W&T Offshore (WTI) has announced that it has entered into a definitive agreement with Ajax Resources, LLC for the sale of all of its interest in its Yellow Rose field in the Permian basin. Gross pre-tax proceeds from the transaction are expected to be approximately US$376 million. W&T also reserved a 1-4% sliding scale overriding royalty interest in the field. The transaction is expected to close during the 3Q 2015, with an effective date of 1 January 2015.
W&T's interest in its Yellow Rose field includes approximately 25,800 net acres in Andrews, Martin, Gaines, and Dawson counties in West Texas. For the month of July 2015, net production from the Yellow Rose field averaged approximately 3000 boe/d.
The proceeds from the transaction will be used to pay down the outstanding balance under WTI’s secured revolving credit facility and provide additional liquidity for future operations and acquisitions.
"This sale will allow us to strengthen our balance sheet and improve our financial flexibility to pursue the acquisition of Gulf of Mexico assets while valuations are favorable," said Tracy W. Krohn, W&T Offshore's Chairman and CEO.
Image: Perman basin asset/W&T Offshore