UPDATE: Chesapeake Energy Selling Assets For Total Cash $6.9B To Repay Loans; Shares Down 1%

By MidnightTrader.com Staff,

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Chesapeake Energy ( CHK ) is down 1% at around $19.85, but above a day's low of $19.65, after the company announced that has signed multiple agreements to sell majority of its Permian properties, substantially all of its midstream assets and certain noncore leasehold for total net cash proceeds of $6.9 bln. The company will use a portion of the proceeds from these asset sales to fully repay its $4 bln of term loans during the 2012 fourth quarter.

Meanwhile, Bloomberg reported that Chesapeake, facing claims by mineral rights holders in multiple states over canceled oil and gas lease offers, lost a bid to reverse a $19.7 million judgment to a Texas lease owner.

CHK will sell its assets in the southern Delaware Basin portion of the Permian Basin to SWEPI, a subsidiary of Royal Dutch Shell (RDS.A). CHK has also entered into purchase and sale agreements with three other companies for total net proceeds of $3.3 bln. Additionally, it sold its assets in the northern Delaware Basin portion of the Permian Basin to Chevron U.S.A. Inc., a subsidiary of Chevron Corporation ( CVX ).

Following these transactions, CHK will continue to own about 1.3 mln net acres of leasehold in the Utica Shale, in which its cost basis, net of various sales and its joint venture with Total, will be $200 per net acre (including all drilling carries in the Total JV.

CHK trades in a 52-week range of $13.32 - $32.07; shares have fallen 35% in the last 12 months.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing Commodities
Referenced Stocks: CHK , CVX

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