Chesapeake Earns Almost $1B from Two Haynesville Gas Asset Sales

Chesapeake Earns Almost $1B from Two Haynesville Gas Asset Sales
Chesapeake Energy exceeds 2016 divestment goal of $2 billion with second Haynesville transaction in December, which pushed total assets sales to $2.5 billion for the year.

Racking up proceeds of $915 million in one month, Chesapeake Energy Corp. has announced its second package sale of Haynesville natural gas producing assets.

The deal announced this week sold 41,500 net acres in northern Louisiana that produce about 50 million cubic feet per day (MMcfd) to Covey Park Energy LLC for $465 million. Analysts peg the price per acre between $7,500 and $10,400 – well above the first package price, which analysts at Simmons & Company International estimated was closer to $5,600 per acre.

Doug Lawler
Doug Lawler, CEO, Chesapeake Energy Corp.
CEO, Chesapeake Energy Corp.

The pair of non-core Haynesville asset sales have brought Chesapeake about $915 million for 120,000 net acres that produce about 88 MMcfd. Combined with proceeds from the Dec. 5 deal, the Oklahoma City-based gas driller has exceeded its targeted divestiture goal of $2 billion for year by $500 million.

Both deals are expected to close in the first quarter.

“Upon closing, this strong bid for our second Haynesville package, along with our recent new issue and tender, will position Chesapeake with significant liquidity as we begin a new year,” said CEO Doug Lawler in a statement.

Lawler added that the company’s long-term debt reduction target between $2 billion and $3 billion means Chesapeake will continue to seek opportunities to grow its value through non-core asset sales.

Chesapeake’s aggressive portfolio management this year will support a meaningful outspend and keep downward pressure on net leverage levels, said David Tameron, Wells Fargo senior analyst, in a note to investors.

“While still work to do in the execution of the company's large scale transformation, we think management has taken some big steps to position the company for not only survival, but success given 2018+ is looking increasingly brighter,” Tameron said.

Chesapeake is part of a growing list of exploration and production companies adopting a narrowed focus on core areas and selling off other assets to trim debt and boost cash flow.

An award-winning journalist, Deon has reported on energy, business and politics for almost 20 years. Email Deon at deon.daugherty@rigzone.com

WHAT DO YOU THINK?

Click on the button below to add a comment.
Post a Comment
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

Related Companies
Events  SUBSCRIBE TO OUR NEWSLETTER

Our Privacy Pledge
SUBSCRIBE

More from this Author
Deon Daugherty
Senior Editor | Rigzone
 -  Come Together: All Eyes On OPEC's Epic... (May 24)
 -  Op-Ed: With Saudi Aramco IPO Looming, ... (May 18)
 -  BLOG: Job-Hopping Traders May Weigh Do... (May 17)
 -  Midstream Gains $1.9 Billion on Gas in... (May 17)
 -  All Washed Up? Shale Oil and Gas Drown... (May 10)


Most Popular Articles

From the Career Center
Jobs that may interest you
Senior Proposals Specialist
Expertise: Business Development|Marketing|Sales
Location: Houston, TX
 
Principal Consultant
Expertise: Business Development
Location: Houston, TX
 
Chloride Sales Manager
Expertise: Business Development|Customer Service|Sales
Location: The Woodlands, TX
 
search for more jobs

Brent Crude Oil : $54.15/BBL 0.51%
Light Crude Oil : $51.47/BBL 1.45%
Natural Gas : $3.22/MMBtu 3.30%
Updated in last 24 hours