Chesapeake Energy Corporation (CHK) To Sell Stake In Assets To Sinopec – ValueWalk Premium
Chesapeake Energy earnings

Chesapeake Energy Corporation (CHK) To Sell Stake In Assets To Sinopec

Chesapeake Energy Corporation (NYSE:CHK) has agreed to sell a 50% stake in its Mississippi Lime play in northern Oklahoma to China International Petroleum Exploration & Production Corp., Sinopec  for $1.02 billion in cash.

Chesapeake Energy Corporation (CHK) To Sell Stake In Assets To Sinopec

The natural gas company aims to focus on developing its profitable liquids-rich plays by entering into this joint venture agreement, where about 93 percent of the cash Sinopec Shanghai Petrochemical Co. (ADR) (NYSE:SHI) is paying will be received upon closing of the deal.

“We are excited to announce the execution of our Mississippi Lime joint venture with Sinopec, which moves us further along in achieving our asset sales goals and secures an excellent partner to share the capital costs required to actively develop this very large, liquids-rich resource play,” Chesapeake’s Chief Operating Officer, Steven Dixon said.

Chesapeake Energy Corporation (NYSE:CHK) reported that net production from Chesapeake’s Mississippi Lime assets and other formations prior to the Sinopec acquisition averaged approximately 34,000 barrels of oil equivalent per day (boepd) in fourth quarter 2012.

“Sinopec is paying a reasonable rate for oil and gas production, $65,000 a flowing barrel for oil and $5,000 a flowing thousand cubic feet for gas,” Scott Hanold, a Minneapolis-based analyst for RBC Capital Markets LLC, said today in an interview. “They’re getting the acreage for free.”

As of Dec. 31, 2013, approximately 140 million boepd of net proved reserves were associated with these assets.

According to a Feb. 25 analyst note from GHS Research, Chesapeake’s 24,000 boepd fourth quarter production from the play included 45 percent oil, 9 percent natural gas liquids and 46 percent natural gas.

Chesapeake Energy Corporation (NYSE:CHK) said last year that the company had been looking for ways to divestment to cut down its debt. The company decided to sell most of its natural gas processing and gathering assets for $2.16 billion to Access Midstream Partners LP.

The joint venture transaction is expected to be completed in this year’s second quarter. Chesapeake Energy Corporation (NYSE:CHK) shares were up 2 percent at $20.90 in premarket trading on Monday.

LEAVE A COMMENT


X
Saved Articles
X
TextTExtLInkTextTExtLInk

The Life and Career of Charlie Munger

Charlie is more than just Warren Buffett’s friend and Berkshire Hathaway’s Vice Chairman – Buffett has actually credited him with redefining how he looks at investing. Now you can learn from Charlie firsthand via this incredible ebook and over a dozen other famous investor studies by signing up below:

  • Learn from the best and forever change your investing perspective
  • One incredible tidbit of knowledge after another in the page-turning masterpiece of a book
  • Discover the secrets to Charlie’s success and how to apply it to your investing
Never Miss A Story!
Subscribe to ValueWalk Newsletter. We respect your privacy.

What’s missing today for many investors is real, straightforward advice.

Especially when it comes to Value Investing and Hedge Funds. 💵

That’s what makes ValueWalk Premium different. Some would say we’re “unusual.”

Our subscribers look forward to clear, easy-to-understand information they can act on.

Sign up for  today for only a few dollars a day and get a 3 day no obligation trial with a targeted 20% discount coupon code.

Cancel anytime during trial and you are never charged.

Limited time offer: For first 50 subscribers

0