Anadarko to Sell Eagle Ford Assets

Anadarko Sells Eagle Ford Assets

Anadarko Sells Eagle Ford Assets

Anadarko announces plans to sell its interest in 318,000 Eagle Ford acres.

Related: Venada and KKR to Develop Eagle Ford

Anadarko Petroleum Corporation (NYSE: APC) announced today it has agreed to sell its Eagle Ford Shale assets for approximately $2.3 billion to Sanchez Energy Corporation and Blackstone Group LP.

Upon completion of the acquisition, we will triple our exposure to the Upper and Middle Eagle Ford trends that have been successfully developed by the Company at Catarina. The Upper and Middle Eagle Ford sections thicken in Southern Dimmit County, where the majority of the acquired leasehold is concentrated. Upon closing the transaction, we believe we will have locked up the core of the trend within the volatile oil window. With the ability to duplicate the cost structure of our Catarina and Maverick operations throughout the Comanche Eagle Ford Asset, we expect to further improve operating efficiencies while enhancing our capability to achieve sustainability of well cost reductions over time.

The transaction is expected to close in the first quarter of 2017 and details include:

  • Approximately 318,000 gross operated acres in Dimmit and Webb counties
  • Current production of approximately 67,000 Boe/d (70% liquids)
  • Proved reserves of approximately 300 MMBoe (70% liquids, 75% proved developed)
  • Estimated total resource potential of over 1,100 MMBoe
  • Significant near-term, low-risk production growth driven by 132 gross drilled but uncompleted wells
  • More than 4,000 Eagle Ford drilling locations, which provides over 20 years of economic drilling inventory
  • Sanchez Energy will fully fund its 50% of the acquisition through a combination of cash on hand and commercial bank and preferred equity commitments at a newly formed non-recourse subsidiary
  • Blackstone will fund its 50% of the acquisition through a separate entity via equity and commercial bank commitments
  • Anadarko’s sponsored master limited partnership, Western Gas Partners, LP (NYSE: WES), will continue to own and operate its midstream assets in South Texas and is expected to benefit from drilling commitments made by the buyers in conjunction with this transaction

Despite the decline, the Eagle Ford is still a prized space in the industry with many productive years ahead. Researchers from the UT’s Bureau of Economic Geology say that the 400-mile field has seen just a fraction of its ultimate activity and their new study predicts that another 100,000 wells can still be drilled. In October, Venado Oil and Gas, LLC and global investment firm KKR announced that they are joining together to develop assets in the Eagle Ford Shale.