Exclusive: Mesquite Sells Eagle Ford’s Catarina Ranch to Black Mountain O&G

Mesquite Energy offloaded more of its acreage in the southern Eagle Ford Shale to a private E&P, Hart Energy has learned.

Fort Worth-based Black Mountain Oil & Gas, along with Houston-based equity backer Trace Capital Management, acquired the Catarina Ranch asset from Mesquite Energy at the end of May, Black Mountain told Hart Energy on June 12.

The transaction includes 51,921 net acres spanning Dimmit, Webb and La Salle counties, Texas–south of the town of Catarina, Texas, near the Mexican border.

The Catarina Ranch asset is currently averaging production of 12,400 boe/d, according to Black Mountain.

A Black Mountain representative said the company had a roughly 20,000-acre tract largely contiguous with Catarina Ranch prior to its deal with Mesquite.

Financial terms of the deal were not disclosed. The deal’s value was likely about $300 million, Andrew Dittmar, director at Enverus, told Hart Energy on June 12. 

Hart Energy reached out to Black Mountain and Mesquite Energy for more information on the transaction.

Black Mountain’s acquisition keeps alive the Eagle Ford's megadeal streak, with the mature play’s M&A generating $5 billion in the first quarter alone. In the past year, companies including Canada’s Baytex Energy, Chesapeake Energy, Marathon Oil, Devon Energy and others have conducted billions in transactions.

The Catarina Ranch has been a part of Mesquite’s portfolio since the company’s predecessor, Sanchez Energy Corp., acquired the southern Eagle Ford asset from Shell in June 2014.

RELATED: Mesquite Energy Weighs Sale of Catarina Ranch Asset in Eagle Ford Shale

Sanchez Energy, which developed a sizable position in the Eagle Ford Shale, voluntarily filed for Chapter 11 bankruptcy protections in August 2019, citing the challenging commodity price environment for oil and gas.

The company emerged from bankruptcy as a private operator Mesquite Energy in mid-2020, eliminating about $2.3 billion in debt through a court-ordered reorganization.

Catarina Ranch grew into an important part of Sanchez’s portfolio prior to the bankruptcy.

The Catarina asset accounted for more than 60% of Sanchez’s total natural gas production and 36% of the company’s total crude oil production during 2018, according to Securities and Exchange Commission filings.

Mesquite’s deal is part of a broader divestiture campaign in the Eagle Ford.

In May, Mesquite entered into an agreement to sell its Comanche assets —adjacent to Catarina Ranch— to Crescent Energy for $600 million.

The deal with Crescent included approximately 75,000 contiguous net acres, primarily in Dimmit and Webb counties, and average production of 20,000 boe/d (70% liquids).

Crescent’s transaction with Mesquite is expected to close during the third quarter.

Sanchez had acquired the Comanche assets through a $2.1 billion transaction with Anadarko Petroleum in 2017.

RELATED: Crescent Energy Bolt-on Adds Eagle Ford Assets for $600 Million