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Ensign’s Assets Are Acquired by Marathon for $3 Billion01/05/2023
Marathon Oil Corp. closes the acquisition of Ensign Natural Resources’ Eagle Ford assets for $3 billion cash, according to the company’s release on December 27.
The purchase includes 130,000 net acres (99% operated, 97% working interest) in acreage adjacent to Marathon Oil’s existing Eagle Ford position. Ensign’s estimated fourth-quarter production will average 67,000 net boe/d, including 22,000 net bbl/d of oil.
According to Marathon’s release, this acquisition complies with every element of its disciplined acquisition criteria. It is accretive to the key financial metrics, it is driving higher shareholder distributions consistent with the operating cash flow driven Return of Capital framework, it is accretive to its inventory life with attractive locations that immediately compete for capital and it offers truly compelling industrial logic given the existing Eagle Ford footprint and its track record of execution excellence in the play.
The acquisition was announced on November 2, following Devon Energy Corp.’s purchase of Validus Energy for $1.8 billion. Those deals and the impending sale of Chesapeake Energy Corp.’s Eagle Ford assets put the mature shale play back into the spotlight after years in which the Permian Basin has taken center stage for M&A.
Analysts and dealmakers admit the Eagle Ford appears to be an area of focus for companies seeking to add inventory, while the others are getting out. Chesapeake, with its pivot to natural gas, which has been marketing its Eagle Ford position, is anticipated commanding $4.6 billion to $5.9 billion in value. Other companies, such as BlackBrush Oil & Gas LLC, GulfTex Energy LLC, and 1776 Energy Operators LLC also have the potential to lure buyers.
The acquired assets from Ensign span Live Oak, Bee, Karnes, and Dewitt Counties across the condensate, wet gas, and dry gas phase windows of the Eagle Ford.
Marathon Oil can deliver maintenance-level production from the acquired asset of 67 net boe/d (22 net bbl/d of oil) with almost one rig and 35 to 40 wells to sales a year.
The company's estimation of the asset does not include any assumptions for synergies or upside redevelopment opportunities.
Based in Houston, Ensign was formed in 2017 in partnership with Warburg Pincus, a global growth investor. The company secured an equity commitment from the Kayne Private Energy Income Funds platform in 2019 as part of an acquisition of Pioneer Natural Resources Co.’s Eagle Ford assets.
Marathon Oil is an independent exploration and production (E&P) company based in Houston, which is focused on the most significant oil-rich resource plays in the U.S. — the Eagle Ford in Texas, Permian in New Mexico, STACK and SCOOP in Oklahoma, and the Bakken in North Dakota.
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On December 15, Pipeline giant Williams made a deal to purchase MountainWest Pipelines Holding Co. from Southwest Gas Holdings Inc. for almost $1.5 billion including debt. Williams is paying $1.07 billion in cash and assuming $0.43 billion of debt to buy MountainWest, which comprises approximately 2,000 miles of interstate natural gas pipeline systems mainly situated across Utah, Wyoming, and Colorado.
A $3.0 billion cash definitive agreement to purchase the Eagle Ford assets of Ensign Natural Resources has been concluded by Marathon Oil Corporation on November 2.
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.
On January 6, Phillips 66 announced that it plans to acquire more than 43% of DCP Midstream LP for $3.8 billion, expanding the business in the oil & gas business.
On January 5 Northern Oil & Gas (NOG) concluded a deal to acquire working interests in Midland-Petro D.C. Partners LLC (MPDC)'s Mascot Project in the Midland Basin, according to a January 9 press release. Firstly estimated at $330 million in cash, the deal was signed with an additional 3.25% working interest added to the 36.7% agreed upon when the transaction was announced on October 19. NOG paid $29 million more for the additional interests, which now totalled 39.958%. Finally, the deal closed for $320 million in cash and $43 million in debt at signing in October with the finance of Minnetonka, Minn.-based NOG with cash on hand, operating free cash flow, and assistance from its revolving credit facility.