Sanchez and Hess have reached a $265 million agreement for 43,000 net acres in Dimmit, Frio, La Salle, and Zavala counties in the gas condensate and oil window of the Eagle Ford. Sanchez also mentioned potential in the Austin Chalk, Buda Limestone, and Pearsall Shale.

Tony Sanchez, CEO, commented, "We will initially focus on the development of the Eagle Ford section; however, this area is currently experiencing considerable Buda Limestone and Pearsall Shale activity from other operators which may provide us with additional potential growth opportunities."

Current production is 4,500 boe/d with a little more than 70% considered oil from 50 gross operated wells. The deal more than doubles Sanchez Energy's production from 3,800 boe/d to 8,300 boe/d.

Hess had 13.4 million boe of proved reserves related to the properties.

Tony Sanchez, CEO, said, "The Eagle Ford assets we are acquiring are highly strategic and accretive on a variety of metrics, and provide critical mass and scale for the company by significantly increasing our reserves and more than doubling our current production rate.

If we assume Sanchez paid $60,000 per flowing boe of production, that means the company paid only $6,000 per acre. That's far less than deals we've seen trade for more than $10,000 an acre and a few that have traded for more than $20,000 per acre. Hess has not been one of the most active operators in the Eagle Ford, so I assume this acreage is discounted for a multitude of reasons -

• Some acreage is not likely held by producing wells (HBP)
• Facilities & midstream are not likely built out
• There may be questions regarding well productivity in areas

Read more at sanchezenergy.com