Chesapeake Energy Corp (NYSE:CHK) is on an asset-selling spree after finding itself in the midst of a host of problems such as a $10 billion funding deficit, plunging natural gas prices, irate shareholders, and media reports of scandals swirling around CEO Aubrey McClendon relating to corporate governance.
The company intends to sell pipeline and other related assets to Global Infrastructure Partners for about $4 billion. Of this, $2 billion would come from the sale of its limited partner units and general partner interests in Chesapeake Midstream Partners LP, giving GIP 69 percent of the limited partner and 100 percent of the general partner units.
Chesapeake may also sell GIP its wholly-owned subsidiary Chesapeake Midstream Development LP. There’s a 45-day negotiating period and an option to extend talks for another 45 days in the event a price is agreed. Certain mid-continent gathering and processing assets would also be sold to GIP. These deals would likely realize another $2 billion for Chesapeake.
The assets have been sold at a substantial premium to book values, though the company is not out of the woods just yet, according to analysts. As per the company, it is likely to reap about $11.5 billion to $14 billion from asset sales this year – and these could include its 1.5 million acres of lease holdings in the oil-rich Permian basin and about 337,000 acres in Ohio.