Southwestern Energy Co. on Wednesday agreed to sell EXCO Resources Inc. a piece of its East Texas oil and natural gas portfolio for close $355 million.
The transaction, with an effective date of April 1, is scheduled to close by the end of this month.
The sale includes the producing rights to the Haynesville and Middle Bossier shale intervals on about 20,063 net acres. Southwestern’s net production from the acreage to be sold was about 10 MMcf/d as of April 1; proved net reserves totaled 31 Bcf at the end of 2009.
The properties to be acquired include producing assets, gathering lines and acreage in the Texas counties of Shelby, San Augustine and Nacogdoches, and they are located within the area of mutual interest established by an existing East Texas/North Louisiana joint venture with BG Group plc (see Daily GPI, July 1, 2009). Under the partnership agreement, BG Group has the right to purchase half of the latest EXCO acquisition.
According to Dallas-based EXCO, nearly all of the interest to be acquired is “incremental to the interest in the producing assets, gathering lines and acreage” it acquired with BG Group through their purchase last month of Common Resources LLC (see Daily GPI, May 11).
The latest acquisition would increase EXCO’s interest in more 900 gross drilling locations in the region. Assuming BG Group participates in the acquisition, they each would double their working and net revenue interests in much of the Common Resources acreage, EXCO said.
Southwestern retained drilling and producing rights covering all other depths in the East Texas acreage, including the company’s current James Lime and Pettet drilling programs.
Southwestern, which is one of the biggest operators in the Fayetteville Shale in Arkansas, said it would continue to have an active drilling program in East Texas, with about 10,500 additional net acres under which it believes that the Haynesville and Middle Bossier intervals are prospective.
A second Haynesville/Bossier well now is being drilled by Southwestern in this additional acreage, with initial production expected in the latter part of the year once pipeline infrastructure is completed.
As a result of the sale, Southwestern cut its capital spending program in East Texas to about $185 million for this year from $230 million. The Houston-based producer plans to participate in 35-45 gross wells, down from its earlier estimate of 50-60 wells.
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