Chesapeake Dumps More Assets (CHK, RDS-B, CVX, UNG)


Continuing the process of dumping properties in order to raise cash to pay down debt it incurred to purchase the properties in the first place, Chesapeake Energy Corp. (NYSE: CHK) said this morning that it had reached multiple agreements to sell the "vast majority" of its properties in the Permian Basin, "substantially all" of its midstream assets and "noncore leasehold assets" in the Utica shale play, among other areas, for about $6.9 billion. CEO Aubrey McClendon had this to say:

The net proceeds of approximately $6.9 billion from the sales discussed today are in addition to the $4.7 billion of sales previously closed in the 2012 first half and will bring our 2012 year-to-date sales to $11.6 billion, or approximately 85% of our full-year goal of $13-14 billion, which we expect to achieve by year end.

Buyers of the Permian Basin properties were Royal Dutch Shell PLC (NYSE: RDS-B), Chevron Corp. (NYSE: CVX) and privately held EnerVest Ltd., and the total sale price was $3.3 billion. Privately held Global Infrastructure Partners completed a previously announced deal to pick up the midstream assets for another $3 billion, and four unnamed companies paid $600 million for the Utica shale assets.

One of the unnamed buyers of Chesapeake assets in Texas is Energy and Exploration Partners, which filed yesterday for an IPO to raise $275 million, of which $125 million will go to Chesapeake for assets in the Woodbine/Eagle Ford shale play.

Chesapeake picked a good time to sell. Natural gas futures have risen to nearly $3 per thousand cubic feet on the cutbacks in production and the end of the line as far as fuel-switching from coal to natural gas goes. Both coal and natural gas prices are rising again, and it remains to be seen just how much the increase will be.

The United States Natural Gas Fund (NYSEMKT: UNG) rose more than 6% yesterday and is up another 0.15% in premarket trading this morning at $20.23 in a 52-week range of $14.25 to $41.12.

Paul Ausick

Filed under: 24/7 Wall St. Wire, Commodities, ETF, IPOs, Oil & Gas, Pre-Market Activity Tagged: CHK, CVX, RDS-B, UNG