Oklahoma City-based Chesapeake Energy Corporation said Feb. 21 it will sell all of the company’s interests in about 487,000 net acres of leasehold and producing natural gas properties in the Fayetteville Shale play in central Arkansas to BHP Billiton Petroleum, a wholly owned subsidiary of BHP Billiton Limited, for $4.75 billion in cash.
The transaction includes existing net production of approximately 415 million cubic feet of natural gas equivalent per day and midstream assets with approximately 420 miles of pipeline. As part of the transaction, Chesapeake has agreed to provide essential services for up to one year for BHP Billiton’s Fayetteville properties for an agreed-upon fee. The deal is expected to close in the first half of 2011.
Chesapeake CEO Aubrey K. McClendon commented, “We are pleased to announce the sale of our Fayetteville Shale assets to BHP Billiton and quickly achieve substantial progress in implementing the debt reduction targets of our previously announced 25/25 Plan. BHP Billiton is a premier global company and we look forward to working with BHP Billiton’s management to ensure a smooth transition of operations.”
“The Fayetteville shale is a world-class onshore natural gas resource,” said J. Michael Yeager, CEO of BHP Billiton Petroleum. “The purchase of this long-life field immediately adds over 10 trillion cubic feet of gas resources to our portfolio and is consistent with our strategy of investing in large, low cost assets with significant volume growth for future development.”
Jefferies & Company Inc. advised Chesapeake on the transaction.
