Houston-based Contango Oil & Gas Co. on Friday clinched an agreement to buy the assets of bankrupt White Star Petroleum LLC for $132.5 million.

The deal would include some White Star affiliates that produce 15,000 boe/d and an estimated 20 million boe of proved developed producing (PDP) reserves. Contango also would acquire 315,000 net acres in Oklahoma as part of the transaction.

“This opportunity became actionable as a result of our recent successful recapitalization of the company, and it is exactly the type of acquisition we said we’d be looking for when we last spoke to the investment community,” CEO Wilkie S. Colyer said.

“We expect White Star to add approximately $60 million in asset level cash flow over the next 12 months. It increases the company’s production by a factor of almost four times and more than doubles our PDP reserves…”

Colyer said the acquisition also “fits well from a geographic perspective” as part of a pending deal to acquire Will Energy Corp. assets.

“Contango intends to be a consolidator” in what is expected to be continued contraction in the exploration and production sector, he said. “We will continue to look for acquisitions with an overarching goal of maximizing value for our shareholders.”

White Star’s production is liquids-weighted, 63% oil and natural gas liquids, and the acreage is 80% held by production. Around 65% of the wells are operated by White Star. The assets also include integrated gathering and saltwater disposal systems. 

The transaction is expected to close by the end of the year.

Contango last year underwent a management shakeup, and Colyer was appointed CEO. John C. Goff, who at the time held an 18.3% stake in Contango, also joined the board.

About 35% of Contango’s equity is owned by Goff affiliates, which recently invested $25 million into the company. Contango’s asset base is made up mostly of offshore properties in the shallow waters of the Gulf of Mexico and within Texas and Wyoming.