Chesapeake Energy Corp. has reached a deal to sell its Upper Eagle Ford Shale assets in East Texas to WildFire Energy LLC for $1.425 billion.

The sale includes 377,000 net acres and 1,350 wells across Chesapeake’s Brazos Valley operating area. The company absorbed the assets after acquiring WildHorse Resource Development Corp. in a $4 billion cash-and-stock deal in 2018.

The sale is part of a broader push to divest a 610,000 net acre position across the Eagle Ford in East and South Texas. The company began marketing the properties late last year as it shifts from oil back to natural gas, with a focus on assets in Pennsylvania and Louisiana. 

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The sale “marks an important step on our path to exiting the Eagle Ford as we focus our capital on the premium, rock, returns and runway of our Marcellus and Haynesville positions,” said CEO Nick Dell’Osso. “We remain actively engaged with other parties regarding the rest of our Eagle Ford position.”

Average net production from the Brazos Valley assets was 27,700 boe/d in 3Q2022. Net proved reserves were 96.8 million boe at the end of 2021. 

Privately held WildFire was formed in 2019 with investments from Warburg Pincus and Kayne Anderson. The company is led by former WildHorse Resource Development executives, including CEO Anthony Bahr, COO Steve Habachy and CFO Drew Cozby. 

The acquisition would boost WildFire’s assets to 2,000 gross wells and 600,000 net acres in East Texas. The company has made in the region since 2021, including the purchase of MD America Energy and Hawkwood Energy LLC as it works to consolidate the basin

“This acquisition is highly synergistic with our existing assets and the combined size of the overall business positions WildFire Energy as a leading operator in the eastern Eagle Ford basin,” Habachy said. “The consolidation of 600,000 contiguous acres is transformative to the business and will drive economies of scale to deliver more high margin barrels to the advantageous Gulf Coast market.” 

Chesapeake expects the deal to close by the end of March. Initially it would receive $1.2 billion, with the additional $225 million paid in yearly installments over the next four years. The company plans to use the proceeds to repay debt and fund a share repurchase program.