A court has authorized Chesapeake Energy Corp. to sell its Midcontinent assets and approved procedures to get the process started. 

Chesapeake Energy

Under an order issued by the U.S. Bankruptcy Court for the Southern District of Texas, Chesapeake has until Oct. 22 to designate a stalking horse bidder that would set the bar for the value and terms of any sale. The court set a deadline of Oct. 29 for other qualifying bids and tentatively scheduled an auction for Nov. 10. 

Chesapeake, once a symbol of the American natural gas industry’s revival, filed for Chapter 11 bankruptcy protection in June to wipe out $7 billion of debt. The company’s stock was delisted from the New York Stock Exchange in July. 

The company holds more than 700,000 net acres in west and northwest Oklahoma, where it has long been one of the state’s largest oil and gas producers. But it hasn’t focused on those properties in recent years, instead spending in places like the Powder River Basin of Wyoming and Eagle Ford Shale in Texas to drive more oil production. 

Chesapeake produced just 4,000 b/d of oil, 36 MMcf/d of natural gas and 3,000 b/d of natural gas liquids (NGL) in the Midcontinent during 2Q2020. The assets accounted for a small share of the 93,000 b/d of oil, 1.8 Bcf/d of natural gas and 28,000 b/d of NGLs it produced from its assets across the Lower 48, which also include the Marcellus Shale in Northeast Pennsylvania and Haynesville Shale in Louisiana. At one time or another, Chesapeake has operated in nearly all of the Lower 48’s major plays, but it has whittled its asset base down in recent years as part of cost-cutting initiatives it tried undertaking before filing bankruptcy. The company last sold a portion of its Midcontinent acreage in 2018, exiting the Mississippian Lime in a $491 million sale.