Chesapeake Slips In Another Sale, Divesting Marcellus Acreage For $500 Million
Bought an estimated 75,000 Marcellus acres with 130,000 Mcf/d of production and 40 operated wells.
Chesapeake Energy (NYSE: CHK) has parted with an estimated 75,000 Marcellus acres for $500 million, a continuation of the company’s noncore divestiture program.
Chief Oil & Gas of Dallas, with its working interest partners Enerplus and Tug Hill, said on Dec. 17 that it had acquired MKR Holdings LLC from Chesapeake Appalachia LLC, a subsidiary of Chesapeake.
The assets produce about 130,000 cubic feet per day (Mcf/d) and about 40 operated wells are waiting on completion or pipeline. Some acreage is undeveloped. The acquisition includes leasehold in Bradford, Lycoming, Sullivan, Susquehanna and Wyoming counties in Pennsylvania.
Chesapeake had zero rigs on the properties. While Chief did not provide acreage details, recent information from Chief suggests that about 75,000 gross acres were acquired, said David Tameron, senior analyst for Wells Fargo Securities.
In the Marcellus, the company’s third quarter net production was 825 MMcf/d. The company has contracted pipeline capacity of more than 550 MMcf/d in fourth-quarter 2013.
Chesapeake previously said it anticipated fourth-quarter divestitures of $600 million. As of Sept. 30, Chesapeake had completed asset sales of about $3.6 billion in 2013.
The news “is another positive step for the developing CHK story,” Tameron said.
Chief Oil & Gas had existing working interest in many of the wells and will be increasing its ownership percentage in them and future wells due to the acquisition. Chief Oil & Gas currently operates more than 100 wells in the Marcellus shale and owns about 210,000 gross leasehold acres.
“With this acquisition we have significantly expanded our operational footprint in the northeastern Pennsylvania region,” stated Sam Fragale, senior vice president of operations for Chief Oil & Gas. “This acquisition comes with existing cash flow from current production, increases our working interest in wells we currently operate and provides additional development opportunities in a great area.”
This asset purchase is another stage in the multi-phased growth plan for Chief Oil & Gas in the region.
Chief Oil & Gas is a privately held exploration and development company that operates primarily in the Marcellus Shale in northeastern Pennsylvania and holds interests in oil & gas fields throughout the United States.
Tug Hill is a diversified investment firm based in Fort Worth, Texas. Enerplus is a North American energy producer with a diversified asset base of high-quality, low-decline oil and gas assets.