Pogo Producing Co., pressured by a major shareholder to realign the company, on Tuesday agreed to sell its remaining Gulf of Mexico (GOM) shelf properties to Energy XXI (Bermuda) Ltd. (EXXI) for $419.5 million. Pogo said its strategic alternatives process, including the sale or merger of the company and various assets, is ongoing.
The properties sold to EXXI include 28 fields currently producing 7,400 boe/d net, and with net proved reserves of 20 MMboe. About 62% of the production and 70% of the reserves are oil. On a reserves basis, 73% of the properties are operated and 74% are proved developed. Offshore leases included in the purchase agreement total nearly 282,000 gross acres (91,600 net acres).
The acquisition, which is expected to close by June 1, will boost EXXI's current production run rate by more than 40% and its proved reserves base by about 50%, said CEO John Schiller.
EXXI's properties are primarily located in the GOM and Gulf Coast onshore. The South Timbalier 21 Field, six miles offshore Lafourche Parish, LA, is its largest single asset.
"These properties largely overlap our current offshore holdings from both a geographic and geologic standpoint, which offers significant operating synergies," Schiller said. Schiller, former vice president of exploration and production for Devon Energy Corp., said the assets would be immediate accretive to cash flow. "We also see upside potential as more than 1,500 boe/d of net production is restored at hurricane-affected facilities and as we drill the inventory of identified development and exploration locations," Schiller said.
Pogo has been working to sell off assets and possibly sell the company since last December (see Daily GPI, Dec. 4, 2006). The decision to realign the company followed demands by majority shareholder Third Point LLC, which recently disclosed it has purchased a stake in ATP Oil & Gas Corp. (see related story).
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