Natural gas provider, Chesapeake Energy Corporation (CHK) has entered into a definitive agreement to sell its assets in the Northern Eagle Ford Shale and Haynesville Shale to EXCO Operating Company, LP a subsidiary of EXCO Resources, Inc. (XCO).
Chesapeake would dispose the assets for approximately $1 billion, of which approximately 90% will be received upon closing. Payment of the remaining proceeds is subject to customary post-closing contingencies. The transaction is expected to close in the third quarter of the ongoing fiscal.
The Northern Eagle Ford Shale assets to be sold comprise approximately 55,000 net acres in Zavala, Dimmit, La Salle and Frio counties, Texas. The area includes approximately 120 producing wells with average net daily production of approximately 6,100 barrels of oil equivalent during the month of May.
In the Haynesville Shale, the company will dispose approximately 9,600 net acres in Desoto and Caddo parishes, Louisiana. Included in the transaction are 11 units operated by Chesapeake and 42 units operated by EXCO. Average net daily production from the Haynesville properties to be sold was approximately 114 million cubic feet of natural gas equivalent during May.
Chesapeake Energy is an independent oil and gas company engaged in the development, exploration, acquisition and production of onshore natural gas and oil reserves. The company owns interests in producing oil and gas wells concentrated in three primary operating areas: the Mid-Continent region of Oklahoma, western Arkansas, southwestern Kansas and the Texas Panhandle; the Gulf Coast region; and the Helmet area of northeastern British Columbia. Chesapeake is the second largest U.S. natural gas producer after ExxonMobil Corporation (XOM).
The company currently retains a Zacks Rank #2 (Buy), implying that it is expected to perform better than the broader U.S. equity market over the next 1 to 3 months. Other stocks that are also expected to outperform the equity market include Zacks Ranked #1 (Strong Buy) Oasis Petroleum Inc. (OAS).
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