WildFire to acquire certain Chesapeake Eagle Ford assets for $1.425 billion

WildFire Energy I LLC, Houston, has agreed to acquire certain Eagle Ford assets from Chesapeake Energy Corp., Oklahoma City, for $1.425 billion.

The privately held company will acquire about 377,000 net acres and about 1,350 wells in the Brazos Valley region, along with related property, plant, and equipment, Chesapeake said in a Jan. 18 release.

Average net daily production from the properties was about 27,700 boe (85% liquid) during third-quarter 2022. As of Dec. 31, 2021, net proved reserves associated with the properties were about 96.8 MMboe, Chesapeake said.

Asset build

WildFire entered East Texas in 2014 and shored up its position in 2017 through a deal with subsidiaries of Halcon Resources Corp. (OGJ Online, July 1, 2014; Jan. 6, 2017). In August 2021, WildFire acquired Hawkwood Energy LLC, Denver, for an attributable enterprise valuation of about $650 million. In March 2022 the company made a deal to acquire 45,000 net acres and 200 operated wells in the East Texas Eagle Ford from MD America Energy. 

Upon closing of the Chesapeake deal, expected in this year’s first quarter, WildFire will operate about 2,000 gross wells on about 600,000 net acres in the eastern Eagle Ford encompassing Burleson, Brazos, Robertson, Madison, Lee, Washington, and Grimes counties, WildFire said in its own release.

Eagle Ford exit

For Chesapeake, the deal is a step forward in its plan to exit the Eagle Ford shale and become a pure-play natural gas company focused on its Marcellus and Haynesville positions. With the sale, the company expects to pay down debt and advance share buybacks during the year.

Chesapeake will receive $1.2 billion upon closing, subject to customary adjustments, and the additional $225 million in yearly installments of $60 million over the next 3 years, and $45 million in year four.

As for its remaining Eagle Ford assets, Chesapeake president and chief executive officer Nick Dell’Osso said the company remains “engaged with other parties regarding the rest of our Eagle Ford position.” In a Jan. 18 research note, citing a conversation with Chesapeake management, Jefferies analysts said two more Eagle Ford divestiture packages are expected.