SilverBow Resources Inc. has agreed to acquire oil and gas assets in condensate-rich portion of the Eagle Ford shale play in South Texas from Chesapeake Energy Corp. for $700 million.
With the acquisition, SilverBow’s eighth over the past 2 years, the operator adds about 42,000 net acres (100% operated) in Dimmit and Webb counties across the liquids-heavy window of South Texas, along with related property, plant, and equipment. Second-quarter 2023 average net daily production from the properties was about 29,000 boe/d (60% oil/NGLs). The acquisition increases SilverBow’s expected fourth-quarter 2023 net production to 87,000-99,000 boe/d (50% oil/NGLs).
Included are 300 additional high-confidence drilling locations across the Austin Chalk and Eagle Ford formations which immediately compete for capital, SilverBow said in its release Aug. 14.
The deal “transforms SilverBow into the largest public pure-play Eagle Ford operator,” said Sean Woolverton, SilverBow’s chief executive officer, materially increasing the company’s scale, enhancing high-return inventory, improving capital efficiency, providing balanced commodity exposure, he said. The deal also deal better positions the company for future acquisitions, Woolverton continued.
For Chesapeake, the deal completes its exit from the Eagle Ford shale in South Texas, bringing total proceeds from multiple sales to more than $3.5 billion (OGJ Online, Feb. 21, 2023; Feb. 6, 2023). Chesapeake continues to focus its capital on its Marcellus and Haynesville positions, said Chesapeake president and chief executive officer Nick Dell'Osso in a separate release Aug. 14.
The deal is expected to close by yearend, subject to certain regulatory approvals and consents, with an effective transaction date of Feb, 1, 2023. The company will receive $650 million upon closing, with the final $50 million installment paid 1 year from the closing date. SilverBow has also agreed to pay Chesapeake an additional contingent payment of $25 million should oil prices average $75-80/bbl WTI NYMEX or $50 million should WTI NYMEX prices average above $80 during the year following the deal’s close.