EXCO Resources Inc. (NYSE: XCO) will sell its Eagle Ford assets for $300 million in order to free up capital for Haynesville Shale development, the company said April 10.
Venado Oil and Gas LLC agreed to buy EXCO’s interests in oil and natural gas properties and surface acreage in Zavala, Frio and Dimmit counties in South Texas, including average production in December of 4,100 barrels of oil equivalent per day (90% oil).
EXCO's planned divestiture of the South Texas oil and natural gas properties represents an important step in its portfolio optimization initiative and will improve its financial flexibility. The Company intends to use the proceeds to fund drilling and development of its core Haynesville and Bossier shale assets in North Louisiana and East Texas and for other general corporate purposes. After the closing of the sale, the borrowing base under the Company's revolving credit agreement (“Credit Agreement”) will be $100 million. The next borrowing base redetermination under the Credit Agreement is set to occur in November 2017.
Venado, an Austin, Texas-based company backed by investment firm KKR, recently acquired about 37,500 net acres in the Eagle Ford’s Maverick Basin from SM Energy Co. (NYSE: SM) for $800 million in a transaction which closed in March.
EXCO holds 49,300 net acres in South Texas, of which 95% are HBP. The position’s proved reserves were estimated at 155 billion cubic feet equivalent.
In fourth-quarter 2016, EXCO did not operate a rig on the acreage. The company had been mulling a sale of its Eagle Ford assets for some time to ensure capital is maximized. EXCO also holds about 184,100 net acres in Appalachia.