Chesapeake Energy Reaches $2 Billion in Asset Sales for 2016

Shares of Chesapeake Energy Corp. (NYSE: CHK) rose to within 53 cents of the stock’s 52-week high Monday morning, following the announcement that the oil and gas producer is selling some $450 million in assets in one of two sales of properties the company holds in the Haynesville shale play of northern Louisiana. The buyer in the announced transaction was not named.

According to Chesapeake, Monday’s asset sale includes 78,000 net acres, of which the company considered 40,000 acres to be part of its core holdings. Also part of the deal are 250 wells producing about 30 million cubic feet of dry natural gas per day net to Chesapeake. The transaction is expected to close in the first quarter of next year.

The company also is marketing a second asset sale of 50,000 net acres in the Haynesville shale and expects to close a transaction on these assets in the first quarter of next year.

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Chesapeake CEO Doug Lawler said:

With this proposed transaction and our previously announced Devonian asset divestiture, the company has reached approximately $2.0 billion gross proceeds from divestitures either signed or closed in 2016, excluding certain volumetric production payment repurchase transactions. We expect this total to grow in the 2017 first quarter with our second proposed acreage sale in the Haynesville. With our long-term target of $2 to $3 billion in debt reduction, we will continue to look for opportunities to accelerate value through the sale of additional non-core assets in 2017 and beyond. Through the continual optimization of our asset base, reduction in our net leverage, improvement in liquidity and cash flow generating capabilities, we believe Chesapeake is well positioned for the years ahead.

Shares traded up more than 5% Monday morning, at $7.61 in a 52-week range of $1.50 to $8.15, and the one-year consensus price target on the stock is $7.44.

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