EXCO Resources Inc. (NYSE: XCO) will sell its Eagle Ford assets for $300 million in order to free up capital for Haynesville Shale development, the company said April 10.

Venado Oil and Gas LLC agreed to buy EXCO’s interests in oil and natural gas properties and surface acreage in Zavala, Frio and Dimmit counties in South Texas, including average production in December of 4,100 barrels of oil equivalent per day (90% oil).

Venado, an Austin, Texas-based company backed by investment firm KKR, recently acquired about 37,500 net acres in the Eagle Ford’s Maverick Basin from SM Energy Co. (NYSE: SM) for $800 million in a transaction which closed in March.

EXCO holds 49,300 net acres in South Texas, of which 95% are HBP. The position’s proved reserves were estimated at 155 billion cubic feet equivalent.

In fourth-quarter 2016, EXCO did not operate a rig on the acreage. The company had been mulling a sale of its Eagle Ford assets for some time to ensure capital is maximized. EXCO also holds about 184,100 net acres in Appalachia.

EXCO plans to use the sale proceeds to fund drilling and development of its core Haynesville and Bossier shale assets in North Louisiana and East Texas, which is the Dallas-based company’s largest producing region, according to its website.

The company held about 96,300 net acres in East Texas and North Louisiana, with 87% of acreage HBP as of year-end 2016.

In March, EXCO said enhanced completion methods in North Louisiana achieved strong results during 2016, including a 13% increase in the EUR to an average of 2.3 billion cubic feet per 1,000 lateral ft for certain proved developed locations in the Haynesville within its core area.

The company plans to continue to enhance its well designs including the use of an average of 3,500 pounds of proppant per lateral ft for completions during 2017 and may extend laterals up to 10,000 ft.

EXCO said the sale “represents an important step in its portfolio optimization initiative and will improve its financial flexibility.”

After the closing of the sale, the borrowing base under EXCO’s revolving credit agreement will be $100 million. The company's next borrowing base redetermination is set for November 2017.

UBS Securities was Venado's financial adviser and Kirkland & Ellis LLP represented a subsidiary of the company. BMO Capital Markets served as EXCO’s exclusive financial adviser for the transaction. The company said it expects the sale to close in June.

Emily Patsy can be reached at epatsy@hartenergy.com.