Chesapeake Energy Corporation closes southern Marcellus and Utica Shale sale

Chesapeake announces $1 billion common stock repurchase authorization

OKLAHOMA CITY—Chesapeake Energy Corporation (NYSE:CHK) today announced the closing of its asset sale to Southwestern Energy Company (NYSE:SWN) and initiatives to further enhance shareholder value.

Chesapeake closed the previously announced sale of its assets in the Southern Marcellus Shale and a portion of the Eastern Utica Shale to Southwestern for net proceeds of $4.975 billion. The $400 million adjustment to the previously reported $5.375 billion sale price is attributable to a settlement for various items, including Southwestern’s waiver of any future claims related to title defects and environmental liabilities. The properties sold to Southwestern consist of approximately 413,000 net acres and approximately 1,500 wells located in northern West Virginia and southern Pennsylvania, along with related property, plant and equipment. Net production of the divested properties in mid-December was approximately 57,000 barrels of oil equivalent (boe) per day. This represents approximately 7% of a new company record for total production that was achieved last week of 770,000 boe per day.

Doug Lawler, Chesapeake’s Chief Executive Officer, commented, “This transaction marks another significant event in Chesapeake’s transformation and solidifies our strong financial position. With the closing of this transaction and the available borrowing capacity under our unsecured revolving credit facility, Chesapeake now has a liquidity position of approximately $9 billion, putting Chesapeake in an advantageous position to enhance shareholder value in this volatile commodity price market. Consistent with our financial strength and our focus on enhancing shareholder value, Chesapeake’s Board of Directors has authorized a $1 billion common stock repurchase program. Further, building on our outstanding operational momentum of 2014, we will be focused on additional strategic growth opportunities to enhance our asset portfolio and continue to improve our ability to deliver top quartile growth metrics and shareholder returns.”

Via: Business Wire

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Shale FAQ

What is fracking?

Fracking is a slang term for hydraulic fracturing. Fracturing is a process by which highly pressurized fluid is pumped thousands of feet into the ground to fracture rock formations. The goal is to release the natural gas that’s locked inside the rock.

Is it safe?

What most concerns people about fracturing is ground water contamination. The worry is that fractures underground, caused by the process, will extending upwards and into aquifers, releasing gas and chemicals into the ground water supply. There’s been no confirmed reports of such a thing happening. Though surface spills and drill site blowouts can lead to localized environmental concerns.

Will my water catch on fire?

Flammable water is caused by the release of methane gas into a drinking water supply. Methane gas occurs naturally and can be released by any kind of drilling, including water wells. In Pennsylvania officials fined Chesapeake Energy $1 million for contaminating ground water with methane. It was determined that the company had not properly cemented it’s boreholes and gas migrated up the well, between rock and into aquifers.

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