12 September 2012 16:59 [Source: ICIS news]
LONDON(ICIS)--Chesapeake Energy has announced the sale of a raft of midstream assets and Texas-based shale gas interests for a total of $6.9bn, the US natural gas producer said on Wednesday.
Key buyers in the sale include oil companies Royal Dutch Shell, Chevron and EnerVest, and private equity firm Global Infrastructure Partners (GIP). A significant portion of the proceeds are to be used to pay off $4bn in term loans coming due in the fourth quarter of 2012.
The shale assets being sold are all located in the Permian Basin in Texas and extending across the border into New Mexico. They are being acquired by Shell, Chevron and EnerVest for a total of $3.3bn.
Chevron and EnerVest declined to disclose transaction values, but Shell paid $1.93bn of a total for 618,000 acres in the southern Delaware portion of the basin, currently producing 26,000 bbl of oil equivalent per day. The shale play has “significant” potential for growth, Shell said on Wednesday.
The acreage being acquired by Chevron is in the northern Delaware region of Permian, while EnerVest is acquiring assets in the Midland portion. The assets sold in the three deals represent 5.7% of the Chesapeake’s production last quarter, according to the company, which is retaining a 470,000 acre interest in the region
All three transactions are expected to close within 30 days, with Chesapeake to receive 87% of the proceeds in cash at time of the close. Goldman Sachs and Jefferies & Company are advising on the sales.
Aubrey McClendon, CEO of Chesapeake, said: “These transactions are significant steps in the transformation of our company’s asset base to a more balanced portfolio among oil, natural gas liquids and natural gas resources.”
The firm is also to raise $3bn from a series of midstream asset sales, which are all expected to close in the third and fourth quarters of the year.
The key buyer is Global Infrastructure Partners, which is to acquire most of the assets owned by pipeline infrastructure subsidiary Chesapeake Midstream Development for $2.7bn. The assets being sold include systems in the Eagle Ford, Utica, Haynesville and Powder River Basin Niobrara shale plays.
Chesapeake has also sold or entered into purchase agreements for midstream assets with another two buyers, and is expecting to close a third. If all three deals are finalised, their collective value will be around $300m.
Also in the process of being sold are various non-core leasehold assets, predominantly located in the Utica Shale, in the Appalachian region of the US. Those non-core leasehold asset sales are to fetch a total of $600m.
Prices are currently weak for North American natural gas, with South African energy major Sasol attributing impairments in its Canadian shale assets, worth $118m, to a drop in overall operating profits in the second half of the year.
($1 = €0.78)
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
Asian Chemical Connections