Sanchez Energy to sell non-core assets in US Eagle Ford Shale for $181m
US-based Sanchez Energy has signed an agreement to sell certain non-core assets in Eagle Ford Shale to Carrizo Oil & Gas in a transaction valued at $181m.
As part of the transaction, the company will sell about 15,000 net acres primarily located in La Salle and McMullen Counties, Texas, net proved reserves of 6.9 million barrels of oil equivalent, and net production of about 3,000 barrels of oil equivalent per day (boe/d) from 112 gross wells.
With the closing of the transaction, Carrizo will hold more than 100,000 net acres in the Eagle Ford Shale.
The acquisition will increase the company’s drilling inventory in the play to about 1,100 net locations.
Sanchez Energy CEO Tony Sanchez, III said: “The transaction announced today is further evidence of our dedication to improving our balance sheet while maintaining our focus on core areas of operations.
“Proceeds from the transaction, which is expected to close in the fourth quarter of 2016, are expected to enhance the company’s already strong liquidity position which, as of the end of the third quarter of 2016, totalled approximately $629m, consisting of approximately $329m in cash and cash equivalents and an undrawn bank credit facility with an elected commitment amount of $300m."
Sanchez said that the divestiture of non-core assets is consistent with its strategy to increase liquidity and focus on the growth of Catarina asset.
The company has already identified more than 1,350 high-quality drilling locations at Catarina.
Sanchez’s recent focus was on the Catarina and Maverick areas of its asset base and the latest sale will allow it to expand its capital allocation in core areas.
Carrizo Oil & Gas president and CEO Chip Johnson, IV said: "We are pleased to announce this bolt-on acquisition in the Eagle Ford Shale, as it increases our acreage position in the play by more than 15% and expands our Core inventory in it by approximately 10%, with additional upside possible from a combination of infill drilling and multi-zone development.”