CHK To Dump $1B In Assets
Chesapeake Energy is shedding about 65,000 acres in Texas and Louisiana for $1 billion in its ongoing efforts to reduce debt and refocus its drilling activity.
Chesapeake is selling the acreage to Dallas-based EXCO Resources to allow that company to further explore the Eagle Ford and Haynesville shale formations.
“Today’s announcement brings our year-to-date asset sales signed or closed to approximately $3.6 billion, which, combined with forecasted net operating cash flow, enables Chesapeake to fully fund its 2013 capital expenditure budget. Additional asset sales contemplated for later this year may reduce long-term debt and further enhance our financial liquidity,” said Doug Lawler, Chesapeake’s chief executive officer.
“The Eagle Ford acquisition establishes our position in the high value oil core area of the Eagle Ford Shale, and delivers immediate production and reserve additions, significant resource potential, and solid economic returns,” added Douglas H. Miller, EXCO’s chairman and chief executive officer.
Oklahoma City-based Chesapeake remains the most active natural gas driller in northern West Virginia, and it is the only company with horizontal Marcellus Shale wells in Ohio, Brooke or Hancock counties. Over the past few years, former CEO Aubrey McClendon took a 2.5-percent personal interest in Chesapeake’s operations in Brooke, Ohio, Marshall and Wetzel counties. This left some investors concerned because Chesapeake is a publicly traded company on the New York Stock Exchange, while McClendon’s firms – Larchmont Resources and Jamestown Resources – are his own private businesses.
Marcellus and Utica shale wells can yield a variety of dry methane natural gas, liquids such as ethane, propane and butane, as well as crude oil. Production levels from the Chesapeake Couch and Glenn Didriksen wells in Ohio County for the first three months of 2013 are highlighted in the company’s earnings report as follows: the Couch 8H well, south of West Liberty just off W.Va. 88, produced 3.4 million cubic feet of dry methane natural gas, 505 barrels of oil and 290 barrels of natural gas liquids per day; and the Didriksen 1H, north of Oglebay Park just off Dement Road, produced 4.6 million cubic feet of natural gas, 395 barrels of oil and 195 barrels of NGL each day.
In the Ohio Utica Shale, where Chesapeake recently opened field offices at Fox Commerce Park in St. Clairsville, the driller is now operating 14 rigs.