Monday, December 05, 2016 /PRNewswire/
Transaction results in approximately $2.0 billion in gross divestiture proceeds either signed or closed to date in 2016
OKLAHOMA CITY, Dec. 5, 2016 /PRNewswire/ — Chesapeake Energy Corporation (NYSE:CHK) today announced that it has signed an agreement to sell a portion of the company’s acreage and producing properties in its Haynesville Shale operating area in northern Louisiana for approximately $450 million to a private company. Included in the sale are approximately 78,000 net acres, 40,000 net acres of which the company considered as core acreage. The sale also includes 250 wells currently producing approximately 30 million cubic feet of gas per day, net to Chesapeake. The company expects this transaction to close in the 2017 first quarter.
In addition, Chesapeake is marketing approximately 50,000 net acres located in the northeastern part of its Haynesville Shale operating area, which the company also expects to close in the 2017 first quarter. Following both of these planned divestitures, Chesapeake will retain approximately 250,000 net acres in the core of the Haynesville Shale. The company’s 2017 development program in the Haynesville will be focused on longer laterals and further enhanced completions, resulting in projected adjusted production growth of approximately 13% from its Haynesville operations in 2017.
Doug Lawler, Chesapeake’s Chief Executive Officer, commented, “We are pleased to announce the first of two proposed Haynesville asset sales for $450 million. With this proposed transaction and our previously announced Devonian asset divestiture, the company has reached approximately $2.0 billion gross proceeds from divestitures either signed or closed in 2016, excluding certain volumetric production payment repurchase transactions. We expect this total to grow in the 2017 first quarter with our second proposed acreage sale in the Haynesville. With our long-term target of $2 to $3 billion in debt reduction, we will continue to look for opportunities to accelerate value through the sale of additional non-core assets in 2017 and beyond. Through the continual optimization of our asset base, reduction in our net leverage, improvement in liquidity and cash flow generating capabilities, we believe Chesapeake is well positioned for the years ahead.”
Headquartered in Oklahoma City, Chesapeake Energy Corporation’s (NYSE: CHK) operations are focused on discovering and developing its large and geographically diverse resource base of unconventional oil and natural gas assets onshore in the United States. The company also owns oil and natural gas marketing and natural gas gathering and compression businesses.
This news release and the accompanying Outlook include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are statements other than statements of historical fact. They include statements, but are not limited to, the anticipated timing and proceeds from asset sales, if any, as well as the effect of such assets sales on our ability to optimize our asset base, further reduce outstanding debt and grow production in 2017. Although we believe the expectations and forecasts reflected in the forward-looking statements are reasonable, we can give no assurance they will prove to have been correct. They can be affected by inaccurate or changed assumptions or by known or unknown risks and uncertainties.
Factors that could cause actual results to differ materially from expected results include those described under “Risk Factors” in Item 1A of our annual report on Form 10-K and any updates to those factors set forth in Chesapeake’s subsequent quarterly reports on Form 10-Q or current reports on Form 8-K (available at http://www.chk.com/investors/sec-filings). These risk factors include the volatility of oil, natural gas and NGL prices; the limitations our level of indebtedness may have on our financial flexibility; our inability to access the capital markets on favorable terms or at all; the availability of cash flows from operations and other funds to finance reserve replacement costs or satisfy our debt obligations; a further downgrade in our credit rating requiring us to post more collateral under certain commercial arrangements; write-downs of our oil and natural gas asset carrying values due low commodity prices; our ability to replace reserves and sustain production; uncertainties inherent in estimating quantities of oil, natural gas and NGL reserves and projecting future rates of production and the amount and timing of development expenditures; our ability to generate profits or achieve targeted results in drilling and well operations; leasehold terms expiring before production can be established; commodity derivative activities resulting in lower prices realized on oil, natural gas and NGL sales; the need to secure derivative liabilities and the inability of counterparties to satisfy their obligations; adverse developments or losses from pending or future litigation and regulatory proceedings, including royalty claims; charges incurred in response to market conditions and in connection with our ongoing actions to reduce financial leverage and complexity; drilling and operating risks and resulting liabilities; effects of environmental protection laws and regulation on our business; legislative and regulatory initiatives further regulating hydraulic fracturing; our need to secure adequate supplies of water for our drilling operations and to dispose of or recycle the water used; impacts of potential legislative and regulatory actions addressing climate change; federal and state tax proposals affecting our industry; potential OTC derivatives regulation limiting our ability to hedge against commodity price fluctuations; competition in the oil and gas exploration and production industry; a deterioration in general economic, business or industry conditions; negative public perceptions of our industry; limited control over properties we do not operate; pipeline and gathering system capacity constraints and transportation interruptions; terrorist activities and cyber-attacks adversely impacting our operations; potential challenges of our spin-off of Seventy Seven Energy Inc. (SSE) in the event of a bankruptcy of SSE; an interruption in operations at our headquarters due to a catastrophic event; the continuation of suspended dividend payments on our common stock and preferred stock; certain anti-takeover provisions that affect shareholder rights; and our inability to increase or maintain our liquidity through debt repurchases, capital exchanges, asset sales, joint ventures, farmouts or other means.
Expected asset sales may not be completed in the time frame anticipated or at all. We caution you not to place undue reliance on our forward-looking statements, which speak only as of the date of this news release, and we undertake no obligation to update any of the information provided in this release or the accompanying Outlook, except as required by applicable law.
Brad Sylvester, CFA