Chevron sells Permian package
US supermajor progresses plan to divest up to 200,000 acres in premier tight-oil play
US supermajor Chevron has sold a chunk of producing assets in the Permian basin to private equity-backed start-up Sabinal Energy.
The asset comprises about 66,500 acres in Hockley, Terry and Gaines counties, Texas. Current production is about 7500 barrels of oil equivalent per day. A purchase price was not disclosed.
The acreage lies in the central basin platform and Northern Shelf areas of West Texas.
Sabinal is backed by Kayne Private Energy Income Fund, which financed the company in July 2016 with a $300 million equity commitment. The deal with Chevron marks Sabinal's first acquisition.
"The central basin platform is an area that we know well and one that we believe offers considerable upside potential through focused management," said chief executive Bret Jameson.
"We are happy to welcome aboard many of the field employees from Chevron that will provide continuity which will be extremely helpful as we grow our position both organically and through future acquisitions in the area."
Chevron said last month that it intends to "transact" between 150,000 and 200,000 net acres in the Permian this year and next as it looks to optimise its operations in the prolific oil play.
That could include acreage swaps, joint ventures or outright sales, as well as farm-out agreements, Chevron officials have said.
Chevron controls about 2 million acres in the Permian basin, including 1.5 million acres combined in the Midland and Delaware sub-basins. Much of that acreage is owned outright and not leased, given Chevron’s long history operating in West Texas.
Chevron has closed on sales covering about 79,500 acres in the Permian so far this year, including the deal with Sabinal. It could divest another 110,000 acres in the Permian next year.
Wells Fargo Bank provided a sole underwritten commitment for debt financing as part of the acquisition.
CORRECTION: This story has been updated to clarify the size of the acreage sold. The previous figure (64,500 acres) was incorrect due to a typographical error. It should be 66,500 acres. Apologies.