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
As most of us are painfully aware, the days of the pension are mostly gone. The percentage of employers still offering a traditional defined benefit pension plan to newly hired employees fell from about 50% to 5% between 1998 and 2015, according to advisory firm Willis Towers Watson. Many companies... Cruise Critic, a cruise reviews and information site, has announced its 10th annual Editors' Picks Awards for the best cruise ships and lines of 2017. The awards are given in three categories - ocean cruises, luxury cruises and river cruises. Viking Cruises, with five wins, topped the list of award winners. Following Viking in second spot was Crystal Cruises, with four awards. French real estate company Unibail-Rodamco SE Tuesday announced that it has entered into an agreement to acquire Australian shopping centre group Westfield Corp. in a deal that implies an enterprise value of $24.7 billion. The deal is expected to create the world's premier developer and operator of flagship shopping destinations with 61.1 billion euros or $72.2 billion of Gross Market Value.
comments powered by Disqus
RELATED NEWS
Trade BX now with 
Follow RTT