Kosmos Energy Ltd. (NYSE: KOS) said Sept. 17 it completed its acquisition of Deep Gulf Energy Cos., marking the Dallas-based E&P’s entry into the U.S. Gulf of Mexico (GoM).
Deep Gulf is a portfolio company of First Reserve with deepwater assets focused in the U.S. GoM. Kosmos announced in August it had agreed to acquire Deep Gulf and its affiliates for about $1.23 billion in cash and stock.
Kosmos planned to fund the cash portion of the purchase price with borrowings under its existing credit facilities. In connection with the transaction, the company said it also received $200 million of additional firm commitments to increase its reserves-based loan facility capacity.
The acquisition is Kosmos’ largest to date and adds to the company’s portfolio of assets along the Atlantic Margin, including offshore Ghana and Equatorial Guinea as well as Cote d'Ivoire, Mauritania, Morocco, Sao Tome and Principe, Senegal and Suriname.
In August, Kosmos Chairman and CEO Andrew G. Inglis said the company’s entry into the U.S. GoM is perfectly timed.
“With many competitors leaving the Gulf of Mexico to chase onshore shale plays, a huge opportunity has opened in the basin,” Inglis said in a statement. “The best deepwater assets can compete with the best of shale, and now is a good time to enter the Gulf of Mexico.”
So far in 2018, the U.S. GoM has seen a recent uptick in M&A activity, most recently with the acquisition of Whistler Energy II LLC by Talos Energy Inc. (NYSE: TALO). The purchase came only months after Talos closed its combination with Stone Energy.
RELATED: Offshore M&A Builds With Talos Acquisition Of Whistler Energy II
Other notable deals in the Gulf so far this year include the $710 million purchase of Noble Energy Inc.’s GoM business by Fieldwood Energy LLC in April and Cox Oil Offshore LLC’s acquisition of Energy XXI Gulf Coast Inc. (NASDAQ: EGC), which is expected to close in October.
Kosmos expects the Deep Gulf acquisition to generate significant free cash flow, enabling the company to return cash to shareholders through a dividend, beginning in first-quarter 2019, according to the company press release.
Law firm Gibson, Dunn & Crutcher LLP represented First Reserve in its sale of Deep Gulf Energy to Kosmos. Vinson & Elkins represented Deep Gulf and Kosmos was represented by Davis Polk.
Evercore Inc. and Goldman Sachs & Co. LLC were financial advisers to Kosmos. Barclays was an adviser for First Reserve and Deep Gulf Energy. Lazard Freres & Co. LLC and Moelis & Co. provided fairness opinions to the special committees of the Deep Gulf Energy vehicles in the transaction.
Recommended Reading
NOV's AI, Edge Offerings Find Traction—Despite Crowded Field
2024-02-02 - NOV’s CEO Clay Williams is bullish on the company’s digital future, highlighting value-driven adoption of tech by customers.
From Restructuring to Reinvention, Weatherford Upbeat on Upcycle
2024-02-11 - Weatherford CEO Girish Saligram charts course for growth as the company looks to enter the third year of what appears to be a long upcycle.
Todd Holdco to Invest Further into Northcliff Resources
2024-01-24 - Todd Holdco will acquire 37,333,333 common shares in Northcliff at CA$0.01875 (US$ 0.014) per common share.
Hess Corp. Boosts Bakken Output, Drilling Ahead of Chevron Merger
2024-01-31 - Hess Corp. increased its drilling activity and output from the Bakken play of North Dakota during the fourth quarter, the E&P reported in its latest earnings.
The OGInterview: Petrie Partners a Big Deal Among Investment Banks
2024-02-01 - In this OGInterview, Hart Energy's Chris Mathews sat down with Petrie Partners—perhaps not the biggest or flashiest investment bank around, but after over two decades, the firm has been around the block more than most.