Chesapeake reports ‘tremendous interest’ in its Eagle Ford assets

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(Bloomberg) – Chesapeake Energy Corp. said its Eagle Ford shale assets have generated “tremendous interest” as the U.S. company pursues a sale to become a pure natural gas producer.


The company has responded to requests for data from potential buyers, and the process could result in the sale of all assets to a single buyer or the splitting and sale piecemeal to multiple buyers, the director said on Tuesday. General Nick Dell’Osso in an interview in New York. .

Chesapeake, which was co-founded by Aubrey McClendon and has become one of America’s best-known shale operators, has announced plans to sale last month’s transactions. The planned divestment, which comes less than two years after the company emerged from bankruptcy, would further undo some of the acquisitions made by previous management and mark a pullback from oil.

“When we think of the Eagle Ford today, it’s a great asset that generates a lot of free cash flow,” Dell’Osso said. “So it’s a process that we can be very patient about how we approach a sale. We think about how our shareholders will benefit from the simpler strategy that our company will have.

Dell’Osso said natural gas has a longer trail as a fuel than crude oil amid the current global energy crisis and the transition to cleaner fuels. He said proceeds from Eagle Ford’s assets would be returned to shareholders through dividends and share buybacks.

Once the divestiture is completed, Chesapeake will become a 100% dry gas producer for the first time in its history, with leases in Pennsylvania’s Marcellus Shale and Louisiana’s Haynesville Shale, the two largest gas fields in the nation. This process has already been underway since its emergence from Chapter 11, with Chesapeake using new capital to to buy Chief E&D Holdings LP focused on Marcellus earlier this year and player Haynesville Vine Energy Inc. in 2021.

Dell’Osso spoke just before EQT Corp., the largest US gas producer, confirmed its $5.2 billion acquisition of a tightly held rival in the Marcellus. The Chesapeake CEO said his company would only look to make acquisitions in the Marcellus and Haynesville.

“When there are things to sell in basins where we have a strategic position and where we are a big operator, we will be careful,” he said.

Chesapeake stock has gained 53% this year, boosted by natural gas prices rising to a 14-year high amid global pressure exacerbated by Russia’s invasion of Ukraine. U.S. benchmark Henry Hub price fell 2.6% to $7.94 per million British thermal units at 10:37 a.m. in New York on Wednesday, 74% higher than a year ago.

But despite such high prices, and even though many previous hedging obligations are set to disappear from its books in the first quarter of 2023, Dell’Osso said Chesapeake will continue to hedge half of its gas production to secure its commitments. expenses. The company will use a “fairly wide collar structure,” he said.

As natural gas in Europe and Asia trades for up to eight times more expensive, Dell’Osso said Chesapeake is looking to gain exposure to international prices, possibly through U.S. exports of liquefied natural gas.

“A company like ours can benefit from price diversification,” Dell’Osso said. “That would mean we are open to looking for contracts that are priced on a TTF or JKM or international index,” he said, referring to price benchmarks in Europe and Asia respectively.

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