Chesapeake Energy Corporation Sells 98 BCFE of Proved Reserves for Proceeds of $412 Million
Chesapeake Energy Corporation Sells 98 BCFE of Proved Reserves for Proceeds of $412 Million, or $4.20 Per MCFE, in a Volumetric Production Payment Transaction
1/5/2009 7:02 AM
OKLAHOMA CITY, Jan 05, 2009 (BUSINESS WIRE) -- Chesapeake Energy Corporation (NYSE:CHK) today announced it has sold certain Chesapeake-operated long-lived producing assets in the Anadarko and Arkoma Basins in its fourth volumetric production payment transaction (VPP). Through the VPP, Chesapeake conveyed a royalty interest to investors associated with Argonaut Private Equity. The purchase was financed by GS Loan Partners, an affiliate of The Goldman Sachs Group, Inc. (NYSE:GS). The assets include proved reserves of approximately 98 bcfe and current net production of approximately 60 mmcfe per day for proceeds of $412 million, or $4.20 per mcfe. Chesapeake retained drilling rights on the properties below currently producing intervals. The company previously announced its intention to complete a VPP by year-end 2008 as part of its plan to build larger cash reserves over the next two years. The transaction, which closed on December 31, 2008, will be treated as a sale for accounting purposes and the company's proved reserves will be reduced accordingly. Chesapeake was advised on the transaction by Jefferies Randall & Dewey of Houston, Texas.
Chesapeake Energy Corporation is the largest producer of natural gas in the U.S. Headquartered in Oklahoma City, the company's operations are focused on exploratory and developmental drilling and corporate and property acquisitions in the Barnett Shale, Haynesville Shale, Fayetteville Shale, Marcellus Shale, Anadarko Basin, Arkoma Basin, Appalachian Basin, Permian Basin, Delaware Basin, South Texas, Texas Gulf Coast and East Texas regions of the United States. Further information is available at www.chk.com.
1/5/2009 7:02 AM
OKLAHOMA CITY, Jan 05, 2009 (BUSINESS WIRE) -- Chesapeake Energy Corporation (NYSE:CHK) today announced it has sold certain Chesapeake-operated long-lived producing assets in the Anadarko and Arkoma Basins in its fourth volumetric production payment transaction (VPP). Through the VPP, Chesapeake conveyed a royalty interest to investors associated with Argonaut Private Equity. The purchase was financed by GS Loan Partners, an affiliate of The Goldman Sachs Group, Inc. (NYSE:GS). The assets include proved reserves of approximately 98 bcfe and current net production of approximately 60 mmcfe per day for proceeds of $412 million, or $4.20 per mcfe. Chesapeake retained drilling rights on the properties below currently producing intervals. The company previously announced its intention to complete a VPP by year-end 2008 as part of its plan to build larger cash reserves over the next two years. The transaction, which closed on December 31, 2008, will be treated as a sale for accounting purposes and the company's proved reserves will be reduced accordingly. Chesapeake was advised on the transaction by Jefferies Randall & Dewey of Houston, Texas.
Chesapeake Energy Corporation is the largest producer of natural gas in the U.S. Headquartered in Oklahoma City, the company's operations are focused on exploratory and developmental drilling and corporate and property acquisitions in the Barnett Shale, Haynesville Shale, Fayetteville Shale, Marcellus Shale, Anadarko Basin, Arkoma Basin, Appalachian Basin, Permian Basin, Delaware Basin, South Texas, Texas Gulf Coast and East Texas regions of the United States. Further information is available at www.chk.com.
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Replies to This Discussion
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Permalink Reply by Snake Stewart on
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That last paragraph of yours read like a disclaimer for a pack of condoms in the French Riviera at Carnivale.
Its 2009 Dion.........Cant blame a Snake for a little good natured goading can you ? (LOL)
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Permalink Reply by sesport on
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Ummm ... what do ye' know of disclaimers on packs of condoms in the French Riviera during Carnivale??????????? And don't claim to be usin' 'em as finger protection while practicin' for that HS Pirate's Bowl-Off. Pirates don't need purtty hands.
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Too much "Travel Channel" I do believe!
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Permalink Reply by Dion Warr, CPL on -
Sanke:
Individual results may vary. This advice is not an intended to be an effective safeguard against STDs (Standard Total Divestitures, aka 'mother of flippin' lease flips')
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Permalink Reply by sesport on
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Dion - thanks once again for your valuable insight, and for being willing to stick your foot near the plank. Would you be willing to share your opinions about what you think they will apply that money toward in their budget? Thanks.
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Permalink Reply by Dion Warr, CPL on
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Sesport:
Not that O&G is willing to earmark revenues from a single deal, but I would estimate 75/15/10 allocation as far as monies committed to the HS area (75% - 'Drill, baby, drill', HBP as much as possible ASAP, but HBP verticals to be cased 'big bore' for future conversions; 15% to lease acquisition and title examination & curative in predominantly established leasehold sections (prep. and WI closeouts for future operations); 10% reserve for liquidity based upon HS results and/or necessity to reallocate to shore up VPP-pledged assets e.g., reworking and development operations in the Anadarko & Arkoma, or elsewhere.
Total SWAG, however.
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I hope their latest "divestiture" works out well for them and that the 75 % for drilling creates a huge windfall because the 15 % ( $66.15 million) set aside for lease acquisition isnt going to get them all the way through Big "D", much less the rest of the known core area of tier 1 shale. :-)
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