Former EnerVest Affiliate Continues To Trim Portfolio With Barnett Exit

Harvest Oil & Gas Corp. agreed on July 30 to exit the Barnett through a divestiture of its position in the North Texas shale play with sale proceeds earmarked for shareholder returns.

An undisclosed buyer agreed to buy the Barnett Shale assets from Harvest, a Houston-based company formerly tied to EnerVest Ltd., for $72 million. The sale, which Harvest said includes “substantially all of its interests in the Barnett Shale,” follows a series of divestitures made by the company since its successor emerged from bankruptcy last year.

According to an investor presentation from March, Harvest’s Barnett Shale acreage covers 164,276 gross (40,658 net) acres across North Texas. The company’s working interest in the position was roughly 28%, of which over 90% was nonoperated.

Harvest’s Barnett Shale production for the first three months of 2019 averaged 55.6 million cubic feet equivalent per day, the company said in its July 30 release.

The company added that the estimated proved reserves for the interests being divested in the Barnett were 276.6 billion cubic feet equivalent (62% natural gas, 37% NGL and 1% crude oil) as of year-end 2018 using U.S. Securities and Exchange Commission pricing.

Subject to approval by its board of directors, Harvest plans to use net proceeds from the Barnett sale “to return capital to its shareholders.”

Harvest expects to close the transaction in third-quarter 2019 with an effective date of April 1. UBS Investment Bank is acting as financial adviser to Harvest on the transaction and Kirkland & Ellis LLP is its legal adviser.

Earlier this year, Harvest announced divestitures totaling more than $90 million. These included its exit from the San Juan Basin as well as the sale of all the stock it holds in Magnolia Oil & Gas Corp. Proceeds from those sales were used initially to pay down debt.

Harvest is a successor company of EV Energy Partners LP, a former affiliate of EnerVest that emerged from bankruptcy in June 2018. EnerVest was not a part of its affiliate’s bankruptcy filing.

Other divestitures made by Harvest since the bankruptcy include the roughly $191 million sale of Eagle Ford properties to Magnolia and an April deal comprising certain Midcontinent assets for $4.1 million. Magnolia had also previously purchased EnerVest’s South Texas division for roughly $2.7 billion in a transaction that closed July 2018.

Following completion of Harvest’s transaction with Magnolia in September 2018, the company said it “continues to explore strategic opportunities to monetize noncore assets.”

Pro forma the Barnett sale, Harvest’s remaining assets consist primarily of producing and non-producing properties in the Appalachian Basin, which includes the Utica Shale, Michigan, the Midcontinent areas in Oklahoma, Texas, Kansas and Louisiana, the Permian Basin and the Monroe Field in Northern Louisiana.

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