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Chesapeake (CHK) CEO Doug Lawler says the $1B asset sale to Exco Resources (XCO) brings the...

Chesapeake (CHK) CEO Doug Lawler says the $1B asset sale to Exco Resources (XCO) brings the value of CHK's YTD asset sales to ~$3.6B; combined with CHK's anticipated operating cash flow, the sales will allow the company to fully fund its 2013 capital spending budget. The sale is part of CHK's plan to sell up to $7B in assets to raise cash. CHK +0.2% premarket.
Comments (10)
  • Will they have any assets left after 2014? It seems at the rate they are shedding assets that they will be left with nothing in a few years time.
    3 Jul 2013, 09:07 AM Reply Like
  • From an old IR presentation, CHK had about 490K acres in the play as of March. So this deal only gives up about 11% of their Eagle Ford acreage.

     

    http://seekingalpha.co...
    3 Jul 2013, 09:21 AM Reply Like
  • 3.6B now, so their 2013 capex shortfall is now covered. Asset sale will continue through the end of 2013 and they will hit the 7b mark..and exit 2013 with 9.5 of LT debt.

     

    In 2014, we will get the next round which should cover their 30% in FTI, their in-house proprietary RTC data center and hopefully, their services division. With gas comfortably above $6, look for them to strike a JV for some of their Utica dry gas assets as well. All going towards further paying down debt. Wouldn't surprise me to see a swap on CHKR either, again, they want to demystify CHK as much as possible.

     

    Unlike some analysts comments today who are using current price of natural gas when making 2014 assumptions, I tend to agree with CHK mgt. that they will be cash flow neutral come 2014. Drilling efficiencies, pad drilling as opposed to majority delineation and focus on core-of-core.
    3 Jul 2013, 02:42 PM Reply Like
  • CHK has 22,500 sq. miles of leaseholds, the largest reserves in the US. Somehow this "drop in the bucket" will not affect anything.

     

    Keep in mind that it also has identified two major plays but without the cash it will not go after them... But with analysts now having earnings up 52% next year ($2.10 area), there will opportunities down the road.

     

    Rather than worrying about CHK, what about the other companies that do NOT have 22,000 sq. miles. THEY have "issues."
    3 Jul 2013, 09:45 AM Reply Like
  • According to the 10K approximately 4200 sq miles expire this year, and 5300 square miles in 2014.

     

    So about half of CHK's fables reserves are going bye-bye because they do not have the money to drill them. And if they did, it would not be economically feasible with sub $6 gas.
    3 Jul 2013, 12:27 PM Reply Like
  • Hat tip to you, westelk, for reading the 10K. I found it so long and convoluted I had to give up.
    3 Jul 2013, 08:58 PM Reply Like
  • So looks like they got $18K+ per acre... Does anyone know what they paid for this acreage?
    3 Jul 2013, 12:58 PM Reply Like
  • Passed by CHK sub's rig yard yesterday, and they are still building rigs. Hard to figure out that strategy when they can't keep all they already own busy. (I know the new ones are more efficient. So are new cars, but if you can't afford a new one, you make do with the old one.)
    3 Jul 2013, 05:30 PM Reply Like
  • They need the highly efficient rigs if their strategy of pad drilling in the "core of core" will have any hopes of being cash flow neutral come 2014. Older, stacked rigs will allow them to rapidly deploy if/when Nat gas spikes up to more acceptable levels.

     

    The rest of their non-core assets gives them loads of optionality going forward. With the Indian SOV energy company sniffing around their assets, it wouldn't surprise me if they JV some of the non-core remaining Eagleford.

     

    Assets sales will remain on the agenda going forward but will now, seeing how the capex shortfall has been met for 2013, will take a backseat to getting the SEC and DOJ investigations brought to closure.
    3 Jul 2013, 09:40 PM Reply Like
  • As I've stated in the past, LNG exports are important but Mexico will also be a huge prover of Nat gas demand going forward...no DOE approval necessary...

     

    http://bit.ly/14R2NMF
    4 Jul 2013, 09:23 PM Reply Like
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