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SilverBow Successfully Completes $700MM Purchase of Chesapeake’s South Texas Holdings
12/07/2023![SilverBow-Successfully-Completes-700MM-Purchase-of-Chesapeake-s-South-Texas-Holdings](https://images2.rextag.com/public/blog/209blog_SilverBow Successfully Completes 700MM Purchase of Chesapeake’s South Texas Holdings.png)
SilverBow Resources Inc. finished buying Chesapeake Energy Corp.'s oil and gas areas in South Texas. They agreed to this $700 million deal back in August.
The deal included SilverBow paying $650 million in cash when the deal was closed. They will also pay another $50 million in cash a year later, with some usual changes in the amount. Chesapeake might get an additional $50 million later, depending on the prices of oil and gas in the future.
SilverBow paid for this big purchase with the money they had, by borrowing from their credit line, and by selling more of their second lien notes.
“Our strategy of growth and acquisitions has led us to a stronger financial position, a more diverse mix of commodities, and a collection of prime locations in a strategically beneficial basin. The assets we’ve acquired from Chesapeake significantly add to our ability to choose the best projects for capital investment and offer immediate competition for capital.”
- Sean Woolverton, the CEO of SilverBow
Expectations
- The company anticipates that over 40% of its full-year production will be oil and natural gas liquids.
- For 2024, SilverBow is planning to enhance its capital program to develop the Chesapeake assets. This includes operating two rigs on liquid-rich fields and one on dry gas fields, as stated by Woolverton.
- The company does not plan any additional capital expenditures specifically for these newly acquired assets.
- SilverBow expects a significant increase in oil production in 2024, projecting about a 70% rise from the previous year, aiming for an average output of 25,000 barrels per day.
About SilverBow Resources Inc.
SilverBow Resources is an independent company that explores and produces oil and gas. They focus on the Eagle Ford Shale and Austin Chalk regions in South Texas. With around 30 years of experience in these areas, SilverBow aims to create value for its shareholders through efficient operations, strategic acquisitions of high-return inventory, and generating sustainable free cash flow. The company manages approximately 220,000 net acres of land, which consist of low-risk development locations and a balanced mix of commodities.
About Chesapeake Energy Corporation
Chesapeake Energy Corporation, based in Oklahoma City, is a team of dedicated and innovative employees committed to discovering and responsibly developing leading oil and gas resources across the United States. They have set an ambitious goal to reach net zero greenhouse gas (GHG) emissions (Scope 1 and Scope 2) by 2035. Chesapeake Energy is dedicated to providing affordable, reliable, and lower carbon energy in a safe manner.
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Anticipated Growth: Endeavor Energy's Value Nearing $30 Billion
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/206Blog_Endeavor Energy’s Value Nearing 30 Billion.png)
This summer, J.P. Morgan Securities highlighted Endeavor Energy Resources as the Midland Basin's standout in mergers and acquisitions, suggesting its value might approach $30 billion. Endeavor Energy Resources, a privately-owned entity in Midland focusing solely on its operations, has seen a significant uptick in production. It now boasts a production rate of 331,000 barrels of oil equivalent per day (boe/d), marking a 25% increase from the previous year.
Chesapeake Dominates with $7.4B Southwestern Buy
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/223Blog_Chesapeake and Southwestern Energy agree on $7.4bn merger (2).png)
Chesapeake Energy has agreed to purchase its competitor, Southwestern Energy, in a $7.4 billion all-stock deal. The acquisition anticipates a boost in natural gas demand with new U.S. LNG export terminals coming online in 2025.
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/297_Blog_Keystone XL Pipeline Controversy and Wildlife Disaster From Trump's Green Light to Biden's Red Light on the 15 Billion Project.jpg)
The pipeline industry in the USA faced and still faces a range of regulatory challenges, including permitting delays, environmental requirements, and public opposition to pipeline projects. In recent years, pipeline projects like the Keystone XL and Dakota Access pipelines had legal and regulatory obstacles that delayed or canceled their construction. Keystone XL Pipeline, proposed by TransCanada in 2008, aimed to transport crude oil from Canada (around Calgary and Edmonton) to refineries on the Gulf Coast (Port Arthur). The project faced opposition from environmental groups and indigenous communities, who argued that it would contribute to climate change and pose a risk to water resources. In 2015, President Obama rejected the project, citing concerns about its environmental impact. However, in 2017, President Trump revived the project, leading to further legal challenges. In June 2021, U.S. President Joe Biden officially canceled the project on his first day in office.
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/282_Blog_Renewable Natural Gas How RNG Changes the Industry.jpg)
The renewable natural gas (RNG) industry in the United States is showing promising signs of growth. As of 2019, the U.S. consumed 261 billion cubic feet (BCF) of RNG, primarily utilized by independent power producers, electric utilities, and various commercial and industrial entities. However, this figure represents only a small fraction of its potential. Research indicates that the U.S. could theoretically produce up to 2,200 BCF of RNG through anaerobic digestion alone, which would equate to about 11% of daily national natural gas consumption.
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Recently, the progress toward an energy transition is hitting a snag. Sales of electric vehicles are decelerating, and the growth in wind and solar power needs to be keeping pace with expectations. To make matters more challenging, electricity prices are climbing when they were expected to fall. Amidst these setbacks, the oil and gas sectors are proving resilient. According to BP's latest energy outlook, not only are these energy mainstays here to stay, but their demand is expected to remain relatively high even after reaching a peak. Interestingly, BP forecasts that oil demand will reach its zenith next year, marking a critical moment in energy consumption trends. This isn't the first time BP has projected a peak in oil demand. Back in 2019, their review anticipated a decline in demand growth, but the prediction fell flat. Instead, oil demand surged to unprecedented levels following the end of the global pandemic lockdowns, defying previous forecasts and underscoring the enduring dominance of traditional energy sources in the global market.