US-based oil and gas company Kosmos Energy has signed an agreement to buy Deep Gulf Energy for almost $1.23bn, from private equity firm First Reserve and other associated shareholders.
The agreement involves a $925m cash sum and $300m worth of Kosmos common shares issued to the First Reserve, management, and other Deep Gulf Energy shareholders.
Marking Kosmos’ foray into the Gulf of Mexico, the acquisition will complement and expand the company’s deepwater Atlantic Margin portfolio focussed on infrastructure-led exploration.
Kosmos expects the deal to add about 25,000 barrels of oil equivalent per day (boed) production, which is set to deliver 50% rise in 2018 pro forma production, from 45,000 boed to 70,000 boed.
The acquisition of Deep Gulf Energy will add estimated 2P reserves of around 80 million barrels of oil equivalent (MMboe), a 40% increase in total 2P reserves from more than 200MMboe to 280MMboe.
The deal also includes an experienced deepwater Gulf of Mexico management team who are said to have delivered short-cycle, high-margin production.
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Kosmos Energy chairman and CEO Andrew Inglis said: “With this acquisition, Kosmos continues to grow into a larger, more balanced exploration and production company, with increasingly diversified production, a pipeline of world-class development projects, and a portfolio of short- and longer-cycle exploration opportunities.
“With many competitors leaving the Gulf of Mexico 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 Gulf of Mexico.”
Inglis added that the deal provides a platform to double the company’s production over the next four years. The acquisition is expected to be immediately accretive.
Subject to regulatory approval and customary closing conditions, the transaction is scheduled to be completed during the third quarter of this year.