Chesapeake to complete Eagle Ford basin exit with SilverBow deal

(Reuters) -U.S. producer Chesapeake Energy (NYSE:) said on Monday it would sell its remaining Eagle Ford assets to SilverBow Resources (NYSE:) for $700 million, completing its exit from the south Texas basin.

The company’s asset sales in the basin has generated total proceeds of more than $3.5 billion, including Monday’s deal.

Chesapeake said last year it viewed the Eagle Ford acreage as no longer core to its strategy and would focus on the gas-rich Marcellus and Haynesville shale formations.

It had sold parts of its operations in Eagle Ford to WildFire Energy for $1.43 billion in January and some positions to chemical maker INEOS for $1.4 billion the following month.

The Oklahoma City-based energy producer also faced pressure from activist investment firm Kimmeridge Energy Management, which has urged a shift toward solely natural gas production.

Chesapeake has agreed to offload about 42,000 net acres and about 540 wells of its Eagle Ford asset located in Dimmit and Webb counties, along with related property, plant and equipment.

Average net daily production from these properties was about 29,000 barrels of oil equivalent (boe) during the second quarter.

SilverBow said the deal, expected to close by the end of this year, would make it the largest public pure-play Eagle Ford operator and would immediately add to key financial and operating metrics.

The deal consists of a $650 million upfront cash payment due at closing and an additional $50 million deferred cash payment 12 months after close.

Chesapeake is also eligible to receive up to $50 million in additional contingent cash based on future commodity prices.