLP was legal adviser to Ajax.
The transaction has an effective date of Jan. 1, 2015.