SilverBow Resources Inc. announced on Nov. 30 the closing of its acquisition of Chesapeake Energy Corp.’s oil and gas assets in South Texas for $700 million.
SilverBow’s deal, announced in August, includes a a $650 million upfront cash payment paid at closing and an additional $50 million deferred cash payment due 12 months after closing, subject to customary adjustments. Chesapeake may also receive up to $50 million in additional contingent cash consideration based on future commodity prices.
The payment was funded with cash on hand, borrowings under the company’s credit facility and proceeds from the sale of additional second lien notes.
“Our differentiated growth and acquisition strategy has positioned us with a stronger balance sheet, a broader commodity mix and a portfolio of locations across a single, geographically advantaged basin,” Sean Woolverton, SilverBow CEO, said in a press release. “The acquired Chesapeake assets further enhance our optionality to continue allocating capital to our highest return projects and will immediately compete for capital."
To develop its newly acquired Chesapeake inventory, SilverBow plans on expanding its capital program in 2024, running two rigs on its liquids properties and one rig on dry gas properties, Woolverton said. SilverBow does not plan on any incremental capex on the acquired assets.
In 2024, SilverBow expects oil production to increase approximately 70% year-over-year and average 25,000 bbl/d, with a full-year production mix at more than 40% oil/NGLs, the company said in the release.