08-06-2012
Chesapeake Energy announces plan to sell its midstream assets for more than $4B
Chesapeake Energy Corporation (NYSE:CHK) today announced plans to sell its midstream assets in three separate transactions for total expected cash proceeds of more than $4.0 billion. The midstream divestitures will also enable Chesapeake to reduce previously budgeted capital expenditures by approximately $3.0 billion over the next three years.
Chesapeake has agreed to sell its limited partner units and its general partner interests in Chesapeake Midstream Partners, L.P. (NYSE:CHKM) to Global Infrastructure Partners (GIP) for cash proceeds of $2.0 billion. Chesapeake expects to receive the first half of the proceeds on June 15, 2012 with a final closing and payment of the second half of the proceeds scheduled to occur by June 29, 2012. Chesapeake’s net book value for these assets as of March 31, 2012 was approximately $1.0 billion, and the company anticipates reporting a pretax gain on the sale of approximately $1.0 billion.
Chesapeake has also entered into a letter agreement with CHKM relating to the potential sale of certain Mid-Continent gathering and processing assets to CHKM and a separate letter agreement with GIP for the sale of the company’s interests in its wholly owned subsidiary, Chesapeake Midstream Development, L.P. (CMD) to GIP. Chesapeake expects total cash proceeds of more than $2.0 billion from these two transactions. The company’s net book value for these assets as of March 31, 2012 was approximately $1.4 billion. The GIP letter agreement includes a 45-day exclusive negotiation period and a 45-day extension period if a purchase price has been agreed to and progress is being made toward closing.
Aubrey K. McClendon, Chesapeake’s Chief Executive Officer, commented, “We have been working for the past few months to monetize our substantial and valuable midstream assets and are pleased to announce the sale of our investments in CHKM and a plan to sell our remaining midstream assets at attractive prices. These transactions will preserve the strategic relationships we have with CHKM and CMD as our primary midstream service providers and further strengthen the close relationship we have enjoyed with GIP since 2009. The proceeds of these transactions are an important part of our 2012 asset sales program that is on track to generate cash proceeds of $11.5-14.0 billion. Combined with the $2.6 billion of proceeds generated to date in 2012 from asset sales, this series of midstream transactions will bring our announced asset sales for the year up to approximately $6.6 billion. With our Permian asset sale, Mississippi Lime JV and other miscellaneous asset sales still to come in the second half of the year, we feel very good about our ability to meet our targeted range for 2012 asset sales. Importantly, the sale of CMD will also reduce previously planned capital expenditures by approximately $3.0 billion over the next three years. We greatly appreciate the hard work and dedication of our midstream employees as they have contributed to building one of the largest and highest quality midstream businesses in the industry. We look forward to the continued success of our midstream businesses under the leadership of its existing midstream management team and GIP’s new ownership.”
J. Mike Stice, CHKM’s Chief Executive Officer and CMD’s President, commented, “This is a new beginning for both CHKM and CMD and an opportunity to explore additional growth opportunities from a solid foundation provided by CHK as our anchor shipper. We have built a very talented and profitable organization, and I am very excited about the future of our independent midstream businesses. We believe our unique combination of contractual, organic and dropdown growth is unmatched in the midstream industry.”
Adebayo Ogunlesi, GIP’s Managing Partner, commented, “We have enjoyed a mutually beneficial partnership with Chesapeake over the past three years, and we look forward to continuing to provide Chesapeake with high quality midstream services while expanding these offerings to other producers requiring similar services. The management team and employees at CHKM have proven to be very capable and highly customer focused, and we are confident this business will continue to be successful and grow profitably in the years ahead.”
News Category:
-
Beyond processbook & PI vision: Exploring today’s industrial analytics tools
(Webinar) - In the Manufacturing 4.0 era, industrial organizations have more data at their fingertips than ever, offering the promise of higher production rates, more ...
04-06-2024
-
Sasol provides state of the art catalysts to INERATEC for the production of sustainable e-fuels
The catalysts will be used, among others, in the first large-scale industrial Power-to-Liquid (PtL) plant that INERATEC is currently building in Frankfurt, Germany, which ...
24-04-2024
-
Baker Hughes to supply 17 centrifugal compressors to Saudi Master Gas System project
Baker Hughes, an energy technology company, announced Tuesday that it has received an order by Worley, for and on behalf of Aramco, to supply gas technology equipment ...
23-04-2024
-
SABIC Fujian Petrochemicals select Phenol yechnology from KBR
KBR announced today it has been awarded a contract by SABIC Fujian Petrochemicals to license KBR's market-leading phenol technology in China. Under the terms of the ...
22-04-2024
-
Lummus Expands R&D capabilities to enhance innovation and water and wastewater technologies
Lummus Technology, a global provider of process technologies and value-driven energy solutions, announced the opening of its cutting-edge research and development (R&D) ...
17-04-2024
-
Clariant launches new CATOFIN® 312 propane dehydrogenation catalyst
Clariant, a sustainability-focused specialty chemical company, today announced the launch of CATOFIN 312, its latest propane dehydrogenation catalyst. The new catalyst ...
16-04-2024
-
Yokogawa and GridBeyond conclude investment and strategic partnership agreements
Yokogawa Electric Corporation and energy IT solutions provider GridBeyond of Ireland announce that they have concluded a strategic partnership agreement. Furthermore, ...
16-04-2024
-
Heraeus Precious Metals launches Circlear
Heraeus Precious Metals, a globally leading company in the precious metals industry and one of the largest recyclers of precious metals, has introduced its new offering ...
16-04-2024
-
EMA and JERA to cooperate on LNG procurement and supply chains
The Energy Market Authority and JERA Co Inc, have signed a Memorandum of Understanding to cooperate on mutually beneficial areas in liquefied natural gas procurement ...
16-04-2024
-
Hexagon and Dragos unveil technical partnership to strengthen industrial cybersecurity
Hexagon’s Asset Lifecycle Intelligence division today announced a strategic partnership with Dragos, a global leader in cybersecurity for operational technology (OT). ...
16-04-2024