EPL Oil & Gas has executed a purchase and sale agreement to acquire certain shallow water Gulf of Mexico (GoM) shelf oil and natural gas interests from Hilcorp Energy GOM Holdings for US $550 million, according to a news release.

The assets are producing approximately 10,000 boe/d, about 50% of which are oil. Estimated proved reserves as of the July 1 economic effective date totaled approximately 36.3 million boe, 54% of which are oil.

The properties include three fields that Hilcorp had acquired from Chevron Corp. in Ship Shoal Block 208, South Pass 78, and South Marsh Island 239, which are all on the central GOM shelf in the vicinity of EPL’s existing core field areas. These three fields account for 64% of the current proved reserves and approximately 82% of the total proved acquisition PV10 value estimated at $626 million using strip prices as of Aug. 31. The currently estimated asset retirement obligation to be assumed by EPL in the acquisition is expected to total approximately $120 million.

“There are already over 90 low-risk, oil-rich shallow behind pipe and drilling opportunities, as well as numerous optimization projects that our operational teams will vigorously pursue,” said Gary Hanna, EPL’s president and CEO. “This transaction nearly doubles our proved reserves to approximately 74 million boe.”

The purchase is subject to customary closing conditions and adjustments. Hilcorp has indicated to EPL that this sale represents their exit from the GoM shelf. The economic effective date is July 1, with closing expected by Oct. 31. EPL has submitted a 10% cash deposit to Hilcorp under the terms of the purchase agreement.