Chesapeake Is Said To Discuss $4 Billion Pipeline Sale

This, I believe, would be good news to mineral owners.

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why did the stock holders threaten to file injunction against selling off assets? 

Maybe they think they are being sold at fire sale prices and could be sold for more at a later date.

The pipeline assets generate cash flow, and should continue to generate increasing cash flow for years.  the partner in the pipeline venture has sufficient capital to float its operations if for some reason CHK can't - CHK midstream actually has a much better debt rating than CHK.  Maybe the pipeline folks should shell the upstream folks?

Oops - that Only gives GHK $2 Billion to play with.  next sale better come quick

How would this be good for mineral owners?

I would hope that having the pipeline owned by a third party would alleviate any bias by Chesapeake.

one reason for the sale: they owe 22 billion, if the papers are right.

Can't make the math work..If CHK has a 22 billion cash flow shortfall how will selling off 4 billion of producing assets help that?

It will just make the stock fall farther.

Shell's move to export ng makes more sense...wonder why chk doesn't go that direction? 

would be a blessing to all landerowners if they sold everything.  It would slow down a lot of false info they give out. or give someone new a chance at it.

I agree with you on your position.  I think it's only a matter of time.

Good news/bad news:


Good news:  a different operator/owner to provide at least an appearance of "arms-length" transactions with CHK E&P in the future - perhaps more competitive gathering rates on future CHK drilling activity. 


Bad news:  Most of the larger diameter pipe and treating infrastructure in the HS play has already been built by CHK and others - most additional "gathering" infrastructure will be smaller diameter connections with CHK & 3rd party producers. It is probable that the purchase price paid by GIP is based on the high gathering/treating rates everyone is rightfully complaining about - the 3rd party sale by CHK will seek to "legitimize" these rates on the majority of the gathering/treating assets already built.  It is unlikely that GIP will lower the rates to appease the affected parties - CHK gets the upgraded value (cash) with the sale, and GIP needs the higher rates to obtain the expected ROR/ROI. 

With Aubrey's close connection with GIP's CEO (see previous midstream deals), it would not surprise me if there were some undisclosed (or disclosed, but flying very low below the radar screen) "finer points" to the sale wherein CHK dedicates 100% of future development in the HS to the gathering systems at these higher gathering/treating rates regardless of other, more competitive options in various regions of the play.....nothing that a typical E&P company wouldn't do to maximize sale value of the assets, but it erodes the "netback" to its own E&P group going forward...since immediate cash is their primary concern, easy to presume that CHK would sacrifice future value to themselves & royalty owners in order to get more from the sale.  While a 100% dedication secures guaranteed rates for CHK E&P for the future, high rates make this "security" far less attractive. 


Don't bet on "gathering" and "compression" charges to go down with this deal...if you are a CHK mineral owner...  Just adding one more "fracker" into the mix...


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