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Chesapeake Sells Its Brazos Valley Assets to Be Sold for $1.43 Billion to WildFire Energy02/02/2023
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.
Chesapeake will maintain other assets in the Eagle Ford that at one time were estimated at from $4.6 billion to $5.9 billion by Enverus Intelligence Research, according to strip prices in mid-2022.
Chesapeake may have defied some expectations by selling to a private company, as in 2022 two high-profile Eagle Ford deals were transacted by public companies Devon Energy Corp. and Marathon Oil Corp. for privately-held E&Ps. Devon and Marathon Oil, spending a total of $4.8 billion in the mature shale play.
Chesapeake decided to sell roughly 377,000 net acres and almost 1,350 wells in the Brazos Valley, along with related property, plant, and equipment, the company said. A subsidiary Brazos Valley Longhorn LLC has been used to manage those assets. In 2019, Chesapeake acquired approximately 420,000 net acres from WildHorse Resource Development Corp. for almost $4 billion.
The assets sold to WildFire averaged net daily production of almost 27,700 boe (85% liquid) during the third quarter of 2022. As of December 31, 2021, net proved reserves associated with these properties were approximately 96.8 MMboe.
The company will collect $1.2 billion upon closing, subject to customary adjustments, with the additional $225 million received in yearly installments of $60 million over the next three years and a final $45 million payment in year four.
For WildFire, the purchase follows the company’s acquisition of MD America Energy in March 2022 and the acquisition of Hawkwood Energy LLC, which commenced the process of consolidating the basin in August 2021.
The Chesapeake purchase includes acreage in Burleson, Brazos, Robertson, Madison, Lee, Washington, and Grimes counties Texas.
Chesapeake said it expects proceeds will be used to repay borrowings under its revolving credit facility and be available for its share repurchase program. Chesapeake anticipated the WildFire transaction to close in the first quarter of 2023.
Chesapeake’s Eagle Ford divestiture comes as it pivots toward a focus on producing natural gas. Analysts had anticipated that, given the size of its holdings, the Oklahoma City-based company would look to divest its South Texas assets in pieces.
Also, Chesapeake is one of the largest operators in the Marcellus, having entered the area through an acquisition in 2005. The company's position is concentrated in northeast Pennsylvania with about 650,000 net acres under lease. Additionally, Chesapeake began developing natural gas in the Haynesville in 2008 and currently holds leases covering roughly 350,000 net acres.
RBC Capital Markets, Citi, and Evercore are serving as financial advisers, Haynes and Boone, LLP is serving as legal adviser, and DrivePath Advisors is serving as a communications adviser to Chesapeake.
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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.
Hydro-Québec to acquire Great River Hydro With 13 hydropower generating stations in New England
Vermont Business Magazine HQI US Holding LLC, a wholly-owned subsidiary of Hydro-Québec, concluded the agreement to purchase Great River Hydro, LLC, which possesses 13 hydropower generating stations with a total capacity of 589 megawatts along New England's Connecticut and Deerfield rivers in Vermont, New Hampshire and Massachusetts. The affiliates of Arc Light Capital Partners, LLC is selling Great River Hydro for a price of roughly US $2 billion. The facilities are situated along the Connecticut and Deerfield rivers. Hydro-Québec is the largest single supplier of electricity to Vermont, comparing to the closed Vermont Yankee nuclear power station in Vernon which produces 620 megawatts. Great River Hydro has A 589-MW hydropower fleet, 13 cascading generating stations and 3 storage-only reservoirs along some 310 miles (500 km) of the Connecticut and Deerfield rivers. Moreover, its annually supply has enough energy to power over 213,000 homes in New England. One fifth of the energy generated is subject to long-term supply contracts, guaranteeing revenue stability. Land holdings of almost 30,000 acres (12,140 hectares), allowing for the possibility of various renewable energy projects.
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.