W&T Strikes Oil in US Gulf of Mexico

Oil and natural gas producer W&T Offshore has discovered oil at the Gladden Deep prospect in Mississippi Canyon block 800 in the deepwater Gulf of Mexico.

W&T is operator of the well, which is one of 14 planned for the drilling program under the Monza JV. The company owns a 17.25% interest in the discovery.

Gladden Deep is located in approximately 3,000 feet of water and was drilled to a total measured depth of 18,324 feet and encountered 201 feet of net oil pay. This single-well completion is expected to be brought online through the existing Gladden pipeline to the Medusa spar in the fourth quarter of 2019 through a subsea tie back.

Based on preliminary analysis of drilling and wireline logging results, the recoverable resource is expected to be in line with the pre drill estimate of 7 mmboe gross, said partner Kosmos Energy.

Tracy W. Krohn, W&T's Chairman and Chief Executive Officer commented, “We are very pleased to announce our first deepwater discovery in 2019 at Gladden Deep. This is an excellent example of how quickly we can drill highly-economic subsea tieback wells and have them placed on production and generating free cash flow within a year."

Krohn added, "We currently have three rigs running in other areas of the Gulf of Mexico and will continue to have an active drilling program this year. We are likewise pleased to have expanded our offshore inventory by 69,000 acres as a result of the awarding of leases from the federal lease sale held in March of this year.”

W&T was recently awarded 14 of the 15 blocks on which it was apparent high bidder in the Gulf of Mexico Lease Sale 252 held by the Bureau of Ocean Energy Management (BOEM) on March 20, 2019.

W&T was awarded eight deepwater and six shallow water blocks, which includes Garden Banks 173, Green Canyon blocks 3, 46, 47, 49, 91 and 92 and Mississippi Canyon 244 in the deepwater and Eugene Island blocks 357, 378, 393, 395, 396, and South Marsh 205 in the shallow water. Awarding of Main Pass 286 in the shallow waters is still pending with final action expected by June 30, 2019.

These 14 blocks add approximately 69,000 gross acres to W&T’s offshore portfolio with the company owning a 100% working interest in the acreage.

All of the blocks have a five-year lease term, with the exception of one of the deepwater blocks which has a seven-year lease term. The royalty rate for eight of the blocks is 12.5%, and the remaining seven leases are at a rate of 18.75%.

For American upstream oil company Kosmos, which has 20% working interest in Gladden Deep, the well is the first of a four well infrastructure-led exploration (ILX) program in the US Gulf of Mexico in 2019. Kosmos will drill the Moneypenny prospect in the third quarter, followed by the Oldfield and Resolution prospects in the fourth quarter. These three prospects are collectively targeting around 100 mmboe net to Kosmos.

Kosmos Chairman and Chief Executive Officer Andy Inglis said, “Although Gladden Deep is the smallest prospect in this year’s drilling campaign, it is a prime example of our ILX strategy in action – targeting high margin, high return barrels that can be quickly brought online through existing facilities."

Inglis added, "The development of Gladden Deep has a full cycle rate of return of over 100% at $60/bbl Brent. This discovery continues the strong momentum we have seen in our Gulf of Mexico business unit, following the recent lease sale results and increased production from the Tornado-3 well coming online.”

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