Chesapeake Energy Corporation Announces Sale of Northern Eagle Ford and Haynesville Shale Assets for Aggregate Proceeds of $1 Billion - PRESS RELEASE July 3, 2013, 7:06 a.m. ET

http://online.wsj.com/article/PR-CO-20130703-903790.html

OKLAHOMA CITY--(BUSINESS WIRE)--July 03, 2013--

Chesapeake Energy Corporation (NYSE:CHK) announced the execution of agreements to sell assets in the Northern Eagle Ford Shale and Haynesville Shale to EXCO Operating Company, LP a subsidiary of EXCO Resources, Inc. (NYSE:XCO) ("EXCO") for aggregate proceeds of approximately $1.0 billion, of which approximately 90% will be received upon closing. Payment of the remaining proceeds will be subject to customary post-closing contingencies. The transactions, which are subject to certain closing conditions, are expected to close in the 2013 third quarter.

In the Northern Eagle Ford Shale, EXCO has agreed to acquire approximately 55,000 net acres in Zavala, Dimmit, La Salle and Frio counties, Texas, including approximately 120 producing wells with average net daily production of approximately 6,100 barrels of oil equivalent during the month of May.

In the Haynesville Shale, EXCO has agreed to acquire Chesapeake's operated and non-operated interests in approximately 9,600 net acres in Desoto and Caddo parishes, Louisiana. Included in the transaction are 11 units operated by Chesapeake and 42 units operated by EXCO. Average net daily production from the Haynesville properties to be sold was approximately 114 million cubic feet of natural gas equivalent during the month of May.

The impact of these asset sales on net production and capital expenditures was previously reflected in Chesapeake's May 1, 2013, Outlook guidance.

Doug Lawler, Chesapeake's Chief Executive Officer, commented, "Today's announcement brings our year-to-date asset sales signed or closed to approximately $3.6 billion, which, combined with forecasted net operating cash flow, enables Chesapeake to fully fund its 2013 capital expenditure budget. Additional asset sales contemplated for later this year may reduce long-term debt and further enhance our financial liquidity."

Jefferies & Company, Inc. is acting as financial advisor to Chesapeake.

      CONTACT: Chesapeake Energy Corporation

Jeffrey L. Mobley, CFA, 405-767-4763

jeff.mobley@chk.com

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Permalink Reply by barneyfife on July 3, 2013 at 2:15

The article is not there

Permalink Reply by Skip Peel - Mineral Consultant on July 3, 2013 at 2:24

barn, the link to the article is in blue just below "View Discussions".  Click on it and it will take you to the full article.

Permalink Reply by tc on July 3, 2013 at 2:38

My expectations is that EXCO will now suspend Haynesville drilling until higher NG prices.  Almost every other operator, who had oily assets, has ceased drilling Haynesville wells.  Also with the new Haynesville production acquired from Chesapeake, they won't need additional production to meet commitments.  After this deal EXCO will have limited capital and will need to focus all they have to HBP the farm-out option and increase oil production.

Permalink Reply by Skip Peel - Mineral Consultant on July 3, 2013 at 2:48

If past performance is any indication, EXCO will develop the CHK units just as they have their own.  They have maintained an aggressive pace of development under considerably lower prices than exist currently.  It appears the 11 CHK wells are the unit wells for the 11 HA units included in the sale.  That would mean they are largely depleted and will not contribute much in the way of cumulative production.  I hope you're right, tc, but I think that EXCO will continue with business as usual.

Permalink Reply by kittycatmama on July 3, 2013 at 5:28

Jay if you or anyone else listens to the conference call, it will be interesting to find out which sections in the Haynesville that CHK is throwing into this deal

 

Permalink Reply by layla on July 3, 2013 at 3:16

Thanks Skip for posting the whole article.  When I heard this on the news this morning, there was only a mention of the sale and I thought "Yippee!" but the article would indicate that it is only for an extremely limited number of sections.  If the sale is for 9600 acres then that would only be 15 sections so EXCO seems only interested in the far northern part of DeSoto and most extreme southern Caddo which is where EXCO has been having most of their drilling program anyway.  Good for those folks as they will be getting more multiple wells, but for the rest of Caddo and DeSoto-SOL as we get to remain with CHK (unless they are planning to sell us to someone else).

Permalink Reply by Henry on July 3, 2013 at 3:32

I'm with Layla -- the headline made me say "YEAH!" and the details made me yawn.  Only 15 sections of lucky people will get out from under the heavy hand of CHK.

Now, let's see if this nudges my dead money in XCO stock....

Permalink Reply by Sheila C on July 3, 2013 at 5:35

Will we receive notice from EXCO that our sections have been included in the purchase?

Permalink Reply by Skip Peel - Mineral Consultant on July 3, 2013 at 5:42

Yes, Sheila.  Keep in mind that EXCO held leases in these CHK units and were Working Interests in the wells drilled in the units.  The change of operator should be relatively simple.

Permalink Reply by TL DS1 on July 3, 2013 at 5:51

That is 15-640 acre units. That's 540 sections.

Permalink Reply by Henry on July 3, 2013 at 5:51

Am I doing the math right???   $320M for 9,600 acres?  That's $33k/acre???

Permalink Reply by Skip Peel - Mineral Consultant on July 3, 2013 at 5:57

Including wells and associated equipment and improvements.  It's also proven core acreage.

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