Chesapeake Energy, a major energy company based in Oklahoma, has announced that it will complete its exit from the Eagle Ford shale region in Texas by selling its remaining assets there to SilverBow Resources, a Houston-based exploration and production company.
SilverBow agreed to pay between $700 million and $750 million for the assets, depending on the price of oil. The deal is expected to close by the end of this year.
The assets include about 42,000 acres and 540 wells in Dimmit and Webb counties, which produced about 29,000 barrels of oil equivalent per day in the second quarter, according to Chesapeake. The company also estimated that it had at least 124 million barrels of reserves in the region as of December.
Chesapeake has been divesting its assets in the Eagle Ford shale formation, which stretches from south to central Texas, as it shifts its focus to the Haynesville and Marcellus plays in Louisiana and the Northeastern U.S., respectively. Earlier this year, it sold 2,300 Eagle Ford wells to INEOS, a global chemicals company, for $1.4 billion.
With the pending sale to SilverBow, Chesapeake said it has generated more than $3.5 billion in proceeds from its Eagle Ford departure.
Chesapeake’s CEO Doug Lawler said in a statement: “We are pleased to announce this transaction with SilverBow as we continue to optimize our portfolio and focus on our core development areas. This transaction accelerates our strategy of reducing debt and improving our balance sheet while delivering value for our shareholders.”
SilverBow’s CEO Sean Woolverton said in a statement: “We are excited to announce this acquisition of high-quality assets that complement our existing portfolio and operations in the Eagle Ford. This transaction enhances our scale and diversification, increases our cash flow and reserves, and creates significant synergies and value for our shareholders.”