Chesapeake Selling Assets to Concentrate on OH/Wet Gas

Under pressure from low commodity prices for natural gas causing a cash deficit for drilling, Chesapeake Energy is looking to sell off some of its oil and gas fields in Texas, Mexico and Oklahoma so it can continue to concentrate on drilling in eastern Ohio’s Utica Shale and other “wet gas” areas of the country.

Chesapeake Energy Corp., the second-biggest U.S. natural gas producer with operations in Ohio, is seeking as much as $12 billion from asset sales and joint ventures to cope with a cash crunch amid rising debt and tumbling gas prices.

The company expects to get $10 billion to $12 billion from transactions such as the potential sale of all of its oil and gas fields in the Permian Basin of Texas and New Mexico, Chesapeake said Monday.

The company did not address Ohio, but it has said it intends to pursue drilling in Ohio’s Utica shale because the formation also provides lucrative wet gases, such as propane, ethane and butane, not just natural gas.

The Oklahoma City-based company expects to receive about $2 billion in the next 60 days from two transactions involving advance sales of output in Texas and Oklahoma.

Chesapeake said that later in the year, it could raise as much as $8 billion from transactions in the Mississippi Lime and Permian Basin, where it also is seeking joint-venture partners. Chesapeake holds the rights to drill on 1.8 million net acres in the Mississippi Lime, which spans northern Oklahoma and southern Kansas.

For the Permian Basin, where Chesapeake holds 1.5 million net acres, the company said it might consider selling all of the assets “if it receives a compelling offer.”*

*The Akron Beacon Journal (Feb 14, 2012) – Chesapeake Energy eyes $12 billion in asset sales