logo
Share SHARE
FONT-SIZE Plus   Neg

Chesapeake Energy Announces Three Oil, Gas Asset Monetization Transactions

Chesapeake Energy Corp. (CHK) announced three oil and gas asset monetization transactions for total proceeds of about $2.6 billion in cash.

Chesapeake stated that it has completed the sale of preferred shares of a newly formed unrestricted, non-guarantor consolidated subsidiary, CHK Cleveland Tonkawa, L.L.C. or CHK C-T, and a 3.75% overriding royalty interest in the first 1,000 new net wells to be drilled on CHK C-T leasehold and certain wells contributed at closing for proceeds of $1.25 billion.

Also, the holders of CHK C-T preferred shares are entitled to receive an initial annual distribution of 6%, payable quarterly, the company said.

Chesapeake has retained an option exercisable prior to March 31, 2019 to repurchase the preferred shares for cash in whole or in part at any time, at a valuation equal to the greater of a 9% internal rate of return or a return on investment of 1.35x.

In addition, Chesapeake has also completed the sale of a 10-year volumetric production payment or VPP to an affiliate of Morgan Stanley (MS) for proceeds of about $745 million, or approximately $4.68 per thousand cubic feet of natural gas equivalent, for certain producing assets in its Anadarko Basin Granite Wash play.

Chesapeake said that the transaction included about 160 billion cubic feet of natural gas equivalent or bcfe of proved reserves and current net production of an estimated 125 million cubic feet of natural gas equivalent or mmcfe per day.

Including this transaction, the company has completed 10 VPP transactions since December 2007 and, in doing so, has sold about 1.37 trillion cubic feet of natural gas equivalent or tcfe of proved reserves for combined proceeds of approximately $6.4 billion, or about $4.65 per mcfe, which is approximately 300% more than the company's current drilling and completion cost per mcfe.

Finally, Chesapeake added that it has recently signed a purchase and sale agreement covering approximately 58,400 net acres of leasehold in the Texoma Woodford play in Bryan, Carter, Johnston and Marshall counties in Oklahoma to XTO Energy Inc., a subsidiary of Exxon Mobil Corporation (XOM), for about $590 million in cash before certain deduction and standard closing adjustments. The transaction is expected to close on April 30, 2012.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

Business News

Quick Facts

Editors Pick
President Donald Trump has continued his assault on one of his favorite targets on Wednesday, lashing out at major media outlets in a series of posts on Twitter. Trump singled out the New York Times and the Washington Post in his tweets, describing the newspapers as "fake news." Christoph, born on-board a Spirit flight destined to Dallas from Fort Lauderdale airport, can celebrate all his forthcoming birthdays in life with a free travel on Spirit airline. Blue Apron Holdings Inc. has cut the expected price range for its initial public offering amid worries about the potential impact on the food retail sector of Amazon.com Inc.'s recent deal to buy grocery chain Whole Foods Market Inc. for $13.7 billion.
comments powered by Disqus
Follow RTT