Enterprise Oil PLC, London, has completed the acquisition of the Gulf of Mexico E&P properties of R&B Falcon Corp. units Reading & Bates Development Co. (DEVCO) and R&B Falcon Subsea Development Inc. (R&B Subsea) for $127.3 million in cash.
Under the terms of the agreements, DEVCO sold its 50% working interest in the Boomvang field development and, subject to final closing, will sell interests in 19 other Gulf of Mexico deepwater exploration blocks. R&B Subsea is selling its 100% working interest in the Gyrfalcon field.
Paul B. Loyd Jr., chairman and CEO of R&B Falcon, said the DEVCO sale "partially unlocks the considerable, unrecognized value the company has built at Boomvang.
"We have been working for some time to monetize all or part of DEVCO, and we believe our patience in waiting for the right time and the right buyer has clearly paid off for R&B Falcon shareholders," said Loyd. Proceeds from the sales will be utilized to strengthen the company's balance sheet.
Enterprise said the deal enhances its US portfolio and advances its plan to make the Gulf of Mexico a core business holding for Enterprise.
Kerr-McGee Corp., Oklahoma City, which operates and holds a 30% interest in Boomvang, estimates the field to hold reserves between 70-100 million boe. The Boomvang field covers five blocks, including East Breaks 641, 642, 643, 688, and 732. Located about 100 miles south of Galveston, Tex., the blocks lie in about 3,450 ft of water. Ocean Energy Inc. also is a partner in Boomvang, with a 20% interest.
Production at Boomvang is expected to begin the first half of 2002, using a spar platform designed to produce 30,000 b/d of oil and 200 MMcfd of natural gas.
Gyrfalcon gas field, located about 80 miles off Louisiana on Green Canyon 20 Block, is estimated to hold reserves of 3 million boe. The field, which came on stream in December 1999 and currently produces 10 MMcfd of gas, is produced through a single well tied back to Shell's nearby Boxer platform.
The acquisition of R&B's gulf interests follows a recent agreement in which Enterprise acquired a farmout in 12 exploration blocks operated by Texaco Inc., gaining a 25% interest in each block. All the blocks are located in the Green Canyon and Walker Ridge areas of the Gulf of Mexico. The Texaco-operated Catahoula exploration well will be drilled on this acreage later this year.
Enterprise's gulf exploration acreage also increased with the award of nine new leases in the Atwater Valley and Mississippi Canyon areas, obtained during the Outer Continental Shelf Gulf of Mexico Lease Sale 175 in March 2000.
"We are committed to building the US business into a core area for Enterprise," said CEO Pierre Jungels. The R&B deal will add value through current and near-term production, and the increase in exploration acreage also complements and strengthens Enterprise's existing portfolio, added Jungels.
License blocks acquired from Texaco include 25% interests in Green Canyon Blocks 952 and 993-996; 25% interests in Walker Ridge 26-29 and 70-72. License blocks awarded to Enterprise in OCS Lease Sale 175 include 25% stakes in Mississippi Canyon Blocks 531, 532, 575, 619, and 664; and 100% interests in Atwater Valley Blocks 49, 93, 225, and 226.
