Chesapeake makes $218 mln asset sale to Indigo
Chesapeake makes $218 mln asset sale to Indigo
Mon Jun 8, 2009 12:42pm EDT
NEW YORK, June 8 (Reuters) - Chesapeake Energy Corp (CHK.N) will sell hundreds of natural gas wells and undeveloped properties to privately held Indigo Minerals LLC for $218 million in cash, Indigo said on Monday.
Chesapeake, which has sold more than $2.2 billion in debt and shares over the past year to help pay for a 2008 spending spree that gave it large stake in the development of shale gas, has suffered like other energy producers as the price of natural gas has slumped.
The sale includes 519 producing wells in more than 60 fields in North Louisiana, East Texas and Arkansas along with 40,000 undeveloped acres, bringing the total acreage in the deal to more than 122,000 net acres.
The wells are currently producing about 26 million cubic feet per day of gas.
Indigo will also buy some of Chesapeake's midstream assets that transport gas from Chesapeake's fields, while Chesapeake will retain leasehold rights to the shale reserves in those properties.
Chesapeake has bet heavily on developments in shale plays, which are more expensive to develop than conventional gas wells but produce gas more quickly and at a more sustained rate.
The transaction has an effective date of March 1 and is scheduled to close on June 30.
Indigo, which owns 635,000 net fee mineral and royalty acres located primarily in the Upper Gulf Coast, said it plans to drill hundreds of development wells in the properties.
Indigo was formed in late 2006 as a venture between Yorktown Partners, the Martin Companies, Bank of America Capital Investors and Indigo Management.
Chesapeake's shares were down 3.99 percent at 22.35 per share on the New York Stock Exchange. (Reporting by Matt Daily; Editing by Tim Dobbyn and Gunna Dickson)
Buck
Mon Jun 8, 2009 12:42pm EDT
NEW YORK, June 8 (Reuters) - Chesapeake Energy Corp (CHK.N) will sell hundreds of natural gas wells and undeveloped properties to privately held Indigo Minerals LLC for $218 million in cash, Indigo said on Monday.
Chesapeake, which has sold more than $2.2 billion in debt and shares over the past year to help pay for a 2008 spending spree that gave it large stake in the development of shale gas, has suffered like other energy producers as the price of natural gas has slumped.
The sale includes 519 producing wells in more than 60 fields in North Louisiana, East Texas and Arkansas along with 40,000 undeveloped acres, bringing the total acreage in the deal to more than 122,000 net acres.
The wells are currently producing about 26 million cubic feet per day of gas.
Indigo will also buy some of Chesapeake's midstream assets that transport gas from Chesapeake's fields, while Chesapeake will retain leasehold rights to the shale reserves in those properties.
Chesapeake has bet heavily on developments in shale plays, which are more expensive to develop than conventional gas wells but produce gas more quickly and at a more sustained rate.
The transaction has an effective date of March 1 and is scheduled to close on June 30.
Indigo, which owns 635,000 net fee mineral and royalty acres located primarily in the Upper Gulf Coast, said it plans to drill hundreds of development wells in the properties.
Indigo was formed in late 2006 as a venture between Yorktown Partners, the Martin Companies, Bank of America Capital Investors and Indigo Management.
Chesapeake's shares were down 3.99 percent at 22.35 per share on the New York Stock Exchange. (Reporting by Matt Daily; Editing by Tim Dobbyn and Gunna Dickson)
Buck
Views: 92
Replies to This Discussion
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Permalink Reply by LP on -
Interesting. Now...how do we find out what leases are involved in this transaction?
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Permalink Reply by Jaybird on
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Buck,
Thanks again for the update. I am curious where all of the acreage that is not developed is located. From the article I am assuming that Chesapeake didn't sale their core acreage. But maybe the experts can comment about that. Thanks again,
Jaybird
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Permalink Reply by kittycatmama on
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Jay, I am posting this under wrong discusssion, but couldn't find an exclusive discussion for seismic testing and I need your opinion. North Desoto is "alive" with seismic testing crews. I know one person who works for one of the major testing companies and that person said they are testing for oil beneath the shale because they know gas is there. What is your opinion on the purpose of all this testing?
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Permalink Reply by Les Bamburg on -
Jaybird, unfortunately the article doesn't even give an acreage breakdown by state.
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You think if I called Indigo directly they would tell me???? LOL only kidding.
Jaybird
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Permalink Reply by Spring Branch,mineral owner on
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Jay/Les, it seems to me that there is still a future for horizontal Cotton Valley wells in certain areas. The horizontal Cotton Valley theme was just getting going when the Haynesville came along. In 15/11, Section 5, Questar drilled a horizontal Cotton Valley that has made almost a billion cu ft in its first 5 months of production. There are some Haynesvilles that haven't done any better than that. They have just drilled and awaiting completion on a horizontal Cotton Valley in the adjoining Section 4 of 15/11. We'll see.
As an aside, I thought Indigo, which is a private company, just owned fee land and royalty interests. When did they become an operating company and start drilling their own wells???
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Permalink Reply by BirdDawg, plain ole' idiot on
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SB,
They have been drilling in Lincoln Parish for a little over a year. They have drilled 11 or 12 wells with no dry holes, and they seem to be very competent with their completions.
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You are correct about the Cotton Valley Horizontals just getting started when the Haynesville came along. EL PASO has done that in our area so we are just watching and learning all we can. Hosston and Cotton Valley are being targeted more now...so we can look forward to the results hopefully.
Jaybird
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Permalink Reply by Les Bamburg on
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SB, you hit on it with the phrase "in certain areas". The Cotton Valley formation is more conventional in nature and therefore not gas bearing over a continuous large area. Also, horizontal drilling would be only be applicable in areas and layers of the Cotton Valley with lower permeability ("tight sandstone"). The higher perm areas have likely already been developed and produced with conventional vertical wells. There is some chance of finding new Cotton Valley potentional with all the Haynesville Shale drilling.
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Permalink Reply by Spring Branch,mineral owner on
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Jim, where were the minerals they sold to Encana a year ago?? Haynesville Shale prospective??
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Permalink Reply by Spring Branch,mineral owner on
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Jim, am I missing something?? Have they essentially traded deep rights (Haynesville) fot Cotton Valley and shallower rights?
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