Chesapeake Energy Hands Over Keys to Barnett Shale to Someone Else

hand over keysChesapeake Energy had some big news on Tuesday. The company is selling off its Barnett Shale assets, and in the process lightening the company’s future debt load considerably. This is a bit complicated, but we’ll try our best to break it down. Chesapeake announced Tuesday they are handing over the keys to 215,000 Barnett Shale acres (some developed, some not), along with 2,800 operational wells–giving it away to Saddle Barnett Resources LLC, a Dallas-based firm backed by First Reserve Corp. In return, Saddle Barnett is taking on renegotiated midstream contracts with Williams. The net result for Chesapeake is that the deal will “incinerate” about $1.9 billion in payments they would have had to make to Williams and others. As we said, it considerably lightens the stress on Chesapeake’s balance sheet. Williams is trying to put a happy face on the fact they will get less money after the deal than before. But then again, a solvent Chesapeake (and/or Saddle Barnett) paying something less is better than a bankrupt Chesapeake paying nothing. Why cover this story on MDN, a Marcellus/Utica focused website? Because if Chesapeake did it in the Barnett in Texas, they (or someone else) may try to do something similar in the Marcellus/Utica…

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