(By Balachander) EPL Oil & Gas Inc. (NYSE:EPL) has agreed to acquire certain shallow water Gulf of Mexico shelf oil and natural gas interests from privately-held Hilcorp Energy GOM Holdings LLC for $550 million.
New Orleans, Louisiana-based EPL, an oil and natural gas explorer, said the deal nearly doubles its proved reserves to roughly 74 million barrels of oil equivalent (boe) and drives its production above 20,000 boe per day.
According to EPL, the assets are producing around 10,000 boe per day, of which 50 percent are oil. As of July 1, 2012, estimated proved reserves totaled around 36.3 million boe, 54 percent of which are oil.
The company's operations are concentrated in the U.S. Gulf of Mexico shelf, focusing on the state and federal waters offshore Louisiana. Hilcorp is the third-largest exploration and production company in the United States.
EPL said the latest transaction, expected to close by October 31, is its fourth acquisition since 2011.
The company plans to hedge 80 percent of the forecasted proved producing oil and natural gas production of the assets being acquired for years 2013 through 2015, with 2013 hedges scheduled to be secured early this week representing roughly 80 percent of forecasted proved production.
EPL said it has obtained committed financing from Bank of Montreal to close the deal, including an increase in its senior secured credit facility to $750 million from $250 million.
In addition, Bank of Montreal and BMO Capital Markets have provided EPL a commitment for $200 million in the form of a senior unsecured bridge loan.
On Friday, shares jumped 7.94 percent to close at $20.94.