Current CHK Stock Info

Combined Haynesville divestitures have raised $915 million for Chesapeake Energy

Oklahoma City-based Chesapeake Energy (ticker: CHK) announced Tuesday that the company has signed an agreement to sell the second of two non-core positions in the Haynesville. The northern Louisiana assets will be sold to an affiliate of Covey Park Energy, a private energy company, for $435 million, according to Chesapeake.

Between the two sales, Chesapeake has raised $915 million in December.

Tuesday’s sale includes 41,500 net acres and 326 operated and non-operated wells currently producing approximately 50 MMcf/d of natural gas net to Chesapeake. Assuming $4,000 per flowing Mcf of gas, the deal works out to about $6,385.54 per acre. The price tag represents approximately 3% of Chesapeake’s enterprise value, while the divested volumes represent about 1% of CHK’s production.

“We are pleased with the results of our non-core Haynesville sales packages, totaling projected gross proceeds of $915 million, while divesting of only approximately 80 MMcf of daily gas production and approximately $50 million of estimated 2017 operating income,” said Chesapeake CEO Doug Lawler.

“Chesapeake delivered on its strategy and achieved our stated financial and operational objectives in 2016. We exceeded our 2016 asset sales goal by approximately $500 million, bringing total gross proceeds from divestitures either signed or closed in the year to approximately $2.5 billion, excluding certain volumetric production payment repurchase transactions. We will continue to pursue opportunities to strengthen our balance sheet in 2017.”

Chesapeake announces early results of $1.2 billion tender

In addition to the company’s divestiture Tuesday, Chesapeake also announced the early results of the cash tender for non-convertible senior notes, with an aggregate purchase price up to $1.2 billion. The company said that it expected to purchase $498.5 million of “Priority One” senior notes due 2017 through 2019 (about 46% of outstanding principal) at 105% of par, $38.6 million of its “Priority Two” senior notes due 2020 (3.5% of outstanding principal) at 101% of par, 15.4 million of its “Priority Three” senior notes due 2021 through 2023 (0.4% of outstanding principal) at 98.5% of par.

The Haynesville divestitures, along with the company’s issue and tender “will position Chesapeake with significant liquidity as we begin a new year,” said Lawler. The deals are expected to lower the company’s year-end 2017 net debt-to-EBITDA ratio to 4.6x from 4.8x previously, according to a note from KLR Group Tuesday.

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