OGJ Senior Editor
HOUSTON, Apr. 15 -- Oklahoma City independent Chesapeake Energy Corp. has entered into a definitive agreement with Bronco Drilling Co. Inc. to acquire the Edmond, Okla.-based drilling contractor in a deal worth $315 million, including debt, net working capital, and outstanding warrants.
Chesapeake said the acquisition will help further its goal of owning two thirds of the rigs it now operates in its drilling program—“a key aspect of its vertical integration strategy—at an attractive price per rig,” it said. Bronco owns 22 drilling rigs, which operate in the Williston and Anadarko basins. Three of Bronco’s rigs are currently under contract with Chesapeake.
Chesapeake Chief Executive Officer Aubrey K. McClendon said, “The acquisition of Bronco is a great additional step in our vertical integration strategy and increases confidence in our plan to ramp up drilling activities in highly lucrative, liquids-rich unconventional resource plays.”
Following the closing of the transaction, which is expected in the second quarter, Chesapeake will integrate Bronco’s rigs into its wholly owned subsidiary, Nomac Drilling LLC, which currently owns 95 drilling rigs available for service, of which 90 are currently drilling under contract for Chesapeake.
Chesapeake is currently operating 160 drilling rigs and plans to end 2012 utilizing 200 drilling rigs. Chesapeake said the Bronco deal “should satisfy the vast majority of Chesapeake’s anticipated rig investment needs through 2012.”
The transaction has been unanimously approved by the boards of both companies. Bronco’s board unanimously recommends that its shareholders accept the Chesapeake offer.
Chesapeake is the second-largest producer of natural gas—second only to ExxonMobil Corp.—and the most active driller of new wells in the US.
Chesapeake owns leading positions in the Barnett, Haynesville, Marcellus, and Bossier gas shale plays and in the Eagle Ford, Granite Wash, Cleveland, Tonkawa, Mississippian, Wolfcamp, Bone Spring, Avalon, and Niobrara unconventional liquids plays.
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