Following the trend toward liquids-rich basins, Penn Virginia Corp. recently announced plans to sell much of its Mid-continent assets to an undisclosed buyer for $30.5 million.
The sale includes properties in the Arkoma Basin, the Woodford Shale and the Hartshorne coalbed methane formation of Oklahoma, as well as conventional natural gas plays in the Mid-continent region. The properties include 7.8 MMcfe/d of existing net production, almost entirely gas, and 42.5 Bcfe in estimated proved reserves.
"Our strategy to shift the focus of our capital spending to oil and natural gas liquids made our Arkoma and other Midcontinent assets appropriate divestiture candidates," CEO H. Baird Whitehead said, adding that the capital from the sale would allow Penn Virginia to pursue its "liquids-rich plays, such as the Eagle Ford Shale, that generate higher rates of return and also improve our growth and profitability going forward."
Penn Virginia holds around 12,700 net acres in the oil window of the Eagle Ford, a stretch of Gonzales County, TX, that is 75% oil and 15% natural gas liquids.
Prices in the Arkoma-Woodford region averaged $4.15/Mcf as of last Friday, according to NGI's Shale Price Indices. While Eagle Ford gas is selling for only a few pennies more, Penn Virginia is hoping to capitalize on oil prices approaching $100/bbl.
The Radnor, PA-based company announced its shift towards liquids late last year and began moving rigs to the Eagle Ford this February (see Shale Daily, Feb. 28; Dec. 20, 2010).
Weak prices lead the company to seek a partner in the Marcellus after releasing "disappointing" results from otherwise impressive wells (see Shale Daily, June 30).
Shale players having been shedding dry gas acreage for months.
Chesapeake Energy Corp. sold its Fayetteville Shale assets in February and Range Resources Corp. sold its Barnett Shale properties in March (see Shale Daily, March 2; Feb. 8). Last week Cabot Oil & Gas Corp. sold its Rockies production (see Shale Daily, July 29). All three companies are big players in the Marcellus and Utica shales.