With the acquisition of around 2,300 wells producing net 36,000 barrels of oil equivalent per day and 172,000 net acres in south Texas, INEOS Energy enters the US onshore oil and gas market as an operator
INEOS Energy, the energy business of British chemicals company INEOS, has partly acquired Chesapeake Energy’s oil and gas assets in south Texas, US, for $1.4bn.
The company will acquire around 2,300 wells producing net 36,000 barrels of oil equivalent per day in the Eagle Ford asset primarily in Texas.
With the acquisition, INEOS Energy enters the US onshore oil and gas market as an operator.
Upon completion, which is expected in the second quarter of this year, the company will have production and exploration leases covering 172,000 net acres in south Texas.
INEOS Energy said the addition of Chesapeake’s assets and operations in south Texas is part of its strategy to build a global integrated portfolio.
INEOS Energy chairman Brian Gilvary said: “The deal marks our entry into the US market and is another significant step in the INEOS Energy journey.
“Over the last two decades, US onshore oil and gas production has provided security of supply for the global market and competitive advantage for US industry.
“We believe this acquisition will help us to serve our internal and external customers today as we continue to position our business to meet the energy transition.”
Established in 2020, INEOS Energy oversees the company’s growing portfolio of energy-related businesses, including exploration and production, as well as trading of oil and gas.
The company operates exploration and production activities, with a focus on onshore and offshore oil and gas assets in the North Sea, the UK and Denmark.
According to The Wall Street Journal report, Chesapeake intends to divest its Eagle Ford assets to focus on natural-gas assets in the Marcellus gas field of Appalachia and in the Haynesville basin.
Under the terms of the agreement, the company will receive $1.175bn upon closing, with the additional $225m paid in annual tranches of $56.25m for four years.
Chesapeake intends to use the proceeds to repay borrowings under its revolving credit facility and be available for its share repurchase programme.
Chesapeake president and chief executive officer Nick Dell’Osso said: “Today marks another 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.
“We are pleased to have secured an aggregate of $2.825bn to date and remain actively engaged with other parties regarding the rest of our Eagle Ford position.”