UPDATE 1-Chesapeake to get funds from Plains early
Thu Aug 6, 2009 9:46am EDT Email | Print | Share| Reprints | Single Page[-] Text [+]

Market News
Wall St drops on caution before July jobs data
Oil slips from six-week high as Wall Street drags
Goldman Sachs' Cohen: New bull market has begun
More Business & Investing News... Featured Broker sponsored link
* Chesapeake shares up over 5 pct

* Plains shares tumble

HOUSTON, Aug 6 (Reuters) - Chesapeake Energy Corp (CHK.N) said on Thursday that Plains Exploration & Production Co(PXP.N), its joint venture partner in the Haynesville shale, agreed to pay $1.1 billion for its share of drilling costs early in exchange for a 12 percent discount.

Analysts said the cash payment should put to rest any lingering worries about Chesapeake's liquidity. Shares of Chesapeake climbed over 5 percent.

At the closing of the deal on Sept. 29, Chesapeake would receive cash of about $1.1 billion instead of an estimated $1.25 billion in remaining drilling costs that Plains would have paid over the next three years under the original agreement, the companies said.

Shares of Chesapeake rose $1.22 to $24.53, while Plains shares fell $2.64, or more than 9 percent to $26.09 in early trade on the New York Stock Exchange.

The Haynesville shale is located mostly in northern Louisiana. (Reporting by Anna Driver, editing by Gerald E. McCormick)


Buck