Blackstone (NYSE:BX), alongside its affiliates’ corporate partner and operator GeoSouthern Energy Corporation (“GeoSouthern”), today announced the sale of the principal subsidiary of GeoSouthern for a total transaction value of $6.0 billion to Devon Energy Corporation (NYSE:DVN). In connection with the sale to Devon, the stake in the enterprise of private equity funds managed by Blackstone, Blackstone Energy Partners and Blackstone Capital Partners V, will be valued at approximately $1.54 billion. The sale to Devon is subject to customary terms and conditions for transactions of this type.
The acquired assets include current production of 53,000 barrels of oil equivalent (BOE) per day and 82,000 net acres with 1,200 undrilled locations. The risked recoverable resource is estimated at 400 million barrels of oil equivalent, the majority of which is proven reserves. The transaction is, to date, the largest domestic oil and gas transaction of 2013.
In January 2011, the two private equity funds of Blackstone and affiliates of GeoSouthern formed a joint venture partnership to significantly accelerate the expansion, drilling and development of its position in the Eagle Ford shale in South Central Texas. Since the formation of the partnership, GeoSouthern has made tremendous progress in developing its position in the eastern window of the Eagle Ford shale, an area that has since become known as the core of the play. The acquired Eagle Ford acreage is located in DeWitt and Lavaca counties in Texas and is largely contiguous, with most of the position now held by production. The acreage position is located in the best part of the play, as evidenced by the highest average initial production rates in the entire play and average estimated ultimate recoveries in DeWitt County exceeding 800,000 BOE per well.
Since 2011, GeoSouthern has become one of the most active drillers and oil producers in the basin and has achieved significant milestones. The Company has increased its employee base tenfold, increased horizontal drilling rigs from 5 active rigs to 18, and net production from approximately 5,000 BOE per day to over 50,000 BOE per day. By virtue of the work the GeoSouthern team pioneered in the Eagle Ford and the milestones the joint venture partnership has achieved, production is enabled to continue to grow at an anticipated compound annual growth rate of 25 percent over the next several years, reaching a peak production rate of approximately 140,000 BOE per day.
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