Thursday, February 10, 2011

Chesapeake to divest Fayetteville assets for ~$5 billion

Chesapeake Energy Corporation has announced that, as part of its 2011-12 strategic and financial 25/25 plan, the company has decided to sell all of its Fayetteville Shale assets, as well as its equity investments in Frac Tech Holdings LLC and Chaparral Energy Inc. If these sales are completed, Chesapeake anticipates that the combined pre-tax proceeds could exceed $5.0 billion. Chesapeake owns 25.8% of Frac Tech, a leading provider of oil and natural gas well stimulation services and products with expertise in high-pressure hydraulic fracturing. Chesapeake owns 20% of Chaparral, which has operations in the Mid-Continent, the Permian Basin, Ark-La-Tex, NorthTexas, the Gulf Coast and the Rocky Mountains, with Proved NPV10 of $1.77 billion.
Fayetteville asset overview:
  • Approximately 487,000 net acres of leasehold with 75% of WI; BP is the JV partner with 25% WI
  • Current net production of approximately 415 MMcfe/d
  • As of 30 Jun 2010, Net Proved reserves were 2,404 Bcfe
  • 4,900 Potential net unrisked undrilled wells
  • 9,300 Bcfe of Potential net unrisked resource.

Are we seeing Consolidation across US shale plays moving to larger companies????
  • In 2008, BP Plc bought 25% interest in Chesapeake’s Fayetteville Shale operations for $1.9 billion after buying producing natural gas properties in the Arkoma Basin Woodford Shale play for US$1.75 billion.
  • In 2009, Exxon acquired XTO Energy for $41 billion.
  • In 2010, Chevron Corp. bought Atlas Energy Inc. for $4.3 billion to add acreage in the gas-rich Marcellus Shale.
  • In 2011, Chesapeake to divest Fayetteville assets for ~$5 billion.

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