Titan Exits Gulf of Mexico, Louisiana
Independent producer Titan Exploration Inc. announced Monday it
has agreed to sell all of its Gulf of Mexico assets to Coastal Oil
& Gas for $71.3 million in cash plus overriding royalty
interests in certain properties. The deal, which is expected to
close May 18th, comes on the heels of the completion of the sale of
its Louisiana onshore properties to Phoenix Oil and Gas Ltd. for
$5.4 million in cash.
Although only 25 Bcf of equivalent proved reserves were
associated with the Gulf of Mexico properties, the sale attracted
widespread interest among producers because it included a major
discovery that Titan made last November, said William White,
Titan's vice president of finance.
"The fact is Coastal and everybody else who was interested in
this package made a substantial bid for the discovery well, which
has no proved reserves booked to it but which has a [gross]
potential for 340 Bcf of gas," he noted. The multi-well discovery
project, of which Titan is 50% owner and operator, "is what
attracted all the attention, and [was] the principal reason behind
the large sale price."
Despite the project's potential, Titan kept to its original
decision - which was made prior to last November - to exit the Gulf
of Mexico. "Our Gulf of Mexico presence is small relative to
Titan's overall reserve size. Titan has almost 500 Bcfe of total
proven reserves, but the proven reserves out in the Gulf of Mexico
accounted for only 2-3% of that number. It just didn't warrant our
attention," White said.
In a separate deal, the producer closed on the sale of a handful
of wells in northern Louisiana with about 7 Bcfe of proved reserves
to Phoenix Oil on April 29th. Titan noted the properties also
accounted for only a small portion of its overall reserve
"We're trying to remain focused in areas where we can justify
[maintaining] offices," such as the Texas gulf coast region and the
Permian 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 oil
equivalent or 41 Bcf equivalent. This year we're going to produce
about the same amount given our current base. We don't have much
debt, and we're actively pursuing acquisition opportunities."
Titan Chairman Jack Hightower said the company will use the sale
proceeds to pay down its debt and to pursue additional acquisition
opportunities this year and next. Titan already has looked at a
"number of deals" in the Rockies, MidContinent, South Louisiana and
Mississippi, but "we haven't seen anything yet that met our
objective," White noted.
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