Chesapeake Energy completes sale of Midstream assets for roughly $5 billion

Laurie Huffman Dix Communications Published:

Chesapeake Energy announced at the close of 2012 its plan to sell its Midstream assets is nearly complete.

Chesapeake Energy Corporation is selling a substantial majority of its remaining midstream assets to Access Midstream Partners, L.P. (NYSE:ACMP) for approximately $2.16 billion. These midstream assets are located primarily in the company’s Marcellus, Utica, Eagle Ford, Haynesville and Niobrara shale plays. The transaction with Access includes new market-based gathering and processing agreements covering various acreage dedication areas and it closed at the end of 2012.

Additionally, the company completed the sale of other midstream assets in Oklahoma and Texas, during the 2012 fourth quarter, for approximately $175 million.

Finally, Chesapeake anticipates a sale of its remaining midstream assets, including Mid-Continent and other assets, by the end of the first quarter of this year for approximately $425 million, bringing the total of current and anticipated midstream asset sales to $2.75 billion. Including the approximate $2.125 billion of midstream asset sales completed in the 2012 second and third quarters, the proceeds from the company’s midstream exit are anticipated to total approximately $4.875 billion.

Aubrey K. McClendon, Chesapeake’s CEO, stated, “We are pleased to announce further progress towards our asset sale goals for 2012-13. We look forward to completing additional asset sales and achieving our goals of strengthening our balance sheet, tightening our asset focus and increasing returns to shareholders.”

While the company has sold its Midstream assets, which is primarily installation of pipeline to be used to move the company’s anticipated gas and oil product, Chesapeake has also announced it owns its own drilling company, Nomac, which will save the company yet untold dollars when compared to the utilization of vendors.

Nomac is an affiliate of Chesapeake Energy Corporation, and virtually all of Nomac’s rigs are employed in unconventional shale resource plays, making Nomac one of the leading horizontal drillers. Over the last 10 years, Nomac has been the fastest-growing driller in the U.S., growing from five rigs in 2001 to 103 marketable rigs today. Nomac Services was formed in 2011 to provide integrated directional drilling, mud logging, geosteering and geotechnical services in both conventional and horizontal applications to maximize drilling efficiencies and lower costs.

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