Cox Oil has agreed to acquire Texas-based exploration and production company Energy XXI Gulf Coast (EGC) through one of its affiliates for a sum of about $322m to expand its presence in the Gulf of Mexico.
As per the terms of the all-cash deal, Cox Oil will pay EGC’s shareholders $9.10 per share.
Headquartered in Houston, EGC is into the development, exploitation and acquisition of oil and natural gas properties in conventional assets located across the US Gulf Coast region. The company is engaged in both offshore in the Gulf of Mexico and onshore in the US states of Louisiana and Texas.
On the other hand, Cox Oil’s assets are spread across the outer continental shelf (OCS) and the shallow waters off the coast of Louisiana.
Cox, which presently operates nearly 35,000 barrels of oil equivalent per day (boe/d) in the Gulf of Mexico, will increase its production to more than 61,000 boe/d through the acquisition of EGC.
Cox chairman Brad E. Cox said: “The combined entities represent the continuation of our past practices to generate economies of scale through the consolidation of assets without wavering on our commitment to safe and responsible production in the Gulf of Mexico.
“In addition, Cox strives to preserve and protect the natural resources of the United States while balancing the need to reduce the abandonment liabilities.”
EGC said that its board of directors had approved the proposed transaction with Cox unanimously after assessing various transactions. Included in these is an offer made last month by Orinoco Natural Resources (ONR) and its affiliates to assume the non-core asset portfolio and related asset retirement obligations of EGC.
Following the agreement with Cox Oil, EGC has ended all negotiations with ONR and its affiliates relating to the non-binding term sheet announced in early May.
EGC CEO and president Douglas E. Brooks said: “We have sought to protect and maximize shareholder value and have searched for the best way to address EGC’s asset retirement obligations, liquidity challenges and need for financing to invest for future growth.
“We have determined that the best available course of action is a transaction that provides stockholders with a certain cash premium and less execution risk.”
The transaction, which would need necessary approvals from stockholders of EGC and regulatory authorities, is expected to be completed in the third quarter of this year.