Friday, November 4, 2011

Dealin' Chesapeake at it Again

This week, Chesapeake Energy announced that it has signed a letter of intent with "an undisclosed international major energy company" for a joint venture in the Utica Shale in eastern Ohio. The deal gives the new investor a 25% interest in around 650,000 net acres in the wet gas area of the play.  The acreage is currently owned by Chesapeake (570K net acres) and EnerVest, Ltd. (80K net acres).  The deal values the acreage at $15,000 per net acre, and will yield $2.438 billion to CHK and EnerVest. CHK's $2.14 billion proceeds will be paid $640 million in cash at closing and $1.5 billion in carried drilling and completion cost.

The company also announced a transaction to sell up to $750 million of preferred shares for acreage the company owns in the Utica Shale.  You can read all about it (starting in paragraph four) because it just wears me out to try to understand and explain Chesapeake's funding deals.

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