EPL Oil & Gas To Buy Oil & Natural Gas Assets In Shallow-water GOM For $70.4 Mln

(RTTNews) - EPL Oil & Gas Inc. (EPL) announced Thursday that it has executed a purchase and sale agreement to acquire oil and natural gas assets in the shallow-water central Gulf of Mexico or GOM from Nexen Petroleum Offshore U.S.A. Inc. for $70.4 million.

According to the company, the Eugene Island 258/259 field consists of five leases, namely 254, 255, 257, 258, and 259, all at 100% working interest. The assets are currently producing approximately 900 net barrels of oil equivalent (Boe) per day, about 95% of which is oil.

EPL estimates the proved reserves as of the September 1, 2013 effective date consist of approximately 2.6 million Boe of proved developed producing reserves, about 91% of which is oil. The field areas exhibit shallow decline and EPL has identified upside potential beyond the current proved reserves.

The company also estimates the asset retirement obligation to be assumed in the acquisition is expected to total approximately $27 million.

The company noted that it has worked with its lenders to expand the borrowing base under its senior secured credit facility from $425 million to $475 million, which maintains substantial liquidity for the Company. Currently EPL has $130 million outstanding under its revolving credit facility. The firm has begun implementing additional oil hedges to provide further downside protection in conjunction with this acquisition and its anticipated oil growth in 2014.

The closing of the transaction is subject to customary closing conditions and adjustments. The economic effective date is September 1, 2013, with closing expected late January.