HOUSTON (Reuters) – Chesapeake Energy Corp (N:) plans to sell all of its Ohio assets to privately owned Encino Acquisition Partners for about $2 billion, the company said on Thursday.
The Oklahoma City-based natural gas producer said it will use the proceeds to cut its debt, which totaled about $9.83 billion at the end of March.
The transaction would “significantly improve the health of our balance sheet,” Chesapeake Chief Executive Officer Doug Lawler said in a statement.
The deal includes 320,000 net acres in the Utica shale with about 920 wells that produce about 107,000 barrels of oil equivalent per day.
The sale of Chesapeake’s entire stake in the Utica shale is part of the company’s plan to pay down debts that had ballooned to as much as $16 billion in 2012 after the collapse of natural gas prices and a string of land acquisitions.
Chesapeake expects the transaction to close in the fourth quarter of 2018. The purchase price includes a $100 million contingent payment based on future natural gas prices.
Chesapeake also said its 2019 oil production is expected to grow about 10 percent from 2018, adjusted for asset sales, with additional oil growth anticipated in 2020.
Chesapeake, co-founded by shale gas pioneer Aubrey McClendon who died in 2016, has said it will attempt to cut debt by $2 billion to $3 billion this year.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Source: Investing.com
