Chesapeake to sell Eagle Ford, Haynesville assets to Exco for $1 bn
04 July 2013
Chesapeake Energy Corp, the second-largest producer of natural gas in the US, yesterday said that it would sell oil and gas assets in the Eagle Ford and Haynesville shale fields to a unit of Exco Resources Inc for about $1 billion.
|Chesapeake - Energizing America|
In the Northern Eagle Ford Shale, Exco will acquire approximately 55,000 net acres in Zavala, Dimmit, La Salle and Frio counties, Texas, including approximately 120 producing wells with average net daily production of approximately 6,100 barrels of oil equivalent during May.
In the Haynesville Shale, Exco will acquire Chesapeake's operated and non-operated interests in approximately 9,600 net acres in Desoto and Caddo parishes, Louisiana.
Included in the transaction are 11 units operated by Chesapeake and 42 units operated by Exco. Average net daily production from the Haynesville properties to be sold was approximately 114 million cubic feet of natural gas equivalent during May.
Oklahoma-based Chesapeake, which has debt of $13.4 billion and a $3.5 billion shortfall to fund its operations this year, said that with yesterday's sale, it has sold or agreed to sell assets worth $3.6 billion this year.
Doug Lawler, Chesapeake's CEO, said, "Today's announcement brings our year-to-date asset sales signed or closed to approximately $3.6 billion, which, combined with forecasted net operating cash flow, enables Chesapeake to fully fund its 2013 capital expenditure budget. Additional asset sales contemplated for later this year may reduce long-term debt and further enhance our financial liquidity," he added.
In February 2012, Chesapeake said that it would raise around $12-billion by selling assets as part of its plan to reduce debt and fund its ongoing operations.
Natural gas prices recently have fallen to 10-year lows, making natural gas drilling operations unprofitable and Chesapeake has curtailed its drilling in some plays and shut production in some gas fields.
Chesapeake prospered during the shale gas boom in the US and went on an acquisition spree of unexplored shale gas fields.
The company has good natural gas shale acreages in the Barnett in Texas, and the Haynesville in Louisiana and Arkansas, which together make for almost half its total output.
Late last month, The Economic Times reported that India's state-owned Oil and Natural Gas Corporation (ONGC) is planning to buy Chesapeake's oil and gas assets. (See: ONGC eyes Chesapeake Energy's shale assets: report)