US-based oil and gas company Chesapeake Energy Corp. (NASDAQ: CHK) hassigned definitive agreements to acquire US-based oil and natural gas exploration and production company Chief E and D Holdings, LP and associated non-operated interests held by affiliates of Tug Hill, Inc, for USD 2bn in cash and approximately 9.44m common shares.
Chief and Tug Hill hold high quality producing assets and an inventory of premium drilling locations in the prolific Marcellus Shale in Northeast Pennsylvania.
The cash portion of the transaction will be financed with cash on hand and the use of the company's revolving credit facility.
The transaction, which is subject to customary closing conditions, including certain regulatory approvals, is expected to close by the end of 1Q22.
Chesapeake also signed an agreement to sell its Powder River Basin assets in Wyoming to Continental Resources, Inc. (NYSE: CLR) for approximately USD 450m in cash.
The transaction, which is subject to certain customary closing conditions, is expected to close in 1Q22.
At closing, net proceeds from the sale will go toward the purchase price of the Chief acquisition.
Upon closing of the transactions, Chesapeake plans to operate two rigs on the acquired properties during 2022, resulting in a total of 9 11 gas-focused rigs and 2 3 oil-focused rigs.
The company will maintain a disciplined capital reinvestment strategy, anticipating a 2022 reinvestment rate of approximately 47%.
At current commodity strip prices, this preliminary capital program is anticipated to generate USD 3.4 - USD 3.6bn in total adjusted EBITDAX.
Headquartered in Oklahoma City, Chesapeake Energy Corp.'s (NASDAQ: CHK) operations are focused on discovering and developing its resource base of unconventional oil and natural gas assets onshore in the United States.
Chief E and D Holdings, LP is a privately held, independent, oil and natural gas exploration and production company.
Tug Hill, Inc. is a privately held, independent oil and gas exploration company focused on drilling and producing oil and natural gas in the continental United States.
RBC Capital Markets is serving as financial advisor (Chief acquisition), Shearman and Sterling LLP is serving as legal advisor, and DrivePath Advisors is serving as communications advisor to Chesapeake.
J.P. Morgan Securities LLC is serving as financial advisor and Gibson, Dunn and Crutcher LLP is serving as legal advisor to Chief and Tug Hill. Akin Gump Strauss Hauer and Feld LLP is serving as legal advisor to Tug Hill and its affiliates.