Chesapeake in Advanced Talks to Sell Midstream Unit for $4B

Bloomberg news service reported yesterday that Chesapeake Energy is in advanced talks to sell its midstream subsidiary, Chesapeake Midstream, to Global Infrastructure Partners for $4 billion. Chesapeake Midstream operates not only in Texas and Louisiana, but also in the Pennsylvania Marcellus Shale.

Chesapeake Energy Corp. (CHK) is in advanced talks to sell pipelines to Global Infrastructure Partners for more than $4 billion, said two people with knowledge of the matter.

The energy explorer, facing a $22 billion cash-flow shortfall after natural-gas prices touched a decade low, is discussing selling its entire stake in Chesapeake Midstream Partners LP (CHKM) and other pipeline assets, said the people, who spoke on condition of anonymity because the talks are private. The negotiations may lead to a deal within days and could also fall apart, the people said.

Chesapeake Midstream operates pipeline networks in Texas, Louisiana, Pennsylvania and other gas-producing states, and had 3,953 miles (6,360 kilometers) of pipe as of March 31. The partnership gets about 75 percent of its revenue from Oklahoma City-based Chesapeake Energy, with the remainder from energy producers such as France’s Total SA (FP) and Norwegian oil company Statoil ASA. (STL) Chesapeake Energy also owned 1,950 miles of pipelines separate from the Midstream partnership as of Dec. 31.*

Chesapeake’s stock price jumped up over 6% on the news of the a possible sale.

*Bloomberg (Jun 6, 2012) – Chesapeake Is Said To Discuss $4 Billion Pipeline Sale