Chesapeake's Eagle Ford assets will be trimmed down as the company's focuses on its core areas of development. As part of the company's "core of the core" strategy, they will divest areas of the Eagle Ford that might not be held by production as leases expire. Chesapeake is simply capital constrained.

The CEO Aubrey McClendon put it best:

"We’re long assets and short capital"

Chesapeake is selling Eagle Ford assets to create cash flow for ongoing development. The company simply doesn't have the money needed to develop all of its acreage across the U.S. As you would expect, the company is rationalizing all of its assets and focusing development in areas offering the highest returns.

The company calls the area for sale its "Northern Block", where the Eagle Ford is largely an oil producing formation. The majority of acreage in the Northern Block is located in Zavala County. Production associated with the area currently amounts to 10,000-11,000 boe/d. The company expects to close the deal by the end of the year and its should be an attractive acreage position. There's a rough outline of what might be sold in the image above. Especially if the Pearsall proves to have liquids potential across portions of the acreage.

Chesapeake Third Quarter Eagle Ford Highlights

While they're selling a portion of their acreage, the company continues to impress operationally. Highlights from their quarterly earnings release include:

• 120,500 gross (52,200 net) boe/d of production; Up 371% year over year and 44% sequentially
• Production is 68% oil, 14% NGLs, and 18% natural gas
• 124 wells reached first production during the quarter
• 233 wells have been drilled, but are not yet producing
• Will exit the year with 22 rigs, down from 34 at its peak
• 93% of wells brought online in Q3 produced more than 500 boe/d and 35% produced more than 1,000 boe/d
• Three wells highlighted during the quarter came online at rates between 1,600 and almost 2,200 boe/d.