Blackstone, Sanchez Buy US Shale Assets for $2.3bn

Blackstone Energy Partners has entered a 50/50 partnership with Sanchez Energy to buy Anadarko’s working interest in about 318,000 gross acres in the US Western Eagle Ford for some $2.3bn.

Describing the oil and gas assets as “world class”, Blackstone said January 12 that the deal fitted its history and focus on partnering with oil and gas companies to “provide the growth capital to realise the long-term value associated with the company’s assets.”

Making no mention of the higher oil price, which some analysts such as Bank of America Merrill Lynch see reaching $70/barrel this year, Blackstone said that its “experience and success in investing in the oil and gas sector and the Eagle Ford Shale" and its strategic partnership with Sanchez gave it confidence that the investment would be successful and said it would be buying more assets in this part of the basin.

For Anadarko, the deal means that it now has the flexibility "to further accelerate capital investments" at its higher-return oil opportunities in the Delaware Basin, the deepwater Gulf of Mexico and elsewhere, which drive its ability to deliver a 12%-14% five-year compounded annual oil growth rate.

The acquired assets (155,000 net acres to Sanchez Energy and Blackstone) are primarily in Dimmit and Webb counties, contiguous to Sanchez’s existing assets. Sales volumes from these properties were about 45,000 barrels of liquids/day and 131mn ft³/day of gas, as of the end of 4Q 2016. The acreage includes about 130 gross drilled but uncompleted wells, which will drive initial production growth. The transaction is expected to close 1Q 2017.

William Powell