Chesapeake Energy Corporation (NYSE: CHK), today, announced that is planning to sell its pipeline and related assets to Global Infrastructure in three separate transactions for over $4 billion. CHK is selling its pipeline assets in order to plug a funding shortfall.
Chesapeake has been under pressure to sell some of its assets and reduce spending to lower its debt burden amid falling natural gas prices. CHK has also come under pressure due to corporate governance issues.
The second-largest U.S. natural gas producer plans to sell its limited partner units and general partner interests in Chesapeake Midstream Partners LP to Global Infrastructure Partners for $2 billion.
Separately, CHK also entered into a letter agreement with Global Infrastructure for sale of its interests in Chesapeake Midstream Development LP, which is CHK’s wholly-owned subsidiary. The agreement has an exclusive 45-day negotiating period, with an option to extend discussions for an additional 45 days if needed.
CHK also signed an agreement with Chesapeake Midstream for potential sale of some Mid-Continent gathering and processing assets.
The company expects to fetch over $2 billion from these two transactions.
Aubrey K. McClendon, CEO of Chesapeake, said that CHK has been working for the past few months to monetize its substantial and valuable midstream assets and is pleased to announce the sale of its investments in Chesapeake Midstream Partners and a plan to sell its remaining midstream assets at attractive prices. McClendon said that the transactions will preserve the strategic relationships CHK has with Chesapeake Midstream and Chesapeake Midstream Development as its primary midstream service providers and further strengthen the company’s close relationship it has enjoyed with Global Infrastructure since 2009.
CHK shares are marginally higher in early trading today. At last check, the stock was trading 0.06% higher at $17.86.
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