U.S. independent Newfield Exploration Company (NFX) completed its previously announced agreement with energy explorer W&T Offshore Inc. (WTI) to sell all of its remaining 78 offshore assets in the Gulf of Mexico (GoM).
Newfield received $208 million for the properties, subject to further adjustments and the assumption of asset retirement obligations. Earlier, the companies said the deal would be valued at $228 million.
The divestiture comprises 65 deep-water blocks, of which 6 are currently producing and 10 additional shelf blocks, among which 4 are producing. W&T will also acquire Newfield’s overriding royalty interest in three other deepwater blocks, of which two are producing. The divested deep-water blocks are located in the Garden Banks, Mississippi Canyon and Viosca Knoll areas.
These properties span over approximately 432,700 gross acres, of which around 312,000 gross acres are undeveloped. Around 91% of the undeveloped acreage is deepwater.
The deal includes properties holding proved and probable reserves of 7.7 million barrels of oil equivalent. In July, the average daily output was around 8,350 barrels of oil equivalent, with oil being 37%. W&T will secure operations over 90% of the production.
Newfield announced that its production of the upcoming quarter will include the GoM properties and anticipates that its third quarter production will be approximately 75 billion cubic feet equivalent (Bcfe). This includes the adverse effect of about 0.5 Bcfe related to storms in the GoM.
The company has however updated its 2012 production guidance owing to the GoM asset sale. Newfield now expects that its production will be approximately 298 Bcfe versus its previous expectation of 296 Bcfe to 304 Bcfe.
Newfield’s main objective behind exiting the GoM region is to concentrate on its onshore oil-rich assets in the United States and Southeast Asia. The company aims to increase its cash flow by boosting oil and liquids growth from its core assets in these regions. Since the beginning of 2012, the company has secured about $565 million from non-strategic asset sales, including the current divestment. This reflects the effort put in by Newfield to increase value for its shareholders.
Newfield retains a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months.
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