Chesapeake Energy Corporation Announces Sale of Southern Marcellus and Utica Shale Assets for Proceeds of $5.375 Billion
16 October 2014 - 10:01PM
Business Wire
Chesapeake Energy Corporation (NYSE:CHK) announced that it has
executed a Purchase and Sale Agreement to sell assets in the
Southern Marcellus Shale and a portion of the Eastern Utica Shale
in West Virginia to Southwestern Energy Company (NYSE:SWN)
(“Southwestern”) for aggregate proceeds of $5.375 billion. The
transaction, which is subject to certain customary closing
conditions, including the receipt of third-party consents, is
expected to close in the fourth quarter of 2014.
Chesapeake has agreed to sell approximately 413,000 net acres
and approximately 1,500 wells in Northern West Virginia and
Southern Pennsylvania, of which 435 are in the Marcellus and Utica
formations, along with related property, plant and equipment.
Average net daily production from these properties was
approximately 56,000 barrels of oil equivalent (boe) during the
month of September, consisting of 184,000 Mcf of gas, 20,000
barrels of natural gas liquids and 5,000 barrels of condensate. As
of December 31, 2013, net proved reserves associated with these
properties were approximately 221 million barrels of oil equivalent
(mmboe).
Doug Lawler, Chesapeake’s Chief Executive Officer, commented,
“Today’s announcement marks a major step in Chesapeake’s
transformation and a dramatic improvement in our financial strength
as we seek to maximize value for our shareholders. Earlier this
year, we committed to unlocking the significant value inherent in
this asset, recognizing the disconnect of its perceived value
within our portfolio. It’s important to note that this transaction
has no impact on our expected growth profile or on our views around
maintaining a disciplined capital program. We expect our full-year
production guidance for 2015 to remain in the range of 7-10% growth
from 2014 levels adjusted for asset sales. I am very proud of the
efforts that our Southern Marcellus team and all of our employees
have put into building and developing our assets and creating value
for our company. We look forward to deploying the proceeds from
this significant transaction in ways that will continue to drive
even greater shareholder value.”
Chesapeake Energy Corporation (NYSE:CHK) is the
second-largest producer of natural gas and the 11th largest
producer of oil and natural gas liquids in the U.S.
Headquartered in Oklahoma City, the company's operations are
focused on discovering and developing its large and geographically
diverse resource base of unconventional natural gas and oil assets
onshore in the U.S. The company also owns substantial
marketing and compression businesses. Further information is
available at www.chk.com where Chesapeake routinely
posts announcements, updates, events, investor information,
presentations and news releases. This news release includes
“forward-looking statements” within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Forward-looking statements are
statements other than statements of historical fact that give our
current expectations or forecasts of future events. They include,
but are not limited to, the effect of the sale on the Company’s
efforts to: (i) improve its financial strength; (ii) transform and
optimize its asset portfolio; (iii) maximize shareholder value; and
(iv) maintain its growth in full-year production guidance and
growth profile. Although we believe the expectations and
forecasts reflected in the forward-looking statements are
reasonable, we can give no assurance they will prove to have been
correct. They can be affected by inaccurate assumptions or by known
or unknown risks and uncertainties.
Factors that could cause actual results to differ materially
from expected results include those described under “Risk Factors”
in Item 1A of our 2013 Annual Report on Form 10-K, as filed with
the U.S. Securities and Exchange Commission on February 27, 2014.
These risk factors include: the volatility of natural gas, oil and
NGL prices; the limitations our level of indebtedness may have on
our financial flexibility; declines in the prices of natural gas
and oil potentially resulting in a write-down of our asset carrying
values; the availability of capital on an economic basis, including
through planned asset sales, to fund reserve replacement costs; our
ability to replace reserves and sustain production; uncertainties
inherent in estimating quantities of natural gas, oil and NGL
reserves and projecting future rates of production and the amount
and timing of development expenditures; our ability to generate
profits or achieve targeted results in drilling and well
operations; leasehold terms expiring before production can be
established; hedging activities resulting in lower prices realized
on natural gas, oil and NGL sales; the need to secure hedging
liabilities and the inability of hedging counterparties to satisfy
their obligations; drilling and operating risks, including
potential environmental liabilities; legislative and regulatory
changes adversely affecting our industry and our business,
including initiatives related to hydraulic fracturing, air
emissions and endangered species; a deterioration in general
economic, business or industry conditions having a material adverse
effect on our results of operations, liquidity and financial
condition; oilfield services shortages, gathering system and
transportation capacity constraints and various transportation
interruptions that could adversely affect our revenues and cash
flow; adverse developments and losses in connection with pending or
future litigation and regulatory investigations; cyber-attacks
adversely impacting our operations; and an interruption at our
headquarters that adversely affects our business. In
addition, this transaction is subject to closing conditions,
including third-party consents, and may not be completed in the
time frame anticipated or at all.
Chesapeake Energy CorporationInvestor Contact:Brad
Sylvester, CFA, 405-935-8870ir@chk.comorMedia Contact:Gordon
Pennoyer, 405-935-8878media@chk.com
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