Chesapeake Energy Corporation recently announced that it has executed an agreement to sell its remaining Eagle Ford assets to SilverBow Resources for $700 million, bringing the total proceeds from its Eagle Ford exit to more than $3.5 billion.
Chesapeake agreed to sell approximately 42,000 net acres and approximately 540 wells in the condensate-rich portion of its Eagle Ford asset located in Dimmit and Webb counties, along with related property, plant, and equipment. During the second quarter of 2023, these properties’ average net daily production was approximately 29,000 barrels of oil equivalent (boe) (60% liquid), generating approximately $50 million of EBITDAX. As of December 31, 2022, net proved reserves associated with these properties were approximately 124 million barrels of oil equivalent (mmboe).
Chesapeake expects the transaction will close, subject to certain regulatory approvals and consents, in 2023, with an effective transaction date of February 1, 2023. The company will receive $650 million upon closing, subject to customary adjustments, with the final $50 million installment paid one year from closing. And SilverBow has also agreed to pay Chesapeake an additional contingent payment of $25 million should oil prices average between $75 and $80 per barrel WTI NYMEX or $50 million should WTI NYMEX prices average above $80 during the year following the close of the transaction, which could increase total proceeds of the deal to $750 million. Chesapeake anticipates the proceeds will be available to strengthen its balance sheet further and for its share repurchase program.
KEY QUOTES:
“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. I want to thank our employees who built a culture of safety and excellence, which made this a powerful and attractive asset.”
— Chesapeake President and Chief Executive Officer Nick Dell’Osso
