Independent producer Titan Exploration Inc. announced Monday ithas agreed to sell all of its Gulf of Mexico assets to Coastal Oil& Gas for $71.3 million in cash plus overriding royaltyinterests in certain properties. The deal, which is expected toclose May 18th, comes on the heels of the completion of the sale ofits Louisiana onshore properties to Phoenix Oil and Gas Ltd. for$5.4 million in cash.

Although only 25 Bcf of equivalent proved reserves wereassociated with the Gulf of Mexico properties, the sale attractedwidespread interest among producers because it included a majordiscovery that Titan made last November, said William White,Titan’s vice president of finance.

“The fact is Coastal and everybody else who was interested inthis package made a substantial bid for the discovery well, whichhas no proved reserves booked to it but which has a [gross]potential for 340 Bcf of gas,” he noted. The multi-well discoveryproject, of which Titan is 50% owner and operator, “is whatattracted all the attention, and [was] the principal reason behindthe large sale price.”

Despite the project’s potential, Titan kept to its originaldecision – which was made prior to last November – to exit the Gulfof Mexico. “Our Gulf of Mexico presence is small relative toTitan’s overall reserve size. Titan has almost 500 Bcfe of totalproven reserves, but the proven reserves out in the Gulf of Mexicoaccounted for only 2-3% of that number. It just didn’t warrant ourattention,” White said.

In a separate deal, the producer closed on the sale of a handfulof wells in northern Louisiana with about 7 Bcfe of proved reservesto Phoenix Oil on April 29th. Titan noted the properties alsoaccounted for only a small portion of its overall reserveportfolio.

“We’re trying to remain focused in areas where we can justify[maintaining] offices,” such as the Texas gulf coast region and thePermian Basin of West Texas and Southeast New Mexico, White said.At the same time, “we are always looking at [new] opportunities.Titan is financially pretty strong. Last year we cash flowed about$32 million. We produced right at 7 million barrels of oilequivalent or 41 Bcf equivalent. This year we’re going to produceabout the same amount given our current base. We don’t have muchdebt, and we’re actively pursuing acquisition opportunities.”

Titan Chairman Jack Hightower said the company will use the saleproceeds to pay down its debt and to pursue additional acquisitionopportunities this year and next. Titan already has looked at a”number of deals” in the Rockies, MidContinent, South Louisiana andMississippi, but “we haven’t seen anything yet that met ourobjective,” White noted.

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