Chesapeake Energy has agreed to sell its remaining oil and gas assets in the Eagle Ford area in South Texas, US, to SilverBow Resources in a $700m deal.

The purchase price includes an upfront cash payment of $650m, which is due at the closing of the transaction and an additional deferred cash payment of $50m due 12 months post-closure.

Furthermore, Chesapeake is expected to receive additional contingent cash consideration of up to $50m based on future commodity prices.

Under the deal, Chesapeake will sell about 42,000 net acres and around 540 wells in the condensate-rich portion of its Eagle Ford basin in Dimmit and Webb counties, South Texas, as well as related property, plant and equipment.

These properties reported average net daily production of approximately 29,000 barrels of oil equivalent (boe) during the second quarter of 2023.

As of 31 December 2022, these properties had net proved reserves of approximately 124 million barrels of oil equivalent (mmboe).

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Chesapeake 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.”

SilverBow Resources expects the deal to significantly increase its scale in South Texas while supporting greater operational efficiency.

Earlier this year, Chesapeake divested oil and gas assets in the Eagle Ford basin to Ineos Energy for $1.4bn.

The latest transaction will take the total proceeds from the sale of its Eagle Ford assets to more than $3.5bn for Chesapeake.

SilverBow CEO Sean Woolverton said: “The Chesapeake Transaction transforms SilverBow into the largest public pure-play Eagle Ford operator.

“This acquisition advances all our long-term strategic objectives, by materially increasing our scale, enhancing our decade-plus high-return inventory, improving our capital efficiency and providing balanced commodity exposure, all while maintaining a strong balance sheet.”

Subject to certain regulatory approvals and consents, the transaction is planned to close by the end of this year.