Chesapeake Energy Announces Sale of Second Haynesville Package


Dec. 21 2016, Published 5:33 p.m. ET

Chesapeake Energy’s second Haynesville divestiture

Less than one month after announcing its $450-million Haynesville Shale asset divestiture, Chesapeake Energy (CHK) announced its second Hayneville divestiture on December 20, 2016. On December 5, 2016, CHK had announced that it had agreed to sell 78,000 net acres in Louisiana’s Haynesville Shale for $450 million to an undisclosed private player. Along with the

Along with this news, CHK announced that it was also marketing another 50,000 net acres in the northeastern part of its Haynesville operations, which it expected to close by 1Q17. The company announced the second deal sooner than anticipated on December 20.

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The sale includes ~41,500 net acres along with 326 operated and non-operated wells, with a current net production of ~50 MMcfpd (million cubic feet) per day. The assets will be sold to an affiliate of Covey Park Energy for $465 million, bringing the total proceeds from the Haynesville divestitures to $915 million. CHK hopes to close the transaction in 1Q17.

The image above shows CHK’s Haynesville position and production mix, which is 100% natural gas (UNG). Key players in the Haynesville Shale include BHP Billiton (BHP), EXCO Resources (XCO), and Goodrich Petroleum (GDP).

CHK noted that the company is “divesting of only approximately 80 MMcf of daily gas production and approximately $50 million of estimated 2017 operating income.”

Management comments

After its second Haynesville Shale divestiture announcement, Chesapeake Energy Chief Executive Officer Doug Lawler stated the following in a press release: “Chesapeake delivered on its strategy and achieved our stated financial and operational objectives in 2016. We exceeded our 2016 asset sales goal by approximately $500 million, bringing total gross proceeds from divestitures either signed or closed in the year to approximately $2.5 billion, excluding certain volumetric production payment repurchase transactions. We will continue to pursue opportunities to strengthen our balance sheet in 2017.”

Asset divestitures have been one of CHK’s key strategies for strengthening its balance sheet in 2016. The company had planned to sell ~$2 billion in assets during the year. For more details, check out Market Realist’s “Why Has Chesapeake Energy Been Divesting Its Assets?


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