Chesapeake Energy Corporation Announces Marcellus Shale Joint Venture and International Unconventional Natural Gas Exploration Alliance with StatoilHydro
BELOW FROM CHESAPEAKE NEWS RELEASE, NOTE THAT 20% CHK INTEREST WAS SOLD TO PLAINS EXPLORATION. FOR COMPLETE NEWS RELEASE SEE CHESAPAKE WEB SITE.
"Chesapeake has now completed three shale joint ventures that collectively value Chesapeake's Haynesville, Fayetteville and Marcellus Shale assets (before the joint ventures) at approximately $34 billion. Through these transactions, Chesapeake sold a 20% working interest in its Haynesville Shale assets to Plains Exploration & Production Company (NYSE:PXP) for $3.3 billion (thereby retaining an 80% working interest valued at $13.2 billion), a 25% working interest in its Fayetteville Shale assets to BP America (NYSE:BP) for $1.9 billion (thereby retaining a 75% working interest valued at $5.7 billion) and now has agreed to sell a 32.5% working interest in its Marcellus Shale assets to StatoilHydro for $3.375 billion (thereby retaining a 67.5% working interest valued at $7.0 billion). The total consideration to CHK from these sales has been approximately $8.575 billion, of which approximately $4.0 billion has been (or will be) in cash and approximately $4.575 billion is in drilling and completion cost carries. Furthermore, CHK retains the remaining ownership percentages of the joint ventures that have been valued at approximately $26 billion, or over $40 per share of value from just these three shale joint venture transactions. These joint ventures clearly demonstrate the enormous value of Chesapeake's shale natural gas assets and the unique capability of our organization to develop them."
"Chesapeake has now completed three shale joint ventures that collectively value Chesapeake's Haynesville, Fayetteville and Marcellus Shale assets (before the joint ventures) at approximately $34 billion. Through these transactions, Chesapeake sold a 20% working interest in its Haynesville Shale assets to Plains Exploration & Production Company (NYSE:PXP) for $3.3 billion (thereby retaining an 80% working interest valued at $13.2 billion), a 25% working interest in its Fayetteville Shale assets to BP America (NYSE:BP) for $1.9 billion (thereby retaining a 75% working interest valued at $5.7 billion) and now has agreed to sell a 32.5% working interest in its Marcellus Shale assets to StatoilHydro for $3.375 billion (thereby retaining a 67.5% working interest valued at $7.0 billion). The total consideration to CHK from these sales has been approximately $8.575 billion, of which approximately $4.0 billion has been (or will be) in cash and approximately $4.575 billion is in drilling and completion cost carries. Furthermore, CHK retains the remaining ownership percentages of the joint ventures that have been valued at approximately $26 billion, or over $40 per share of value from just these three shale joint venture transactions. These joint ventures clearly demonstrate the enormous value of Chesapeake's shale natural gas assets and the unique capability of our organization to develop them."
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Replies to This Discussion
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Permalink Reply by Grillin' - MmmMmm on -
Way cool. Continue to make good leveraged deals that allow them to be "carried" on drilling costs for the next few years. Pure genius. Shareholders will be rewarded over the next few years.
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Permalink Reply by groovy grove on
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ok where is all the bonus money you all have not paid ???????????????????????????????
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Permalink Reply by Grillin' - MmmMmm on
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Do you accept Norwegian Kroner??
If you think you have a valid enforceable contract I'd recommend trying to get someone to enforce it. Doubting wholesale pay off will be coming without some type of legal action. Be ready to fight, though, as the lawyers will be able to shred those letters of intent in court. This new injection of capital will not start the leasing boom back up again, only the drilling!
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Permalink Reply by BirdDawg, plain ole' idiot on
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Am I missing something, or is the PXP deal old news?
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Thanks KB, I thought so. Not real relavent today, in my opinion. (which doesn't mean much).
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Permalink Reply by Spring Branch,mineral owner on
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You prepared to spend your hard earned money on lawyers, KB?
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What?
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KB,
You need a lawyer?
Ha Ha
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Permalink Reply by Grillin' - MmmMmm on
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Don't have a dog in this fight so I'm not hoping for anything. Just saying that in order to get money out of this mess it will mean fighting in court. And since most companies have an army of lawyers, it just means being ready to go after them well-armed. That's all!
And this new money from Statoil is basically already spent! That's been the urgency of getting the deal done by the end of the year...to fund the drilling they are doing as we speak.
Not on any side of this fight (than goodness) but do see where there's a lot of lessons to be taken into the next round! Biggest: letters of intent aren't all they're made out to be. I don't want intent,,,I want cash!
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Permalink Reply by Grillin' - MmmMmm on
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I also think this wouldn't have been a problem had the market not turned so quickly and so violently. If prices were still high, these drafts would have been honored and the leases finalized.
Of course, it kind of makes you wonder...what if someone verbally agreed to take $25,000/acre but then while the paperwork was being compiled prices continued to rise and others were getting offers for $35,000/acre...would these same landowners be looking for a way out of the letter of intent?? Or asking the companies to increase the offers??
Based on what happened back in May/June, I'd have to say that some would in fact be trying to get the companies to match current market prices. In essence, what CHK is doing now is matching current market prices...which are pretty close to zero as no one is actively leasing.
With rapid changes in market prices, control shifts quickly from buyer, to seller, back to buyer, etc. I believe all concerned would prefer to have a stable market...gas at $13/mmBtu and leases at north of $20,000/acre!! But that's not the hand dealt these days.
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Permalink Reply by Two Dogs, Pirate on
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NG doesn't need to be at $13, it was the same as it is now and CHK was paying big bucks in TX for OGMLs. There stock needs to go up for them to have the bucks to pay out.
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Permalink Reply by Grillin' - MmmMmm on
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Agree 2 Dogs...but their stock isn't going up until NG prices go up. Its down because prices fell and fell hard. It will go up when prices go back up. Same with all of the other O&G companies, big and small. Everyone is currently working on 2009 budgets and guess what...they are all being cut, cut and cut again. Projects are being deferred and a lot of buying/drilling is being cancelled. See it everyday. In the last 20 days, I've spent 10 of them working on how to reduce our budget. That's where everyone's energy is right now...not finding new prospects or fields...but finding budget cuts.
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