Thursday, September 13, 2012

Chesapeake Energy Corporation (NYSE:CHK) selling some assets for $6.9Billion- a quick view

Chesapeake Energy Corporation(NYSE:CHK) has decided to sell its large portion of land and construction in West Texas against a price of 7 billion in order to arrange finance for its new focus of business like from prior focus on natural gas to present concern for oil drilling.

The assets and property in the Permian basin area in oil and about natural gas is being sold  is a deal involving a series to Chevron Corp, and Royal Dutch Shell PLC and in a prior declared sale to the affiliates of EnerVest Ltd. Chesapeake had recently acquired plenty of lands and other statutory assets and these havoc purchase has created some fund deficiency for the company.

Once upon a time natural gas was a profit making sector and what was the loan acquired by Chesapeake was easily repayable. But with increased production, now the price and profit in the natural gas sector has reduced quite a lot so is about profit. Therefore paying the debt has become quite an intricate factor for Chesapeake as earning for this company has reduced significantly which has influenced its debt repayment system.

Market analysts has said that Chesapeake has received good price for their property of Permian Basin land from Chevron and Shell; the accumulated amount was less than $4 million although Chesapeake expected to fetch $5 billion to repay the debt. In this situation either the company has to sale its some more assets or has to stop their oil field drilling operation somewhere under their projects area.

Chesapeake shares have reduced to 21 cents t the price of $19.89, which ensures a drop of 1%. Chevron shares have increased by 30 cents amounting to $114.48, while Shell stock value was fixed at flat rate of $71.73 after the deal.

Chesapeake has decided to sale its major portion of pipeline and storage resources to Global Infrastructure Partners at a price of $2.7 billion. The deal includes congregation and dispensation systems in the Eagle Ford, Utica, Haynesville and Powder River Basin Niobrara shale plays.

Despite these deals Chesapeake has kept reserved approximately 470,000 net acres of undeveloped leasehold property in the Midland Basin either to sale or for further development. 

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