Newfield Exploration and its subsidiary, Newfield Exploration Gulf Coast, have entered into an agreement to sell all of its exploration and production properties located in the Gulf of Mexico to W&T Offshore for $228m.

The properties include 78 federal offshore lease blocks, of which 65 blocks are in deepwater, six of which are producing, and ten blocks on the conventional shelf, four of which are producing.

All the blocks are located across approximately 432,700 gross acres, undeveloped acreage is approximately 312,000 gross acres, 91% of which is in deepwater.

The sale also includes an overriding royalty interest in three deepwater blocks, two of which are producing.

Tracy W Krohn, W&T Offshore chairman and chief executive officer, said: "This acquisition will substantially increase our current production, provide numerous development and exploration opportunities in the deepwater Gulf of Mexico, as well as significantly expand our deepwater acreage holdings."

Lee K. Boothby, Newfield Exploration chairman, president and CEO, said: "Our focus today is on driving strong oil and liquids growth and increasing cash flow from our core assets onshore US and in south-east Asia."

The transaction, subject to closing conditions, is estimated to close on or around 1 October 2012. W&T Offshore will fund the acquisition from available cash in hand and a revolving credit facility.

Newfield Exploration said the sale, including divestments made in 2011, mark the company’s exit from the Gulf of Mexico.

W&T will takeover operations of approximately 90% of the production of the assets, where total proved and probable reserves are 7.7 million barrels of oil equivalent (MMBoe) and 1.2 MMBoe, respectively.

Image: Newfield Exploration’s properties include 78 offshore lease blocks in the US Gulf of Mexico. Photo courtesy of: Newfield Exploration.