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Kosmos Enters U.S. GOM with $1.23B Acquisition of Deep Gulf Energy

Kosmos Energy Ltd. said Monday it plans to enter the U.S. Gulf of Mexico (GOM) by acquiring Deep Gulf Energy Cos. (DGE), three entities with several deepwater projects, from the portfolio of First Reserve Corp. in a cash and stock deal valued at about $1.23 billion.

Kosmos CEO Andy Inglis said the acquisition of Deep Gulf Energy LP, Deep Gulf Energy II LLC and Deep Gulf Energy III LLC would help Dallas-based Kosmos "grow into a larger, more balanced exploration and production [E&P] company." Kosmos currently operates in offshore Africa and South America.

"Over the last four years, Kosmos has doubled production, and this acquisition creates the platform to double production again in the next four years," Inglis, a former CEO of BP plc's E&P business, said. "With many competitors leaving the GOM to chase onshore shale plays, a huge opportunity has opened in the basin.

"The best deepwater assets can compete with the best of shale, and now is a good time to enter the GOM. This highly complementary transaction is immediately accretive -- delivering sustainable production and free cash flow growth, and enabling dividend payments to begin in 1Q2019."

Most of the companies’ assets are in Mississippi Canyon (MC) and Garden Banks blocks.

DGE LP has a 20% working interest (WI) in the Gladden field in MC block 800, operated by W&T Offshore Inc. DGE II operates and holds a 25% WI in the Sargent field in Garden Banks (GB) block 339, where DGE LP holds an additional 25% stake. DGE II also operates and holds a 29.875% interest in the Odd Job field in MC blocks 214 and 215; DGE III holds an additional 25% stake in Odd Job.

DGE II also operates and owns a 20% WI in the Kodiak field, which was originally discovered by BP and its partners in 2008 and is in MC blocks 727 and 771. DGE III also owns a 9.06% stake in the field. DGE II holds an 11.82% WI in the Son of Bluto Field in MC block No. 431, where LLOG Exploration Co. serves as operator. It also holds a a similar stake in the Marmalard Project, which is in portions of MC blocks 255, 256, 300, 301 and 344 and where LLOG also serves as operator.

Meanwhile, DGE III operates and holds a 22.5% stake in the Barataria field in MC block 521. The company also serves as operator of the Bonvillain oil prospect in GB blocks 295 and 339. DGE III holds a 100% WI in the block 295 part of the prospect, while DGE LP and DGE II each hold a 25% stake in the block 339 part.

DGE III serves as operator and holds a 100% WI in the Madame X oil prospect in GB block 338 and it has a 35% WI in the Tornado field in Green Canyon blocks 280 and 281, where Talos Energy LLC serves as operator.

In the Rampart Deep prospect in MS blocks 116 and 117, DGE III serves as operator and holds a 30% WI. It also operates and holds a 25% WI in the Derbio prospect in MC block No. 72, and operates and holds a 40.5% WI in the South Santa Cruz Field in MC block No. 563.

DGE III holds a 5.3% WI in the Big Bend Field in MC block No. 698. DGE's website lists the Don Larsen oil well in East Breaks block 598 and operated by Anadarko Petroleum Corp. as an asset of a DGE company but doesn't list the WI. The Danny Field, located in GB block 506, is also listed, with Talos and a DGE company serving as operators.

Also listed is the Highgarden subsalt prospect in GC Block 895, where Houston Energy LP serves as operator and a DGE company holds an 18% WI. LLOG also serves as operator of the Oldfield prospect in MC block No. 684, in which a DGE company holds an 11% stake.

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