The Eagle Ford Shale’s mystery buyer of 12,000 net acres is EP Energy Corp. (EPE) and the company is touting production, acreage and more drilling locations.

On July 27, Goodrich Petroleum Corp. (GDP) said it had sold its Eagle Ford operations in La Salle and Frio counties, Texas, for $118 million with expectations of gaining up to $60 million in proceeds. It did not disclose the buyer.

However, Goodrich filed documents July 30 with the Securities and Exchange Commission show EP Energy was the buyer.

Gabriele Sorbara, analyst, Topeka Capital Markets, said the bolt-on acquisition for EP Energy came at an attractive valuation and production that is about 80% liquids.

“We estimate that the position was acquired at a very attractive valuation of about $2,500 per undeveloped acre, when ascribing a value of $30,000 per flowing boe [barrels of oil equivalent] of acquired production,” he said.

Analysts variously viewed Goodrich’s sale as dilutive to its valuation and its $150 million borrowing base, and some estimated that the company appeared to receive little or no consideration for its undeveloped land.

Global Hunter Securities analysts said that could be a potential trend as low prices linger and E&Ps are “pushed to pursue asset divestitures to shore up their balance sheets.”

Goodrich sold properties that made up about 44% of the company's first-quarter 2015 oil production. But in a mini-lesson on E&P spin, both companies presented the transaction in a slightly different light.

Production

EP Energy, for instance, said it had acquired production of 2,950 boe/d based on May figures. Goodrich put production at 2,850 boe/d based on the first quarter of 2015.

EP Energy said the transaction is expected to add an average 2,200 boe/d of production in the last four months of 2015.

Acreage

EP Energy also said it had acquired 12,000 net acres with an operated position consisting of 66% working interest and 50% net revenue interest. Goodrich, by contrast, did not appear to disclose the acreage it was retaining. Instead, it said it would keep about 58% or 17,000 net acres of its undeveloped leasehold in the Eagle Ford for future development or sale.

Locations

The acquisition gives EP Energy an additional 164 identified future drilling locations. In June, Goodrich said it had 336 gross (226 net), unrisked probable locations remaining. Based on Goodrich’s presentation, EP Energy picked up nearly 49% of Goodrich’s gross locations. However, Goodrich locations are based on 100-acre spacing, while EP Energy employs 40-acre spacing in the Eagle Ford.

EP Energy said the acquired acreage was largely HBP with minimal near-term capital requirements. Goodrich has no capex devoted to the Eagle Ford.

Brent Smolik, chairman, president and CEO of EP Energy, said he liked the transaction.

"We think that the valuation is compelling for current production and also adds over a year of future drilling locations to our highest return program,” he said. “We are a disciplined acquirer with a low-cost operating structure and have a strong track record of value enhancing acquisitions."

The deal is expected to close in September.

Contact the author, Darren Barbee, at dbarbee@hartenergy.com.