Chesapeake Vitality Company is promoting its remaining Eagle Ford belongings to SilverBow Assets, Inc. for $700 million, which might deliver the entire proceeds from its Eagle Ford exit to greater than $3.5 billion.
Chesapeake has agreed to promote roughly 42,000 internet acres and roughly 540 wells within the condensate-rich portion of its Eagle Ford asset situated within the Dimmit and Webb counties, together with associated property, plant, and gear, the corporate mentioned in a information launch Monday.
Within the second quarter of 2023, the common internet every day manufacturing from the properties included within the transaction was roughly 29,000 barrels of oil equal (boe), which generated roughly $50 million of earnings earlier than curiosity, taxes, depreciation, amortization, and exploration expense (EBITDAX), in response to Chesapeake. As of December 31, 2022, the online proved reserves related to the properties had been measured at roughly 124 million barrels of oil equal (MMboe), Chesapeake mentioned.
Chesapeake expects the transaction to shut inside the yr, topic to sure regulatory approvals and consents, with an efficient transaction date of February 1. The corporate will obtain $650 million upon closing, topic to customary changes, with the ultimate $50 million installment paid one yr after the cut-off date. Chesapeake mentioned the proceeds will additional strengthen its steadiness sheet and can fund its share repurchase program.
SilverBow has additionally agreed to pay Chesapeake a further contingent cost of $25 million if oil costs common between $75 and $80 per barrel WTI NYMEX or $50 million if WTI NYMEX costs common above $80 within the yr after the transaction closes, which might doubtlessly enhance complete proceeds of the deal to $750 million, in response to the discharge.
“We’re happy to have efficiently accomplished the exit of our Eagle Ford asset, permitting us to focus our capital and crew on the premium rock, returns, and runway of our Marcellus and Haynesville positions”, Chesapeake President and Chief Government Officer Nick Dell’Osso mentioned. “I wish to thank our workers who constructed a tradition of security and excellence, which made this a strong and enticing asset”.
In January, Chesapeake introduced an settlement to promote the Brazos Valley area of its Eagle Ford belongings to WildFire Vitality I LLC for $1.425 billion. The belongings are roughly 377,000 internet acres and roughly 1,350 wells within the Brazos Valley area, together with associated property, plant, and gear. The common internet every day manufacturing from these properties was roughly 27,700 boe within the third quarter of 2022. As of December 31, 2021, the online proved reserves related to these properties had been roughly 96.8 MMboe.
In February, Chesapeake introduced an settlement to promote a portion of its Eagle Ford belongings to INEOS Vitality for $1.4 billion. The belongings are roughly 172,000 internet acres and roughly 2,300 wells primarily in Dimmit, LaSalle, and McMullen counties, together with associated property, plant, and gear. The common internet every day manufacturing from these properties was roughly 36,000 boe within the fourth quarter of 2022. As of December 31, 2022, the online proved reserves related to these properties had been roughly 144 MMboe.
The corporate lately reported $391 million in internet earnings for the second quarter, down almost 4 instances from $1.389 billion for the prior three-month interval. Chesapeake’s manufacturing totaled 3.653 billion cubic ft of fuel equal (Bcfe), down 416 Bcfe quarter on quarter. Pure fuel comprised 96 p.c of April-June manufacturing, the remaining being liquids, in response to an earlier launch.
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