- Energy company said to work with Citigroup on asset sales
- Deals pick up as companies raise cash for drilling, debt
Sanchez Energy Corp. is seeking buyers for some of its acreage in the Eagle Ford Shale region in south Texas, according to people familiar with the matter, as the explorer looks to raise cash for developing its best prospects.
The Houston-based company is soliciting offers for about 25,000 net acres on three patches of land within the basin, one of the people said, asking not to be identified because the process isn’t public. The assets are expected to fetch less than $500 million, the person said.
Citigroup Inc. is helping Sanchez sell more than 17,000 net acres, primarily in La Salle and McMullen counties, the people said, in drilling areas that Sanchez has dubbed Cotulla and Wycross.
RBC Richardson Barr, an energy advisory unit of Royal Bank of Canada, is separately helping the company sell its interest in the Palmetto field in Gonzales County, they said. Sanchez has about a 50 percent working interest in that asset, which includes about 8,000 net acres and is operated by rival explorer Marathon Oil Corp., according to regulatory filings.
Sanchez has just begun soliciting offers for both batches of assets, with initial offers due in mid-September, the people said.
Sanchez’s shares have almost doubled this year, giving the company a market value of about $567 million.
Representatives for Sanchez, Citigroup and RBC declined to comment.
Oil and gas explorers including Chesapeake Energy Corp. and Whiting Petroleum Corp. have been selling assets to raise money for drilling and debt payments as the continued oil rout squeezes profits. Sanchez has been monetizing parts of its oil and gas pipeline network to stay flush as it focuses on drilling on a lucrative patch of the Eagle Ford it calls the Catarina. About 60 percent of the company’s drilling budget this year is focused on that area.
It also wants to raise cash to expand Catarina through potential acquisitions, one of the people said.
Sanchez, which went public in 2011, is almost exclusively focused on drilling in the Eagle Ford, where it has 650 producing wells and about 200,000 net acres, according to an investor presentation this month.