Penn Virginia to buy Devon Energy’s Eagle Ford assets in US for $205m

US-based oil and gas exploration company Penn Virginia has signed an agreement to acquire Devon Energy’s Eagle Ford shale assets located in Lavaca County, Texas, for $205m.

The proposed acquisition comprises 19,600 net acres contiguous to the Penn Virginia’s core operations and is expected to enhance its net production by about 30%, or 3,000 barrels of oil equivalent per day.

The asset sale is part of Devon’s $1bn divestiture programme, announced in May this year.

Also included in the acquisition are midstream assets valued at around $20m.

Penn Virginia interim principal executive officer and chief operating officer John Brooks said: “This strategic acquisition is an excellent fit and an important step in our long-term growth strategy for Penn Virginia.

“It is particularly attractive as it materially increases our Eagle Ford production, acreage and drilling.

“The transaction is also accretive to all key per-share metrics including earnings, cash flow and net asset value.”

The acquisition, which includes an infield gathering and compression system, has net proved developed producing (PDP) reserves of around 6.3 million barrels of oil equivalent (mmboe), while its total resource potential is estimated at more than 60mmboe.

It will increase the company’s core leasehold position by 35%, offering an upside potential in the upper Eagle Ford and Austin Chalk formations.

Furthermore, Penn Virginia’s working interest in the Lager 3H well, located in Gonzales County, will be increased from about 41% to 96%.

The transaction offers operational synergies worth $40m and is expected to close on or before the end of next month.