Penn Virginia has entered into an agreement to buy $205m worth Eagle Ford assets that will add nearly 19,600 net acres contiguous to its core operations in Texas.

The company will buy the Eagle Ford assets, which are primarily located in Lavaca County, from Devon Energy in an all-cash deal. 

The Eagle Ford assets would offer Penn Virginia an expanded well inventory. Besides, it would give it the scope for extended reach laterals having PV10 breakeven pricing under $30 per barrel or so.

Penn Virginia expects the additional acreage to boost its production by about 30%, resulting in nearly 3,000 surplus barrels of oil equivalent per day (BOEPD) with about 64% of it being oil.

The Radnor-based oil and gas firm plans to use its technical capabilities to streamline production and cut down on the operating and administrative costs per BOE on the added assets.

It is expecting the acquisition of the Eagle Ford assets to offer it years of drilling inventory with improved economics even in the current commodity price environment.

Penn Virginia interim principal executive officer and chief operating officer John A. Brooks said: “This strategic acquisition is an excellent fit and an important step in our long-term growth strategy for Penn Virginia.

“It is particularly attractive as it materially increases our Eagle Ford production, acreage and drilling. The transaction is also accretive to all key per-share metrics including earnings, cash flow and net asset value.”

For Devon Energy, the sale is part of its $1bn divestiture program of non-core assets which has reached $340m following the agreement with Penn Virginia.

Devon Energy president and CEO Dave Hager said: “The divestiture proceeds will further strengthen our investment-grade financial position and provide us additional flexibility to build operational momentum across our top-tier U.S. resource plays.”

The transaction is anticipated to be completed by September end.

According to Penn Virginia, the purchase price at the time of closing could be reduced by nearly $15m to reflect estimated net cash flows from the effective date of March 1 to closing.