Chesapeake Energy Corp. announced three oil and gas asset transactions totaling $2.6 billion with the largest value deal involving $1.25 billion to a group of investors acquiring a stake in the Cleveland and Tonkawa unconventional liquids-rich tight sand plays in Oklahoma.
Another transaction involved a volumetric production payment (VPP) for Anadarko basin natural gas production, and a separate transaction involved the sale of assets in the Texoma Woodford play in Oklahoma to XTO Energy Inc., a subsidiary of ExxonMobil Corp.
These transactions are part of Chesapeake’s ongoing plans to divest assets in coming months for anticipated proceeds of $8-10 billion.
Aubrey K. McClendon, Chesapeake’s chief executive officer, said, “We plan to monetize other nonstrategic assets during 2012, including our assets in the East Texas Woodbine play.” Chesapeake owns 50,000 net acres of leases in the Woodbine play.
In the Cleveland and Tonkawa plays, Chesapeake sold shares of its new subsidiary, CHK Cleveland Tonkawa LLC, to an investment group led by GSO Capital Partners LP, an affiliate of the Blackstone Group. The purchasers also included TPG Capital, Magnetar Capital, and EIG Global Energy Partners.
CHK C-T owns 245,000 net leasehold acres in Oklahoma’s Roger Mills and Ellis counties. It sold 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. Chesapeake retained all common equity interests in CHK C-T.
In addition, Chesapeake has an option exercisable before Mar. 31, 2019, to repurchase the preferred shares in whole or in part at any time.
Chesapeake also completed the sale of a 10-year VPP to a Morgan Stanley affiliate for $745 million, or $4.68/Mcf of gas equivalent for producing assets in the Anadarko basin Granite Wash play. The transaction included 160 bcfe of proved reserves and current net production of 125/MMcfed.
Chesapeake retained drilling rights on the Anadarko basin properties above and below currently producing intervals and outside of existing producing wellbores.
Including this VPP, Chesapeake has completed 10 VPP transactions since December 2007 involving a total of 1.37 tcfe of proved reserves for combined proceeds of $6.4 billion.
In the Texoma Woodford play in Oklahoma, Chesapeake agreed to sell 58,400 net acres of leasehold in Bryan, Carter, Johnston, and Marshall counties to XTO for $590 million.
The properties include 25 MMcfed of current net production. The transaction is expected to close on Apr. 30.
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