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Chesapeake Agrees to Second Planned Haynesville Sale For $465M

Chesapeake Energy Corp. said Tuesday that it has agreed to the second of two planned divestitures of noncore assets in the Haynesville Shale, selling 41,500 net acres to an affiliate of Dallas-based Covey Park Energy LLC for $465 million.

The announcement comes after the Oklahoma City-based Chesapeake agreed earlier this month to sell 78,000 acres of its position in the gassy North Louisiana play for $450 million. The exploration and production company said at the time that a second deal was in the works and that both transactions are expected to close in 1Q2017.

The second Haynesville sale includes 326 operated and non-operated wells producing roughly 50 MMcf/d net to Chesapeake, the company said Tuesday.

CEO Doug Lawler said the asset sales carry total “projected gross proceeds of $915 million while divesting of only approximately 80 MMcf of daily gas production and approximately $50 million of estimated 2017 operating income.

“Upon closing, this strong bid for our second Haynesville package, along with our recent new issue and tender, will position Chesapeake with significant liquidity as we begin a new year,” he said.

The Haynesville transactions bring Chesapeake’s “total gross proceeds from asset sales either signed or closed in the year to approximately $2.5 billion, excluding certain volumetric production payment repurchase transactions,” Lawler said.

This total outpaces the company’s original asset sales goal by $500 million, he said.

Management had discussed plans to market a portion of the debt-heavy Haynesville assets during a 3Q2016 conference call last month. During the third quarter, the company saw its Haynesville output increase both year/year and sequentially.

Chesapeake said earlier this month that it will retain roughly 250,000 net acres in the core of the Haynesville after the divestitures are complete. The company said its 2017 program in the play will focus on longer laterals and further enhanced completions, which management projects will result in adjusted production growth of 13% for the year.

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