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W&T Offshore forms JV with investors for $419.6M Gulf of Mexico drilling program

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W&T Offshore forms JV with investors for $419.6M Gulf of Mexico drilling program

W&T Offshore Inc. struck joint exploration and development agreements with a number of investors for up to 14 drilling projects in the Gulf of Mexico over the next three years.

W&T and the investor group, led by an entity controlled by funds managed by HarbourVest Partners LLC, formed a joint venture investment entity to execute a drilling program that has an estimated project level commitment of up to $419.6 million. Under the agreements, W&T would initially receive 30% of the net revenues from the drilling program wells for contributing 20% of the total well costs, leases and access to infrastructure, according to a March 12 news release.

The offshore Gulf of Mexico producer's share of net revenues may also increase to 38.4% once investors meet sufficient return thresholds. W&T would also be reimbursed for about $20 million of drilling costs incurred for wells included in the program that have already started drilling work.

"The drilling program will allow us to accelerate the development of our high return inventory to bring significant cash back to the corporate entity, while maintaining the flexibility to manage our balance sheet and pursue additional accretive acquisition opportunities in the Gulf of Mexico as other operators exit," W&T Chairman and CEO Tracy Krohn said.