Monday, February 21, 2011

Chesapeake Agrees to Sell Fayetteville Shale Assets to BHP Billiton

Boy, that was fast.  Chesapeake Energy announced today that it has agreed to sell its Fayetteville Shale assets to the oil and gas subsidiary of Australian mining giant BHP Billiton, Ltd. for $4.75 billion.  Chesapeake announced a couple of weeks ago its intentions to sell its 487,000 net acres as part of its effort to reduce debt and grow production less rapidly.

The deal also includes Chesapeake's regional midstream assets, which amounts to 420 miles of pipeline.  Also, Chesapeake will provide "essential services for up to one year for BHP Billiton's Fayetteville properties for an agreed-upon fee."  Not sure what that means, but since BHP Billiton doesn't have much of a presence in North America, it will lean on Chesapeake to give it time to build an operation.

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