EXCO Resources (XCO) Announces $1B Acquisition of Eagle Ford Assets from Chesapeake (CHK)

July 3, 2013 7:04 AM EDT

An Eagle Ford Well

EXCO Resources, Inc. (NYSE: XCO) announced that it has entered into definitive agreements to acquire producing and undeveloped oil and gas assets in the Eagle Ford and Haynesville shale formations (“Eagle Ford” and “Haynesville”, respectively) for an aggregate purchase price of approximately $1 billion, subject to closing adjustments and customary terms and conditions, from subsidiaries of Chesapeake Energy Corporation (NYSE: CHK).

Acquisition Highlights:

Eagle Ford
  • Approximately $680 million purchase price
  • Approximately 55,000 net acres
  • Approximately 120 total producing wells including 94 Eagle Ford producing wells
  • Average net production of approximately 6,100 barrels of oil equivalent per day in May
  • Adds approximately 300 identified drilling locations
  • Farm-Out option on an additional approximately 147,000 net acres
  • Approximately $320 million purchase price
  • Average net production of approximately 114 million cubic feet of natural gas equivalent per day in May
  • Non-operating interests in 170 EXCO operated wells in EXCO core area
    • Approximately 5,600 net acres
  • Operating interests in 11 operated wells directly offset to EXCO core area
  • Approximately 4,000 net acres
  • Adds approximately 55 identified drilling locations
    Douglas H. Miller, EXCO’s Chairman and Chief Executive Officer, stated “These acquisitions are consistent with our strategy of targeting opportunities in both existing core areas and new plays. The Eagle Ford acquisition establishes our position in the high value oil core area of the Eagle Ford shale, and delivers immediate production and reserve additions, significant resource potential, and solid economic returns. The Haynesville acquisition adds to our leading core position and provides an expanded platform to apply our technical expertise, best-in-class drilling and completion focus, and project execution skills.”

    The effective dates of the Eagle Ford and Haynesville acquisitions are April 1, 2013 and January 1, 2013, respectively. EXCO anticipates completing the transactions in July 2013 with the Haynesville acquisition closing first.

    EXCO expects to finance the Haynesville acquisition under the Company’s existing credit agreement. The Haynesville acquisition is subject to an affiliate of BG Group plc.’s preferential right to acquire 50% of the Haynesville properties.

    EXCO has secured a financing commitment from J.P. Morgan pursuant to which the existing credit agreement will be replaced with a new credit agreement that has an initial $1.6 billion borrowing base, which includes a $400 million bridge loan tranche, and will be utilized to finance the Eagle Ford acquisition. The undeveloped locations in the Eagle Ford are expected to be drilled and developed under a partnership with entities advised by or affiliated with Kohlberg Kravis Roberts & Co. L.P. (collectively, “KKR”), including KKR Financial Holdings LLC (NYSE: KFN). EXCO and KKR have entered into a non-binding Memorandum of Understanding whereby KKR will fund approximately $133 million, which represents 50% of certain undeveloped acreage included in the Eagle Ford acquisition, and become the drilling capital partner in the Eagle Ford acreage.

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