Chesapeake Energy Corp. on Monday closed on the first of its multi-asset transactions to sell its midstream businesses with the $2 billion sale of Chesapeake Midstream Partners LP (CHKM) to Global Infrastructure Partners (GIP) for $2 billion.
The sale, which is expected to result in a pretax gain of around $1 billion to Chesapeake Energy, gives GIP 100% of CHKM's general partner interest and 69% of its limited partner units.
GIP had been Chesapeake Energy's original funding partner in forming the midstream business in 2009 before it was launched as a public company two years ago (see Daily GPI, July 7, 2010).
Last month Chesapeake Energy announced it was selling its midstream businesses to GIP in three separate packages for more than $4 billion in cash (see Daily GPI, June 11). It said negotiations were continuing between the parties for the sale of additional Midcontinent gathering and processing assets to CHKM, as well as a separate transaction to sell stakes in Chesapeake Midstream Development LP to GIP.
Proceeds from the transactions are part of Chesapeake Energy's 2012 asset sales program, which is supposed to generate cash proceeds of $11.5-14 billion, according to CEO Aubrey McClendon. Including the sale of the CHKM assets and midstream businesses, announced asset sales for the year to date total around $6.6 billion.
Meanwhile, Reuters reported on Monday that the U.S. Department of Justice is "probing" allegations that Chesapeake and Encana Corp. plotted in 2010 to avoid bidding against each other in some Michigan public land auctions and several private land owner transactions.
Michigan officials had told NGI's Shale Daily that they were reviewing the allegations after Reuters reportedly obtained rival executives' emails from two years ago indicating that they had "repeatedly" discussed the land deals (see Daily GPI, June 26).
The Justice Department source is "not authorized to speak publicly," Reuters stated. The "probe could last for months, if not longer," the report indicated.
The companies declined to comment, as did the Justice Department.
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