Chesapeake Energy stockholders have seen the stock slide 44 percent in the past six months. Chesapeake’s largest outside investor, Southeastern Asset Management, recently encouraged the board to sell the company (see this MDN story). But who would buy?
A wide-ranging article in yesterday’s Financial Times about Chesapeake tosses out the names of a few companies that would be the likely buyers if Chesapeake were sold.
The issue is whether a higher value will be realised by breaking the company up or accepting a bid for the group as a whole.
Chevron, which is the second-largest US oil company by market capitalisation but has been relatively slow in acquiring American shale reserves, would top the list of possible buyers. Total of France or BHP Billiton of Australia might also be interested.
Chesapeake’s principal assets are leases to produce oil and gas across a vast area of the US: roughly 15m acres, or twice the size of the state of Massachusetts.*
At a minimum, Chesapeake will sell off its assets in the Permian Basin (in west Texas) later this year. Who will buy that? FT speculates:
Al Walker, the new chief executive of Anadarko Petroleum, one of the leading US independent oil companies and a partner of Chesapeake’s in wells in the Permian region, said this week that it would “take a look” at those assets.
Mark Hanson, an analyst at Morningstar, says others such as Devon Energy, Apache and Occidental are all possible buyers, as is Chevron.*
Will Chesapeake go on the auction block? Will CEO Aubrey McClendon still have his job a year from now? Only time will tell. Read the rest of this interesting story by clicking the link below (may require a registration).
A “hat tip” and thank you to MDN reader Chris Acker for bringing the FT story to MDN’s attention. Thanks Chris!
*Financial Times (May 17, 2012) – Chesapeake’s rivals circle ahead of sales