Chesapeake Agrees to Sell Utica Assets For $2B
OKLAHOMA CITY – Chesapeake Energy Corp. announced Thursday that it has entered into an agreement to sell its assets in Ohio’s Utica shale to Houston-based Encino Acquisition Partners for $2 billion.
Most of the wells owned by Chesapeake are concentrated in Carroll County, and the company has positions in Columbiana, Belmont, Harrison, Jefferson, Monroe and Noble counties.
Under the terms of the agreement, Chesapeake would sell all of its Utica leasehold acreage, estimated at about 933,000 acres. About 320,000 acres of that are in the commercial window for oil and gas development.
In addition, Chesapeake is to sell 920 operated and non-operated wells that collectively produced an average of 107,000 barrels of oil equivalent, or boe, per day in 2017.
Encino Acquisition Partners was formed in 2017 by the Canada Pension Plan Investment Board and Encino Energy to acquire and develope high-quality assets with an established base of production and a large, low-cost development inventory in the United States.
“With a multi-decade inventory of development projects held by 920 producing wells, the Utica acquisition provides an excellent start for EAP,” Hardy Murchison, CEO, said. “We are excited to work with Chesapeake’s employees in the Utica and all other stakeholders in the state of Ohio. With a strong balance sheet and a partner of [the Canada Pension Plan Board] stature, EAP is well positioned for continued growth through drilling and acquisitions.”
The transaction is expected to close in the fourth quarter.
“Today’s announcement makes Chesapeake a stronger and more competitive company,” said Doug Lawler, Chesapeake president and CEO, in his prepared statement. “By divesting our position in the Utica and using the proceeds for debt reduction, we will not only significantly improve the health of our balance sheet, but we will also accelerate progress toward our strategic goals of reducing debt, improving our margins, and reaching sustainable free cash flow neutrality.”
Chesapeake is credited for initiating exploration and production in the Utica shale. In 2010. The company, then under the direction of the late Aubrey McClendon, became the first major energy company to pursue horizontal drilling in the Utica in eastern Ohio.
Copyright 2023 The Business Journal, Youngstown, Ohio.