(WO) – Chesapeake Energy Corporation has executed an agreement to sell its remaining Eagle Ford assets to SilverBow Resources, Inc. for $700 million, bringing the total proceeds from its Eagle Ford exit to more than $3.5 billion.
Chesapeake has 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, average net daily production from these properties was approximately 29,000 boe (60% liquid)m which generated approximately $50 million of EBITDAX. As of December 31, 2022, net proved reserves associated with these properties were approximately 124 MMboe.
Chesapeake expects the transaction will close in 2023, with an effective transaction date of February 1, 2023. The company will receive $650 million upon closing, with the final $50 million installment paid one year from the closing date. 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 further strengthen its balance sheet and for its share repurchase program.
"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," said Chesapeake President and Chief Executive Officer Nick Dell'Osso.
