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Energy XXI to acquire ten new Gulf of Mexico blocks

Last updated: 03:07 21 Mar 2014 EDT, First published: 04:07 21 Mar 2014 EDT

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Energy XXI (LON:EXXI, NASDAQ:EXXI) is set to acquire ten new shallow water blocks in the Central Gulf of Mexico.

The dual listed offshore oil firm today told investors it was the apparent high bidder for those blocks in the most recent Gulf of Mexico licence auction in America.

Bids were focussed on areas that were adjacent to existing operations, Energy XXI said, and it believe this could provide near-term development opportunities. It was the sole bidder for eight of the ten licences.

It expects to pay a total of US$2.6mln for the new acreage.

This is quite a lot less than the cost of Energy XXI’s other recent expansion, last week’s US$1.5bn acquisition of EPL Oil & Gas.

The deal sees acquisitive Energy XXI become the largest publicly traded independents operating in the shallower area known as the Gulf of Mexico shelf. After completion, it will be producing around 65,000 barrels of oil equivalent per day.

Many other oil firms participated in the Gulf of Mexico lease auction. BP was successful with 24 of its 31 bids, spending just over US$40mln.

Freeport McMoRan was the biggest winner, pledging over US$300mln and taking away six of the ten best assets. Chevron is to spend a shade over US$100mln, while Murphy Oil and Shell bought assets for US$50mln and US$45mln respectively.

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