Ending with an unexpected twist at the end of a bidding war for bankrupt San Antonio-based TXCO Resources Inc.'s oil and gas assets in the Maverick Basin of Southwest Texas, Newfield Exploration Co. and Anadarko Petroleum Corp. -- once competitors for the assets -- announced a joint transaction last week valued at up to $310 million.
According to the terms of the transaction, a wholly owned subsidiary of Anadarko will acquire more than 80,000 net acres in the basin from TXCO for approximately $93 million and increase its operated working interest in these properties to 75%. For its part, Newfield will acquire substantially all of TXCO's remaining assets in the Maverick Basin, which include more than 350,000 gross acres (300,000 net acres), for approximately $217 million.
Newfield said the current net production of the assets it is acquiring is 1,500 Boe/d, of which two-thirds is oil. The acreage has multiple geologic targets, primarily in the Eagleford and Pearsall formations, Newfield said.
The joint transaction announcement comes as the latest of many sea changes following TXCO's Chapter 11 bankruptcy protection filing on May 17 of last year (see NGI, May 25, 2009). The company continues to operate its business as debtor-in-possession under the jurisdiction of the bankruptcy court.
One week prior to the new agreement, Anadarko agreed to buy the majority of TXCO (see NGI, Jan. 11). Anadarko's bid of as much as $310 million beat an earlier bid from Newfield for $223 million, which had also been accepted by TXCO.
Assets to be retained by TXCO include drilling rigs, offshore properties, Oklahoma properties, nonoperated properties within the Williston Basin, nonoperated properties in South Texas outside Maverick, LaSalle, Zavala and Dimmit counties, and the company's interests in the "Dexter Waterflood Unit," the "Forrest WM B1U" and the "Vinton Dome."
"This acquisition is consistent with our goal of focusing on large, domestic plays of scale. Including this transaction, we have added more than 500,000 net acres in long-lived resource plays over the last several months," said Newfield CEO Lee K. Boothby. "Our acquisition of TXCO's assets will mark an entry into the Maverick Basin and provide us with a deep inventory of potential locations -- both oil and gas. We expect to have an active drilling program in 2010."
Bob Daniels, Anadarko senior vice president, Worldwide Exploration, said, "The additional interest being acquired increases our position in this program and should afford Anadarko strong growth opportunities in the high-potential emerging Eagleford and Pearsall shale plays. The enhanced liquids yield we've encountered to date in the Eagleford offers significant value and balances the dry gas opportunities found in the Pearsall. We have been very encouraged with our early results, are pleased to add to our existing 180,000 net acres in this area and look forward to continued success."
The final price of the transaction will be determined at closing, which is expected in mid-February 2010. The closing is subject to bankruptcy court approval.
In 2008 Anadarko granted drilling rights to TXCO and St. Mary Land & Exploration Co. to explore part of its leasehold in the Pearsall and Eagle Ford gas shale plays in the Maverick Basin of Texas, an area in which TXCO already had enjoyed success (see NGI, April 7, 2008).
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