Pioneer Natural Resources Company has completed the sale of its Eagle Ford shale and remaining South Texas assets for a total consideration of $475m.
The company sold the assets to Ensign Natural Resources, an exploration and production company that focuses on becoming a core operator in the Eagle Ford shale.
Under the agreement, Ensign has made a $25m payment to Pioneer at the deal closing.
The remaining $450m is contingent on future commodity prices and will be annually earned by Pioneer between 2020 and 2024.
The completion of the transaction has enabled Pioneer to become a Permian ‘pure play’, with reduced production costs and improved margins.
The Eagle Ford shale assets bought by Ensign include 59,000 net acres located primarily in Bee, DeWitt, Karnes and Live Oak counties in South Texas, US.
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By GlobalDataThe acquisition comprises all of Pioneer’s remaining interests in the field, including all of its producing wells and the associated infrastructure.
According to Pioneer, net production from the assets sold averaged around 14 thousand barrels of oil equivalent per day (MBOEPD) during the first quarter of this year.
The company’s Permian oil production for the first quarter averaged 203 thousand barrels of oil per day (MBOPD).
Pioneer Natural Resources president and CEO Scott Sheffield said: “Pioneer had an outstanding first quarter, delivering robust production growth while underspending our budgeted capital.
“Our results were highlighted by continued strong well performance and improving capital efficiency that led to production being above the top end of guidance.
“As a leader in the Permian Basin, we continue to take steps to reduce our cost structure. We ended last year by executing on strategic initiatives to materially reduce our drilling, completion and facilities capital. We are now taking action to reduce our corporate general and administrative costs.”
The company also noted that it plans to pursue the sale of its gas processing midstream assets during the year to drive capital savings and increased free cash flow.
