Chesapeake Energy is set to exit the Eagle Ford in the US by selling the remaining assets in the basin to SilverBow Resources in a deal worth $700m.

The American shale gas producer will realise total proceeds of over $3.5bn through its Eagle Ford exit. This includes a $1.4bn deal with INEOS Energy in February 2023, which followed a transaction of similar value with WildFire Energy in January 2023.

According to Chesapeake Energy, the consideration of the latest deal is made up of an upfront cash payment of $650m at closing and an additional $50m deferred cash payment, which has to be paid 12 months after the transaction is finalised.

Furthermore, the shale producer could also get additional contingent cash consideration of up to $50m, which will be contingent on commodity prices in the future.

Chesapeake Energy president and CEO Nick Dell’Osso said: “We are pleased to have successfully completed the exit of our Eagle Ford asset, allowing us to focus our capital and team on the premium rock, returns and runway of our Marcellus and Haynesville positions.”

Under the terms of the deal, Chesapeake Energy has agreed to divest roughly 42,000 net acres of land and around 540 wells situated in the condensate-rich segment of its Eagle Ford asset. The assets are situated in Dimmit and Webb counties and include relevant property, infrastructure, and equipment.

Throughout Q2 2023, the collective daily production from the acreage averaged about 29,000 barrels of oil equivalent (boe), with 60% of it being liquid. The production yielded approximately $50m in EBITDAX.

The net proved reserves linked to the assets, as of 31 December 2022, amounted to approximately 124 million barrels of oil equivalent (mmboe).

The buyer, SilverBow Resources, is focused on the Eagle Ford Shale and Austin Chalk in South Texas. The company said that the deal bolsters decade-plus inventory life with Austin Chalk and Eagle Ford locations that are in direct contention for capital and offer diverse hydrocarbon opportunities.

SilverBow Resources CEO Sean Woolverton said: “SilverBow is well positioned to convert this premium resource into tangible value for its stakeholders. The Chesapeake Transaction transforms SilverBow into the largest public pure-play Eagle Ford operator.”

Subject to certain regulatory approvals and consents, the deal is expected to close by the year-end.