HOUSTON, Oct. 25 (UPI) -- U.S. shale player Sanchez Energy said it was optimizing its balance sheet by unloading non-core assets in one of the premier basins in Texas.
For a cash consideration of $181 million, Sanchez sold off about 15,000 acres of land in the Eagle Ford shale basin in Texas to rival Carrizo Oil & Gas, Inc.
"The transaction is further evidence of our dedication to improving our balance sheet while maintaining our focus on core areas of operations," CEO Tony Sanchez, III, said in a statement.
The company started the year with a spending cut. Much of its focus has been on the Catarina section of the Eagle Ford shale reserve area in Texas. The released acreage was producing about 3,000 barrels of oil equivalent per day for Sanchez and has an estimated 6.9 million barrels of oil equivalent in proved reserves.
The assets acquired by Carrizo are outside the Catarina area. In August, Sanchez said it aims to increase its spending on exploration and production by as much as $50 million, which it said would translate to a production increase of between 5 percent and 7 percent in 2017.
Sanchez said the divestment was part of a growth strategy that would facilitate a focus on high-quality drilling opportunities at a lower cost.
For Carrizo, the company said it acquired lucrative shale acreage in Texas that had no additional drilling requirements. The grab builds its position in the Eagle Ford shale by about 15 percent. The company said it already expects production to increase 13 percent year-on-year.
A review from the U.S. Energy Information Administration finds global tight oil, a lighter grade of crude oil found typically in shale deposits, is expected to double by 2040 to about 10.4 million barrels per day. Most of that will come from the United States.