Independent oil and gas explorer, Stone Energy Corporation (SGY) closed its acquisition of the Pompano and Mica fields in the Gulf of Mexico from BP Plc (BP) for $167.6 million.
Per the deal, a subsidiary of Stone Energy, Stone Energy Offshore, LLC, acquired BP’s 75% operated working interest in the five-block Pompano field and a 50% non-operated working interest in the Mica field. ExxonMobil Corporation (XOM) is the operator of Mica field, holding the remaining 50%.
Simultaneously, Stone Energy also took over BP’s 51% operated stake in Mississippi Canyon Block 29 and interests in 23 deep water exploration leases in the proximity of the Pompano field.
After adjusting for the effective date of July 1, 2011, the declared purchase price of $204 million was adjusted under the agreement to $167.6 million. Further adjustments may be made to the final purchase price in the subsequent period through the closing date.
Stone Energy financed the deal with cash in hand and bank financing of $45 million. After the closure of the transaction, Stone Energy had $45.0 million in bank borrowings and $61.1 million in letters of credit outstanding under its bank credit facility.
Stone Energy’s initial appraisal of the acquired properties indicates estimated proved reserves of approximately 17 million barrels of oil equivalent (Boe) – 83% oil – as of December 28, 2011.
With seven producing leases, the Pompano platform is considered to be a production hub, with a capacity of 60,000 barrels of oil per day and 135 million cubic feet of gas per day. The production hub has a provision for processing of additional third party production. Presently, Pompano produces at an average rate of approximately 3,300 Boe per day, net to Stone.
Stone Energy holds a Zacks #2 Rank, which is equivalent to a Buy rating for a period of one to three months. We maintain a Neutral rating on the stock for the long term.
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