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In Focus: Chesapeake Energy Has Been Divesting Assets since 2014

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Dec. 6 2016, Published 4:24 p.m. ET

CHK’s asset divestiture history

Chesapeake Energy (CHK) has been aggressively focusing on divesting its assets since 2014. At the end of 2014, the company had raised ~$6.1 billion in proceeds from asset sales. A bulk of that came from its deal with Southwestern Energy (SWN), which paid ~$5.4 billion for CHK’s Marcellus and Utica assets. You can read about how the deal impacted SWN in Southwestern Energy’s Outlook for 2016: The Road Ahead.

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Although Chesapeake Energy (CHK) didn’t announce any major divestments in 2015, it again chose asset divestitures as a key strategy for 2016. The company plans to sell ~$2 billion in assets during the year. The chart above shows the impact of the Haynesville Shale and other divestitures on CHK’s 1Q17 production volumes.

Management comments

Following the recent Haynesville shale divestiture announcement, Doug Lawler, Chesapeake Energy’s CEO, stated in a press release, “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.”

He added that this number is expected to grow in 1Q17 following the second proposed Haynesville acreage sale. To learn more about CHK’s recent asset divestiture, please read Part 1 of this series.

CHK’s other asset divestiture in 2016

On August 10, 2016, Chesapeake Energy (CHK) announced its intentions to exit the Barnett Shale. This deal helped CHK eliminate ~$1.9 billion in financial commitments to Williams Partners (WPZ), which marketed CHK’s Barnett natural gas production.

In May 2016, Newfield Exploration (NFX) agreed to acquire 42,000 net acres in the Anadarko Basin STACK[1. Sooner Trend Anadarko Canadian and Kingfisher] play from Chesapeake Energy.

Among the other upstream companies, Marathon Oil (MRO), Hess (HES), Noble Energy (NBL), and Anadarko Petroleum (APC) have also made the sale of non-core assets one of their key strategies in a low price environment. Combined, these companies make up 7% of the Energy Select Sector SPDR ETF (XLE).

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