Chesapeake Energy Corporation (NYSE:CHK) has exited the Eagle Ford shale, a core area of the ‘shale boom’ of the 2010s, in a US$700 million transaction with SilverBow Resources.
The final asset sale in the Eagle Ford takes Chesapeake’s total proceeds from the play exit to over US$3.5 billion.
It comes as Chesapeake sharpens its focus on its two other core shale territories, the Marcellus and Haynesville.
"We are pleased to have successfully completed the exit of our Eagle Ford asset, allowing us to focus our capital and team on the premium rock, returns and runway of our Marcellus and Haynesville positions," chief executive Nick Dell'Osso said.
For SilverBow, meanwhile, the deal delivers roughly 42,000 net acres and about 540 wells in a condensate-rich segment of the Eagle Ford asset located in Dimmit and Webb counties.
The asset package in the most recent quarter yielded 29,000 barrels of oil equivalent per day, 60% liquid hydrocarbons, to generate earnings (EBITDAX – which also excludes exploration spending), with the back-dated deal being effective from February 1, 2023.
SilverBow chief executive Sean Woolverton told investors that his company is now positioned to turn the “premium resource” into tangible shareholder value.
“The Chesapeake transaction transforms SilverBow into the largest public pure-play Eagle Ford operator," he said.
“This acquisition advances all our long-term strategic objectives, by materially increasing our scale, enhancing our decade-plus high-return inventory, improving our capital efficiency and providing balanced commodity exposure, all while maintaining a strong balance sheet.”
Woolverton added: “This acquisition is immediately accretive to all key financial and operating metrics, and offers compelling industrial logic that increases the company’s size and scale by approximately 50% across a range of metrics.”
The SilverBow boss meanwhile hinted strongly that more deals may follow.
“Upon closing, this will mark SilverBow’s eighth acquisition over the past two years totaling nearly US$1.4 billion. We believe the benefits of further consolidation are very compelling, and we strongly believe this is a value-enhancing transaction for SilverBow shareholders,” he said.