Total Proceeds from Eagle Ford Exit to Top
$3.5 billion
OKLAHOMA CITY, Aug. 14, 2023 /PRNewswire/ -- Chesapeake Energy
Corporation (NASDAQ:CHK) today announced that it has executed an
agreement to sell its remaining Eagle Ford assets to SilverBow
Resources, Inc. (NYSE:SBOW) for $700
million, bringing the total proceeds from its Eagle Ford
exit to more than $3.5 billion.
"We are pleased to have successfully completed the exit of our
Eagle Ford asset, allowing us to focus our capital and team on the
premium rock, returns and runway of our Marcellus and Haynesville
positions," said Chesapeake
President and Chief Executive Officer Nick Dell'Osso. "I want to thank our employees
who built a culture of safety and excellence, which made this a
powerful and attractive asset."
Chesapeake has agreed to sell approximately 42,000 net acres and
approximately 540 wells in the condensate rich portion of its Eagle
Ford asset located in Dimmit and Webb counties, along with related
property, plant and equipment. During the second quarter of 2023,
average net daily production from these properties was
approximately 29,000 barrels of oil equivalent (boe) (60% liquid)
which generated approximately $50
million of EBITDAX. As of December
31, 2022, net proved reserves associated with these
properties were approximately 124 million barrels of oil equivalent
(mmboe).
Chesapeake expects the transaction will close, subject to
certain regulatory approvals and consents, in 2023, with an
effective transaction date of February 1,
2023. The company will receive $650
million upon closing, subject to customary adjustments, with
the final $50 million installment
paid one year from the closing date. SilverBow has also agreed
to pay Chesapeake an additional contingent payment of $25 million should oil prices average between
$75 and $80 per barrel WTI NYMEX or $50 million should WTI NYMEX prices average above
$80 during the year following the
close of the transaction, which could increase total proceeds of
the deal to $750
million. Chesapeake anticipates the proceeds will be
available to further strengthen its balance sheet and for its share
repurchase program.
RBC Capital Markets, Citi, and Evercore are serving as financial
advisors, Haynes and Boone, LLP is serving as legal advisor, and
DrivePath Advisors is serving as communications advisor to
Chesapeake.
Headquartered in Oklahoma
City, Chesapeake Energy Corporation is powered by dedicated
and innovative employees who are focused on discovering and
responsibly developing leading positions in top U.S. oil and gas
plays. With a goal to achieve net zero GHG emissions (Scope 1 and
2) by 2035, Chesapeake is committed to safely answering the call
for affordable, reliable, lower carbon
energy.
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.
They include statements that give our current expectations,
management's outlook guidance or forecasts of future events,
expected natural gas and oil growth trajectory, projected cash flow
and liquidity, our ability to enhance our cash flow and financial
flexibility, dividend plans, future production and commodity mix,
plans and objectives for future operations, ESG initiatives, the
ability of our employees, portfolio strength and operational
leadership to create long-term value, and the assumptions on which
such statements are based. Although we believe the expectations and
forecasts reflected in our forward-looking statements are
reasonable, they are inherently subject to numerous risks and
uncertainties, most of which are difficult to predict and many of
which are beyond our control. No assurance can be given that such
forward-looking statements will be correct or achieved or that the
assumptions are accurate or will not change over time.
Factors that could cause actual results to differ materially
from expected results include those described under "Risk Factors"
in Item 1A of our annual report on Form 10-K and any updates to
those factors set forth in Chesapeake's subsequent quarterly
reports on Form 10-Q or current reports on Form 8-K (available at
http://www.chk.com/investors/sec-filings). These risk factors
include: the risk that we may not be able to successfully close the
divestiture transaction with SilverBow; the volatility of oil,
natural gas and NGL prices; the limitations our level of
indebtedness may have on our financial flexibility; our inability
to access the capital markets on favorable terms; the availability
of cash flows from operations and other funds to fund cash
dividends, to finance reserve replacement costs or satisfy our debt
obligations; write-downs of our oil and natural gas asset carrying
values due to low commodity prices; our ability to replace reserves
and sustain production; uncertainties inherent in estimating
quantities of oil, natural gas 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; commodity derivative
activities resulting in lower prices realized on oil, natural gas
and NGL sales; the need to secure derivative liabilities and the
inability of counterparties to satisfy their obligations; adverse
developments or losses from pending or future litigation and
regulatory proceedings, including royalty claims; charges incurred
in response to market conditions; drilling and operating risks and
resulting liabilities; effects of environmental protection laws and
regulations on our business; legislative and regulatory initiatives
further regulating hydraulic fracturing; our need to secure
adequate supplies of water for our drilling operations and to
dispose of or recycle the water used; impacts of potential
legislative and regulatory actions addressing climate change;
federal and state tax proposals affecting our industry; potential
OTC derivatives regulation limiting our ability to hedge against
commodity price fluctuations; competition in the oil and gas
exploration and production industry; a deterioration in general
economic, business or industry conditions; negative public
perceptions of our industry; limited control over properties we do
not operate; pipeline and gathering system capacity constraints and
transportation interruptions; terrorist activities and
cyber-attacks adversely impacting our operations; and an
interruption in operations at our headquarters due to a
catastrophic event.
In addition, disclosures concerning the estimated
contribution of derivative contracts to our future results of
operations are based upon market information as of a specific date.
These market prices are subject to significant volatility. Our
production forecasts are also dependent upon many assumptions,
including estimates of production decline rates from existing wells
and the outcome of future drilling activity. We caution you not to
place undue reliance on our forward-looking statements that speak
only as of the date of this news release, and we undertake no
obligation to update any of the information provided in this news
release, except as required by applicable law. In addition, this
news release contains time-sensitive information that reflects
management's best judgment only as of the date of this news
release.
INVESTOR
CONTACT:
|
MEDIA
CONTACT:
|
Chris Ayres
|
Brooke Coe
|
(405)
935-8870
|
(405)
935-8878
|
ir@chk.com
|
media@chk.com
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/chesapeake-energy-corporation-announces-sale-of-final-eagle-ford-package-for-700-million-301899448.html
SOURCE Chesapeake Energy Corporation