Tuesday, May 3, 2011

Chesapeake divests certain mid-continent assets through its ninth VPP for $850 million or $28/BOE!

Chesapeake has agreed to monetize certain of its producing assets in the Mid-Continent through a ten-year volumetric production payment (VPP) to an affiliate of Barclays PLC for proceeds of approximately $850 million. The transaction includes approximately 180 bcfe of proved reserves and approximately 80 mmcfe per day of current net production. The reserves in the package are approximately 80% gas, 20% liquids.

Chesapeake has retained drilling rights on the properties below currently producing intervals and outside of existing producing wellbores and the production tail beyond ten years. The transaction will be Chesapeake's ninth VPP and is expected to close in the 2011 second quarter. Inclusive of the pending VPP sale and the company's eight previously closed VPPs, the company will have sold 1.215 tcfe of proved reserves for total proceeds of $5.619 billion, for an average sales price of $4.62 per mcfe.
The following table shows the other VPP deals of Chesapeake -

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