Asset/portfolio management

INEOS Enters US Onshore With $1.4B Chesapeake Deal

The UK company will purchase oil producing acreage across the northern part of the south Texas Eagle Ford shale play.

This is Chesapeake's second significant sale as part of its Eagle Ford exit strategy.

UK chemical specialists INEOS has entered the US onshore oil and gas market with a $1.4 billion acquisition of a portion of Chesapeake Energy’s Eagle Ford shale holdings in south Texas. Under terms of the deal, INEOS Energy will acquire approximately 2,300 wells producing net 36,000 BOE/D. The acquisition, which includes production and exploration leases across 172,000 net acres, is expected to complete in the second quarter of 2023, with an effective date of October 2022.

"The deal marks our entry into the US market and is another significant step in the INEOS Energy journey,” said Brian Gilvary, chairman of INEOS Energy. “Over the last 2 decades, US onshore oil and gas production has provided security of supply for the global market and competitive advantage for US industry. We believe this acquisition will help us to serve our internal and external customers today as we continue to position our business to meet the energy transition.”

The addition of Chesapeake's assets and operations in south Texas is part of INEOS Energy’s strategy to build a global integrated portfolio fit for the energy transition.

INEOS Energy historically has focused its exploration and production activities on onshore and offshore oil and gas assets in the North Sea in the UK and Denmark. In recent years, INEOS Energy has made investments in low-carbon technologies, including carbon capture and storage and hydrogen.

The company also has pledged to reduce its carbon footprint and achieve net zero emissions by 2050.

For Chesapeake, it is the second Eagle Ford package the producer has sold as part of its exit from the area. The INEOS package includes acreage in the black oil portion of play primarily in Dimmit, LaSalle, and McMullen counties, along with related property, plants, and equipment. As of 31 December 2022, net proved reserves associated with these properties were about 144 million BOE.

Chesapeake will receive $1.175 billion upon closing, subject to customary adjustments, with the additional $225 million paid in annual installments of $56.25 million. The company anticipates the proceeds will be applied to repay borrowings under its revolving credit facility and be available for its share repurchase program.

In January, Chesapeake agreed to sell approximately 377,000 net acres and approximately 1,350 wells in the Brazos Valley region of its Eagle Ford asset, along with related property, plants, and equipment to WildFire Energy for $1.425 billion.

Average net daily production from these properties was approximately 27,700 BOE.