NEW YORK -- Devon Energy Corp. announced today that it will acquire a significant stake in a sought-after Texas oil project for $6 billion from GeoSouthern Energy.
The all-cash deal grants Devon (IW 500/115) 82,000 net acres in the sprawling Eagle Ford shale formation in southern Texas, which currently produces 53,000 barrels of oil per day.
Devon, a pioneer in the U.S. shale gas boom, said the transaction would enable it to boost its output of oil, which currently has a better price outlook than natural gas.
"With this transaction, we have secured a premier acreage position in the very best part of the world-class Eagle Ford oil play," CEO John Richels said.
Devon plans to boost investment in order to achieve annual production growth of 25%, reaching a peak of 140,000 barrels of oil-equivalent per day. The company said its experience with other vast energy projects was a "core competency" that would be exploited in the venture.
Blackstone private equity ventures, which in 2011 formed a joint venture with GeoSouthern to accelerate development of the Eagle Ford shale, will get $1.54 billion in the deal.
"GeoSouthern was one of the pioneers of the Eagle Ford," said Angelo Acconcia, a managing director with Blackstone Energy Partners. "The company has done a world-class job of not only putting together a significant core acreage position, but of accelerating the drilling, development and production."
The Eagle Ford formation is one of a number of hot exploration locations in the United States for shale oil and shale gas that have enabled the country to reduce oil imports and cut its dependency on foreign suppliers.
Oil production from Eagle Ford has risen from just over 15,000 barrels a day in 2010 to more than 635,000 barrels a day in the first eight months of 2013, according to Texas state data.
Copyright Agence France-Presse, 2013