Chesapeake Energy to spin off oilfield services division

Chesapeake Energy Corp, the second-largest producer of natural gas in the US, yesterday said that it would spin off its oilfield services division, after finding it difficult to get a good offer for the unit that generated revenues of $2.2 billion in 2013.

The announcement comes less than a month after the Oklahoma City-based company said that it was looking at strategic alternatives for its Chesapeake Oilfield Services (COS) unit, including an outright sale or a spin-off to its shareholders. (See: Chesapeake Energy explores strategic options for oilfield services unit)

COS, which operates through Chesapeake's wholly-owned subsidiary, Chesapeake Oilfield Operating, LLC, provides drilling, hydraulic fracturing, oilfield rentals, rig relocation, and fluid handling and disposal services.

Led by CEO, Jerry Winchester, former head of oilfield services company Boots & Coots, COS owns or leases 115 land drilling rigs, including 10 PeakeRigs that utilise advanced electronic drilling technology.

It also owns nine hydraulic fracturing fleets, a diversified oilfield rentals business, an oilfield trucking fleet comprising of 260 rig relocation trucks. 67 cranes and forklifts used to move drilling rigs and other heavy equipment, and 246 fluid hauling trucks.

Chesapeake Oilfield reported a loss of $19.7 million in 2013, compared with a profit of $69.6 million a year earlier although revenues rose by 16 per cent to about $2.2 billion.

The division accounted for 5 per cent of Chesapeake Energy's total revenue of $17.51 billion in 2013.

In early 2012, Chesapeake, in which activist investor Carl Icahn holds an interest, had said that it would raise around $12-billion by selling assets as part of its 2012 financial plan to reduce debt and fund its ongoing operations. (See: Chesapeake Energy announces $12-bn asset sale to reduce debt)

It has since sold several shale gas and pipeline assets in the US to companies like China's Sinopec, BHP Billiton, EXCO Resources, and Access Midstream Partners LP.