Ensign and Reliance Acquire ALFA's South Texas Assets
Newpek LLC, a subsidiary of diversified Mexican conglomerate ALFA SAB de CV has closed an agreement with Ensign Operating LLC and Reliance Eagleford Upstream Holding LP to divest all of its wells and leases in the Eagle Ford and Edwards Shale formations in South Texas.
The assets have been transferred to Ensign and Reliance Eagleford in exchange for the complete cancellation of Newpek’s obligations in the joint venture and operating contracts, currently valued at US$88 million. Further details of the agreement were not disclosed.
Newpek held stakes in 557 producing wells in the Eagle Ford Shale formation and in 34 producing wells in the Edwards formation, with an average 20% working interest. Production from the assets averaged 3,000 barrels of oil equivalents per day (boe/d) during Q2-2020, 56% of which was oil/liquids.
The transaction is in line with ALFA’s strategy of unlocking underlying value potential through divestitures and spin-offs. In a statement released on August 17th, ALFA said that the company intends to move away from its current conglomerate structure towards fully independent subsidiaries.
Monterrey-headquartered ALFA is listed on the Bolsa Mexicana de Valores (BMV) exchange and operates across the oil & gas, IT and telecom sectors in 21 countries worldwide. The group is also engaged in the production of petrochemicals, auto components, and refrigerated foods. Through Newpek, ALFA is engaged in oil & gas exploration and production activities in Mexico, with a primary focus on the San Andrés and Tierra Blanca fields located in Veracruz.
Reliance Eagleford is an indirect subsidiary of Reliance Industries Ltd., a major Indian conglomerate with business interests across the oil & gas, petrochemicals, telecom, textile, and retail sectors. Houston-based Ensign is a privately held E&P company backed by Warburg Pincus and is focused on upstream oil & gas operations both onshore and offshore in the United States.