Chesapeake Energy said on Wednesday, 18 January, that the company is selling 377,000 acres of its Eagle Ford Shale position in south Texas to Wildfire Energy for a sum of $1.4 billion.
The deal involves about 1,350 producing wells in an area called the Brazos Valley found in the eastern portion of the prolific shale play.
The asset generated an average of 27,700 BOE/D in the third quarter of 2022, Chesapeake said. The oil and gas company added that about 85% of the output figure was liquid hydrocarbons and that remaining reserves amount to almost 97 million BOE.
Chesapeake has been seeking buyers of its Eagle Ford assets for several months as it pivots its portfolio toward natural gas production from the Marcellus and Haynesville shales. With this deal struck, Chesapeake may still have as much as 233,000 acres yet to sell before it can complete its exit from the Eagle Ford.
"We remain actively engaged with other parties regarding the rest of our Eagle Ford position,” Nick Dell’Osso, CEO of Chesapeake, said in a statement.
Terms of the deal will see Wildfire hand over $1.2 billion upon closing, expected to be sometime this quarter, before making additional installments over the next 4 years to cover the remaining balance of $225 million.
On a pro forma basis, the private equity-backed Wildfire said its Eagle Ford holdings have grown to nearly 2,000 wells and about 600,000 acres. Wildfire began building up its position in the Eagle Ford last year with separate acquisitions of two other US independents, Hawkwood Energy and MD America Energy.
“The consolidation of 600,000 contiguous acres is transformative to the business and will drive economies of scale to deliver more high-margin barrels to the advantageous Gulf Coast market," Steve Habachy, president of WildFire Energy, said in a statement.
The Houston-based Wildfire Energy was formed in 2019 by former executives of Wild Horse Resource Development, which was sold to Chesapeake in 2019 for almost $4 billion.
