Cox Oil unit to acquire Energy XXI Gulf Coast for US$322 million
An affiliate of privately held Cox Oil LLC, Dallas, has agreed to acquire Energy XXI Gulf Coast Inc (EGC), Houston, in a deal worth US$322 million.
The deal expands Cox’s presence in the Gulf of Mexico.
Cox holds assets in both the Outer Continental Shelf and the shallow waters off Louisiana and operates more than 200 producing wells over 25 fields.
EGC’s key assets are located primarily offshore on the OCS and onshore in the Gulf Coast region. The company operates 89% of its proved reserves. In this year’s first quarter, the company produced an average of 26,600 boe/d, of which 79% was oil. During the quarter, the company incurred a net loss of US$33.1 million, which included a US$12.8 million loss on derivative financial instruments.
The deal addresses EGC’s asset retirement obligations, liquidity challenges, and need for financing, the companies said. EGC’s board approved the proposed transaction after evaluating others, including a proposal from Orinoco Natural Resources LLC to assume EGC’s noncore asset portfolio and related asset retirement obligations, EGC said. Those negotiations have been terminated, EGC said.
“We have been a proponent of consolidation in the Gulf of Mexico for some time. Cox currently operates approximately 35,000 boe/d and the combined entities will have production exceeding 61,000 boe/d,” said Douglas Brooks, EGC’s chief executive officer and president
Cox will acquire all outstanding common shares of EGC for US$9.10/diluted share in cash, representing a 21% premium to EGC’s closing share price on the 15th June, the companies said.
There is no financing contingency, but customary conditions including approvals from EGC stockholders and regulatory authorities apply. Closing is expected in this year’s third quarter.
Source: Oil & Gas Journal