Chesapeake Energy Corporation (NYSE:CHK) today announced the closing of
its asset sale to Southwestern Energy Company (NYSE:SWN) and initiatives
to further enhance shareholder value.
Chesapeake closed the previously announced sale of its assets in the
Southern Marcellus Shale and a portion of the Eastern Utica Shale to
Southwestern for net proceeds of $4.975 billion. The $400 million
adjustment to the previously reported $5.375 billion sale price is
attributable to a settlement for various items, including Southwestern’s
waiver of any future claims related to title defects and environmental
liabilities. The properties sold to Southwestern consist of
approximately 413,000 net acres and approximately 1,500 wells located in
northern West Virginia and southern Pennsylvania, along with related
property, plant and equipment. Net production of the divested properties
in mid-December was approximately 57,000 barrels of oil equivalent (boe)
per day. This represents approximately 7% of a new company record for
total production that was achieved last week of 770,000 boe per day.
Doug Lawler, Chesapeake’s Chief Executive Officer, commented, “This
transaction marks another significant event in Chesapeake’s
transformation and solidifies our strong financial position. With the
closing of this transaction and the available borrowing capacity under
our unsecured revolving credit facility, Chesapeake now has a liquidity
position of approximately $9 billion, putting Chesapeake in an
advantageous position to enhance shareholder value in this volatile
commodity price market. Consistent with our financial strength and our
focus on enhancing shareholder value, Chesapeake’s Board of Directors
has authorized a $1 billion common stock repurchase program. Further,
building on our outstanding operational momentum of 2014, we will be
focused on additional strategic growth opportunities to enhance our
asset portfolio and continue to improve our ability to deliver top
quartile growth metrics and shareholder returns.”
Chesapeake Energy Corporation (NYSE:CHK) is the second-largest
producer of natural gas and the 11th largest producer of oil and natural
gas liquids in the U.S. Headquartered in Oklahoma City,
the company's operations are focused on discovering and developing its
large and geographically diverse resource base of unconventional natural
gas and oil assets onshore in the U.S. The company also
owns substantial marketing and compression businesses. Further
information is available at www.chk.com
where Chesapeake routinely posts announcements, updates, events,
investor information, presentations and news releases.
This news release includes “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. Forward-looking statements are
statements other than statements of historical fact that give our
current expectations or forecasts of future events. They include, but
are not limited to, the effect of the asset sale and use of proceeds,
the common stock repurchase program and other strategic growth
alternatives on the Company’s efforts to enhance current and long-term
shareholder value, deliver top quartile growth metrics and shareholder
returns. The company’s ability to execute on the stock
repurchase program depends upon many factors, including the price of the
common stock, the availability of other alternatives and market
conditions. Although we believe the expectations and forecasts reflected
in the forward-looking statements are reasonable, we can give no
assurance they will prove to have been correct. They can be affected by
inaccurate assumptions or by known or unknown risks and uncertainties.
Chesapeake does not intend to update any forward looking statements.
Factors that could cause actual results to differ materially from
expected results include those described under “Risk Factors” in Item 1A
of our 2013 Annual Report on Form 10-K, as filed with the U.S.
Securities and Exchange Commission on February 27, 2014. These risk
factors include: the volatility of natural gas, oil and NGL prices; the
limitations our level of indebtedness may have on our financial
flexibility; declines in the prices of natural gas and oil potentially
resulting in a write-down of our asset carrying values; the availability
of capital on an economic basis, including through planned asset sales,
to fund reserve replacement costs; our ability to replace reserves and
sustain production; uncertainties inherent in estimating quantities of
natural gas, oil and NGL reserves and projecting future rates of
production and the amount and timing of development expenditures; our
ability to generate profits or achieve targeted results in drilling and
well operations; leasehold terms expiring before production can be
established; hedging activities resulting in lower prices realized on
natural gas, oil and NGL sales; the need to secure hedging liabilities
and the inability of hedging counterparties to satisfy their
obligations; drilling and operating risks, including potential
environmental liabilities; legislative and regulatory changes adversely
affecting our industry and our business, including initiatives related
to hydraulic fracturing, air emissions and endangered species; a
deterioration in general economic, business or industry conditions
having a material adverse effect on our results of operations, liquidity
and financial condition; oilfield services shortages, gathering system
and transportation capacity constraints and various transportation
interruptions that could adversely affect our revenues and cash flow;
adverse developments and losses in connection with pending or future
litigation and regulatory investigations; cyber-attacks adversely
impacting our operations; and an interruption at our headquarters that
adversely affects our business.
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