Constellation Energy to form new business with Sanchez Oil & Gas

US-based Constellation Energy Partners (CEP) has signed an agreement with Sanchez Oil & Gas (SOG) and its affiliate Sanchez Energy (SEP) to establish a new business, acquiring oil and gas assets in the process.

CEP has acquired oil, natural gas and natural gas liquids assets located in Texas and Louisiana from SEP, for approximately $30.4m.

The acquired assets include 67 wells. They produce around 1,167 barrels of oil equivalent (Boe) a day, of which 25% are oil and natural gas liquids.

The assets include total reserves of arouund 1.7 million Boe, of which 87% are proved developed.

Constellation Energy president and CEO Stephen R Brunner said that the latest deal will transform the company, helping to refinance and improve the balance sheet.

"In addition to the immediate benefits we anticipate from the acquired assets, we see our new relationship with SOG as a means to achieving enhanced deal flow, which may occur through future asset contributions or joint acquisitions," he said.

As well as Texas and Louisiana, Constellation Energy has proved reserves in the Cherokee Basin of Oklahoma and Kansas, Woodford Shale in the Arkoma Basin of Oklahoma, and in the Central Kansas Uplift also.

SOG carries out major activities in the onshore Gulf Coast, Mid-Continent and Rocky Mountain regions, drilling over 900 wells in total.

Sanchez Energy is currently focusing on US Gulf Coast conventional natural gas assets, and on undeveloped acreage positions in Kansas, Illinois and west Texas.