Fieldwood Energy LLC said Tuesday it will add to its leadership position in the shallow waters of the Gulf of Mexico (GOM) by acquiring the offshore portfolio of SandRidge Energy Inc. in a transaction worth close to $1.2 billion.

The Riverstone Holdings LLC affiliate agreed to pay $750 million cash and assume close to $350 million in liabilities for the portfolio, which today is producing more than 25,000 boe/d. As part of the transaction, SandRidge, which is about 11% controlled by Riverstone, would retain a 2.0% overriding royalty interest in two exploration prospects.

Just last year Houston-based Fieldwood became the largest operator on the GOM Outer Continental Shelf after buying Apache Corp.’s offshore operations for close to $5.25 billion (see Daily GPI, July 19, 2013). Apache’s Shelf portfolio was considered the largest-operated asset base in GOM waters up to 1,000-feet deep, comprising more than 500 blocks with 1.9 million net acres.

“This transaction, coming only three months after the closing of our inaugural acquisition from Apache, demonstrates Fieldwood’s continued commitment to our acquire and develop strategy in the Gulf of Mexico,” said CEO Matt McCarroll. “Additionally, the acquisition adds further geographic and geologic diversity by expanding our business to include an onshore Gulf Coast division, as well as the deepwater Bullwinkle field.”

Onshore-focused SandRidge bought the offshore position just two years ago in a $1.28 billion deal to acquire Dynamic Offshore Resources Inc. from Riverstone and The Carlyle Group (see Daily GPI, Feb. 2, 2012). SandRidge plans to use the sales proceeds to bulk up spending in the Midcontinent.

With the SandRidge purchase, Fieldwood would add 57.2 million boe in total proved reserves, 51% weighted to oil and 72% developed, according to a report Dec. 1 by Netherland, Sewell & Associates. Total proved, probable and possible (3P) reserves are estimated at 77.5 million boe, with probable reserves estimated at 11.4 million boe and possible reserves of 9 million boe.

Pro forma, the leasehold gives Fieldwood more than 650 blocks in the shallow water, with net production of about 125,000 boe/d, 54% weighted to oil.

“Given our substantial footprint across the Gulf of Mexico, which includes over 50 blocks with common interests between Fieldwood and SandRidge, I am confident that we will be able to achieve meaningful operational synergies and cost efficiencies with this combined asset base,” McCarroll added. “Furthermore, the acquired assets add a number of near-term, high-quality drilling prospects to our existing drilling inventory. Most importantly, this transaction enhances the financial strength of the company by providing additional liquidity, significant cash flow and further opportunities for growth.”