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Asset Sales: Chesapeake Energy’s Key Focus in 2016

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CHK’s asset sales

As we discussed in a previous Market Realist series, Chesapeake Energy (CHK) has been aggressively focusing on divesting its assets since 2014.

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CHK’s asset divestiture in 2016

In May 2016, Newfield Exploration (NFX) agreed to acquire 42,000 net acres in the Anadarko Basin STACK play from Chesapeake Energy.

Then, 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.

On December 5, 2016, CHK announced that it had agreed to sell 78,000 net acres in Louisiana’s Haynesville Shale for $450 million. On December 20, CHK announced its second Haynesville asset sale. The assets were to be sold to for $465 million.

A key strategy

Asset divestitures have been one of CHK’s key strategies in 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?“)

Another company that focused on asset sales in 2016 was Anadarko Petroleum (APC). (You can read more about this in Market Realist’s “What Are Anadarko’s Key Management Objectives and Strategies?“)

Notably, CHK, APC, and NFX make up ~3.9% of the Energy Select Sector SPDR ETF (XLE).

Next, we’ll talk about another key strategy deployed by CHK in 2016.

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