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Chesapeake Energy's $3.4 Billion in Deals

Written By Brianna Panzica

Posted November 4, 2011

Chesapeake Energy (NYSE: CHK) has struck several deals lately in asset sales in order to boost shares.

The first deal, worth $2.14 billion, is a sale of 25% of Chesapeake’s stake in the Utica shale deposit in Ohio.

Yet Chesapeake has not revealed the name of the buyer, saying only that it is an “international major energy company,” as the Wall Street Journal reports.

Chesapeake will receive $640 million for the stake, as well as $1.5 billion for drilling costs, and its partner EnerVest will receive $90 million plus $210 million for drilling.

Bloomberg quotes Chesapeake’s statement, which reveals that the deal is worth about $15,000 an acre for the Utica land.

The Wall Street Journal reports that this deal should close in December.

In addition, Chesapeake is selling shares of CHK Utica LLC, its subsidiary, to EIG Global Energy Partners, a deal worth $500 million.

And it is looking to sell $750 million more to investors, Bloomberg reports.

CHK Utica owns 700,000 acres in the Utica deposit.

Shares rose high on Thursday after these deals were revealed. Chesapeake traded at $29.03 at close.  On Friday, however, confidence was not so high, and Chesapeake fell 5.58% to $27.41.

Chesapeake owns 1.5 million acres of Utica, reports Bloomberg, and selling assets to bring in funds has always been one of the company’s strategies.

For example, $11.5 billion has been sold in just the last two years to bring in funding.

But some analysts and investors are afraid that the company is putting too much focus on Utica, and Michael Bodino confirmed this in an interview with Bloomberg.

Utica is, however, full of valuable resources, including a potential of 15.7 trillion cubic feet of natural gas, as the article reports.

It has brought in a fair amount of revenue for the company already, and in this time of the natural gas boom, assets in shale are a good idea.

That’s all for now,


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