Australian oil and gas company Karoon Energy has agreed to acquire a stake in certain oilfields and associated infrastructure in the Gulf of Mexico for $720m.
Karoon will acquire a 30% interest in the Who Dat and Dome Patrol fields, including the Who Dat Floating Production System (FPS) and related infrastructure.
It will acquire around 16% stake in the Abilene field, both from LLOG Exploration Offshore and LLOG Omega Holdings, collectively known as LLOG.
In addition, Karoon will acquire interests in adjacent acreage which contains the Who Dat East, Who Dat West and Who Dat South exploration and appraisal opportunities.
The acquisition is subject to certain customary conditions for a transaction of this kind.
Karoon managing director and CEO Julian Fowles said: “This transaction meets our strategic objectives to acquire a material, value and earnings accretive, producing asset with expansion opportunities in either Brazil or the Gulf of Mexico (GoM).
“The GoM is a Tier 1 jurisdiction with a stable and well-understood regulatory and fiscal regime. The Who Dat assets provide Karoon with both geographical and asset diversification, complementing our existing Brazilian business with a second high-quality operation.
“Production from Who Dat will help offset the natural decline from Baúna and, with a unit operating cost of less than $6 per boe in FY23, will add a high margin, long-term cash flow stream to Karoon.”
Who Dat is a high quality, low cost, conventional deepwater oil and gas operation located around 800m of water offshore Louisiana within federal waters of the US Gulf of Mexico.
Through the acquisition, Karoon would add around 4 to 4.5MMboe to its production for the calendar year 2024 (CY24) on a Net Revenue Interest (NRI) basis.
The company’s total proforma production for CY24 will reach 12 to 14.5MMboe.
Upon completion of the acquisition, it will have a diversified production base in two prolific hydrocarbon basins and material near-term organic growth potential.
The Australian oil and gas exploration company intends to fund the $720m consideration and $27m related costs, using $171m cash, $274m debt facility and a $300m equity raise.
Karoon plans to raise $300m through a fully underwritten institutional placement and accelerated non-renounceable entitlement offer.
Fowles added: “Following the transaction, we will have a robust balance sheet and the flexibility to deliver on our organic growth opportunities, including the potential Neon development.
“Strong proforma cash flows are expected to enable repayment of drawn debt from our new facility within two years.
“Our long-term strategy remains to maintain low leverage and high liquidity to enable value-accretive organic growth, M&A and returns to shareholders.
“We look forward to working closely with LLOG, a very well respected and established offshore GoM operator and joint venture partner, Westlawn Group, on this exciting asset.”
