Chesapeake Energy Corp., Oklahoma City, (NYSE: CHK) plans to acquire a 32% equity interest in privately held Oklahoma City-based Chaparral Energy Inc. for $280 million.
Chesapeake will acquire 361.3 Chaparral shares at $775,000 each. Chaparral will receive $102 million of the funds and two shareholders, Oklahoma-based privately held general partnership Altoma Energy and Fischer Investments LLC, will receive $178 million.
Chaparral has properties in Oklahoma, Texas, Kansas, Arkansas and New Mexico, with total production of 82.8 million cu. ft. of gas per day. Proved reserves are 33.9 million bbl. of oil and 414.4 billion cu. ft. of gas for a total 617.9 billion cu. ft. of gas equivalent.
Chaparral has $475 million in debt and is planning an initial public offering.
Standard & Poor's reports this deleveraging event and others, including an eventual initial public offering, are factored into its rating of Chaparral (B+/Stable/-). However, Chaparral's aggressive spending levels may affect the benefits of potential debt-reduction plans, and the company's credit ratings would suffer if debt leverage increases, S&P reports.
In January, Chaparral filed for an IPO to raise up to $345 million. The proposed symbol on the NYSE is CPR.
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