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Exco sells Eagle Ford assets for $300m

Proceeds from deal with KKR-backed Venado to be poured into drilling Haynesville, Bossier shale

US junior Exco Resources has agreed to sell producing oil and gas properties in the Eagle Ford area of South Texas for $300 million.

Dallas-based Exco signed a definitive agreement with private equity-backed Venado Oil & Gas to sell the assets located in Zavala, Frio and Dimmit counties in Texas.

The properties produced about 4100 barrels of oil equivalent per day (90% oil) in December 2016.

Exco did not provide an acreage amount in its announcement. In 2013 the company bought 55,000 net acres from Chesapeake in the Eagle Ford, then producing about 6100 boepd.

Exco paid $680 million in that deal.

Private equity giant KKR, which is a financial backer of Venado, contributed to Exco $133 million and some extra capital for drilling expenses in the 2013 deal.

KKR teams with Venado in Eagle Ford

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The most recent transaction is expected to close in June 2017, Exco said.

"Exco's planned divestiture of the South Texas oil and natural gas properties represents an important step in its portfolio optimization initiative and will improve its financial flexibility," the company said.

Exco plans to use the proceeds to fund drilling and development of its core Haynesville and Bossier shale assets in North Louisiana and East Texas.

BMO Capital Markets served as the Exco's exclusive financial advisor for the transaction.

Austin-based Venado has been on an acquisition push in the Eagle Ford.

Last month the company closed on an $800 million deal with SM Energy, acquiring non-operated interests across about 37,500 net acres in the Maverick basin/Eagle Ford area of South Texas.

Last month Exco, which has been struggling during the industry downturn, announced a series of transactions to "significantly improve" its capital structure.

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