Chesapeake finalizes Eagle Ford basin exit through SilverBow deal.

(Reuters) ‌-U.S. natural gas ‍producer Chesapeake Energy is making waves with its latest announcement. The company revealed on Monday that it will be selling its remaining Eagle Ford assets⁣ to SilverBow Resources for a whopping $700 million. This deal marks ‍Chesapeake Energy’s complete exit⁤ from ⁣the south Texas basin.

Chesapeake Energy’s strategic move to sell its assets in the Eagle Ford ​basin has proven to be highly‍ lucrative. Including the recent deal ⁤with SilverBow Resources, the​ company has generated total proceeds of over ​$3.5 billion.

Chesapeake Energy⁣ made it clear ⁤last⁢ year ⁤that‍ it no longer⁢ considered ​the Eagle Ford⁤ acreage as ⁣a core part of its strategy. Instead, the company ‌has shifted its⁤ focus to‌ the gas-rich Marcellus and Haynesville‌ shale ​formations.

In January, Chesapeake Energy sold parts of its operations ⁢in the Eagle Ford basin to WildFire ‌Energy for a staggering $1.43 billion. The following month, ‌it also sold some positions to chemical maker⁤ INEOS ‍for $1.4 billion.

One of the driving forces behind Chesapeake Energy’s decision to exit the Eagle‌ Ford basin was activist investment ⁢firm⁣ Kimmeridge Energy Management. The firm has been pushing for a shift towards solely natural ‌gas production.

The assets being sold to SilverBow Resources​ include approximately 42,000 net acres and about 540 wells located ⁢in Dimmit and Webb counties. Additionally, related property, plant, and equipment will also be transferred. These properties have been producing an average net ​daily production of around 29,000 barrels ​of oil equivalent (boe) during the second quarter.

SilverBow Resources, on the other hand, is ⁤thrilled ​about the deal. Once the transaction is​ finalized by ⁤the end of ⁣this year, it will become the largest public ⁢pure-play Eagle ⁤Ford operator. The‍ deal is ⁢expected⁣ to immediately enhance⁢ key financial⁣ and operating metrics for ‍SilverBow Resources.

The deal ‌structure consists of a $650 million‍ upfront cash payment due ‌at ⁤closing, with an additional $50 ⁢million⁢ deferred cash⁢ payment⁤ to be made 12 months after the close. Chesapeake Energy also⁣ stands to receive up to $50 million in additional contingent cash based ‍on future commodity prices.

Reporting by Arunima Kumar in Bengaluru; Editing by Sriraj Kalluvila

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