US oil firm Energy XXI is set to become the largest independent producer in the Gulf of Mexico after launching a £1.4billion takeover of rivals EPL Oil and Gas.
The Houston-based firm, which has more than a dozen operations in the Gulf already, will see its output increased to more than 65,000 barrels of oil equivalent per day as part of the deal.
It will take over EPL’s interests in 37 fields focused on nine areas in the region, giving the company access to potentially more than 800million barrels of oil in resources.
Energy XXI said the combined company’s operations would allow them to reduce costs and increase operating efficiency, along with drilling expertise and seismic data sharing.
“EPL’s assets and operations closely resemble our own, predominantly oil, with some of the highest margins in the industry and extraordinary opportunities for reserves and production growth through development and exploration activities,” said chief executive John Schiller.
“Energy XXI will be the only publicly traded pure play on the Gulf of Mexico shelf, with the highest concentration of large, mature oil fields ever owned by a single shelf operator.
“With a history of increasing acquired reserves, we have proven the adage that big oil fields get bigger, and we are excited at the prospect of continuing that trend with the addition of EPL’s properties.”
The $2.3billion deal will see Energy XXI take outright ownership of EPL, along with assuming its debt.
“This merger of the two premier independent oil producers on the shelf will create an unrivalled operator,” said EPL chief executive Gary Hanna.
“As part of a larger organization, EPL shareholders will benefit from synergies across the board, a high-grading of the drilling portfolio and opportunities to expand across the Gulf of Mexico.”