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Chesapeake Divests More Eagle Ford Assets; 172,000 n.a. and 2K+ Wells Sold to INEOS For $1.4 billion

Chesapeake Energy Corp. has announced that it will receive $1.4 billion from INEOS Energy for the sale of its remaining Eagle Ford asset, just a month after selling its Brazos Valley assets for a similar amount. This brings the total value of Chesapeake's Eagle Ford assets to over $2.82 billion. The Oklahoma City-based company will continue to market its other Eagle Ford assets.

Chesapeake has agreed to sell almost 172,000 net acres and 2,300 wells in the black oil portion of its Eagle Ford asset, Situated mainly in Dimmit, LaSalle, and McMullen counties in Texas, along with related property, plant, and equipment.

During the fourth quarter of 2022, the assets had an average net production of roughly 36,000 boe/d, with 81% being liquid. The net proved reserves associated with the properties were estimated to be about 144 MMboe as of December 31, 2022.

INEOS, a chemical company with some shale holdings, is acquiring the Eagle Ford asset and entering the U.S. for the first time through this acquisition. However, INEOS Group Holdings SA purchased a shale oil and gas business in the Giddings Field in Texas in 2019, and also owns petrochemical plants in Texas, including the Chocolate Bayou cracker.

In 2021, the company reported that its South Texas Giddings Field assets included 108 operated wells spread across 44,701 net mineral acres in Austin, Brazos, Burleson, Fayette, and Washington counties in Texas.

Chesapeake anticipates the transaction closing in the second quarter of 2023, with an effective transaction date of October 1, 2022. Upon closing, Chesapeake will receive $1.175 billion, subject to customary adjustments, with an additional $225 million paid in annual installments of $56.25 million.

The company expects that the proceeds will be used to repay borrowings under its revolving credit facility and be available for its share repurchase program.

Chesapeake has secured an aggregate of $2.825 billion to date and remains actively engaged with other parties regarding the rest of our Eagle Ford position. In January, Chesapeake agreed to sell its Brazos Valley region assets to WildFire Energy I LLC for $1.425 billion.

Chesapeake Energy's Eagle Ford Shale assets, located across Texas, are an important part of the company's operations. The Eagle Ford Shale is a geological formation that has the capability to produce both natural gas and oil. Named for the town of Eagle Ford, Texas, this shale play extends nearly 50 miles wide and 400 miles long with an average thickness of 250 feet and depths reaching between 4,000 and 14,000 feet. Its high percentage of carbonate makes the shale more brittle and more conducive to hydraulic fracturing.

In 2023, Chesapeake Energy has entered into agreements to sell a portion of its Eagle Ford assets to WildFire Energy I LLC and INEOS Energy for $1.425 billion and $1.4 billion, respectively. The company will have approximately 50,000 acres in the southwest portion of the play, the "Rich Gas" portion, remaining after the two announced sales.

Chesapeake Energy expects to have 0.5 to 1 active rig in the area resulting in 20 to 25 wells to be turned in line in the Rich Gas portion of the play in 2023. As of 4Q'22, the Eagle Ford Shale assets accounted for 13% of the company's total production, with 90 net production (mboe/d), an average of 2 active rigs, 12 wells drilled, and 16 wells turned in line. The company has field offices in Caldwell and Carrizo Springs, TX.

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Tyler Reitmeier Tel. +1 713-203-3128 Email: treitmeier@hartenergy.com

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Chesapeake Sells Its Brazos Valley Assets to Be Sold for $1.43 Billion to WildFire Energy

In order to sell its part of the sprawling Eagle Ford Shale acreage, Chesapeake Energy Corp. on January 18 concluded an agreement to trade its Brazos Valley region assets to WildFire Energy I LLC for $1.425 billion.

Nuevo Midstream will add 100 miles of gathering pipeline in Gonzales, Lavaca, and Dewitt counties to its Eagle Ford assets.

Enbridge acquired Tres Palacios natural gas storage facility in Texas for $335 million, adding approximately 35 Bcf of natural gas storage to their portfolio. The facility uses salt caverns for storage and has a gas header pipeline system that spans 62 miles and links to 11 major gas pipelines. Crestwood Equity Partners LP intends to divest its interests in Tres Palacios by the second quarter.

The U.S. natural gas pipeline network is a complex system of pipelines that transport natural gas from production areas to consumers across the country. The pipeline network consists of three main types of pipelines: gathering pipelines, transmission pipelines, and distribution pipelines. Gathering pipelines are small-diameter pipelines that transport natural gas from production wells to processing facilities or larger transmission pipelines. Transmission pipelines are large-diameter pipelines that transport natural gas over long distances, sometimes across multiple states. Distribution pipelines operate at low pressure and are located in or near urban areas. They are often referred to as "utility pipelines" because they are typically owned and operated by local gas utility companies.

Diamondback Energy, an independent oil and gas company, has successfully completed the acquisition of Lario Permian, marking the closure of two major deals in the fourth quarter of 2022. The company purchased two private operators in the Midland Basin for approximately $3.3 billion.

2023 blog posts