GeoSouthern Energy — Eagle Ford Shale News

Devon's Eagle Ford acquisition of GeoSouthern Energy's assets in the play is on track to close by the end of the first-quarter of 2014.

The company announced the acquisition of GeoSouthern Energy’s assets in the Eagle Ford oil play in November.

The acquired Eagle Ford acreage includes 82,000 net acres located in DeWitt and Lavaca counties. Devon expects to almost triple production from 53,000 boe/d at the time of the deal to ~140,000 boe/d over the next several years.

“2013 was a year of strong execution and exciting change for Devon,” said John Richels, CEO. “...... Additionally, we high-graded our portfolio through an accretive Eagle Ford Shale acquisition, an innovative midstream combination, and initiated an asset divestiture program. These actions provide a platform for Devon to achieve attractive high-margin growth in 2014 and for many years to come.”

Devon Eagle Ford Production Estimates

Devon predicts production will grow at a compound annual growth rate of 25% over the next several years, reaching peak production of ~140,000 boe/d. I suspect we'll see much more than 25% growth in the first few years.

According to the company, the Eagle Ford development program in 2014 will be self-funding and is expected to start generating free cash flow beginning in 2015. Risked recoverable resources in the Eagle Ford are estimated at 400 million boe, of which more than 60% are proved reserves.

Devon Fourth Quarter 2013 U.S. Production

Natural Gas - 1.9 Bcf/d
Oil - 85,300 bd
NGL's - 122,400 b/d

Read more at devonenergy.com

Devon Energy has agreed to acquire GeoSouthern Energy's Eagle Ford assets for $6 billion in cash.

The deal includes 82,000 net Eagle Ford acres in DeWitt and Lavaca counties, with associated production of 53,000 boe/d.

Current production is 56% oil, 20% NGLs, and 24% natural gas.

The properties hold an estimated resource potential of 400 million boe.

Devon has an average 50% interest in the properties and a 38% net revenue interest.

“With this transaction, we have secured a premier acreage position in the very best part of the world-class Eagle Ford oil play. This acquisition enhances our already strong North American portfolio by adding another low-risk, light oil asset that provides outstanding well economics and self-funded growth.”

— John Richels, CEO.

There is at least one producing well in each owned unit in DeWitt County and Devon expects EURs as high as 800,000 boe. The company estimates a drilling inventory of 1,200 locations and has a joint development agreement with BHP Billiton.

Devon expects annual growth of 25% from the assets for the next several years, with an ultimate peak of 140,000 boe/d.

The deal will be funded with cash on hand and borrowings.

Read the full press release at devonenergy.com