Photo: Mary Altaffer, STF / ASSOCIATED PRESS
Houston’s Deep Gulf Energy is being sold for more than $1.2 billion to Dallas-based Kosmos Energy in a major Gulf of Mexico transaction.
Kosmos, which operates almost exclusively in Africa and South America, is entering the Gulf in a big way with the move. The Connecticut-based private equity firm First Reserve is selling Deep Gulf after funding it from its inception in 2005.
First Reserve gets a nice return on its investment, while Kosmos seeks to balance its portfolio with more growth in the slowly rebounding, but politically stable, U.S. Gulf.
Kosmos Chairman and Chief Executive Andrew Inglis said Deep Gulf gives the growing company more diversification, exploration opportunities and a pipeline of quality development projects in the Gulf. Kosmos has doubled its oil and gas production in the last four years, and this deal should allow Kosmos to double again in the next four years, he said.
“With many competitors leaving the Gulf of Mexico to chase onshore shale plays, a huge opportunity has opened in the basin,” Inglis said. “The best deepwater assets can compete with the best of shale, and now is a good time to enter the Gulf of Mexico.”
The deal would initially give Kosmos an additional 25,000 barrels a day of oil equivalent with the potential to grow production volumes much higher, he said.
The sale is expected to close in September. Kosmos said it will pay $925 million in cash and another $300 million in its stock shares.