Pioneer Natural Resources Co.'s effort to become a Permian-only producer took a step forward with a recent sale of a portion of its Eagle Ford Shale assets, and analysts applauded the move.
Multiple reports from Australia indicate that Sundance Energy Australia Limited, a producer already active in South Texas, had reached an agreement to buy nearly 22,000 net acres from Pioneer and India's Reliance Industries Ltd., which have an Eagle Ford joint venture. The assets are in McMullen, Atascosa, LaSalle and Live Oak counties in Texas and reportedly fetched $221.5 million. The two companies have had a joint venture in the Eagle Ford since 2010 but have been looking to sell it recently.
Pioneer still has more than 59,000 acres in the Eagle Ford in DeWitt, Karnes and Live Oak counties that it intends to put up for sale later this year. Williams Capital Group analyst Gabriele Sorbara said the $106 million Pioneer is expected to obtain as a result of the Sundance deal tops estimates.
"The valuation was [approximately] $7,200 per underdeveloped acre, better than our expectation," he said, adding that Pioneer's remaining assets in the Permian could bring significantly more with a net value of $650 million.
In its take on the deal, Tudor Pickering Holt & Co. said the sale was a successful conclusion when considering the acreage had been on the market for a year.
"Good to see this level of undeveloped value as we carried no value for this acreage in our recent [Pioneer Eagle Ford] valuation analysis, representing a positive read-through for other upcoming deals in the basin such as PXD's remaining, larger package," the firm said.
