Ensign Natural Resources has 130,000 acres that are owned and operated by it in the core of the Eagle Ford Shale, which are expected to produce 67,000 barrels of oil equivalent per day in Q4 2022
Marathon Oil, a US-based oil and gas firm, has agreed to acquire Ensign Natural Resources’ assets in the Eagle Ford Shale in South Texas for $3bn in an all-cash deal.
Ensign Natural Resources has 130,000 acres that are owned and operated by it in the core of the Eagle Ford Shale. The production from the acreage in Q4 2022 is projected to be 67,000 barrels of oil equivalent per day.
The acreage being acquired by Marathon Oil is near its existing position in Eagle Ford. It will enable Marathon Oil to increase its footprint in the basin to 290,000 net acres.
The assets are spread over the Live Oak, Karnes, Bee, and Dewitt Counties covering the condensate, dry gas, and wet gas phase windows of the Eagle Ford Shale.
Marathon Oil said that it will gain access to over 600 undrilled locations through the deal. The undrilled locations have an inventory life of more than 15 years, said the company.
According to Marathon Oil, the acquisition includes 700 existing wells. Most of the wells, which have early generation completion designs, were completed before 2015. The company expects these existing locations to provide upside redevelopment potential.
Marathon Oil chairman, president, and CEO Lee Tillman said: “This acquisition in the core of the Eagle Ford satisfies every element of our exacting acquisition criteria, uniquely striking the right balance between immediate cash flow accretion and future development opportunity.
“The transaction is immediately accretive to our key financial metrics; it will drive higher distributions to our shareholders consistent with our operating cash flow driven Return of Capital Framework; it’s accretive to our inventory life with high rate-of-return locations that immediately compete for capital; and it offers compelling industrial logic by nearly doubling our position in a Basin where we have a tremendous track record of execution excellence.”
Ensign Natural Resources was created in late 2017 in partnership with Warburg Pincus. The company further obtained an equity commitment from the Kayne Private Energy Income Funds, which is Kayne Anderson Capital Advisors’ energy private equity platform.
Ensign Natural Resources president and CEO Brett Pennington said: “Over the past four years, Ensign has become one of the largest producers in the Eagle Ford basin, operating more high-quality drilling inventory than nearly all other private operations in the basin, with strong drilling results.”
The deal, which is subject to customary terms and conditions, is anticipated to close by the year-end.