Chesapeake to Sell Southern DJ Basin Assets
Chesapeake Energy will sell approximately 500,000 net leasehold acres and 29 operated and producing wells in the southern portion of the Denver-Julesberg (DJ) Basin in Colorado, a company spokesperson confirmed to Rigzone on Thursday.
The company considers the area to be highly prospective, but no longer core to the company's operations, the spokesperson said.
The acreage for sale encompasses all of Chesapeake's holdings in northeastern Colorado, and will allow Chesapeake to concentrate on developing its 500,000 net acres of Niobrara leasehold in the Powder River Basin in east central Wyoming.
Chesapeake will continue to exit from non-core operations as it focuses on 10 areas it considers core, the spokesperson said. The sale will not impact the company's joint venture with CNOOC because all Niobrara drilling has been refocused into Powder River.
Chesapeake in a recent investor presentation said it was on track to complete an estimated $11.5 billion to $14.0 billion of total asset sales this year.
The company has been embroiled in controversy in recent months. Both Moody's and Standard and Poor's downgraded Chesapeake due to concerns over the plan's plans to fund its capital budget amid diminishing cash flows.
In a letter to shareholders Wednesday, Chesapeake's board of directors addressed concerns raised by John C. Liu, the comptroller of New York City and overseer of New York pension funds, about Chesapeake's management. The New York pension funds beneficially own less than .25 percent of Chesapeake's common shares outstanding.
Chesapeake said it had made significant changes to its executive compensation program. On May 18, the company's board adopted a new compensation arrangement for outside directors.
"These measures are responsive to shareholder feedback and ensure that Chesapeake's compensation programs are fully aligned with peers while reinforcing the link between directors' and executive officers' interests and those of shareholders," Chespeake's board said in the letter.
The board also noted it had reduced directors' annual compensation by 20 percent; reduced the CEO's total compensation for 2011 by 15 percent; separated the chairman and CEO roles and plans to hire a new independent non-executive chairman; and terminated the Founder Well Participation Program as of June 30, 2014.
"The board also is conducting a thorough review, through the Audit Committed and its independent counsel to determine whether there are any conflicts with the company arising from the financial arrangements between [Aubrey] McClendon (and the entities through which he participates in the FWPP) and any third party that has had or may have a relationship with the company in any capacity," the board said.
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