Exco Resources Inc., a Dallas-based energy producer whose market value has dropped by more than half since 2010, has agreed to buy Chesapeake Energy Corp. assets in the Eagle Ford and Haynesville shale formations for about $1 billion.
Exco is adding the equivalent of 6,100 barrels of oil production a day in the Eagle Ford and 114 million cubic feet of natural gas in the Haynesville, the company said in a statement Wednesday.
The transaction, expected to close this month, includes 55,000 net acres in Texas and 9,600 net acres in Louisiana, Exco said.
“These acquisitions are consistent with our strategy of targeting opportunities in both existing core areas and new plays,” Exco Chairman and Chief Executive Officer Douglas H. Miller said in the statement. Exco’s proved reserves declined 24 percent last year and its stock fell 35 percent.
“Plays” is an industry term referring to areas where energy exploration takes place.
Production in the Eagle Ford rose 54 percent in April from the same month a year earlier, the Texas Railroad Commission reported June 20. Exco has been seeking acquisitions this year as gas prices in New York have rebounded from a 10-year low in April 2012.
“Our emphasis is going to be on acquisitions,” Miller said on a May 1 conference call with analysts. “Our defensive days are over.”
The transaction brings Chesapeake’s year-to-date asset sales to about $3.6 billion, which enables the Oklahoma City-based company that has Ohio operations to fully fund its capital spending for 2013. Chesapeake has been selling assets to fund operations and reduce debt piled up under former Chairman and CEO Aubrey McClendon.
BG Group Plc has a right to buy half of the Haynesville properties, Exco said. JPMorgan Chase & Co. has committed to replace an existing credit agreement and include a bridge loan tranche to fund the Eagle Ford purchase. KKR & Co. funds have agreed to pay for about half, or $133 million, of the development costs in certain parts of the Eagle Ford, Exco said.
Jefferies Group LLC advised Chesapeake on the transaction.
On Monday, Chesapeake announced a $1.02 billion joint venture with China Petroleum & Chemical Corp (known as Sinopec). It will buy half of Chesapeake’s Mississippi Lime oil and gas properties in northern Oklahoma to increase its presence in the booming North American shale gas industry.
Companies in China are eager to learn how to drill in shales.
Sinopec, Asia’s largest oil refiner, will buy 50 percent of Chesapeake’s 850,000 acres of net oil and natural gas leasehold properties in the Mississippi Lime shale field, the companies said.
Sinopec struck a deal with Devon Energy Corp in January 2012 to buy a third of the U.S. oil and natural gas producer’s interest in five developing fields, including Ohio’s Utica shale, for about $2.2 billion.
Beacon Journal staff writer Bob Downing contributed to this report.