Hess Corp. has agreed to sell assets in the Eagle Ford shale in south Texas for $265 million to Sanchez Energy Corp. as it continues to whittle its operations.
The deal includes around 43,000 acres in the Eagle Ford shale in Dimmit, Frio, LaSalle and Zavala Counties, and was effective March 1.
The deal comes as Hess has been selling assets to fund drilling and exploration concerns and reduce costs, and amid shareholder pressure to focus its operations.
The transaction is expected to boost the smaller oil and gas explorer Sanchez' production by around 4,500 barrels of oil equivalent a day, more than doubling its production from its rate of 3,800 boe in the first two months of 2013. The acquisition also increases Sanchez' total proved reserves by 13.4 million boe, and increases its proved developed reserves by around 6.6 million boe. It adds 50 wells, for a total count of 84 producing wells.
"The Eagle Ford assets we are acquiring are highly strategic and accretive on a variety of metrics, and provide critical mass and scale for the company by significantly increasing our reserves and more than doubling our current production rate," said Sanchez Chief Executive Tony Sanchez III.
Mr. Sanchez said the company plans for continuous drilling of development locations on the newly acquired assets with one rig.
Hess has said it aims to turn itself into a pure exploration and production company, as hedge fund Elliott Management has urged it to restructure its operations. The energy company has said that it is exploring options for its entire downstream business and pruning its Asian portfolio.
Copyright (c) 2012 Dow Jones & Company, Inc.
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