US shale player Chesapeake Energy Corporation has clinched a $700 million deal to sell its remaining Eagle Ford assets to New York-listed SilverBow Resources.

This transaction completes Chesapeake’s exit from the non-core Eagle Ford and brings the total proceeds secured by its phased departure from the basin to more than $3.5 billion.

For Houston-based SilverBow, the deal is its eighth acquisition of the past two years totalling nearly $1.4 billion, and will transform the company into what chief executive Sean Woolverton described as “the largest public pure-play Eagle Ford operator”.

However, the deal did little to boost SilverBow’s share price, which was up only 0.33% at $39.49 in early morning trading in New York, while Chesapeake was down 0.88% at $84.29.

Chesapeake has agreed to sell about 42,000 net acres and some 540 wells in the condensate-rich portion of its Eagle Ford asset located in South Texas counties of Dimmit and Webb, along with related property, plant and equipment.

During the second quarter of 2023, average net daily production from these properties was running at about 29,000 barrels of oil equivalent per day — 60% of which was liquids — which generated $50 million of earnings before interest, taxes, depreciation, amortisation and exploration expense.

As of the end of 2022, net proved reserves associated with these properties were some 124 million boe.

Chesapeake expects the transaction to close this year, with an effective transaction date of 1 February 2023.

The company will receive $650 million upon closing, with the final $50 million instalment paid one year from the closing date.

SilverBow also agreed to an additional payment of $25 million should oil prices average between $75 and $80 per barrel on the West Texas Intermediate market in New York, or $50 million if WTI prices average above $80 in the year following the close of the transaction.

Chesapeake expects to use the proceeds to strengthen its balance sheet and repurchase shares.

“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,” Chesapeake chief executive Nick Dell’Osso said.

The deal will increase SilverBow’s expected fourth quarter of 2023 net production to 87,000-99,000 boepd, and will add about $825 million to $925 million of pro forma Ebitda over the next 12 months.

“Free cash flow in 2024 expected to increase by more than 80%, driving material accretion to both cash flow per share and free cash flow per share,” the company said.

Woolverton said SilverBow “is well positioned to convert this premium resource into tangible value for its stakeholders”, adding that the deal 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 [and] maintaining a strong balance sheet.”

He said the deal is “immediately accretive to all key financial and operating metrics, and offers compelling industrial logic that increases the company’s size and scale by approximately 50% across a range of metrics”.

Woolverton added that more deals could take place because “we believe the benefits of further consolidation are very compelling” in the South Texas Eagle Ford.

Silverbow will fund the transaction with cash on hand and a revolving credit agreement.