Southwestern Energy Co., Houston, has signed an agreement to purchase oil and gas assets, including 46,700 net acres, in northeast Pennsylvania from WPX Energy Inc., Tulsa, for $300 million.
The acreage in the transaction is producing 50 MMcfd of gas from 63 operated horizontal wells primarily in Susquehanna County. Southwestern will also assume firm transportation capacity of 260 MMcfd predominantly on the Millennium Pipeline.
The deal is conditional on receiving a waiver from the US Federal Energy Regulatory Commission regarding transfer of the firm transportation capacity and is currently expected to close in next year’s first quarter.
“This acreage position complements our existing Marcellus [shale] acreage in northern Susquehanna County, where we have recently seen very good results from two of our wells, the Hughes North 1H and the Dayton 4H,” commented Steve Mueller, Southwestern president and chief executive officer.
Hughes North 1H completed the entire lateral length of 4,981 ft and had a maximum 24-hr rate of 4.7 MMcfd. Dayton 4H has a total lateral length of 5,278 ft and tested a maximum 24-hr rate of 4.5 MMcfd from the first 30% completed to date.
“Further, the additional firm transportation capacity adds to our existing firm transportation portfolio to provide 1.3 bcfd of firm transport capacity upon closing and growing to 1.4 bcfd by the end of 2016,” Mueller said. “The immediate availability of this firm transportation provides the pathway for ongoing growth in production over the next 3 years and the added acreage solidifies future value through a growing well inventory.”
Southwestern over the past 2 years has undertaken a large-scale expansion of its position in the Marcellus.
In October, the company acquired 413,000 net acres and 1,500 wells in northern West Virginia and southern Pennsylvania—along with related property, plant, and equipment—from Chesapeake Energy Corp. for $5.375 billion (OGJ Online, Oct. 16, 2014). That deal expanded on the previously made 162,000-net-acre Marcellus acquisition, which include Susquehanna County acreage, from Chesapeake for $93 million (OGJ Online, Apr. 30, 2013).
The deal represents WPX’s sixth agreement since May to “narrow the company’s business focus, increase scalability of core assets, bring value forward, and further strengthen its balance sheet.”
Photo from WPX Energy Inc.