(AFP) – Sep 12, 2012
WASHINGTON — Embattled natural gas giant Chesapeake Energy said Wednesday it would sell most of its properties in the southwestern US Permian Basin as well as other assets for about $6.9 billion.
The company said it would use some of the proceeds from the sales to repay $4.0 billion in loans during the fourth quarter.
The group is the second-biggest producer of natural gas in the United States after ExxonMobil.
The group's assets in the Permian Basin -- which stretches from western Texas to southeastern New Mexico -- would go to Royal Dutch Shell and Chevron for about $3.3 billion.
The assets being sold produced about 21,000 barrels of liquids and 90 million cubic feet of natural gas a day during the second quarter of 2012, or 5.7 percent of the US gas giant's production during the period.
In a separate statement, Shell said the share of the shale assets it was buying were worth $1.935 billion and covered 618,000 net acres in the West Texas part of Permian.
The acquisition backed its aim of building "an industry-leading liquids-rich shale resource," Shell said.
Chevron meanwhile said its acquisition reached 246,000 acres in the Permian's Delaware Basin, where it already holds about 700,000 acres in properties.
"The acreage included in the agreement has current net production of 7,000 barrels of oil equivalent per day, with the potential to increase substantially over the next few years," it said in a statement.
Chesapeake would sell most of its midstream assets in three separate transactions. It would also let go of its non-core leasehold assets in the Utica Shale basin and other areas.
The US group's chief executive Aubrey McClendon said the latest sales come on top of $4.7 billion in divestments already made in the first half of 2012, and brings year-to-date sales to $11.6 billion.
That is about 85 percent of the group's full-year goal of divesting $13 to $14 billion in assets.
"These transactions are significant steps in the transformation of our company's asset base to a more balanced portfolio among oil, natural gas liquids and natural gas resources and production," said McClendon in a statement.
The group posted in May a first-quarter net loss of $28 million, after three consecutive quarters of profits.
Its shares have also come under pressure amid reports that McClendon took out more than $1 billion in personal loans using stakes he owns in company wells.
The Oklahoma City, Oklahoma-based company has been shifting away from natural gas drilling and focusing on oil and liquefied natural gas, meanwhile shedding assets to cope with the changing market.
Chesapeake has predicted it would limit its full-year loss to $180-200 million, based on a natural gas price of $3.40 per cubic feet (0.028 cubic meters). The current gas future price is about $2.98.
Copyright © 2013 AFP. All rights reserved. More »