WTI produces about 50000 boed so this transaction makes WTI worth +$5 billion
Plains paid “full price” for the fields and needs to find oil deeper or nearby to make the deals work, Duane Grubert, a Stanford, Connecticut-based analyst for Susquehanna Financial Group, wrote clients today.
The acquisition is Plains’ biggest since it bought Pogo Producing Co., adding onshore U.S. fields for $5.84 billion of cash, stock and debt in 2007, according to data compiled by Bloomberg.
Production from the deep-water fields is equivalent to 67,000 barrels of oil a day and is expected to increase as more wells come online, James C. Flores, Plains chairman and chief executive officer, said on a conference call today.
The purchase will make Plains owner of three offshore platforms, Flores said on the call. It includes sole ownership of BP’s Marlin, Dorado, King and Horn Mountain fields and minority stakes in fields operated by Exxon Mobil Corp. (XOM) and Shell. Plains gets full ownership of the Holstein field and platform, buying both halves from BP and Shell.
“There’s only one way to play the deep-water Gulf of Mexico: It’s with infrastructure,” Flores said of the platforms on the call. “We’ll be able to control our own destiny.”
Deep-water platforms can cost $2 billion before pumping any oil, he said later in an interview. The three platforms will pay for themselves as Plains drills additional wells neglected by BP.