Friday, July 17, 2015

Penn Virginia Out of Haynesville

On Wednesday, Penn Virginia Corporation announced that it had agreed to sell its East Texas properties to an undisclosed buyer for $75 million.  The 33,400 net acres changing hands covers both the Cotton Valley and Haynesville Shale. Going forward, the company will concentrate its efforts on the Eagle Ford Shale.

Personally, I find PVA's exit is a little bittersweet because they were one of the first companies to register a Haynesville completion way back when I started collecting them.

This sale is not completely unexpected.  Independents like PVA don't have the luxury to hold onto non-core properties in the current market environment.  PVA doesn't have a big acreage position in the Haynesville and it hasn't operated a rig since July 2010 (although it has drilled a small handful of wells in other E. Texas strata in the past five years), so it clearly did not view the Haynesville as core.

I think this transaction is part of a larger trend where the leaseholders are going to become increasingly fractured but the number of operators will consolidate.  Many leases will end up in the hands of non-operating investors or operators that don't actively drill the Haynesville Shale, while the current big Haynesville operators will drill their own leases and act as contract operators for other owners' properties.

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