Southwestern Energy Co., which has begun to concentrate its exploration in the Marcellus Shale over the past few months, on Friday agreed to sell conventional natural gas leaseholds in East Texas and the Arkoma Basin of Arkansas for $218 million.
The Houston operator has been working the Arkoma since 1943, first in the White Oak field in Franklin County, AK. Activities recently have focused on the Waveland and Midway fields in Yell and Logan counties. Total net production from the properties was 12 Bcf during 2013.
In East Texas, Southwestern had 50,451 net acres that were producing 6 Bcfe (1% of output) at the end of 2013. Exploration primarily has targeted the Travis Peak, Pettet, Cotton Valley, James Lime, and Haynesville/Bossier tight gas formations.
The announcement came one day after Southwestern agreed to sell its gathering system in northeastern Pennsylvania (see Shale Daily, March 19).
"Combined with the already announced divestiture of our northeast Pennsylvania gathering system, this transaction achieves the net divestiture proceeds targeted as part of the acquisition financing plan," said CEO Steve Mueller. "With the acquisition financing now complete, we will continue our focus on extracting the long-term value from our premier assets for our shareholders for years to come."
The sale to a private buyer would be used to reduce debt. Closing is expected by the end of June.
The gas-focused producer made its name in unconventionals as the first mover in the Fayetteville Shale, and the Arkansas play still drives a lot of revenue (see Shale Daily, March 3). However, beginning last fall, it began to expand its war chest in the Marcellus Shale in a $5 billion-plus deal with Chesapeake Energy Corp. (see Shale Daily, Oct. 16, 2014). It has since grabbed more land in Appalachia through transactions with WPX Energy Inc. and Statoil ASA (see Shale Daily, Dec. 23, 2014; Dec. 3, 2014).
Tudor, Pickering, Holt & Co. said in a note Monday the sale, and the recent pipeline sale in Pennsylvania, complete the funding of its Chesapeake purchase in the Marcellus.
However, while the financing headwind is a positive, analysts said near-term issues with the Marcellus asset, such as weak 2015 natural gas liquid realizations and constrained gas takeaway “still persist.”